Graduating from extreme poverty
Pakistan participated in pioneering experiments of poverty alleviation under the able leadership of Qazi Ismat Isa
The writer is vice-chancellor of the Pakistan Institute of Development Economics
More than a billion people live in extreme poverty, in conditions which would be unimaginable for readers of this column. Economists say that this is due to ‘scarcity’ — there are not enough resources to feed them. The solution lies in economic growth, increased production to enable us to provide for all. This diagnosis deliberately distracts attention from the real problems. One of them is the rapidly rising inequality. In 2010, the richest 388 people owned more than half the wealth of the planet, an astonishingly skewed income distribution. Although there has been substantial growth, benefits of the growth accrue only to those who are already extremely wealthy. According to recent Oxfam reports for 2014, the richest 80 people now have more than $1.3 trillion, which is more than half of the total privately-owned planetary wealth. A tax of only 33 per cent on just these 80 would suffice to feed, clothe, house, educate and provide for the health needs of all of the extremely poor. Coincidentally, global defence budgets are of similar magnitude. We don’t have to become peaceniks; just scaling back our bloodthirstiness by 33 per cent would suffice to remove extreme poverty from the planet. Just avoiding the Iraq war would have saved sufficient money to feed the planet for 30 years.
Proposals for peace and for equality seem like pipe dreams. Even after dozens of random shootings, the president of the US does not have enough political clout to make a move towards gun control. Similarly, proposals to tax the poor to support defaulting bankers with criminal records sail through parliaments, but the reverse cannot even be contemplated. Thus, we must turn to less visionary and more prosaic ideas about how to solve the problems of extreme poverty, without interfering with political and social structures. Many standard health, education, training or credit interventions have failed to break the Ultra-Poor out of a vicious cycle of abject poverty. The success of an innovative, tailor-made approach which Targets the Ultra Poor, designed by Bangladesh Rural Advancement Committee, has attracted worldwide attention. Poverty Action Labs (JPAL) has successfully replicated the programme in six different countries spread over three continents with more than 10,000 participants, showing that it is robust. The results support a fundamental thesis of JPAL that it is possible to significantly improve the lives of the poor without making radical changes in the overall socio-political system.
We are fortunate that Pakistan participated in the pioneering experiments, under the able and visionary leadership of Qazi Ismat Isa of the Pakistan Poverty Alleviation Fund (PPAF). The extraordinarily successful Livelihoods Enhancement and Protection (LEP) project, which since been refined and improved, has changed the lives of more than 300,000 households over the past few years. The programme is based on principles which seem obvious in retrospect. The key is to provide an income-producing asset: LEP builds upon local livelihood traditions with 75 per cent of the grants consisting of smaller livestock, such as goats. Meanwhile, 25 per cent of the grant interventions are for micro-enterprises in transport (donkey carts or trolleys), wood manufacturing or repairing of agricultural machines or tools, enterprises such as grocery or general stores, food vendors selling fruit, vegetables, clothes etc., or micro-enterprises making brooms, baskets, mats, tailoring, embroidery, etc. These economically diverse activities consist of the elements of a subsistence economy within a village.
But it is not enough to provide an income-producing asset. The lives of the Ultra-Poor are subject to so many urgent shocks that this asset would often be sold to cover an emergency. To protect against this, income to cover basic consumption needs is also provided. In addition, training in how to utilise the asset (or to care for goats and so on) is provided. Health coverage is an essential element of the programme, since health shocks are the most common cause for people to fall into poverty. Furthermore, some hand-holding and encouragement is provided by trainers, to enable the Ultra-Poor to dream of a better future, and to give them the strength to stay the course. This is a complex multi-dimensional intervention which requires coordination on many fronts. The PPAF mobilises local partner organisations, communities and appropriate governments agencies. The results have been vastly superior to the current patchwork social welfare programmes, which provide partial support to special segments of the population. The difference is analogous to teaching a man to fish versus giving him a fish to eat. Well-designed, large-scale post-experimental surveys document that this programme allows people to “graduate” out of poverty, with long-term significant increases in income and savings. It is encouraging that the government is moving towards evidence-based and result-based management practices to create a more efficient bureaucracy. The dramatic results obtained from the graduation programme open the door to a new world of opportunities for the Ultra-Poor.
Published in The Express Tribune, October 26th, 2015.
Proposals for peace and for equality seem like pipe dreams. Even after dozens of random shootings, the president of the US does not have enough political clout to make a move towards gun control. Similarly, proposals to tax the poor to support defaulting bankers with criminal records sail through parliaments, but the reverse cannot even be contemplated. Thus, we must turn to less visionary and more prosaic ideas about how to solve the problems of extreme poverty, without interfering with political and social structures. Many standard health, education, training or credit interventions have failed to break the Ultra-Poor out of a vicious cycle of abject poverty. The success of an innovative, tailor-made approach which Targets the Ultra Poor, designed by Bangladesh Rural Advancement Committee, has attracted worldwide attention. Poverty Action Labs (JPAL) has successfully replicated the programme in six different countries spread over three continents with more than 10,000 participants, showing that it is robust. The results support a fundamental thesis of JPAL that it is possible to significantly improve the lives of the poor without making radical changes in the overall socio-political system.
We are fortunate that Pakistan participated in the pioneering experiments, under the able and visionary leadership of Qazi Ismat Isa of the Pakistan Poverty Alleviation Fund (PPAF). The extraordinarily successful Livelihoods Enhancement and Protection (LEP) project, which since been refined and improved, has changed the lives of more than 300,000 households over the past few years. The programme is based on principles which seem obvious in retrospect. The key is to provide an income-producing asset: LEP builds upon local livelihood traditions with 75 per cent of the grants consisting of smaller livestock, such as goats. Meanwhile, 25 per cent of the grant interventions are for micro-enterprises in transport (donkey carts or trolleys), wood manufacturing or repairing of agricultural machines or tools, enterprises such as grocery or general stores, food vendors selling fruit, vegetables, clothes etc., or micro-enterprises making brooms, baskets, mats, tailoring, embroidery, etc. These economically diverse activities consist of the elements of a subsistence economy within a village.
But it is not enough to provide an income-producing asset. The lives of the Ultra-Poor are subject to so many urgent shocks that this asset would often be sold to cover an emergency. To protect against this, income to cover basic consumption needs is also provided. In addition, training in how to utilise the asset (or to care for goats and so on) is provided. Health coverage is an essential element of the programme, since health shocks are the most common cause for people to fall into poverty. Furthermore, some hand-holding and encouragement is provided by trainers, to enable the Ultra-Poor to dream of a better future, and to give them the strength to stay the course. This is a complex multi-dimensional intervention which requires coordination on many fronts. The PPAF mobilises local partner organisations, communities and appropriate governments agencies. The results have been vastly superior to the current patchwork social welfare programmes, which provide partial support to special segments of the population. The difference is analogous to teaching a man to fish versus giving him a fish to eat. Well-designed, large-scale post-experimental surveys document that this programme allows people to “graduate” out of poverty, with long-term significant increases in income and savings. It is encouraging that the government is moving towards evidence-based and result-based management practices to create a more efficient bureaucracy. The dramatic results obtained from the graduation programme open the door to a new world of opportunities for the Ultra-Poor.
Published in The Express Tribune, October 26th, 2015.