Pakistan Ranked Among Top 5 For Financial Inclusion

[Asian.Century]

Pakistan Has World's 4th Highest Number of Shadow Entrepreneurs

Pakistan has 109 informal entrepreneurs for every formally documented entrepreneur, ranking the country 4th in the world for the size of its shadow economy, according to a study published by Professor Erkko Autio and Dr. Kun Fu of the Business School of London's Imperial College.

Pakistan's 109 shadow entrepreneurs for every officially registered one rank it 4th behind Indonesia's 131, India's 127 and the Philippines' 126. Egypt ranks 5th with 103 shadow entrepreneurs.

The UK exhibits the lowest rate of shadow entrepreneurship among the 68 countries surveyed, with a ratio of only one shadow economy entrepreneur to some 30 legally registered businesses.


Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and services but they do not register it. This means that they do not pay taxes, operating in a shadow economy where business activities are performed outside the reach of government authorities.

The shadow economy results in loss of tax revenue, unfair competition to registered businesses and also poor productivity - factors which hinder economic development. As these businesses are not registered it takes them beyond the reach of the law and makes shadow economy entrepreneurs vulnerable to corrupt government officials.

In a study of 68 countries, Professor Erkko Autio and Dr Kun Fu from Imperial College Business School estimated that business activities conducted by informal entrepreneurs can make up more than 80 per cent of the total economic activity in developing countries. Types of businesses include unlicensed taxicab services, roadside food stalls and small landscaping operations.

A 2011 World Bank report titled "More and Better Jobs in South Asia" showed that 63% of Pakistan's workforce is self-employed, including 13% high-end self-employed. Salaried and daily wage earners make up only 37% of the workforce.

M. Ali Kemal and Ahmed Waqar Qasim, economists at Pakistan Institute of Development Economics (PIDE), have published their research on their estimates of the size of Pakistan's shadow economy.

They have explored several published different approaches for sizing Pakistan's underground economy and settled on a combination of PSLM (Pakistan Social and Living Standards Measurement) consumption data and mis-invoicing of exports and imports to conclude that the country's "informal economy was 91% of the formal economy in 2007-08".

While Pakistan's public finances remain shaky, it appears that the country's economy is in fact healthier than what the official figures show. It also seems that the national debt is less of a problem given the debt-to-GDP ratio of just 30% when informal economy is fully comprehended. Even a small but serious effort to collect more taxes can make a big dent in budget deficits. My hope is that increasing share of the informal economy will become documented with the rising use of technology. Bringing a small slice of it in the tax net will make a significant positive difference for public finances in the coming years.

 

[RiazHaq]

Queen Máxima of #Netherland to arrive in #Pakistan tomorrow to promote #financialinclusion

Queen Máxima to arrive in Pakistan tomorrow - The Express Tribune …


Queen Máxima of the Netherlands will begin a three-day visit to Pakistan from Tuesday as part of her global efforts to promote financial inclusion.

The queen is the UN secretary-general’s special advocate for inclusive finance for development and her scheduled visit comes in support of Pakistan’s National Financial Inclusion Strategy.

Financial inclusion

During her visit, the queen is set to hold meetings with the president, Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar, together with governor State Bank of Pakistan, according to Radio Pakistan.

On the sidelines of these meetings, the queen is also scheduled to meet with other stakeholders from public and private sectors.

Further, Queen Máxima will hold discussions with the representatives of international organisations, financial organisations, telecom companies and micro-finance institutions to explore their role in improving access to financial services such as savings, payments, credit and insurance.

Davos meetings: Regional peace to map future progress, says PM

Launched in May 2015, the strategy aims to expand the availability of the financial tools the poor need to protect themselves against hardship and improve their lives.

The World Bank is preparing a programme to support the implementation of Pakistan’s financial inclusion strategy over the next five years.

Pakistan has a well-organised financial system but the use of formal services is low, particularly among women, farmers and small businesses.

 

[Jungibaaz]

I'd like to see some measures for how this is calculated, by what I've read so far, and what I can see, it looks like it's a list of countries that are most open to the neoliberal game, IMF style capitulation, economies listed seem open for market penetration and total disregard for social welfare.

 

[Nilgiri]

I'd like to see some measures for how this is calculated, by what I've read so far, and what I can see, it looks like it's a list of countries that are most open to the neoliberal game, IMF style capitulation, economies listed seem open for market penetration and total disregard for social welfare.

Here ya go:

https://centerforfinancialinclusionblog.files.wordpress.com/2015/12/eiu_microscope_2015_web.pdf

Take it with a pinch of salt. The onus seems to be on inclusion of the poorest segments of the population through microcredit etc... so its pretty biased against the more traditional MSME focused model employed by China. Although its interesting to see Bangladesh did quite poorly (with its famous grameen bank etc). The study seems to take stock of credit rating and insurance to explain that, which I think is a good point that Bangladesh should seriously look into (i.e you cannot just rely on an original system/revolution...it must be continually improved/modified to suit new knowledge, experience gained and a changing economy/demand portfolio).

So they (EIU) are not all wrong in having that stand overall....but I think they should factor in more results rather than relying on theory much more.

Everyone is equally open to the neo-liberal IMF dynamics you mention (in my opinion)....in fact I would say the traditional "proven" model is even more vulnerable to it....thats why for example China has to "go with the flow" regarding its currency, treasury bonds and export orientation....and only slowly bring about macroeconomic changes. It has effectively become more IMF "controlled" and thus potentially vulnerable (though its sheer size gives many more margins and layers compared to most of the famous IMF capitulations) compared to what it was in the 80s and early 90s for example.