Can Pakistan Deliver?

December 20, 2018 Financial , Opinion , OPINION/NEWS , OTHER , Pakistan

Reuters photo



Zeeshan A. Shah



Pakistan is under siege on rising costs and is struggling to deliver. The incoming government has been gifted with an enormous pile of debt payments, a crumbled economy, white collar crime-proceeds and trail of corruption that has been unprecedented in the history of Pakistan.


Not only does the government but also the people of the country today have to demonstrate jurisprudence and conduct self-analysis. As they say: “Charity begins at home.” Pakistan has one of the largest number of charitable trusts in the region but unfortunately has one of the lowest tax to GDP ratios. Maybe it is time we start analyzing our tax-to wealth ratios instead of taking GDP as a key indicator, considering over 40% of our population is not even documented in the tax net and only 24% of the population actually pays tax deducted at source.


Here, I shall try to ascertain the underlying risks by exploring a few options. Streamlining our debts and finances becomes a key part of midlife, as we steer through short term gains and long term plans.


In Pakistan, one out of twenty men and one out of twelve working women are looking at re-management, retaking their personal financing to enhance their ability to earn more. Now we can be on the defensive and say that it is economic uncertainty, speculation, the devaluation or maybe even the fuel hikes. Here is where we have to study some personal facts. Pakistan has one of the lowest rates of savings in the world for many decades where people do not spend as per their disposable income ratios but overspend recklessly over and above their means. Simple things count.


Do we know that we are ruled by TV?


A brainwashed nation that we are today, the fact is that with age, we must generally improve our personal planning. It is not job insecurity, or country politics or even the desire to go impulse buying that is under debate here. It is predominantly the need to get better at what you do with your money and improve on your savings that matters today. Money becomes a strong motivator as a saving tool if you align your mind-set towards planning to save for a better future and economize as a family.


Few considerations come with time, as we understand how the world works better. Whether we are averaging a hundred thousand dollars a year or less than fifty, we must do the math multiplying income and savings.


In a developing country, most of what we make is not saved but is spent on the “acquired lifestyle“, which is costly. Then there are other peer pressures to be able to fit into the “social circle“, where child costs, travel costs, maintenance, health, and security costs make up a lot of stress. The biggest car, the nicest locality, servant costs and entertainment costs that we feel the need to remain constant, consistent and payable- puts more pressure on us in today’s uncertain environment. We need to become more mature about our spending habits. Minimalists actually enjoy life to the fullest.


In the tech-savvy universe, information is critical and current, valid and vital to us to feed our need for speedy communication, staying ahead in terms of sense and logic, money and power. We are all control freaks, one way or the other. We thrive on being the ones in power, like human nature to eat well, drink at will, drive at leisure and sleep to the maximum. Again, we need to hold on to our control mechanism to sensibly spend money and reinvest it. Create a work life balance.


Sometimes we start taking things for granted. But what if these things are not for granted? What if the cost of living gets too unbearable? Will we go to the streets like the crowds in Paris today and demand vigilante justice or will we resort to bigotry and corruption inspired by our past leaders who have lived and thrived by looting the country? I think we need to educate our minds.


Let us take an example of the average educated family in Pakistan. We are on average four to five people per house or apartment, where almost two thirds do not work and depend on the rest who actually earn a living. In a culture where family takes care of their own, we exert more pressure involuntarily on ourselves just to be able to take care of our immediate family, parents, siblings and children. Stress levels hike up.


The inherent pressure to ensure “all is well“ is the hidden cost of living to begin with that no one really evaluates to the fullest, until its starts to appear visible by the hour by itself. And that is the breaking point for the bread-earner, nowadays termed as the midlife crisis. On average, the cost of education for one child today in rupee terms is on average fifteen thousand rupees a month, give or take a few. This includes the cost of books, uniform, lunch, private tuition and transportation or fuel cost whether your own or rent a vehicle or school bus. With a devalued currency, the total costs doubles to Rupees thirty thousand Rupees a month.


Here the new government must be given credit for rationalizing the education costs being borne by citizens through user-friendly policy-making by focusing on government schooling as an option and forcing private schools to reduce the fees they charge today.


Then you have water and maintenance costs of living, inclusive of water charges per apartment or house that ranges anywhere between eight to twenty-five thousand per month, along with maintenance costs of imported water through tankers to about five to ten thousand or more, depending on the city population.


An average cost of taking our family out for dinner these days is anywhere between three to five thousand rupees for an average family of four. Kids eat more, so one can add another three thousand per month as extra food costs outside the home. While indoors, the average food will cost you around five hundred a month, which adds to the total of around ninety thousand a month. On the whole, the family has to spend over a hundred thousand a month and this does not include car or bike fuel where we have to ensure another fifty thousand a month by car, and half that by bike. Both parents need to work to support the family today and to break-even, unlike 20 years ago. We need to align with the world instead of relying on miracles. Hence, the government needs to create new jobs and we need to indulge in multitasking.


Sustainability – How to cope with this cost while ensuring we save our income generated every month from a job. Simple ways are there to be followed strictly and it can be a lot easier for the average social animal out there. There are ways to bring in extra income that we need to look at today in order to cope up with finances.


First, the idea to start making our homes productive by putting a portion of our owned house on rental which can fetch us an easy twenty five thousand every three months on an average apartment and sixty to a hundred thousand per house, depending on the size and condition of the one we own. A golden rule in Pakistan actually benefits the owner as a ten percent minimum rental increase is a mandatory requirement for the tenant to pay to the owner, that too along with the advance rent for the year, which is immediate extra income as pure savings.


Another way to enhance savings is to “manage our debts“– restructure them wisely. Checking our credit card interest payments and our car insurance we pay every year or our house mortgage – the rate at which we pay may be costing us a lot more than we are willing to pay. Reduce that cost and readjust the rates through your bank and settle for a cheaper mortgage or insurance policy. Or simple, take one loan and pay off all our credit cards bills and only use debit cards. Most of us are too lazy to look into these matters, as we do not look for the best value for money. Reckless days are over.


Then we also need to look at daily spending habits that consume our savings, like eating out daily, buying extra DVDs, ordering food in-house, not collecting fuel receipts to know how much you are wasting driving your car unnecessarily, kids’ toys we spent on thinking they don’t cost at all, endless trips to the salon, buying on impulse, using credit cards instead of cash to buy groceries, something that really adds up to our monthly cost which is where home cooking and weekend outings offer relief.


Living beyond our means is not what I see overseas. People prefer driving bicycles and walking a lot; instead of lazing behind back seats of cars having drivers drive them everywhere and having maids cook for the kids, paying hefty amounts for both. Such examples of lethargic and extravagant lifestyles actually affect our health and wellbeing in the long run. Not to mention that we teach our children to become worse than we are.


Finally, we need to “moth ball our other commitments“– saving up for one holiday a year instead of two, cost sharing the holiday between two adults, not making too many cell phone calls, getting a better cellular package. Most of us ignore little things that add to the cost of living comfortably. Another thing to look at is the concept of “living within your means“. While we are living within our means, we simply forget to be disciplined which is the exact and only thing to do consistently.


Working out a budget is the easy thing to do as we calculate our monthly income versus spending, food, accommodation, car fuel, bills, etc. One excellent way of helping ourselves while you are out window shopping is to simply walk out of the shop or outlet. It works. Same thing when you are on a career break and while you are sun bathing on the beach, stay by the beach bring back groceries instead of going out clubbing. Abstinence is key.


One needs to avoid two things here: One is: “Carry on as usual“ – a big mistake as you end up with more debts, less savings, more frustration and stress and less control over your financial life. Another mistake not to make is: “Not making contingency plans“. Plan for unexpected events that have not occurred but as if they do take place, like illness, job changes, recession, transfer, parent care, hospitalization, etc. Someone has to pay for them all of a sudden as they do not just happen to us pre-informed.


Pakistan is under siege with the rising consumer costs, where we now need to rectify spending, where we see it happening. Real savings are negligible, taking us by the root as every day is getting harder to earn hard dollars and put up savings, while taxes rise all over and so does downsizing. Plus, another cost that is rising fast is the “nepotism cost“ – the cost you have to pay due to someone else coming in and taking away your benefits. It happens a lot these days in an unfair work system, such as the one we have in Pakistan. Getting out of the status quo and out of the classist system is not easy and the populist decisions will not help. Planning ahead for contingencies is most crucial.


Can Pakistan deliver? Yes it can. But we must all deliver along with the country and improve. Text book rules do not apply anymore. Reinvest in yourself and your habits or face the tightrope. The government is doing what any good government does – educating the people and fixing the economy. Patience is the key. So we improvise and see our lives get better.





Zeeshan A. Shah

The writer is a Director at CNNA Pakistan – a leading advocacy institute and is an expert on International Relations and Education Policy.

With over 150 publications in major local and global social media & newspapers, he has been instrumental in producing over 5000 radio broadcasts aired globally.

A thought leader, environmental journalist, media broadcaster and a change maker with an acute focus on development affairs & education for Pakistan.

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