Policy paper

UK–Pakistan development partnership summary

Published 17 July 2023

This was published under the 2022 to 2024 Sunak Conservative government

Introduction

The Strategy for International Development (IDS) places development at the heart of the UK’s foreign policy. It sets out a new approach to development, anchored in patient, long-term partnerships tailored to the needs of the countries we work with, built on mutual accountability and transparency. This approach goes beyond aid and brings the combined power of the UK’s global economic, scientific, security and diplomatic strengths to our development partnerships. Our 4 priorities are to deliver honest, reliable investment, provide women and girls with the freedom they need to succeed, step up our life-saving humanitarian work, and take forward our work on climate change, nature, and global health. The Integrated Review Refresh (IR23) reiterates that sustainable development is central to UK foreign policy and sets out how the UK will go further and faster on development to reduce poverty and reinvigorate progress towards the SDGs. This Country Development Partnership Summary details how the IDS and IR23 will be put into practice with Pakistan.

Country context

Pakistan is an important regional and strategic partner to the UK. Our partnership is founded on culture, shared history, diplomacy, development, security, trade, and the economy. The 1.6 million-strong Pakistani diaspora in the UK and 100,000 British and dual nationals in Pakistan bestows deep personal ties. The UK provides Pakistan’s third largest source of Foreign Direct Investment. The Integrated Review 2021 highlighted the UK’s national interest in the Pakistan partnership and IR23 affirms the UK’s commitment to strengthening our international partnerships. The UK’s vision is for a more inclusive, prosperous, and stable Pakistan which is less reliant on external finance, more resilient to shocks, and contributing to regional security, while becoming a diminishing source of threats (criminal and security) to the UK and more aligned with the UK’s global geopolitical interests.

Our partnership with Pakistan is in transition from a traditional aid relationship to a mutually beneficial partnership, reflecting Pakistan’s status as a lower middle-income country, and the country’s growing status as strategic trade and investment partner. This partnership is built upon shared objectives and mutual interests which will support accelerated progress in key areas of Pakistan’s development. This transition shifts our investment from large scale service delivery programmes to systems strengthening work, policy engagement, catalytic technical assistance, and seed capital to crowd in investment. This strategic development partnership embraces programming, higher-education and academic links, the work of UK Non-Governmental Organisations (NGOs), our defence and security engagement and through arts and culture.

The UK-Pakistan development partnership is focussed on addressing critical structural issues: population dynamics, climate vulnerability, gender equality, and macroeconomic stability. According to the World Bank Human Capital Review 2022, Pakistan’s Human Capital Index (HCI) has a value of 0.41 which is low in both absolute and relative terms – lower than the South Asia average of 0.48 and comparable with some Sub-Saharan African countries. It is home to 9% of the world’s out-of-school children – more than 22 million – and it has the third highest number of new-born deaths in the world. Five million more people are added to Pakistan’s population yearly – the world’s fifth most populous nation. Fast population growth exacerbates low levels of human development and holds back economic growth. Pakistan’s economy is going through a turbulent period which requires continued structural reforms to stabilise the economy, ensure debt sustainability and create opportunities for its growing labour force. An additional 1.7 million jobs are required every year to provide employment to young people. The COVID-19 pandemic and the floods of 2022 had a negative impact on Pakistan’s growth, pushing the country’s most vulnerable further into poverty. Pakistan is also the eighth most vulnerable country to climate change disasters (assessed pre-floods) and gender inequality is a major brake on development – Pakistan performs poorly on the World Economic Forum’s Global Gender Gap Index 2022.

The UK has played an influential role in supporting Pakistan to address its development challenges over the last 2 decades. Most recently, during the pandemic, the UK supported emergency response systems, vaccines, a nationwide communications campaign against vaccine hesitancy, and helped secure food security, sanitation, and hygiene in the most vulnerable communities. In December 2022, in response to the floods, the Government of Pakistan launched the Resilient Recovery, Rehabilitation and Reconstruction Framework (4RF). Aligned with this, the UK is supporting key system reforms, humanitarian response, macro-economic stability, and climate-resilient recovery, working closely with the multilateral system on climate finance access and systems reform.

More broadly, the UK’s support is aligned with Pakistan’s long-term development strategies focusing on human capital (health, education, gender equality), improving governance and human rights, macroeconomic stability and trade, and building climate resilience. Over the past decade, the UK has invested £900 million in girls’ education and broader education systems reform. Technical assistance has helped the Government of Pakistan generate £1.1 billion through revenue mobilisation reforms and public financial management assistance in Punjab and Khyber Pakhtunkhwa provinces. This has doubled the development spending of these provinces to more than £1 billion. Our work to empower women and girls has ensured that over 34 million people were reached through campaigns to prevent violence against women and girls, minorities, and child marriages. There has been an increase in UK-Pakistan bilateral trade from £2.4 billion (2020) to £4.1 billion (2022).

Why and how: the UK’s development offer with Pakistan

The UK development offer is rooted in a long-term, consistent, and patient development partnership with Pakistan, with the aim of supporting critical issues that will shape Pakistan’s progress towards the SDGs. Our approach seeks to use all the tools of diplomacy, defence engagement, trade, and UK partnerships, alongside Official Development Assistance (ODA) and Conflict, Stability and Security Fund (CSSF) programmes. The UK’s development goals in Pakistan are aligned to the IR23 and the 4 priorities of the IDS: mobilising honest and reliable investment, unlocking the potential of women and girls, providing humanitarian assistance, and taking forward our commitments on climate change and global health.

Our first development goal is to achieve a step change in human capital. Effective, inclusive, and resilient health and education systems will provide quality services for all, a healthier and more literate population and will focus on women and girls. On health, we will be focusing on family planning and demography, nutrition, global health security, climate resilience and universal health coverage. Alongside our bilateral portfolio, we will leverage centrally managed programmes, multi-lateral partnerships, and global initiatives such as the Global Health Initiatives. We will draw on UK expertise from UK Health Security Agency (UKHSA), the British Council and wider UK government, academia, and trade partners.

The second goal is to support Pakistan to adopt a more resilient and cleaner growth path by preparing for, responding to, and reducing the impact of, climate change and biodiversity loss. Our portfolio focusses on adaptation by communities, government, and public services and on strengthening disaster preparedness and disaster management. The UK’s considerable influence in the multilateral system is being leveraged to lobby for reforms through the Bridgetown Agenda that will enable Pakistan quicker access to climate finance, for adaptation and transition to net zero.

The third goal is to support Pakistan to become a more open society, in which the rights of women and girls, minorities, persons with disabilities and vulnerable groups are better protected, the government is held to account, and the state is better able to manage interconnected crises and be accountable to its citizens. Our work on border security, countering terrorism and serious organised crime plays an integral role in supporting Pakistan’s peace and prosperity. Our programmes and partnerships will focus on advancing freedom of religion or belief, media freedom, and stopping gender-based violence, child marriages and intolerance. We will build strategic partnerships and capability at federal and provincial level institutions to enable improved revenue mobilisation, fairer and more accountable use of resources and tackle delivery blockages.

Our fourth goal is to support Pakistan to become a stronger trade and investment partner, with a more stable, inclusive, and transforming economy, providing shared prosperity and resilience to the UK and Pakistan. We will use the UK’s expertise to help accelerate macro-economic reforms whilst our bilateral portfolio will be supplemented by harnessing wider UK capabilities, such as the London Stock Exchange, and leveraging private sector expertise through our British Investment Partnerships Toolkit – such as our Development Finance Institution and British International Investment (BII). The new Developing Countries Trading Scheme demonstrates UK commitment to building long-term, mutually beneficial relationships with Pakistan. Following implementation on 19 June, 94% of goods exported from Pakistan are eligible for duty-free access to the UK.

Who we work with

The IDS sets our approach anchored in long-term partnerships with the aim to advance our shared objectives, supported by an enduring relationship with federal and provincial governments. The UK in Pakistan has established constructive partnerships with multilateral and bilateral partners such as the World Bank and International Finance Corporation (IFC), United States Agency for International Development (USAID), United Nations (UN) organisations, Asian Development Bank, the private sector, and local civil society organisations. Our broad engagement brings collective power to multi-stakeholder dialogues on key policy issues and shapes strategic collaboration with the aim to have a greater impact and limit aid fragmentation. A recent example of a successful partnership is the response to the 2022 floods in Pakistan where our early engagement helped coordinate and galvanise the international community, lobbied for a greater volume of humanitarian finance and stronger coherence to make a more effective impact on the areas most affected.

The UK remains a key funder of global development efforts in Pakistan. The UK is supporting control and eradication of communicable diseases in Pakistan through its contributions in Global Health Initiatives including Global Fund for AIDS, Tuberculosis and Malaria (GFATM), Global Alliance for Vaccination (GAVI) and Global Polio Eradication Initiative (GPEI). These investments have helped improved diagnostics and treatment coverage, quality of care (93% treatment success rate) and reduction in morbidity and mortality due to these infections. The UK government is the largest contributor to the Green Climate Fund (GCF) – over USD 3 billion since its inception. The UK government has made significant contributions to the Climate Investment Fund and leads the Clean Energy Innovation Facility which provides grants to researchers to accelerate the development of innovative clean energy technologies in developing countries. The UK is the largest contributor centrally to the Global Partnership for Education (GPE), which in Pakistan is supporting (grant of USD 125 million) the development and implementation of the education sector plans in 4 provinces.

Key programmes

Following are the top 3 bilateral aid programmes according to budgeted expenditure for 2023 to 2024:

• Delivering Accelerated Family Planning in Pakistan (DAFPAK) which aims to increase access to quality family planning information and services, particularly to underserved groups such as rural women. Since 2017, it has supported about 8 million women and girls to access family planning services in 4 provinces and is currently advancing the policy agenda on demography
• Girls and Out of School Action for Learning (GOAL) which will support the Governments of Punjab and Khyber Pakhtunkhwa (KP) to improve education outcomes for girls and the most marginalised. Since 2011, over 11 million children (5.5 million girls) in primary school and nearly 6 million children (2.5 million girls) in secondary school have benefited from UK support
• Revenue Mobilisation, Investment and Trade (REMIT) which, through provision of high-quality technical assistance, will support Pakistan to implement reforms that lock in macroeconomic stability and improve conditions for high and sustained growth, mutual prosperity, job creation and poverty reduction

DAFPAK, Evidence for Health (E4H), GOAL and Data and Research in Education (DARE) will be the key programmes contributing to the goal of human development and supporting Pakistan’s demographic challenge, supported by Centrally Managed Programmes (CMPs) on education and health.

Key programmes to partner Pakistan towards a cleaner and more resilient growth path will be Building Resilience and Addressing Vulnerability (BRAVE) and the Water Resource and Accountability in Pakistan (WRAP) programmes. Between 2014 and 2022, the Multi-Year Humanitarian Programme reached over 9.5 million people with emergency and recovery assistance. Additionally, the Humanitarian Response Pakistan – 2022 Floods programme has provided immediate lifesaving, humanitarian, and early recovery support to more than 1.4 million people.

Awaaz II, our flagship voice and accountability programme, the Sub National Government II (SNGII) programme and the Hate Speech and Disinformation programme (HSDP) are our key bilateral programmes towards the goal of a more open society. So far, SNG II has delivered technical assistance which helped the Governments of Punjab and KP increase tax revenue by £310 million compared with their annual targets.

Alongside REMIT, the key programmes in support of Pakistan’s sustainable economic development are the Sustainable Energy and Economic Development programme (SEED), which includes supporting InfraCo Asia in a £370 million portfolio of investments, and the Enterprise and Assets Growth (EAGR), which is unlocking greater Small and Medium Enterprise (SME) finance access, principally through the UK-funded investment vehicle Karandaaz – which has already supported close to one million jobs through microfinance access. The next generation of private sector development programmes in Pakistan will focus on mobilising climate investment to support low-carbon, resilient growth, and catalysing economic transformation in high potential manufacturing value chains.

Financial information

Initial allocations have been set internally to deliver the priorities set out in the International Development Strategy (May 2022) and the Integrated Review Refresh 2023, based on the FCDO’s Spending Review 2021 settlement.

The department’s spending plans for the period 2022 to 2023 to 2024 to 2025 have been revisited to ensure HM Government continues to spend around 0.5% of Gross National Income (GNI) on ODA. This was in the context of the significant and unexpected costs incurred to support the people of Ukraine and Afghanistan escape oppression and conflict and find refuge in the UK, and others seeking asylum. The Government provided additional resources of £1 billion in 2022 to 2023 and £1.5 billion in 2023 to 2024 to help meet these unanticipated costs. The Government remains committed to returning ODA spending to 0.7% of GNI when the fiscal situation allows, in line with the approach confirmed by the House of Commons in July 2021.

The country development partnership summaries include the breakdown of programme budgets allocated to individual countries for 2023 to 2024 and 2024 to 2025. These allocations are indicative and subject to revision as, by its nature, the department’s work is dynamic. Programme allocations are continually reviewed to respond to changing global needs, including humanitarian crises, fluctuations in GNI and other ODA allocation decisions.

It should be noted that these figures do not reflect the full range of UK ODA spending in these individual countries as they do not include spend delivered via core contributions to multilateral organisations, or regional programmes delivered by the FCDO’s central departments. Other UK Government departments also spend a large amount of ODA overseas. Details of ODA spent by other UK government departments can be found in their Annual Report and Accounts and the Statistics for International Development.

FCDO ODA allocation

Figure 1. 2023 to 2024 thematic breakdown: Climate Change, Nature and Global Health, 33%; Humanitarian, 30%; Women and Girls, 22%; British International Investment, 15%

Allocated ODA budget financial year 2023 to 2024: £41.54 million.

Indicative ODA budget financial year 2024 to 2025: £133 million.

56% of programmes are marked as being principally or significantly focused on promoting gender equality and 26% of programmes are marked as being principally or significantly focused on disability inclusion.