UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
Africa: World Bank on Poverty Date Distributed (ymd): 961022
World Bank, Africa Region Findings, 73, October 1996
[Findings reports on ongoing operational, economic and sector work carried out by the World Bank and its member governments in the Africa Region. It is published periodically by the Knowledge Networks, Information and Technology Center on behalf of the Region. It is available on the Web at http://www.worldbank.org/aftdr/findings/english/findtoc.htm]
Poverty in Sub-Saharan Africa: Issues and Recommendations
Concerns about poverty in Sub-Saharan Africa are not new and poverty reduction efforts have been documented fairly extensively. However, this report, Taking Action for Poverty Reduction in Sub-Saharan Africa, commissioned in 1993 by the Bank's Africa Region differs from others in that it focuses on the Bank's operational program to reduce poverty. It analyses the connections between its poverty assessments, country assistance strategies and the content of the lending program. It also examines actions that the Bank--in partnership with governments and donors--can take to reduce poverty. The report reflects numerous discussions with the Bank's development partners -- Africans, the donor community, and nongovernmental organizations (NGOs).
Profile of Poverty
On average, 45 to 50 percent of Sub-Saharan Africans live below the poverty line -- a much higher proportion than in any region of the world except South Asia. In 1993, an estimated 40 percent lived on less than a dollar (US) a day. At least 50 percent of these people are from five East African countries and Nigeria. Also, the depth of poverty -- that is, how far incomes fall below the poverty line -- is greater in SSA than anywhere else in the world.
Beyond low income, a principal indicator of poverty is inadequate access to social services. Currently, the availability of social services in most SSA countries is the lowest in the world. The average gross primary school enrollment rate, which declined in many countries in the Sahel during the 1980s, is currently only 67 percent compared with 94 percent for South Asia and 117 percent for East Asia. Health services are falling behind demand in most countries in SSA. This is reflected in an average infant mortality rate of 93 per 1,000, which is higher than South Asia's 84 per 1,000, Latin America's 46 per 1,000 and East Asia's 36 per 1,000.
Economic growth rates
The growth of income in Sub-Saharan Africa during recent years has been dismal. Between 1970 and 1992, average per capita Gross Domestic Product (GDP) grew by only $73 in relation to purchasing power parity. In contrast, during the same period, South Asia's per capita GDP increased by $420 (2.3 percent per year) and East Asia's by $900 (3.1 percent per year). In 1970, average per capita GDP for these two regions was similar to Africa's.
Causes of Poverty in SSA
The consequences of poverty often reinforce its complex causes, exacerbating the problem. The study has identified the following as the main causes of poverty:
Inadequate access to employment opportunities
Inadequate physical assets, such as land and capital, and minimal access by the poor to credit even on a small scale
Inadequate access to the means of supporting rural development in poor regions
Inadequate access to markets where the poor can sell goods and services
Low endowment of human capital
Destruction of natural resources leading to environmental degradation and reduced productivity
Inadequate access to assistance for those living at the margin and those victimized by transitory poverty
Lack of participation; failure to draw the poor into the design of development programs
Identifying the gaps
The World Bank's lending program
The study reviewed the Bank's lending program for the fiscal years 1992-97 to determine if it reflected statements that poverty reduction is the Bank's overarching objective. Projects were classified into three categories according to their objectives: enabling growth, broadly-based services and narrowly-targeted services for the poor. This made it possible to examine the effectiveness of poverty assessments, other economic analyses, country assistance strategies and business plans as the basis for designing the Bank's lending programs; assess whether the emphasis of the Bank's lending program for poverty reduction needs to be modified; and identify the actions most likely to reduce poverty.
Of the Bank's lending assistance to African countries in FY92-97, almost 58 percent has been (or will be) focused on creating the enabling conditions for growth through policy change and large-scale investments. On average, 24 percent was (or will be) for broadly- based services while 18 percent was (or will be) for narrowly-targeted services. This distribution of the Bank's lending program reflects aggregate growth as an end in itself. Increased growth--assuming it generates employment opportunities for the poor--is indeed essential for reducing poverty in Sub-Saharan Africa. But preoccupation with growth, particularly if it is not distributed widely, can mean insufficient attention to development of human capital--one of the factors that sustain growth in the long term. At issue, however, is not the distribution of lending among the three broad categories but the extent to which lending in each category benefits the poor.
Strong and logical connections among poverty assessments, country assistance strategy (CASs), and the lending program should form the core of the Bank's operational program to reduce poverty. The study reviewed the influence of country assistance strategies and poverty assessments on lending programs for each country in SSA and reached the following conclusions:
Poverty reduction is rarely a central or motivating theme in the business plan or country assistance strategy, although attention to poverty has improved in recent months.
Even though the operational cycle begins correctly with a poverty assessment, the poverty focus is often lost by the time a lending program is implemented.
Country assistance strategies are generally not specific enough to ensure that the lending program actually addresses the causes and consequences of poverty.
The lending program often changes, and for about three-quarters of the projects, even a tentative outline is not available as little as one year prior to appraisal.
To address these concerns and increase its operational emphasis on poverty reduction the Bank must implement four key changes:
* Focus clearly and unequivocally on growth and poverty reduction including human capital development.
* Make poverty, gender, and environmental issues the heart of macroeconomic and sectoral strategies--not "add-ons".
Arrange to monitor poverty systematically in all countries that receive Bank lending.
* Hold management and staff accountable for ensuring the participation of all stakeholders in the formulation of assistance strategies and for achieving the Bank's stated objective of poverty reduction.
Other key messages
Achieving high rates of sustained growth is undoubtedly the most important strategy for reducing poverty in Africa. Growth rates of at least 6.5 percent per year are necessary if typical Sub-Saharan countries are to reduce poverty at an acceptable rate. Yet high aggregate growth, in itself, will not reduce poverty. The pattern of growth must benefit the poor, either directly through increased employment and incomes or indirectly through improved social services. The distribution of growth in turn, is critical in determining which groups benefit from expanded employment and income-earning opportunities. Emphasizing growth in agriculture, remote poor regions, or urban slums could improve the extent to which various groups, including and especially the poor, benefit.
Poverty is not likely to be reduced in Sub-Saharan Africa without considerable improvement in government commitment and ownership of programs to support this goal. Yet only a few Sub-Saharan African governments (a quarter of the total number) have explicitly identified poverty reduction as important policy objective in their programs with the Bank.
Discussions with government officials and NGOs on the issue of government commitment have led to three conclusions:
* Africans must take the lead in reducing poverty, and donors must accept and facilitate that leadership.
* The failure of many African governments to define poverty reduction as their central objective is a major shortcoming. Donors including the Bank, must accept some responsibility for this failure because of their willingness to lend despite the weak commitment of governments to poverty reduction.
* Understanding the problems of the poor and their needs, and taking action to improve their circumstances requires the involvement of all stakeholders.
In effect, the study emphasizes the point that poverty reduction is good economics and good politics. It must, therefore, be at the heart of any economic and social development strategy.
Taking Action for Poverty Reduction in Sub-Saharan Africa: Report of an Africa Region Task Force, Report No. 15575-AFR, May 1996. This report will also be published as part of the World Bank's Development in Practice series. For more information, please contact Jack van Holst Pellekaan, tel. no. (202) 47-34185. Or contact P.C. Mohan, Rm. J3-165, World bank, 1818 H Street NW, Washington, D.C. 20433, tel. no. (202) 47-34114; Internet address: email@example.com
************************************************************ The 200-page report is currently available on request to firstname.lastname@example.org. The following are a sampling of quotes from the full report:
"Foreword: The Task Force on Poverty in Africa was established in 1994 ... From the start, extensive consultation involved staff, donors, and a group of distinguished Africans (formerly known as the "Oslo Group" and now the African Poverty Reduction Network) comprising government officials, academics, and representatives of the private sector, including nongovernmental organizations." (p. vii)
"Executive Summary 26. It is possible to identify patterns of growth favoring the poor without sacrificing overall growth performace--so-called 'win-win' approaches. Several approaches would improve the impact of growth on the poor without reducing the pace of growth. These include (a) macroeconomic and sectoral politicies that achieve stabilization and provide incentives to produce for domestic and export markets and (b) rural development, including strategic rural infrastructure, agricultural research and extension, pro-poor public expenditure patterns, and investment policies that do not discriminate against labor. The underlying point is that development policies and strategies in countries in SSA [Sub-Saharan Africa] should focus on growth, but the distribution of this growth must be fully analyzed to identify those policies and strategies that will contribute most to poverty reduction." (p. 12)
"Executive Summary 35. Greater emphasis on poverty reduction cmbined with the fact that the majority of Africa's poor resides in rural areas should lead the Bank to focus lending on the rural sector. Although lending in the agricultural sector does not completely measure the rural compared with urban allocation of resources, this lending accounts for only 13 percent of the Bank's total in Africa for the fiscal 1992- 97 period." (p. 14)
"Executive Summary 59. The following actions will be taken within the Africa Region. * Establish the common objective of poverty reduction as the pervasive organizating principle through the leadership of managers and actions of staff. ... * Focus the Bank's operations much more on rural development in the poorest regions, on rural domestic water supplies and roads, and on primary services for education and health. ... * Orient incentives for staff in such a way that success in poverty reduction becomes a criterion for rewards and advancement." (pp. 22-23)
"2.34 Imbalances in the gender division of labor and in access to and control of economically productive resources are derived from the unequal rights and obligations of men and women. ... The central position of women in economic production in SSA needs to be juxtaposed against the systematic discrimination they face in accessing basic technologies and resources (including education) which are required to function in an ecnomically productive and efficient manner. Gender imbalance in access to and control of economically productive resources leads to a lower response to economic incentives than would be the case if these differences were reduced."
"4.78 Consequently,although this report concludes that the PA's [Poverty Assessments] have done a reasonably good job of identifying the policy and strategy options that will assist the poor to become more active participants in the growth process, these options typically are not being reflected in the Bank's assistance strategies or operations." (p. 102)
"5.3 ... The East Asian experience suggests that the preconditions for high levels of long-term sustainable growth, such as a healthy and trained work force, take many years to achieve. It is unrealistic to expect either the preconditions for this growth or the effect of growth on poverty reduction to occur quickly. ...
5.4 The 'four tigers' of East Asia (Malaysia, Indonesia, Thailand, and Singapore) acheived universal primary education by 1965 and had a base of educated people on which to build their growth. ... The lesson is that if investments in education, for example, are not made, economic growth and poverty reduction will not be achieved or sustained; hence, difficult but important public expenditure choices should be made now." (p. 105)
"5.6 The essential lesson for the Bank is that a larger proportion of incremental growth should reach the poor." (p. 106)
Message-Id: <199610230141.SAA02023@igc3.igc.apc.org> From: email@example.com Date: Tue, 22 Oct 1996 21:38:08 -0500 Subject: Africa: World Bank on Poverty
Editor: Ali B. Ali-Dinar
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