Can an intensive package of support lift the ultra poor out of extreme poverty to a more stable state? This 24-month program provides beneficiaries with a holistic set of services including: livelihood trainings, productive asset transfers, consumption support, savings plans, and healthcare.By investing in this multifaceted approach, the program strives to eliminate the need for long-term safety net services. Spanning seven countries on three continents, the Ultra Poor Graduation program is being piloted around the globe. IPA is conducting randomized evaluations in India, Pakistan, Honduras, Peru, Ethiopia, Yemen, and Ghana to understand the impact of this innovative model.
Governments have often attempted to address the needs of the ultra poor by offering consumption support that is costly and offers no clear pathway out of food insecurity. The Ultra Poor Graduation Pilots attempt to apply a model, developed by BRAC in Bangladesh, which recognizes that the ultra poor need the "breathing space" that is provided by temporary consumption support, but that public funds may be better used to build households’ capacities to maintain a sustainable livelihood. The idea is that this initial assistance, lasting two years, will place households securely on the first rung of the development ladder, which they can then climb with the help of appropriate development strategies. The model incorporates a comprehensive package of services: a productive asset (such as chickens or goats), consumption support, livelihood trainings, healthcare, and financial services.Ideally this wide set of support services will help households to weather any shocks they may face along during their climb out of ultra poverty.
This project is a part of a set of evaluations, in partnership with CGAP and the Ford Foundation, that intends to determine whether the model, pioneered in Bangladesh, is effective in a range of contexts.
Context of the Evaluation:
Poverty in Pakistan is a growing concern—almost one third of the county’s 170 million inhabitants live in poverty, an increase of almost 13% since the1990s,[i] and there are currently 3.2 million people displaced by wars[ii]. Pakistan is home to a large feudal landholding system, where numerous poor tenants are indebted to landowners. Lacking access to formal credit, poor tenants are bonded to their impoverished condition and are often exploited for their labor.
This study takes place in the Coastal Sindh region of Pakistan. Four NGOs, Aga Khan Planning and Building Services Pakistan (AKPBSP), Badin Rural Development Society (BRDS), Indus Earth Trust (IET), Sindh Agricultural and Forestry Workers Coordinating Organization (SAFWCO), have partnered with IPA and the Pakistan Poverty Alleviation Fund to implement the Ultra Poor Graduation Pilot to assist these vulnerable households.
Details of the Intervention:
Eligible households are identified using a Participatory Wealth Ranking (PWR), a method that engages villagers in creating an economic ranking of all households in a community. After the economic status of eligible families is verified, households are randomly assigned to either a treatment or comparison group. The treatment beneficiaries receive a monthly stipend of Rs. 1000 ($12 US) for the first year to stabilize consumption. Next, households choose an asset and begin livelihood training. Examples of livelihood activities include embroidery, raising livestock, fishing, and carpentry. Beneficiaries are encouraged to save money at home, in savings boxes, or with Rotating Savings and Credit Associations (ROSCAs) that pool money and periodically distribute group savings to each member. Lady Health Visitors working with some of the partners provide health services to participating households.
For additional information on Ultra Poor Graduation Pilots, click here.
Revenue collection and public sector efficiency is a central question for developing countries. The low level of tax revenues raised in these countries can result in the under-provision of public goods, heightens vulnerability to economic crises, and may constrain growth. Poorer countries collect on average only two-thirds or less of the amount of tax revenue as a fraction of GDP that richer countries do1, with an estimated $285 billion per year loss due to tax evasion. Past work on this topic attributes the weak performance of tax collection to the poor incentives for proper tax collection and administration. It is thought that incentives, accountability and monitoring can raise public sector efficiency, but there is little rigorous evidence on anti-corruption measures that systematically address the incentives faced by government bureaucrats.
Context of the Evaluation:
Punjab is Pakistan’s most populous province with a population of over 80 million. International comparison reveals that the present level of property tax collection in Punjab is roughly a fifth of the level of comparable countries. Evidence suggests that the main way tax evasion takes place is through several distortions such as granting exemptions to widows, the disabled, owners of small plots, retired federal and provincial government employees, and religious charitable institutions. Because officials may employ significant discretion in applying valuation to individual properties and determining exemptions, the system leaves considerable opportunities for leakages, collusion, and low collection.
Tax collectors in Pakistan are part of the provincial career bureaucracy with wages determined by salary band and length of service. Tax officials have few avenues for vertical mobility through promotions, and wage levels are not tied to performance in any way. As a result of these factors, tax officials suffer from low motivation, and evidence suggests that tax evasion and rent seeking are prevalent.
Details of the Intervention:
Geographical areas serviced by a set of tax collectors (called tax circles) were randomly assigned one of the following four wage and incentive programs (or no treatment):
Pure Wage Increase: the base salary of tax inspectors, clerks, and constables will be increased by a fixed amount. The usual monitoring and control systems from the Excise and Taxation Department (which also apply to the control group) remained in place in this and all other treatments.
Pure Wage Increase Plus Audit: In addition to the increase in wages, tax officials were told that a random sub-sample of the properties under their jurisdiction would be visited by an independent government unit outside the tax department and audited. Officials were told that they would be rewarded or penalized based on the accuracy of their audit relative to audits in other circles, as well as on taxpayer satisfaction with the quality of interactions with tax officials. The reward / penalty will be in the form of job assignments: the best performing circles would be given the highest priority in postings in the subsequent year, and the worst circles will be given lowest priority in reassignment in the subsequent year and denied the wage increase.
Output-Based Incentives: In this scheme, tax officers were rewarded on the basis of revenue collected. Specifically, a percentage of revenue collected in the circle above a historical benchmark will be given to the tax officers as performance honorarium.
Output-Based Incentives Plus Audit: In this scheme, the output incentives were combines with the audits, with the penalty that if the audit performance is good/poor the circle officials are given highest/lowest priority in reassignment to tax circles and forfeit future incentive payments.