Pakistan has the potential to generate Rs. 1.2 trillion through alternative sources, including Zakat, Corporate Social Responsibility contributions and religiously motivated initiatives, to meet social sector needs, according to participants at a policy discussion in Islamabad.
The amount is roughly equal to the funds utilized through the four provincial Annual Development Plans in previous years. Speakers said similar resources could be mobilized by improving public confidence and ensuring greater transparency in the collection and use of funds.
The discussion, titled “Towards Integrated Financing for Pakistan’s Social Sector,” was organized by the Sustainable Development Policy Institute in collaboration with UNICEF and Germany’s GIZ. Participants highlighted the need to combine public funding with alternative financing to address growing social sector requirements.
A study by LUMS presented at the event estimated that people in Pakistan paid Rs. 620 billion in Zakat, while State Bank of Pakistan data showed that only Rs. 11.77 billion was collected through bank deductions.
Minister of State for Finance Bilal Azhar Kayani said grants received by the federal government from provinces under Article 164 were a temporary arrangement and remained part of discussions at the National Finance Commission forum. He said funds could be used more effectively by transferring greater authority to local governments and noted that Provincial Finance Commissions had yet to be established, describing the task as incomplete.
Kayani also highlighted simplified tax schemes for retailers, which he said could bring more than 3.5 million people into the tax net. He said greater localization and devolution of authority could improve service delivery at the grassroots level. He also called for better coordination between the federal Public Sector Development Programme and provincial Annual Development Plans to avoid duplication.
Speaking about Corporate Social Responsibility, Kayani welcomed discussion on Zakat, CSR and other alternative financing channels. Referring to recent CSR legislation passed by the National Assembly, he said companies were being encouraged to increase and transparently report their CSR spending, while compliant firms would receive public recognition.
The event launched the first policy engagement under the Financing the Future initiative, which is part of UNICEF Pakistan’s broader Public Finance for Children framework. UNICEF Pakistan Deputy Representative Sharmeela Rasool said alternative financing should remain focused on measurable results for children and should be predictable, equitable and transparent.
Rasool said a child born in Pakistan was expected to achieve only around 41 percent of their productive potential by age 18, highlighting the economic and human cost of insufficient investment in health, nutrition, education and social protection. She said government leadership and public financing must remain central, while alternative financing should strengthen existing national and provincial systems.
Advisor to the Finance Minister Adnan Pasha said human development should be treated as critical infrastructure for Pakistan’s economic future. He called for stronger accountability and results frameworks to attract responsible private and philanthropic financing as population growth increases pressure on public services.
Pasha proposed independently reviewed disbursement linked indicators to connect private contributions with measurable results. He said private financing should produce measurable social and financial returns and proposed directing revenues from selected taxes and levies, including those on sugary drinks, toward priority interventions in underserved districts.
SDPI Deputy Executive Director for Research Dr. Sajid Amin Javed said Pakistan faced a structural financing challenge as population growth and social sector needs continued to outpace provincial resources. He said the response should combine revenue mobilization, spending priorities, greater efficiency and responsible use of alternative financing.
Javed said only around Rs. 12 billion of the estimated Rs. 620 billion in national Zakat was currently mobilized through formal channels, highlighting the need for stronger institutions, greater public trust and transparent collection and spending 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. Citing a 2023 study, she said annual corporate philanthropy in Pakistan was estimated at around $300 million, but limited trust, weak transparency and fragmented institutional coordination continued to restrict its potential.
SDPI Deputy Executive Director for Policy Dr. Shafqat Munir thanked UNICEF, GIZ and federal and provincial government representatives for supporting the initiative.
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