08 08 Bykea’s battle for survival 12 Death, devastation, and now starvation — what is the cost of this catastrophe? 18 18 Miftah in the middle Khurram Husain 20 Between a school and an icecream shop Femme Finance 22 5G: Too soon to Tell? 26 26 Closing the open accounts and gham hour: Pakistan’s widening CAD 28problemThemainstreaming of the tote bag 08 26 12 CON TENTS Publishing Editor: Babar Nizami - Editor: Khurram Husain - Joint Editor: Yousaf Nizami Assistant Editors: Abdullah Niazi I Sabina Qazi - Sub-Editors: Mariam Zermina | Basit Munawar Editor Multimedia: Umar Aziz - Video Editors: Talha Farooqi I Fawad Shakeel Reporters: Ariba Shahid I Taimoor Hassan l Shahab Omer l Ghulam Abbass l Ahmad Ahmadani Shehzad Paracha l Aziz Buneri | Maliha Abidi | Daniyal Ahmad | Ahtasam Ahmad | Asad Kamran Chief of Staff: Maliha Abidi - Regional Heads of Marketing: Mudassir Alam (Khi) | Zufiqar Butt (Lhe) | Malik Israr (Isb) Business, Economic & Financial news by 'Pakistan Today' Contact: profit@pakistantoday.com.pk Profit
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The company has made a gambit to try and earn a spot in car-hailing. But will they make it?
Muneeb Maayr has a unique place in Pakistan’s startup ecosystem. In some ways, he is your typical startup founder. Amer ican educated, clean-cut, well-spoken, impressive. All of the things you first notice when someone introduces you to the hot-shot CEO of a startup. In some other ways, he sticks out like a sore thumb. For starters, he is significantly older than most of the other founders in the ecosystem, having graduated from the University of Virginia more than two decades ago in 2001. And perhaps even more importantly he has the advantage of experience. Maayr began his professional journey as an investment banker, and worked in the corporate world for more than 10 years. That is, until 2012, when he ventured into the world of startups as the co-founder of Daraz, which he helped build into the largest online marketplace in the country, before guiding it through a successful exit to Alibaba in 2016. That is when he launched Bykea. Launched in 2016, Bykea came into existence in a market where Careem and Uber were two titans fighting it out to establish dominance. Pakistan has long had a mobility issue, and here we had not one but two well-funded startups offering a solution and willing to burn cash to prove their point. In the middle of all this, Bykea came in with the concept that since the Pakistani market had an abundance of bikes, the solution to urban mobility lay in utilizing two-wheelers rather than cars the way Uber and Careem were doing. In the six years since its launch, Bykea has made a name for itself. While oth ers have fallen around it, Bykea has been the little engine that could. Behind it has been the steadying hand of Muneeb Maayr, who even in the early days of startup cheerleading was critical of cash burning strategies and was a more traditional, no-nonsense, focus-on-good-business-fundamentals kind of CEO that is rare in the startupSoecosystem.whyinthe world is Maayr now taking Bykea the car-hailing route? The startup had been founded on the idea that it was not cars but bikes that would fix the urban mobility crisis in large cities like Lahore, Karachi, and Islamabad. And
STARTUPS
By Taimoor Hassan
10 now, all of a sudden, Maayr tells Profit that not only is Bykea going full steam ahead with car-hailing, but that if it comes to it they will even shut down verticals other than mobility and lay people off if it comes to it. This, of course, is not to imply that this will happen. This is another thing about May yar that sets him apart from his competitors and fellow startup founders. He is very candid about his business, and does not hide behind slippery half-answers. And there are only really two questions to ask Maayar. The first is why, after being a vocal critic of the ride-hailing model, has he gone back on his stance. And the second question, of course, is how on earth does he plan to pull it off. The evolution of car-hailing in Pakistan In 2015, back when there wasn’t as much noise or fanfare surrounding the con cept of startups in Pakistan, there was a wave of fascination regarding a new app: Careem. For movie-watchers and pop-culture connoisseurs it was exciting because suddenly there was an Uber-like service in Pakistan. For others, it was an amazing concept that they could call an air conditioned sedan to come pick them up from anywhere at around the same cost that a rickety rickshaw or structurally compromised taxi would.
The Russian-origin inDriver is very well funded. It has raised a total of $237 million ac cording to Crunchbase data, out of which $150 million was raised in February last year. The company seems to have very lean operations in Pakistan, with a small number of workforce and brick-and-mortar offices. inDriver has not responded to Profit’s request for comments. inDriver has been able to create a dent in the ride-hailing market because it has given the power of negotiating the ride price to custom ers. On its app, riders can bid and drivers can offer a price for a ride. Multiple drivers can offer their price for a ride at the same time, increasing competitiveness and giving the power to price sensitive customers to choose the best price.
Bykea takes a dent
Too good to be true? Or can it still be done?
“The financial optimisations that were brought in the ride-hailing industry changed the class of drivers. Full-timers turned to part-timers and it now only made sense for people who had their own cars to drive as captains on these platforms,” said an official familiar with the ins and outs of the ride-hailing business.Theincrease in platform commissions has also given rise to instances of fraud where drivers, to increase their income, would find ways around the platform to avoid giving the platform any commission. One way is that the driver would pick a ride on the price that appeared on the platform, but would ask the customer to cancel it after a short distance to avoid paying commission for the full ride, and take the customer on the same price just without the full ride accounted for on the app.
Incentives such as free rides for custom ers and bonuses for drivers for completing ride milestones were to drive the adoption of the ride hailing apps by burning money, lots and lots of it. The cash required to spend on keeping these incentives rolling would grow as ride-hailing grew, with more drivers joining these platforms and more customers looking for a subsidised mode of transportation in vehicles of quality. The cash burn behind making ride-hail ing a recognised if not dominant mode of transportation in Pakistan brought both Careem and Uber the coveted verb status that they have now. Both ride-hailing companies are estimated to have spent hundreds of millions in the Pakistani market to build the ride-hailing ecosystem. According to Careem’s social impact report released last year, the ride-hailing company claims to have spent over $100 mil lion in Pakistan alone in five years following its launch. In these years, according to the report, Careem claims to have created a customer base of 9-10 million, completed a total of 236 million rides and had 800,000 registered captains in the country.Thesheer scale at which Careem op erated is worthy of praise but calls for more money as well if that scale is to be continued, but investors pumping money for years only for valuation gains wouldn’t be comfortable doing that at some point in time and seek better unit economics that would turn profitability. That point for Uber came in 2019 when it came under pressure to achieve profitability and couldn’t sustain further losses. Similar pressure came on Careem after it was acquired by Uber in a $3.1 billion deal announced in March 2018.
Things got a little complicated. You see, because of the heavy earnings in the early days investors had deployed entire fleets of cars and hired drivers to just run on Careem and Uber because of hefty earnings. The earnings would cover the cost of the asset if it was leased, as well as the cost of the driver and the fuel and would still turn a profit. With all of those margins gone because companies are not willing to burn more cash, investors would pull out their cars from the platforms as well.
While all of the above explains how inDriver has been able to grow in a market dominated by Careem and Uber, it doesn’t really explain why Bykea would enter into car-hailing, especially in the presence of inDriver which has already successfully taken market share from others. The answer lies in the fact that while inDriver has snatched a share in car-hailing, it has also made inroads into the bike category with little to no margins charged to bike drivers. So when you’re venture funded and see a company trying to take your market share, what do you do? The answer is that if your competitor is trying to kill you where you are strong, you try to kill the competitor where they are strong, or atleast put up a fight. You
In those early days, taking a Careem to travel was a sweet deal, especially since the UAE based ride-hailing service was in the phase where it was burning cash to acquire customers. Then, in 2016, Uber burst onto the scene as well and the two locked horns. The concept was totally new for the Pakistani market, like every tech oriented solution is, and it was whole-heartedly accepted, with “careeming it” entering the local lexicon. In conversations with senior officials with knowl edge of ride-hailing and directly involved in the operations of these companies from their early days, the mindset at these companies initially was to capture growth as quickly as possible and the only way to achieve this in a country where the concept of booking a ride over an app was new, was by burning a lot of money and veryConsequently,quickly. drivers and customers were heavily incentivised. Think about the times when you booked a ride on Careem and Uber and a notification popped up later on your app that you had earned a free ride. Think also about the times when if you had a little chatter with the drivers, they will tell you that they drive for 12 hours or more in a day. If they were candid enough, they would even tell you that they make hundreds of thousands of rupees in a month just by driving these cars.
The turn of events has been something like this: both Uber and hence Careem have had to bring readjustments in their models to drive profitability which required cutting down driver bonuses and increasing margins charged to drivers by respective platforms, as well as reducing promotional rates for customers. The correction in the model decreased earnings of drivers and increased ride prices, causing a drop in the demand as well supply.
While the dynamics of the industry were evolving and ride prices were increasing, another ride-hailing company, inDriver, entered into the foray with zero percent initial commissions charged to drivers and low fares, and has taken the market by storm. Launched in early 2021, inDriver has been able to take a significant market share, estimated to be in 2535% range, within a span of a year and a half.
If you use the inDriver app today, it will allow you to increase or decrease fares and then you as a customer can choose the lowest price to save money even if the driver is a few minutes away, or maybe even accept a higher price for a ride if you are in a rush to reach somewhere and the low fare ride will take time. At Bykea, such customer behaviour is an opportunity to further crash prices because of a macro economic downturn. “We are presum ing that the recession is going to prevail but people are not going to stop moving. But they will have a lower expectation of quality and time,” says Muneeb.
The plans seem rational but nothing inDriver can not replicate. If inDriver can give Bykea a tough time in its niche of bikes, it can very well do that in cars. For the record, an official from inDriver did tell Profit that it sees Bykea as a strong competitor. inDriver might very well be ready to flex its muscle to keep Bykea from impinging on its share in the cars category.Muneeb says that Bykea would be con tent even if it is not crowned a king in car-hailing and retains a second spot. One obvious question here is that to make it work, does Bykea have enough money? Bykea announced a $10 million raise from existing investors in June this year and it is entering into a new category with established competitors, and zero commissions charged to drivers at least initially. So clearly expecting money anytime soon from the business is unrealistic and when the path to monetisation is followed, market shares start shaking and unit economics turn worse when the scale shrinks.
“We are rolling out a hybrid between immediate matchmaking that we do today and a bid offer that inDriver does,” explains Muneeb Maayr, the CEO of Bykea. “In a reces sion, we feel that the hybrid of both of these is going to be something that the market is going to accept. It is going to both allow drivers to send offers and even allow customers to send bids, even if they are low bids, especially the customers that want to save money and want to wait after bidding for low fare.”
Essentially, Bykea is banking on the assumption that because of the fall in disposable income due to soaring inflation but the necessity to move for the purpose of going to work or to school, people would be willing to interchange waiting time with the price of the ride. This will also allow entry of low quality vehicles which would be priced even lesser, bringing down the overall prices down and help Bykea capture the market.
The opportunity that Bykea sees is of taking market share from all three players.
Since Uber and Careem are still focusing on profitability and will continue to do so in this downturn, ride fares on Uber and Careem will remain high. On the other hand, inDriver is also expected to increase prices having already started charging commissions to drivers. Bykea sees that as an opportunity to make a play in the cars category and it is ready not to play gently to do that.
“Schools have opened up and the demand compression because of the monsoon is going to start coming back. Secondly, the car cate gory is used by the upper middle class which does not have many options now. They would either have to buy new cars and keep a driver, or cut down a larger portion of their disposable income to transport but they will still use it, as opposed to the middle and lower middle class.”
For long, Muneeb Maayr has been a vocal critic of the sustainability of underlying business fundamentals of car-hailing, and an advocate for the fundamen tals of bike-sharing business which he considers viable. But ask him now and he will tell you that unit economics of bike-hailing have deterio rated because of the recent surge in fuel prices, the overall decline in purchasing power and the subsequent decline in supply of bike drivers and demand. And that cars have a better chance of getting to positive unit economics and therefore a better business model that investors would be more willing to put their money into in the current investment downturn. This repositioning of views can be explained from the fact that until inDriver’s entry into the Pakistani market, Uber and Careem were driving unsustainable models focused on growth and achieving meteoric valuations. And as soon as tough optimisations to bring profitability were put into effect, the model started crumbling. For a driver that had leased out a car to just work as an Uber or Careem driver, he would always need to make a high income from Uber and Careem rides to recover the cost of the asset as well as cost of fuel and an income on top.
An official that has worked with one of the two (Uber and Careem) ride hailing companies told Profit that their company did account for the cost of assets while deciding incentives for the drivers, hence the driver incentives were high, but could not be contin ued when profitability was to be achieved. In that sense, unit economics would never have worked.Itwas perhaps inDriver’s sheer good luck that the timing of its entry into Pakistan coin cided with Uber and Careem - then the only two dominant players in ride hailing - being stricken by the effects of Covid-19 pandemic and chasing profitability at the same time made them vulnerable. The drivers were not making money and inDriver gave them a choice to make some money. Customers were not getting good fares for their rides and inDriver gave them an option to get somewhat better fares (not at all comparable to the free rides during the glory days of Careem and Uber) than the high rates of Careem and Uber rides now. But inDriver’s path to profitanility is still questionable. A zero per cent commission can almost certainly not turn profits. While Uber and Careem became vulnerable, inDriver did not flinch in exploiting that vulnerability and consequently grew to become one of the dominant players in ride-hailing business. Some even say that it has taken over Careem and Uber to become the top ride-hailing company in the country.
But inDriver has started to show the same vulnerability that Careem and Uber did: after over a year and a half of operations in Pakistan and charging no platform margins to drivers, inDriver has reportedly decided to charge some margins, with reports further claiming that inDriver has also started charging a subscription fee to drivers for the platform. inDriver has not responded to Profit’s request for comments on how the drivers are charged. So if inDriver has started changing commissions to drivers, this time around, its Bykea that is ready to exploit this vulnerabil ity. Bykea gets into car-hailing If it isn’t still obvious, Bykea plans to get into cars the same way inDriver did: by charging a zero percent commission to drivers and giving customers the option to decide what price they want to take a ride for.
Muneeb claims that they would have turned profitable if only they had gotten to the revenues they had in March 2022. According to Bykea’s pitch deck available with Profit, till March 2022, Bykea had an annualised GMV of $98 million and an annualised revenue of $6.5 million. Muneeb candidly admits that their business took a hit this summer with unforeseen eventualities such as monsoon rains dropping the numbers significantly. So if only Bykea could get to these num bers again, it would be able to turn profitability. It is already focusing on cost optimisations and might even roll back two other verticals - fintech and eCommerce - completely and focus just on mobility. And even if profitabil ity takes a while to achieve, Muneeb claims they have enough runway to last through the investment downturn and by then, investor sentiment would have turned favourable and fundraising would become easier which would keep them going. n
STARTUPS see all three of them, Careem, Uber and inDriv er, operate in cars, rickshaws and bike categories, whereas Bykea operates in rickshaws and bikes only. It makes all the more sense for Byke to enter into car-hailing. It has the tech to do it and claims to have a monthly active user base of 1.7 million to build it on. Still this does not fully explain why Bykea would get into car hailing.
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AGRICULTURE AND CLIMATE CHANGE
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people is the need of the hour, these floods have also ransacked the economy. The overall impact is difficult to measure. The on-ground situation presents a bleak picture, and with the rains and floods still refusing to ebb, it will be days before a tally of lives lost, crops destroyed, and live stock washed away can be tabulated. In the meantime, educated guesses from government sources put deaths in the thousands, millions of acres of agricultural land damaged, and nearly 10,000 livestock animals lost. In Sindh, Chief Minister Murad Ali Shah has estimated that 90% of all farmers in the province have had their entire crops damaged or entirely destroyed. With a similar situation prevailing in both South Punjab and KP, it means the breadbasket regions of the country have been devastated. In the months to come, food inflation is expected to see a sharp rise on top of which Pakistan will be forced to import food Perhapsitems.most relevant to the economy, the flooding has directly hit the ‘Kapas belt’ of the country — the region stretching from South Punjab all the way into Sindh towards the Indus Delta where cotton is the primary crop. Cotton is grown in the Kharif period, which constitutes the monsoon months from May to August. The destruction that this rain has caused in this period means the cotton crop has faced a major setback. This might be detrimental, since the cotton crop is a major export oriented crop for Pakistan.
The secretaries of both the Pakistan Cotton Ginners Association (PCGA) and the All Pakistan Textile Mills Association (APTMA) have expressed serious concern over what will become of the industry in the year to come. With food inflation set to rise, and the PCGA estimating that 70 million bales of cotton needing to be imported in the coming year, these floods will have lingering and potent effects on the economy in addition to the immediate human cost. Of course, at the centre of all this are the record rains that have overwhelmed our disaster management system which had already been in tatters. As Pakistan stares down the barrel of the climate change gun, the question on everyone’s mind is the same: what do we do about it? What the lookdevastationeconomicwilllike Nearly a thousand people have per ished in these floods, and those are only the confirmed numbers. Nearly 70,000 people have lost their homes, at least 3200 roads and 149 bridges have been destroyed, while upwards of 80,000 livestock animals have died in the floods. Recovering from this will be economically devastating as it is. But there might be a larger long-term problem caused by these events that will linger and continue to bleed people dry: crop damage. As the situation became dire in August, and the Sindh Chief Minister’s estimation that nearly 90% of all crops had been destroyed became public, the ministry of finance released a warning. Q block said that the recent floods/ torrential rains during July and August would adversely affect the standing Kharif crops, specifically cotton, which may impact economic outlook through agriculture performance.“Recent floods driven by exceptionally heavy monsoon rains have reduced the potential output of both main and minor Kharif crops, thereby tempering the positive outlook of the agricultural sector,” said the ministry’s Economic Adviser’s Wing in its Monthly Economic Update & Outlook for August. “Assessment of the crop damages is in progress by the provinces; however, significant losses can “Cotton prices are currently on the rise across the world and countries like China are also facing low cotton production. In Pakistan too, the per mound price of cotton has increased compared to last year. In such a situation, there is undoubtedly the fear of increasing the import of cotton”
By Abdullah Niazi S ajid Mahmood trudges through his cotton fields in Mirpur Khas. As he makes his way from one end of the field to the other, wading through nearly knee-deep water, there is an overwhelming realisation that it is a walk of complete desolation. His entire crop for that year has been destroyed. The rains have swept away upwards of around Rs 1.6 million worth of cotton from his land. Sajid will have to abandon his flooded fields until next year when they are ready again, and work on theqa for someone else in the meantime.Heis one of the lucky ones. His house’s roof has holes and is ankle-deep in water but it still stands. None of his family has perished even though some have lost their homes. In other areas, the picture is much more terrifying. Only 56 kilometres away in neigh bouring Sanghar, the entire district has been submerged in water nearly five feet deep in areas. The entire village of Chak 7 has been displaced and wiped out. More than 100 kilometres away in Sukkar, a similar story of devastation reigns. These are just a few pictures of the misery that the still raging floods in the country have caused. Outside of Sindh, Balochistan finds itself with more than 50,000 houses lost and nearly as many dam aged, and more than 700,000 acres of crops worth around $10 million destroyed across the province.Byallaccounts, both from government officials and non-governmental organisations, the flooding that has laid waste to huge parts of the country over the past couple of months is as bad if not worse than the flood disasters of 2010-11. With nearly a thousand casualties reported, the floods that have lashed Sindh, Balochistan, vast swathes of Southern Punjab, and now KP have caused insurmountable human and ecological damage. And while the loss of human life and the immediate provision of relief to all displaced and affected
Raza Baqir, secretary general APTMA
AGRICULTURE AND CLIMATE CHANGE be witnessed. The present situation depicts water inundated cotton fields mostly in Sindh, Balochistan and southern districts of Punjab,” it added. The cotton crop will be very important in this situation. While cotton has largely been left to its own devices in the past 15 years since the 2008-09 financial crisis momentarily crippled the textile industry, it is still a major contributor to Pakistan’s exports. And since we desperately need the foreign exchange from these exports, it means the impact will be all the higher. Pakistan currently does export cotton, but more important is the cotton that is used by the local textile industry to produce clothes that are then exported from Pakistan. The timing of these floods, of course, have been particularly ironic since Pakistani cotton had seen signs of recovery this year for the first time since at least 2015. In the secondary sector, the cotton-based textile industries have a 21% share in largescale manufacturing and consequently a 2% share in the national GDP. For decades, the textile industry thrived on the back of local cotton being easily and readily available. How ever, because of the decline in the cotton crop because of both climate change and the brief collapse of the textile industry, cotton began to be imported to Pakistan as well. However, this had gotten too expensive for the industry since the beginning of the pandemic when international prices of cotton shot up signifi cantly, which is why they once again fell back on local cotton and farmers also began to grow more of it. The problem is, however, that with the ‘Kapas Belt’ so singularly affected, they will once again have to rely on expensive imports which will be another blow to the balance of payments.While cotton farmers are already in a state of desolation, the textile and cotton ginning industry is sitting with bated breaths. All they can do right now is hope for the best, and the effects of this will only become apparent in a few months, but they are clearly worried.
“It is about unsustainable construction, a lack of appropriate infrastructure, and a clear disaster management strategy. This should not be seen as an attack on your ministry but on the mismanagement of several governments over the years”
“We will need to thismillionapproximatelyimport70balesofcottonyear.Millswillalso find that if the yarn is not available cheaply, they will go to lower production or switch to an alternative fibre if it becomes cheaper. This will decrease our competitiveness on the international market”
APTMA Secretary General Baqir Raza, for example, believes that based on the reports received from the media regarding the cotton crop damage, there is a lot of concern in the industry. And while it is too early to make any final judgements, there has been a wave of concern ever since the news came out.
“A few media outlets have reported that the government is going to conduct a survey in this regard, and the situation won’t be very clear until such a report comes out. Cotton prices are currently on the rise across the world and countries like China are also facing low cotton production. In Pakistan too, the per mound price of cotton has increased com pared to last year. In such a situation, there is undoubtedly the fear of increasing the import of cotton,” he said. “If that happens, the picture won’t be pretty for the industry.”
Asif Khalil, chairman of the Pakistan Cotton Ginners Association
“The price of cotton per 40 Kg has reached Rs 23,500, which was also very high last year but stopped at Rs 22,000. If we talk about the cotton cultivated in Pakistan, it will not have much impact in the beginning. We are due to release the cotton figures on September 3 and my own view is that they will be the same as last year for now. But there will be an effect. We will need to import approximate ly 70 million bales of cotton this year. Mills will also find that if the yarn is not available cheaply, they will go to lower production or switch to an alternative fibre if it becomes cheaper. This will decrease our competitiveness on the international market.”
“Cotton has become expensive. On top of this, fuel prices mean purchasing power has gone down. The demand for cotton is there but not as much as it should be because we’ve been hit by a double whammy, and on top of that there is now this concern for the cotton crop as well,” says Asif Khalil, Chairman of the Pakistan Cotton Ginners Association. At the current rates of cotton, worldwide consump tion will continue to decline. Cotton mills are shutting down due to high prices.”
The market players are worried, and cotton’s impact could be huge on our upcoming financial outlook. With associations, farmers, and the finance ministry all in a sweat over this, the picture is bleak. On top of all this, there are
Dr Nida Kirmani, associate professor of sociology at LUMS
The anatomy of the floods
In Northern Punjab on the border with KP, the situation is balanced precariously, with military and NDMA officials on high alert in the Kalabagh and Chashma regions where the met department has issued a flood warning ranging between 5,50,000 Cusecs to 7,00,000 Cusecs over the next 24 hours (as of Saturday). According to the Sindh Chief Minister who based these estimates on the recent cen sus, this means that more than 10 million peo ple were possibly displaced. In villages, nearly 1.5 million homes have been destroyed entirely. In at least 23 districts, the rains have destroyed all crops, and 90% of farmers have lost their entire crops on more than 2 million acres. While the CM said that it was difficult to measure livestock, some data has come through from the PDMA which estimates that tens of thousands of livestock animals have perished in the hill torrent flood. The size of catastrophe has not been seen in the province in living memory. All of this has raised concerns among environmentalists, who have been raising alarms over the fast changing weather patterns in the country. “It is not easy to attribute every flood to climate change. But Sindh has received a ridiculous amount more rainfall than average. The definition of climate change 16
The cloud burst that hit the Swat region went undetected by the met department.
In short, climate change has resulted in a gargantuan increase in the amount of monsoon rainfall that Sindh and Ba lochistan have seen this year. The two provinces saw the highest amount of water fall from the skies in living memory, recording 522 and 469 per cent more than the normal downpour this year according to the met depart ment. “Sindh has received 680.5 millimetres of rain since July when the monsoon season actually began,” said a Met official. “As per calculated and defined standards, Sindh normally gets 109.5mm of rain in the monsoon season. So it’s 522pc higher than nor mal. Similarly, Balochistan receives 50 mm rain on an average every monsoon, but it has so far recorded 284mm — 469pc higher. The country has overall witnessed 207 times higher rainfall so far this monsoon and the season is going to last till September-end.”
While the department is currently not answering questions to the press, there was no advisory or press release leading up to the issue and a source on the condition of anonymity confirmed that they had not caught the burst on their radar.
The cloud burst in Swat
also reports from farmers that food crops have been severely compromised. Since it is currently the tail-end of the Kharif period, it means that crops such as rice and maize will be under pressure. With the economic outlook generally poor as well, especially with global and domestic uncertainties abound and worldwide inflation high, the added pressure on crops may mean a rise in food inflation in particular.
In 2015, an article in Dawn reported how “in 2015, we saw a cloudburst in Chitral so intense and so sudden that the ensuing rainfall triggered multiple simultaneous outbursts of glacial lakes, unleashing torrential floods so powerful they destroyed an entire district in a single night. The gathering clouds that caused the event did not even register on the Met office’s radars, since the few radars that looked west were either not operational or did not have reach above the mountains where they gathered.”
While the met department has not officially responded to this, their phone lines were busy until Friday and dead after Saturday and their PRO’s number was constantly engaged and whatsapp showing only single ticks, it is unfortunate that seven years down the line they were still not able to record this cloud burst over Swat that has now caused so much destruction in the form of flash floods.
The main reason behind the flooding has been this abnormally high rainfall causing hill torrents — which are a distinct type of waterway in which water drains from the mountains and hits localities and infrastruc ture in its path at an enormous speed. More than 200 hill torrents originate from the west of Suleiman Range and hit Taunsa, Dera Ghazi (D.G.) Khan and Rajanpur Districts of Punjab in Pakistan. Among these, 13 hill torrents have large catchment areas and flood potential. All of these have realised this potential this monsoon season at the same time. The discharge at Taunsa, Guddu & Sukkur barrages is more than Twice that of Kalabagh and Tarbela, showing that the additional water is coming from Koh-i-Suleman hills and torrential rains. Dams would not have stopped this overflow, particularly since the Indus is not overflowing, it actually has levels of water. This has caused destruction in Baloch istan and South Punjab, with the rains and a swollen Indus river delta wreaking havoc in Sindh. In KP, meanwhile, flash floods coming from fast melting glaciers have overrun shod dily and dangerously built constructions on the banks of rivers. The main cause behind the flash floods has been the inflow of heavy rains and a massive river current from the Kabul river that has overrun the province. In KP, in fact, while the Kabul river swelled because of excessive monsoon rains, with KP recording a 50% increase in the level of rain, one of the major reasons for the flash floods were cloud bursts in the Swat and Mingora regions that overran the Swat river and swept away hotels and buildings on the embankments. The met department, according to an anonymous source, did not pick up on the the cloud burst and issued no advisory for it.
In Swat, it came with no warning. A massive cloud burst over the Mingora region sending a large swathe of water into the Swat river. Freshly engorged by the cloud, the river came hurtling down with a vengeance. Normally gentle, blue, pristine and calm, the Swat river has over the years sprung along its embankments many hotels that are favoured destinations forOntourists.thisoccasion, however, the river was not itself. It swept away buildings on the embankments, with the brown, heavily silted water crashing into the foundations of the structures. In KP, the monsoon rains were significantly heavier this year than in years past. However, they were not heavier by as much as in Balochistan and Sindh, where rains fell by more than 500% in some areas.
AGRICULTURE AND CLIMATE CHANGE
Additional reporting by Shahab Omer and Taimoor Hassan.
“There are two layers to the problem. Addressing the climate crisis on a national basis is sub-optimal. This is all because of global economic activity over the past 200 year. This is a man made disaster caused by the global north’s emissions. At the same time, we can’t sit idly by as this issue ravages the country. Governance priorities need to focus on climate catastrophe. Remember, this is going to be the coolest summer of our lives. The immense amounts of devastation that are going to take place in the years to come is something we must prepare for and contingencies for these catastrophes should be a priority for the feder al and provincial governments.” “This is the biggest issue faced by Paki stan and indeed the entire earth and human civilization right now. This will cause food shortages next year, especially with heat waves in China and the global north. Immediate action is needed.”
is unprecedented weather conditions in a pattern. This looks very much like climate change,” says Ahmad Raffay Alam, a lawyer and climate activist based in Lahore.
Unfortunately, the Global South is surrounded by a myriad of socio-economic and environ mental factors limiting their fight against the climateNonecrisis.of this takes away from the fact that Pakistan, like other countries, has a major emissions issue, however, there is a difference between allocating emissions and allocat ing responsibility for those emissions. The developed world has a massive emissions debt that it must pay to the developing world for the damage it has caused them. One of the real sore points has been climate funding worth $100 billion that was promised more than a decade ago. The promise was made twelve years ago, at a United Nations climate summit in Copenhagen, rich nations made a significant pledge. The pledge to put in $100 billion a year towards less wealthy nations by 2020, to help them adapt to climate change and mitigate further rises in temperature. That promise was broken. Figures for 2020 are not yet in, and those who negotiated the pledge don’t agree on accounting methods, but a report last year for the UN1 concluded that “the only realistic scenarios” showed the $100-billion target was out of reach. “We are not there yet,” conceded UN secretary-general António Guterres. As a country, we have been given a poor lot in life on the climate front. The actions of others have resulted in serious consequences for us. It is unfair, but it must be fought. If we are not quick in acting and preparing for the future, the harrowing sights we are seeing right now will become commonplace in the years to come. People will continue to lose lives and homes. Climate refugees and inter nally displaced climate refugees will live unbearable lives. The economic depredation will continue, which will once again hit the people. It is already too late to avoid this. Climate change is here, and it will stay. The best we can do is prepare to our best abilities, and keep fighting for climate justice. n
In an exchange with climate minister Sherry Rehman, Dr Nida Kirmani, a professor at LUMS, argued that the immediate concern was not about emissions. “It is about unsustainable construction, a lack of appropriate in frastructure, and a clear disaster management strategy. This should not be seen as an attack on your ministry but on the mismanagement of several governments over the years.” Then there is the second prong of how this issue should be addressed. Essentially, Pakistan is ranked eighth among counties most vulnerable to climate crises despite contributing less than one percent to global carbon emissions, according to the Climate Change Risk Index 2021. According to the Centre for Global Development, developed countries are responsible for 79% of historical carbon emissions. Yet studies have shown that residents in least developed countries have ten times more chances of being affected by these climate disasters than those in wealthy countries.
“We can’t sit idly by as this issue ravages the country. Governance priorities need to focus on climate catastrophe. Remember, this is going to be the coolest summer of our lives. The immense amounts of devastation that are going to take place in the years to come is something we must prepare for and contingencies for these catastrophes should be a priority for the federal and provincial governments”
The climate crisis It is real. It is here. And it is already too late to avoid the disasters that we will face ahead. But that does not mean there is nothing to be done. Pakistan must go forward with a two-pronged strategy. The first part of this strategy must be focused on mitigation. As the global north continues on its path of apathy after causing the global climate crisis, these disasters will happen and our gov ernment must be prepared to deal with them when that happens. The second part of the strategy will be more actively calling for climate reparations and making a better case for Pakistan to be on the path to climate recovery through international consensus. Here is what all of this means. The first part of the problem must be dealt with first. As Raffay Alam pointed out, we can’t sit idly by as this issue ravages the country. The government must recognise pub licly that Pakistan is in the middle of a serious climate change crisi, and must declare a climate emergency. This does not mean immediately cutting down emissions, since that is a global issue, but first and foremost preparing for possibilities such as the one we are seeing right now. Emergency services must be revamped with a view to climate change, and more funds must be allocated towards this cause otherwise we will see a similar situation in the very near future. It also means focusing on better planning and development in the country.
Ahmad Raffay Alam, lawyer and climate activist
Further, critical views have it that it would take over 100 years for lower income countries to attain the resiliency of developed countries.
The next day Jhagra offered up his own reasons for withdrawing himself from the central fiscal arrangement around which the IMF program is built. He listed once again his grievances, and primarily blamed his inability to even reach Miftah for a meeting, let alone sit down with him to negotiate the fiscal requirements of his province. But it is impossible to look past the fact that these grievances are years old, and pressing for a meeting with Miftah did not have to happen on the eve of the IMF board meeting. In short, its impossible to miss the timing of the letter, coming one day after the party spokesman tells his TV audience that they will do this to press their political demand for early elections, and two days before the IMF board meeting.
And now, at the final moment, only days away from Board ap proval of the much anticipated IMF agreement, the finance minister finds himself sandwiched between two fronts. One is his own party. At least two senior people – Abid Sher Ali and Hanif Abbassi – have lashed out at him publicly for the rising cost of living, especially fuel and power prices. Both of these gents invoked memories of Ishaq Dar, former finance minister of the PML(N), as a successful alternative and asked for the IMF program that is about to commence assuming Board approval goes through on Monday, to be renegotiated.
The second front is the PTI, which chose Friday as the day to launch a broadside attack on the IMF program. Provincial finance minister of KP, Taimur Jhagra, sent a letter to Miftah Ismael on Fri day, the very day when the full impact of the floods ravaging his own province was coming into view, saying his province will no longer be Miftah in the middle
The writer is editor Profit With two fronts to fight on, and two months left in his term (unless renewed), the candy magnate finds himself in the fight of his life to save the country from default
Khurram Husain
It is hard to believe that the letter detailing the withdrawal of this intention had any purpose other than scuttling the IMF program. After all, only the night before, the PTI’s own spokesman Fawad Chaudhry was on the air saying his party intended to do precisely this. Speaking on Dunya news, he laid it out in so many words. First he told the anchor that the whole IMF deal “is based on the thing that both Punjab and KP will give the centre” a certain amount in the form of a provincial surplus at the ended of the fiscal year. He did not specify the amount, nor did he need to. When the anchor asked him whether his party intends to play this card, he squarely replied yes, we will. Then he went on to list the political demands they want in return for not playing this card. “They will have to hold elections, it will not work like this”.
It was never going to be easy, but nobody could have foreseen that it would be this difficult for Miftah Ismael. The economy was headed towards imminent default when he took oath of office as Finance Minster on April 27, 2022. Reserves were dropping so fast that banks were forced to ration dollars to retire LCs, a process that intensified to near breaking point by July, the month that saw massive oil payments come due.
OPINION
The question naturally arises: which is of these is deadlier?
18 in a position to run a budget surplus that he had committed to run back in July. Commitments of this sort were obtained from each of the four provinces as part of the IMF program, in which provincial surpluses are an important part of the fiscal framework.
So Miftah now finds himself sandwiched between two sets of demands coming from two different direc tions. One from within his own party, to renegotiate the program with softer conditions, and another from the opposition, which wants to hold the program hostage to press its own demands for an early election.
When considering this question it is worth bearing in mind that all these challenges facing the embattled finance minister are only the beginning. All this is happening just to come up to the start line. The real game will
The very next day a letter arrives, not from Punjab (which was the province being named in the Fawad’s televised remarks) but from KP instead. How are we then expected to believe that there was any motive other than a political one when this card was played?In his impassioned press conference given hours after receipt of the letter, Miftah pointed out the timing, and raised an im passioned plea against “this type of politics”, especially at a time when the country is reeling from the worst flooding it has seen in decades. “Do we want that the country should face default at this time?” he asked. “Do we want that the exchange rate should plummet, oil stocks to run out, the country should face a shutdown at a time when it is drowning in a catastrophic flood?”
begin after Board approval (assuming it hap pens, which looks likely despite all the pushes and pulls). All the problems so far have grown from the uphill task of getting a Staff Level Agreement, so Pakistan’s case can be presented to the Board in the first place. Once approved program implementation begins in earnest, and things will get trickier from there on. So far two former finance minister’s have tried to walk the tightrope that Miftah is about to walk. Shaukat Tarin in 2008 and Hafeez Shaikh, twice, in 2010 and again in 2018. Tarin did not last long, less than a year. Shaikh lasted longer in his first stint, primarily due to back ing he enjoyed from the army. But in his second stint he barely lasted 15, entering office in December 2020 and exiting it in March 2021.
Those who remember those months will recall the cries of agony that rose up from the busi ness community within weeks, and by October the top business elites and controllers of capital in the country showed up at the doorstep of General Bajwa, demanding relief. Now consider the task Miftah. The primary balance has to not go shrink by nearly 3 whole percentage points in one year, an adjustment almost five times as big as the one that Shaikh was administering in 2019, which caused the outcry from the business community. And interest rates are already at 15pc, far above the level they were at back in 2019. The adjustment facing the country today is far more strident, far more intense, than anything undertaken in the previous two decades. The only other time I can recall might be the Standby Arrangement completed by the Musharraf regime in 2000. And Miftah has to walk this line, with his own party member snapping at his heels, and an opposition eager to upset the applecart first chance they get. And to top it off, we now have the floods with their own fiscal requirements arising from the rehabilitation effort, and the economic damage that they have caused, including large scale destruction of the country’s crops, which is likely to fuel food inflation and drive import requirements for cotton. This is not an enviable position to be in these days. How he finds his balance, main tains his poise, keeps his allies and adversaries on board while embarking on this awful journey, will clearly be the biggest challenge Miftah Ismael has faced in his life. If he doesn’t realize this yet, he will soon enough. Add this one more wrinkle: his term as finance minister ends on October 27, well before the next scheduled review of the facility. He can only serve for six months as an outsider. After that he either needs to be a Member of the National Assembly, or the Senate. Either way, his party will have to invest a certain quantum of its political capital to get him to continue in office. That is the first big decision point looming before him now. The bet to place now is how long will Pakistan be able to walk the path outlined in this program. The floods have already changed everything. The politics that will shape up once the pain begins to bite in earnest, will add a new chorus of voices to those already being raised against the conditions agreed upon. The time when the government is forced to ask for relaxation of these conditions is not far now.
n COMMENT
These are the only people who have actu ally walked the hot coals of a severe macroeconomic adjustment of the sort that Miftah is gearing up to walk on now. For some perspective, consider the size of the fiscal adjustment that has to be undertaken in the current fiscal year (graph 1). The reduction you see between FY19 and FY20 was Hafeez Shaikh undertak ing the first IMF program that he signed in July 2019.The primary balance (the key metric around which the health of the fiscal frame work is assessed) was supposed to be reduced by 0.6 percent of GDP between FY19 and FY20 in that program. Next, look at the interest rates, that were hiked sharply to a near record of 13.25pc. Both these steps – sharply lower government spending, rising tax burden, and sharply higher debt servicing cost – brought the economy to a near standstill at that time.
Working woman. Mother. Survivor. Teri maa, bhen. How much does waiting in an air conditioned car cost when picking up your kids from school, and is there a better option?
20 it is a different kind of hell – that of different home times. I, like so many others, pick up my youngest from school at 12.45pm but I don’t leave. Because the second child’s home time is too close for us to leave, and far enough to be more torture. That is where a decision must be made. Do I go home and come back again or slug it out for the extra 30-40 minutes in the car with the engine running and the AC on. With petrol at nearly Rs 240 per litre, it isn’t as easy a call as one might think. For most people it will depend on how close home is to the school. In my case, I wait. I sit there. I sit and I wait. My second one walks out lan guidly by 1.15pm. We weave through parents (mostly mothers), older siblings, grandparents, domestic staff and all the while I have a manic smile plastered on my face, desperately trying to appear pleasant to people saying hello. We can now wait for the car to drive up to us or walk to it. The heat makes it difficult to decide. Sometimes the driver will decide for us while we squint at him confusedly, brain melting at 100 degrees centigrade. If I’m driving myself there is no decision to make and we trudge forth. There is a lot of traffic, a lot of honking, a lot of students with obnoxiously large bags that bump into you. Did I mention it’s very hot at this point? We get into the car, sticky and tired and wonder why the AC is cooling so slowly. I only wish, dear reader, that the challenge was just physical. It isn’t. It’s financial as well. And this is where it begins. You see, one more child has to be picked up, from a different school, at a different time. Until May, I was just going home, drop ping my younger ones to change, eat and do whatever they wanted with their lives while I rushed back to pick my eldest. She gets off at 2.15pm but makes it to the gate by 2.20pm. Come August, and the rise in fuel prices made me reconsider our routine, because going back and forth costs an arm and a leg. Sorry for the cliche. (Damn you, Miftah Ismail. No, wait… damn you, IMF. No wait… damn you, previous PTI government. No wait… damn you, Putin. You know, you can damn whoever you want, depending on your political opinion, but it won’t make much difference to today’s trying economic realities.)
For those of you who don’t have children, imagine standing outside the school gate, with one, two, three or however many little ones you have while you wait for your car. The beads of sweat that were forming earlier when you were going inside the gate are now full-fledged globules hurtling down your spine. It is, as the French would call it, qiyammat. Except this happens five days a week. And things can get even more complicated. Those who have kids in different schools or with kids at least four years apart in age, Between a school and an ice-cream shop
We’ll wait, I decided, now that the new school year has started. It’s financially prudent. The options are waiting in the car or hanging out nearby. On day one, I decided we’d go to a convenience shop in a strip mall across the road, get snacks, Gatorade, crisps and so on. At checkout I realised I’d spent Rs2,600. I quickly returned the 750-rupee packet of almonds. It was still too much of a bill to do five days a week. Mental calculation: Rs1,900 into 22 days of school a month equals… Rs.41,800! Err, that’s no good.
B eing subjected to the terrors of the midday sun in Kara chi while you do daily school runs amidst soul-crushing traffic is bad enough without being subjected to the mental gymnastics of everyday financial consider ations.But for those with children, this extreme-sport is an everyday phenomenon. And when parenting and the weather join hands with a troubled economy an unholy trinity is formed, and calculations become a necessity.
Femme
Finance OPINION
On day two, I decided no convenience store. Ice cream, perhaps. So we went to Baskin Robbins, where child number one got two scoops of chocolate ice cream, child number three got one scoop, and well, I got excited when I saw that there was a sug ar-free variety and decided to treat myself to a scoop too. We spent approximately Rs1,200. Mental calculation: Rs1,200 into 22 days of school a month equals… Rs26,400! Still too much.On day three, I thought let’s just wait in the car. I kept falling asleep while child two and three argued, cried, growled, said ‘I will never speak to you again’ to each other and then fell silent from sheer fatigue. Of course this meant keeping the car and AC on for al most an hour. This day I was told I’m ruining the car, I’m destroying the car, how can I leave it running for so long and so on. Google throws up about 1.2 litres per hour, but not with an AC. So let’s call it an even 2 litres per hour. Or Rs 460 into 22 days… that’s Rs 10,120 per month for sitting around. And another cost is the apparent long term one to the car. Profit’s resident auto expert, Daniyal Ahmad says, “keeping the car on for long periods with the AC on increases fuel consumption in the long run, including your engine and battery maintenance.”
Mental calculation: about 14 kilometres to and from school, my 2006 Civic gives me at best 7 kilometres to the litre these days, less if the traffic is worse. So that’s about… who am I kidding, I’ll ask a friend to calculate this for me. He says it will be about Rs 500 just for the fuel, at minimum. So 500 into 22 days… Rs 11,000 a month. Sigh. And the cost to my soul is priceless.Outside the school gate, I ran into a parent who is also a friend, and she said ‘God these petrol prices are insane,’ and then, ‘wouldn’t it be better if you just hung around in the area instead of going home?’ It would, wouldn’t it? But inflation is 25%, and my budget is shrinking faster than Pakistan’s FOREX reserves, thanks to rising fees, electricity bills, and grocery costs. But what would she know? She’s wearing a handbag that is worth more than my monthly budget. I can’t say that, of course. Not to her, not to anyone. Not at such schools. n COMMENT
Damn you, Miftah Ismail. No, wait… damn you, IMF. No wait… damn you, previous PTI government. No wait… damn you, Putin. You know, you can damn whoever you want, depending on your political opinion, but it won’t make much difference to today’s trying economic realities
On day four, I brought the kids home and then went back to get child number 1 from school. Leaving aside the torment of getting through traffic, dropping the kids and then rushing back in traffic to the crowded school area, all while the sun burns your head and your very being is one thing. But like I’ve said before, there’s a financial cost.
As per a research paper published by the Pakistan Institute of Develop ment Economics (PIDE) last year, “5G will help the digitalisation of Pakistan by connecting people with robust purpose-built technology opening up oppor tunities for industries as well as individuals. They are expected to benefit from future innovations in distance learning, public safety, manufacturing, transportation, health, etc.”
The latest buzzword in the Telecom sector is 5G. However, for many countries, it has become a reality. These countries, mostly developed ones, are riding the wave of technological advance ments enabled by the successful launch of 5G services.Yet, the 5G revolution hasn’t arrived in its true sense as large chunks of the global population are still awaiting access to the Next Generation of Mobile Technology.
22 By Ahtasam Ahmad
Further, a key region that can propel the global 5G revolution is South Asia. Two major economies in the region, Bangladesh and India have already auctioned the 5G spectrum, with the operators prepping for mass in their respective countries. Bangladesh auctioned the spectrum for around $1.2 billion in March this year while India also conducted a successful auction earlier this month for $19 billion.
The government has its eyes set on the first half of next year for a 5G auction, but the Telcos have a different plan
5G enabled Economy
“The introduction of e-governance will enhance the enabling role of the government and bring about transparency and efficiency in processes. 5G will increase the demand for fiber as each building needs a fiber connection and a small antenna/base station for a cellular company. It will increase demand for mobiles that are compatible with 5G technology and we also need new devices to operationalise 5G
The case is a bit different for Pakistan, however. Initially, it was planned that the auc tion would be held in December 2022 which was subsequently pushed to March next year. However, amid growing political uncertainties and the country’s economic woes, an auction in March seems unlikely. And this is just one part of the problem. The primary issue is the unwillingness of the Cellular Mobile Operators (CMO) to participate in the 5G auction as they believe that currently, the business case for such roll out doesn’t exist. However, before diving deeper into the feasibility aspect, let’s take a look at the possible economic benefits that the country can leverage from the mass adoption of the 5G technology.
Source: The Financial Express, 5G tech upgrade: Focus on value extraction
TELECOM in our country.” The document further added.
“I strongly believe that we should auction the spectrum next year. Basically, market readiness is contingent on multiple factors and it can be achieved through a continuous process. However, the policy/regulatory initiatives are extremely important to ensure that the CMOs participate in the auction.” Parvez Iftikhar, Senior IT consultant and Founding CEO of Pakistan’s Universal Service Fund (USF). “It is no secret that we were late in launch ing 3G by a good five to six years. We cannot afford such complacency in the case of 5G,” he emphasised.Yet,if the market is analysed from a totally commercial perspective, which would also be the perspective of the CMOs, the situation looks bleak.
Pakistan’s 5G case and impediments
“Currently, there are around 1% to 2% users on our network that have 5G handsets. Even if the spectrum is provided for free, still the business case for 5G in the country is quite weak. We launched 4G around eight years ago, and still, 50% of the handsets being sold today are 2G. Therefore, we need to focus on 4G for all before thinking about 5G for a few,” stated Aamir Ibrahim, CEO of Jazz. The Jazz’s head honcho was right in pointing out that there is room for improvement on the 4G front and before achieving that we cannot indulge in a discussion about 5G. South Korea, for instance, rolled out 5G services only when 4G penetration reached 80%. In Pakistan’s case, the figure is around 50%. Not everyone agrees, and some experts have a different take on this matter.
As per the World Bank’s 5G readiness Plan for Pakistan, “Pakistan’s current telecommunications market has been analysed in this report to determine readiness for 5G through comparison with neighbouring countries and global benchmarks. Based on the analysis, and comparisons with other comparable markets it is possible to conclude that the Pakistan market as at August 2021 is not yet 5G ready. There exists a considerable number of factors to address in facilitating Pakistan’s market readiness especially the lack of large contiguous blocks of affordable spectrum, broader access to fibre backhaul and widespread availability of affordable 5G smartphones and other devices which are necessary preconditions in order to make 5G a Thoughsuccess.”thereport refers to the situation a year ago, unfortunately, no significant change has occurred that invalidates the aforementioned findings. Further, the CMOs. when contacted, almost all of them were of the view that active participation in a 5G auction next year seems unlikely as the industry is dealing with serious sustainability issues and cannot splash huge amounts of cash at the whim of the regulator. Though Profit was unable to obtain a fig ure for the requisite investment for 5G in Paki stan. However, we can look at other economies, We need to create demand for 5G before introducing it. 3G/4G were introduced in 2014 without any demand side policy and so far it is mostly being used for entertainment and streaming. Unless use cases are there justifying the need for 5G, it would be a waste of resources and consequently no business case for operators
Aslam Hayat, Senior ICT regulatory official and Former Chief of Corporate Affairs and Strategy at Telenor Pakistan
The unwillingness of the operators stems from their opinion of Pakistan’s infrastructure and regulatory frame work which they believe do not allow for a viable 5G business case.
24 for instance, South Korea. As per the Financial Express, “Upon incurring a cost of $20 billion in setting up 215,000 5G base stations for offering low-end services to 45 percent population, South Korea figured out the need for $370 billion to roll out the fastest 5G services for all citizens.”
Further, there is a need for fiber proliferation on an urgent basis as currently, only 10% of telecom towers in the country are connected to fibre which is essential for deploying 5G.
The auction, if held next year, might see all the players opting out of it. Ufone is likely to not even participate in the upcoming 2100 MHz 4G auction as stated by PTCL’s Group president and chief executive, Hatem Bamatraf, in a board meeting in July. Therefore, the bidding for 5G seems like a far-fetched dream. The same auction would most probably see Telenor take up the 4G spectrum and the company going for a 5G spectrum immediately after that seems unlikely and highly contingent on what benefits the 2100 MHz spectrum can bring in for them. Jazz has been quite vocal about the fact that 5G is not an option for at least the next two years and if it stands by this theory, the company won’t be bidding for the 5G spectrum anytime soon. However, Zong might be an exception to this as it has more strategic interest in Pakistan than commercial ones. Further with a cash-rich parent company in the form of China Mobile and synergies brought in by other Chinese compa nies like Huawei and ZTE, Zong might just take a leap of faith in the 5G spectrum. However, if that happens, it would add to a string of auctions that went uncontested. (In 2016, 2017, 2021, and the 2022 4G auction would most likely see only Telenor bidding).
As per Tabadlab working paper, The Fixed Broadband Challenge, published in January 2022, “It isn’t possible to roll out next-generation technologies on existing and (in I strongly believe that we should auction the spectrum next year. Basically, market readiness is contingent on multiple factors and it can be achieved through a continuous process. However, the policy/regulatory initiatives are extremely important to ensure that the CMOs participate in the auction
To support the case for this recommen dation, the example of the 2004 auction is presented which is considered one of the most successful in the country’s history. The govern ment was expecting to earn $100 million from the sale of each license but was able to generate $291 million as the auction was left to the mar ket forces to decide the price. Further, the license fee is supposed to be paid in 5 years with interest charges added. This problem might also need to be addressed. For instance, Bangladesh in the recent 5G auction has collected only 10% in fees upfront and has al lowed its companies to pay the remaining figure over a period of 9 years.
Yet, even if not next year, the government needs to focus on bringing in the next generation of mobile technology as soon as possible. For that to happen, the industry needs some major reforms. Starting with a significant reduction in spectrum price so that the Telcos are encouraged to invest. The government currently decides the base price on its own, but as per experts, the most efficient method would be leaving it to the market forces to ascertain the price.
The Way Forward
The Pakistan Telecommunication Authority (PTA), responded to Profit’s queries, “when policy directive is issued by Federal Govt, Spectrum Auction will be conducted by PTA. However, the time frame between the decision of GoP to introduce 5 G and the launch of 5G will be approximately 6 to 8 months. The entire process involves the hiring of an Internation al Consultant to analyze market readiness, spectrum pricing, spectrum auction design, the conduct of the auction and culmination of the process by the award of a license to successful bidders.”“All the related queries regarding price benchmarks for different bands would only be determined after market assessment by the con sultant, hence it is too early to determine price at this stage. Similarly, as far as participation of CMOs in auctions to acquire 5G spectrum, it would largely depend upon the overall business / economic environment in the country and the terms and conditions associated with the auction.” PTA further added.
Parvez Iftikhar, Senior IT consultant and Founding CEO of Pakistan’s Universal Service Fund (USF)
India has gone a step further, as per an article published in Communications Today, “ The (Indian) Telecom Ministery introduced structural reforms to boost cash flow in the industry. It introduced a four-year moratorium for the payment of adjusted gross revenue by operators and a policy of non-levy of spectrum usage charges acquired through auctions after September 2021.”
many cases) outdated infrastructure, which is why investing into a fibre optic infrastructure is essential.” India here can again serve as an example, As per the figures of the Telecom Regulatory Authority of India, 34% of its telecommunication towers are fiberised compared to Pakistan’s 10% as per PTA. India is further expanding its fibre network under the National broadband mission which aims to connect all Indian villages to the network and provide fibre optic coverage to 70% of telecomMoreover,towers.the government needs to remove handsets and data taxes to facilitate the rapid adoption and uptake of services. Also, it is high time that we sunset 2G/3G phones and develop cheaper 4G and 5G smartphones to create an enabling environment for the launch of 5G. The importance of compatible consumer-end devices cannot be ignored. Case in point, Telenor bought 850MHz spectrum for 4G in 2016 which was supported by a few high-end handsets back then and was contradictory to Telenor’s low-pricing strategy to attract rural consumers.Asthe current situation stands, the government only seems to be fixated on earning the maximum dollars out of spectrum auctions. However, it is ignoring the fact that nurturing the demand side is as important.
“We need to create demand for 5G before introducing it. 3G/4G were introduced in 2014 without any demand side policy and so far it is mostly being used for entertainment and stream ing. Unless there are use cases justifying the need for 5G, it would be a wastage of resources and consequently, no business case for opera tors,” said Aslam Hayat, Senior ICT regulatory official and Former Chief of Corporate Affairs and Strategy at Telenor Pakistan He further added, “The government should come out with a demand-side policy before the supply of 5G. The last comprehensive demand-side policy in the shape of the IT Policy was made in the year 2000. There is a need to work on 5G use cases especially in increasing agricultural productivity, improving remote education, smarter logistics, advanced healthcare, efficient manufacturing operations, smarter government management and services, autono mous vehicles, and IoT.” However, this does not mean that we are the only country that is facing challenges in deploying 5G effectively. As per an article published in Light Reading by Gagandeep Kaur, “In the short term, as 5G services are launched in metros and major cities (of India), there is no killer use case for Furthermore,consumers.”Bangladeshi operators are in a conundrum as they need to import equipment for the 5G roll out, but the country is facing a foreign exchange crisis and is seeking IMF’s help. Yet, when compared to the region, Pakistan lags behind. As per the Global Inclusive internet Index 2022, “Despite a rank of 79 globally, Pakistan ranks last out of 22 countries in Asia. The country’s overall score is brought down by low scores in both Availability and Relevance - Pakistan ranks last in Asia for both categories.” Source: PTA
n TELECOM
Open accounts are one of the five major types of payment methods and terms. Others are cash in advance, letter of credit, documentary collection, and consignments.
What this means is that although this move is done to control foreign exchange outflow, it effectively made it seem like the country does not have enough of it to meet its commitments. This was enough to cause the rupee to shed value. This situation is similar to July 2022 when the banks were unable to retire large fuel LCs making the market panic.
26 MACROECONOMY
hour:andaccountstheClosingopenghamPakistan’swideningCADproblem
Why is the CAD made of nightmares?
The SBP’s decision to post about the sharp drop at around 2am on Thursday night was a wrong decision. For starters, it gave off the illusion that the SBP is trying to hide. Another way to look at it is that the SBP decided to post during gham hour, specifically due to the alarming situation at hand.
By Ariba Shahid
The SBP says the decline in the CAD is primarily because of the sharp drop in energy imports and moderation in imports of other goods and commodities. The SBP tweeted, “The narrower deficit is the result of wide-ranging measures taken in recent months to moderate growth & contain imports, including tight monetary policy, fiscal consolidation & some temporary administra tive measures.”
It can be said with certainty that at least one person has been having sleepless nights at the State Bank of Pakistan (SBP): The social media manager. Paki stan’s current account deficit clocked in at $1.2 billion for the month of July 2022 after dropping 45.45% month on month. This sharp drop is enough to keep anyone up.Ted Mosby, in the hit show How I met your mother is often found quoting his mom saying, “Nothing good happens after 2 am… when 2am rolls around just go home and go to sleep because decisions you make after 2am are the wrong decisions.”
“As bankers we already have visibility on the slowing down of LCs, now cutting out another form of payments is enough to tell anyone that the situation is tough,” said a treasury employee at a leading bank.
For what it’s worth, banks are always jittery and anxious. The constant state of paranoia of losing out on other people’s money just makes them jump on every scare. Howev er, the SBP should know how important a role sentiments play in the markets. . n
By restricting open accounts, the SBP has created an element of panic within the foreign exchange market. “My clients have been using this form of payments for years. Their entire business model depends on it. Making changes like this only add pressure on the already fragile system,” said a banker while speaking to Profit Another added, “By coming out with an other restriction, the SBP is giving a signal that the FX position in the country is weak. This is enough to send a panic sentiment and push the dollar to rally against the rupee.”
However, it is alarming that the deficit is still fairly large despite the formal controls on imports in addition to the informal controls, such as the delay in LC processing. Despite all that, the CAD still managed to increase by 42% compared to last year. However, despite the CAD worsening on a yearly basis and the reserves depleting, the rupee had been on a way of recovery having regained some lost ground until this week. The foreign exchange reserves held by the SBP fell by $87 million bringing the reserves to $7.81billion on August 19, 2022. The import cover is hovering just above 1.1 months sending more cause for alarm. This week, the rupee registered losses for four successive sessions against the dollar. The decline has been witnessed despite news of Qatar Investment Authority mulling investing $3 billion in Pakistan. In addition, news of $1 billion in assistance from Saudi Arabia will also provide support to the reserves. This begs the question, why is the rupee depreciating – what is causing alarm? Open accounts now closed The SBP, in order to increase curbs on imports has proven to be counterproductive in terms of its spillovers. In a recent move, the SBP has instructed banks to limit their operations of open accounts, which has sent out a mayday signal regarding reserves and foreign exchange.Anopen account transaction in inter national trade is a sale where the goods are shipped and delivered before payment is due. This makes it easy for importers to manage cash flow and cost.
“Bag add karna hai?” That is when you remember … you forgot your shopping tote bag at home again. You know, the big cloth ones that supermarkets give out to be seen as environmentally friendly after the government has banned plastic. You look at your shopping haul and realise you can’t carry it in your arms, so you reluctantly agree. At home, you unload your groceries and stuff the tote bag into the same drawer where all of your other tote bags are kept. Next time, you think, next time I won’t forget. Except you will, and you’ll pay for another tote back and the vicious cycle will continue. Of course, even if you managed to re member your tote bag every time, it would take 54 years of using an organic cotton tote nearly 20,000 times to offset the environmental im pact of production. These tote bags in grocery stores, and the concept of tote bags in general, is a strangeBecauseone.these once very practical inventions have now also become fashionable items to carry around, with tote bag designers making custom bags. As a method to carry things, they are fashionable and versatile. Yet their promotion as an environmentally friendly part of life and as a replacement for plastic bags is not quite the simple matter one might think it to be.
By Ariba Shahid
The ban and ‘unban’ on plastics Acliché Mark Twain quote comes to mind; “Quitting smoking is easy. I’ve done it hundreds of times.” It’s as if the various governments in Pakistan relate to the sentiment while talking about banning plastic bags. Banning plastic bags is easy; the government has done it multiple times. Effectively banning plastic, however, is not thatTheeasy.most recent ban in Karachi was de cided on May 20, 2022. This was done through a letter sent to the Administrator, Karachi Metropolitan Corporation from the Planning
You get to Imtiaz for your weekly shopping. Or if you’re in Lahore instead of Karachi, maybe you go to Al-Fatah. You lock your car and go inside. Everything is working smoothly as you get your trolley and thread your way through the aisles. A couple of hours later you’ve successfully checked off your entire list. There wasn’t a big rush, you managed to get a small treat for yourself and now you’ll be home in time for lunch. As the cashier checks out your items, he asks a dreaded question.
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What types of carrier bags are available?
The first formally defined tote bag came into being in 1944 by the LL Bean Company, known for its outdoor equipment and totes. The inspiration had been drawn from ice! They had come up with a simple water resistant canvas bag that could be used to transport ice from the car to the freezer. Users realised early on that while the bag was water resistant, its usage didn’t have to be limited to ice. People started expanding the usage of the bag and used them while running household chores or picking up groceries. If you’re interested in what the original tote bag looked like, just check out the L.L. Bean Boat Bag. It’s based on the original design of the ice bag and remains popular. The history of totes gets more glamorous when you find out its linkages with Birkins. Jane Birkin’s original tote was an oversized woven basket that she used to carry her belongings with ease. While the basket was useful in carrying her things and snacks for her daughters, the mate rial wasn’t the easiest to carry around. However, once while flying from Paris to London, Birkin met Jean-Louis Dumas, the chief executive at Hermes. He offered her to make a new tote bag, the Birkin Bag. This made totes not just an item of utility, but also a must-have fashion item. In the 1980’s, however, The Stand, a bookstore in New York City introduced its own design for a tote made of natural cotton duck canvas. It advertised the store’s name, address, and slogan. “18 miles of books”, read the tote. The trend picked on. Several other bookstores, artisanal brands and so on started their own versions. Thus, making the totes a form of personalised statement and expression. In a way, the totes helped define a characteristic of the wearer. The tote rush
“A cotton tote bag would be at minimum, a hundred rupees. The spunbond materials made here are primarily for mattress covers and sanitary wear that include diapersm and while they are usable for tote bags, the ‘quality’ used by the tote bag industry means they will soon wear-out, tear or deteriorate,” says Abid Omar, Director at Duraprints by Syntech Fibres, a digital textile printer for fashion and interiors.Omer adds that while these nonwovens are produced in large scale industry, the tote bag manufacturing sector is largely in the promotional give-away sector which works in cottage industry or ‘unorganised sector.’ “This is due to the small volumes involved with or ders being in hundreds or at most thousands of units, involving lots of customisation, which is not cost-competitive for the organised sector.”
PLASTICS and Development Department, Government of Sindh. It recommended the implementation of the decisions taken by the government agencies regarding a complete ban on polythene bags.
Kamran Ahmed, a resident in Karachi explains, “To save myself from all the hassle, I started going to Imtiaz. They always have plastic bags. More importantly, you don’t have to buy them. I reuse those bags multiple times. In fact, we have a plastic bag full of plastic bags at home.”
According to the Pakistan Plastic Manu facturers Association (PPMA), there are nearly 8,000 industries and units that make products related to plastic. The largest among this group of manufacturers are those that produce polyethyleneRepresentativesbags. of the PPMA have said that the exact size of the plastic bag manufacturing industry cannot be determined, because Pakistan churns out thousands of tonnes of this product every single day. Large chains of fast food and shopping malls often require up to 80 tonnes of shopping bags every single month. Because of a lack of political will behind its implementation, the ban on plastic bags has been an on-and-off phenomenon. Provincial governments regularly fail to implement their own bans and go back on them when they strike a deal with either shop owners or the plastic bag industry.
While some individuals appreciated the efforts to reduce pollution, some individuals planned their shopping destination based on whether they sold plastic bags or not.
Low density polythene bags (LDPE) are the regular plastic bags you find at stores. The quality, however, can vary. Plastic bags formed from an LDPE plastic melt, which is blown and sealed to form aNon-wovenbag. polypropylene bags are a bit more stronger and durable. These are usually bigger than the plastic bags and are not single use bags. They are formed from molten fila ment of PP which is spunbonded but not wo ven. These are gaining popularity in Pakistan.
“Making the rules is one thing, but there’s been no effort in implementing the rules. If you don’t make sure the ban is carried out. What’s the use?” says Naheed Mooraj, the entrepreneur behind Candle Works and an avid user of tote bags. “Ofcourse tote bags are underutilised, you see more people with plastic bags than tote bags when you go out.”
From ice to fashion to branding: a history The verb “to tote” simply means to lug or to carry by hand. Totes are traditionally made of canvas, however, the definition of a tote does not define the material. Therefore, a tote can be any material as long as it can be used to tote.
In Pakistan’s case, tote bags (or promotional give-away bags) are usually made from polypropylene ‘spunbond nonwoven’ material, which is a cheap alternative to cotton bags. They can cost anything from Rs 20 to 50 per bag.
Woven polypropylene (PP) bags are made by weaving PP fibres. They’re stronger and more durable than plastic bags. Tote bags sold by supermarkets are often made of this material. Recycled polyethylene terephthalate (PET) bags are also available sometimes. These are plastic bags obtained from weaving molten fibres from recycled PET pellets Paper bags were a little more popular in the past and are rarely seen lately as they tear with weight. These are made of craft paper which is glued to form bags. Lastly, we have textile bags. They’re made of woven cotton or jute. They can be used multiple times. They can be made of organic or conventional textiles.
The situation, however, is better in other cities such as Lahore and Islamabad where the earlier ban is followed a bit more seriously in most areas, if not all. Second-tier cities, however, still use an abundance of plastic bags.
The concepts of totes are not new to Pakistan. Families would be seen lugging soft plastic baskets and big bags of sturdy material across traditional budh and itwar bazaars carrying groceries and other finds. “I’ve always carried a bag with me whenever I went to the bazaar. It would simply be easier to put everything in one big bag than to carry five small bags of different vegetables, one bag of masala packets, and a toy I’d buy for my son,” says Mehwish Khan, a resident of Karachi. Khan adds, “People would be selling strong material bags and big plastic bags at these bazaars.”Supermarkets picked up on this concept too. Following the various bans on plastic bags, these stores started selling sturdier bags made out of cloth. Since people would have no option but to buy the tote bag sold by the gro cery store itself, they would end up doing so.
The resolution further requested KMC to approve a complete ban on the manufacture, sale and use of polythene bags in the city. If not followed, under Section 15 (132) of the Sindh Local Government Act 2013 and Schedule VI, the KMC has jurisdiction to take legal action against violators after June 15. At this point, we are well beyond the 15th of August, two months since the deadline - and the ban on plastics in Karachi is nowhere near implementation.
Instagram, vanity, and statements
In Pakistan, it was introduced on 1 April 2014, and other than Punjab and Islamabad, using this technology was made mandatory under law in the rest of the country. Meanwhile, this technique started being used in the preparation of plastic bags in Lahore and other cities of the Punjab. But the problem was once again the market, and how it responded. The extra cost was unacceptable and the tech quickly failed in Pakistan, and since there were no compliance laws, manufacturers stuck to their old“Getplastic.people to start using reusable containers for their groceries, for example yogurt can be purchased in your own container rather than in a poor quality ‘thali’,” says Omar.
An organic cotton tote needs to be used 20,000 times to offset its overall impact of production, according to the report. That equates to daily use for 54 years — for just one bag! This is primarily because organic cotton doesn’t use fertilisers and so production is around 20 to 40% lower yield than convention al cotton. Conventional cotton bags must be used at least 7100 times.
“People don’t have any concept of virtual water and the longevity of recyclable material, how that material can become a part of the earth so right now [awareness] is just to move away from single use plastic. There’s noth ing wrong with reusing plastic, as long as it doesn’t become part of trash,” explains Salam patiently. Indeed, single use plastic bags’ im pact on the environment is severe. They make their way into the digestive system of animals both on land and sea, they add to pollution, and clogWithdrains.thehelp of this tech, the hundreds of years that plastic takes to degrade was brought down to a matter of a few months. This is why it is called controlled life plastic technology. The way it works is that it is also made in the shape of plastic grain, and during the process of making plastic, a specific amount of this material is added, which makes the plastic environmentally friendly.
30 PLASTICS bags, however, have become a style statement lately in Pakistan. Every community pop up features some stalls or stores carrying totes.
“You can tell people about virtual water (which is water hidden in products that goes into their making. Buyers rarely account for how water friendly a product is) and the foot print of growing cotton and using its products, and how conscious they should be. Because then there’s this whole debate that moves beyond bags, moves beyond things to wear; the fast fashion concept. And that is another very long debate that we should continuously have anyway,” says Salam.
“There definitely has been an increase in tote bag usage over the past 3-4 years. They’re handy, carry a distinct personality and are super convenient to use. I also feel there could be a direct correlation between festivals/events like Daachi etc that have promoted the use of tote bags,” says Sonya Rehman, an art and culture journalist and founder of From Lahore with Love, a venture which not only aims to revive the joy of snail-mail in Pakistan through a series of postcards, but also pays homage to Lahore’s cultural heritage. The designs of a tote bag also pull consumers in. “I think people buy tote bags because it’s cool, is an extension of their personality and make such a lovely, subtle statement! Besides, tote bags are eco-friendly and durable,” says Rehman. “Tote bags are the next journals/statio nery -- you can’t help but instinctively pick up a pretty tote bag no matter how much you have lying around at home,” adds Rehman. While consumers do tend to use them, it is important to note that most of the time they are not used to their full potential.
“No, I don’t think people buy tote bags for vanity purposes. People who are conscien tious people, who are aware of their environment are people making the decision to use tote bags even if it’s just them doing it. There’s nothing about vanity in it,” states Mooraj.
Tote
He adds, “Our polyethene industry uses the worst possible PE [polythene] which are not recyclable, instead of the HDPE [high density polyethene]? They also stamp the bags with “oxo biodegradable” where in reality it’s nothing more. And most importantly, plastics are not the enemy, it is rather our culture.“
The state of plastic — is there another way out? The environmental concerns caused by shopping bags is an international phenomenon, which is why Oxo Biodegradable technology was introduced. The industry at first thought they had a saviour. Two or three other technologies had been introduced before this, but this proved to be the most successful and feasible one yet.
Of course, the tote bag industry is nothing like the plastic bag industry. It is utilitarian for sure, but also has a very particular presence as a fashionable item. Whether you’re wearing a Birkin, a Goyard or a cotton tote from Liberty books with your favourite Shakespeare quote, the reality is that it would most likely remain the mainstay of fashion in Pakistan. For an environmentally friendly solution to this problem, there are other avenues that must be explored.And explored they must be. Tomorrow, in the early hours of the morning, on the way to school, or, if you’re a parent, to drop your kids to school, notice how still the city is. In the sky, the sun will be bright but not overly so, the streets will be quiet, people stirring slowly but the only things that will be taking flight energetically will be white plastic bags, destroying both the serenity and beauty of the city.
“While the environmentally conscious are carrying cotton tote bags, they are ignorant about their environmental impact which is manifold more than a simple plastic bag… at best it is a cultural signifier that they too ‘care for the environment’ while becoming a walking advertisement,” argues Omar. What this means is, if you do end up buying a cotton tote for environmental reasons, you should use it as much as possible and not buy multiple bags for vanity. To credit her cus tomers, Rehman adds that the totes she sells are made of cotton and are durable. She says, “I introduced my totes to my product line a few years ago, I’m always pleasantly surprised to meet friends/strangers who continue using my totes that they bought very early on.”
In 2018, a study by the Ministry of Environment and Food of Denmark and Danish Environmental Protection Agency released a research report on the number of times a carrier bag should be reused. “For all carrier bags, reuse as many times as possible before disposal is strongly encouraged. The calculated number of reuse times might be compliant with the lifetime of PP, PET and polyester carrier bags, but might surpass the lifetime of bleached paper, compos ite and cotton carriers, especially considering all environmental indicators,” reads one section of the Thereport.very high number of reuse times scored by cotton and composite bags is primar ily due only to the ozone depletion impact category, for which the cotton production dataset provides larger impacts than the reference LDPE carrier bag.
