Rural poverty root cause of terrorism in Pakistan .
By: Tarique Khan Javed
President, Overseas Pakistani Investors Forum.
                           Dated 05 Nov 2008

Obama’s promise for poor in Pakistan:
Like a wise Leader Obama has searched for the root cause of terrorism in Pakistan and have come to the conclusion that poverty is the cause. During election complaining he promised to provide Pakistan substantial civil aid to alleviate poverty.

In coming days while we expect to see lots of activity on the military side as USA shifts its forces from Iraq and pours them into Afghanistan. The combined action of USA, NATO and Pakistani forces will lead to a decisive battle. My judgment is that at least in our Tribal area anti state forces will be defeated and these areas would be incorporated into Pakistan.

FATA was not incorporated in to then British Punjab mainly due to financial reasons.  The cost was four time more than keeping these areas as they are now. In Baluchistan on the other hand, Robert Sandeman  as Agent of Governor General of India, realized that cost consideration were insignificant to the strategic importance of Phustun region from Chaman to Zoab. He forcefully conquered these most difficult mountain areas, inhabited by fierce and hostile tribes. He took sons of leading Sarders as hostages, he provided jobs to tribes in militias and agreed to pay an annual subsistence allowance to tribes; in return of complete loyalty and maintaining peace in there respective Regions. On top he kept substantial force to punish any tribe breaking the promise. FATA can be pacified using same formula.

Once pacified we should request international community to help us create jobs in these areas. Time is right for this as world has realized that extreme poverty in this vital area is detrimental to world peace.

Lack of Industries in rural areas-a British rule product:
The general absence of industries other than limited seasonal agriculture, handicraft, animal husbandry and fish processing industries is a major source of continued poverty in Pakistan.   Before the arrival of British rule and modern industries which are all located in big cities. Each Rural community and house hold had small spinning, weaving, sewing and other small scale processing industries right in the villages. The industrial activity provided one third income of the families. With shifting of industries to the cities the rural communities became fully dependent on handicraft, animal husbandry, fishing and agriculture as a source of income besides diminishing government jobs.

Under these conditions when fish stock gets depleted or land is destroyed due to water logging and salinity; desperation sets in these communities leading to all kinds of ills.

The biggest national challenge for Pakistan:  
A national challenge for Pakistan is creation of industrial jobs in the rural areas. This indeed  is a daunting task and thus will require extra ordinary effort and resources. However the benefits from this exercise is worth the cost as it will engage a large population into industrial work force, reduce cost of doing business thus improving our international competitiveness.  

Among many if we consider the case of Garment industry the benefits of shifting this industry in rural areas become clear. In the current quota free regime, the lowest cost producer is going to emerge a winner. China, Bangladesh and India are giving us tough competition. The wages of stitching workers in the cities are rising fast. During the last three years average wages have increased from Rs 2,500 to Rs 4,500.

If we can shift part of the industries to rural areas the wages can reduce to Rs 1,500 to Rs 2,000 thus making a large saving in labour cost. The initial investment in relocating and training can be recoup within a short while.

Need for  a massive Rural Industrial Support Fund (RISF):
Government may create a Rural Industrial Support Fund (RISF) of say Rs 100 billion (USD 1.5 billion), which could provide capital and land to factories willing to relocate to rural areas. Government involvement will also provide security support to these factories and reduce the risk of the entrepreneurs. 

USA, European Union, Oil rich Gulf States, World Bank, Asian Development Bank, European Union and Bill Gates funds may be asked to contribute capital and expertise in RISF so that its resources may be increased to say Rs 2,000 billion (USD 24 billion).

These Governments and institutions now cognizant of the impact of massive poverty in Pakistan would be willing to contribute in this biggest poverty alleviation project, ever undertaken in Pakistan, which has the potential to change the outlook of the country forever.

SME and Micro credit Banks may be offered 50% risk sharing for their lending in rural areas by RISF thus inducing them to open Branches in these Areas. Their current involvement in rural areas is very disappointing.