Urban Middle Class Surge in Pakistan

[Riaz Haq]

The simplest definition of the middle class is a group of people in a society who are neither rich nor poor. The middle class has always been considered vital to a country's stability and growth. The rich and the poor simply distrust each other too much to let the other govern. Nations with large middle class populations find it easier to sustain good, democratic governance.

Unfortunately for Pakistan, the size of the middle class was very small when it came into existence, and the country was dominated by a small powerful feudal elite created by the British rulers to sustain their colonial rule. And the urban middle class remained small for decades. The situation has, however, finally begun to change in the the last decade of 1999-2009 with a combination of increasing urbanization and faster economic expansion that fueled significant job creation in the industrial and services sectors to enable middle class growth.

Pakistan is now more urbanized with a larger middle class than India as percentage of the population. In 2007, Standard Chartered Bank analysts and State Bank governor Dr. Ishrat Husain estimated there were 30 to 35 million Pakistanis earning an average of $10,000 a year. Of these, about 17 million are in the upper and upper middle class, according to a recent report.



Urbanization is not just a side effect of economic growth; it is an integral part of the process, according to the World Bank. With the robust economic growth averaging 7 percent and availability of millions of new jobs created between 2000 and 2008, there has been increased rural to urban migration in Pakistan to fill the jobs in growing manufacturing and service sectors. The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster.

Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, the UN forecast says Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%. For this year, a little over 40% of Pakistan's population lives in the cities.

The urban population now contributes about three quarters of Pakistan's gross domestic product and almost all of the government revenue. The industrial sector contributes over 27% of the GDP, higher than the 19% contributed by agriculture, with services accounting for the rest of the GDP.



A 2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998. The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008, and it is increasing with 3% of the nation's population migrating to cities every year. With over 5 million rural migrants each year, the population of Pakistani cities in exploding, and Karachi has now become the world's largest city, according to Citymayors.com.

India's urban residents in 2008 residents accounts for 29% of its population, and the CIA Fact Book estimates it growing at 2.4% of the total population every year.

As to India's much hyped middle class, a new report by Nancy Birdsall of Center for Global Development says it is a myth. She has proposed a new definition of the middle class for developing countries in a forthcoming World Bank publication, Equity in a Globalizing World. Birdsall defines the middle class in the developing world to include people with an income above $10 day or $3,650 a year, but excluding the top 5% of that country. By this definition, India, even urban India alone, has no middle class; everyone at over $10 a day is in the top 5% of the country.

Unlike poverty which is defined by the World Bank as people living on less than $1.25 a day, there is no widely accepted definition of who counts as a member of the middle class in the developing world.

In India, for example, a scooter company aims ads at a schoolteacher who earns $2,500 a year and lives in a tiny brick house with no running water. Why? Because that teacher is counted as middle class by Indian marketers, according to MSN Money.

Economist Nancy Birdsall of the Center for Global Development (CDG) is attempting to establish a $10 a day minimum limit in terms of purchasing power parity (PPP) as the low end of the middle class, while excluding the top 5% of the population in a country from the middle class. "An upper limit of the 95th percentile, while on the high side, is just about sufficient to exclude the country's richest," Birdsall adds.

In India's case, everyone who makes $3,650 a year is in the top 5% (about 55 million people) of the nation's population. It is on this basis that economist Birdsall concludes that India has no middle class. Over 75% of India's population (versus 60% in Pakistan) lives on less than $2 a day, or $750 a year, according to Human Development Report 2009. The rest of about 20% of India's people falls between $2 and $10 a day.

It is interesting to note, however, that India has been much more successful in sustaining democracy than Pakistan. Perhaps it is attributable to early land reform in India that significantly tamed the power of the feudal class.

Using Birdsall's proposed definition, Pakistan now does have a middle class of tens of millions (at least 10% of the population), as its 30 to 35 million people earning an average of $10,000 a year (well above Birdsall's lower limit of $3,650.00 a year) account for about 17% of Pakistan's population. Another 60% of Pakistanis (vs 75% of Indians) live on less than $2 a day, according to UN Human Development Report 2009. The rest of 23% of the people have incomes between $730 a year ($2 a day) and $10,000 a year.

According to development economist Lant Pritchett, fewer than 25% of the people in the richest quintile in India complete 9 grades of school.

This is a combination both of the depth of India's p overty and its inequality. China had no middle class in 1990, but by 2005, had a small urban middle class (3% of the population). South Africa (7%), Russia (30%) and Brazil (19%) all had sizable middle classes in 2005.

In spite of the recent growth in Pakistan's middle class, it is still not strong enough to seize power. However, with the recent growth of independent mass media and greater political activism, the Pakistani middle class has begun to exert more influence on how the nation is governed. And the power of the current ruling feudal zamindars' party, the Pakistan Peoples Party, appears to be waning in the face of the new assertive middle class.

Unlike the more urban and middle class voters of the Pakistan Muslim League (PML) and the Muttahida Qaumi Movement (MQM), the PPP's voter lives in a different world, a world that has been dominant for decades. It is a feudal world controlled by the rural elite that is much more rural, more deferential, more rooted in tradition. Its nationalism is less marked and its Islam less influenced by the international trends of the last 30 years and thus much less politicized and much more based in centuries-old Sufi traditions. Describing this situation, Jason Burke of the Guardian has argued that "This is a Pakistan that is disappearing". Burke has quoted an unnamed 2008 PPP electoral candidate in rural Punjab who recognized and reportedly said that his party needed to "re-invent itself".

While many rural residents in Sindh and Southern Punjab who voted for the PPP have remained relatively isolated from major developments in Pakistan in the last decade, the urban middle class has grown dramatically in numbers and influence during the military rule of President Musharraf. The New York Times reported on this expansion of Pakistani middle class in November 2007 in these words: "As he fights to hold on to power, General Musharraf finds himself opposed by the expanded middle class that is among his greatest achievements, and using his emergency powers to rein in another major advance he set in motion, a vibrant, independent news media". Acknowledging this fact, William Dalrymple, a British journalist/author considered knowledgeable about India and Pakistan, recently wrote as follows: "It was this newly enriched and empowered urban middle class that showed its political muscle for the first time with the organization of a lawyers' movement, whose protests against the dismissal of the chief justice soon swelled into a full-scale pro-democracy campaign, despite Musharraf's harassment and arrest of many lawyers. The movement represented a huge shift in Pakistani civil society's participation in politics. The middle class were at last moving from their living rooms onto the streets, from dinner parties into political parties."

The future of Pakistan clearly belongs to its urban middle class. The behavior of the members of this rising urban middle class will largely determine if and when Pakistan grows out of the current crises to face the future with greater confidence.

Related Links:

Comparing India and Pakistan in 2010

Indian poverty

Middle Class Clout Rising in Pakistan

Urbanization in Pakistan

The Rise of Mehran Man

Industr ial Sector of Pakistan

India Has No Middle Class

Pakistan's Foreign Visitors Pleasantly Surprised

Escape From India

Reflections on India

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

Pakistan's Multi-Billion Dollar IT Industry

India -Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

[Riaz Haq]

Here's a report on Marble Slab Creamery opening outlets in Pakistan:

Global Franchise Group LLC inked a franchise agreement with Western Brands PVT Ltd. to open the first Marble Slab Creamery locations in Pakistan.

Financial terms were not disclosed.

The deal calls for the development of 10 Marble Slab Creamery stores in Pakistan over a 10-year period, with the 5,000-square-foot flagship store opening up in Lahore.

“The new locations in Pakistan are an extension of Marble Slab Creamery’s existing presence in the Middle East and the South East Asian sub-continent,” said John Peddar, director of international development, Global Franchise Group. “In a nation of 176 million people, we expect that the brand product will be well-received and positioned for growth in this emerging market.”

Marble Slab Creamery is managed by GFG Management LLC, a subsidiary of Atlanta-based Global Franchise Group.

Marble Slab Creamery operates in Australia, Bahrain, Canada, Guam, Kuwait, Lebanon, Mexico, Oman, Puerto Rico, Scotland, Trinidad and Tobago, United Arab Emirates, and the United States.

Global Franchise Group’s other brands include Great American Cookies, MaggieMoo’s, Pretzelmaker and Pretzel Time

http://www.bizjournals.com/atlanta/news/2013/03/19/marble-slab-crea...

[Riaz Haq]

AFP on slum removal and evictions in Islamabad:


Arif Hasan, widely considered Pakistan’s foremost urban planner, blamed much of the rise on speculation by developers, while urbanisation, infrastructure expansion and a recent economic revival have also helped push up prices.
“Land is the new gold,” said Hasan, adding that at least 30 per cent of Pakistan’s urban population can only afford to live in areas considered “slums” or “katchi abadis”.
“You cannot have a city like Islamabad without having a sizeable area for affordable low-income housing,” he said. “It is irresponsible at best and criminal at worst.” Designed by Greek architect Constantinos Apostolou Doxiadis, Islamabad was founded in 1960 to house the newly independent country’s bureaucrats.

Its wide boulevards and grid design set it apart from most South Asian cities, but also mean it offers little accommodation for the lower-classes who work as labourers or domestic servants for the well-to-do.
Political activist Aasim Sajjad Akhtar said the poor were being unfairly penalised for not having the wealth or power to influence officials and claimed authorities were running a smear campaign against slum residents, most ethnic Pashtuns who have escaped unrest in the northwest and tribal areas.
“They chose to demonise and criminalise the residents, calling them crooks and terrorists. They use their Pashtun ethnicity to create the idea they are terror sympathisers.” Authorities have rejected such accusations in the past.


http://www.news.com.au/world/asia/the-heartbreaking-housing-crisis-...

[Riaz Haq]

Musharraf accelerated urbanization of Pakistan Post by Profit on X


Profit
@Profitpk
This shift started in earnest during the Musharraf era. Before then, Pakistan had cities, towns, and villages. Now, we have sprawling metro areas—each with dense urban cores, growing suburbs, and exurbs stretching further out.

https://x.com/Profitpk/status/1902232635067208007

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Metropolitan areas: the new face of urban Pakistan

As it urbanizes, the geography of Pakistan’s cities no longer looks the same; cities once surrounded by villages are now surrounded by suburbs and smaller cities part of the same metropolitan area

By Farooq Tirmizi

https://profit.pakistantoday.com.pk/2025/03/17/metropolitan-areas-t...

The easiest way to know that something big is changing in Pakistan’s urban geography is by looking at what happened to Raiwind.

In the 1990s, Raiwind was famous for being the site of the Tablighi Jamaat’s annual ijtima. As a young boy, whenever I asked somebody where Raiwind was, the answer was always: “It is somewhere outside Lahore”.

Raiwind today is not outside Lahore. It is very much a part of Lahore and feels like it, even though it was once so far out that it was described as not being part of the city at all. And the numbers show exactly why that is. In the 1998 census, Raiwind had a population of just over 27,000 people. As of the 2023 census, it had 1.1 million people. Raiwind alone is as big as Islamabad, and bigger than Sialkot or Bahawalpur.

In sheer scale, it is one of the largest and fastest growing parts of urban Pakistan. But it is far from being alone. Parts of Pakistani cities that were once deemed to be “the outskirts” of cities or even rural areas are now completely connected parts of those cities and changing the very definition of what it means to be from those cities.

They are introducing to Pakistan something that was first invented in post-World War II United States: the metropolitan area.

The boundary between city and village is never completely sharp, but up until the late 1990s, that boundary used to blur in favour of the village. City limits would extend far beyond the denser neighbourhoods that characterize urban areas and significant portions of the jurisdiction of “municipal” governments would actually consist of farmland. And indeed even now, it is possible to see cows walking on the side of streets in the middle of even the largest cities in Pakistan, and not just before Eid ul Azha.

But the nature of that boundary is now changing, and it appears that cities are claiming a larger share of the physical space of this country. And more specifically, while it was once the norm for the city to end and be immediately abutted by farmland, now it is much more common to see suburbs, followed by perhaps a small green belt followed by the suburbs of another city that is so close as to feel functionally an extension of the larger city in its vicinity.

This blurred sense of place for urban locations is a metropolitan area, something that functionally did not exist prior to the Musharraf Administration. As recently as 25 years ago, Pakistan had cities, towns, and villages. Now, it has metropolitan areas, each with dense urban cores, with suburbs and exurbs. Some of these metropolitan regions are even part of the one (and a half) mega regions in the country.

In this story, we will take a look at how the geography of urban Pakistan is changing, specifically not just which cities, but which areas within each metropolitan area are growing the most rapidly (and a handful of the ones that are shrinking). We will look at why these changes are happening and what the implications are for the economy’s future. We will examine what it means for how to find opportunities to invest in real estate. And finally, we will look at the rise of both of Pakistan’s mega regions (with one considerably bigger than the other).