Poverty in Pakistan: Vulnerabilities, Social Gaps and Rural Dynamics World Bank, 2002

1. Poverty in Pakistan: Vulnerabilities, Social Gaps and Rural DynamicsWorld Bank, 2002 Presentation at Lahore December 28, 2002

2. Objectives of the Poverty Assessment • Look beyond measurement of poverty, to focus on non-income dimensions of poverty – including qualitative and institutional aspects - and the rural economy • Initiate collaboratively an ongoing research program to inform and elevate dialogue and debate on policies related to poverty reduction • Key Elements • Rationalize poverty trends over the decade of the 1990s, using multiple rounds of household survey • Undertake a new survey to explore in-depth issues of poverty, rural and human development • Combine quantitative information with insights from qualitative survey • Focus on the institutional and political economy factors that impede effective delivery of public services

3. Broad Messages • Poverty has stagnated in the nineties (up to 1998-99), also revealing a high incidence of vulnerability • Rural poverty is of special concern, having shown little reduction over the period • Even during periods of relatively high poverty reduction, human development has not registered commensurate progress • Institutional constraints pose major obstacles to distribution of benefits of growth across sectors • Recent reforms present unique and innovative opportunities to support better distribution of public benefits

4. 60.0 50.0 40.0 Urban Rural 30.0 Head Count (% Values) Overall 20.0 10.0 0.0 1984-85 1987-88 1990-91 1993-94 1998-99 Poverty Trends: the Static Picture Static measures do not tell the full story; Large movements in and out of poverty indicate high incidence of vulnerability

5. Trends in Mean Consumption & Inequality Inequality (Gini Coefficient) in Per Equivalent Adult Consumption

6. Poverty is Multidimensional • Moreover, other deprivations often adversely affect the future potential to climb out of poverty • Vulnerability to shocks: Inadequate access to insurance opportunities • Landlessness: Over 50% of the rural population in Pakistan is landless, over 40% of them are poor • Lack of education: 42% of the population living in households with illiterate heads is poor, compared to 2% of those in other households. • Poor access to health care and basic infrastructure: The poor are less likely to access health facilities. 24% of the poor rely on unsafe sources for drinking water, compared to 19% of the non-poor • Exclusion: Social groupings such as caste, kinship groups and biradris determine access to services and economic opportunities

7. Why Social Gap • Social indicators (with a few exceptions) have stagnated during the 1990s • Factors that contribute are: • Inadequate social spending • Inefficiency in spending allocated amounts • Poor quality in delivery of services linked to incentives

8. Primary Gross Enrollment Rates (GERs) in the Nineties

9. Rising rich-poor gap: primary GERs have fallen from 1991 to 1998-99 for the lowest 5 deciles

10. What Factors Determine School Enrollments? • Household’s economic status is important • So is parents’ education: having a mother who has attended school makes it 23% more likely that a child will also do so • Proximity to school is a factor for girls’ schooling in rural areas • Proximity to physical school facilities however is only part of the story: quality matters

11. Results from the PRHS sample of 206 rural public schools offering primary education • Inadequate basic facilities: 1/3 of the schools had an adequate building; about 50% had access to drinking water, toilets or furniture; 16% of co-ed schools had a separate toilet for girls • Teacher absenteeism: At the time of the visit, no classes were being held in 34 schools. In the remaining schools, 20% of teachers were absent • Low student attendance: At the time of the visit, about 64% and 61% of enrolled boys and girls respectively were present in the classroom • Better quality of schools is associated with higher enrollments in rural communities

12. Expansion in Private Schooling • Recent years have seen a rapid expansion in private schooling • From 1991 to 98-99, share of private sector in primary enrollment increased from 14% to 23%, in secondary schooling from 8 to 17%. The expansion occurred across all consumption groups

13. Private school fees are fairly low lowest in Punjab account for 1.7% (rural) and 2.1% of hh expenditure in Punjab Distribution skewed to the right Are Private Schools Affordable?

14. Compare favorably on observable indicators with public schools Preliminary work on testing (ADK 2002) suggests that learning may be on par with public schools Indicators of Quality

15. The Promise of Public/Private Partnership ? • Private Schooling a fast-growing sector • Tend to have ‘reasonable’ fees • better quality inputs • Better gender balance • higher ratio of female students in private compared to public schools (43% vs. 37%) • IF private schools are desirable, what can be done to encourage the setting up of such institutions?

16. Health Outcomes • The decade registers improvements in some indicators of health and fertility • Infant mortality has fallen • Immunization coverage has improved • Knowledge and use of family planning methods have increased • Significant challenges remain • High incidence of nutritional deficiencies among children • Access to health care, and maternal care remains low in rural areas

17. Based on data from PRHS (2002) Declines over time till 20-24 months Subsequent `catch-up’ to a small extent By the age of 5, a child has about 60 percent probability of being stunted, and 45 percent probability of being underweight Anthropometry Source:PRHS(2001) Nutritional Status of Rural Children

18. Insights from Analysis of Nutritional Outcomes • Nutritional status of children almost unchanged over last 15 years in sample areas • Strongly correlated with income and mother’s education • Impact of income almost entirely driven by community level average income • Indications that quality of community facilities may explain this phenomenon

19. Rural Challenges • Virtually no change in rural poverty or consumption inequality over the decade of the 1990s (HIES), although value-added in agriculture grew at average 4.2 percent What happened to the growth? The apparent disconnect between agricultural growth and poverty may have a number of causes: • Droughts and floods over the decade: suggest year-to year fluctuation in measured consumption (as in agricultural growth) • Stagnation in the non-farm sector • Direct and indirect effects of land and asset inequality on productivity and poverty: our main focus

20. Distribution of Land Ownership Note: Marginal <= 2 acres of land, small >2 and <=5, medium >5 &<=15, large >15 &<=40 and very large >40 acres

21. What Factors Limit Productivity in Agriculture? • Imperfect or non-existent markets for land and other assets like tube-wells and tractors • Inequality in asset ownership, particularly land, appears to have significant and large productivity effects • Inefficiencies in irrigation lead to productivity losses • Both canal and tubewell water have strong effects on crop yields and farm profits; the supply of canal irrigation is a significant constraint on productivity

22. Inefficiencies in the Irrigation System • Irrigation infrastructure is increasingly dilapidated • Investments in physical infrastructure (rehabilitation of canals, lining of water channels, land leveling) and maintenance undertaken only sporadically • Why? Poor incentives for irrigation departments and farmers to maintain/improve the system or reduce wastage • Institutional factors influence access to water • Payments to irrigation officials for delivery of sanctioned water supplies are routine and endemic • Misappropriation of canal water by upstream farmers is substantial and integrally involves irrigation officials

23. Policy Imperatives • The broad thrust of the policy framework in I-PRSP reinforced • Increasing and sustaining growth remains critical for poverty reduction • Concomitant reforms necessary to maximize the poverty-reducing potential of growth • Reduce inequality in asset ownership; Land reform ? • Improving the coverage and targeting of social protection schemes to help cope with shocks • Building institutions for better delivery of services - from human development to irrigation, infrastructure, credit and insurance services • Empowering communities in the design and delivery of services

24. Rural Poverty: an Urgent Priority • Land and asset inequality in rural areas has important productivity consequences—beyond a distributional concern • Decreasing poverty and increasing agricultural productivity are not competing policy objectives • Land and tenancy (security of tenure) reform • Innovative use of credit to enable land leasing, and the leasing of other productive assets • Restructuring of canal irrigation • Income diversification through more vibrant non-farm rural development

25. Social Protection • In the long-run, vulnerability will be reduced through growth and increased opportunities for diversification • In the absence of credit and insurance markets, public programs like zakat and Khushal Pakistan can serve as insurance mechanisms for vulnerable groups • Appropriate targeting and coverage is key • Design and targeting will both benefit from regular monitoring of programs on the ground • Community-based experiments in credit and insurance can work where formal mechanisms fail • Scaling these efforts up will require concomitant reform of formal institutions

26. Momentum for Change: Reforming Institutions • The ongoing devolution reform provides a natural starting point • Devolution may lead to increased participation of communities in decision-making and greater accountability of government officials • Devolution not a panacea by itself • Continuing role of higher level governments in defining roles and responsibilities, designing fiscal incentives and promoting equity • The challenge of capacity-building at the local level • Re-thinking the role of the government: forging partnerships with the private sector and community organizations