For the first time in the history of economic
policy in Pakistan poverty alleviation has been made the center piece of
the government's economic revival plan. However for the 45 million people
of Pakistan who live in hunger today what matters is not so much that a
pro poor policy pronouncement has been made by the government as the issue
of whether or not it will be successfully implemented. In this article we
will first indicate how the objective of poverty alleviation can be made
integral to a macro economic growth strategy and then discuss the implementation
mechanism of a direct attack on poverty.
At the outset it is important to specify three elements
in the political economy of poverty in Pakistan: (a) The reproduction
of poverty on an increasing scale is endemic in an economy where productive
assets are concentrated in the hands of a small elite. (b) The resultant
inequality in the distribution of incomes is further reinforced by the
institutions of credit and skill training which are designed to cater
to the elite rather than the poor. (c) A centralized bureaucracy whose
mode of exercising power involves the use of state resources to intensify
the dependency of the poor through the establishment and maintenance of
patron-client relationships between the elite and the poor. In view of
these features underlying the poverty phenomenon in Pakistan, any realistic
strategy of poverty alleviation would essentially involve initiating an
economic and social process through which the poor acquire power. The
poor must be enabled to organize themselves at the village and mohallah
level, to acquire skill training for increased productivity, to access
credit for building their asset-base and to participate in institutions
of local self governance, as well as at the provincial and national levels.
It is only then that the poor can replace their sense of being isolated
and ineffectual with a sense of being part of a community. It is only
then that they will have control over the decisions that affect their
economic and social lives. This perhaps constitutes 'empowerment' of the
poor. By contrast, the power of the ruling elite is constituted by fragmenting
and isolating those they 'govern', and locking them into a relationship
of dependence, in which each handout of resources to the poor reinforces
their dependency and reproduces their poverty. The enterprise of poverty
alleviation, therefore, brings into focus two counter-posed conceptions
of power. The issue of taking 'poverty alleviation' to scale, raises the
question of how a different space is to be created, in which the process
of reproducing the power of the ruling elite is replaced by a process
of 'empowerment' of the poor.
A three pronged strategy of growth and poverty alleviation
needs to be launched: (1) Winning both time and space for an independent
national revival strategy through financial negotiations with the IMF
and political negotiations with the G-8 countries. (2) Injection of aggregate
demand into the economy by increasing investment in those sectors which
have the capacity of generating a relatively higher GDP growth, employment
and exports per unit of investment. (3) Launch a national initiative of
developing and replicating Community Based Organisations (CBOs) at the
village and mohallah level. Such an initiative to be feasible must be
characterized by autonomy of CBOs, rapid pace of coverage and cost effectiveness.
The tendency to set up government sponsored top-down NGOs which are bureaucratic
and have high overheads must be eschewed.
Let us examine each of these prongs of a national
strategy of growth and poverty alleviation:
1. The necessary financial space must be won through
economic diplomacy with G8 countries and the IMF. We must reason with
them that the rescheduling of some of our debts that occurred last year
must be repeated again in the year 2001 to avoid a crippling increase
in our debt servicing burden. Another three years of respite from debt
servicing beginning from 2001 is necessary to win the financial space
for launching a revival strategy. What makes this economic diplomacy particularly
challenging is that together with achieving a second rescheduling of loans
we must also persuade the IMF that a home grown, high growth strategy
is necessary for sustainable macro economic stabilization. It would be
unrealistic to expect that western financial support for Pakistan's economic
revival strategy can be acquired merely through the quality of our economic
logic or the eloquence of our negotiators. It may be necessary to seriously
address the major political concerns of the G-8 countries. These could
be: (i) the problem of export of Jehadi militants, (ii) stabilization
of nuclear deterrence at a minimum level, (iii) a peace process with India
and (iv) initiating a new democratic era in Pakistan within a specific,
though not necessarily declared time frame.
2. The second prong of the revival strategy should
be to sharply increase investment through public-private partnership in
three key sectors of the economy:
2 (a) Rehabilitation of the irrigation system which
is currently in a state of acute disrepair with irrigation efficiency
down to only 30%. Such a campaign would involve organising semi skilled
labour for the desilting of canals, strengthening the banks, organising
villagers for making "Pucca Khaalas" (concrete lined water courses)
and to improve the gradient of water courses and farmlands in order to
improve both the delivery and application efficiency of irrigation. Such
a campaign being inherently labour intensive would not only generate large-scale
employment rapidly but also help to improve water availability and yields
per acre at the farm level. If the campaign is professionally designed
and managed, the funding for financing wage payments to the newly employed
labour force could be sought from the World Bank or the Asian Development
Bank both of which have poverty alleviation and sustainable agricultural
growth as their priority concerns.
In addition to the campaign for improved maintenance
of the irrigation system other labour intensive infrastructure projects
should also be undertaken to simultaneously generate employment and stimulate
aggregate demand in the economy. Such projects could be the building of
farm to market roads, national high ways and ports, together with improved
infrastructure in small towns across the country. Such infrastructure
projects would need to be undertaken through joint venture arrangements
between domestic construction outfits such as the FWO and specialized
foreign firms. The joint ventures would have to be pro-actively facilitated
by the government.
2 (b) Rapidly develop export led production capacity
for milk, fisheries and high value added agricultural products such as
fruits, vegetables and flowers. Let us illustrate this initiative by using
the example of milk. At the moment Pakistan is producing approximately
177 billion rupees worth of milk annually for domestic consumption. This
makes milk the largest agricultural product. By comparison, wheat, Pakistan's
largest crop has an annual production value of approximately 111 billion
rupees. Unlike wheat however, the output of milk can be accelerated sharply
within a couple of years. Currently Pakistan's milch cattle have a yield
per animal which is one-fifth of the European average. Demonstrable experience
in the field has shown that the milk yields per animal in Pakistan can
be doubled within two years through scientific feeding, breeding and marketing.
If the institutional framework could be established for training the farmers
in scientific feeding and breeding and if the logistics could be set up
to collect milk from the farm door by means of refrigerated transport,
milk output in Pakistan could be doubled. This would have a dramatic impact
not only on the incomes of poor peasants, but also on exports and overall
GDP growth. In view of the fact that Pakistan lies at the hub of milk
deficit regions such as Central Asia, West Asia and South East Asia, if
milk out put in Pakistan could be doubled our export earnings could increase
by US $ 4 billion annually. Keeping in mind that Pakistan's balance of
trade deficit is about US $ 1.5 billion an additional four billion US
$ of foreign exchange earnings from milk exports would resolve Pakistan's
balance of payments problem. Such an initiative therefore can lead to
accelerated exports, higher GDP growth and improved income distribution
in Pakistan.
Marine Fisheries, also provide a significant potential
for improving foreign exchange earnings although not as large as the potential
for milk. Here again what is required is improved institutional support
and better management rather than huge investments by the Government.
In the case of marine fisheries currently there are large losses and failure
to achieve significant exports due to the fact that the storage conditions
of fish during transportation are both unscientific and unhygienic by
international quality standards. Currently alternate layers of fish and
hard sharp edged ice are placed in containers on the boat. Under the weight
of upper layers of fish and the sharp edged ice, fish at the lower layers
are crushed, and the resultant bleeding causes putrefaction. To avoid
this it is necessary to provide shelves for layered storage of fish in
boats, topped by dry ice, with fiberglass covers. Through such measures
it would be possible to bring back the fish at the European Union standards
of minus 7oC and thereby make it exportable. An export potential of at
least 300 million dollars exists over the next three years if such improved
management of the marine fisheries industry could be achieved.
Another element in increasing high value added production
and export in the agricultural sector would be to facilitate the production
of fruits, vegetables and flowers for exports. This would require institutional
support for improved quality of output, improved grading packaging, and
refrigerated transport right up to the cargo terminals for air freight
to the export market.
2 (c) Establish industry specific training institutions combined with
institutional support for credit and marketing to the small-scale industrial
sector in Pakistan. Large-scale training of software experts for example
could quickly result in significant software exports from Pakistan. India
with its 200,000 computer specialists, exports about 5 billion US$ worth
of software and has a target of 20 billion software exports in the next
five years. There is no reason why Pakistan cannot build a pool of software
experts for a large increase in its export earnings. This would of course
require a pro-active government to establish joint ventures between large
software companies such as Microsoft and Pakistan's institutions such
as LUMS and Private sector firms such as Informatics.
Similarly other high value added small scale industries such as manufacture
of moulds, dyes, electronics and machine tools could be encouraged to
produce quality products for export. This could be done by providing institutional
support in terms of credit, quality control management, skill training
and marketing. (A detailed blueprint on such industrial support institutions
is available in my book titled: A strategy of Poverty Alleviation). Such
support institutions while being facilitated by the government can and
should be in the private sector and be market driven. Such small-scale
industries have the advantage of having a low gestation period, are labour
intensive, and can generate larger output per unit of investment compared
to the large scale manufacturing sector. This would accelerate GDP growth
in the medium term at relatively low levels of investment and would also
increase employment and exports for given levels of GDP growth.
The third prong of the revival strategy should be to launch a national
campaign for poverty alleviation. The objective of this campaign should
be to facilitate rapidly and cost effectively, the establishment of village
and mohallah level organisations of the poor through which they can identify
income generating projects, initially at the household level; acquire
skill training from governmental sources, private sector, NGOs and donors;
and access credit for micro enterprise projects through apex organisations
such as the Pakistan Poverty Alleviation Fund (PPAF).
The very concept of 'empowerment' of the poor, is problematic in a form
of governance in which political support is to some extent acquired and
maintained through patron-client relations between the 'governors' and
the 'governed'. In this context, disbursement of the state's financial
resources and provision of employment opportunities are used as a means
of enlarging patronage and power. Even some of those who are heading large
government initiated, but autonomous poverty programmes, tend to operate
them as fiefdoms and form alliances with politicians and the bureaucracy
by granting them unwarranted access over resources and employment decisions
within their 'demesnes'. Consequently, resources (whether granted by donors
or government) apparently provided to create a space of empowerment for
the poor, tend to get re-appropriated by the ruling elite. The space of
empowerment for the poor tends to get restructured into a more complex
space which appears to be empowering the poor while actually reinforcing
their dependency through patron-client relations. Some of the government
sponsored large NGOs or "Support Organisations" have become
subject to this dialectic.
The question that arises is how scaling up of support organizations for
Participatory Development is to be achieved without bureaucratizing the
support organizations and the space 'allocated' for the empowerment of
the poor, prevented from being used for the exercise of patron-client
relations. This possibility occurs whenever governments create large support
organizations which while being formally autonomous are actually subordinate
to the ruling elite and its mechanisms of reproducing dependency. Perhaps
a workable solution to this problem could be to foster the rapid replication
of existing community based organisations at the village/mohallah level,
through the PPAF and a major Micro Credit Bank along the lines of the
Grameen bank in Bangladesh.
It is important that such village level community based organisations
(CBOs) be autonomous and have the ability to form cluster apex organisation
with other CBOs. Such organisations by means of social mobilisation, increased
productivity through skill training, increased income, savings and investment
would begin a process of localised capital accumulation. Such a process
would be integrally linked with the emergence of a new consciousness of
participatory development. The poor could thus break out of the poverty
nexus and become active subjects of economic growth rather than being
passive victims of it. Such a process of village/mohallah level increases
in productivity incomes and savings, would not only constitute a direct
attack on the poverty problem but would also contribute to a faster and
more equitable macro economic growth.
CONCLUSION
We have argued in this article that poverty alleviation cannot be conceived
either as a trickle down effect of growth or as a handout by the elite.
It is essentially about changing the structure of power itself from an
elite dominated to a more broad-based and decentralized one. A credible
strategy would therefore require two inter related strategic initiatives:
(a) First to initiate an economic growth strategy based on high value
added small scale units in both the farm and manufacturing sectors which
can generate higher output, employment and exports per unit of investment.
This should help to restructure the growth process itself by developing
the asset-base of the relatively lower income groups and thereby achieving
growth with equality. (b) To induce a decentralized and cost effective
process of empowering the poor by facilitating the organisation of the
poor, skill training, access over credit and local self governance. Thus
poverty alleviation instead of being merely a sop by the elite, would
become an integral part of the process of economic growth and change in
the structure of political power.
|