The Belt and Road Initiative
Approximately 26.5 million out of 221.8 million Pakistani citizens live below the national poverty line, determined based on one’s ability to afford to consume 2,350 calories a day. Indigence is particularly widespread in rural areas, which houses almost two-thirds of the national population. Due to persistent fiscal deficits, Pakistan has failed to implement appropriate anti-poverty and welfare measures. Currently, Pakistan lacks an umbrella social protection institution, while state loan schemes exclude many rural inhabitants, whose economic activity is largely informal and temporary. However, the Belt and Road Initiative may provide support to Pakistan’s poor.

The Situation

Farming and animal husbandry remains indispensable to the country’s agrarian regions. However, while almost 40% of Pakistan’s labor force relies on other sources of income, rural development may not occur without industrialization and infrastructural advancements, which is essential to connect the locals with the neighboring urban areas. Luckily, the Belt and Road Initiative, launched in 2013 by the Chinese and the Pakistani authorities, has endeavored to facilitate these positive changes. The BRI or the China-Pakistan Economic Corridor is the collective name for a plethora of Sino-Pakistani projects that primarily concentrate on infrastructure and energy, with an estimated budget of more than $62 billion.

Although the BRI is not the only major investment scheme operating in Pakistan, with the Asian Development Bank similarly funding road construction and having spent circa $14 billion on developing the country’s energy sector and rural communities, the former’s scale is unprecedented. Whether one could say the same about its impact on the Pakistani poor is equally important to establish, and now that the Belt and Road Initiative’s initial projects have come to fruition, it is possible to discern that.

Energy Sector Benefits

Within the first seven years of its existence, the Belt and Road Initiative resulted in the completion of 24 energy projects, which are worth $25.5 billion altogether. These include the erection of non-renewable power plants, namely coal stations in the Pakistani towns of Port Qasim and Sahiwal, as well as of solar and wind facilities. Thanks to this, where Pakistan’s annual GDP growth has been traditionally undermined by at least 2% owing to energy shortages, and where only half of the rural population had permanent access to electricity in 2018, the projects successfully replenished its national grid with 3,240 MW.

This was an 11% increase in its overall power capacity, and it helped stabilize the electricity supply to the indefeasible benefit of rural communities due to its diversification of the national energy resources. Furthermore, rural communities are expected to benefit from the construction of natural gas pipelines from Iran to the Pakistani provinces of Baluchistan and Sindh, whose rural poverty rates remain the highest in the country.

Infrastructure Benefits

Besides helping Pakistan attain energy self-sufficiency, the Belt and Road Initiative has invested $12 billion in constructing new roads and modernizing the local railway system. For example, Pakistan is currently building a 680-mile-long motorway linking its two major economic powerhouses, Karachi and Lahore. Moreover, the equally ambitious Karakorum Highway is connecting those cities to other Pakistani towns.

With faster, higher-quality roads accelerating cargo movement across Pakistan, the government determines farmers will face fewer hardships when transporting their produce to urban markets and city-based purveyors of important amenities will be able to improve their presence in rural areas. Additionally, the former will increase earnings, whereas the latter might encourage competition and bring down prices for basic goods, thereby making them more accessible to the rural public.

Other Economic Benefits

In 2019, China gave Pakistan $1 billion to cover the costs of 27 projects in education, agriculture and poverty alleviation. Most of these projects are concentrated in Southern Punjab and Baluchistan, which scored few points on the Human Development Index and correspondingly have many impoverished villages.

Analyzing the Belt and Road Initiative

Although Sino-Pakistani cooperation under the BRI has created more than 70,000 jobs in Pakistan and the World Bank believes that it could lift as many as 1.1 million Pakistanis out of poverty, it constitutes no silver bullet to the problem of domestic rural poverty.

On many occasions, the dire state of the country’s economy stifled project implementation, which suffered yet another balance of payments crisis in 2018, as well as by government bureaucracy. Thus, the construction of a power plant in Gwadar, a Pakistani port located in the province of Baluchistan and leased to Chinese companies, experienced a three-year delay, awaiting local government authorization.

Some have also questioned the Belt and Road Initiative’s socioeconomic inclusivity. According to the Sino-Pakistani agreement concerning the lease of Gwadar, the Pakistani economy will only receive 9% of the port’s revenues. An even smaller proportion of these funds will go to poverty alleviation programs. Moreover, the nation’s skilled wages have not registered significant growth, which suggests that many professionals still receive meager pay and struggle to cover their daily expenses.

The Belt and Road Initiative in Pakistan is hardly a finished enterprise. Although the majority of the so-called “early harvest” projects have reached fruition, many more are undergoing planning and construction. For this reason, we cannot conclude our evaluation of the BRI’s contribution to fighting rural poverty in Pakistan. Yet, since impoverished populations have benefited from the energy sector and job creation initiatives, this project may indeed prove helpful in alleviating poverty in Pakistan.

– Dan Mikhaylov
Photo: Flickr

KarachiPakistan is currently undergoing many development projects in order to improve the safety and general quality of life for its people. Here are five development projects in Pakistan that are currently underway.

The Strategic Strengthening of Flood Warning and Management Capacity of Pakistan

In 2010, around 2 million homes were damaged and 20,000 lives were lost due to flooding caused by heavy monsoon rains. There was no system set in place to warn individuals of the impending flooding and no recovery programs to assess the damages. The Strategic Strengthening of Flood Warning and Management Capacity of Pakistan project, developed by the United Nations Educational, Science and Cultural Organization began in 2011. $2.5 million in aid was provided in order to upgrade flood warning systems, asses damages caused by flooding, and update flood hazard maps in order to help with recovery efforts as well as prevent future catastrophes.

Sindh Resilience Project

Another one of the development projects in Pakistan which focused on disaster management is the Sindh Resilience Project. The main goals of this project are to mainstream disaster risk reduction in development budgeting, support restoration and improvement of high-risk sites, and construct rainwater dams in drought regions. Starting in 2016, the Pakistan government allocated $120 million for this project.

Karachi Neighborhood Improvement Project

Many Pakistani people live in neighborhoods that are not easy for pedestrians to navigate and do not have safe transportation. The objective of the Karachi Neighborhood Improvement Project is to create usability of public spaces, increase mobility, improve traffic safety, and provide better city management. Funded by the International Development Association, this project will cost around $98 million.

The Polio Eradication Project

Pakistan is one of the only polio-endemic countries in the world, along with Afghanistan and Nigeria. Due to an increasing trend of polio cases in Pakistan, the government announced the National Emergency Action Plan for Polio Eradication. In order to support these efforts in collaboration with the Bill and Melinda Gates Foundation, the Polio Eradication Project allocated $43 million to provide polio vaccines and to implement campaigns focusing on bringing light to the polio-endemic. 

Ranolia Hydropower Project

Imported oil is Pakistan’s main source of power. The high price of oil is causing a strain on the country and causing power outages. The Ranolia Hydropower Project was started in order to harness clean energy and create jobs. The Renewable Energy Development Sector Investment Program, a $510 million program, is funding the construction of a hydropower plant fueled by the Indus river, which will generate three times the electrical capacity of Pakistan’s current national demand.

These five development projects in Pakistan are all working to make Pakistan a better place to live thanks to the support and cooperation of generous organizations committed to public health and safety in Pakistan.

– Jenae Atwell

Photo: Flickr