ISLAMABAD, May 20: Minister for Finance Shaukat Aziz said here on Monday that Pakistan has been experiencing declining growth rate for the last several years due to which poverty has been increasing in the country.
This was stated by Minister for Finance Shaukat Aziz in a statement at the inaugural session of one-day conference on current issues in micro finance, read out on his behalf by Advisor for Economic Affairs Dr Ashfaque Hassan Khan here on Monday.
“Poverty remains a major global issue with one-fifth of the world’s population, two-thirds of them women, living in abject poverty. South Asia houses more than one-third of the world’s poor,” he said stated.
The seminar was organized by Pakistan Micro Finance Network here on Monday.
He said Pakistan had been experiencing an increase in the incidence of poverty, which was a consequence of declining economic growth rate over the past several years.
The Government of Pakistan has, therefore, taken a conscious decision to prioritize poverty alleviation in the overall framework of economic policy-making, an approach evident through the government’s comprehensive Poverty Reduction Strategy Paper.
Aziz pointed out that as a part of new strategy, a higher resource allocation had been ensured for poverty alleviation programmes such as the integrated small works programme, which was aimed at generating direct employment, ensuring enhanced access to basic education, health and nutrition, strengthening the Zakat system and the provision of safety nets such as the food support programme.
The strategy also focused on ensuring access to sustainable micro finance services to the poor to enhance their income-generating capacity since there existed a direct nexus between poverty and micro finance, he said.
In Pakistan, among the nearly 6.5 million poor households, less than five per cent had access to affordable micro finance services from institutional sources. The poor thus have to turn to informal credit suppliers where the terms and conditions were such that they perpetuated rather than ameliorated poverty, he observed.
The government, therefore, has decided to pro-actively address the underlying issues that had restricted the flow of micro finance services to the poor and designed a comprehensive micro finance development strategy for Pakistan.
The goal of this strategy is to ensure that the poor and low-income households and their micro enterprises have permanent access to institutional financial services. The purpose is also to support the development of a sustainable micro finance system capable of providing high-quality diverse services.
The strategy focuses on creating a policy environment conducive to micro finance, developing financial infrastructure, building viable institutions, supporting pro-poor innovations, and supporting social intermediation.
“We realise that a large financial resource gap needs to be filled to provide institutional micro finance services to over 95 per cent of potential clients that are currently out of the formal financial system,” the finance minister said. Without reaching out to a large number of households on a permanent basis, micro finance is not likely to have any impact.
“Our strategy therefore is to catalyse expansion of micro finance supply and strengthen the capacity of potential clients to access the service”, he added.