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Old Sunday, November 11, 2012
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What is to be done to alleviate poverty in Pakistan


According to recent Asian Development Bank's estimates, almost one-third of the Pakistan's population lives below the poverty line. Seventy-five percent of these poor reside in the rural areas. Major poverty characteristics in Pakistan include high levels of income and asset poverty, economic and social vulnerability, gender disparity, and low levels of human capital. Poverty has several dimensions in Pakistan. The poor people not only have low income levels, they also lack access to basic needs like education, health, clean drinking water and proper sanitation facilities. All of these undermine their capabilities, limit their opportunities to secure employment, result in their social exclusion and expose them to exogenous shocks. The vicious cycle of poverty is accentuated when the system of governance excludes the most vulnerable from the decision-making process. It is an alarming situation, indeed, for a country which is conferred with huge natural resources, vast agricultural land and a large labour force. There are a number of factors responsible for this sorry state of affairs. These can be broadly divided into political, economic and social.

The policy makers in Pakistan are facing two very huge challenges. They need pragmatic steps to revive economic growth of the country and also to help a huge chunk of population come out of the deadly trap of poverty. Serious efforts are needed to ensure pro-poor growth and socially inclusive development. It has to be kept in mind that an increase in growth rates may only lead to an appreciable reduction in poverty if it is broad-based. Social development can only be inclusive if it provides protection to the most vulnerable sections of the society.
The vicious cycle of poverty is accentuated when the system of governance excludes the most vulnerable from the decision-making process.
Employment opportunities are diminishing day by day because the overall milieu of the country is not very conducive for economic activity of the private sector. Consequently, the domestic as well as the foreign investors are not willing to inject their money into the system. Public resources have not been managed properly and significant improvements are required to make best use of them. An intrusive system of economic regulation coupled with deteriorating law and order situation are aggravating the problem.

Role of prudent macroeconomic policies in reducing poverty can hardly be overemphasized. At the same time, large-scale improvements in the structure and functioning of systems of governance have to be brought about. We have been hearing about good governance for quite some time now. Have we ever realized what the repercussions of poor governance are? It is the root cause of poverty as it increases vulnerability and reduces business confidence which translates into lowering of investment and substantial reduction in efficient service delivery. All of this has serious implications for human advancement. Public sector in Pakistan has made only half-hearted and lukewarm attempts in some areas like devolution, public expenditure management and anti-corruption efforts to improve governance within the country. There is a dire need of reforms in the tax collecting machinery, the police and the judiciary in specific and in civil service in general.

Devolution is needed to ensure that development of the country is equitable and includes all segments of the society especially the poorest and marginalized. Improvements in corporate governance and overhaul of the Public Sector Enterprises in order to reduce government's liabilities are imperative for encouraging private sector participation and investments.



Sustained economic growth is essential for poverty alleviation. The policy maker and managers in Pakistan must understand that there are strong linkages between pro-poor growth on one side and human development, good governance, private sector development and regional cooperation on the other.

Rural development demands a lot of attention from those who are at the helm of affairs. Serious efforts are needed to enhance agricultural productivity and strengthening of research and extension services. Role of private sector in storage and agriculture support services has become all the more important.

Developing agribusiness for exports and rural small and medium enterprises has the potential of increasing non-farm employment opportunities substantially. Improving communications infrastructure needs more focus, as it will promote rural-urban linkages. Inadequate infrastructure has remained one of the major obstacles in the economic growth of the country. Improved access to credit in rural areas and mobilizing savings can also play a vital role in rural development.
Have we ever realized what the repercussions of poor governance are? It is the root cause of poverty as it increases vulnerability and reduces business confidence which translates into lowering of investment and substantial reduction in efficient service delivery.
Pakistan has to make it a priority to employ major portion of its labour force, both male and female as income generation from employment is considered to be the most potent weapon in alleviating poverty. The demographic transition, commonly known as the 'demographic dividend', results in a smaller population at young dependent ages and relatively larger population in the adult age groups. Pakistan must make full use of this advantageous position. The period of this dividend will not be infinite but will come to an end as the working-age population grows older, eventually increasing the size of dependant population. Moreover, the dividend will not be repeated. This unique opportunity can, however, easily turn into a 'demographic liability' if appropriate policy measures are not taken to fully utilize the expanding labour force. Government of Pakistan has established National Vocational and Technical Training Commission as an apex body to coordinate, facilitate and regulate the technical and vocational education and training sector of the country. Although this is a very positive step in the right direction but the results of this effort have yet to be seen. A more professional approach in handling the affairs and strategic direction of this Commission is required in order to reap maximum benefits from it. Linkage with industry and revamping the training methodology along with revision of curricula, keeping in view international advancements and requirements, are imperative.

The country's poverty reduction strategy must include large-scale investment in strengthening the available human resource base so as to produce a skilled and competent workforce that can respond to the increasing demands of a steadily growing economy. This strategy has to take into account four very important factors;

(i) accelerating economic growth while maintaining macroeconomic stability;
(ii) improving governance;
(iii) investing in human capital; and
(iv) targeting the poor and vulnerable.

Athar Mansoor
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