Situation and cooperation

Women in Lahore, Pakistan

Pakistan is facing multiple challenges in terms of its political, economic and social development. The country was unable to achieve the majority of the Millennium Development Goals by the end of 2015. The most recent Human Development Index (HDI) ranks Pakistan 150th out of 189 countries, which is a poor performance, compared with others in the region.

The current government has significantly increased public expenditure on health and education, however it still falls short of what would be needed to achieve universal provision of services. Maternal and child mortality, too, remain high by regional comparison. Thanks in part to German support, the quality of the education system has improved since 2013, especially the vocational education and training system.

Pakistan has a rapidly growing population. Roughly 35 per cent of the population is under the age of 15 – many young people have no chance of finding a job. Another consequence of this population growth is the over-exploitation of scarce natural resources, in particular arable land and water.

Millions of internally displaced persons and refugees

Two children in a shelter in the Al-Khidmat camp for displaced North Waziristan residents near Bannu, Khyber-Pakhtunkhwa

Pakistan has been remarkably willing to offer shelter to Afghan refugees ever since the 1980s. More than 1.5 million Afghans are officially registered in the country. Another one million refugees are estimated to be living in the country without having registered. They can be found in the region close to the Afghan border and in the larger urban areas around Lahore and Karachi – where some of them have been living for decades. Pakistan has repeatedly extended the residence permits for the refugees; land has been made available to build settlements for refugees and they have been granted access to public schools and health care facilities.

The German government has been providing around 11.5 million euros a year since 2011 to support the efforts of the UN Refugee Agency (UNHCR) in Pakistan. This sum is made up of 10 million euros from the BMZ's budget and 1.5 million from the budget of the Federal Foreign Office. These funds are being used to finance health care, basic education and vocational training programmes, and the construction of schools and hospitals.

German support is making a difference: roughly 40,000 Afghan refugees are benefiting from measures to improve infrastructure facilities; 1,100 basic health care centres have been funded in border regions over the last few years; 40,000 girls and boys have benefited from modernisation measures and new equipment for primary schools.

In addition, in 2014, 12 million euros was pledged to Pakistan and Afghanistan under the special initiative "Tackling the root causes of displacement, reintegrating refugees", in order to support refugees returning to Afghanistan.

The security situation remains precarious, especially in the province of Khyber Pakhtunkhwa and in the Federally Administered Tribal Areas (FATA) on the border with Afghanistan. In June 2014, a comprehensive military operation was launched in the tribal areas, which had largely been controlled by extremist organisations until then. The the cost of reconstruction is put at the equivalent of 840 million US dollars by the government. Here, too, Germany is providing support, with ten million euros being made available in 2014 to support reconstruction activities and IDPs returning to their homes.

Governance and human rights

The Supreme Court building in Islamabad, Pakistan

For sixty years, Pakistan has been governed by a constitution that provides for a democratic state based on the rule of law. But in fact, the real power was mostly in the hands of the military. The democratic change of government in 2013 was, therefore, a historic event. However, considerable shortcomings with regard to governance are still evident.

Although Pakistan has ratified the most important international human rights conventions, implementation is often inadequate. In rural regions in particular, women are largely excluded from public life. They also experience discrimination in judicial proceedings.

The number of trade unions is small and they are poorly organised. Working conditions, especially in small and medium-sized industrial companies, often fail to comply with international standards.

Freedom of religion is restricted as well. An article from the criminal code making blasphemy a crime punishable by law is misused time and again to discriminate against religious minorities.

Economic development

Control centre of the hydroelectric power station Ghazi Barotha, Pakistan

Pakistan has considerable economic potential: a favourable geographical location, abundant resources, low labour costs, a young population and a growing middle-class. Numerous German companies are present in the country. The developing market for renewable energies in particular has a lot of potential.

However, at the moment, investors are still being put off by the tense security situation and wide-spread corruption. However, in 2015, Pakistan moved up three places on the Corruption Perceptions Index (CPI) published by Transparency International.

In the past, slow progress on economic and fiscal reform, a subsidy policy that lacks transparency and an export economy largely dependent on a small number of products (cotton, textiles, leather, rice, sports goods) put a brake on economic growth. Yet in 2015, economic growth was once more over four per cent.

In 2014, Pakistan was included in the European Union's Generalised System of Preferences (GSP+). This gives Pakistan's export sector better access to the European market for various products, in particular textiles. Within the EU, Germany had spoken in favour of admitting Pakistan to the system. In order to be granted GSP+ status a country needs to comply with 27 core international conventions. These also include the core labour standards of the International Labour Organization (ILO), which are not yet being sufficiently implemented in Pakistan's textile industry – a sector that is of vital importance for the country.

Progress and potential

In recent years, the Government of Pakistan has made visible efforts to bring about the political stabilisation of the country. For example, in 2010, a constitutional amendment was adopted strengthening parliament, the position of the Prime Minister, the powers of the provinces vis-à-vis central government and the independence of the judiciary. The right to information and the right to education were also enshrined in the constitution.

However, the stabilisation and sustainable development of the country depend on protecting universal human rights, legal certainty, better governance and reducing corruption. The economic and social potential of young people and the female population is, in particular, still far from being fully harnessed. Establishing peace in the tribal areas under federal governance is also important.

Priority areas of Germany’s cooperation with Pakistan

Government negotiations on development cooperation between Germany and Pakistan were held in October 2015. The German government pledged a total of 93.6 million euros for 2015 and 2016. The following have been agreed as priority areas of cooperation:

  • good governance
  • sustainable economic development
  • energy and energy efficiency

In addition, Germany will continue until 2020 to give Pakistan support towards its efforts to improve basic health care. Activities in which Germany is involved include developing quality standards for commercial health services, introducing a health insurance scheme, establishing a national network of blood banks and training health managers and medical staff. Moreover, Germany is supporting programmes to improve reproductive health and family planning, and to fight polio.

Measures for biodiversity conservation and forest protection are also receiving German support. The purpose of these measures is to protect the country's scarce national resources, to enhance disaster preparedness and also contribute to climate protection.

After more than 30 years, German development cooperation in the area of basic education was phased out at the end of 2015. More than nine million children have directly benefited from the education programmes implemented by GIZ, which have now been taken over by the Pakistan government.

Geographically, German cooperation is concentrated on the north-west of the country. Germany is one of the few donors working in Khyber Pakhtunkhwa and the Federally Administered Tribal Areas (FATA) with their own structures and staff.

Good governance

Germany is supporting Pakistan in carrying out administrative reforms, in introducing a transparent and fair taxation system and in combating violence against women.

A new Local Government Act, which has been in place in the Khyber Pakhtunkhwa province since 2013, transfers a number of tasks to existing and some newly established municipalities. The local governments are receiving support to help them execute their new tasks and provide services geared to meet people's needs transparently and efficiently.

The Federal Foreign Office, too, provides funding for projects in Pakistan in the priority area of good governance. These include measures to promote human rights, the rule of law and civil society and the media. Here, too, activities focus on the Khyber Pakhtunkhwa and Balochistan provinces and the tribal areas (FATA).

Sustainable economic development

Textile factory in Faisalabad, Pakistan

Germany is helping Pakistan to fundamentally reform its vocational training system in cooperation with the Netherlands, Norway and the EU. GIZ has been commissioned by the BMZ to advise the National Vocational and Technical Training Commission and vocational training agencies at provincial level on how vocational training can be better aligned with the needs of the labour market. More than 100 vocational careers advice and job centres have been established throughout the country. Uniform standards and material for examinations have been developed for nearly 60 vocational profiles in agriculture, energy and services; 87,000 young people have completed a training programme; 4,000 vocational training instructors have already been trained, with at least that many set to receive training in the near future.

The model of cooperative training is being applied successfully in Karachi and Lahore under the Germany Pakistan Training Initiative (GPATI). More than 80 German and Pakistan companies are involved.

The textile sector is Pakistan's most important manufacturing industry. Textiles account for 54 per cent of the country's exports and the sector represents nearly 40 per cent of industrial jobs. Along with big players with successful international operations, a high number of small and medium-sized enterprises operating in the informal sector are involved in much of the production. Evident weaknesses in occupational health and safety and environmental protection still persist. That is why the BMZ is funding a range of projects aimed at improving working conditions and social and environmental standards.

Germany is providing support for a centre for sustainable textile production that was opened in Lahore in September 2015. It will assist member companies of Pakistan's textile association in investing in sustainable production, energy and water efficiency and safety at work.

Energy and energy efficiency

Hydroelectric power station Ghazi Barotha, Pakistan

Development in Pakistan is very much held up by an ongoing energy crisis. Pakistan wants to further expand the use of renewable energies in order to reduce dependence on imported oil. Germany has been supporting these efforts for decades. Germany has helped to build a whole generation of hydro-electric power plants by providing reduced-interest loans. Further plants are either already under construction or are in the planning stage.

Other sources of alternative energy such as biomass, wind and solar power are being promoted as well, especially in rural areas that are not connected to the national electricity grid.

Measures to increase energy efficiency are being implemented in cooperation with the private sector. Energy management systems have already been successfully introduced in the textiles industry. In cooperation with the respective industry associations, steps will now begin to expand these systems to cover other sectors, such as food production or metal processing.

In November 2014, the German and Pakistan governments concluded an agreement to create a Pakistan-German Renewable Energy Forum (PGREF). The Forum is to be launched in Lahore in 2016. It will serve as a point of contact in Pakistan for the German energy sector, for associations and for non-governmental organisations. In the longer term, it is to provide training and information and facilitate cooperation between partners from Germany and Pakistan.

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