Two-pronged approach suggested for social protection reforms: World Bank Report

Pakistan has the lowest penetration of micro-finance in South Asia with less than 2 percent of poor households covvered, said World Bank Report. According to WB report on "Social protection in Pakistan", in Bangladesh and Sri Lanka, over 60 percent of the poor are micro-finance clients and this share is 9 and 14 percent in India and Nepal, respectively.
However, the impact of micro-finance on those who receive them is positive. The slow growth of micro-finance in Pakistan is caused in part by the lack of a solid and profitable core business, relying on subsidised donor funds rather than profitability.
In the past, WB report said, Pakistan has implemented workfare programs to build infrastructure and offer temporary employment to the poor, but no major program currently exists. Past programs include workfare for Afghan refugees and the Khushal Pakistan Program, though their overall impact on poverty reduction is not known.
Currently, no public works program exists to target the poor through low wages or conditions on public works contracts to employ local labour. WB report stated that "Social Welfare and Care Services" are fragmented with low budgets, and their effectiveness is not well known. The poor need only cash transfers, but also need services to improve their welfare, eg, rehabilitation services for the disabled.
The Ministry of Social Welfare and Special Education has been active in designing and providing several types of social welfare and care services programs for vulnerable groups such as working children, vulnerable women, and the disabled. The programs are publicly financed and administered by the federal government in some instances (eg, special education schools for children with disabilities; PBM child labour or vocational training centres); provincial governments (beggar and drug addict homes; Punjab Child Protection Bureau); and districts (district social welfare offices).
THE DELIVERY OF SERVICES FACES SEVERAL ISSUES:
(i) Programs are fragmented and no over-arching framework for service provision to vulnerable groups exists.
(ii) Public financing of social welfare and care services is low compared to needs (3 percent of social assistance spending), resulting in deficient coverage. Low budgets coupled with program fragmentation lead to poor coverage and weak administrative capacity to deliver and monitor services.
(iii) The public sector remains focused on service delivery instead of policy development, setting service standards, regulation, and supervision. Finally, (iv) private provision of services by NGOs to vulnerable groups exists, but also with small coverage. WB report said that the Ministry of Social Welfare and Special Education is aware of these issues and has announced its intention to strengthen service provision to special vulnerable groups.
WB report pointed out that the government regularly intervenes in the wheat market through a subsidy with the understanding that wheat is a major staple food for Pakistani households, and therefore changes in wheat prices directly impact welfare, particularly of poor consumers and producers, but at significant economic and fiscal costs. Since resale prices are not high enough to cover payments to producers and storage and handling costs, the government incurs significant fiscal expenses.
Over the last 10 years, annual wheat subsidy costs have averaged around Rs 6 billion, with the subsidy fluctuating from 0.1 to 0.5 percent of GDP. About a third of the subsidy accrues to millers to cover the difference between the guaranteed purchase and resale prices, and the other two-thirds finance inefficient government grain procurement and handling procedures.
Aside from creating distortions in wheat prices, and although more in-depth analysis is needed, preliminary evidence seems to suggest that the current system favours millers and the non-poor. The ability of the program to help the poor cope with wheat price shocks is therefore small, report mentioned.
WB report said that the recent earthquake exposed the gap in the ability of the government to cope with natural disasters. Since no safety net structure existed that could be rolled out quickly, interventions had to be designed from scratch. The final relief package combined short-term income support (cash support) with long-term aid for reconstruction (housing).
Community-based rehabilitation services anchored in four resource and information centres for persons with disabilities in the earthquake-affected areas are planned to complement this program. Following the earthquake, the government has developed the National Strategy and Plan of Action for Vulnerable Populations in Earthquake Affected Areas and the Earthquake Reconstruction and the Earthquake Rehabilitation Agency has approved its draft social protection strategy.