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Proposals for poverty alleviation during COVID-19

As the COVID pandemic furies, the world is entering into the deepest global recession since the Great Depression during 1930. Since it emerged in December 2019, the virus has spread to every continent. It was declared a pandemic by the World Health Organization (WHO) on 11 March 2020. As of July 21, 2020, there were 14.69 million confirmed cases in 187 countries with 610,110 deaths. As countries work to stalk its spread with different strategies like lockdowns, testing, isolation, treating patients and mitigation measures; the virus’ high reproducibility and complex nature threatens to overwhelm health systems in both the developing and developed states. Its socio-economic impact is being felt with greater intensity in almost every country of the world; whether under developed or developed; irrespective of their income levels. Most countries would see their GDP plunging, while the loss of jobs and income drives up poverty, food insecurity and malnutrition. The productivity growth has been in decline in emerging market and developing economies since the 2007-2009 financial crisis. Evidences from past epidemics and deep recessions suggests that the COVID-19 pandemic could depress labor productivity even further for years to come.

Prior to COVID-19, Pakistan was already struggling from large amounts of poverty and had few ways to come out of it. Currently, about 25% of the Pakistani population falls under the poverty line and 50% struggles to feed their families. This article will discuss contributing factors to poverty as well as the situation with COVID-19.

In Pakistan, confirmed cases of COVID-19 have skyrocketed, from two initial cases on 26 February 2020, to 265K cases and 5599 confirmed deaths till July 21, 2020. The Case Fatality Rate has risen to 2.1. Pakistani lives are at risk, as is the country’s social and economic fabric. Pakistan’s location makes it especially vulnerable. It borders both China and Iran, which have reported large outbreaks. People are travelling for trade, work, education, tourism and pilgrimage between Pakistan and its high-risk neighbors, as well as Gulf countries and Europe. This increases the risk of COVID-19 spread.

Pakistan’s public health system is already under stress. It has a ratio of one doctor for every 963 people and one hospital bed for every 1,608. It faces an acute shortage of 200,000 doctors and 1.4 million nurses. The absence of Universal Health Coverage heightens people’s vulnerability to COVID-19 in health, economic and social fallouts.

These trends do not portend well for Pakistan. The world’s sixth most populous nation is among the ‘medium’ human development countries on the 2019 Human Development Index (HDI), where it ranks 152nd of 189 states. Gender disparities are pronounced and women’s labor force participation is low (21% in 2019). Nationwide, 72% of non-agricultural jobs are in the informal economy, employing 22 million people, most of whom are women. The 8.5 million of domestic workers are women.

Without urgent response measures, COVID-19 may push back Pakistan’s hard — won gains on poverty reduction and social indicators. The poverty rate has declined by 40% in the last 15 years, lifting 23 million people out of poverty. With GDP projected to contract by 1.5% in FY2020, there is a real risk that poverty will rise. The pandemic is expected to slash consumption, investment, international trade, remittances and private capital flows. Agriculture will be hard hit, as a prolonged lockdown may disrupt transportation, logistics, labor for harvests and transport and access to inputs for the next planting season.

Since 72% of the population is associated with the low-income farming districts, purchasing tests or seeing doctors may not be possible for many. This quandary is then augmented by the fact that Pakistani families are normally consist of five to six people. So, risk increases many folds as compared to smaller families; despite people quarantine themselves. Though there are many factors which contributes the poverty in Pakistan but one of main reason is population explosion.

Based on UN worldometer amplification, the current population of Pakistan is 221,096,300, as of Tuesday, July 21, 2020, 2.83% of world population and ranked at 5th position. Often families are comprised of five to six people. High child mortality rates from a lack of healthcare and misinformed cultural stigmas around contraceptives are the primary reasons for these large families. To offer some perspective, in Pakistan, one in 89 women die from childbirth; however, the country only spends around 1% of its gross domestic product (GDP) on healthcare.

Pakistan’s first official poverty line was set in 2001 at PKR 723.40 per adult equivalent per month. The poverty line was estimated using the Food Energy Intake (FEI) methodology and a minimum threshold level of 2,350 kcal per day per adult equivalent. According to this poverty line, 34.7 percent of the population was registered as poor in 2001-02, a proportion that progressively declined to 9.3 percent in 2013-14.

 

Pakistan’s success in reducing poverty encouraged the government to raise the bar and estimate a more ambitious and inclusive poverty line reflecting the evolution of consumption patterns in the society. The new poverty line was estimated using HIES 2013-14 data and was set at PKR 3,030.32 per adult equivalent per month in 2013-14 prices. In line with international best practice, the poverty line was estimated following the Cost of Basic Needs (CBN) method. The new line sets a higher bar and provides a more inclusive view of those that are considered disadvantaged in Pakistan today. In absolute numbers and based on population estimates of 180 to 200 million in 2013-14, the new poverty line allows 6.8 to 7.6 million households (53 to 59 million people) to be classified as poor. This demonstrates the government’s commitment to reaching low-income households through its policies and interventions. Back-casting this new poverty line to 2001-02, using the Consumer Price Index (CPI), shows that the headcount rate using this new higher line would have been 64.3 percent in 2001-02 which is almost double the rate seen using the old poverty line. However, the trends over time remain the same.

Though pandemic is still escalating but the pain it is causing in the lives of billions of people is especially evident in the world’s 74 poorest countries supported by the International Development Association (IDA). These are countries where children, women, people living in fragile and conflict-affected situations, and those employed in the informal sector are suffering the most.

IDA’s support is part of the broader $150-160 billion World Bank Group response over a 15-month period and includes $50-55 billion in low-interest credits and grants focused on saving lives, protecting the poor and vulnerable, creating jobs, saving businesses, and building a more resilient recovery. Over the next 12 months, IDA will deliver close to $10 billion in new grants for low-income countries at higher risk of debt distress. In July 2020, IDA started its 19th funding cycle. The IDA19 program is supported by a historic $82 billion replenishment. It was developed before the COVID-19 pandemic hit, but in the face of the crisis it shines as even more relevant today.

Government policies should focus on stronger resilience building including pandemic preparedness and reducing risks from climate shocks. The COVID-19 pandemic reminds us of the importance of strengthening resilience against any shocks that might strike.

Many countries were already at high risk of debt distress before COVID-19, which is exacerbating the situation. Donor agencies should look for new debt policies to help incentivize countries to borrow sustainably and promote coordination between them and creditors. On the other hand, Jobs are a critical element of poverty reduction. In most of the countries jobs are scarce and COVID-19 has exacerbated this situation. The jobs agenda will include facilitating job-creating private investments and much needed infrastructure. Digital technology will also be important in the jobs’ agenda. Scaled up support for regional integration, such as investments in infrastructure for greater regional connectivity, trade facilitation, and digital economy. Thinking regionally will help facilitate collective action to address common goals. Likewise, tailored support in fragile and conflict-affected situations should be increased. This will help to address a range of risks related to fragility, conflict, and violence with strong incentives and accountabilities for countries to confront these. Even though the environment might be challenging, the world optimistically move on. All the people in poor countries should look forward to have a better world. With just 10 years to 2030, it’s important that we shift the gear of development back to overdrive towards ending extreme poverty.

To save lives, Pakistan needs an integrated health, humanitarian and socio-economic response to COVID-19. The nexus between humanitarian and development work has never been more relevant, nor the need for collaboration and coherence more acute. This framework focuses on rapidly extending Pakistan’s socio-economic response, hand in hand with humanitarian and health interventions, as a coherent emergency package.

Responsibility for leading the response on all three fronts (health, humanitarian and socio-economic) lies with Pakistan’s national and sub-national governments, including local governments. But government alone cannot deliver this response. Development partners, UN agencies, international financial institutions, NGOs, the private sector, academia and the media all have a role to play in accelerating response efforts, and protecting lives and livelihoods.

Steps required to taken:

  1. The first step is to embed this COVID-19 socio-economic framework and its recommendations in Pakistan’s response strategies and plans for the COVID-19 National Action Plan, provincial response plans, federal and provincial budgets for FY 2020-21. Support at the national and sub-national levels to ensure that the framework’s recommendations are adopted and implemented.
  2. Secondly, the technical, advisory and implementation support will be needed to analyze the evolving situation, sharpen the focus of response measures and improve their delivery. Government should set up COVID Response Committee with donors and development partners to ensure an integrated, unified and vigorous response.
  3. Thirdly, there should be gathering of solid, disaggregated socio-economic data. The community-based organizations, local governments, CSOs and should be mobilized to identify, map and register beneficiaries, especially the most vulnerable groups, so that relief and rehabilitation packages reach them.
  4. Lastly, in-depth analysis is required on COVID-19 medium and long-term impacts. The government should engage public sector research and policy institutes, academics and research institutes to undertake specific, in-depth specific studies on the pandemic’s impact on susceptible sectors and households. This analysis should be used to sharpen the focus of government response plans and interventions.
The author, Mr. Nazir Ahmed Shaikh, is a freelance columnist. He is an academician by profession and writes articles on diversified topics. He could be reached at [email protected]

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