Boosting non-traditional employment in rural areas

The Asian Development Bank (ADB) is to help Pakistan create non-farming jobs in rural areas through a technical assistance loan of US $5 million over the next three years. “There is a pressing need to create an enabling environment to stimulate enhanced employment opportunities in rural areas beyond traditional farming. This project aims to diversify job and income-earning opportunities, particularly for the landless, wage earners, and women in rural and peri-urban areas,” Ahsan Tayyab, a project economist, said on Thursday from Manila, where the ADB is headquartered. Pakistan depends substantially on agriculture and other rural activities to provide livelihoods for the majority of its people. Almost 68 percent of the country’s total population is rural, where agriculture accounts for nearly half of employment. "Efforts must be made to diversify the rural economy in non-farm sectors such as services, small-scale manufacturing, and value-added agricultural processing since such activity offers important economic opportunities for the rural poor in areas where landlessness is high,” Tayyab added. In many areas of rural development, Pakistan lags behind its Asian neighbours with fewer natural resources. In addition, drought and poor quality crops and livestock often force rural people to migrate at least temporarily to the cities. The situation is exacerbated by the traditional system of landholding in the two most populous provinces of Sindh and Punjab. According to the ADB, the urban population of the country grew from 24 million in 1981 to 53 million in 2005. Nevertheless, for Pakistan to meet its goal of reducing poverty by half by 2015, and also to reduce rapid rural-urban migration, non-farm economic opportunities in rural areas must expand, economists maintain. The country has around 150,000 small businesses and more than 3 million micro-enterprises. However, “the informal economy is largely unregulated and faces crucial resource constraints, particularly finance, skills, new technology, management and immediate interventions are required for improvement in these areas,” Mohsin Babbar, an Islamabad-based economic analyst, noted. In support of the Pakistani government’s objective of private enterprise development, this is the third such effort by the ADB to promote investment, growth, and employment generation over the years. Besides the ADB, several other institutions like the World Bank, Aga Khan Rural Support Programme (AKRSP), bilateral donors, including the Swiss Agency for Development and Cooperation (SADC) and a range of NGOs, have also supported private enterprise development in Pakistan in previous years. The Pakistani government will contribute $1.5 million toward this project's total estimated cost of $6.5 million, which will be carried out over three years to December 2008.