Poverty Reduction

1
Poverty Reduction

• Background facts for Kenya SDI Workshop
• Nairobi, November 12, 2001
• Prepared by Dozie Ezigbalike

2
What is poverty?

• Poverty is pronounced deprivation in well-being.
• To be poor is to be hungry,
• To lack shelter and clothing,
• To be sick and not cared for,
• To be illiterate and not schooled.

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Poverty

• Poor people are particularly vulnerable to
  adverse events outside their control.
• They are often treated badly by the institutions
  of state and society and excluded from voice and
  power in those institutions.

4
Measuring Poverty

• Income-based Measures
• Rowntree Poverty is a level of total earnings
  insufficient to obtain the minimum necessities
  for the maintenance of merely physical
  efficiency, including food, rent, and other
  items.
• Within a country, income or consumption survey
• To compare across countries, use International
  Dollar
• Using commodity prices, convert raw income to PPP
  ? Purchasing Power Parity

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Measuring Poverty

• Non income-based measures
• Health
• Infant mortality figures are higher for poor than
  rich households
• Difficult because this requires a system for
  registration of births and deaths
• Education
• Net primary school enrolment rate
• Ratio of enrolled primary-school-age children to
  all primary-school-age children.

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Measuring Poverty

• Vulnerability
• The risk that a household or individual will
  experience an episode of income or health poverty
  over time, including exposure to other risks.
• Indicators of vulnerability
• Physical assetsthose that can be sold to
  compensate for loss of income
• Measure both value and liquidity of the asset

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Vulnerability

• Human capital for example level of education
• Income diversification
• Links to networks family-based networks,
  occupation-based groups of mutual help, rotating
  savings and credit groups,
• Participation in the formal safety net
  insurance, etc
• Access to credits

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Poverty Reduction Strategies
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Areas of Action

• Promoting opportunity
• Facilitating Empowerment
• Enhancing Security

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Opportunity

• Expanding economic opportunity for poor people by
  stimulating overall growth and by building up
  their assets
• e.g., land and education
• Increasing the returns on these assets through a
  combination of market and non-market actions

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Targeted Actions

• Encourage effective private investment.
• Investment and technological innovation are the
  main drivers of growth in jobs and labor incomes.
  
• Reducing risk for private investors
• through stable fiscal and monetary policy, stable
  investment regimes, sound financial systems, and
  clear and transparent business environment.
• Also ensuring the rule of law and taking measures
  to fight corruption
• Tackling business environments based on
  kickbacks, subsidies for large investors, special
  deals, and favored monopolies

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Targeted Action Public investment

• Private investment will have to be complemented
  by public investment to enhance competitiveness
  and create new market opportunities.
• Expanding infrastructure and communications
• Upgrading the skills of the labor force.

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Targeted Action Building assets

• Building the assets of poor people
• Creating human, physical, natural, and financial
  assets that poor people own or can use
• This requires actions on three fronts

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Assets

• Public spending
• Increase the focus of public spending on poor
  people
• This expands the supply of basic social and
  economic services and relaxes constraints on the
  demand side
• For example, scholarships for poor children

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Assets

• Good quality service delivery
• Institutional action involving sound governance
• The use of markets and multiple agents
• Reforming public delivery, e.g., education,
• Privatizing in a fashion that ensures expansion
  of services to poor people, e.g., urban water and
  sanitation

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Assets

• Participation
• Participation by poor communities and households
• In choosing and implementing services
• In monitoring them to keep providers accountable

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Targeted Action Inequalities

• Asset inequalities across gender, ethnic, racial,
  and social divides
• Be aware of political and social difficulties
  that obstruct change
• Mechanisms include using a mix of public
  spending, institutional change, and participation

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Mechanisms

• Negotiated land reform, backed by public action
  to support small farmers
• Getting girls into school,
• E.g., by offering cash or food for schooling, as
  in Bangladesh, Brazil
• Hiring more female teachers, as in Pakistan.
• Support for micro credit schemes for poor women

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Targeted Action Infrastructure

• Getting infrastructure and knowledge to poor
  areas
• Rural and urban
• Community and regional levels
• Public support and a range of institutional and
  participatory approaches.
• Social and economic infrastructure in poor,
  remote areas
• E.g., transport, telecommunications, schools,
  health services, and electricity, as in Chinas
  poor areas programs

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Infrastructure

• Broad based provision of basic urban services in
  slums, within an overall urban strategy.
• Access to information for poor villages
• To allow them to participate in markets and to
  monitor local government.

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Facilitating empowerment

• Making state institutions more accountable and
  responsive to poor people
• Strengthening the participation of poor people in
  political processes and local decision making
• Removing social barriers that result from
  distinctions of gender, ethnicity, race, religion
  and social status.

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Targeted Actions Inclusive Development

• Laying the political and legal basis for
  inclusive development.
• State institutions need to be open and
  accountable to all
• Transparent institutions
• Democratic and participatory mechanisms for
  making decisions
• Monitoring their implementation, backed up by
  legal systems that foster economic growth and
  promote legal equity

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Targeted Action Public administration

• Create public administrations that foster growth
  and equity
• Implement policies efficiently
• And without corruption or harassment improve
  service delivery by the public sector and
  facilitate growth of the private sector.
• Performance incentives may be needed to make
  public administrations accountable and responsive
  to users
• Access to information
• Reform public administration system to increase
  accountability and responsiveness
• E.g., the police

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Targeted Action Decentralization

• Can bring service agencies closer to poor
  communities and poor people
• Potentially enhances peoples control of the
  services to which they are entitled
• Strengthen local capacity
• Devolve authority and financial resources

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Decentralization

• Needs to be combined with effective mechanisms
  for popular participation and citizen monitoring
  of government agencies.
• Foster community-driven choices for resource use
  and project implementation.
• E.g., parental involvement in schooling
• Users associations in water supply and irrigation

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Targeted Action Tackling social barriers.

• Social structures and institutions form the
  framework for economic and political relations
  and shape many of the dynamics that create and
  sustain povertyor alleviate it.
• Social structures that are exclusionary and
  inequitable, such as class stratification or
  gender divisions, are major obstacles to the
  upward mobility of poor people.
• Selective affirmative action policies
• Particular attention to gender equity
• Poor women are thus doubly disadvantaged
• the lack of autonomy of women has significant
  negative consequences for the education and
  health of children

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Enhancing security

• Reducing poor peoples vulnerability
• Ill health, economic shocks, crop failures,
  policy-induced dislocations, natural disasters,
  and violence,
• Coping and recovery mechanisms
• Effective safety nets
• To mitigate the impact of personal and national
  calamities

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Targeted Action

• National Programs
• Prevent, prepare for, and respond to macro shocks
• Financial and natural
• Social Risk Management
• Without undermining competitiveness
• Address civil conflict.
• Bulk of conflicts are in poor countries and most
  are civil wars
• More than 85 percent of all conflicts were fought
  within country borders between 1987 and 1997.

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Reduction Strategies

• Country-specific
• Consistent with preservation of culture
• The national level, reflecting national
  priorities
• But with local leadership and ownership,
  reflecting local realities.

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Sample PRSP contents

• Reduce income poverty to 10 y 2017
• Achieve universal primary enrolment by 2004-2005,
  along with higher completion rates
• Reduce under-five mortality rate to less than 103
  per 1000 live births
• Reduce HIV prevalence by 35
• Reduce incidence of stunting to 28
• Reduce total fertility to less than 5.4 births
  per woman

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Global Actions

• Promote global financial stability and open the
  markets of rich countries to the agricultural
  goods, manufactures, and services of poor
  countries.
• Bridge the digital and knowledge divides, thus
  bringing technology and information to people
  throughout the world.
• Provide financial and non-financial resources for
  international public goods, especially medical
  and agricultural research.

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Global Actions

• Increase aid and debt relief to help countries
  take actions to end poverty, within a
  comprehensive framework that puts countries
  themselvesnot external aid agenciesat the
  center of the design of development strategy and
  ensures that external resources are used
  effectively to support the reduction of poverty.
• Give a voice to poor countries and poor people in
  global forums, including through international
  links with organizations of poor people.