Policy Research Institute of Market Economy (PRIME) organized a policy dialogue on fiscal federalism and devolution, at Pearl Continental, Peshawar. A select group of the informed audience was invited to participate in the discussion. Participants belonged to a diverse background of government, academia, business, media, and civil society. PRIME is conducting these dialogues in all four provincial capital cities in the country.

These sessions serve to provide a platform to the concerned stakeholders across the country to provide their inputs to PRIME’s ongoing research. For the purpose, PRIME has engaged five economists for authoring policy papers on 5- different NFC related issues. And these authors are part of all these provincial level dialogues.

Inter-governmental resource distribution is more of a political matter rather than a purely economic one. All decisions reached the National Finance Commission have to be reached at by a consensus. Therefore, in order to come up with pragmatic recommendations, research authors from PRIME are holding consultative sessions across the country. Peshawar session was moderated by Shehryar Aziz, whereas authors briefed the audience on their respective NFC paper. It was followed by an open discussion at the forum.

Dr. Ghulam Samad (Director, Centre for Environmental Economics and Climate Change, PIDE)

Pakistan does not have a framework for provincial government expenditures. The federal authorities are collecting almost 98 percent of the total revenue and the provincial governments’ total expenditures are more than that of the federal expenditures. While the provincial governments’ expenditures are increasing, the same trend cannot be observed in the provinces’ contribution to revenue growth. The forum voiced its concern that while the federal government is seeking a great share in the gross divisible pool, at the same time it is vying to take over control of major hospitals from the provincial government in Karachi.

Dr. Sajid Amin (Head, Policy Solutions Lab, SDPI)

Granting such a high weightage to the population as a resource distribution criterion needs to be evaluated. When the population has a weightage of 80 percent in the horizontal distribution formula, other important indicators get left with very insignificant weightage.

Provinces that have a high population naturally are in need of greater resources to be able to meet their needs. When the population has such a high weightage in the resource distribution formula, this creates an incentive for the provinces for not keeping a lid on their population growth rates.

A major sticking point in the NFC discussions is achieving a consensus. And that becomes further difficult when certain stakeholders do not even sit at the table for discussions. Case in point is the first meeting of the recently reconstituted NFC, which was not attended by Chief Minister Mr. Murad Ali Shah, the representative of Sindh province.

Shahid Mehmood (Public Policy Consultant; Instructor, Pakistan Institute of Trade & Development)

Under article 160 of the constitution of Pakistan, the provinces have ownership of their natural resources. However, it is seen that the federal government exercises far more control over them as against the provincial governments. For example, it is the federal government which bi-annually determines the well-head pricing.

This argument was further strengthened by the participants who questioned that if oil and gas are shared resources; then where is the representation of provincial representatives on the boards of SOEs operating in the Oil and Gas sectors? Granting the right of collection of revenue (that is eventually transferred to provinces in the form of straight transfers) to provincial governments is currently disadvantageous for the federal government, which faces a budgetary shortfall of Rs.2 trillion.

Unfortunately, the districts from which natural resources are being extracted, their human development indicators are faring too bad as compared to other settled districts in the country. Neither the provincial nor the federal government spares a thought about the uplift of these areas.

Sohaib Jamali (Editor, BR Research)

Discussants at the forum spoke on the need to adhere to the constitution. It was pointed out that before the NFC deliberated upon a new formula for resource distribution, one must first ensure compliance on the existed formula. As per the participants, KP is still deprived of its due share in net hydel profits. There is a severe trust deficit between the federal government and the provinces. How can then a new formula benefit from a consensus, when the formula that has previously been agreed upon is not being respected?

Sohaib elaborated that the issue of Provincial Finance Commission (PFC) is an entirely provincial domain. If there is some bone of contention between the federal and provincial governments, it does not mean that the provinces should not proceed with improving their PFCs or empowering their districts. Provinces’ grievances with the federation and the subject of municipal empowerment are mutually exclusive. Out of a provincial finance commission comprising of 12 members, 8 are bureaucrats and only 4 are elected representatives of the people. So if there is tilted representation on the PFC, this cannot be justified with lack of mistrust between the federation and the provinces.

Policy Research Institute of Market Economy (PRIME) organized a policy dialogue on fiscal federalism and devolution, at Karachi Marriott Hotel. A select group of the informed audience was invited to participate in the discussion. Participants belonged to a diverse background of government, academia, business, media, and civil society. PRIME is conducting these dialogues in all four provincial capital cities in the country. These sessions serve to provide a platform to the concerned stakeholders across the country to provide their inputs to PRIME’s on-going research. For the purpose, PRIME has engaged five economists for authoring policy papers on 5- different NFC related issues. And these authors are part of all these provincial level dialogues. Inter-governmental resource distribution is more of a political matter rather than a purely economic one. All decisions reached at the National Finance Commission have to be reached at by a consensus. Therefore, in order to come up with pragmatic recommendations, research authors from PRIME are holding consultative sessions across the country.

The Karachi session was moderated by Dr. Imtiaz Bhatti, Additional Secretary (Coordination) at Chief Secretary’s Secretariat, Government of Sindh; whereas the panelists briefed the audience on their respective NFC paper.

Dr. Ghulam Samad (Director, Centre for Environmental Economics and Climate Change, PIDE)

Pakistan does not have a framework for provincial government expenditures. The federal authorities are collecting almost 98 percent of the total revenue and the provincial governments’ total expenditures are more than that of the federal expenditures. While the provincial governments’ expenditures are increasing, the same trend cannot be observed in the provinces’ contribution to revenue growth. The panelist posed the following questions before the forum:

1. Is there a need for expenditure framework for the provinces?

2. Should it really be a mandate of the NFC to discuss transparency and accountability?

3. What kind of incentives should be given to the provincial governments to encourage them to increase their own revenues? 4. Do the provinces need a fiscal responsibility law?

Dr. Naimat U. Khan (Assistant Professor, Institute of Management Sciences, University of Peshawar)

The panelist sought the forum’s opinion on the suggestion that the two territories of Gilgit-Baltistan and Azad Jammu & Kashmir should be treated like other provinces, so that a permanent percentage of divisible pool can be allocated for the two. This way they will not be each year dependent upon the federal government’s share of resources.

In case of Balochistan there is a protection with respect to the minimum percentage of share in divisible pool. Dr. Naimat posed the question whether there can be any such protection for GB/AJK or not? Can the federation assign a fixed percentage of non-tax resources for GB/AJK?

Dr. Sajid Amin (Head, Policy Solutions Lab, SDPI)

Granting such a high weightage to population as a resource distribution criteria needs to be revaluated. When population has a weightage of 82 percent in the horizontal distribution formula, other important indicators get left with very insignificant weightage.Provinces that have a high population naturally are in need of greater resources to be able to meet their needs. When population has such a high weightage in the resource distribution formula, this creates an incentive for the provinces for not keeping a lid on their population growth rates.

Poverty is given a weightage of 10 percent. It is proposed that this indicator should be substituted with poverty distance. Furthermore, the value obtained for poverty distance shall then be multiplied with the population in the province as this figure will be more representative of the actual needs of the province, with respect to poverty alleviation. The major resistance in the current NFC negotiations is coming from the province of Sindh. The question is what will be the level of willingness of the government of Sindh in undertaking population control initiatives?

Shahid Mehmood (Economic Policy Consultant; Instructor, Pakistan Institute of Trade & Development)

Under article 160 of the constitution of Pakistan, the provinces have ownership of their natural resources. However, it is seen that the federal government exercises far more control over them as against the provincial governments. For example, it is the federal government which bi-annually determines the wellhead pricing. Granting the right of collection of revenue (that is eventually transferred to provinces in the form of straight transfers) to provincial governments is currently disadvantageous for the federal government, which faces a budgetary shortfall of Rs.2 trillion.

Unfortunately, the districts from which natural resources are being extracted, their human development indicators are faring too bad as compared to other settled districts in the country. Neither the provincial nor the federal government spares a thought about the uplift of these areas.

Sohaib Jamali (Editor, BR Research)

Sindh has been without a Provincial Finance Commission for the last so many years. As per Sindh Local Government laws, property taxes, taxes on transfer of immovable property, tax on professions, trades and 4 callings, lie in the domain of local government. But realistically speaking it is still being levied and collected by the provincial government. From the perspective of PFC, development spending is still top-down instead of being the other way round.

There are thirteen/fourteen members of the PFC in Sindh of which 6 out rightly belong to the provincial government. Two are from the private sector, nominated by the provincial government. This is to say that if the district governments/local government are not fairly represented on the PFC, how fair would an award really be?

Background:

Policy Research Institute of Market Economy (PRIME), in collaboration with Friedrich Naumann Foundation (FNF), National Youth Assembly and Ahmed Bashir & Associates had conducted its 1st Working Group meeting of Street Vendor Project in Islamabad. Known as “thelay walay” in local vernacular, these street vendors make a valuable contribution by bringing the market to one’s doorstep. Their role, in the livelihood sustenance of poorer segments of the society, cannot be underestimated. The project targets five cities namely Islamabad, Karachi, Lahore, Peshawar, and Quetta and comprises of two phases. Under its first phase, Street Vendor Assemblies have been organized in four cities (Islamabad, Karachi, Peshawar, and Quetta) while the second phase focuses on working group meetings to be held in each of the aforementioned cities. Under this project, PRIME has taken the initiative to draft a legislative bill for regulating and protecting the rights of street vendors in Pakistan. For the purpose, a focus group discussion was held to solicit feedback from multiple stakeholders on the preparation of the Legislative Bill.

Participants:

The target audience for this working group meeting included an array of participants from the municipality, businesses, multilateral, academia, media, and vending community. Mr. Sajid Abbasi, Chairman of Metropolitan Corporation Islamabad and Mr. Tikka Khan, Ex-Federal Minister and Secretary-General of All Pakistan Newspaper Seller Federation graced the event with their presence. 25 in the number of participants attended the discussion.

Proceedings :

The Forum started with a welcome address and a brief overview of the street vendor project given by Ms. Beenish Javed, Research Associate, PRIME. She highlighted the rationale and objectives of the meeting. In doing so, she also shed light on the economic significance of the vending community, the challenges facing their livelihoods and the need to regulate and protect their vending rights. It was followed by a presentation on “Street Vendors’ Rights” by Mr. Ahmed Bashir, Advocate, Ahmed Bashir & Associates. He outlined the challenges facing vendors, plausible solutions to their problems and essential features of the draft legislative bill. Thereafter, the forum was opened for a focus group discussion.

Discussion:

Mr. Ahmed Bashir briefed that the legislative bill would cover aspects related to the demarcation of vending zones, licensing, compensation, penalties, the formation of a representative body, establishment of vendors’ association, provision of micro-credit, redressal mechanism and formulation of a national policy for street vendors. He emphasized that in order to provide legal recognition to street vendors, declaration of clearly demarcated vending zones is a priority. While discussing the essential features of the draft bill, he proposed that the license fee should not exceed Rs. 100 per month. Additionally, it should contain the names of family members, including women.

Street vendors present at the meeting shared the extent of humiliation they have to encounter at the hands of police and unelected market committee. They feel powerless and despite paying bribes, feel insecure and fearful owing to uncertainty in their tenure. Their carts are often confiscated by the CDA without any compensation or reimbursement for the damages caused to their products. They also mentioned how complex it is to retrieve their carts from the CDA. They said most of the vendors are unaware of the nearby local dispensary and those, who are aware, do argue that it is of little use due to inadequate availability of medicines. Other participants suggested that public-private partnership is the key to improving the plight of vendors. In this regard, they suggested signing MoU with the Planning Commission in order to take this initiative forward with the requisites of Ehsaas Program.

Mr. Hanan Abbasi, President, National Youth Assembly reiterated the engagement of youth in supporting the cause of street vendors for improved rights and enhanced livelihood. Mr. Sajid Abbasi, Chairman, Metropolitan Corporation Islamabad touched upon the fragmented governance structure at Islamabad and mentioned that he is well aware of the plight of the street vendors. Despite the administrative constraints, he assured that efforts would be made to provide relief to the vendors. The forum ended with a vote of thanks from Mr. Tikka Khan, Ex-Federal Minister & Secretary General of All Pakistan Newspaper Seller Federation who reassured his full support to the organizations involved in this project.

A MoU signing ceremony was held in the Mayor’s Office, Peshawar, for the setting up of Economic Development Unit (EDU). MoU Signatories included City District Government Peshawar, Sarhad Chamber of Commerce & Industry, UN Habitat and PRIME Institute, an Economic Think Tank. Purpose of the EDU is to serve as a platform for the Peshawar Municipality to engage broader stakeholders in the facilitation of economic development of Peshawar. Through EDU, Peshawar Municipality will be striving to attain 3 goals of job creation, investment flow and tax generation.

Mr. Asim Khan, Mayor of Peshawar, welcomed the signatories at his office. He elaborated on the utility of EDU for the economic development of Peshawar. He mentioned that a city needs to create jobs and bring investments for spreading prosperity. He linked the business growth with the increase in tax revenues for the municipality. This tax flow is essential to fund the municipal services and improve upon their quality. In this manner, city livability rises that further enhances economic competitiveness.

Mr. Faiz Muhammad, President Sarhad Chamber, has assured about the commitment of business community of Peshawar in backing the EDU venture. He was of the opinion that EDU will contribute in creating job and business opportunities. He thanked the Mayor of Peshawar for extending his backing for the EDU and engaging broader business community for economic coalition building.

Mr. Jawed Ali Khan, Country Representative of UN Habitat, has defined the role of UN in supporting LED initiatives in Pakistan and other countries. He mentioned that UN Habitat is looking to establish similar EDUs in 10-largest cities of Pakistan. He highlighted the vital role of municipalities in economic development for job creation and investment solicitation. He reiterated his understanding of the utility of EDU in expanding economic horizons of Peshawar.

Mr. Zia Banday, Joint Executive Director of PRIME, has highlighted their involvement in economic-related initiatives for Peshawar. He did mention that this work is line with PTI government vision of empowering and engaging local governments in economic development. EDU mechanics will comprise of a bottom-up approach, whereby Municipality will be contributing to the federal and provincial pro-growth and poverty alleviation agenda. Mr. Banday did inform that EDU will be embarking on its first initiative of preparing an Economic Development Strategy of Peshawar. Based upon this strategy, further LED initiatives will be designed and implemented.  

The MoU signing ceremony was attended by a number of Municipal officials and representatives of the business community of Peshawar. Zahid Nadeem, Town-1 Nazim, Shafiq Rehman, Director General Peshawar Municipality and Mr. Haris Mufti, Vice President Sarhad Chamber were also in attendance.

PRIME Institute, in collaboration with Friedrich Naumann Foundation and National Youth Assembly, has held a Street Vendor Assembly in Shahi Bagh Area of Peshawar. Zafar Ullah Khan, President of Rehri Baan Association in Peshawar, organized the participation of a large number of stall holders and cart pushers in the assembly. Purpose of the assembly was to create awareness among street vendors about the lacunas in-country laws that exacerbate their economic plight. Faiz Muhammad, President of Sarhad Chamber of Commerce, was the Chief Guest at the event.

Zia Banday, Executive Director of PRIME, elaborated on the economic aspects of street vending. He mentioned that this low economic segment is much resilient in survival against all odds, which has emerged due to uneven imposition of rule of law. It is impacting the earning capacity of the street vendors, who are the victims of state apathy and at the mercy of different mafias. Street vendors are playing a very important role in serving as a distribution channel for taking the goods of cottage and small businesses to the low and middle income groups. Mostly street vendors are from low skilled and rural migrant segments. They are a vital cog in an urban economy, which needs to be taken into account for any city planning.

Ahmed Bashir, a Senior Lawyer and a Research Fellow, said that street vendors are heart of Peshawar’s economy.  And yet, Street vending and provision of services escapes attention despite it being the primary means of combating poverty and of economic survival for many inhabitants of the city.  Importance of street vendors as service providers is immense, however, all the laws concerning them are for controlling their economic activity and there are hardly any workable provisions for facilitating them and to improve their working conditions and general betterment.

Zafar Ullah Khan highlighted the plight of street vendors in Peshawar. He did mention the lack of protection to street vendors and their continuous fear of being uprooted from their place of business. He demanded the government to provide them amenities for operating in the newly constructed Bachat Bazar. Hanan Ali Abbasi, President of National Youth Assembly, has reiterated the engagement of youth in supporting the cause of street vendors for improved rights and enhanced livelihood.

In his concluding remarks, Faiz Muhammad, President of Sarhad Chamber, has informed the audience about the commitment of business community in helping the street vendors and taking their voice to higher echelons of the government. Business community is even ready to allocate their own money for easing the water problems of street vendors.

In a question & answer session, various street vendors did talk about the humiliation they have to undergo at the hands of police and other city agencies. They feel powerless and despite paying bribes, they remain insecure and fearful owing to uncertainty in their tenure. They demanded the issuance of health cards and education facilities for street vendors and their families. PRIME Institute did announce constituting of a working group that will comprise of elected representatives, street vendors and civil society to lobby government for improving upon the legal structure for the street vendors.

PRIME Institute, in collaboration with Friedrich Naumann Foundation and National Youth Assembly, has held a Street Vendor Assembly in New Sabzi Mandi, Karachi. Purpose of the assembly was to create awareness among street vendors about their vending rights in country laws that exacerbate their economic plight. Mr. Rabistan Khan, Local MPA, was the Chief Guest at the event.

Zia Banday, Executive Director of PRIME, elaborated on the economic aspects of street vending. He mentioned that this low economic segment is much resilient in survival against all odds, which has emerged due to the uneven imposition of the rule of law. It is impacting the earning capacity of the street vendors, who are the victims of state apathy and at the mercy of different mafias. Street vendors are playing a very important role in serving as a distribution channel for taking the goods of the cottage and small businesses to the low and middle-income groups. Mostly street vendors are from low skilled and rural migrant segments. They are a vital cog in an urban economy, which needs to be taken into account for any city planning.

Ahmed Bashir, a Senior Lawyer and a Research Fellow, said that street vendors are heart of Karachi’s economy.  And yet, Street vending and provision of services escapes attention despite it being the primary means of combating poverty and of economic survival for many inhabitants of the city.  Importance of street vendors as service providers is immense, however, all the laws concerning them are for controlling their economic activity and there are hardly any workable provisions for facilitating them and to improve their working conditions and general betterment.

Rabistan Khan , highlighted the plight of street vendors in Karachi. He did mention the lack of protection to street vendors and their continuous fear of being uprooted from their place of business. He demanded the government to provide them. He has given his full support to initiative for improving the environment for street vending. He mentioned his commitment for introduction for any legislative bill in the provincial assembly in this regards.

 Hanan Ali Abbasi, President of National Youth Assembly, has reiterated the engagement of youth in supporting the cause of street vendors for improved rights and enhanced livelihood.

In a question & answer session, various street vendors elaborated on difficulties they face in running their business. They said the absence of civic humanities in the Mandi area despite collection of hefty taxes by market committee.

PRIME Institute did announce constituting of a working group that will comprise of elected representatives, street vendors and civil society to lobby government for improving upon the legal structure for the street vendors.