Private sector critical stakeholder in economic development: LCCI chief
LAHORE – President of the Lahore Chamber of Commerce & Industry Mian Nauman Kabir has said that the private sector forms a key part of implementing the Sustainable Development Goals (SDGs) in Pakistan.
He was speaking at the Consultation Session arranged by the United Nations Development Program (UNDP). LCCI President Mian Nauman Kabir, Chairman Planning & Development Board Muhammad Abdullah Khan Sumbal, Representative UNDP Knut Ostby, Assistant Resident Representative/Chief Development Policy Unit Ms. Ammara Durrani and others spoke on the occasion.
Mian Nauman Kabir said that the private sector is recognized as a critical stakeholder and partner in economic development, a provider of income, jobs, goods, and services to enhance people’s lives and help them escape poverty. It also can provide the government with the fiscal room to meet basic infrastructure requirements and the tax revenue to tackle urgent priorities and address wider development challenge.
The LCCI president said that according to the World Economic Forum, the private sector is responsible for nearly 90% of the jobs available in the world right now, which essentially means that the private sector in Pakistan also has an opportunity to tackle many of the challenges that the country faces. For instance, creating jobs has a direct impact on poverty reduction. Additionally, by implementing inclusive hiring practices and promoting diversity in their workplaces, businesses can contribute to the overall reduction of inequalities. Finally, decent jobs allow people to thrive.
“According to the UN estimates, there is a US$ 2.5 trillion annual gap in the US$ 5-7 trillion in investment required to achieve the SDGs. Adequate financing for development has become one of the most critical development challenges of our times”, Mian Nauman Kabir mentioned.
He said that the credit availability to the private sector in Pakistan is only 17 percent of the GDP which is the lowest in the region. Furthermore the SMEs in Pakistan get only 6.5% of the private sector credit in Pakistan. This scenario makes it clear that the traditional banking system in Pakistan is crowded out and does not enable the private sector to play an adequate role in achieving SDGs and hence there is need for innovative financing solutions.
To a question, the LCCI President said that Pakistan’s financial market is vibrant, private sector-led, and offers possibilities of professionally raising capital for SDG investments. He said that if technical assistance is provided and meaningful partnerships facilitated between the global investors, government and leading financial institutions, there is potential to structure debt and equity funds of USD 1 billion to finance sustainable projects in priority areas with a direct impact on SDGs.
He said that financial sector institutions in Pakistan are well placed to partner with government and international investors to float SDG bonds or manage sector-specific private equity transactions. He said that these bonds may be issued for five and 10-year terms, in order to finance sustainable development-related projects and interventions. In order to encourage and secure investment by the private sector in these bonds, the government could serve as an underwriter. He added that sector specific “development funds” such as healthcare, infrastructure, education, food security, women empowerment, energy, etc. can be introduced. The private sector participating in these funds could be granted different fiscal incentives. “A blended financing model with investments from multi-lateral banks, Government, and private investors will not only reduce risks, but will also provide shared spaces for mutual learning”, he concluded.