UNDP Poverty Report 2000

Anti-poverty plans need to be comprehensive -
much more than a few projects "targeted" at the poor.

The 1995 Social Summit's programme of action calls for "national poverty eradication plans" - preferably beginning in 1996 - to address "the structural causes of poverty". These plans are to push for local, national and international actions to eradicate extreme poverty and substantially reduce overall poverty.

Such plans, at the heart of national efforts to address poverty, help focus and coordinate activities and build support. But to deal with the structural causes of poverty, they have to be comprehensive - much more than a few projects "targeted" at the poor. And to be effective, they need adequate funding and coordination by a government department or committee with genuine influence. Most critical, they should be nationally owned and determined - not donor driven.

For this second Poverty Report 23 national anti-poverty plans were assessed - to identify the obstacles and to highlight successful actions (table 2.1; for the assessments, see the country profiles). In most cases UNDP commissioned special assessments. In a few cases UNDP headquarters staff participated in evaluations organized by UNDP country offices with governments and other multilateral donors. In a third set of cases staff members went to countries to do rapid reviews.

The assessments covered a range of topics: the plan's nature, its funding, its management, targeting, inequalities, social expenditures, shocks encountered, the degree of participation, monitoring and evaluation, the connection between the plan and macroeconomic policies and the link between poverty and the environment. Based on the assessments, this report places special emphasis on the link between governance and poverty reduction.

The Range of Poverty Plans

A quick review reveals that the term anti-poverty plan covers a wide range of instruments. Many countries are still at the rudimentary stage of charting out a general strategy - a "strategic framework" to organize activities. Usually this framework is no more than a conceptual document.

Another group of countries has progressed to elaborating programme components that give the strategy concrete content - such as public works or basic social services. These components are not necessarily well integrated. Often individual projects are launched primarily because of external financing.

A few countries have progressed to adopting an action plan. To get off the ground, national poverty programmes need targets, timetables, budgets and organizations. Though obvious, these requirements are not always fulfilled. The issue of "affordable time-bound goals and targets" is especially important. What good is a plan if it has no achievable and measurable goals? Often the targets seem ambitious in view of the limited budgets available.

Realistic, affordable targets are one of the hallmarks of a well-conceived plan. Whatever the goal, if it is formulated as a target, there is a basis for meaningful monitoring and evaluation of progress.

Why a Plan?

"Why have a plan at all"? some might ask. Isn't planning old-fashioned in market-driven economies? Perhaps, but markets don't promote social justice. That takes organized public action. And that implies a need for an anti-poverty plan - the evidence of a national commitment to eradicating poverty. The plan is a means to build a constituency for change. It is also evidence of an explicit allocation of resources to the task - and the means to mobilize additional, external resources.

But haven't some countries made notable progress without ever having had a poverty programme? Yes, there are some exceptions. Take China and its spectacular progress in the early 1980s before instituting an anti-poverty plan. Thailand made noticeable inroads against poverty until it plunged into financial crisis in the 1990s. Tunisia also made steady progress over three decades without an explicit national plan.

Sustained growth has no doubt been an essential factor. But closer examination reveals that the growth has been pro-poor or that other means - such as social policies, job creation or regional development - have supplemented growth-inducing economic policies. China's growth in the early 1980s was driven by an expanding rural economy. Tunisia maintained high spending on human development throughout its period of growth.

In most cases some political stability is a precondition for success - and minimal conditions of peace and security are an obvious requirement. Uganda, though apparently strongly committed to reducing poverty, has been hampered by instability and conflict in some of its poorer regions. Mozambique's development has been held back by internal conflict. Now peaceful, it is poised to start a new poverty reduction plan.

Why do most countries keep economic policies and poverty programmes separate? Why not make policies to foster pro-poor growth part of a national plan? Aren't a government's general tax, spending and investment policies also likely to have a big impact on poverty? Making China's tax system more progressive, for example, might now do as much for the poor as many of its explicit poverty programmes.

Beyond Targeted Interventions

Part of the problem is that many people tend to regard poverty programmes as a set of targeted interventions - a conception that is too narrow. Macroeconomic and national governance policies have as much impact on poverty as targeted interventions - if not more.

The narrow conception has to do with how poverty programmes have emerged. Many have arisen from some breakdown - a financial crisis, a prolonged recession, a wrenching adjustment to external shocks - and continue to bear the birthmarks of that origin. Many have emerged in the wake of structural adjustment programmes - set up as "social safety nets" to cushion the fall in employment and incomes. Those in the Dominican Republic, Ghana, Mozambique, Yemen and Zimbabwe are examples. The Dominican Republic's new poverty programme has to overcome people's low opinion of the earlier poverty-mitigating efforts mounted in response to the fallout from structural adjustment.

Other programmes have been created to address the adverse effects of financial crisis. Thailand's new, more poverty-focused development strategy is an illustration. A third set has responded to the fallout from transition from a centrally planned economy to a more market-based one. The new programme in Kyrgyzstan is an example.

All these programmes are dealing with poverty "after the fact", holding the line against further deterioration. They have not been designed, at least originally, to eradi-cate the roots of poverty, which can persist even under conditions of general prosperity.

Often poverty programmes are implemented for compelling political reasons: mass unrest threatens stability. Many of those hurt by economic reforms are newly poor - from the middle strata, more vocal and organized than the chronically poor. With recovery, a major reason for a poverty programme might fade, along with the popular coalition supporting it.

Broader support would come from involving all sectors of society in formulating a national poverty programme. Zambia recently used a participatory approach in devising its poverty action plan. The Ministry of Community Development and Social Services involved a wide, representative spectrum of participants in drafting the national plan as well as provincial and district plans. But such efforts are just the start. Some governments have included civil society organizations in formulating a plan, but then failed to incorporate them in its implementation.

Strengthening coalitions for poverty reduction can be particularly important, perhaps ironically, when people's incomes are rising. With healthy economic growth, many people believe (mistakenly) that poverty programmes need be only isolated safety nets for the needy.

But such misconceptions merely reinforce the case for a new generation of poverty programmes, more explicitly concerned with pro-poor growth and with overcoming inequality as a source of impoverishment. In many developing countries - as in industrial ones - there are deep-seated structural reasons for the persistence of poverty. Uganda is a good example of a country trying to shift from stringing together social safety nets to attacking the fundamental causes of poverty.

Poverty is not a one-dimensional problem - a lack of income that can be solved sectorally. It is a multidimensional problem that calls for integrated, multisectoral solutions. A big problem of most poverty programmes is that they are disjointed sets of projects. And since many activities are donor driven, they can overlap and duplicate one another. The Gambia, to provide some coherence to its variety of poverty reduction activities, has set up a Strategy of Poverty Alleviation Coordinating Office (see the country profile).

Where is National Ownership?

Still, donor funding powers many national programmes. Mozambique's new poverty programme depends heavily on external resources: official development assistance accounts for 38% of the country's GDP. Moreover, in many countries much of the external funding for poverty programmes is not channelled through the regular government machinery.

Often separate poverty funds are set up. In Mongolia a $17 million Poverty Alleviation Fund was established outside the structure of line ministries to administer a set of donor-financed projects. In such arrangements the activities of the funds overlap with those of line ministries, which then have less motivation to become involved in poverty reduction activities (see the country profile).

The donor-sponsored projects financed by these semi-autonomous funds have demonstrated some advantages over government-run projects, particularly in institutional aspects. In some cases the funds have been more successful in decentralizing decision-making and resources and in fostering community participation. They also tend to be more immune to political influence and corruption. Transparency and accountability in resource allocation are more likely.

But why neglect governments' long-term capacity to administer poverty programmes? Isn't the price too high for the short-term expedient of bypassing the slower, established government machinery? How can the advantages of such funds be combined with greater influence being wielded by governments?

China has been willing to devote considerable national resources to combating poverty. Its programme, backed by a broad coalition of forces at different levels of govern-ment and in society, now commands more than $2 billion a year. Donors also contribute to the effort. The Leading Group for Poverty Reduction coordinates the programme but does not implement it. If China had set up a separate bureaucracy for the programme, it might have narrowed the range of participants (see the country profile).

South Africa finances most poverty reduction activities through its regular government budget. The Department of Finance has also set up a special Poverty Relief Fund, able to mobilize some external resources. Other government departments can obtain resources from the fund only if they have already made their budgets more pro-poor. This arrangement can increase incentives for a greater focus on poverty in all government programmes.

Many governments, even with the best of intentions, simply do not have the resources to overcome poverty or the discretion to use them for that purpose. Like many heavily indebted countries, Burkina Faso already uses a sizeable part of its budget to pay off its debt (see the country profile). In other cases the government does not raise enough revenue from society: Nepal's revenue-to-GDP ratio is only about 11%.

Are Poverty Programmes Manageable?

Part of the solution for effective administration of poverty programmes can be to set up a good management structure within the government - an important condition for promoting pro-poor governance. With a separate poverty fund, operating in parallel to the government, confusion often reigns about the authority to run the programme. Kyrgyzstan has its Poverty Alleviation Fund, but it's still unclear whether the fund's management unit or the Ministry of Labour and Social Protection has primary responsibility for programme activities (see the country profile).

Morocco and Yemen have had their national capacities stretched thin in overseeing and coordinating their many different donor-financed programmes and funds - unnecessarily, since the activities duplicate one another and overlap with the programmes of line ministries. In Ghana UNDP has supported a Poverty Coordinating Unit within the planning commission to register and clear all projects so as to avoid duplication and foster complementarities. In addition, UNDP has favoured the Consultative Group process to reach consensus among the government, civil society and donors on the direction for poverty reduction (box 2.1). The Dominican Republic's new poverty programme has tried to overcome the problem of past poverty policies, which had been the uncoordinated responses of different ministries. Since poverty was not the responsibility of any government office, it became a hostage to sectoral policies (see the country profile).

In many countries the ministries of labour and social affairs have been responsible for poverty reduction, because of the traditional view that poverty is primarily a social issue. But the power and influence of such ministries are usually exceeded by those of others, such as the ministries for finance or planning. Since ministries of social affairs generally carry little weight with other government departments, poverty carries little importance as an overriding objective for all government programmes. Mauritania is trying to overcome this problem by giving the chief executive of its semi-autonomous poverty commission the rank of minister. And as an indication of the importance Uganda attaches to poverty reduction, the Ministry of Finance, Planning and Economic Development manages its poverty programme.

Another way to deal with the problems in assigning poverty programmes to less influential ministries is to set up a central coordinating committee to oversee all poverty reduction activities. These committees, often reporting to the president or prime minister, comprise representatives from a cross-section of government departments and even from civil society. The committee's authority is greater if the prime minister chairs it, as in Mongolia. But these committees generally meet too infrequently.

The committees' secretariats wield the real day-to-day influence. The funding for these secretariats is a barometer of how seriously poverty is taken. The department running the secretariat is another telling indicator. Too often the government puts a ministry of labour or social affairs in charge, repeating the original mistake.

It is far better for a much more influential ministry with cross-cutting responsibilities - such as planning or finance - to run the secretariat. That gives the secretariat enough clout to provide coordination across departments - and to provide leadership for the operation of poverty funds set up separately to facilitate resource mobilization.

Funding for Poverty Programmes

Governments have great difficulty in reporting how much funding goes to poverty reduction. For most of the assessments of national poverty programmes, no reliable statistics could be provided for such funding. One reason is that poverty is by its nature cross-sectoral. Where does one draw the line between activities that are relevant to poverty and those that are not?

In place of estimates of funds directed to poverty reduction, some governments point to information on expenditures allocated to such sectoral interventions as basic social services. These types of interventions might benefit the poor, but they benefit almost everyone else as well. By this standard, investments in agriculture or in rural roads could be counted too.

Such a sectoral calculation confuses the targeting of funds to the poor with the type of intervention used to do so. Many different government programmes could be considered pro-poor if most of their benefits reach poor households. The standard is based on who benefits - not on the type of programme.

It makes sense to channel funds through a special poverty reduction fund if the programmes it finances are designed to disproportionately benefit the poor. Allocating money to such a fund would have several advantages. But the fund would need to be administered by a government body that not only has authority and influence but also can ensure accountability and transparency in the use of funds. One advantage of such a fund is that it can lead to a better general accounting of financing for poverty reduction.

Different government departments or ministries could apply to the fund for financing for programmes focused on the poor. A stricter arrangement, such as that instituted for South Africa's Poverty Relief Fund, could also be established: government units could obtain funds only if they had already endeavoured to make their regular budgets more pro-poor.

A special poverty reduction fund would also be a logical depository for a significant share of the money released by debt relief, such as from the Enhanced Heavily Indebted Poor Countries Initiative. With such an arrangement, financing could be channelled more transparently into poverty reduction activities. To avoid problems, however, two general features are desirable. One is that the fund should be nationally managed and controlled. External donors should not control the money or set conditions on its use. The country's national poverty programme should determine the broad parameters for allocating the funds. The second condition - which could foster greater accountability and participation - is that representatives of civil society organizations representing the poor should be active in overseeing the fund and deciding how its money is allocated.