In Pakistan, government attempts to crowdfund $12bn for dams – By Asad Hashim (aljazeera.com) / Sept 19 2018
Government launches donation drive analysts say is unlikely to succeed, raising questions of how funds will be used.
Islamabad, Pakistan – Pakistan’s government has launched an ambitious $12.4bn crowdfunding drive to build two major hydroelectric dams, a move analysts say is unlikely to succeed and could leave citizens with no recourse to recoup donations if the goal isn’t met.
The drive, launched by populist Chief Justice Saqib Nisar in July, has so far gathered $29.1m. If donations continue at this rate, it will take 87 years for Pakistan to reach the initial cost estimates.
Large multi-purpose dams tend to overrun cost estimates by an average of 63 percent, according to a study by the World Commission on Dams.
Nevertheless, donations have been pouring in, buoyed by the backing of newly elected Prime Minister Imran Khan, who has supported the campaign and called on citizens at home and overseas to donate heavily.
“It will succeed because we finally have a person who has proved himself,” said Momina Aslam, an Islamabad resident who said she voted for Khan and has donated to the dam fund.
Pakistan’s powerful military – which has ruled the country for roughly half of its 71-year history – has also backed the drive, with army chief General Qamar Javed Bajwa handing over a cheque worth $8.1m to the chief justice earlier this month.
The dams in question, the 4,500MW Diamer-Bhasha hydroelectric project and the 800MW Mohmand hydroelectric dam, are both located in northern Pakistan.
Construction on the $2.5bn Mohmand project has been under way since 2012, funded so far by the Pakistani and French governments.
Work on Diamer-Bhasha, by far the larger project at a cost of $9.9bn (about four percent of Pakistan’s GDP), has yet to begin.
‘Not feasible’
Across Pakistan, messages imploring one to donate to the dam bombard citizens at every corner.
Banners fly outside bank branches, which have been ordered by the Supreme Court to set up accounts to accept funds from the public. Donations are also accepted by SMS via mobile phone service providers.
On television, news channels have been instructed to run government-produced advertisements and telethons promoting the drive. In one advertisement, a child’s voice makes an emotive plea, as images show a dried-out river bed.
Criticism of the funding drive, meanwhile, is tantamount to sedition, according to Nisar, who said last week he will charge those who publicly oppose the project with “high treason”.
Pakistan’s media regulator, too, has warned channels not to criticise the effort.
Questions, however, persist, particularly on whether the drive is a feasible way to fund a major infrastructure project.
“This is not really feasible at all,” said Khurram Husain, an economic analyst, and one of the first journalists to raise the alarm at the potential folly of the donation drive.
“The amounts involved are far too large, and raising them through donations is far too slow a process and likely to take too long to get to even initial targets.”
Husain said the government should have undertaken a more thorough review of options available for infrastructure finance, including the issuance of bonds, redirecting existing expenditures or approaching international donor organisations.
In 2011, Ethiopia launched a similar public drive to construct the $5bn Grand Renaissance Dam on the River Nile.
While it reached its target, the majority of funds were generated from a mix of bonds and Chinese infrastructure financing.
It is also unclear what the fate of the money donated will be if the targets to build the dams are not met.
“What happens to the funds is something we don’t know,” said Husain. “We don’t even know how they intend to spend this money.”
A Supreme Court spokesperson did not offer comment when asked how the fund is being administered.
Crowdfunding infrastructure?
In the realm of crowdfunding civic infrastructure, what Pakistan is attempting has never been successfully done before, analysts say.
“If they want it to be strictly crowdfunded, and are not incentivising to bring in [international aid organisations] for more than 70 percent of it, it is very, very difficult,” said Kate Gasparro, a researcher at Stanford’s Global Projects Centre who studies initiatives aimed at crowdfunding civic infrastructure.
Successful crowdfunding of civic infrastructure projects, she says, tends to be aimed at specific aspects of a project, and is usually undertaken in the design phase, not for actual construction.
“This is very atypical,” she told Al Jazeera. “Usually civic crowdfunding is used just for the design aspect of a project. It is used for financial and social support at the early stage so you can understand what the community wants.”
Civic infrastructure projects that have been successful at raising the required capital tend to be in a range between $30,000 to $70,000, she said, and are usually much smaller in scope, such as funding bicycle lanes on existing roads, or renovations of community centres.
One of largest such projects was the renovation of the Madeira terraces, in the United Kingdom town of Brighton, where citizens donated more than $600,000 for the partial renovation of a seaside boardwalk.
Pakistan’s Diamer-Bhasha and Mohmand dams, however, require more than 20,000 times that amount.
Moreover, most civic infrastructure crowdfunding initiatives in other countries work through an intermediary, such as Spacehive and ioby. Pakistan’s approach of soliciting donations directly from citizens leads to inherent risks, Gasparro says.
“It creates a risk for what happens to the money if they don’t reach the goal, or even how the money will be released at all.”
Why donate?
So, given the risks and the unlikelihood that the drive will ever reach its goal, why are citizens giving at all?
“It is not just about the money, it’s about creating a sense of togetherness, that we all need to do something for the country, together,” said Suhela Asif, 39, an aid worker from Islamabad.
Asif says she was aware the fund was unlikely to ever reach its goal, but she intended to donate anyway.
Seen from that perspective, analysts say it makes sense why citizens would want to contribute, regardless of the risk.
“People are contributing because there is a national fervour for a project that attempts to address a problem [a countrywide water shortage] that people have obviously realised is a serious one,” said Umair Javed, a political scientist at the Lahore University of Management Sciences.
“It’s like any patriotic fervour, so the arguments against it can be dismissed as scepticism or cynicism and … people aren’t really interrogating their decision to donate.”
‘Dark side’ of donations
There is, however, a potentially darker side to the donation drive.
Last month, the chief justice ordered a litigant to pay 1 million Pakistani rupees ($8,115) into the dam fund if he wanted his request for an adjournment to be granted.
In another case, a group of chiefs of medical colleges – whose case was being heard by the Chief Justice – made a donation of nearly 17 million Pakistani rupees ($137,500) to the fund. Soon after, that case was disposed of, with the Chief Justice reversing his previous opposition to a fee rise.
Major donors to the fund so far have included banks, an association of foreign exchange dealers and a major real estate developer, many of whom have cases pending before the Supreme Court, or are in negotiations with the government.
“One hopes that various litigants are not seeing their contributions to the dam fund as ways of softening their image before the court,” said Husain, the economic analyst.
Not every citizen, meanwhile, is on board with the drive.
“Why is it that every time a catastrophe happens, the people have to pay for it?” says Meher Azmat, 34, an architect from Lahore who voted for Khan, but opposes the donation drive.
“I think the public has suffered enough over the years, this government needs to come up with sustainable solutions. This is just stupid.”
