Pakistan’s misguided obsession with infrastructure

The government is building more airports, roads and railways, even though the existing ones are underused.

NEARLY 20 years after it opened, Pakistan’s first motorway still has a desolate feel. There is scant traffic along the 375km link between Islamabad and Lahore (pictured). Motorists can drive for miles without seeing another vehicle, save perhaps for traffic cops manning speed traps. As the two cities are already connected by the Grand Trunk Road, which is 90km shorter and toll-free, there is simply not much demand for a motorway.

Yet this $1.2bn white elephant is one of the proudest achievements of Nawaz Sharif, who was prime minister when it opened in 1997 and is once again running Pakistan. Mr Sharif, who enjoys comparisons to Sher Shah Suri, a 16th-century ruler who renovated the Grand Trunk Road, never tires of talking about it. He regained power in 2013 with a campaign which both harked back to his famous road and promised more infrastructure to come. He even pledged bullet trains that would enable pious passengers to leave Karachi after dawn prayers and arrive in Peshawar, more than 1,000km to the north, in time for evening worship.

It is an article of faith for Mr Sharif and his party, the Pakistan Muslim League Nawaz (PML-N), that investment in infrastructure is a foolproof way of boosting the economy. His government is racing to finish umpteen projects before the next election, due by mid-2018, including a metro line in Lahore and a new airport for Islamabad. The likelihood is that the new airport (which has been plagued with problems, including runways that have been built too close together) will be as underused as most of the country’s other airports, many of which are modern and spacious.

Pakistan’s infrastructure is underused because the economic boom it was meant to trigger has never arrived. Over the past three years the government has successfully staved off a balance-of-payments crisis, achieving some measure of macroeconomic stability. It has trimmed the budget deficit, partly by broadening the tax take and partly by cutting energy subsidies. That, along with lower oil prices, has narrowed Pakistan’s trade deficit and allowed it to begin rebuilding its foreign-exchange reserves. The stockmarket has risen by 50% since the end of 2015.

But terrorism and insurgency have put off investors, both foreign and domestic. The country is also held back by inefficient and often cartelised industries, which have fallen behind rivals in India and Bangladesh. Exports, 60% of which are textiles, have been shrinking for years. Much more needs to be done to create an educated workforce. Almost half of all those aged five to 16 are out of school—25m children. Health, like education, is woefully underfunded, in part because successive governments shy away from taxing the wealthy. Only 0.6% of the population pays income tax. As the World Bank puts it, Pakistan’s long-term development depends on “better nutrition, health and education”.

Cement to be

But Mr Sharif’s government is pinning its hopes on yet more infrastructure to fix the country’s economic problems, in the form of a $46bn investment scheme known as the China-Pakistan Economic Corridor (CPEC). Much of it is being financed on commercial terms, including several power plants. Pakistan undoubtedly needs to relieve a chronic shortage of electricity. But critics fear the country will struggle to pay back the debt, especially if foreign-exchange earnings from exports continue to dwindle. At the very least, the government will need to continue chasing deadbeat customers to pay their bills and cutting expensive subsidies—steps that are deeply unpopular.

In addition to boosting Pakistan’s power supply, CPEC is supposed to link China by land to Gwadar, a deep-water port on the Arabian Sea, in the hope of creating a lucrative new trade route. New or upgraded roads will stretch the length of the country. The Karakoram Highway between the two countries, which was built in the 1960s at vast expense over a high and crumbly mountain range, is being upgraded as part of the trade corridor. But it forever needs patching up and is little used. Sceptics say Xinjiang, China’s westernmost region, is still too poor for better transport links to make much difference to Pakistan’s economy. Securing isolated stretches of road from separatist rebels in Balochistan is also gobbling up large amounts of cash.

Lijian Zhao, a Chinese diplomat, says China is all too aware that Pakistan needs more than just big-ticket infrastructure if it is to flourish. Disarmingly, he praises the efforts of Britain and other countries to improve Pakistan’s “software”, such as education and the rule of law. “But China’s expertise is hardware,” says Mr Zhao.

It may not concern Mr Sharif unduly if the next generation of roads is as deserted as the last. Civilian governments have often struggled to get much done in between military coups, but voters are impressed by gleaming new projects, even if they never use them. It’s an approach that has worked for Mr Sharif’s brother, Shehbaz, the popular chief minister of Punjab province. He has lavished resources on endless sequences of over- and underpasses to create “signal-free” traffic corridors in Lahore, the provincial capital, that are of most benefit to the rich minority who can afford cars.

There are limits, however. Khawaja Saad Rafique, the railways minister, recently admitted to parliament that the country would not be getting a bullet train after all. “When we asked the Chinese about it, they laughed at us,” he said.