Poverty Alleviation initiatives have traditionally
been mere marginal additions to mainstream policy. For the first time
in Pakistan's history, poverty alleviation has become the centre piece
of the strategy of economic growth. In this context a two pronged approach
has been adopted. The first prong consists of a set of policies that would
not simply accelerate GDP growth but would also induce a change in the
structure of growth itself so as to enhance its capacity to alleviate
poverty. The second prong consists of building institutions both at the
national as well as grassroots level through which a direct attack on
poverty could be undertaken. In this essay policy initiatives with respect
to each of the two prongs would be briefly elaborated, the strategic linkages
between the two prongs specified and finally the necessary conditions
for successful implementation indicated.
Poverty in Pakistan has grown during the last 12 years
at a rate unprecedented in the country's history and perhaps in the contemporary
developing world. For example the percentage of population below the poverty
line has increased from 17% in 1987-88 to over 30% in 1998-99. The levels
of unemployment have increased even faster as a sharp slow down in economic
growth has been accompanied by a decline in the employment elasticity
of GDP growth. The social dimension of this phenomenon can perhaps be
grasped by the fact that every third household in Pakistan to-day is going
hungry. The overwhelming emotional pressures of hunger and unemployment
in families has been poignantly expressed in the fact that for the first
time in Pakistan's history large numbers of men and women have committed
suicide leaving behind written evidence that they chose to die rather
than bear the indignity of being unable to feed their families. Given
the magnitude and pace of increase in poverty and unemployment, it is
clear that macro economic growth must be restructured so as to increase
employment and incomes of the poor for given growth rates of GDP. This
concern has been addressed by three macro economic policy initiatives:
(i) Policies for increasing the production of milk, fisheries, vegetables
and flowers. The output of each of these products can be increased by
poor peasants and small farmers living close to urban centers. If credit,
marketing facilities, refrigerated transportation and storage for exports
could be facilitated for these products, then not only could the incomes
of poor peasants be sharply increased but Pakistan's GDP growth and exports
could also accelerate significantly. (ii) A sharp increase in small and
medium scale industries producing high value added exportables is being
aimed at by providing the necessary support system. This support would
consist of (a) providing credit, (b) technical support for quality control,
(c) common facilities for heat treatment and forging, and (d) marketing
facilities. Small industries have been known to generate higher employment
output and exports per unit of investment compared to large scale manufacturing.
Therefore it is clear that an increase in the weight of these industries
in total GDP would help to accelerate national output employment and exports
at relatively low levels of investment. (iii) The tax structure in Pakistan
is not only skewed in favour of indirect taxes but is also characterized
by a low tax elasticity with respect to GDP growth. Consequently not only
is Government operating under pressure of low tax revenues but also the
burden of taxes adversely affects the poor rather than the rich. For example
according to a recent study the burden of indirect taxation reduces the
real income of the bottom ten percent of the people while it increases
the real income of the top ten percent of the population. The policies
of restructuring GDP growth would be incomplete if the tax structure was
not rationalized in such a way that the percentage of direct taxes is
increased and the tax GDP ratio is improved. Rationalization of taxes
is also necessary to remove distortions whereby investors in high value
added goods and exports are discriminated against.
The second prong of the strategy of economic revival
and poverty alleviation consists of establishing both national apex institutions
as well as village/mohallah level institutions through which a direct
attack on poverty can be launched. In this regard new apex institutions
such as the Pakistan Poverty Alleviation Fund (PPAF) and the Micro Finance
Bank have been established. The purpose of these institutions is to help,
foster village level community based organisations (CBOs.) which could
provide skill training, technical support and micro credit for income
generation projects of poor households in both the rural and urban sectors,
to initiate a process of Participatory Development. This process involves
creating organisations of the poor, through which the poor can acquire
new skills, increase their productivity, savings, incomes and thereby
become active subjects rather than the victims of the process of economic
growth. As the poor get capacitated and begin to take the decisions that
affect their economic lives and as their incomes and savings increase,
the poor could become significant contributors to GDP growth. This is
the second prong, through which as the poor shift out of poverty the GDP
growth would become higher and more equitable.
As far the people of Pakistan are concerned what matters
to them is not that an imaginative new strategy for poverty alleviation
has been articulated. What matters to them is that such a policy be implemented
rapidly to make a palpable impact on their lives. If the policy of economic
revival and poverty alleviation is to come to fruition, three challenges
to implementation must be addressed: (i) At least 400,000 community based
social mobilizers/facilitators must be developed over the next three to
five years. These social mobilizers should be trained in community management
skills, village level banking and a wide range of skills necessary to
support micro enterprise projects. These social mobilizers/facilitators
would have the task of organizing and managing community based organisations
(CBOs.) at the village/mohallah level and to access micro credit and technical
support from government, donors, larger NGOs and the private sector. It
is only when a large reservoir of village/mohallah level social mobilizers
is created that it will be possible to implement and sustain government
policies of decentralization at the district level. In the absence of
social mobilizers and the countervailing power of the poor, devolution
to district level governments will increase oppression and injustice in
those districts where powerful feudal and other vested interests dominate
the local structures of power.
The second challenge of implementation is to undertake
a Civil Services Reform. Such a reform should aim to reduce the number
of civil servants drastically, fill key positions by professionals and
create adequate goal oriented evaluation and monitoring systems. An essential
feature of the civil services reform would be the training and orientation
of a new cadre of district level professionals who would be trained and
committed to serve the people rather than rule over them at the district
level.
The third challenge of implementation is to create
a new data set at the village level that would enable the formulation
and implementation of development policy at the district level. Such a
data set would provide district level information on three issues: (a)
A Poverty Map that should show the location and size of poor communities
in each district. (b) The map should also articulate the specific mechanisms
through which the poverty of each community is reproduced. It should also
identify the interventions that can be made to break the nexus of poverty
in each district. (c) An assessment of the various actors on the ground
that are claiming to alleviate poverty in each district. Such an assessment
should present a typology of NGOs, government departments, donors and
private sector in terms of the impact on the poor, cost effectiveness,
speed of coverage and quality of leadership. It is only such a dynamic
Poverty Map that would set the stage for efficacious action by district
level governments and provide a basis for evaluating the impact of such
action over time.
In this essay I have indicated the outline of a strategy
for economic revival and poverty alleviation on the one hand and the challenge
to implementation on the other. The seriousness and effectiveness of the
government will be judged not merely in terms of what it says but in terms
of the result that it produces on the ground.
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