|Project Rationale and Linkage to Country/Regional Strategy
The last official estimates of poverty incidence were released in Pakistan in 2005/2006, with the headcount index for poverty reported at 22.3%. Since 2007 the Government of Pakistan has faced difficult challenges, including external and domestic economic shocks, economic uncertainty, and security problems. Annual gross domestic product (GDP) growth rates post-2007 averaged about 3%, while inflation averaged 13.8%, resulting in lower living standards. A recent study, using district-based poverty profiles, estimated poverty incidence for all households in the country at 33%.
Starting in 2007, the government significantly increased its spending on social protection, established a new institutional framework, and approved the National Social Protection Strategy. In October 2008 the government launched the BISP as the national social safety net program. The immediate objective was to decrease the adverse impact of food, fuel, and financial crises on low-income families. The broader goal was to implement the government's redistributive policy by providing regular cash income support to the poor. The main BISP intervention is a cash transfer program providing PRs1,000 per month to the female head of the family. The government's social safety net spending increased from 0.3% of GDP in FY2004 to 0.9% in FY2011 after introducing the BISP.
The BISP uses a transparent and objective methodology to select beneficiaries. It identified 7.2 million eligible poor families (23% of the total population) on the basis of a nationwide poverty scorecard survey using a proxy-means test approach. Initial evaluation findings demonstrate that it is a credible targeting system, covering a substantial number of the poorest in Pakistan. However, 2.4 million eligible poor families are not yet receiving the cash transfer because the female head does not hold a CNIC, which is the key eligibility criterion. Pending families are the most difficult to reach and likely to be the most destitute.
The introduction of a national safety net program and the availability of the poverty scorecard database can potentially lead to more efficient use of resources and better targeting and coordination with the provincial social safety net programs. A well-managed targeting system will enable the replacement, over time, of other inefficient social safety net programs and untargeted subsidies that are still pervasive in Pakistan.
The BISP piloted several graduation initiatives for health insurance, skills development training, small business development loans, and primary education co-responsibility cash transfers. These programs aim to support human development and economic opportunities for beneficiaries, and reduce the likelihood of intergenerational transfer of poverty. The first two of these graduation initiatives are of special relevance for social protection:
(i) Almost 70% of total health expenditures are paid out-of-pocket by families, driving about 4% of the population into poverty every year. Unexpected severe health problems are the most prevalent shock for families. In addition to income loss from being unable to work, medical costs alone can push households into poverty. Health insurance for the poor that covers catastrophic risks and major costs such as births can provide significant financial relief and protection to the most vulnerable families, while improving access to health facilities.
(ii) More than 53% of the target population depends on casual labor as their major source of income it is insecure and risky. Beneficiary family members have extremely low literacy and numeracy, affecting confidence and social participation. Rural employment opportunities (both wage employment and self-employment) could be enhanced through skills training. This will improve poor families' income-generating capacity and boost their resilience to shocks.
In April 2012, the BISP launched a health insurance program, Waseela-e-Sehet (WES), on a pilot basis to provide protection against catastrophic health expenditure to registered beneficiary families in Faisalabad district in Punjab Province through the State Life Insurance Corporation. The insurance package covers full hospitalization for all age groups with an annual maximum benefit cap of PRs25,000 per family. It covers preexisting conditions as well as hospitalization for maternity and child health. So far, 37,575 families have been insured and provided access to WES registered private hospitals on a cashless and paperless basis. Of these expenditures, 40% were maternity related.
The Waseela-e-Rozgar (WER) was launched in July 2011 to provide center-based formal skills training to any selected family member of a beneficiary. In FY2013, 56,600 trainees graduated from training centers providing 4 6 month programs. The current WER is very costly; the average cost of PRs53,000 limits outreach of the program. Most courses are taught beyond the absorptive capacity of BISP potential nominees, who are largely illiterate or semiliterate. Training delivery and competency assessment and certification have fundamental problems. While the impact of current training provision on employability is likely very limited, the reputational risks of training delivery arrangements and the lack of effective monitoring are high.
Under the 18th Constitutional Amendment (30 June 2011), several subjects including health, education, and social welfare became a shared responsibility of the federal government and the provinces. The federal government continues to play a critical role in ensuring that long-term poverty reduction and social protection goals are met. A centrally operated safety net program is better placed to ensure equal chances for the poor to qualify for the cash transfer program, and to coordinate consistent program standards for provincial graduation programs. The provinces play a key role to develop and implement complementary graduation programs, especially highly customized graduation interventions.