Pakistan progresses on poverty reduction — but what about equity?

Updated March 24, 2019


"Can Pakistan afford inequality of opportunities? The answer is no."— Reuters/File
"Can Pakistan afford inequality of opportunities? The answer is no."— Reuters/File

IN recent years, Pakistan has made remarkable progress in reducing poverty. Estimates based on the national poverty line, which was set at Rs3,030.3 per adult equivalent per month based on 2013-14 prices, show a consistent decline over the past two decades. Between 2001 and 2015, approximately 32 million people were lifted out of poverty and the poverty rate was more than halved, going from 64 per cent in 2001 to 24pc in 2015. However, a lot is yet to be done. Not only because 2015 estimates show that approximately one in four Pakistanis still does not have enough money to satisfy basic needs, but — even more alarming — progress has been far from equal when looking across the provinces, districts, cities, and rural areas.

While poverty declined at a fast pace in Khyber Pakhtunkhwa and, to a lesser extent, in Punjab, progress was less positive in Sindh and Balochistan. Within provinces, poverty has remained stubbornly high in southern Punjab and northern Sindh. Similarly, the pace of poverty reduction has been slower in rural areas compared to cities, where the risk of poverty is less than half compared to rural areas.

Inequalities in poverty levels and poverty reduction performance are compounded by substantial inequalities in access to and quality of basic services such as health, education, electricity, water, and sanitation. Being born in one of the country’s lagging areas and/or in a poor family largely predetermines a child’s chances of escaping deprivation and realising his or her full human capital potential in life.

Can Pakistan afford inequality of opportunities? The answer is no: not only in terms of social justice and social cohesion, but also — as shown by international evidence — because economic development that is not inclusive is not sustainable. With a growing and young population, the future of the country’s economic development relies on realising in full the human capital potential of its new generations. In this sense, tackling poverty traps and ensuring that every child has the same opportunities in life, irrespective of circumstances at birth, is not only imperative to realise a more inclusive Pakistan, but it is also crucial to sustain growth and to continue reducing poverty over the years to come.

The task is not easy, and results cannot be achieved overnight. But here’s how to make a start.

First and foremost, the equity problem must be recognised, and a broad consensus must be sought about the need to address it. The government has identified the need to strengthen investments in human capital. It will be important to also acknowledge the need to level the playing field by ensuring equal access and quality of services throughout the country.

Second, once the need of equalising opportunities is properly recognised, financial resources should be mobilised and targeted accordingly. This could entail a reform of the National Finance Commission award formula. Currently, resources are for the most part allocated to provinces “unconditionally”, based on each province’s population. A possible reform could entail reducing the population weight in favour of health and/or education service requirements, possibly also including rewards to incentivise performance on service delivery outputs (services access, quality and standards). A similar approach could be further applied to allocation of resources to districts, with the objective of addressing service delivery gaps in lagging areas.

Third, effort should be made to strengthen local governments and to address capacity and accountability constraints, especially in lagging areas. Local governments play a key role in service delivery. Yet, the role, responsibilities and capacity of local governments is not uniform across the country. With provinces experimenting with different forms of local governance, providing a platform that allows for knowledge exchange is an opportunity to foster learning, strengthen capacity and develop a uniform model of local governance across Pakistan.

Lastly, a credible and transparent monitoring system should be put in place to build the base of evidence necessary for informed policy making and to track progress over time.

Reducing inequality is one of the main challenges in Pakistan today. By acting strategically to cut inequality, and particularly to redress inequality in opportunities, the country could not only lift more people out of poverty at a faster pace, but it could also achieve a more sustainable and inclusive process of development moving forward. The vision should not only be of a more prosperous Pakistan@100, but also of a more equitable country for all its citizens.

The author is a member of the World Bank staff

Published in Dawn, March 24th, 2019

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