Ahmad Nawaz Sukhaira
Whenever Pakistan’s economic growth is discussed, exports inevitably come into the conversation. For decades, the same chorus has been heard from policymakers, industry representatives, and business leaders: exports need more subsidies, cheaper loans, lower interest rates, and a weaker currency. On the surface, these demands appear logical, aimed at making Pakistani products more competitive in international markets. However, my observations, supported by years of engagement with government and industry, suggest that the real story is far more complex, and far more troubling.
Pakistan’s export sector is dominated by a small but extremely influential group of exporters who, through lobbying and political influence, have shaped government policies to their advantage. While these actors benefit enormously from state support, their actions have not led to sustained growth or diversification in exports. On the contrary, much of the country’s export potential remains underdeveloped, and the overall system encourages dependency rather than competitiveness. In my experience, this creates a cycle where policy incentives are misused, leaving the economy’s broader potential untapped.
One of the most striking examples of policy misuse is the Export Refinance Facility (ERF). This scheme was originally designed to provide exporters with affordable financing to help them scale up, invest in modern technologies, and improve product quality. Unfortunately, over the years, ERF has largely been repurposed by influential exporters as a mechanism to secure cheap bank loans. Rather than incentivizing innovation or value addition, the program has often been used to reduce operational costs for businesses that already enjoy market dominance. As a result, the scheme’s core purpose, to enhance competitiveness and encourage diversification, has been largely sidelined.
This issue is not a matter of individual ethics alone. It is systemic. Government policies have consistently favored short-term financial relief over long-term strategic development. Subsidies, low-interest loans, and currency devaluations have become the default approach, without linking these benefits to measurable outcomes such as product diversification, entry into new markets, or improvements in production quality. The unintended consequence is a strong reinforcement of the status quo, where a handful of well-connected exporters continue to dominate the sector while the majority of businesses, particularly smaller and emerging ones, struggle to compete.
The concentration of influence in the hands of a few exporters has broader economic implications. Political connections and lobbying often determine which businesses receive financial incentives, creating an uneven playing field. While large exporters continue to profit from government schemes, smaller players are left without the resources or support to grow. This lack of inclusivity prevents Pakistan from building a truly competitive export ecosystem. Instead of encouraging efficiency, innovation, and modernization, the system perpetuates dependency on subsidies and policy favors.
Another area where policy measures fall short is currency management. Frequent devaluation of the Pakistani rupee is often presented as a tool to boost exports. While a weaker currency can temporarily make exports cheaper and more attractive globally, it does not address the fundamental structural weaknesses in the sector. Many exporters rely heavily on imported inputs, which become more expensive with devaluation, eroding profit margins. Moreover, currency adjustments alone cannot compensate for the lack of high-value products, limited diversification, and insufficient adherence to international quality standards.
Sustainable growth in exports requires a rethinking of both policy and practice. Short-term financial measures such as subsidies or low-cost financing are insufficient. Instead, the government should focus on fostering innovation, improving quality, and supporting sectors that have the potential for high-value exports. For instance, investing in advanced textiles, agro-processing industries, and information technology could yield durable economic benefits. Linking incentives to performance metrics such as market expansion, value addition, and product quality would ensure that government support directly contributes to growth, rather than merely subsidizing existing operations.
Transparency and accountability are equally critical. Currently, the allocation of benefits under schemes like ERF or other export incentives is often opaque. Decisions are made behind closed doors, allowing a small group of exporters to secure advantages without scrutiny. Implementing transparent procedures and tying financial incentives to tangible results can reduce the influence of these cartels and create opportunities for smaller, emerging exporters to compete fairly. Only by combining regulatory oversight with performance-based incentives can Pakistan create a truly competitive export environment.
The consequences of ignoring these systemic issues are significant. Despite years of policy interventions, Pakistan’s exports remain heavily concentrated in a few traditional sectors, such as textiles, with limited penetration in high-value international markets. The export-to-GDP ratio has remained stagnant, foreign exchange earnings are volatile, and the economy remains vulnerable to external shocks. The powerful exporter cartels, while benefiting personally, have contributed little to solving these structural challenges. Without addressing the root causes, repeating the same cycle of subsidies and cheap loans will continue to produce limited results.
In my view, the country’s export policy requires a paradigm shift. Incentives should be performance-oriented, focusing on diversification, innovation, and quality. Policymakers must ensure that all exporters, regardless of size, have equitable access to support. Strategic investment in human capital, technology, and infrastructure is necessary to build globally competitive industries. Currency management should be coordinated with broader sectoral reforms to prevent unintended consequences on production costs. Above all, transparency and accountability must guide every government intervention in the export sector.
Ultimately, Pakistan’s export challenges are not simply financial, they are structural and institutional. A small group of powerful exporters has leveraged government policies to secure benefits without delivering sustainable growth. Meanwhile, the broader economy has been denied the opportunity to compete, innovate, and diversify. By addressing these systemic weaknesses, Pakistan can move beyond dependency on short-term financial relief and build a robust, competitive, and resilient export sector.
This is the real story behind Pakistan’s export paradox. It is not about asking for more subsidies or cheaper loans. It is about reforming institutions, redefining incentives, and creating an ecosystem where innovation and competitiveness drive growth. Until the country takes these steps, the same issues will persist, and the potential of Pakistan’s export sector will remain largely untapped. Policymakers, business leaders, and civil society must recognize this reality and work collectively to transform Pakistan’s exports from a story of dependency to a story of sustainable economic success.
The Writer is a retired senior civil servant. He was reited as a secretary to the cabinet.
