Too Stark for Saarc?

The Dawn, Pakistan

December 10, 2004

By Fawzia Naqvi

The United Nations launched its Year of Micro credit on November 18. Several stock exchanges, including Karachi, Colombo, Bombay and the Nasdaq, helped ring in a year of focused initiatives to broaden financial services access for the poor.

But shortly after the luminaries departed and the bourses returned to frantic wealth accumulation, the micro finance sector continued the hard slog of ensuring that low income entrepreneurs are recognized as legitimate clients of financial services, and are offered access to a wider range of financial products.

Micro finance alone will not do it. It is by no means the silver bullet nor a panacea for poverty alleviation. It is but one intervention which will contribute towards the United Nations Millennium Development Goals.

No developing nation has yet achieved all eight goals. South Asia's scorecard remains woefully inadequate. Its challenge is enormous, not only in democratizing financial services, but in providing access to education, healthcare, information and justice to a majority of the region's citizens.

The largest concentration of poverty, those living below $2 a day, is to be found in South Asia. Out of 1.3 billion people living in absolute poverty, 515 million live in South Asia. It is home to 40 per cent of the developing world's absolute poor.

South Asia sadly is home to 45 per cent of the developing world's adult illiterate women and home to 49 per cent of the developing world's malnourished children. Pakistan is home to about a quarter of the world's illiterate children.

The size of the informal sector in India alone is close to 400 million micro-entrepreneurs. Add Pakistan, Bangladesh and Sri Lanka to this mix and what we get is a "monster market".

Over 90 per cent of South Asia's labour force is in the informal sector - the largest segment being micro and small enterprises employing between one to five people. Yet this is also the most financially squeezed and socio-economically locked out segment of the population.

Our region is home to three of the world's most intractable and bloody conflicts. The conflict in Kashmir, the Maoist rebellion in Nepal and the Tamil separatist movement in Sri Lanka have together killed over 120,000 men, women and children. More keep dying every day and the monetary cost of these conflicts is staggering.

As if that is not daunting enough, South Asia is also the region where two of the world's only seven (declared) nuclear states are hostile neighbours.With these abysmal failures staring each South Asian leader starkly in the face, they will once again convene during the Saarc summit in Dhaka in January 2005.

The current head of Saarc, Prime Minister Shaukat Aziz of Pakistan, has said that the number one agenda item for SAARC this time will be "the war on terror." We need not dwell on his reasons, he too has his ground realities and much has already been posited about Pakistan's post 9/11 jockeying in the world's new order.

However, one can hope that Prime Minister Aziz, when referring to the war on terror, was also declaring the war on terror unleashed by poverty, inhumanity and unrelenting injustice.

For what could be more terrorizing than not having enough money to feed your family? Or watching your child die of a treatable disease because you didn't have money to save the child? Terror is watching a bulldozer tear away at the fragile walls of your shanty dwelling, or being at the mercy of a state war machine extracting collective punishment on a community; be it in western Nepal or in north and eastern Sri Lanka.

Mr. Aziz's statement during his November visit to Nepal was worrying. His foremost offer to the government of Nepal was "to crush the Maoist insurgency" by supplying weapons and training to the Nepalese army in Pakistani training camps. The Maoist insurgency in Nepal is fuelled by egregious socio-economic inequities, especially in the rural dirt poor western region.

A similar offer to crush the Tamil rebellion was not extended to Sri Lanka, although a credit of $20 million was offered for the purchase of arms from Pakistan. The prime minister's visit to Sri Lanka was also preceded by that of two Pakistani naval destroyers. A far more leveraged use of $20 million might have been an economic incentive to coax the Sri Lankan government and the LTTE toward a lasting and just peace.

It will be a real shame if the prime minister of Pakistan runs around South Asia primarily peddling weapons and training camps to other governments. He should not squander an opportunity for Pakistan to engage as a leader in South Asia, one which leverages its economic and political capital for the well-being of this region's populace.

The writer is a micro finance specialist based in New York.