Tackling abject poverty

Nobody talks of 'trickle down' any more. They now talk of 'inclusive growth'. In its post-1980 prescription all that Washington Consensus (WC)needed you to do was to get your economies to grow fast enough and the 'trickle down' effect, the WC doctors claimed, from such a growth would take care of the poor in your country ie, lift them out of the poverty line. But what really happened and is still happening following this kind of growth since the advent of Reaganomics, however, was something entirely opposite to what this prescription had claimed would happen. Instead of the poor being lifted out of the poverty line they went further deep down while the rich became filthy rich because the fruits of growth defying the laws of gravity went up rather than down.
Today in most of the countries which had used the WC prescription of growth a handful of rich have cornered almost 99% of the wealth while the rest of the population is holding the empty sack.
A recent report by Oxfam and the Lahore University of Management Sciences (Lums) has stated that the concentration of wealth in the richer 20% of Pakistanis is five times more than the bottom 20%.
Inequality and poverty have walked hand in hand in many countries for decades and even centuries - the result of non-inclusive growth models and regressive social policies.
Therefore, the buzz word today is 'inclusive growth'. But when it comes to spelling out what exactly do they mean by 'inclusive growth', most of the Breton Woods officials get tongue tied because any mention of equitable distribution of fruits of growth would immediately turn you into a socialist which is still a blasphemous term in the rich world and among their camp followers.
And if you try to further explain the term in some detail by stating that such a growth would ensure that affordable education, affordable health cover, affordable housing, affordable transport and affordable telecommunication facilities would come within the reach of each and every citizen of the country you would only end up annoying the very ruling elite that has cornered the 99% of the wealth of their countries and do not want the status quo to undergo any change that would threaten their wealth accumulation capacity.
However, even before a country can attempt to attain inclusive growth of a kind in which every citizen is afforded the enabling circumstances to better his/her lot, the poorest of the citizens need to be extended a helping hand to escape their abject destitution and be able to make the most of inclusive growth.
The Bangladeshis tried to do this with a fair degree of success through their world famous Grameen Bank launched by Nobel laureate Muhammad Yunus. In some Latin American countries they tried to do it by distributing land among the landless, getting their ownership registered in government documents and making these lands bankable.
In Pakistan the then official economic managers attempted in 2008 to attack abject poverty in the country through direct cash distribution amongst the most destitute through what is called the Benazir Income Support Programme (BISP). The long-term objectives of the project was to support the Millennium Development Goals (MDGs) launched world-wide to eradicate extreme and chronic poverty, to empower women and to achieve universal primary education through the provision of Rs 1000/month to eligible families. The monthly instalment was enhanced to Rs 1200 per month with effect from July 2013 and has now been fixed at Rs 1500 per month since July 2014.
BISP is now the largest single social safety net programme in Pakistan's history. The number of beneficiaries has increased to approximately nearly 5 million and BISP annual disbursements the government claims are likely to go beyond Rs 90 billion during the current fiscal.
A rigorous evaluation of the BISP is said to be underway. Despite some successes, however, the government finds high rates of malnutrition amongst young girls and boys. The BISP beneficiary households still face significant deprivations in access to adequate sanitation and drinking water. Some limited evidence of improvements to material welfare has been found with an increase in the proportion of BISP beneficiary households that own bicycles. The BISP appears to be supporting adult male members to shift away from casual labor towards self-employment. The BISP is also said to have increased the proportion of households that own livestock. The BISP Debit Card accounts could be used to deposit as well as withdraw cash. The potential for the BISP to have an impact on school enrolment has been found to be limited because the average cost of educating a child in a government school would account for 59% of the per adult equivalent value of the transfer.
Given the importance of education in reducing the inter-generational transmission of poverty, it is therefore encouraging that the BISP is also engaging in a Conditional Cash Transfer known as the Waseela-e-Taleem which seeks to provide an additional stipend to children aged 5-12 years, conditional on their attendance at a government school. However, the BISP should also be cognizant of the range of supply side weaknesses in the education sector in Pakistan such as: shortage of school; shortage of teachers; lack of qualified teachers; missing facilities. The BISP should carefully take into account supply side considerations in relation to the Waseela-e-Taleem so as not to dilute the expected impact on education of this complementary program and focus on areas in which the education sector has the absorptive capacity to take on new students from BISP beneficiary households.
Research clearly indicates, officials claim, a change in the status of women in beneficiary households, with almost all women interviewed reporting that they are now being given more importance in the household as a direct result of the BISP. Furthermore, we find that the majority of women continue to retain control over the transfer, with 71% of women in 2014 deciding how the cash transfer is spent.
These official claims notwithstanding, one finds it very difficult not to question the program, its implementation and its monitoring system in a country where the population census itself is outdated by nearly 20 years. Besides, the level of governance, the high incidence of corruption, especially in high places plus the continued practice of the free market economy make it almost impossible to believe that the assistance is reaching the target recipients without at least half of it being siphoned off en-route.
Here it would not be out of place to mention the Brazilian experience of cash distribution among its poorest of the poor and try to learn from this experience.
In the second half of the 20th century, Brazil was one of the most unequal countries in the world, with economists coining expressions such as "Belindia - a society consisting of a tiny Belgium of prosperity in a sea of Indian poverty". For years, the poorest 60% of the population had only 4% of the wealth, while the richest 20% held 58% of the pie.
In 2003 President Lula launched the innovative Bolsa Família (BF) cash transfer programme, scaling up and co-ordinating scattered existing initiatives under a powerfully simple concept: trusting poor families with small cash transfers in return for keeping their children in school and attending preventive healthcare visits.
BF was met with considerable scepticism. After all, Brazil had traditionally been a big spender in the social sector, with 22% of GDP spent on education, health, social protection and social security. One of the images used by academics was that throwing money out of a helicopter would be just as efficient to reach the poor, given Brazil's frustration with the lack of results. How could BF, with about half a percent of GDP, change this bleak scenario?
But ten years of BF helped Brazil to reduce more than halve its extreme poverty - from 9.7 to 4.3% of the population. Most impressively, and in contrast to other countries, income inequality also fell markedly, to a Gini coefficient of 0.527 an impressive 15% decrease. By 2013 BF reached nearly 14 million households - 50 million people or around 1/4 of the population, and is widely seen as a global success story, a reference point for social policy around the world.
Equally important, qualitative studies have highlighted how the regular cash transfers from the program have helped promote the dignity and autonomy of the poor. This is particularly true for women, who account for over 90% of the beneficiaries.
Besides this immediate poverty impact, a second key goal of BF was to break the transmission of poverty from parents to children by increasing the opportunities for the new generation through better education and health outcomes. BF has increased school attendance and grade progression. Poverty invariably casts a long shadow on the next generation, but these results leave no doubt that BF has improved the prospects for generations of children. At the same time, fears about unintended consequences such as possible reduced work incentives have not materialised. Indeed, increased labor income has been another critical player in the reduction of poverty and inequality in Brazil during this period.
Brazil's experience is showing the way for the rest of the world. Despite its relatively short life, BF has helped stimulate an expansion of conditional cash transfer programs in Latin America and around the world - such programs are now in more than 40 countries.
Surveys conducted by the Federal Government among Bolsa Família's beneficiaries indicate that the money is spent, in order of priority, on food; school supplies; clothing; and shoes. A study conducted by The Federal University of Pernambuco, using sophisticated statistical methods, inferred that 87% of the money is used, by families living in rural areas, to buy food.