According to the World Bank, poverty in Pakistan has persisted at more or less the same level since the 1990s



Apr 05 - 11, 2004





Phase two of Pakistan Poverty Alleviation Fund (PPAF) with World Bank support of about Rs. 14 billion (239 US Dollars) was launched in Islamabad last week by Finance Minister Shaukat Aziz, who declared that Phase-II programme, the highest ever micro finance project, would enhance access of the poor to micro credit, infrastructure, health, education and skill enhancement training.

The PPAF established in 1999 as an autonomous institution would carry out the project, with an objective to facilitate access to support and services to poor and disadvantaged people, including micro credit, infrastructure, social services, skill enhancement programmes and training. Women would be especially targeted for this support. The programme would reach out to five million poor of the country.

PPAF uses an integrated approach to address many facts of poverty through challenging vulnerability of poor through well-managed NGOs with good track record. It has reached 86 districts, benefiting 4.6 million people, through 26,500 community organizations. It has 178 PO field offices running 52,200 infrastructure projects and has a base of 316,000 micro credit borrowers as of December 2003.

According to the World Bank, poverty in Pakistan has persisted at more or less the same level since the 1990s. Almost one-third of the population lives below the poverty line, according to the official figures, and the Human Poverty Index of the UNDP estimates 40 percent people living in poverty. The International Monetary Fund (IMF) has also said that the significant gains in the fight against poverty are not visible. The rate of unemployment has also increased to 8.3 percent, according to the last labor force survey.

One of the key dimensions of poverty is the fact that poor have little to sustain themselves, and lack access to basic needs such as education, health, clean drinking water and proper sanitations. More over, the incidence of poverty is much higher in rural areas and much worse if gender disparities are taken into account. According to the poverty of opportunity Index, more than half of the women in Pakistan suffer poverty of opportunity compared to one-third of men. Women and girls often suffer more in poor households primarily due to their low social status, limited access to economic options and social service and lack of control over financial/productive assets.

"The government is fully alive to the endemic, and clearly unacceptable, levels of persistent poverty, Shaukat Aziz said. Sustained, consistent and coordinated national effort is required to be mounted for a comprehensive assault on the structural roots of poverty. He claimed macroeconomic recovery, particularly in the external sector, as one of the pre-conditions that would allow the government to expand budgetary outlays for development and pro-poor programmes, as identified in the Poverty Reduction Strategy Paper (PRSP). "The GDP growth of 6 percent is now well within our grasp," he claimed. A sustainable growth rate is a necessary condition to make an impact on poverty, but not enough to actually reduce it.



Rising levels of PRSP programme and robust recovery in the private sector is needed to create more income generation activity and to provide new jobs to the large unemployed population. Despite a rapid growth in the private sector credit off-take, there are no signs of a real turn around. The foreign private investment continues to be at low levels. However, the Finance Minister said there is healthy indication of a reversal in capital flight. "Private sector development is the cornerstone of the strategy and civil society institutions are visualized as strategy partners of devolved local governments together with provincial and federal agencies in the resolve to accelerate growth and raise per capita income," he maintained.

Qazi Azmat Isa, Task Leader of the World Bank said the PPAF-II would build upon the strong foundations laid down by the first project and scales-up operations. Whilst concentrating on its main activities of providing micro-credit and small scale infrastructure the project is also set to bring in second generation innovations, like offering inclusive financial and business solutions to the poor that consist of marketing, skill development and a choice of lending instruments; in infrastructure going beyond single to more integrated schemes; expanding its agenda to support health and education; encouraging linkages with local government; and comprehensive institutional development of NGOs and community organizations.

According to the bank, access to services is grossly deficient and is one of the main causes why substantial poverty persists throughout Pakistan. This lack of access to both productive resources and social services had resulted in low indicators of well being and lack of employment opportunities. The situation is compounded in rural areas, where access is even more difficult due to the inadequacy or complete lack of basic infrastructure.

The government interventions have little impact, as they largely failed to involve intended beneficiaries, especially women, in any meaningful way. Gender disaggregated indicators confirm this state of affairs. Under the new project, PPAF would expand outreach and move from a micro credit to a micro finance approach, offering more comprehensive financial solutions to its clients. Approximately one million new loans are planned for over half a million borrowers.

A PPAF release says that a third party evaluation exercise of the first WB supported project, household's borrowing from PPAF are better off today than they would have been if they had not borrowed. On average, family incomes and consumption have increased and personal and business assets like house have improved. The social status of the borrowers especially women has improved. Second phase would work on the model of first phase while introducing innovative ideas.