Population

According to UNDP report in 2019,

Pakistan is the sixth most populous country in the world with 0.59 percent of the
Earth’s surface. It’s population estimated at 207.8 million in 2017 . Its population growth
rate of 2.40 percent is the highest in South Asia.
Facts from UNDP report in Sep 2019:

1) Pakistan is facing a formidable challenge of economic development and poverty reduction. If

the population of Pakistan continuous to grow with the same rate, it is likely to double in
the next 37 years, making Pakistan the third most populous country of the world; whereas
the land area will remain the same
2) One in five married women in Pakistan are unable to access effective methods of family
planning if they want to avoid pregnancy and plan the number and spacing of children.
As per Economic Survery of Pakistan 2018-19.
Table 12.1: Demographic Indicators
Indicator 2018
Total population 212.82 Million
(Approx.)
Population growth 2.4%
rate
Contraceptive 34.2%
prevalence rate
Unmet need of 17.3%
family planning
Total fertility rate 3.6
Crude birth rate (per 25.2
1000)

The term “total fertility rate” is used to describe the total number of children an average woman
in a population is likely to have, based on current birth rates throughout her life.

The total fertility rate is higher in Pakistan as compare to other neighboring countries as. Iran
and China has lowest fertility rate in region. Pakistan can learn several lessons from its
neighboring countries. Religious leaders in Iran and Bangladesh fully support family
planning as a social responsibility. These countries have established the link between women's
education, empowerment and family planning usage.
Reproductive health and poverty reduction
Access to sexual and reproductive health, including family planning, can affect population dynamics
through voluntary fertility reduction and reductions in infant and maternal mortality. Improved
reproductive health also helps individuals, particularly young women, break out of intergenerational
cycles of poverty. When women and couples are empowered to plan whether and when to have children,
women are better enabled to complete their education; women’s autonomy within their households is
increased; and their earning power is improved.

Family planning is important an important part of this process because many countries have large
youth populations that will almost ensure continued rapid poulation growth unless fertility declines,
which is what offers the possibility of the demographic dividend.

Targets Set by Present government:

Reducing fertility rate from 3.6 birth per woman to 2.1
Decreasing Population growth rate to 1.5.
https://www.pk.undp.org/content/pakistan/en/home/library/development_policy/dap-vol6-iss1-
population-growth.html
Overpopulation puts pressure on the water supply: Pakistan’s water supply is becoming
scarce due to the increase in the population. The supply should hold steady at 191 million acre-
feet by 2025; however, the demand will increase to 274 million acre-feet. This means that the
people of Pakistan will be approximately 83 million-acre feet short of an important, life-giving
resource. Pakistan’s Karachi Water Partnership, a group of 200 activists, has reached out to
thousands of children in 25 Pakistani schools to raise awareness on saving water. The group was
able to repair pipes and resolve hygiene issues in the schools within 15 months
Overpopulation can lead to food insecurity: Approximately 60 percent of Pakistanis already
live with food insecurity. If the population continues to increase, families will resort to using
agricultural lands for settlement as the urban areas become more crowded. This will decrease
agricultural production, making resources even more scarce and expensive. As a result of
existing food insecurity, there is already an issue with malnutrition and stunting. In 2018, the
World Food Program intervened in the cities Sindh, Balochistan and Khyber Pakhtunkhwa in
Pakistan to give out food from a specialized nutrition program targeting children and pregnant
women. This aided in the effort to prevent stunting in children under five years old. Overall, the
population’s nutrition has improved and is on track to meet goals of reducing stunting by 40
percent and wasting to less than 5 percent by 2025.

Malthusians
The Malthusians are of the view that natural resources are limited and sooner
or later the human population will exceed the carrying capacity of the planet. The
primary focus of this group is to reduce population growth rates in rapidly increasing
population regions of developing countries

Education
Excess population will lead to less educational facilities and uneducated nation remains poor.

 According to UNICEF, An estimated 22.8 million children aged 5-16 are out-of-school. (
https://www.unicef.org/pakistan/education)

 Expected years of schooling (years) : 8.5 Years, For Females its 7.8 and male 9.3

 Government expenditure on education (% of GDP) : 2.8% , 4% is recommended atleast

 Literacy rate of Pakistan is 62.3%. Males have 72.5% and female 51.8% as per Economic

Survery 2018-19. (Above 3 from http://hdr.undp.org/en/countries/profiles/PAK)

Issue in Education system:

Priority of Government as per Economic Survery :
A National Education Policy Framework has been formulated to combat the multiple challenges facing
the education sector. The Framework has established following priorities areas:
Priority 1: Decrease Out of School Children (OOSC) and Increase School Completion
Priority 2: Achieve Uniformity in Education Standards
 Priority 3: Improve the Quality of Education
Priority 4: Enhance Access to and Relevance of Skills Training
Technical and Vocational Education
NAVTTC

Technical and Vocational Education and Training (TVET) offers the shortest and swiftest path to

productive youth engagement. Unfortunately, TVET sector in Pakistan suffers from systemic ailments

including limited training capacity, outdated workshops and laboratories, obsolete training equipment,

archaic teaching methods and antiquated curricula

NAVTTC’s New Initiatives

Implementation of National “Skills for All Strategy” as a Catalyst for uplift of TVET Sector in

Pakistan.. After assuming the office, the current government constituted a task force for devising a

comprehensive strategy for skill development in the country.

Gender Discrimination:
Half of Our Population has very minute share in Labour Force.

According to World Bank data of Females as % of Total Labor Foce for Pakistan is 22%, Bangladesh has
30%, United States and England has 46%. https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS.

Many women in Pakistan would like to work; there are multiple reasons why they do not. One of the key
reason:
women face restrictions on their physical mobility outside the home.
• Several interconnected factors restrict women’s mobility outside the home, among them

(i) social, cultural, and religious norms;

(ii) safety and crime; and
(iii)the quality of available transport services

(ii) Difference in wages:

Wage One potential explanation for low female labor force participation is that the jobs
available to women pay low wages. Women earn less than men, and this difference has
been persistent.

International Labor Organization’s global wage report 2018-19 states the

status of wage gap in Pakistan. The report also highlights the wage and
gender wage gap situation in Pakistan. According to the report, Pakistan has the
highest overall hourly average (mean) gender pay gap of the 73 countries for
which comparable data are available. In particular the gender pay gap for
 Pakistan was identified to be 34 per cent, which is more than double the global
average ( Global average is 20%). Moreover, the report finds that women
account for almost 90 per cent of the bottom 1 per cent of wage earners in
Pakistan.
(https://www.ilo.org/islamabad/info/public/pr/WCMS_651658/lang--en/index.htm)

(iii) Women who go outside the home to work are not considered “respectable “in many social
contexts (World Bank 2006).
(iv) Low literacy rate

Solutions:
Education: Preparing Women for Jobs They are Willing to Take Up
Changing Norms
Making More Workplaces ‘Suitable’
Increasing Demand

Increasing women’s participation in, and reducing discrimination in the workplace, with the
objective of increased equality for both men and women.
Women Empowerment under Ehsas Program as Per Economic Survey
This entire agenda of Ehsas is heavily skewed towards the uplift of poor women—from the 6 million women who
are estimated to benefit from the “Kifalat” to preferential support for women through “Tahafaz”. More than 50
percent of the education vouchers and scholarships will be given to women. Insaf Card covers health conditions for
women preferentially. Not just health and education, but jobs and economic empowerment is crucial for poor
women. In this regard, the graduation initiative solely serves women.

Manufacturing sector of Pakistan

According to Economic Survey 2018-19:

The contribution of Manufacturing in GDP is hovering around the 13.5-13.8 percent for almost decade as
per Economic Survery 2018-19.
Share of Large Scale Manufacturing in GDP : 78%
Share of Medium Scale Manufacturing in GDP :10.2
Share of Small Scale Manufacturing in GDP : 2.0
Manufacturing sector has been on declining trend.

What is role of manufacturing in economic development?

Greater capacity to create relatively better-quality jobs for unskilled and semi-skilled works compared to
agriculture and informal services; employment in manufacturing requires mostly
on the job training.
• Labor productivity growth is generally faster in manufacturing.
Creates jobs in other sectors through forward and backward linkages within manufacturing as well
as with services and primary sectors.

Employment multipliers are usually higher than in other sectors

(Evidence: 1 job in manufacturing creates 2 or 3 three jobs in
the other sectors). Think Example:
Where labour force is concentrated in rural agriculture and informal services; manufacturing has a
crucial role to play in bringing these people out of poverty.

(Labour is the only income generating ‘asset’ owned by the

poor)

Issues faced by Manufacturing sector in Pakistan

The 1st reason for the sick industrial units is the use of out dated technology,

they can produce up to a very low limit, unable to get deals, have to shut down the unit, causing

unemployment that leads to poverty.

Lack of investment and non-provision of financial assistance,

high tax rates,

unskilled workers,

labor unrest and political instability,

shortage of electricity and and other inputs(Water etc)

marketing problems for the local produced goods are the main reasons for the sick industrial units, which

in turn is a main reason for unemployment and poverty.

 Small and Medium Enterprises :

SMEs play a key role in shaping national growth strategies, employment generation and improving
standard of living of the vulnerable segments of the society. SMEs are the backbone of the economy but
lack resources to adopt new technologies and improve their production based on latest development.
as per SMEDA In the industrial development of a country the importance of the SME sector cannot be
overemphasized. SMEs constitute nearly 90% of all the enterprises in Pakistan; employ 80% of the
non-agricultural labor force; and their share in the annual GDP is 40%, approximately. However,
unlike large enterprises in the formal sector, a small and medium enterprise is constrained by financial
and other resources https://smeda.org/index.php?option=com_content&view=article&id=7:state-of-smes-
in-pakistan&catid=15
SMEDA is the flagship organization of Pakistan which is providing the necessary services to help SMEs
overcome the weaknesses that are endogenous to their very nature. It is an autonomous body working
under the umbrella of the Ministry of Industries & Production and contributes towards the growth and
development of SMEs in Pakistan through:

(i) the creation of a conducive and enabling regulatory environment;

(ii) development of industrial clusters;
(iii) and the provision of Business Development Services to SMEs in all areas of business management

Issues:
In case of Pakistan SMEs are not effective as compared to other developed and developing nations
because of financial constraints and stubborn policies of the Government.
insufficient Infrastructure, lack of favorable atmosphere for the development of SMEs, the problem of
organizations, shortage of water supply, inadequate transport systems, lack of energy, and improper solid
waste management causes to lower the standard of living, enhance poverty.
Agwu and Emeti (2014) stated that one problem of SMEs is absence of scheduled planning. As
specifically in Nigeria it is observed that less developed countries are weak in physical and social
infrastructure so they can get boost by the growth of SMEs.
SMEs perform poor because of low capital and they are depending upon Government support or SMEs
friendly policies from different financial institutes.
Does a Small and Medium enterprise play any role to reduce poverty in Pakistan?
As per research conducting in Pakistan and published in Pakistan business review,
SMEs has negative relationship with (poverty).

It means that if small and medium enterprises increase in Pakistan then results indicate that poverty
decreases. If one percent increment in SMEs then poverty reduces 2.976 percent. In other words we can
present the results in different way if one percent decreases in SMEs then poverty increases 2.976 percent.
The main reason is that about 87% of industrialized sector of Pakistan consists of small and medium
enterprises and contribute 35% (some where 40%) of GDP share and employing 78% of population. This
sector has helpful to provide and sufficient opportunities for employment, technological advancements,
income, tax revenue, efficiently utilization of resources of country and improvement in economy so our
results get more strengths. Figures needs to be confirmed.

Recommendations Based on the findings of this study, the following recommendations are made
• Government should arrange training and workshop programs for general public to motivate them to
start Small and Medium enterprises and help to reduce poverty from Pakistan.
• Government should allocate a certain part of budget to invest to develop human capital which ultimately
helps to reduce poverty of Pakistan.
• Government should control the rate of inflation with full concentration to reduce poverty.
https://pbr.iobm.edu.pk/wp-content/uploads/2019/06/19-1413-9001-3-SP-1.pdf

Microfinancing
In Pakistan, the microfinance has gained popularity as a major factor for reducing
poverty.

The history of microfinance activities started in 1980s in Karachi, with launching

of the Orangi Pilot Project (OPP) for katchi aabadies.

Microfinance is seen as animportant instrument with regard to gender empowerment throughout Pakistan
and many studies on it has been carried out to check its impact on poor people.Microfinance
has an excellent impact on the economic life of poor peoples’ poverty eradication, gender
empowerment in rural areas of Pakistan.

Microfinancing and Poverty

The practice of giving small loans (as little as US$10 or as much as $US500) to
the very poor, alongside other financial services such as savings accounts and
financial training, was the brainchild of economist Mohammad Yunus.

In the 1970s, he began offering credit to poor women in the village of Jobra,
Bangladesh, so that they could launch income-generating projects to help
support themselves and their families. In 2006, those experiments won Yunus
and his microcredit-focused Grameen Bank a Nobel Peace Prize.
Access to credit enables poor people to become entrepreneurs, increasing their
earnings and improving their quality of life.
The relation between Poverty and Microfinancing is negative. meaning that the more people
in a given country received small loans, the less poverty it registered. Thus, in
the average developing nation, an increase in the gross loan portfolio per
client by just 10% could reduce the extreme poverty rate by 0.0126 percentage
points.

Financial Inclusion tool to reduce poverty:

National Financial inclusion strategy 2019. It was mainly 100 days agenda with long term objectives.

The GoP has set following headline targets to be achieved by 2023:

1. Enhance usage of Digital Payments (65 million active digital transaction accounts, with gender
segregation of 20 million accounts by Women)

2. Enhance Deposit Base (Deposit to GDP ratio to 55%)

3. Promote SME Finance (Extend finance to 700,000 SMEs; 17% of the private sector credit)

4. Increase Agricultural Finance (Serve 6 million farmers through digitalized solutions; enhance annual
disbursement to Rs.1.8 trillion)

5. Enhance share of Islamic Banking (25 percent of the banking industry; increase branches of Islamic
banks to 30 percent of the banking industry)

How Financial Inclusion in Pakistan can reduce poverty?

It is envisioned that implementation of the five year plan can translate into creation of 3 million new
jobs,

additional exports of US$ 5.5 billion through enhanced access to finance to SMEs.

Furthermore, the plan also includes a strategy to increase the deposit base of banks to 55% of 2 GDP
and encourage higher savings.

A key assumption in this respect is to allow reduced income tax (20%) on income earned by commercial
& microfinance banks on SMEs, Housing & underserved areas for priority sectors

How these targets can be achieved? Or What steps should be taken to promote financial inclusion..

The summary of actions is as follows:

Enhance usage of Digital Payments:

1. 100 % digitalization of Govt. payments & receipts along with back-end automation
2. Digitalization of Pakistan Post
3. Digitalization of Central Directorate of National Savings (CDNS)
4. Creation of Transformation office at PM Secretariat
5. Launch fully functional Assan Mobile Account (AMA) Scheme Enhance Deposit
Base to 55% of GDP:
1. Banks to develop innovative and specialized products for targeted segments to encourage deposits
2. Expand outreach of banks’ branches in rural and semi urban areas
3. Facilitate fully functional digitized echo system to attract savings underserved and hard to reach areas

Promote SME Finance:

1. Launch fully functional Credit Guarantee Company(Done)
2. Launch fully functional E-Registry for creation of charge
3. Strengthen FWBL & SME Bank through privatization
4. Speedy disposal of SME loan cases by banking courts
5. Incentivized refinance schemes for Tourism and IT&ITeS Sectors
6. National SME Policy to be in place
7. Provincial Governments to play an active role
8. Reorganize and empower SMEDA
9. Census of business enterprises 1
0. Banks to be incentivized through fiscal measures i.e. Tax incentives

Increase Agricultural finance:

1. Automation of Land Record Management System (LRMS) and its adoption by banks for agri. lending
2. Kissan Digital Portal to be in place
3. Provision of subsidized agri. inputs to small farmers through digital channels
4. National Crop Insurance to be in place
5. Incentivized scheme for High Value Crops
6. Electronic Warehouse Receipt (WHR) financing mechanism to be in place
7. Incentivized Schemes for Agri. Development Loans for High Efficacy Irrigation Systems and Machine
tools, etc.

Promotion of Financial Inclusion through Low Cost Housing Finance:

1. Defining Low cost housing finance
2. Implementation of Financial Institutions (Recovery of Finances) (Amendment) Act, 2016
3. General reserve requirements to be withdrawn
4. CAR requirements to be reduced
5. The Loan to Value (LTV) ratio to be relaxed 3
6. Bank/DFI’s exposure in low cost housing not to be included in exposure limit
7. Standardization and simplification application forms
8. Housing microfinance to be up-scaled
9. Housing Finance Companies (HFCs) to be rejuvenated Promotion of Financial Inclusion through

Islamic Finance:
1. Develop roadmap for promotion of Islamic banking industry
2. Providing Enabling Legal & Regulatory Environment
3. Efficiency in Liquidity Management
4. Awareness Raising & Capacity Building
All of above things are important to alleviate poverty. We can read document for details if we want for
knowledge.

Significance of SME as per document of Finance ministry on National Financial inclusion strategy 2019

Credit for SME Sector :

However, keeping in consideration the overall developmental impact of SMEs in the economy, the flow
of credit to SMEs is only 416 billion, i.e. 7.0% as percentage of private sector credit. Earlier, SBP
launched Policy for promotion of SME Finance in December 2017 to enhance SMEs share in private
sector credit to 17 % by 2020.

The small & medium enterprise (SME) sector is one of the priority sectors of the economy due to their
economic and developmental contributions in national Gross Domestic Product (GDP), employment
generation and poverty alleviation etc. Significance of SMEs is also evident from the fact that they
constitute over 90 percent of estimated 3.2 million business enterprises in the country. In overall
macroeconomic terms, SME sector is contributing 30 percent towards the country’s GDP, employing
more than 80 percent of non-agricultural workforce and generating 25 percent in export earnings.

http://www.finance.gov.pk/NFIS.pdf
http://hdr.undp.org/en/countries/profiles/PAK