ISLAMABAD - Overcoming the trust deficit is the key to overcoming the economic challenges and initiating sustainable growth in Balochistan, said Dr Khalid Ikram, former advisor World Bank, while addressing a seminar titled ‘Economic Challenges in Balochistan”, organised by Pakistan Institute of Development Economics (PIDE) here on Wednesday.

He argued that rapid inclusive growth was possible in Balochistan taking advantage of mineral and locative assets and sustainable high value activities in agriculture, livestock and fisheries. Given Balochistan’s indigenous labour force of around 1.5 million, it was vital to invest in education and skills if any development strategy was sustainable. He, however, emphasised that no strategy can be imposed from outside either by the federal government or foreign donors and it must conform to Balochistan society vision for the province.

While giving a detailed presentation he said that Balochistan consist of 45% of Pakistan’s land area of Pakistan but only 5 % of its population,  it share Pakistan’s coastline is 75%, it produces one-third of Pakistan’s natural gas,  100% of Pakistan’s copper and gold deposits, and it has significant deposits of coal, marble, granite, and other minerals.

It is ideally located for trade with Iran, Afghanistan, and Central Asian Republics but still remains the nation’s poorest province. The people of Balochistan are not satisfied because of development disparities.

“Balochistan’s population is thinly dispersed and poorly connected; its population density at 19 persons per square kilometer was only 5, 8, and 9 percent respectively of that of the Punjab, Sindh, and the KP Province.  Remoteness was made worse by poor transport infrastructure, which resulted in the shortage of critical mass of skills required for specialization in mostly cities but present in only a few localities, markets are smaller, thus losing economies of scale and the cost of providing a unit of service, including governance, is higher than that in the rest of Pakistan,” he noted.

He said that water shortage is a major hurdle for development of this province, as its spatial water availability is less than 15% of average of other provinces. On the other hand the ground water has almost been used up and most worrisome thing is that water potentially depends 72 % on floods & runoff, 26% on Indus and only 2% on groundwater.     

“Polices in the province have always neglected human resource development, especially education; as a result the labor force of Balochistan lags far behind the rest of Pakistan. The female literacy rate is 19 percent compared with the national average of 46 percent” he lamented.

He said that the physical & human factors drag down Balochistan’s GDP growth in last four decades. It is estimated at about 4.0% a year, compared with about 5.0% for the country as a whole.

The pace of poverty reduction was stable in the Punjab and KP, but poverty incidence in Sindh and Balochistan continued to fluctuate. He said that the instability in Sindh and Balochistan correlated with the growth rate of agricultural, particularly the main crop sector, whereas poverty rates in the Punjab and KP are not linked with growth rates of major crops.

“The development strategy should aim at increasing the incomes of the largest number of persons and to do this, it must provide a sufficient number of productive jobs for all the new entrants into the labor force and start reducing the ranks of the existing unemployed,” he suggested.

This will require a more rapid growth of the provincial GDP than in the past to implement the strategy.  According to World Bank estimates 1% growth in the GDP of the province increase 0.5% in employment and Balochistan’s labor force is estimated to be growing at 3.25 percent per annum. It means that the provincial GDP must increase by at least 6.5% a year to provide jobs for all the additions to the labour force, whereas a higher rate of 7.0-plus%, is required to start eliminating the backlog of unemployment and underemployment

He said, “To drive a higher growth rate, we would have to improve investment climate by addressing core issues like law and order situation, power supply, cost of financing and governance issues (especially tax administration and corruption)”.

While concluding the seminar, Dr Rashid Amjad, Vice Chancellor, PIDE said, “We must create an conducive investment environment to attract domestic and foreign investment in Balochistan and there was need to move on all fronts together- political, social and economic - to achieve this goal.”