Doubling Foreign Remittances to Rebuild Flood-Ravaged Pakistan

Members of Pakistani diaspora must remember their compatriots in distress as we celebrate Eid today.

While there have been high-profile recent efforts by overseas Pakistanis to raise millions of dollars to fund rescue and relief efforts after the recent devastating floods, it is now time to begin to shift focus on to the much longer term and significantly more expensive reconstruction phase that will requires billions, not millions, of dollars.

World Bank economist Sanket Mohapatra has said in a recent post that remittances by overseas Pakistanis have played a significant role in Pakistan's economic improvement. Not only have such remittances contributed to significant poverty reduction in Pakistan "by an impressive 17.3 percentage points between 2001 and 2008 (from 34.5 percent in 2001-02 to 17.2 percent in 2007-08)", but "continued strong growth in worker’s remittances in the past few years has also contributed to improvements in the external current account balance” and “have facilitated improvement in the country’s external position”, according to a World Bank report released on July 30, 2010.

World Bank's Mohaptra adds that "there is now a risk that devastating floods that have hit Pakistan, killing more than 1,200 people and leaving 2 million people homeless, could reverse some of the gains in poverty achieved in the last few years, which were already believed to have been weakened in the wake of the recent financial crisis and rise in food prices. During past natural disasters, migrants have sent additional remittances to help their families and friends in need – for example, during the Pakistan earthquake in 2005, in Philippines after typhoons Ondoy and Pepeng in 2009, after an earthquake in Haiti in early 2010, and in other countries in Asia, Africa and Latin America. It is likely that the Pakistani diaspora will send additional financial resources to help their family, friends and even larger communities. These person-to-person transfers could complement official aid efforts".

The cost and the task of post-flood reconstruction may appear to be monumental, but I feel confident that global Pakistani community is equal to it. Already, non-resident Pakistanis have been sending home nearly ten billion US dollars a year in remittances to their home country. And their invested assets are estimated to be in hundreds of billions of US dollars in different parts of the world. I believe Pakistani diaspora can double their remittances in the next twelve months, thereby boosting Pakistan's overall economy by a $10 billion stimulus for reconstruction.

If a significant part of this additional $10 billion in remittances goes into special, professionally managed, investment funds specifically for post-floods reconstruction and rehabilitation, it will be an even greater boost to Pakistan's overall economy. To put it in perspective, the $10 billion in a year would be 5 times the annual foreign aid, and twice the peak FDI Pakistan received in 2007, the last year of healthy economic growth in 2007-2008.

Here's a video clip of Pakistan's billionaire real estate developer Malik Riaz Husain pledging $2 billion of his own wealth to help the flood victims rebuild:



Related Links:

Haq's Musings

Pakistani-Americans Extend Help to Flood Victims

World Bank Report on Pakistan released on July 30, 2010

Pakistan's Economic Performance 2008-2010

Aid, Trade, Investments and Remittances in Pakistan

World Bank Blog on Impact of Remittances in Pakistan

Comments

Riaz Haq said…
Here are excerpts from a piece by Christine Fair on "What Pakistan Did Right" in 2010 floods:

Arguably, the Pakistan Meteorological Department (PMD) is one of the most important reasons why the floods claimed relatively fewer lives than may have been expected, given the scale of the event. In January, I met with the Director General Arif Mahmood and his team in Islamabad. They walked me through, in painstakingly scientific detail, how their organization saved lives in 2010, as they had done before and as they will continue to do in the future.
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Some six months have passed since the onset of the floods. Surprisingly, many of the predicted disasters did not happen. Pakistan did not have the predicted second wave of deaths in the camps for the millions of internally displaced persons. Astonishingly, none of the predicted epidemics (such as cholera) took place. Pakistan has even managed to stave off the expected food insecurity.
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Pakistan's National Disaster Management Agency (NDMA), headed by Major General (Ret.) Nadeem Ahmed is part of the reason these catastrophes were prevented. The NDMA, along with the four Provincial Disaster Management Agencies, coordinated the massive effort to rescue flood victims, establish camps for internally displaced people, provide the victims with shelter, water and sanitation facilities, food and other logistical requirements. The NDMA coordinates with international donors and maintains a situation room where staff track calls and resolve problems. In a country that routinely sustains criticism for organizations that that underperform, NDMA excels.

Some of the worst fears about lost crops have not materialized. While many of Pakistan's fields have not been properly prepared for planting this year, NDMA working with its domestic and international partners was able to provide seeds to many cultivators. In many cases, they simply flung the seed into the land once the water receded. Many of these efforts are resulting in bumper crops. This was not expected in September of 2010. To be sure, this is only the beginning and much more needs to be done. But measures of this type helped stave off some of the gravest outcomes expected.
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There are still challenges. Complaints persist about corruption with the pre-paid ATM cards (Watan cards) distributed to IDPs. In Sindh, serious charges of corruption persist regarding the purchase of tents, blankets, medicines and food for the flood-affected people. Reports continue that food supplies are languishing in depots while IDPs go without in Sindh. Indeed, the IDP camp I visited in near the office of the District Coordination Officer for Dadu, was saddening. The residents and the camp administrator claimed that there had been no food distributed in a month.
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Nonetheless, half a year after the floods devastated the country and after most of the media has left the story behind, 20 million Pakistanis still need help -- and they need help now. While Pakistan must expand its own tax net to contribute to the long-term costs of rebuilding its infrastructure and preparing for future disasters, the international community should also continue to support immediate needs such as winterization, food support and rehabilitation of the flood victims.
Riaz Haq said…
In flood-stricken Pakistan, a good wheat harvest is expected, reports Food and Agriculture Organization (FAO):

Islamabad/Rome, 30 Mar 2011 -- A large-scale distribution by FAO of wheat seeds to the victims of last year’s floods in Pakistan is now ripe to yield enough food for half a million poor rural households.

With an average family size of eight, this translates into a harvest large enough to feed four million people for the next six months.

FAO spent $54 million of international donor funding buying and distributing quality wheat seeds as part of its emergency intervention that began last August. . Once the harvest is completed, this donation will have produced a crop worth almost $190 million in wheat flour, the main staple, at current local retail prices. “The investment made by donors has been quadrupled,” said Daniele Donati, Chief, FAO Emergency Operations Service. “Moreover, farmers will be able to save the seeds from this year’s harvest to plant again later this year.”

More than 18 million people in Pakistan were affected by last summer’s severe flooding, which caused extensive damage to housing, infrastructure and crops.

Farming nearly fully-funded

In responding to the immediate and critical challenges of the 2010 floods, FAO led the Agriculture Cluster, comprised over 200 organizations, reaching 1.4 million farming families across Pakistan.

FAO received $92 million of its $107 million appeal, which has enabled it to shore up the smallholder agricultural system in the four Pakistan provinces affected by the flooding. The donors were Australia, Belgium, Canada, CERF, the European Commission, IFAD, Italy, Sweden, the United Kingdom and the United States of America.

As well as supporting the “Rabi” wheat planting season, it is estimated that FAO saved the lives of almost a million livestock by supplying temporary shelter and enough de-worming tablets and dry animal feed for almost 290,000 families. Green fodder is now becoming available as the harsh Pakistan winter turns to Spring.

“The livestock interventions really paid off,” Donati said. “It costs ten times more to buy a new animal, which often represent a family’s lifetime savings”.

Canals cleared

FAO is overseeing a thousand cash-for-work schemes by which workers are paid to clear irrigation canals blocked with silt and flood debris.

One severely affected province not to have received much help is Sindh. This was because the fields remained waterlogged until well after the end of the Rabi planting season, and in some cases are still inundated. The UN Agency will shortly distribute quality rice seeds to almost 25 000 families in Sindh for the upcoming planning season, but over 700 000 families will require assistance over the coming months.

Recovery priorities

FAO, in partnership with the Government of Pakistan has identified recovery priorities for the next two years. These are increasing crop, livestock, fishery and agro-forestry production, improving diets and nutrition and boosting agriculture extension services to offer advice to landless and smallholder farmers.

“Pursuit of these core objectives will significantly reduce the vulnerability of the populations in question, improve food production and income generation, and increase affected communities’ resilience to future shocks,” said Donati. FAO expects its recovery programme to cost $94 million, enough to assist 430 000 families in 24 districts.

An Early Recovery Working Group, co-chaired by the Pakistan Government’s National Disaster Management Authority and the United Nations Development Programme, has been set up with eight sectors covered including one on Agriculture and Food Security, co-chaired by FAO, WFP and the Ministry of Food and Agriculture.

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