Will Crowdfunding be Enough to Build Pakistani Dams?

Crowdfunding is a relatively new way of raising funds. In recent times, websites like Gofundme.com have started which allow anybody to raise funds for a specific purpose. Initially, crowdfunding was used to raise money for social causes like education and medicine. However, this was being done by private individuals. However, in the recent past, cash-strapped governments have also tried to use crowdfunding. Consider the case of the Malaysian government which started a gofundme.com page. Local governments like Travis County in the United States have also attempted to raise $1.5 million via crowdfunding. Up until now, the amounts being crowdsourced have been relatively small.

However, this may be about to change. Imran Khan, the new Prime Minister of Pakistan, is trying to use crowdsourcing in a strategic way. This is because Pakistan is facing twin challenges at the moment. Firstly, the country is out of cash. The financial situation is very bad considering the fact that Pakistan only has $10 billion in forex reserves. Hence, Pakistan is completely dependent on external funding to meet its basic obligations. On the other hand, the country is also facing a water crisis. Pakistan has already crossed the water stress line in the year 2015. If no action is taken right now, Pakistan could run out of water by 2025! This would wreak havoc on the agrarian economy of Pakistan. Imran Khan, therefore, finds himself in a fix. It is necessary to spend $19 billion and build a network of dams which will aid in water conservation. However, given the present economic situation, Pakistan doesn’t have any funds for infrastructure projects.

Crowdsourcing from the Pakistani Diaspora

Since Pakistan has run out of traditional sources of funding, Prime Minister Imran Khan is exploring new options. It is a well-known fact that many Pakistanis have settled in foreign countries. The Pakistani diaspora, settled in western nations, is known for being affluent. At the present moment, there are over 10 million Pakistanis which are settled in various parts of the world. The amount that Imran Khan’s government wants to collect is close to $16 billion. This works out to a per head contribution of $1600. This is not a huge amount given the fact that the existence of the nation is at stake. Since Imran Khan does not directly have the power to tax these foreign nationals, he is appealing to their patriotic emotions. This is the reason why Imran Khan is trying to crowdfund money in order to build the dams. However, this has become somewhat of a social experiment. Such huge sums of money have never been crowdsourced. It is unlikely that Imran Khan will be able to reach his target. This is the reason why he is being severely criticized by his opponents for this move.

Why Crowdfunding Works?

Crowdfunding has been used by many governments for small projects. For instance, one local government in Fort Lauderdale crowdsourced $80,000 to build a dog park! It is a strange phenomenon. People seem to detest the government when it tries to raise taxes. However, many have no qualms about paying to crowdsourcing campaigns. Psychologists have analyzed this phenomenon. Many believe that this may be because people like having control over where their money is being spent. When they pay more in taxes, people feel like their money is being thrown off into a pool where they have no control over its usage. On the other hand, when people contribute to crowdsourcing campaigns, they know exactly how their money is going to be spent. Hence, if people feel strongly about a cause, they are willing to contribute even though there is no compulsion.

Also, it is important to notice that in many cases, crowdfunding campaigns end up being successful even if they don’t raise too much money. This is because once governments start crowdfunding money for a task, it gains a lot of attention in the media. This brings it to the attention of investors and higher authorities. Once attention is directed towards the pain point, some sort of solution is finally reached.

Criticisms against the Crowdsourcing Initiative

Ineffective: Imran Khan’s method has been called ineffective. It seems like these methods are only a public relations stunt. When Imran Khan unveiled his plans for crowdfunding dams in Pakistan, it became an instant hit on social media. This was trending on Twitter for many days. However, when the success is measured in terms of rupees collected, the project has been an utter failure. Two months after the project was launched, less than 0.1% of the amount required has been collected. According to critics, Imran Khan will have to be the Prime Minister of Pakistan for 120 years, if the dams have to be built by crowdfunding.

Begging Bowl

Opposition parties have also criticized Imran Khan by saying that his tactics have spoiled the image of Pakistan. The world now believes that Pakistan is now a bankrupt state with a begging bowl.

To sum it up, Imran Khan’s move has been daring and unconventional. However, its effectiveness is yet to be seen. This is the first attempt by anyone to crowdfund a massive infrastructure project. The results will be used as a case study all across the world.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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