The Long Road of Economic and Democratic Reform: Marking Ten Years of CIPE in Pakistan

Background

When CIPE opened its Karachi office in 2006, then-President Pervez Musharraf had installed a technocratic government and had liberalized the media. This allowed for greater debate and discussion, setting the scene for change in Pakistan. The government looked to take steps toward economic liberalization. Pakistan’s gross domestic product nearly doubled in the 2000s, and the country was prepared to make the changes needed to become more competitive. To help sustain that economic momentum and the opening of greater democratic space, CIPE focused on building the capacity of the country’s private sector and civil society to advocate reform.

After a long period of alternation between military and civilian rule, democratic consolidation has been a struggle for Pakistan. Yet recent milestones, including the first-ever transfer of power between elected governments in 2013 and constitutional reforms to devolve more power to the regional level, show that there are opportunities to continue addressing the country’s challenges in a democratic framework.

Highlights

In the years since 2006, CIPE has taken a holistic and dynamic approach to democratic and economic reform in Pakistan, supporting programs in media development, business association capacity building, women’s economic empowerment, and policy advocacy. Each project has focused on supporting civic awareness of, support for, and engagement in the reform process.

In the last ten years, CIPE has:

  • strengthened private sector associations, including women’s associations;
  • supported private sector-driven policy advocacy;
  • created new opportunities and institutional resources for women entrepreneurs;
  • increased access to economic information; and
  • developed stronger think tanks to hold government accountable.

Today, civil society institutions, stronger in numbers and capacity, provide mechanisms for citizens to voice their concerns and advocate reforms, journalists are better prepared to communicate with citizens, and think tanks are monitoring and assessing the government’s follow-through on implementing reforms.

CIPE Pakistan’s First Steps

Chambers of commerce (CCIs) and business associations (BAs) in Pakistan are registered and governed by special national legislation, the Trade Organization Ordinance (TOO). In 2006, it was clear that these organizations were overregulated and many had become inactive. The government had excessive discretionary authority over their operations, and the chambers had become heavily politicized, with poor internal governance. Meanwhile, the role of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) was poorly defined under the TOO, and numerous local CCIs existed only on paper to win votes in the Federation, lacking actual members. Pakistan’s chambers were often controlled by single leaders and vested interests, and were encumbered by corruption. CIPE recognized that the law governing CCIs and BAs was in need of serious reform.

CIPE’s first major program, in 2007, was to work with a reform-minded community of business leaders to develop and support the passage of a revised TOO, creating space for a deep change in Pakistan’s private sector. The new TOO prepared the ground for a revitalization of CCIs and BAs. The revised TOO required associations and chambers to register under stricter guidelines, required that a minimum of two women serve on executive boards, and for the first time allowed women to launch their own chambers. As a result, by 2015, of the previously registered 182 business associations in Pakistan, dozens of so-called “paper” chambers were eliminated. For the first time women’s chambers were also registered, and CIPE worked with them to build organizational capacity and to strengthen the voice of women in business. Over the years, CIPE has worked with over 30 Pakistani business associations across various sectors of the economy, and more than 30 Pakistani CCIs, to support effective, pro-business policy reform. Through the effort to change the TOO, CIPE’s work empowered a core of private sector actors who are dedicated to improving the accountability, transparency, and rule of law in the country.

Capacity Building for Business Organizations

After supporting the reform of the chamber and association system, CIPE began providing technical assistance and capacity building to these organizations through a wide variety of training workshops and strategic planning sessions. These programs sought to help Pakistani business organizations streamline their governance, improve staff skills, grow membership, strengthen finances, and have better communications strategies with the business community, government, media and general public. CIPE also launched annual gatherings of chambers’ and associations’ key staffers to address issues of governance, policy advocacy, financial management, marketing, public relations, and membership development. Since 2007, more than 80 chambers have participated in CIPE’s capacity building programs for business organizations. Chambers and associations in Pakistan today are more member focused and mission driven. The professionalization of chambers was a dramatic and powerful shift.

The Role of Business in Policy Reform

In addition to training and capacity building, CIPE focuses worldwide on the role of chambers and associations in advancing economic policy reform through a transparent advocacy process. Before CIPE’s engagement in Pakistan, the business community had tended not to play a role in policymaking in an organized, public way. As a result, CIPE began to work with a number of associations to draft national business agendas (NBAs), which serve as statements by the business community of their reform priorities. CIPE supported both the Pakistan Business Council and the Pakistan Software Houses Association in preparing NBAs for the manufacturing and IT sectors, respectively.

Further, to provide a platform for business leaders to discuss economic issues and engage in policy advocacy, CIPE initiated the first-ever annual gathering of the presidents of Pakistan’s major chambers, the Chamber Presidents’ Conference. While only 20 participants attended the first conference, within just two years the gathering was attracting attention from key political figures, giving business leaders the chance to offer policy recommendations to government officials. In 2011, then Pakistani President Asif Ali Zardari and Prime Minister Yousaf Raza Gilani called a meeting to discuss energy issues, at which 32 of 44 chamber presidents from across the country jointly voiced the business community's demands for reform. The reform priorities expressed by the business leaders included reforms in the energy and water sectors, and resolution of Pakistan’s chronic circular debt problem. At the conclusion of each Chamber Presidents’ Conference, the participants prepare a policy statement on key reforms, called the Bhurban Declaration, named after the town where the meetings are held.

These advocacy efforts have begun to yield results. For example, in 2011, the government announced several measures recommended by the business community, including the creation of a new 125 billion-rupee microfinance scheme, under which 50 percent of the loans go to women borrowers. In 2013, with the country about to have its first-ever democratic political transition, party leaders from across the spectrum attended the conference and accepted the need to build consensus on a comprehensive economic revival plan for Pakistan. As a result, all of the political parties produced concrete economic visions as part of their 2013 electoral platforms, which were shared with the business community for discussion.

Supporting Think Tanks to Hold Government Accountable

One of the challenges that CIPE identified early in its work in Pakistan was a dearth of good analytical information to understand economic trends and assess the impact of economic policies. In particular, following the 2013 election, as the new government had made a wide range of economic policy pledges, CIPE recognized that in order to ensure that these promises would be implemented, a strong voice for government accountability would need to emerge from civil society. Therefore, CIPE launched a new initiative with an Islamabad-based think tank, the Policy Research Institute of Market Economy (PRIME), to monitor follow-through on what laws were passed, and to ensure that reforms would move beyond just declarations.

With CIPE support, PRIME began tracking implementation of the new government’s economic policy reform promises. The first report was published in 2014 and was welcomed by media, the business community, and the government. PRIME has since released four reports tracking federal government performance as well as assessing provincial governments in Sindh and Khyber Pakhtunkhwa. The reports have become an indispensable tool to support ongoing policy advocacy and keep the public informed about the legislative process.

Expanding the Economic Role of Women in Pakistan

As noted earlier, one of the key accomplishments of the 2007 TOO reform was to give women, for the first time, the right to form their own chambers of commerce in Pakistan. CIPE helped form and provided training to a number of women’s chambers so that they could support the emerging role of women entrepreneurs and give women a voice in the economic policy advocacy process. Today, there are 10 registered women's chambers in Pakistan. The five strongest chambers have a total membership of around 2,500. These organizations have benefitted from CIPE’s tailored training programs on topics including strategic planning, financial management, and leadership – and saw notable engagement and success at the regional level.

These efforts have shown clear results. For example, in Peshawar, which is an exceedingly challenging environment for women, the women’s chamber worked with its members and stakeholders to create a set of policy recommendations to reduce barriers to the development of women-owned businesses at the provincial level. Access to finance was highlighted as a major issue that needed to be addressed to encourage greater participation by women in entrepreneurship and to support the expansion of existing firms. The local women’s chamber held focus groups with officials from financial institutions co-chaired by the Chief Manager of the State Bank of Pakistan, which led to the creation of a financial literacy program for women through local banks in Peshawar. The women’s chamber then formally submitted a set of policy recommendations to benefit women entrepreneurs to the regional government. The recommendations included providing financial literacy programs for women, quotas for bank loans to women, and promoting the inclusion of women on boards of directors. Following this, Peshawar women’s chamber members have been included in the State Bank’s regional focus group. One member was even appointed as a representative from the business community on the Federally Administered Tribal Areas working group.

In addition, the reformed TOO required that all regional chambers include women on their boards, ensuring that women would be represented not only through their own organizations, but also within Pakistan’s mainstream business community, which is typically dominated by men. CIPE provided training for women who serve on the boards of directors of these chambers to ensure they could fulfill their new duties. Today there are 60 women sitting on the executive committees of 30 Pakistani chambers. Moreover, in an important breakthrough, Pakistan saw its first-ever elected woman chamber president when Shabnam Zafar was elected President of the Khairpur Chamber of Commerce and Industry.

CIPE has also used its South Asia regional programs to benefit Pakistani women entrepreneurs. Three women’s chambers and one women’s business resource center from Pakistan – representing Peshawar, Multan, Islamabad, and Lahore – have joined a CIPE-supported South Asia network of women’s chambers and associations. In 2014, CIPE awarded small grants to the Peshawar and the South Punjab women’s chambers to carry out a pilot advocacy project to increase commercial loan repayment periods for artisans. Many of the local artisans are women and reforms could improve their earning potential and help them grow their businesses. Following the women chambers’ efforts, the State Bank issued policy instructions that led to the doubling of the amount of time that artisans have to pay back their loans from 180 days to 360 days. These women entrepreneurs are now better able to fulfill orders as well as plan purchases and sales.

Media Development and Policy Reform

Throughout the years that CIPE has been active in Pakistan, it has sought to ensure that the general public would be an active and informed participant in the process of economic policy reform. When President Musharraf liberalized the media in 2006, the space for greater debate on policy issues was opened. However, much of Pakistan’s media lacked the knowledge to provide informed reporting on business and economic issues. As a result, the media had a limited ability to keep citizens informed about the need for, and impact of, economic reforms. To address this challenge, CIPE worked with journalists, bloggers and editors both to build their capacity to report on business and economic issues, and to improve communication between the press and the business community.

CIPE designed and carried out training programs on topics ranging from selecting trustworthy sources, to simplifying statistics, to writing more informative and concise economic pieces. Working with both print media and bloggers, CIPE not only built journalists’ capacity to produce strong articles on policy and business issues but also worked with editors from leading media outlets to brainstorm on how best to integrate economic information in their publications. Over 100 women economic journalists from print, online, television, and radio media outlets were trained, helping change the public mindset on the role of women in the country.

Since 2012, alumni of CIPE’s economic blogger training sessions in Karachi, Lahore, Islamabad and elsewhere have written over 200 stories on economic issues, and have accumulated over 12,000 followers. These bloggers have covered topics ranging from regional politics, to corruption, to issues facing women entrepreneurs. This effort has provided a new outlet for citizens to discuss issues that affect Pakistan’s democratic development. In recent years, every online English newspaper in the country has started a blog, and Pakistan has seen a significant increase in the number of bloggers contributing to nearly every national newspaper’s website.

Lessons Learned and the Way Forward

Thanks to CIPE’s work, a wide range of stakeholders in Pakistan have begun to envision a role for themselves in the process of economic and democratic reform, from representation, to information and advocacy, to accountability and transparency. Pakistanis who have taken part in or benefited from CIPE’s programs increasingly can come together to demand that their government respond to the country’s economic challenges.

Over the years, CIPE has learned key lessons about supporting the reform process in Pakistan, including:

  • When working with chambers of commerce and business associations, it is unlikely that each organization will be at the same level of competency, so approaches must be tailored individually;
  • Strong think tanks are vital to monitor and assess government performance and follow-through on policy pledges; and
  • National and regional networks can provide crucial opportunities for women entrepreneurs to grow their businesses, advocate policy change, and build a political culture that is welcoming of women’s participation.
  • While Pakistan continues to face a wide array of challenges to its democratic consolidation, CIPE’s focus on the institutional factors affecting Pakistan’s development will remain. This includes strengthening key private sector and civil society organizations and the media, building support for the adoption of major legal and regulatory changes, and encouraging mechanisms for government accountability. Reforms and progress in these key areas have played a crucial role in keeping the country’s democratic and economic development on track, and will continue to play that crucial role going forward.

    Rachel Grossman is an Assistant Program Officer for Eurasia and South Asia at the Center for International Private Enterprise (CIPE) in Washington, DC.

    Marc Schleifer is the Regional Director for Eurasia and South Asia at the Center for International Private Enterprise (CIPE) in Washington, DC.

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