Estimating Poverty Levels and Sustainable Development in Rural

Pakistan

by

Abdul Hameed

and

Ihtsham ul Haq Padda

Introduction • Poverty reduction is key to attaining sustainable

development

• Approximately 1.02 billion people can’t afford basic needs

and go to bed hungry each night

• Pakistan is ranked 149th out 188 economies in the world

in terms of poverty

• 29.5 percent (60 million) people are living below the

poverty line according to official government data (poverty

line Rs.3030 per month; almost equal to $1 per day)

• World Bank estimates (poverty line = $1.25 per day) would suggest that 52 percent Pakistanis live is below the poverty line

Study objectives

Construct socioeconomic score for rural Pakistan

Estimate level of poverty and disaggregate it at district level

Correlate poverty with household characteristics

Compare sustainable development between poorest and richest areas

Data and Methodology

Pakistan Rural Household Survey (PRHS, 2013)

The survey was administered in 19 districts

Data from 1937 out of 2090 households

Principle Component Analysis (PCA)

Variables Description

• Agriculture and non-agriculture assets

• Main source of drinking water

• Drainage facility

• Toilet facility

• Type for dwelling, roof, floor and outer wall material

• Number of rooms used for sleeping purposes

• Livestock and poultry (NUMBER)

• Agriculture Land (Per Acre)

• Energy sources ( Electricity, wood, natural gas, dung cake etc.)

Results • 6.7 (almost 7) average household size

• 14% households have access to high quality

(piped/ bottle) water for drinking

• Only 7% have drains linked with pacca

covered/open piped

• 40% do not have toilet facilities

• 52% have roofs made of concrete, iron sheets, or

t-iron guarder with tiles

• 36% have floors with cement, tiles, and chips

• 12% have outer wall made of cement and stone

• 88% have electricity

• 77% have used wood, dung cake, agriculture waste

and coal for cooking purposes

• Average 2 rooms available for sleeping purposes

• Average 2 acre agricultural land per household

• Average 2 large and 2 small animals per household

• Average 1 poultry/bird per household

Results/

Poverty Cut-off

Quintile Wealth index score minimum Wealth Index score maximum

Poorest (1st) -5.813667 -2.744665

Poor (2nd) -2.73076 -1.123294

Medium (3rd) -1.121825 0.6237519

Wealthy (4th) 0.631431 2.635582

Wealthiest (5th) 2.645651 10.60718

Source : Pakistan Rural Household Survey, 2013

Poverty Levels in Rural Pakistan

• 44% households are living below

the poverty level

• 19% households living as a

medium/ middle man status

• 37% households living above the poor and medium status

• 26% (out of 44%) households living as a poorest status

26

18 19 17

20

0

5

10

15

20

25

30

Poorest Poor Medium Wealthy Wealthiest

PER

CEN

TAG

E

Household Size, Head Age and Poverty Level

• Average household size and

household head age have changed

slightly in the household poverty

status

• Average household head age has

changed between poorest and

poor, wealthy and wealthiest

levels

6.2 6.5 6.9 7.4 7.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Poorest Poor Medium Wealthy Wealthiest

Aver

age

Hou

shold

Siz

e

44 46 47 48 51

0

10

20

30

40

50

60

Poorest Poor Medium Wealthy Wealthiest

Ave

rage

Ho

use

ho

ld H

ead

Age

Household Head Gender, school years and Poverty Level

26

18 19 17 20

9 14

23

16

37

0

5

10

15

20

25

30

35

40

45

Poorest Poor Medium Wealthy Wealthiest

Per

cen

tage

Male Head Female Head

• PRHS results show that there is lot of

variation between household head

gender and poverty levels

• Female-headed households seem to

be less poor than male-headed

households in rural Pakistan • In most countries, poverty

fell faster for FHHs (( world

Bank,2015), (Ayodeji et al, 2013),

(IFAD, 1999))

• There is a statistically significant

correlation between the average

household head’s education and

poverty levels

• Poverty decreases with increasing

household head education levels

4

6 7

7

9

0

1

2

3

4

5

6

7

8

9

10

Poorest Poor Medium Wealthy Wealthiest

Aver

age

Yea

rs o

f S

chooli

ng

Continued

Rural Microcredit and Poverty

47

22

31

42

18

40

0

5

10

15

20

25

30

35

40

45

50

Poor Medium Rich

Per

cen

tage

Microcredit Without Microcredit

• Households that have received microcredit in rural Pakistan tend to be poorer

• This is because households mostly failed to utilize loans properly to generated trade as they promised when accepting loans

District Wise Poverty Level in Rural Pakistan District Name Rank

Poorest

( %) Rank

Poor

(% ) Rank

Medium

( %) Rank

Wealthy

( %) Rank

Wealthiest

( %) Total

Kasur 12 12 6 28 4 30 10 13 9 16 100.0

Bhakkar 14 8 8 24 6 27 6 22 6 19 100.0

Khanewal 10 16 12 15 11 20 4 24 4 25 100.0

Attock 16 0 18 0 17 1 14 11 1 88 100.0

Vehari 10 16 10 22 1 34 13 12 8 17 100.0

Jhang 11 14 11 18 3 30 5 23 10 15 100.0

D G Khan 4 40 1 35 14 14 16 9 16 3 100.0

Bahawal Nagar 9 21 7 25 5 28 11 13 11 13 100.0

Rahim Yar Khan 14 8 13 14 9 23 3 29 3 26 100.0

Multan 8 29 4 31 12 19 8 17 13 4 100.0

Faisalabad 7 29 5 31 13 19 9 17 14 4 100.0

Sargodha 13 10 2 34 7 26 7 18 12 12 100.0

Thatta 2 93 16 7 18 0 19 0 18 0 100.0

Dadu 6 32 3 33 10 22 15 10 15 3 100.0

Sanghar 3 58 15 10 16 7 17 7 7 19 100.0

Jaccobabad 5 40 9 23 8 24 12 12 17 1 100.0

Hyderabad 1 95 17 4 19 0 18 1 19 0 100.0

Nowshera 15 1 14 14 2 31 2 30 5 24 100.0

Mansehra 16 0 19 0 15 8 1 49 2 43 100.0

Poorest Richest

Hyderaba

d (%)

Thatta

(%)

Sangher

(%)

D G

Khan(%)

Attock

(%)

Mansehr

a (%)

Rahim Yar

Khan (%)

Khanewal

(%)

low quality drinking

water 10 7 22 2 2 15 8 0

Low quality drainage 73 99 82 11 1 19 14 38

Low quality toilet 54 89 63 58 1 5 22 18

Low quality roof 92 93 70 54 0 6 8 30

Low quality floor 98 95 69 87 5 15 64 46

Low quality outer

wall 94 54 68 58 0 11 31 32

Sustainable Development Comparison b/w Poorest & Richest Area

Conclusions • 44% households are living below the poverty level

• The major causes of poverty in the study area are low asset base

(household assets, livestock, poultry, agriculture land etc.),

employment opportunities, poor sanitation facilities, and lack of

pure drinking water

• Average household head’s education is significantly related to poverty

• Households receiving microcredit in rural Pakistan tend to be

poorer because of poor utilization of the credit

• Female-headed households tend to be less poor than male-headed

households in rural Pakistan

• Improving education, women empowerment and awareness about rural micro credit policies to reduce rural poverty levels

• Socioeconomic policies aimed at reducing poverty must focus on improving housing and sustainable development conditions (sanitation, drinking water, toilet etc.) and reducing regional level inequalities through pro-rural development

• Income of majority of rural population is based on agriculture. Pro-farmer agriculture policies leading to increased incomes are therefore crucial

• District level polices can help in reduction in poverty and sustainable development

The way forward