Pakistan

Pakistan is experiencing strong population growth, currently the fifth most populous country in the world. The country must be able to meet the basic needs of its population, whilst all the while facing the energy demands to foster its development. Since 2006, AFD has supported Pakistan in the renewable energies and energy efficiency.

Context

Pakistan is the fifth most populated country of the world and lies at the crossroads of several highly strategic Asian regions. Bordered by the Arabian Sea and surrounded by the two giants of the continent (India and China) as well as by Afghanistan and Iran, Pakistan plays a crucial role in the region’s geopolitical balance. Since it obtained its independence in 1947, Pakistan’s foreign policy has been very influenced by its rivalry with India, which has given rise to three wars between the countries. Even though relations have calmed down since the 2000s, the question of Kashmir still remains very sensitive.

Pakistan’s demography is dynamic, and the emergence of a consumer middle class has generated growth in the population’s needs. Pakistan is currently facing a serious energy crisis, and the frequent electricity outages have a considerable negative impact on the Pakistani economy (estimated at a loss of 2 or 3 percentage points in GDP growth rate) and on the living conditions of the country’s inhabitants.Faced with security risks, political instability and the effects of climate change, the country's macroeconomic situation is deteriorating, particularly since the COVID-19 pandemic.

AFD has been active in Pakistan since 2006 with a “green and inclusive growth mandate”. It’s especially involved in financing energy efficiency and the production of hydroelectricity. Its actions thus target renewable energies in order to further climate change mitigation and adaptation. To fulfill its goals, AFD provides sovereign and non-sovereign loans, and it mobilizes European Union grants as part of the Asia Investment Facility.

AFD's Pakistan office is directly attached to the South Asia regional office in New Delhi.

Our approach

"AFD and Pakistan: promoting green and inclusive growth"

The energy sector in Pakistan is experiencing a major crisis: the country is only able to meet half of the demand in electricity. Frequent power cuts handicap companies and interrupt industrial production, creating a real challenge for economic progress and the well-being of the local population.

To deal with this shortage, AFD is particularly committed to financing energy efficiency. It is also providing funding in projects, tapping into the country's enormous hydroelectric potential.

We thus finance the construction and rehabilitation of hydroelectric power stations in order to guarantee access to reliable and environmentally friendly energy, which will improve living conditions for local residents. We contribute to the improvement of the national electricity transmission and distribution network, in order to broaden access to energy, particularly in Punjab and Sindh (Proparco).

Pakistan's growing population and rapidly developing urban centres have raised the challenges of provision of basic services to its people. lnvestment in this sector is vital, which is why, as of April 2018, AFD has been investing in improving access to and provision of water and sanitation services in Pakistan.

AFD has granted a loan of 95 million euros to the Faisalabad Water and Sanitation Agency (F-WASA). The objective is to increase drinking-water production by 30 million gallons per day, by building a new drinking-water production plant, by increasing the existing plant and by improving the effectiveness of its distribution network.

ln addition to increasing the city's drinking water production capacity, AFD also works towards a global vision of ensuring the sustainability of such investments. AFD's strategy in this sector therefore also seeks to combat water lasses (physical and commercial), extend the distribution network to new neighbourhoods, and improve the financial viability of the sector through improving performance and thereby increasing service revenue.

We are also providing capacity building for the sector by supporting Al Jazari Academy, the institution that ensures the training of Pakistan's water agency professionals. The strategic importance this sector has on the future of the country means continued support from the AFD in the coming years.

Pakistan is one of the most urbanized countries in the region. Since 1951, Pakistan's urban population has been growing at the rate of 4% per year. By 2030, 60% of the total population will live in cities and the country will have 12 agglomerations exceeding one million in habitants.

lnnovative approaches in urban planning, access to basic services and urban transport performance is therefore vital to the country's growth and productivity. Pakistan's cities need to develop in order to withstand its rapidly increasing urban population.

AFD's strategy in Pakistan is aimed at supporting urban growth while improving the quality of life and the economic attractiveness of agglomerations. For this reason, AFD's focus is on urban mobility and transport infrastructure in fast-growing cities in order to limit congestion in cities, air pollution and C02 emissions. ln addition, AFD will increase the attractiveness of cities by financing the safeguarding and enhancement of their historical heritage and contributing to the development of the tourism sector.

In partnership with the province of Punjab, the Lahore Fort Authority (WCLA) and the Aga Khan Trust for Culture, AFD granted a loan of 22 million euros for the rehabilitation of the Lahore Fort. This project will enhance its access and immediate surroundings (parking, landscaped areas, etc.).

The objective: to contribute to the promotion of tourism in this emblematic historic city of Pakistan and to enhance its image abroad.

In association with the Louvre Museum, the French school Rubika and the IAC in Pakistan, AFD contributes to strengthening training courses in video games and animation in Lahore.

In 2022, AFD supported Pakistan in the fight against the pandemic, by financing the vaccination campaign, then by strengthening the capacities of the health system in the face of Covid, particularly in Balochistan.