ISLAMABAD: Pakistan has the potential to generate Rs1.2 trillion through alternative resources, including the collection of Zakat, Corporate Social Responsibility (CSR) contributions and religious or religiously motivated initiatives, to meet social sector requirements.
Roughly, the four provincial Annual Development Plans (ADPs) utilised Rs1.2 trillion in previous years, but there are alternative ways to generate equivalent resources by building confidence and ensuring transparency in the use of public money.
This was revealed during a high-level policy discussion titled “Towards Integrated Financing for Pakistan’s Social Sector,” organised by the Sustainable Development Policy Institute (SDPI) in collaboration with Unicef and Germany’s GIZ here on Monday.
Referring to a study undertaken by LUMS, it was informed that the people of Pakistan paid Rs620 billion on account of Zakat, but State Bank of Pakistan data showed that bank deductions of Zakat stood at only Rs11.77 billion.
Minister of State for Finance Bilal Azhar Kayani stated on the occasion that grants obtained by the Centre from the provinces under Article 164 were a temporary arrangement and part of ongoing discussions at the NFC forum. He conceded that funds could be spent more effectively by transferring authority to local levels. He also highlighted the non-establishment of Provincial Finance Commissions (PFCs) and termed it an “incomplete” task.
He mentioned the retailers’ simplified tax schemes, which would bring more than 3.5 million people into the tax net. He said that with the help of localisation and transferring more authority, service delivery could be improved at grassroots levels. He also said he had arranged an Open Katchery in his constituency in Jhelum and came to know realities on the ground that could not be understood while living in Islamabad.
Kayani welcomed the discussion on Zakat, corporate social responsibility and other innovative financing streams. Referring to recent legislation adopted by the National Assembly on Corporate Social Responsibility (CSR), he said companies were being encouraged to increase and transparently report their CSR spending, with compliant firms receiving public recognition. He also called for better coordination between the federal Public Sector Development Programme and provincial Annual Development Plans to prevent duplication. He advocated extending resource-distribution arrangements below the provincial level so that districts and local governments could respond more effectively to grassroots needs. The event launched the first policy engagement under the Financing the Future initiative, which forms part of Unicef Pakistan’s broader Public Finance for Children framework. Unicef Pakistan Deputy Representative Sharmeela Rasool said the search for additional financing must remain centred on results for children. She said financing mechanisms should be assessed not only by how much money they mobilised, but also by whether they were predictable, equitable, transparent and capable of producing measurable improvements in children’s lives.
Rasool noted that a child born in Pakistan was expected to achieve only around 41 percent of their productive potential by age 18, reflecting the human and economic cost of inadequate investment in health, nutrition, education and social protection. She stressed that public financing and government leadership must remain at the centre of the agenda. Alternative financing should reinforce national and provincial systems and prioritise children and communities facing the greatest deprivation.
Advisor to the Finance Minister Adnan Pasha said human development should be treated as critical infrastructure for Pakistan’s economic future. With population growth continuing to increase pressure on public services, he called for stronger accountability and results frameworks to unlock responsible private and philanthropic financing.
Pasha proposed using clearly defined and independently reviewed disbursement-linked indicators to connect private contributions with verifiable results. He said private financing could not be treated as a “free lunch” and should generate measurable social and financial returns. He also proposed transparently directing revenues from selected taxes and levies, including those applied to sugary drinks, towards priority interventions in underserved districts. Visible results, he said, were essential for sustaining public and investor confidence.
SDPI Deputy Executive Director (Research) Dr Sajid Amin Javed said investment in health, children and social protection was an investment in Pakistan’s future. He said the country faced a structural financing challenge as population growth and social-sector needs continued to outpace provincial resources. The response must combine revenue mobilisation, expenditure prioritisation, greater efficiency and the responsible mainstreaming of alternative financing.
Javed noted that only around Rs12 billion of an estimated Rs620 billion in national Zakat was currently mobilised through formal channels, demonstrating the need for stronger institutions, public trust, and transparent collection and expenditure mechanisms.
UNICEF Pakistan Chief of Social Policy Sadaf Zulfiqar said declining traditional development assistance had increased the importance of corporate and individual philanthropy, public-private partnerships and impact-investment opportunities. Citing a 2023 study, she said annual corporate philanthropy in Pakistan was estimated at around $300 million. However, limited trust, weak transparency and fragmented institutional coordination continued to constrain its potential.SDPI Deputy Executive Director (Policy) Dr Shafqat Munir thanked Unicef, GIZ and federal and provincial government representatives for supporting the initiative.