For the masses to be sure that the various levies don’t end up in private pockets, the governmemnt needs to do some serious confidence building. Besides, it will have to improve efficiency, keep a check on pilferage of resources, and give a new orientation to its policy framework
THE act of helping the poor can be witnessed on a regular basis. But it seems that in Pakistan it reaches its peak during the holy month of Ramazan, when most of us try and indulge in virtuous deeds. Philanthropic organizations launch their campaigns in advance to get Zakat, Sadaqaat and other donations. One gets to read and see moving messages, images and appeals in the form of advertisements in newspapers, not to mention leaflets, billboards and banners to mobilize funds for different causes. The competition for getting money becomes an intense one and all campaigns involve high costs. Such investments are made while harbouring expectations of high returns. And the returns, more often than not, prove to be good. It has been estimated that Rs75 billion are donated from all over the country to different campaigns in one year.
The very well known deficit of trust makes the efficacy of the government irrelevant as far as social welfarism in Pakistan is concerned. The country’s total development budget is Rs202 billion and the total revenue generated through direct taxes amounts to Rs181.9 billion. This magnitude of donations (Rs75 billion) in a country where the income tax to GDP ratio is abysmally low at three per cent is astonishing. What does this mean?
If one were to use these numbers to understand the Pakistani mindset, the logic behind certain popular economic choices of the people, and the mismatch of economic policies to address key economic challenges, they would prove very interesting. Unfortunately, most official publications are a result of certain routine exercises carried out by weary, indifferent statisticians and processed by the politicized self-serving experts who apply ‘creative’ accounting skills to get the desired results to suit the country’s hierarchy. These reports fail to bring into light the several evolving trends in our society that influence and sometimes determine the quality of life of the people.
The data quoted above reveals the fact that if taken up for a systematic, in-depth study, it could explain the incomprehensible economic behaviour that can be useful for effective planning. Some observations given below in this article include: Is there any need and scope for philanthropy in Pakistan? What is the financial strength of the classes who can afford to spare hefty amounts (Rs75 billion) to donate? The sense of social responsibility amongst the rich. The lack of trust in the government (Rs182 billion in direct taxes) as far as delivering for the benefit of the country is concerned. The hidden loose network of social welfare outfits of a wide variety. The level of effectiveness and the efficiency of transfer of resources to the needy.
Let’s first examine how the figure of Rs75 billion that philanthropists put together each year was arrived at. To this end several organizations were contacted including the more visible ones such as the Edhi Foundation, the Khidmat-i-Khalq Committee, and the Al-Khidmat Foundation etc. But that’s a small group. There are several hundred bodies, registered or otherwise, that work on charities. Even some individuals reach out to the needy and extend direct help. There are many off-shoots of professional organizations that do the same. Also, there are several outfits in health and education sectors serving the deserving citizens and their children. The role of religious organizations that operate through mosque networks, community-based organizations, and biradri-based bodies must not be underestimated as well.
It’s impossible to gather an aggregate amount without a detailed study that has an institutional support. The only study with some credibility that’s available on the subject was carried out by the Aga Khan Foundation from 1998 to 2000. The study was supported by an assortment of international development agencies. The title of the report was: National Survey of Individual Giving. According to the report, Pakistanis gave out Rs70 billion in the form of monetary donations, volunteer time and gifts-in-kind during 1998. To arrive at a conservative estimate and after discounting the monetary expression of volunteer time the writer chose not to multiply Rs70 billion with the rate of increase in prosperity among prosperous classes over the period of five years from 1998, but just added up a sum of one billion rupees a year to arrive at the figure of Rs75 billion. These estimates could be labelled ‘conservative’ because since 2000 there have been enough supporting figures to conclude that the privileged segments of Pakistani society were benefited disproportionately from the miraculous economic expansion and growth.
So, let’s debate the issue whether there is any need for philanthropy in Pakistan. There could not be two answers to this. Or is it otherwise?
Despite economic growth, the income disparity in Pakistan has increased over the years. Poverty has not receded and the government is gradually disengaging itself from the public economic sphere. Even where it keeps itself engaged, its contribution is abysmally low and performance pathetic. Perhaps the most agonizing fact is that in this country there is no concept of social security that can save people from falling below the survival level. All vulnerable segments of society — the new-entrants from the rural areas to cities, widows, orphans, street children, senior citizens, the terminally sick, the injured, drug addicts, poverty-stricken masses — need help. To rectify the issue would require a lot of generous hearts.
A lot has been written on poverty that has increased over the years. It is also important to see what is happening at the other end of the spectrum, and to those Pakistanis who fall in between and are referred to as the middle class.
The rich in Pakistan have multiplied both horizontally and vertically. Apart from the feudals, the business class and top service men — both civilian and military — hierarchy in the services sector has gained financial muscle to join the club of the rich and mighty. It is difficult to measure the vertical heights that the rich in Pakistan have climbed over the last few year. A president of a certain bank, himself a billionaire, told this writer some time back that at the place where he used to jog with a couple of billionaires in the morning, now there are a dozen people working out to keep themselves fit. If not all, most rich families pick up causes of their choice to support. Some do it to earn social respect, and most do it quietly as a social responsibility or may be for religious reasons.
Even the people belonging to the middle class pay Zakat during the holy month of Ramazan, which is a minimum deduction in Islam to be made from one’s savings to help the needy.
In Pakistan, tax evasion is massive. All sorts of tax reforms have not been able to get the desired results. Taxation and Zakat are not the same. People don’t like to pay first before others. Most people do not trust the government because of the question mark that hangs over the effectiveness and ability of its collecting and distribution organs to deliver the money at the door of the needy. An important indication is the ‘forced’ Zakat at 2.5 per cent that banks collect on the 1st day of Ramazan from bank deposits. But what do the account holders do? They either file an affidavit saying that they belong to the religious sect that is exempted from paying Zakat, when they actually are not, or withdraw all the money and carry it home for an overnight stay. The amount is re-deposited on the second day of Ramazan. “Why should I pay to a government that disappoints us on all counts, be it provision of civil services, public utilities or law and order. I have to fend for myself and my family,” said a mid-level professional.
“I am fortunate and can provide for myself and my family but people who lose their bread winners or are under economic pressure for some other reasons look up to all sources other than the government. Because the government has not put the social security net in place,” explained a businessman who is Sunni but has submitted to his bank a declaration saying he’s a Shia to get his account exempted from Zakat. As long as there exists a credibility gap, there is little hope for the government’s taxation reforms to bear fruit.
The generous, God-fearing people are making up for the government’s failure to provide for those who cannot provide for themselves. The behaviour of the people may be commendable, but there are issues of efficiency and credibility in the way philanthropic organizations function. Had this massive transfer of resources from the resourceful to the needy been efficient, it would have changed the socio-economic scenario of the country.
As for the government, it will have to improve its efficiency, keep a check on pilferage of resources at the centre, and re-orient its policy framework to accommodate people’s concerns. It may not be a bad idea at all for President Musharraf’s government to introduce a social security network to offer an institutionalized social welfare alternative to the people. Only drastic confidence building measures can change the perception that government levies end up in private pockets. Is it not this credibility gap that has forced local people and international donors to try and be sure of the appropriate use of funds, grants and aids donated by them to the earthquake relief fund? But that is another story.
THE act of helping the poor can be witnessed on a regular basis. But it seems that in Pakistan it reaches its peak during the holy month of Ramazan, when most of us try and indulge in virtuous deeds. Philanthropic organizations launch their campaigns in advance to get Zakat, Sadaqaat and other donations. One gets to read and see moving messages, images and appeals in the form of advertisements in newspapers, not to mention leaflets, billboards and banners to mobilize funds for different causes. The competition for getting money becomes an intense one and all campaigns involve high costs. Such investments are made while harbouring expectations of high returns. And the returns, more often than not, prove to be good. It has been estimated that Rs75 billion are donated from all over the country to different campaigns in one year.
