Financing and Managing Poverty Reduction in Rural Pakistan; A Case of DG Khan and Rajanpur Districts

Abstract

In an attempt to reduce poverty in Pakistan, financial resources are provided by microfinance institutions to poor and vulnerable people to engage in income generating activities on soft terms and conditions. Zakat institution and BISP provide free cash to needy and poor as living allowances. ZI, PBM and NGOs provide financing for human capital development through education and training to manage poverty reduction. These institutions facilitate the poor people directly to manage poverty reduction on sustainable basis. The research presented in this study, hence, aims to explore and evaluate the financial dimensions of managing poverty reduction in rural Pakistan through a micro level study to evaluate the outcome and effectiveness of poverty reduction programmes in Pakistan by focusing on the impact of such programmes in DG Khan and Rajanpur Districts. For this purpose, primary data is collected through a questionnaire survey to measure the perceptions of the households, in the form beneficiaries and non-beneficiaries, on the outcome and efficiency of the poverty reduction programmes in DG Khan and Rajanpur. The data is analyzed through non-parametric (Mean U Whitney tests and Kruskal Wallis) and parametric inferential statistics techniques, such as logit model, to draw the result for research questions. The findings from the non-parametric test have shown that institution, employment, marital status, working female members, working male members, assets like land, livestock, business assets, savings and loan are significant and ranked at 1 for income related questions. Training, education, gender, age, child dependency and district variables are also significant and causing for poverty but ranking at second number. The results from Logit model show that beneficiaries and households are statistically significant and positively correlated with probability of being poor. It also concluded that education, institution, gender, age, employment, working male member, and working female member as variables are statistically significant and negatively correlated with probability of being poor. Additionally efficiency of institutions is tested. Zakat institution is found to be contributing towards working male member and change in income. Working male members are found to be statistically significant and negatively correlated with probability of being poor. However BISP is not contributing in determinant for managing the poverty reduction while PBM is contributing in working male member, which is significant and negatively correlated with probability of being poor. As regards MFI is concerned it is found that it is contributing in education and change in income, which are negatively correlated with probability of being poor. The study concludes that financial capital and human capital development are essential elements for financing and managing the poverty reduction in rural Pakistan. The success of which depends on the coordination of different poverty reduction programmes.