“Government is determined to alleviate poverty by promoting microfinance specifically targeted at women entrepreneurs for socioeconomic prosperity of the country,” says Iqbal. PHOTO: Express/Zafar Aslam
ISLAMABAD: Minister for Planning and Development Ahsan Iqbal said on Thursday that the government will promote microfinance for entrepreneurs and small businesses for eliminating poverty and achieve prosperity.
He was addressing the 8th Citi-PPAF Micro-entrepreneurship Awards ceremony at a local hotel, where Pakistan Poverty Alleviation Fund (PPAF) CEO Qazi Azmat Isa and Citibank Pakistan Managing Director Nadeem Lodhi were also present.
Iqbal said that two-thirds of Pakistan’s population was living below the poverty line or earning less than $2 a day. “The government was determined to alleviate poverty by promoting microfinance specifically targeted at women entrepreneurs for socioeconomic prosperity of the country,” said Iqbal.
He added that the government had taken various steps for the revival of the national economy and to generate resources and revenue to achieve economic self-reliance. It had also adopted austerity measures to check non-developmental expenditures and promote financial discipline in the country.
The planning and development minister lamented that the tax-to-GDP ratio of Pakistan stood at 9%, which was the lowest compared to regional countries.
“If we want prosperity and economic self-reliance, we will have to increase our tax-to-GDP ratio to 20%.”
Published in The Express Tribune, June 28th, 2013.
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The learned Minister suggests that microfinance may be useful for eliminating poverty. There is very little evidence of this. The results of academic research to date was perhaps most succinctly summarised by David Roodman of the Center for Global Development (a Washington think-tank): "On current evidence, the best estimate of the average impact of microcredit on the poverty of clients is zero" (from a Time article in February 2012, reference below).
Similar findings have been repeated by respected academics around the world, such as Ha-Joon Chang (Cambridge) and Maren Duvendack (ODI).
While I admire the optimism of the Minister, I wonder if he stated the unique approach Pakistan will be following regarding microfinance, or the distinguishing circumstances in Pakistan that lead to this optimism. I am sure this will be of extreme interest to the global microfinance community, who seem unable to fully explain why the impact on poverty reduction due to microfinance to date has been negligible. Indeed, notable critics of the sector, such as Milford Bateman, suggest that microfinance is harmful to the industrial bases of developing countries and leads to the "infantilization" of entire countries.
Surely the Pakistan government has considered such factors before embarking on this policy?
http://www.time.com/time/world/article/0,8599,2103831,00.html