DAWN Editorials - 27th february2025

[faheemustad]

The challenge before banks

THE gap is huge, to say the least. And those who own Pakistani banks, and the bankers who work for them, do not seem to be cognisant of — let alone prepared for — the challenges being unleashed by rapid tech disruptions led by the emergence of AI. Not that they do not see what is coming — it is just that the banking model that makes them colossal profits through risk-free lending to the sovereign or a few scores of large corporations has made them complacent. But for how long can they survive by sticking to this model, and refusing to adjust to new socioeconomic realities?

While industry leaders focused on the massive tax burden of 54pc on the banks and the billions of rupees taken from them by the FBR in the name of windfall levy at the recent Pakistan Banking Summit in Karachi, others kept reminding them how destructive it could be for the banking industry to delay the adoption of digital technology and AI, as well as investments in human resource, infrastructure, and product development to meet future demands. The way we do banking today will not exist in the next 10 years, and only those will survive who are capable of adopting new technologies.


There is no doubt that the banking industry has transitioned massively from being a heavily state-controlled sector to a privately owned business in the last three-and-a-half decades. Since then, this sector has grown phenomenally, helped governments finance their deficits, invested in digital space in line with the increase in the use of smartphones and mobile apps, and so on.

However, at the same time, the profit-oriented bankers have ignored various sectors of the economy, including smallholder farmers, housing, small businesses, women, and others who do not have collateral to pledge for a loan. Thus, a very large portion of rural and even lower-income urban populations remain outside the financial system and are dependent on expensive informal channels for funding needs. The way the banking sector has been restructured in the last few decades has come under scrutiny in recent years because of the failure to support the growth of those sectors of the economy that needed their help.

Indeed, the summit touched upon all these issues along with the challenges of future tech disruptions. But a conference or two is not enough to deal with all these problems. It is crucial for the central bank to engage with industry on a regular and proactive basis to help it navigate new and old obstacles to ensure that banks play an invigorating role in the growth and development of hitherto ignored sectors of the economy. Conferences can only underline the issues; they cannot tackle them.

Published in Dawn, February 27th, 2025


Torkham tension

CONTROVERSY over demarcation of the common frontier is one of the key obstacles standing in the way of better Pakistan-Afghanistan relations; in fact, it has poisoned ties since this country’s independence. Disputes often lead to the closure of border crossings, causing suspension of trade and people’s movement. In this regard, the Torkham crossing has been closed for the past five days after the Afghan Taliban forces reportedly started building a bunker in a disputed area. Such closures have become far too frequent, as the underlying factors fuelling bilateral differences have not been adequately addressed. Officials say the closure has resulted in losses worth millions, while thousands of people have been unable to cross. Hundreds of workers depend on border trade to make a living, and have not been able to secure work due to the shutdown. Low-level negotiations to reopen the border continue, but nothing concrete had emerged at the time of writing.

The Torkham issue must be seen through the wider lens of Pak-Afghan relations. As ties with Kabul’s Taliban rulers — who, like their predecessors, refuse to recognise the Durand Line as the frontier — remain strained, hostility is reflected at the border. The problem is that there is no proper exchange of information, so when one side starts construction in a disputed area, the other takes umbrage. This can often lead to the exchange of fire and a volatile situation. In order to resolve the issue permanently, a high-level border management mechanism is required. For this, the Afghan side has to recognise the Durand Line as the frontier and that Pakistani sovereignty over the adjoining area is not up for discussion. Beyond this, once the border is clearly demarcated, such disputes should not arise. The fact is that trade is essential to the local economy, and lengthy closures can have a devastating impact on Pakistan’s own people as well. Moreover, Pakistanis also have land and business interests across the border, and closing the frontier cuts them off from their assets. Therefore, the state needs to handle this situation with alacrity and wisdom. A boundary management mechanism with representation from both states should be empowered to resolve matters before they balloon into larger disputes, as the area’s economy cannot afford frequent shutdowns, while border skirmishes also imperil peace.

Published in Dawn, February 27th, 2025


Weak link

KARACHI — economic powerhouse, cultural melting pot, and bustling metropolis of over 20m souls. There is much that distinguishes it among Pakistan’s urban centres. Sadly, it has also earned the distinction of being a crucial battleground in our fight against polio. Recent data shows that this year the city has already seen over 41,800 vaccine refusals — 97pc of all refusal cases in Sindh. More worrying are reports that some polio workers overstate vaccinations to ensure higher compensation, leaving more children vulnerable to the virus. Nevertheless, there has been some progress. Even the current refusal numbers mark a substantial improvement from the general situation five years ago. The government’s efforts have focused on community engagement initiatives, mobilisation of influencers, and involvement of health facilities, schools, seminaries and mosques in advocacy campaigns. One promising development in Karachi’s latest polio drive is the use of fractional Inactivated Poliovirus Vaccine which enhances immunity when combined with oral polio vaccine. The success of this approach should be closely monitored and, if effective, expanded to other high-risk areas.

Karachi’s dense population, continuous movement of people, and the persistent detection of polio in environmental samples means there are high transmission risks. A key challenge that keeps major progress at bay is mistrust in public health initiatives. The government must strengthen community engagement through direct dialogue with parents who refuse vaccination, providing them with factual information to counter conspiracy theories. It must also overhaul the compensation structure for vaccination teams, shifting from quantity-based incentives to quality-focused metrics that reward accurate reporting and genuine community engagement. Digital tracking and community feedback systems should be implemented to ensure data integrity. Our success in eradicating polio depends on eliminating these last pockets of resistance. Karachi should not be a weak link in this fight.

Published in Dawn, February 27th, 2025