In the 1960s, Islamabad was slowly made the capital of Pakistan and now there seems to be talk of naming Karachi as Pakistan’s second capital, as so many other nations have dual capitals too. Regardless of whether Karachi can or will become Pakistan’s capital once again, there is no doubt that Karachi is cemented as Pakistan’s sole financial capital with majority of Pakistan’s economic activity residing in Karachi – estimates state that Karachi generates up to 25% of Pakistan’s GDP. However, the recent surge of development in other parts of Pakistan especially Lahore and Islamabad have challenged the future of Karachi as Pakistan’s financial capital, but could it be a real possibility?
Karachi stereotypes
The image of Karachi has slowly been deteriorating with many people within and outside Pakistan viewing Karachi as a city with mass crime, poor roads and infrastructure, immense land and air population, and rampant political corruption. Events like the recent theft of Rs. 7 billion worth of wheat (from Government facilities) do nothing but worsen the image of Karachi and support the stereotypes surrounding Karachi. Although, stereotypes are largely exaggerated, there is no denying that in the case of Karachi, many of these stereotypes hold some truth. As of 2014, Karachi was considered the 6th most dangerous city in terms of crime but now its ranking has dropped to 93rd thanks to efforts of the federal government on cracking down serial criminals and the MQM – a political party considered to be one of the most corrupt in Pakistan.
Moreover, Karachi has some of the highest air pollution levels all around the year (as per AQI index), and if you do happen to visit Karachi, the first thing you will notice is the noticeable amount of trash lying on roads. Additionally, the Pakistan’s People Party (PPP) for long has ruled the province of Sindh (of which Karachi is capital) and plenty of people hold PPP in negative light. PPP has been riddled with corruption investigations and charges since 1990 when its ruling term was ousted over allegations of corruption. Asif Ali Zardari has been at the forefront of these allegations and over the years, many rumours have become popular among Pakistani people that ruin the image of Zardari and PPP.
These negative stereotypes produce a bad outlook of Karachi and Pakistan when companies think about expanding to Pakistan. The US Department of Agriculture reported in 2019 that majority of American agriculture-related companies are highly reluctant to visit Pakistan due to the negativity surrounding Pakistan, especially Karachi and Sindh. The fact that these stereotypes are having a profound economic impact on Pakistan has led to suggestions that companies should move their headquarters to Islamabad or Lahore.
Improvement of Lahore and Islamabad
While Karachi’s image has deteriorated, the reputation of Lahore and Islamabad has slowly and quietly improved. During the rule of Pakistan Muslim League-Nawaz (PML-N), Punjab went through rapid development because of increased spending in the province which meant that the major cities of Islamabad and Lahore benefited primarily. New roads and highways were built to connect cities to towns/villages, campaigns to reduce land pollution and increase waste management were introduced, and corruption and crime significantly decreased.
The results are that Lahore and Islamabad have become highly attractive destinations for richer people in towns or villages moving to cities, as well as retirees of middle and upper classes. An ex-resident of Karachi who now resides in Lahore told Crux,
“I lived in Karachi up until 2010 and if I could have got a good paying job in Lahore or Islamabad, I would have left much earlier. A lot of things went wrong in Karachi that were out of my control. I was dealing with mafias who would come to my house for racketeering and I could not report them because the local police were being bribed too. There was no suitable water transportation in Karachi either at the time. The water crisis had become a monopoly as you had to call expensive tankers to transport water to your house and pay them extra to come on time too. When I moved to Lahore, the first thing I noticed was the cleanliness and greenery which brought plenty of peace of mind. The additional benefit of living in Lahore is how easy it is to travel to neighbouring places thanks to the ring road.”
The increased movement of people from neighbouring villages and towns to Lahore and Islamabad has meant that Lahore and Islamabad are receiving more skilled labour to fill labour demands, and more money is pouring into Lahore and Islamabad from villages and towns. All of this collectively means that Lahore and Islamabad are becoming more attractive cities than Karachi for foreign investment, and potential multinationals looking to expand to Pakistan may open headquarters in Lahore and Islamabad rather than Karachi.
Why Islamabad replaced Karachi as Pakistan’s capital
In the 1960s, Islamabad was named as Pakistan’s new capital due to various strategical and geopolitical reasons. Karachi is generally considered as an easy attacking threat to Pakistan as it lies close to the South coastal border of Pakistan. This means that in the case of a war against India or any other nation, the Navy of the opposing nation could easily conquer Karachi – conquering the capital is a huge blow in war. On the other hand, Islamabad is surrounded by Himalayan hills making it an excellent location to defend a city. Additionally, Islamabad is located centrally in Pakistan giving it easy and equal access to other cities while being more difficult to get to for enemies if Pakistan is under attack.
Proponents of making Islamabad the financial capital of Pakistan cite similar reasons for their cause. If Pakistan were to be under attack, Karachi would easily be taken down which would be a massive hit to Pakistan financially, so moving financial activities to more central cities like Islamabad would be better. Other experts advocate for more development of Balochistan as the southern ports of Pakistan could be expanded (greater coastal distance to cover for enemies), while Balochistan is highly rich in natural resources so the Pakistani economy’s reliance on imported natural resources can be reduced.
Why Karachi remains important
Karachi is unlikely to be overthrown as Pakistan’s unequivocal financial capital unless rapid development and financial progress occurs in Balochistan. Karachi currently contributes to about 60% of Pakistan’s federal tax revenue due to its port which unloads machinery and other major capital equipment. Furthermore, most major financial institutions and businesses have their headquarters placed in Karachi for the very reasons that it continues to be a financial hub and has an existing port which imports and exports majority of goods in Pakistan. The Gwadar Port and utilisation of resources in Balochistan could be the sole challenger of Karachi’s reign as the financial king of Pakistan, but political reasons, for long, have obstructed the progress of Balochistan.
We could see another city become the financial capital of Pakistan, but that will not happen soon unless a highly efficient government which can overcome political-ethnic issues comes into power.
