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What are the main challenges to poverty reduction policies and strategies in the Islamic Republic of Pakistan?

Introduction

Poverty has been a central challenge of development for the Government of Pakistan. While incidence of poverty declined during the 1970s and 1980s, the absolute number of poor has increased substantially since the 1960s. In addition, it must be noted that the declining trend in poverty incidence that was a feature of the 1970s and 1980s, this trend was reversed in the 1990s, especially after 1997 when the economic growth in Pakistan started to slow down. With approximately a quarter of the population living under the official poverty line, poverty reduction imposes a repressive weight on the country's development agenda. Several factors, including slow economic growth, unequal distribution of income and poor governance, have contributed to the dismal situation in Pakistan with regard to poverty.

In order to address these causes, the government of Pakistan adopted a Poverty Reduction Strategy in 1999. This Strategy was comprehensive in that it extended its scope beyond income poverty and also recognized social indicators and governance as factors that need to be addressed when dealing with poverty reduction. However, this Strategy has not had the kind of impact that was expected of it. Governance gaps and a weak democracy have been major hindrances in the proper implementation of this strategy, as corruption and lack of accountability and transparency have resulted in sub-optimal resource allocation and service delivery. On the economic plane, internal political instability and Pakistan's international image in the context of the war on terror have reduced foreign investment and economic growth, contributing to income poverty.

Pakistan has a long way to go in terms of poverty reduction. In order to alleviate poverty, Pakistan must seek to maximize the gains from globalization by investing in human capital to develop a skilled labor force which can enhance Pakistan's international competitiveness. Trade liberalization and openness must be encouraged to allow more exposure to the export sector in Pakistan - a measure which can potentially promote economic growth. (Kemal, 2001) In addition, small and medium enterprises should be encouraged, especially in rural areas, as they have the ability to generate employment and enhance export earnings. Important services such as venture capital credit, technology and shift up gradation, marketing and management training should be provided for these SMEs to flourish in the country. Entrepreneurship must be encouraged through accessibility of micro-finance. (Jamali and Chang, 2007) Governance issues need to be addressed at the earliest to optimize resource efficiency, improve service delivery and reduce vulnerability. Participation of the poor must be further encouraged, not only in policy formulation but also in implementation and accountability efforts. Social safety nets must be developed to reduce vulnerability to exogenous shocks. (Sadik, 1997) In addition, tax policies should be revamped to minimize tax evasion. Finally, the existing mechanisms of social safety such as the Zakat program need to be upgraded, especially in terms of internal and external monitoring and evaluation, to ensure the efficient implementation of these programs. Finally, a holistic strategy and an institutional framework are essential to understand vulnerabilities and risks faced by the poor in the country, prioritize needs and policy responses, determine the types of assistance that would affectively address these vulnerabilities, ensure proper coordination and delivery of the needed assistance to avoid wastage and duplication.

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