ADB CONCERNED OVER RISING POVERTY, UNEMPLOYMENT

Despite impressive economic growth Pakistan fails to effectively address poverty issue

From SHAMIM AHMED RIZVI, Islamabad.
Sep 12 - 18, 2005

The President of the Asian development Bank (ADB), Haruhiki Huroda, has expressed dissatisfaction over Pakistan's poverty level and urges the Pakistani government to do more for better performance in this area.

Pakistan has performed extremely well on economic front and its pace of development in various key areas was much better than other regional countries but the prevailing poverty level posed a big challenge for the country, he added.

ADB President was flanked by Prime Minister's Advisor on Finance and other senior members of his team at a press briefing held in Islamabad last week.

The ADB chief said Islamabad was facing challenges in various areas but poverty and unemployment were the most serious concerns for the country. Although Pakistan has made some improvement in the area of poverty reduction but it was not enough in view of the enormity of the problem. He suggested that Pakistan should divert funds to less developed areas to improve the living standard of the downtrodden section of society.

Earlier, the ADB President also visited Khushhali Bank, the country's largest micro finance bank which was established with ADB's pioneering assistance for the sector. The Khushhali Bank is playing useful role in mitigating unemployment and poverty by providing small loans to poor households for setting up cottage industries. The bank has so for provided such financial assistance to more than 500,000 households specially poor women in remote areas of Pakistan. Appreciating the contribution of Khushhali Bank, the ADB chief said that such activities should be expanded at a large scale in view of the magnitude of the problem. Assuring his bank's full support for such programmes he said that ADB was dedicated to reducing poverty in Asia and pacific region through pro-poor sustainable economic growth.

In a report released to the press by the chief of Khushhali Bank, Mr. Ghalib Nishtar, explained in detail the efforts of the government in increasing the micro financing in the country with the ultimate objective of helping poor and reducing the level of poverty. The report claims that Khushhali Bank has endeavoured over the last five years to develop an efficient and sustainable distribution system capable of handling large volumes of business across diverse operating environments while at the same time developing an insight into the market. Today, the bank has a network of over 140 service outlets across nearly 75 districts of the country and has processed over a million loans valuing Rs. 5.5 billion with a strategic focus on the rural areas of Pakistan.

The bank has successfully budged with bilateral and multilateral development agencies to simultaneously focus on highly marginalized territories in Sindh and Balochistan and route human and capital investment for sustained results with minimal lead-time. Without such partnerships, which bring valuable global experiences to Pakistan the development of marginalized areas may not remain within the realm of strategic priorities manifesting expansion in productive areas only.

Despite all the tall claims about robust growth in the economy, the harsh reality remains that the common man who is suffering from unemployment and acute poverty for over a decade received no relief from this growth. Rather their miseries have multiplied because of rising inflation, which, according to the economic managers of the country, is the natural outcome of increased wealth in the country. The increased wealth is, however, confined to upper 10 percent population while the rest are there only to suffer its adverse effects.

The budget makers had announced that the year 2005 will be a year for the poors, assuring more jobs and poverty reduction, but it still seems to be a dream. There has been no decline in the poverty or unemployment level. Still more than 33 percent of the population of Pakistan is living below poverty level i.e. less than a dollar a day.

Poverty is a term that does not lend itself to precise definition. But as a broad generalization, we might say that a household lives in poverty when its basic needs exceed its available means of satisfying them. This definition applied to poverty may be based on absolute needs or in terms of that are relative to the basic needs of the household or (individual) as determined by society.

The poor are heterogeneous group. However, poverty is concentrated among the poorly educated, the aged, and households headed by women.

However, if we analyse comparative figures of Pakistan's GDP group and the growth in the rate of poverty, it will show that our GDP growth rate does not seem to be favourable to our poor and deprived strata of our society. Instead, as shown in the following economic indicators of GDP growth and rate of poverty, it is crystal clear that our economic growth is heavily titled in the favour of high-income groups and seems likely to continue until drastic measures are not taken in favour of the poor.

 

1960s

1970s

1980s

1990s

2000-04

GDP growth

6.77

4.84

6.45

4.70

5.20

Poverty growth

40.24

30.68

37.4

32

34

Economic growth is a wide-ranging term that is often misunderstood. For an economy to grow in real terms, a bulk of the economic activity has to come from a large and vibrant middle class that pushes the economy forward. Growth fails to have the desired effect when a small upper class, being the sole beneficiary of government policy and incentives, is burdened with dragging along the entire economy.

Therefore, while it is appreciated that the economic managers are looking to build on the successes already achieved, it cannot be stressed enough that ensuring an egalitarian distribution of the gains deserves just as much, if not more, attention. There can be no denying the government's success in restoring a busted and squandered economy, but there can also be no denying the fact that the areas that they have left out now need their undivided attention.