Tapping the Pakistani Community in America
By Shahid Javed Burki
All the funds that flow into Pakistan from the community of Pakistanis in the US are not remittances sent by workers to help families back in the homeland. A significant amount goes to the country in the form of charity of various kinds. Some of it takes the form of compensation for the work done in Pakistan for the diaspora in the US. Two examples indicate how the community in America is getting integrated with the informal sector in the homeland.
Some IT entrepreneurs speak of what they call the development of a “cottage industry” in their sector. There are thousands of women with good IT skills who are not actively employed in the sector but have set up shops in their homes to work on assignments they receive from relatives and friends in the diaspora community. They get compensated for the work they do, which the State Bank of Pakistan records as worker remittances but are, in actual fact, earnings from the export of services. As much as a billion dollars may come in, in this form. The other example is from the fashion industry. Here again, women are the entrepreneurs. They have good links with the diaspora community and fashion clothes for its members. Some of them use their vacations in American cities that have large concentrations of well-to-do Pakistanis to hold informal “fashion shows”. In these, they sell the garments they have brought with them, as well as take orders from those interested in making purchases. Anecdotal evidence suggests that the earnings and size of this sector are significant.
As the size of the Pakistani middle class grows and the nature of its composition changes, we can expect greater interface between it and the diaspora in the US. How can this be engineered in a way that benefits both Pakistan and the community of Pakistanis in North America?
Several years ago, in a conversation with a senior official in Pakistan, I told him what I thought was the size of the Pakistani community in the US, what its aggregate annual income was, how much it saved every year, and the size of the wealth it had accumulated over the years. He was so impressed with my estimates that he sent over one of his close associates to meet with some of the diaspora leaders and ask them for help to reduce the country’s debt burden. The community leaders made it clear that they were not interested in including the Pakistani government in the list of charities they supported. They were prepared to provide resources for the country’s development, provided channels were available in the private sector through which investments could flow and provide reasonable rates of return. If the government could work to encourage the creation of such instruments, there is reason to believe that the diaspora community would respond with additional money.
Pakistan could learn from the Indian experience in this area. Several well-to-do Indian entrepreneurs with backgrounds in finance and the IT sector have established venture capital funds as well as private equity firms that are channeling financial resources into a number of activities in their home country. Pakistan has made a modest beginning in this area but could do a great deal more. The government could organize meetings with the financial leaders in the community in the US to determine how this particular industry could be developed. There is one other area where a partnership between the diaspora and the public sector could benefit both. This is the area of health services. Some physicians from Pakistan have set up hospitals in some of the major Pakistani cities of their origin. This trend could be encouraged by the government selling some of its hospitals to those from Pakistan who are prepared to invest in this sector.
Financial flows originating in the diaspora communities will become increasingly important. These need to be managed less passively and more aggressively than was done in the past.
(The writer is a former caretaker finance minister and served as vice-president at the World Bank. – Courtesy The Express Tribune)