Can PML-N alleviate poverty?

By

Dr Ghayur Ayub

National social indicators in mid 1990s signaled a need for total development strategy in Pakistan as there was; a) poor access to appropriate technologies, agriculture, health, nutrition, family planning, education; b) lack of access to credit to the poor; c) lack of assets such as skilled human resources; d) large families and so high dependency ratio. It was estimated that poverty inhibited development of 23-34% of the population and if not tackled properly, it would lead to social costs in terms of; reducing living standards; high inflation; unemployment; and malnutrition.

Statistics showed that poverty was the key to ill health as it was associated with social indicators. So the focus was fixed on health sector as an entry point in alleviating poverty because of; awareness about effects of poverty on health; large infrastructure of over 10,000 health facilities; extensive network of health professionals at all levels; having potential to link health facilities with other line departments to achieve Health For All (HFA) strategy.

It was for these reasons, the government started a WHO-sponsored pilot project titled Basic Development Needs (BDN) program to assess how to alleviate poverty in Pakistan. The program was a socio-economic contract between the government and the people, to bring the weakest sector of the society to the forefront in a responsible manner in terms of self-reliance, self management and self-financing, in collaboration with the line departments of government, the donor agencies and the community.

It covered nine necessities of life such as; clean water, food, shelter, livelihood, social services, social life, family planning, emergency preparedness, and communications. The program had the potentials to uplift the community and empower people at both planning and execution stages as part of social and economic integration by bringing employment and dignity to the people at gross root level.

As pilot project it proved to be successful in four provinces and PML-N government in 1997 decided to own it by incorporating it in 9^th Five Year Plan in 1998 as 'Gharibi Mitao Scheme'. The decision was based on program's principles of rationale, implementation ease, replication flow, financial requirements and for the fact that it had synergistic effect on Quality Of Life (QOL) for it being a bottom up integrated approach in which community and other line departments collaborated.

In simple words the salient features of 'Gharibi Mitao Scheme' were; for people to recognize and appreciate government’s role and partnership; to promote visible development at gross root level; to use the existing resources (personnel/infrastructure/logistics) efficiently; to realize that benefits of scheme were far greater than costs (covering both social and economic sectors); to augment the ongoing government initiatives; to promote financial self reliance after initial investment through loan recovery process; to convince community in sharing the cost (both in cash and in kind); to ensure the community of proper utilization and return of public money and its sustainability under varying political conditions.

As part of 'vision 2010' a ten years master plan spreading from 1998 to 2007 was prepared for its implementation. According to the scheme interest-free loans of Rs 15,000 per family were targeted to the lowest 40% of the community whilst the community was expected to contribute up to 30% to government in cash or in kind. By the 10^th year of the scheme 85% of the loans were expected to be recovered at an average recovery rate of 30% per year with a default ratio of 10%. The figures were based on the recovery rate in the pilot areas of the BDN program in previous four years which had been 100%.

In terms of population over a period of 10 years the program would cover:

• 20 Tehsils in the first 5 years covering 0.4 million families equivalent to 6 million.
• 54 Tehsils by the 6^th year equivalent to 1 million families or 16 million for that year.
• 26 Tehsils, 0.5 million families and 7.0 millions population as yearly compound mathematical add-ups for the rest of the duration of the program.
• Thus at the end of 10 years, 341 Tehsils, 6 millions of families and over 100 million of population would have been covered.

In financial terms of loans disbursement and recovery; the recovery would start in the second year, which was added to the disbursement of the following year, thus reducing the actual requirement of loan for that year. In this way after seven years the requirement would change to surplus as the amount of recovery would surpass the amount of disbursement.

To Quantify this in figures, the forecast showed that from Rs 4.0 billions in 1998 it would climb up to Rs 10.840 billions in 2003 but would climb down to Rs 5.130 billions in 2007. Similarly from zero recovery in the first year it would climb up to Rs 9.105 billions in 2005 and would come down to Rs 6.330 billions in 2007. This uneven graph was indicative of the fact that from 2005 the actual requirement would go into surplus.

Total financial requirement from 1998 to 2007 was calculated to be Rs.71.12 billions based on; a) Rs 0.127 billions on training; b) RS 3.278 billions on personnel; c) Rs 0.584 billions on supplies and vehicles; d) Rs 0.798 billions on local cost; e) Rs 66.580 billions on loans.

In this way, apart from achieving health and population targets Pakistan would have come out of the “Poverty Zone” through this program by improved micro-economy. The potential partners in this program were; the government; people; UN agencies, World Bank; Asian Development Bank; and bilateral donors.

While government was in the process of its implementation, a few influential self-centred bureaucrats and economists grab the opportunity and initiated a poverty alleviation program on public-private partnership model under Companies Ordinance 1984. It was called Pakistan Poverty Alleviation Fund (PPAF) with completely different philosophy comparison of which with BDN is beyond the scope of this article. If the aim was to run a parallel project for the poor people it would have been considered a positive and competitive step. But its founders found their success in the failure of government-run 'Gharibi Mitao Scheme'. So when PML-N government was removed in October 1999, those very bureaucrats strangulated the scheme by linking it to Nawaz Sharif and getting favours from Gen Musharaf to let PPAF flourish.

According to reports PPAF resource base consisted of an endowment from the Government of Pakistan of Rs.500 million and a World Bank credit of US$ 90 million. By the end of 2008 its cumulative resource base reached over US$ 1 billion and keeps rising till today. I am not trying to demean PPAF. As a matter of fact, it should be appreciated on its resource success but has it really eliminated poverty in last 13 years the way 'Gharibi Mitao Scheme' would have done in 10 years? The poverty statistics of Pakistan shows the country is still in 'Poverty Zone'. It is shame that a real opportunity was lost to alleviate poverty in real terms by a government sponsored scheme. It would not only have alleviated poverty but would have given dignity to the deprived public. It was definitely better scheme than PPP's Benazir Income Support Program which tended to encourage beggary and thus had potentials to create a beggar-minded society. It is hoped that the PML-N government under the leadership of Mr Nawaz Sharif and economic team of Ishaq Dar, Sartaj Aziz and Ahsan Iqbal will revive this scheme of their past to alleviate poverty and give dignity to the poor people.

The End