hyber Pakhtunkhwa is renowned for its rich cultural heritage and diverse economy. The province faces a unique set of challenges that have stifled the growth of its private sector. Its economic landscape is shaped by distinct security concerns, geographical hurdles and internal conflict, making it crucial for policymakers to adopt a tailored approach to economic policy and development.

Despite its vast potential, the private sector faces several critical issues. If these are addressed in a satisfactory manner, there can be significant growth opportunities.

One of the primary concerns in Khyber Pakhtunkhwa is the inconsistent policy environment. Certain areas within the province, especially those with princely state status, benefit from tax exemptions that have resulted in an unequal competition in the region. This disparity in tax policies not only distorts market dynamics but also discourages investment in the areas that do not enjoy such exemptions.

Varying electricity rates across districts further exacerbate the situation, inflating production costs and posing a significant deterrent to potential investors. The province’s energy sector is plagued by rising costs and unreliable supply. This places additional strain on businesses, especially those already grappling with economic uncertainty.

Local business associations, such as chambers of commerce, are limited in their capacity to advocate effectively for their members. Many of these associations suffer from weak staffing. There is little applied research. This translates into policy proposals that often miss the mark in addressing the economic realities.

The chamber’s proposals are frequently seen by policymakers as disconnected from the macroeconomic landscape. This undermines their credibility in critical discussions on economic policy. Without necessary rigor and evidence-based advocacy, the private sector’s voice is likely to remain largely unheard, diminishing its role in shaping the economic future of the province.

The link between academia and industry is almost nonexistent. This disconnect hampers the development of localised, context-specific research that could guide policy decisions.

A lack of collaboration between universities and businesses leaves a significant gap in the availability of tailored economic profiles crucial for making informed investment and development decisions at the district level. For instance, a more detailed understanding of sectors like tourism, minerals and information technology in regions such as Hazara could catalyse targeted interventions. The absence of certified, investment-ready profiles remains a major bottleneck.

To navigate these challenges, the private sector in Khyber Pakhtunkhwa must pivot towards a more strategic and coordinated approach. The National Network of Economic Think Tanks have already made commendable strides through its Khyber Pakhtunkhwa chapter.

By fostering evidence-based research and enhancing communication around key industries like marble, gems and minerals, the NNETT has set the foundation for a more robust engagement of the private sector in policy advocacy. However, significant ground still needs to be covered to build on these initial successes.

One of the critical steps forward is capacity building at business associations. Strengthening these institutions through targeted training programmes can empower them to conduct applied research and develop evidence-based policy proposals. By enhancing their analytical capabilities, these associations can produce more compelling and actionable recommendations that resonate with policymakers.

This shift from presenting wish lists to delivering strategic, data-driven policy inputs can significantly improve the quality of advocacy and increase the likelihood of influencing policy outcomes.

Improving coordination between public and private stakeholders is another essential strategy. A collaborative approach can help align the objectives of the private sector with the broad economic goals of the government.

Public-private dialogues, facilitated by platforms like the NNETT, can serve as critical forums for exchanging ideas, addressing mutual concerns, and identifying practical solutions to shared challenges. By institutionalising these dialogues, Khyber Pakhtunkhwa can create a more inclusive and participatory policy-making process, ensuring that the voices of private sector representatives are heard and considered in the formulation of economic policies.

Establishing effective industry-academia linkages is equally important. Universities and research institutions in Khyber Pakhtunkhwa can play a pivotal role in generating localised research that addresses the specific economic challenges of the province. By fostering partnerships between academia and industry, the private sector can benefit from evidence-based insights that inform strategic decisions. For example, research on the economic potential of sectors like tourism, minerals and IT can guide targeted interventions and attract investment to these areas.

Such collaborations can facilitate the development of certified, investment-ready profiles that provide a clear roadmap for stakeholders looking to invest in Khyber Pakhtunkhwa.

The private sector in Khyber Pakhtunkhwa must also adopt a more robust approach to policy advocacy, shifting from an activist stance to a lobbyist one that emphasises collaboration and strategic alliances. This transition will not only improve the quality of policy proposals but also ensure that they are aligned with national and provincial priorities, thereby increasing their chances of uptake.

Effective lobbying involves building coalitions, engaging with policymakers and presenting well-researched, persuasive arguments that highlight the benefits of proposed policy changes. By adopting this approach, the private sector can enhance its influence in policy discussions and drive reforms that foster a more conducive business environment.

Another critical strategy for the private sector is to focus on optimising existing industrial estates rather than pursuing the development of new ones. This approach can help maximise the use of current facilities and ensure that they are equipped with the necessary infrastructure, such as laboratories and quality testing centres to support various industries.

By improving the operational efficiency of these estates, the private sector can create a more attractive environment for investors and reduce the costs associated with setting up new facilities. This strategy aligns with the broad goal of sustainable development by minimising land use and resource consumption.

Embracing renewable energy solutions and advocating for policy consistency across the energy sector could also alleviate some of the operational burdens faced by businesses in Khyber Pakhtunkhwa. Renewable energy sources, such as solar and hydropower, offer a viable alternative to the province’s traditional energy mix, which is often unreliable and expensive.

By promoting the adoption of green energy solutions, the private sector can not only reduce its operational costs but also contribute to the province’s environmental sustainability goals.

The economic resilience of Khyber Pakhtunkhwa hinges on a multi-partisan approach to policy formulation — one that prioritises inclusivity, coordination and evidence-based decision-making. By embracing these principles, the province can unlock the full potential of its private sector, creating a more dynamic and sustainable economic future. Such an approach requires commitment from all stakeholders - including government, private sector representatives, academia and civil society - to work together towards common goals.

Through targeted interventions, strategic partnerships and a commitment to continuous improvement, Khyber Pakhtunkhwa can overcome its current challenges and position itself as a leading hub for business and innovation. By focusing on the strengths of its private sector, enhancing the regulatory environment and fostering a culture of collaboration and evidence-based decision-making, the province can pave the way for long-term economic growth and prosperity.

The writer is an associate research fellow at the Sustainable Development Policy Institute and is the secretary of the National Network for Economic Thinktanks. He can be reached at ahad@sdpi.org. The article doesn’t necessarily represent the views of the organisations.