HELPING people move out of poverty, on a sustainable basis, and helping to lower their vulnerability threshold is not a straightforward or easy policy issue.

The poor have low incomes and they have low or non-existent wealth or asset levels — whether human assets (education and/or skills) or physical assets. So, in order to climb out of poverty and ensure that this move is sustainable the poor need help at two levels: they need resources to meet their current needs (food, clothing, shelter etc.), and asset accumulation so that they can continue to benefit from higher income levels in the future.

A pertinent question is that if the poor do not have enough even for today, how can they accumulate for the future? In most cases, apart from meeting their current needs, the poor need accumulation mechanisms for building their savings and assets. There are various ways one can facilitate this. If current income increases sufficiently to allow some savings, these can be accumulated to build assets.

Micro-credit takes this route by giving borrowers loans to make, predominantly, productive investments which leads to an increase in current incomes and allows not only higher current consumption but some accumulation of savings as well. Continued for a sufficient period or with some repetition of loan cycles, and without any negative shocks, the process allows people to climb out of poverty and to stay out of it on a sustainable basis.

If current income increases are not considered feasible or are not sufficient to allow for the accumulation of savings, a good way to address vulnerability and the future is through the transfer of assets. Though a slower route, this can be done through imparting education and/or vocational skills to build human assets. But here we have to ensure the quality of education as well as the relevance of skills. This, evidence shows, is not always easy to manage.

The other option is the transfer of physical assets to the poor. Studies show good returns on transfer to the poor of land, livestock and/or resources for starting a small business. The usual risks with these assets (death of animals, the closure of business etc.) apply but the reported returns, after taking risks into account, from countries that have used asset transfers to tackle poverty, are quite significant.

Within asset transfer programmes, though returns on land transfer to the very poor are significant, land distribution programmes are politically very difficult to set up, and to handle effectively and efficaciously. Taking productive land away from people, even from those who might have large holdings, is not an easy task, while distributing marginal lands does not result in returns that are high enough.

Livestock distribution and business loans are the easiest to manage, while still getting good returns. For these programmes, if there has been some relevant training for recipients, prior to asset transfers, in taking care of animals or in basic skills for business management, success rates appear to be even higher. If too many assets of the same kind are given in a small market and/or area, it can create market saturation issues and a reduction in returns.

The agency responsible for running the programme should keep an eye out for such issues. Too many animals in an area can create fodder shortages or a milk glut and raise the risk of epidemics. In the same way, too many women producing similar embroidery can lower returns as well. A good mix of assets can easily address these issues.

We are facing very substantial levels of poverty in Pakistan and, more importantly, very high levels of vulnerability where even a substantial number of non-poor are at high risk of falling into poverty. Health, employment, and income shocks that are household-specific are quite common, as are systemic shocks like floods and droughts.

The Benazir Income Support Programme has a large transfer programme, Rs1,000 a month for each eligible poor household, and this sum is now reaching millions of households. But this transfer, by design, just takes care of a portion of the current needs of those who are very poor. Federal and provincial governments need to experiment with asset transfer programmes too.

Waseela-i-Taleem (for education) and Waseela-i-Rozgar (vocational training) address human asset questions. But these programmes are just starting out and are still too small and recent for one to say whether or not they will be implemented well enough to address poverty issues at the scale required.

The Rs300,000 one-time transfer programme for business that has been started in Sindh is an asset-transfer programme but it has just been announced. We will not know about its efficacy for some time, even if it continues to work after the elections.

More importantly, for the moment, the government has chosen to only deal with a cash-transfer programme, even on the asset side. It has not tried to experiment with livestock transfer programmes and/or land transfer programmes. Since such programmes have shown promising results in other but comparable jurisdictions, incoming governments should definitely do pilot projects in these areas.

We need to establish the comparative advantages and disadvantages of the various options we have open to us through a careful and rigorous evaluation of these so that large-scale interventions can be designed with some level of confidence.

It is likely that there will be little political opposition to asset-transfer programmes for education/training or even against livestock transfers and business loans. But land redistribution programmes are bound to raise political difficulties.

Will the high returns on land redistribution, as a means of reducing poverty, provide any incentive to political parties to think of this as a policy option for fighting poverty in Pakistan? Will any party include such a programme in its election manifesto? It will be interesting to see this through the election process and beyond.

The writer is senior adviser, Pakistan, at Open Society Foundations, associate professor of economics, LUMS, and a visiting fellow at IDEAS, Lahore.