More than two-thirds of Pakistanis live in rural areas, of which about 68 percent are employed in agriculture (40 percent of total labor force). The agriculture sector accounts for about 22 percent of the national GDP and has enjoyed steady growth for almost three decades, substantially contributing to poverty reduction during the 1970s and 80s.
However, recent trend of agriculture incomes is far less encouraging and rural poverty was back to 38.9 percent by 2002, the same level where it was at the beginning of the 1990s. This has occurred despite generally favorable policies on prices and markets, and a relatively liberalized environment. While consecutive droughts have certainly played a detrimental role in the performance of the sector, it also faces significant structural constraints that hinder the sector’s contribution to economic growth and poverty reduction.
ISSUES & CHALLENGES
- · Poorly functioning factor markets and constrained access to assets
- · Inequality and land concentration:
- · Agricultural growth is constrained:
- · Unsustainable water resources management:
- · Weak rural service delivery:
PRIORITY AREAS OF THE WORLD BANK’S SUPPORT
1. Fostering agricultural growth and competitiveness
- · Policy and Institutional Reforms:
2. Promoting more equitable access to assets and natural resources management.
- · Land:
- · Finance:
3. Institutions for the poor and rural service delivery
- · Participation and accountability:
- Livelihood opportunities. Social mobilization and increased capacity for collective action will enhance opportunities for livelihood and income generating activities and greater “voice” in dealing with the private sector and markets. Support for the basic infrastructure and social services delivery would help improving the rural investment climate, a vibrant private sector, employment and livelihood opportunities, and linkages between farm and non-farm sectors.