The Neo-Liberal Urban Development Paradigm and Civil Society Responses in Karachi, Pakistan


The Asian Coalition for Housing Rights (ACHR) is an Asia-Pacific Network of professionals, NGOs and community organisations. Its headquarters are in Bangkok. The decision to create the ACHR was taken in 1987 and was formalised in 1989. Its founding members were professionals and NGO and community projects working on housing and urban issues related to poor communities. Since then, through an orientation and exchange programme between innovative projects and interested communities and professionals, the Network has expanded throughout South, South-East and East Asia. Links have also been created with Central Asia and Africa through the savings, credit and housing programmes of the Shack Dwellers International.

The ACHR senior members have been very conscious that conditions at the local and international level today are very different from what they were in 1989 when the ACHR was created. They are also conscious that these conditions are affecting the shape and form of our urban settlements and the living conditions of the poorer sections of society. As a result of this consciousness, the ACHR in 2003 decided to carry out a research on a number of Asian cities so as to identify the process of socio-economic, physical and institutional change that has taken place since the ACHR was founded; the actors involved in this change; and the effect of this change on disadvantaged communities and interest groups. Eight Asian cities along with researchers were identified for the purpose of this research. The names of the researchers and the titles of their reports from which this paper is derived are given in Appendix – 1 and the objectives of the research and the terms of reference for it are given in Appendix – 2. All researchers did not strictly follow the terms of reference. However, an enormous amount of material regarding these cities has been generated and is available with the ACHR Secretariat. The research and logistics related to it have been funded by German funding agency Misereor.

It was decided that the cities chosen for the research should be as different from each other as possible in political, social and physical terms and that all the researchers should be local people. A synthesis of the case studies has been prepared by David Satterthwaite, Senior Fellow of the International Institute for Environment and Development (IIED) UK and published by the ACHR under the title “Understanding Asian Cities”. The cities chosen for the research were: Beijing (China); Pune (India); Chiang Mai (Thailand); Phnom Penh (Cambodia); Karachi (Pakistan); Muntinlupa (Manila, Philippines); Hanoi (Vietnam); and Surabaya (Indonesia).

Findings of the Research

The research has identified many differences between the eight cities. However, there are a number of strong similarities which are the result not only of how these cities have evolved historically but also of the major changes that have taken place in the world since the late eighties. It has been identified that these changes are the result of structural adjustment, the WTO regime and the dominance of the culture and institutions of globalisation in the development policies (or lack of them) at the national level.

The most important finding of the report is that “urban development in Asia is largely driven by the concentration of local, national and increasingly, international profit-seeking enterprises in and around particular urban centres”; and that “cities may concentrate wealth both in terms of new investment and of high-income residents but there is no automatic process by which this contributes to the costs of needed infrastructure and services”1.

The more negative aspects of the changes identified in the reports that adversely affect the lives of the more disadvantaged groups in Asia’s cities are given below.

  • Definitions of what is urban are determined by political considerations that seek to support the political and economic status-quo in favour of more powerful sections of society2.
  • Globalisation has led to direct foreign investment in Asian cities along with the development of a more aggressive business sector at the national level. This has resulted in the establishment of corporate sector industries, increased tourism, building of elite townships with foreign investment, gentrification of the historic core of many cities and a rapid increase in the middle classes. Consequently, there is a demand for strategically located land for industrial, commercial, tourism and middle class residential purposes. As a result, poor communities are being evicted from land that they occupy in or near the city centres, often without compensation, or are being relocated formally or informally to land on the city fringes far away from their places of work, education, recreation and from better health facilities3. This process has also meant an increase in land prices due to which the lower middle income groups have also been adversely affected and can no longer afford to purchase or rent a house in the formal land and housing market.
  • Due to relocation, transport costs and travel time to and from work has increased considerably. This has resulted in economic stress and social disintegration as earning members have less time to interact with the family. Incomes have been adversely affected since women can no longer find work in the relocation areas and children can no longer go to school4.
  • Due to an absence of alternatives for housing, old informal settlements have densified and as such living conditions in them have deteriorated in spite of the fact that many of them have acquired water supply and road paving and have better social indicators such as higher literacy and better infant mortality rates5.
  • Local governments in all the research cities have evolved an “image” for their cities. This image is all about catering to the automobile, high-rise construction and gentrification of poor areas. For this they are seeking foreign investment for building automobile related infrastructure and elite townships. Much of this is being implemented through the Build-Operate-Transfer (BOT) process which is two to three times more expensive than the normal local process of implementation. Foreign investment has also introduced foreign fast food outlets, stores for household provisions, mobile phone companies and expensive theme parks and golf courses. Much of this development has pushed small businesses out of elite and middle income areas and occupied public parks and natural assets of these cities for elite and middle-middle class entertainment and recreation at the expense of poor and lower middle income communities.
  • An increase in the number of automobiles in Asian cities has created severe traffic problems and this in turn increases time taken in travel, stress and environment related diseases. Much of the financing of automobiles is being done by loans from banks and leasing companies6. New transport systems (such as light rail) that have been or are being implemented do not serve the vast majority of the commuting public and in most cases are far too expensive for the poor to afford7.
  • As a result of the culture of globalisation and structural adjustment conditionalities, there are proposals for the privatisation of public sector utilities and land assets. In some cities the process has already taken place. There are indications that this process is detrimental to the interests of the poor and disadvantaged groups and there is civil society pressure to prevent privatisation and to reverse it where it has taken place8. An important issue that has surfaced is as to how the interests of the poor can be protected in the implementation of the privatisation process.
  • The culture of globalisation and structural adjustment has also meant the removal or curtailing of government subsidies for the social sectors. This has directly affected poor communities who have to pay more for education and health. In addition, the private sector in education, both at school and university levels, has expanded creating two systems of education, one for the rich and the other for the poor. This is a major change from the pre-1990s era and is having serious political and social consequences as it is further fragmenting society into rich and poor sections.
  • As a result of the changes described above, there has been an enormous increase in real estate development. This has led to the strengthening of the nexus between politicians-bureaucrats and developers due to which building bye laws and zoning regulations have become easier to violate and due to which the natural and cultural heritage assets of Asian cities are in danger or in the process of being wiped out.
  • There are multiple agencies that are involved in the development, management and maintenance of Asian cities. In most cases, these agencies have no coordination between them. In addition, in most cities there are central government interests that often over ride local interests and considerations.
  • In all cities but two governments that are already heavily indebt are seeking loans from International Financial Institutions (IFIs). Development through these loans is exorbitantly expensive, loan conditionalities are detrimental to the development of in-country technical and entrepreneurial expertise and to the evolution of effective municipal institutions 9.
  • In most cases IFI and bilateral agencies funded projects seldom have any coordination between them and/or with national programmes resulting in duplication and a waste of resources10.
  1. David Satterthwaite; Understanding Asian Cities, ACHR, October 2005
  2. For example, the definition of urban in Pakistan was a settlement that had a population of 5,000 or more and had “urban characteristics” related to density and employment. This was changed for the 1981 and  1998 Census to a settlement that had urban governance institutions. As a result, 1,462 areas having a population of more than 5,000 were no longer classified as urban in 1981 Census. (Reza Ali, How Urban is Pakistan, 1999)
  3. ACHR Monitoring of Evictions in seven Asian countries (Bangladesh, China, India, Indonesia, Japan, Malaysia, Philippines) shows that evictions are increasing dramatically. Between January to June 2004, 334,593 people were evicted in the urban areas of these countries. In January to June 2005, 2,084,388 people were evicted. The major reason for these evictions was the beautification of the city. In the majority of cases, people did not receive any compensation for the losses they incurred and where resettlement did take place it was 25 to 60 kilometres from the city centre. (Ken Fernandes; Some Trends in Evictions in Asia; ACHR, March 2006)
  4. In Karachi, due to the relocation of over 14,000 households for the building of the Lyari Expressway, the schooling of more than 26,000 children have been disrupted. (Lyari Expressway: Citizens’ Concerns and Community Opposition; Urban Resource Centre, Karachi, 2005. In the Philippines, they have decided that evictions will only take place after the final exams have taken place in schools
  5. In Pune (India), in the settlements surveyed for the report, densities in the last 25 years have increased by over 300 percent without any major improvement in infrastructure and housing resulting in massive environmental degradation and deterioration in living conditions
  6. For example, 502 vehicles have been added to Karachi per day during the last financial year. It is estimated that about 50 percent of these have been financed through loans from banks and leasing companies who have never had as much liquidity as they have today. This means that loans worth US$ 1.8 billion were issued for this investment which could easily has been utilised for improving public transport systems.
  7. Cities such as Bangkok, Manila, Calcutta have made major investments in light rail and metro systems. Other Asian cities are following their example. However, these systems are far too expensive to be developed on a large enough scale to make a difference. Manila’s light rail caters to only 8 percent of trips and Bangkok’s sky train and metro to only 3 percent of trips and Calcutta’s metro to even less. The light rail and metro fares are 3 to 4 times more expensive than bus fares. As a result, the vast majority of commuters travel by run down bus system (for details, see Geetam Tiwari; Urban Transport for Growing Cities; Macmillan India Ltd., 2002 and Arif Hasan; Understanding Karachi’s Traffic Problems; Daily Dawn, January 29, 2004.)
  8. The privatisation of Manila’s Water Supply System has benefited the rich and upper middle income areas and has had an adverse effect on lower middle income and lower income areas. The privatisation of  Karachi Electric Supply Corporation has created immense problems of power distribution and there is now public pressure to de-privatise it.
  9. According to research carried out by the Orangi Pilot Project in Karachi, the government develops infrastructure at 4 to 6 times the cost of labour and material involved. When loans are taken from IFIs the cost goes up by 30 to 50 percent due to foreign consultants and related purchase conditionalities. Where an international tender is also a condititionality the cost can go up by an additional 200 to 300 percent. Thus something whose cost is US$ 1 in material and labour terms is delivered at a cost of US$ 20 to 30. According to a paper by the Cambodia Development Resource Institute titled “Technical Assistance and Capacity Development in an Aid-Dependent Economy, Working Paper 15, Year 2000”, in 1992, 19 per cent of all aid money was spent on technical assistance. In 1998, it had increased to 57 per cent.
  10. For example, there are currently seven IFI funded studies being carried out for Karachi who have little or no interaction with each other. These studies will result in a proposal for IFI loans. According to a report “The Asian Development Bank: In Its Own Words: An Analysis of Project Audit Reports for Indonesia, Pakistan and Sri Lanka, prepared by ADB Watch, July 2003”, over 70 per cent of all projects funded by the ADB have been unsuccessful and/or unsustainable.

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