Targeting Efficiency of Poverty Reduction Programs in Pakistan

Pakistan has witnessed the introduction of a large number of poverty reduction programs in the last five decades, and most of them have not been able to achieve their financial targets. This paper examines the targeting efficiency of three large, nationally implemented such programs:

• The disbursement of zakat (charitable donations);
• Microfinance;
• The provision of health services through the Lady Health Workers Programme (LHWP).

The paper identifies the challenges with these as follows:

• The problem with zakat is more practical than theoretical - the funds are not sufficient to provide all households with their basic needs;
• The microfinance programs have failed in effective targeting due to lack of verifiable mechanisms to identify the poor;
• LHWP has not yet reached the most disadvantaged areas and the poorest households; however, it contains elements to benefit the poor, but it needs to develop a targeted expansion strategy.

The paper further stresses that while a higher level of social and economic development spending does not guarantee a reduction in poverty, it is also highly unlikely that these would occur without more spending. While there are suggestions of some success in zakat targeting in rural areas, it is not so in the urban areas. The paper concludes with the following recommendations:

• Having the urban zakat committees only in poor slum areas;
• Developing poverty identification mechanisms based on household physical and social assets.