Reviving urban economy in hard times

Efforts should be made to support informal economy along with bailouts for formal sector

ISLAMABAD: The informal economy is the backbone of Pakistan. It took a global pandemic for the country to appreciate its significance, which made possible the supply of fresh fruits, vegetables and other groceries during lockdown.

While food supply chains of many rich nations collapsed, Pakistan’s informal economy saved people from this catastrophe. As Pakistan is relaxing the lockdown and reviving the economy, efforts should also be made to support the informal economy along with bailout packages for the formal sector.

While the informal economy in the areas of food production, transportation and retail continued to operate amid the lockdown, many other street vendors and informal enterprises lost jobs and businesses. Since current efforts are focused only on financial response for economic revival, there is a need to devise an interdisciplinary response to revive the economy. In case of informal enterprises, especially street vendors, Pakistan needs to devise an informed urban response.

In response to the Covid-19, two crucial decisions were implemented: 1) the economy was halted by the closure of formal and informal activities, 2) public services, and even access to common spaces, were suspended. For the privileged, roads became openly available to drive around and park a vehicle anywhere and private parks provided open space when a break was needed from the lockdown.

However, for those without the privilege to live in affluent areas of cities, the lockdown became dangerously oppressive. Earning opportunities on the streets became unavailable, meagre savings were quickly wiped out, transportation options were taken away without any feasible alternatives and the rare public parks shut down. Massive income loss, poor amenity provision, over-crowdedness, lack of mobility options and no access to public space were left as an option for the most low-income urban residents.

During our work with the Rawalpindi Development Authority under the United Nations Development Programme (UNDP)’s urban platform, to strategically respond to the Covid-19 and improve livability in the historic urban Rawalpindi, we set three priorities:

First, reclaim the roads to create public space for people ie pedestrians and area residents; second, create opportunity for safe economic activity on urban streets by creating more space for on-street vending while practising social distancing; and three, de-prioritise motorised vehicles to achieve 1 and 2. Work is still in progress but it is hoped some good developments will come out of it.

Cities in many parts of the world are using this crisis to radically reshape themselves. They are implementing the measures using tactical urbanism tools to test ideas and identify configurations that work for everyone to ensure long-term sustainability.

Jumping ground

Amid the coronavirus crisis, Pakistani cities have the same opportunity. Measures like temporary projects for pedestrians, which formally recognise the first right of street vendors and pedestrians to the street, can become the jumping ground for even more lasting interventions, including the development of a formal street vendor policy or the introduction of cycling infrastructure to improve accessibility.

The provision of alternative means of mobility, which are both cheap and easily available, becomes even more important given the ban on public transit.

“These old men, over 60 to 70 years of age, drag around luggage using hand carts and block entire traffic” was a common refrain from all quarters when they demanded the removal of encroachments and informality.

Moreover, the urge to document everything and impose regulatory burden on such informal enterprises has further affected income opportunities for millions. This paradigm should be changed in the post-Covid-19 world. Right to the city should be provided to street vendors and other informal enterprises.

Lastly, it should be understood and appreciated that the informal economy provides resilience during the post-crisis recovery period due to its more agile decision-making process and it being better leveraged financially.

Tax compliance

For the past many years, Pakistan’s tax administration has made every effort to suppress this sector. In fact, in the last budget, one of the conditions for transactions of over Rs50,000 in a day was the submission of a Computerised National Identity Card (CNIC) copy - a condition that also hurt the vibrancy of this sector. The government should repeal this condition in the upcoming budget. A recent policy brief by Pakistan Institute of Development Economics has also raised warning on the documentation drive considering the high cost of tax compliance in Pakistan.

“The current documentation drive will prove ineffective and rather counterproductive in the presence of high cost of compliance,” it said.

Ayesha Shahid has been trained as city planner and is currently working on urban and rural planning

Naveed Iftikhar is an entrepreneur, teacher and economic/urban policy professional

Published in The Express Tribune, June 1^st, 2020.

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