Poverty in Rural Areas’ of Pakistan as per World Bank

Agricultural Growth Necessary but not Sufficient to Alleviate Rural Poverty, says new report:
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Unequal distribution of land and access to water for the rural poor in Pakistan limit the scope for agricultural growth alone to rapidly reduce poverty in rural Pakistan, according to a new World Bank report released today.
Issued ahead of the Pakistan Development Forum on April 25, the report –– says ensuring efficient use of water and building partnerships with the private sector can help fulfill agriculture’s potential for diversification and growth.
An effective poverty reduction strategy, however, must also address the rural non-farm economy and the needs of the rural non-farm poor. Social mobilization, the report says, can empower the poor, enabling them to have a greater role in the development process, not only to improve delivery of public services, but also to increase their market power by building the voice and scale in the farm and non-farm sectors.
The report says agricultural growth, rural incomes, rural poverty and social welfare indicators have all showed marked improvements in recent years. Yet despite impressive achievements, there is little reason for complacency. Around 35 million people in rural areas remain poor, representing about 80 percent of Pakistan’s poor.
“Agriculture growth is a necessary, but not sufficient condition for rapid reduction in rural poverty,” said Yusupha Crookes, World Bank Country Director for Pakistan. “Appropriate investments in irrigation and the livestock sector can directly benefit small farmers, who account for about 40 percent of the rural poor. However, the majority of the rural poor in Pakistan are not farmers, and additional measures need to be taken to revitalize the rural economy so it generates substantial rural employment. Such an expansion of the rural non-agricultural economy and improvement in the welfare of the rural poor cannot take place, though, without major investments in infrastructure and improvements in social services, including safety nets.”
Overall, agriculture accounts for about 40 percent of rural household incomes. The poorest 40 percent of rural households get only 30 percent of their incomes from agriculture. The report says Pakistan’s rural non-farm sector faces numerous constraints, particularly related to access to credit and inadequate infrastructure. According to the 2000 Agricultural Census, only 37 percent of rural households owned land, and 61 percent of these land-owning households owned less than 5 acres. Access to usable water is also unbalanced. Because of this skewed distribution of ownership and access to productive assets, much of the direct gains in income from crop production, particularly irrigated agriculture, accrue to higher income farmers.
As in other South Asian countries, the non-farm sector in rural villages and small towns primarily consists of family-based micro-enterprises, averaging only about two workers per enterprise. According to a 2005 survey, more than 30 percent of these enterprises rated access to finance as the most important overall constraint to the operation and growth of their business. Other constraints include poor road infrastructure and lack of access to reliable electricity.
Agricultural growth remains important to raise incomes of small farmers and to generate growth linkages by increasing demand for rural non-farm goods and services. However, in most of rural Pakistan, the impact of agricultural growth on rural poverty is limited for two reasons. First, much of the gains in rural incomes are spent on urban goods and services. Second, growth-linkage gains to non-agricultural incomes and employment in rural areas are shared among a large number of rural poor.
Two critical elements underpin the necessary transformation of the rural sector, the report says. First is the efficiency of public institutions and the need to make them more accountable and flexible. Second is the capacity to organize the "people sector" so that farmers, communities, and villages can gain voice and reach the scale needed to attract the private sector and financial services and to strengthen the demand side of development by making government more accountable.
In addition to policies addressing growth of the agricultural and rural non-farm sectors, high rates of rural-urban migration and growing integration require investments in human capital. As in most of Asia, Pakistan’s economy is in the midst of a major transformation involving growing urbanization and increased linkages between the rural, urban, and international markets.
Too often a top-down approach is implemented - one that sees the rural poor simply as beneficiaries of public programs supplied by the government. Instead, the report suggests, the development paradigm should be changed to one that puts the household and its community at the origin of development initiatives. Empowering the rural poor to take on this role, however, requires social mobilization.
Social mobilization, along with economic empowerment, should be at the heart of the rural livelihood development strategy. The benefits of broad economic growth trickle down very slowly when the poor have little access to key physical, social, and financial endowments. To overcome highly unequal distribution of these endowments and achieve rapid pro-poor growth, poor people need new opportunities to organize, to generate business, and to link with mainstream development activities

Source:http:// worldbank.org.pk/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/PAKISTANEXTN