Business As a Bridge to Peacebuilding

EUROPEAN UNION

Business as a Bridge
to Peacebuilding:

Voices from Pakistan

Findings of the Business Mapping Study for the
Plural Business Partnerships for Peace project

December 2012

Ambreen Waheed

Responsible Business Initiative

Project is funded by

EUROPEAN UNION

Citation:Ambreen Waheed “Business as a Bridge to Peaceauilding: Voices from Pakistan
Findings of the Business Mapping Study for the Plural Business Partnerships for Peace
project funded by European Union implemented by International Alert,
December 2012, Responsible Business Initiative, Lahore-Pakistan

Study commissioned by International Alert, UK
as part of the Plural Business Partnership for Peaceproject
funded by the European Union,
conducted by Responsible Business Initiative, Pakistan

Contents

Acknowledgements

Summary

Overview

National Context

PBPP and Business Mapping

Methodology

Analysis

Stakeholder Perspective

Business Feedback

Sectoral Review

Recommendations

Towards an Integrated Response

Annex

Acknowledgements

This business mapping study is perhaps among the first of its kind inPakistan. Designed as a snapshot of the context, challenges andopportunities that surround the relationship between a dynamicenterprise sector and an equally dynamic notion of peace, this mapping
study aims to situate potential peace-building initiatives in arealistic, current paradigm for stakeholders.In conducting the questionnaire-based survey with thirty companies,interviews with over seventy key informants and focus groups with morethan fifty participants, the RBI task team faced three distinctchallenges.

Firstly, the relatively tight timeline imposed by the project work-plan, which impacted the study’s approach, its design andthe extent and level of triangulation possible during the analysis.

Secondly, the subject being new to conventional day-to-day managementfor decision-makers in business, government, citizen sectororganizations, as well as in the media, significant time and efforthad to be allocated to introducing the topic of research, and buildinga level of conceptual understanding among respondents so thatinformation could be collected in a meaningful manner and issues of confidentiality addressed.Thirdly, thediversity and sectoral span of the respondents made the task ofgleaning cross-applicable findings and converting them into practicalrecommendations relatively complex.

None of these challenges could have been addressed by RBI on its own,had it not been for the confidence given by the chair and members of the project advisory committee, the openness demonstrated bycolleagues at each of the respondent organizations, the financial resources provided by the European Union, thetrustreposed in the exerciseby Alert asthe sponsoring partner,the enthusiasm displayed by the study task-team, and perhaps mostimportant, the personal encouragement received from several of the nation' mosteminent thought leaderswho gave of their time and wisdom.

This report would be incomplete without gratefully recognizing allthis support. The RBI team, led by Ambreen Waheed, and Dr.Faiz Shah, and comprisingHussain Tariq, Amina Anwar, Marriyum Khan and TalalSadiqexpress our sincere thanks.

It is a pleasure to share all this accumulated insight in theconfidence that it will inform the Plural Business PartnershipsforPeace project in creating significant impact through its aims.

Responsible Business Initiative
Lahore-Pakistan, December 2012

Business and the United Nations might seem to have different purposes...
But many of our objectives are the same: Building and supporting strong economies and communities, providing opportunities for people to pursue a livelihood, and ensuring that everyone can live in dignity.
Business cannot survive or thrive if societies fail or if people feel that their security is threatened.

Ban Ki-moon
Secretary-General of the United Nations

Summary

This mapping study aims to ascertain the readiness of business in engaging with peace-building initiatives by gauging their understanding of the various kinds of conflict and the issues that emerge for companies and their key stakeholders as a result. It further aims to review sectoral perspectives that drive specific responses, and perhaps most importantly, the attitudes and awareness that would drive effective utilization of peace-building knowledge, tools and processes necessary to identify and respond to challenges borne of conflict.

Given the short time prescribed and the scope and geographical span of the study, the research team designed a trans-sectional methodology that sought to cover as effectively as possible, various regions, sectors and stakeholders.A three-tiered regime– e-survey, focus groups and key informant interviews – collected data for an analytical framework comprising four grids.

Thirty companies were surveyed, based on regional and sectoral spread. Seventy-six key informants, reflecting stakeholder range and seniority were interviewed, and five province-level focus groups were conducted. Triangulation was achieved throughin-depth participant-level interaction within six identified businesses.The narrative of findings ensures that voices of the respondents are conveyed instead of the researchers’ interpretation. A twelve-pointaction agenda and the proposed vehicle to implement itemerged from this multi-layereddiscussion.

The study confirms the obvious reasons of conflict, such as absence of the rule of law, inequity, intolerance, poverty, and a lack of education, political will, coordinationand collaboration.

The key finding is the unanimity among regions, sectors as well as stakeholders, for integrating conflict mitigation and response mechanisms within management decision-making. This translates into a demand for information, guidelines and tools that allow companies to detect, identify, analyze and manage risk and conflict situations. This emerges from a realization that:

•Companies continue to struggle, often on their own, with conflict borne of insecurity and instability of the business environment, even though the nature of threats may vary. There is a well-articulated desire for long-term conflict mitigation and response strategies that can be implemented in collaborative ways, yet be flexible to specific locations and business contexts.

•Companies need to adopt proactive and innovative approaches in reaching out to key stakeholders that move beyond traditional appeasement to productive engagement and shared success. This includes formal and informal alliances with peers, opinion leaders, security service providers, professional groups, government, and citizen sector organizations.

•Companies recognize that demonstrating social responsibility through community investments or ongoing engagement with stakeholders, establishes a viable foundation to build social capital –inside and outside the company – that can help pre-empt as well as react to threats or conflict situations. Peace-building skills for staff and outreach to stakeholders are required.

•Companies understand the drivers of conflict, and frequently react appropriately to threats. However, the high cost of miscalculation and the absence of effective skills and preparation is felt strongly when companies act on their own. A consistent strategy and a common resource-pool to draw on in times of need must be built and managed as a risk management device.

Ideas coalesce around a 9-point strategy that can be developed and rolled out through an independent, professionally runresource-groupseeded and guided by key stakeholders.The proposal calls for this resource-group to be specialized in conflict mitigation and peace-building, charged with developing and offering a portfolio of action research, trainings, advice and network linkages reflecting local experience as well as international insights to companies, chambers, business associations, labour, media, academia, government and the citizen sector.

Overview

Pakistan these days, finds itself often in the headlines because of its unfortunate intersection with what has come to be known as the "war on terror". The national media constantly refers to over 35,000 lives lost in continuing violence across communities as well as the battlefront, and the political failure of its national institutions to respond effectively to the situation.

The Pakistan Economic Survey 2010-11 estimates that this “loss of peace”has cost the country almost 67.9 billion US dollarssince 2001. Add to this the cost ordinary people continue to pay through loss of livelihoods, shrinking business opportunities, and sharply affected economic growth from the spill-over of expanding conflict, and the cost looms even larger, permeating quality of life in every aspect.

The business sector suffers most clearly at two levels. Firstly, the cost of doing business in an insecure economic environment rises in response to increasing threat perception among clients, devaluing currency, higher investment needs for process-level security, and greater workforce instability – to name a few key factors – causing loss of competitiveness.

Secondly, the general collapse of order magnifies threats to management controls that would otherwise operate normally within business environments. From supply chains to business processes, to distribution channels, companies –whatever size or sector they represent – become more vulnerable to internal conflict that impacts quality, work processes, decision-making, and outcomes.

The situation was not always like this. In fact, right through the first years of the new millennium, Pakistan remained among the regions four fastest growing economies alongside China, India and Vietnam. Its average annual growth rate approached 6% between 2000 and 2007, with budget deficits limited to around 1.5% of GDP. The Pakistan Economic Survey 2006-7indicated “robust growth in agriculture, manufacturing and services” over “half-a-decade of strong, stable, resilient and broad-based economic growth”. The contribution of Services climbed to 60% of the reported economic growth during this period, with domestic demand and investment (53%) exceedingconsumption (50%). Food prices remained among the lowest in the region, with job growth and an expanding middle-class making Pakistan a “high mean, low variance economy”.

This economic stability began coming under stress as violence in neighbouring Afghanistan spilled over more and more, first into Pakistan's tribal borderlands and then into major cities like Peshawar, Quetta and Karachi. Today, Pakistan's economic indicators show a downturn, matched in equal measure by deteriorating quality of life. The most important effect has been on livelihoods, particularly in the informal and SME sectors that sustain a significant proportion of jobs and buttress economic resilience.

Exacerbating this trend has been a succession of cataclysmic natural disasters. The 2005 Kashmir Earthquake was followed by massive flooding of the Indus Basinduring 2010 and 2011 successively. Thesedisasters have cost Pakistan 22.4 billion US dollars, according to estimates from the World Bank, Asian Development Bank and the US State Department. Damage from the earthquake was estimated at 5.2 billion US dollars. The 2010 floods left behind 10.8 billion US dollars in losses followed byanother 6.4 billion US dollars in2011.

Disasters have on occasion tested the resilience of Pakistan’s densely packed population, but nothing has sapped the country's economic potential as much as the snowballing impact of violent conflict that manifests itself in prolonged military operations, just as it does in systematic but random terror attacks in heavily populated urban centres. Pakistan Human Rights Commission reports 2.7 million people internally displaced by war, and another 7 million by the floods. For the first time since 1979, internally displaced citizens outnumber foreign refugees from the Afghan war. This influx has strained the already fraught civic infrastructure as well as inter-communal relations. Peshawar, Karachi, Quetta and cities that have received refugees, also report violence, particularly between culturally or religiously diverse communities.

More ominously, the combined effect of violent conflict and natural disasters breeds a feeling of helplessness in the average citizen who relates the ineffective government response to various crises to an absence of the rule of law. This, as well as aspect has implications on the business environment.

National Context

Major Conflicts and Their Risks

Pakistan has increasingly become vulnerable to conflicts that are essentially external to the business sector itself, but risk economic well-being because of their impact on the country’s business environment. A number of writings identify two fundamental and persistent factors that contribute to disrupting peace in Pakistan’s diverse regions, which have plagued the country since independence in 1947, and often appear entwined with its fight against militancy.

The first such conflict emerges from Pakistan’s increased demand for water, while having to negotiate common water sources with India. Ideally, given their respective needs, it would be pragmatic for both countries to cooperate in developing and sharing the benefits of Himalayan water resources, but given their crisis-prone relationship and unresolved border dispute, this remains elusive, and adds enormous socio-economic costto both countries.

The second one stems from what is generally seen as marginalization of less developed regions and provinces by an over-centralized federal framework, particularly in Balochistan where an insurgency continues to enfeeble democratic institutions and fuel anti-national sentiment. This has direct economic implications apart from the human and material cost of battling insurgents or providing security to vulnerable populations, because the significant mineral wealth of the region cannot be utilized for development. In fact, analysts identify the competition to control mineral wealth as a key contributor to the risk of conflict in Balochistan.

Laid over these two primary underlying conflicts are other intractable ones, which are frequently conflated to further confound any attempt for peace-building. One is the worsening relationship between religious extremists and a traditionally secular state apparatus, stemming from the interpretation of ‘Islamization’ efforts that Pakistan has experimented with throughout its history and its relationship with western countries. This attritional relationship is easily exacerbated by concurrent geopolitical influences, such as US drone attacks, and continues to feed militancy, inter-ethnic disharmony and helplessness of state institutions in the face of such complex threats.

Another one is the unresolved settlement of millions of Afghan refugees who came in the wake of the Russian invasion, but have not gone back because of the continued instability in their country. A number of domestic conflicts have been attributed by researchers to issues either faced by refugees or created by refugees, having led to social unrest. These range from property and resource disputes, employment and participation in economic activities to criminal activities and militancy.

A third pervasive threat of conflict surrounds environmental security. Research points to macroeconomic instability, low social sector allocations, policy neglect, low allocations for natural resource conservation and low use of environment-friendly technologies as conflict risks. Similarly, food insecurity, linked closely as it is to poverty and disease lowers quality of life and increases risk to conflict by creating vulnerabilities that have economic, political as well as strategic ramifications.

Effect of National Conflicts on Business and Business Role

It is difficult to see how the business sector can remain immune from the multifarious and complex factors fuelling the risk of conflict in Pakistan. Because a large part of the discontent that is evident flows from unequal and inefficient distribution of critical resources – from water to energy to supplies – caused primarily by poor governance and an entrenched patronage system, there are bound to be interests at play that work to skew level playing field for genuine entrepreneurs. Unfair allocation and exploitation of resources is woven closely with corruption and tax evasion, which scare away businesses that cannot operate in such environments. It affects investments in business development, hampers day-to-day operations, and affects human rights and labour standards. It further compounds a vicious cycle that contributes directly to civil strife, poor human development, and in a number of cases has instigated communities to revolt.

Available research indicates a focus on youth and their role as catalysts in nation-building. There is discussion on how best to engage young people through giving them awareness and tools that enable them to create dynamic pressures upon national development. This emphasis is not new, but previous large-scale initiatives have had limited business sector involvement. A number of small-scale programs that are referred to may not have had sufficient long-term impact. Given that policy interventions for youth have been limited in both vision and substance, there appears room for further discussion on practical steps that work towards a greater understanding of the complex issues that young people face in a traditional society, surrounded by modern technology, but beset with limitations emerging from isolation, lack of representation, deteriorating educational standards, insecure livelihoods, and diminished options for self-actualization. Based on such discussions, there appears to be a strong case for businesses to invest in human development, focusing mainly on occupational trainings that create economic opportunity for youth, but also emphasizing the importance of peace-building for realizing their potential.

Over the last decade, particularly, there is rising acknowledgement within civil society, government and community organizations of the important role that the business sector plays as an agent of socio-economic and political change. The expanding relevance of initiatives clubbed under corporate social responsibility (CSR) indicates the readiness of businesses to participate in activities that are not strictly in their core domain, but strengthen a company’s licence to operate. These activities that were traditionally confined to welfare contributions or sponsorships continue to evolve into more sustainable social investments driven by fundamental shifts in business values that now emphasize social responsibility as integral to profit-making. More and more such examples are now visible.