Poverty Alleviation
By Sohail Ashfaq Malik

Poverty is a multi-faceted phenomenon manifesting itself in a vicious circle; low saving and investment results in low income, poor education, lack of health facilities, unequal distribution of wealth and poor infra-structure. The goal for human development is to increase human capabilities and the level of choices. This will results in a benign and better environment in which humans are given sovereignty and respect.

Due to rapid globalization, countries and their economies are becoming more integrated, it also brings evil effects of rich countries on poor and under-developing countries. The dominant countries not only influence the policymaking of poor countries but also exploit them with the tools of tariff and quota‚s. This widens the gap between the rich and the poor countries of the world, the poor become poorer and the rich become richer.

The poor countries of the world have to reorganize themselves to extract the benefits of globalization and avoid the perils of globalization. They should not beg for loans from the Godfathers of the international arena. Poor countries are also infected because of the so-called economics reforms like downsizing and rightsizing, concomitant the unemployment and increase in the number of poor. The slogan “halving the poverty of world by 2015” was raised in the UN millennium declaration. Policy makers assumed that this statement could be made possible because of the brisk economics growth in India and china. 1.2 billion of total world population is living below poverty level, they are not earning more than 1 dollar a day, it is also aimed that in underdeveloped country the number of poor person will shift to 1 person out of six from 1 person out of three. Eight millennium goals were also there on the agenda to achieve. The millennium development goals (MDG’s) are: eradicate extreme poverty and hunger, achieve primary universal education, promote gender equality and empower women, reduce child mortality, improve maternal health, combat HIV/AIDS, ensure environment sustainability, build a global partnership for development.

The international institutions are doing their job to some extent. We can’t blame them. The debacle of Argentina was caused due to the fact that international financial intermediaries like IMF and WB were not willing to take into account the problem of poverty in UDC’s and provide these countries assistance and grants for poverty alleviation. These situations also reduce the chances of direct foreign investment in these countries, which use to be considered as the catalyst of economics growth. But the flow of direct foreign investment (DFI) is also induced by the geopolitical situations of the region.

As far as poverty in Pakistan is concerned, the situation is deteriorating. Many factors are responsible for this influx of poverty. This country has been facing political turmoil and shutdowns. People have been elected on the basis of their cast and their pervasive influence on the society, uncountable wealth earned from huge and tremendous corruption. The 8th amendment of Zia and 13th amendment of Nawaz couldn’t stabilize the pulse of dying politics. Out of 55 years of independence we face 28 year of military dictatorship which concomitant loss of Bangladesh, hunger, lack of clean water, lack of health care, huge amount of debt burden, unequal distribution of wealth, unemployment, inflation, and irrigation water problems. Nuclear tests of May 28th 1998, the September 11th incident of and the war in Afghanistan have all had negative consequences like cancellation of export orders (most from US), suspension of cargo and passenger flight and imposition of war risk charges (WRS). Another bitter reality is that for past three fiscal years 1.5 million people added to the rank of unemployment, in this atmosphere of political unrest poverty alleviation is like asking for the moon.

Pakistan has a population of 14 million out of which 40 million are living below the poverty level; funds have been allocated on various projects for the improvement of infrastructure and communications, now that is has been realized that the main problem Pakistan has been facing is poverty. In Pakistan, the poverty level varies from province to province. NWFP has the highest rural and urban poverty followed by Punjab. Another obstacle in the way of poverty alleviation is that funds are given not for the purpose of poverty alleviation but to obey the foreign donor and to say YES to them. The UDC’s governments usually do this to attract more foreign assistance.

Tension on borders is also a vital factor that contributes to salinity in the pool of poverty. If this phenomenon carries on for longer period of time, much of the resources reserved for poverty alleviation and for other social action programs will be deployed on military purposes. The social indicators, which explain the picture of poverty in a country, are showing a declining trend in Pakistan as compared to those countries, which have same income level.

Poverty alleviation is also disturbed because of the loopholes of ineffective policymaking, bureaucracy (Red-tapism) and political instability in the system. It is commonly said that the signing of poverty alleviation and growth facilities (PRGF) program for the assistance of 1 billion dollars is also need of the time. In the regard government hit two birds with one stone, fulfilling the foreign reserve shortage and for poverty alleviation. The reality is that policies for poverty alleviation and other social developmental programs are half-baked. Poverty alleviation and growth facility (PRGF) is a buzzword. PRGF is a panacea or a mirage is still a moot question, signing of PRDF is followed by some terms and condition as well. The budgets of 2002-03 and 2003-04 will be dictated by donor authorities, so one expect that there will be new lot of taxes, customs duties, surcharges in the name of collecting revenue instead of broadening tax base stopping tax evasions and educating people. Signing of PRGF paper is followed by a rescheduling of 12.5$ billion of its official debt through Paris club this has result in conversion of these loans into long term concessional loans with extended repayment time of 40 years. The expected reduction in official debt is expected to be 1 billion dollar per year; the important point is that the loan, which is rescheduled, 70 percent of it is already on concessional terms. The real support will be if the high-interest loans would be retired first. The real purpose of seeking rescheduling the debt is to relieve resources and put them on productive public investment to stimulate growth and ultimately alleviate poverty because the poverty alleviation heavily depend upon rapid growth.

The international godfathers are also insisting on eradicating child labor which is not possible because in countries like Pakistan child labor is indispensable, a child may be the only earning hand of his family, eradicating child labor mean increasing level of poverty and unemployment. Lack of good governance is also a factor, which has been contributing in increasing poverty, and it has become a major problem in UDC’s and it needs to be addressed.

Therefore it is important to bring changes on the micro and macro level. Easy access to education, health and food should be given to poor. If Pakistan is able to create an abiding peace with its neighbors, it can become a favorite destination of DFI and if this will happen it will reduce the poverty and social deprivation.

Financial institution like KHUSHHALLI bank (micro finance bank) and SME’s are also a well-appreciated step taken by government in the regard. KHUSHHALLI bank will provide cheep loans to the poor. It has a network in 33 districts and its beneficiaries are 20,000 households and it also has a capacity to reach 100,000 households. Small medium enterprises (SME’s) provides short term and long term loans to medium and small enterprises. It makes the provision of credit easy and accessible to common man. To eradicate poverty from its roots we have to fight against corruption, improve governance, ensure transparent use of funds, and improve the police and judicial system. Greater access and maximum trade is also important for poverty reduction. Pakistan is a developing country. The government should take honest, practical and firm steps in this regard and it should deal the problem of poverty with iron hand so we can switch towards prosperity and insure better future for our coming generations.