The world was saddened this week by the passing of Ronald Coase, who won a Nobel prize for his groundbreaking work providing clarity and insight on a range of questions of economic behavior. His paper The Nature of the Firm looked at why people would choose to create firms rather than be individual market participants, introducing the concept of transaction costs to economic theory. His later study of transaction costs in the context of externalities, in The Problem of Social Cost, informs many of the ideas underpinning CIPE’s work.
The Afghan-Pakistan border. (Photo: EPA)
While most of the coverage of today’s summit meeting in Islamabad between Pakistan’s Prime Minister Nawaz Sharif and Afghan President Hamid Karzai focused on crucial issues of security and the peace process, the two leaders also covered one of the key drivers of long-run regional stability: enhanced trade and economic relations between the two countries.
According to press reports, the sides discussed cooperation on infrastructure, power, and transportation projects. In particular, Pakistan promised to follow through on its pledges under the Afghanistan-Pakistan Transit Trade Agreement (APTTA), which is designed to facilitate the flow of goods from Afghanistan and for export via Pakistan, as well as through customs into Afghanistan, among other provisions. While the agreement is signed and in place, it has long faced an extensive range of issues in practical application.
CIPE has been working with the Pakistan-Afghanistan Joint Chamber of Commerce and Industry on joint advocacy efforts between business leaders in both countries to try to unblock APTTA implementation. Now that such public, high-level support has been given to the process, it will be up to the private sector to maintain the pressure to realize the APTTA vision of free-flowing trade between these neighbors.
Marc Schleifer is Senior Program Officer for South Asia at CIPE.
As reported two weeks ago in The Economist, the Karachi Stock Exchange (KSE) has boomed for the past two years, with returns over 40 percent, albeit on rather low volume. The article cites a range of factors for the KSE’s strong performance, including investors’ appetites for risky markets, a new IMF loan for Pakistan, and general optimism after the country’s reasonably peaceful elections in May. Those elections marked the first time that a democratically-elected government served out its full term and handed over power to another civilian government.
On top of that, the new PML(N) government is considered largely pro-business, both by the local private sector and international observers. PML(N) came into office having made a wide range of assurances on needed economic reforms, and as CIPE’s Pakistan Country Director Moin Fudda has written, it was the business community that was instrumental in pushing the political parties to offer concrete policy platforms in the run-up to the May elections.
But digging deeper shows that caution is in order. The $5.3 billion IMF package still requires approval by the Fund’s board in September, and the government must show that it can deliver on a long list of preconditions. Among those are reforms to the crippled energy sector. But in a recent meeting of the Council of Common Interests, which brings together leaders of the four provinces with key federal ministers, agreement on the PML(N) national energy plan was deferred for further discussion.
CIPE Pakistan Deputy Country Director Hammad Siddiqui was interviewed by the Business Recorder this week, discussing the history and reform of the country’s chambers of commerce and business associations. Siddiqui highlights the role that CIPE has played in strengthening the chamber and association movement since launching its program in 2006, beginning with an effort to re-register all Pakistan’s associations.
As Siddiqui points out, “Back then a lot of these associations did not have offices; they were operating from homes; they lacked staff and had other traits of what is oft termed ‘brief case associations.’ Over 30 percent of these briefcase chambers and associations vanished through the re-registration process.” Siddiqui also illustrates some of the problems that typically face chambers and associations in South Asia generally, including that the original founders have “a hold on the chamber or the association, even when they do not directly hold a position” and that “when they appoint a CEO to run the association’s affairs, they do not really see them as CEOs…. and in spirit, the board does not treat that person as a CEO.”
Siddiqui lays out some recommendations for the further development of chambers in Pakistan, including the need for more competition among chambers and associations, more emphasis on service provision, and a push to empower staff. Read the whole article here.
Marc Schleifer is Program Officer for South Asia at CIPE.
BWCCI founder Selima Ahmad with CIPE Senior Program Officer Marc Schleifer (left) and Regional Director Andrew Wilson (right).
Selima Ahmad, founder of long-time CIPE partner the Bangladesh Women’s Chamber of Commerce and Industry (BWCCI), traveled to Washington DC this week to be honored with the Jeane J. Kirkpatrick Award, established by the International Republican Institute’s Women’s Democracy Network. This award honors those who have made contributions to the advancement of women through politics and civil society around the world.
Ahmad and BWCCI certainly fit that bill, having built an organization in less than ten years from two dozen members to more than 3,000, providing training to over 1,500 women entrepreneurs to improve their business skills, and taken numerous women business owners on trade expositions to allow them to establish trade links with potential partners.
Most importantly, BWCCI has kept the focus on policy advocacy to improve the business environment for its members, to allow them to flourish and to move from microenterprises to the small and medium-sized enterprise (SME) level. In particular, BWCCI has worked on the issue of access to finance for women-owned business, as well as access to marketplaces around Bangladesh.