Yellow cab and housing scheme

Nadeem Moulvi

The writer is a business analyst.

We all remember the yellow cab scheme launched by Nawaz Sharif in 1992 to provide employment. The former prime minister still boasts how he provided jobs to unemployed youth. The scheme failed badly. Now Prime Minister Imran Khan has launched the Naya Pakistan Housing Programme providing loans on subsidized rates.

Let compare the yellow can scheme of Nawaz Sharif with Imran’s housing project. In 1992, the inflation rate was 9.51% and today it’s 10.74% as we face the same problems of unemployment and lack of job security.  So how can we expect that Imran’s scheme will be successful? All governments issue scheme without focusing on improving the purchasing power of the common man, providing a decent living and savings due to the high cost of living.

Nawaz Sharif introduced the yellow cab scheme to modernize to modernize the taxi service and provide employment. It failed badly, but it didn’t stop thousands of imported cars from entering Pakistan. Many of them can plying on our streets. Majority of Pakistanis can easily name three of them: Suzuki Mehran, Daewoo Racer and Hyundai Excel. Others may add Suzuki Alto, Nissan Sunny and Daihatsu Cuore. About 12 different vehicles were imported under the scheme.

Nawaz hailed the scheme as one his greatest achievements and still boasts it. Owners were required to pay only ten percent in down payments and the banks financed the rest. But still the scheme failed? The massive investment to import the new cabs and failure of owners to make timely payments compelled banks to discontinue the scheme. At least Rs15 billion were given in loans. It was estimated that 70% of cab owners failed to make payments. The scheme was stopped by caretaker PM Moeen Qureshi largely because owners were couldn’t keep up with payments and defaulted.

Pakistani banks have a poor track record of taking over defaulted assets and liquidating them. The same problem will be faced by Imran Khan’s Naya Pakistan Housing scheme.

The government has increased the loan limit to allow people purchase plot and construct their own homes. Banks are encouraged to issue loans on markup of 5% for homes. If the lender defaults, the banks have been given the authority to take over your property

Now after nearly thirty years, banks have been given the right to seize your property for foreclosures. However, due to the past tract record and rigidness in offering personal loans, it needs to be seen if banks would issue loans and also take action over non-payments. A common dreams to have his own home. He will now run after loans for houses just they went to get a taxi cab. In the end after failing to pay, they will lose their house and their life savings.

During the yellow cab scheme, cars manufacturers and importers were the real winners minting money. In Nay Pakistan housing scheme, it will be the investors in the housing sector who launder their black money and the banks who earn interest, impose penalties and take over properties. Instead of giving loans on housing, the government should focus on reducing the cost of living. This will only be possible when jobs are well paid, electricity is cheaper, cost of education is reduced and basic needs are fulfilled. Our politicians only show hollow dreams making people beggars rather than teaching them to earn and making the nation stronger.