UNDP Poverty Report 2000

Expecting to Channel Debt Reduction into Poverty Reduction

Poverty is widespread in Mali. Since 1994 the share of people who are income-poor has hovered around 70%. About 58% of the population suffers from forms of human poverty. More than half the people lack access to drinking water, and more than three-quarters are illiterate. Hobbling the progress against poverty is the country's huge debt burden.

General conditions have been relatively favourable in the past five years. With the restoration of democracy, tensions among ethnic groups have subsided. The economy has been growing, and external and internal imbalances have been reduced. Poverty was reduced slightly and its depth moderated from 1996 to 1998. But most progress came in regions with the lowest incidence of poverty. Moreover, despite consistent economic growth since 1994, the share of poor remains unchanged. And in 1999 the economy faced new problems as a result of such factors as declining world cotton prices and a devastating electricity crisis.

Mali's new national poverty programme for 1998 - 2002 has a huge task before it. Not a separate programme, it is a strategic framework that provides coherence to sectoral programmes by having them focus on the principal objective of poverty reduction. It was elaborated - over the course of 18 months - with broad participation by government ministries, regional government units, civil society and external donors.

The Ministry of the Economy, Planning and Integration has primary responsibility for implementing the programme. The Sustainable Human Development Monitoring Unit, funded by UNDP and the World Bank, provides day-to-day coordination. Individuals in different ministries, or in contact with civil society organizations, act as focal points to ensure implementation. But the ministry has the difficult task of trying to implement a cross-sectoral poverty strategy within a sectoral institutional framework.

The government has budgeted $373 million for the programme's priority activities, with 80% to come from external donors. The state's contribution of 15% represents almost 2% of total public expenditure. Almost 70% of the $373 million is earmarked for investment in infrastructure, such as rural roads, schools and health centres.

Expectations for Debt Relief

An additional source of financing for the poverty programme could be debt relief from the Enhanced Heavily Indebted Poor Countries Initiative. Beginning in January 2000, Mali expects to have its debt reduced by $250 million - or by $128 million in net present value terms. If this yearly debt reduction were channelled into expenditures for basic social services - assuming that these continue to rise to become 14% of the total budget - the expenditure level could be increased by about 22%.

Of course, to qualify for debt reduction, Mali must abide by the conditions of the International Monetary Fund's Enhanced Structural Adjustment Facility. It also faces the risk that external donors might reduce their aid in response to debt reduction. In addition, since Mali is a gold producer, it would suffer if the IMF sold its reserves and world gold prices fell as a result.

If debt relief were channelled into funds for poverty reduction and used efficiently, it could enable the country to reach its modest targets for 2002. Among the poverty programme's objectives are to reduce the share of people who are income-poor to 60%, those who are illiterate to 47% and those lacking access to drinking water to 30%. Much depends on how well the programme targets its funds.

A Need for Improved Targeting

The government relies on broad targeting of resources to the poor, allocating resources to poor regions. Often, however, the poorest in these regions do not benefit. As evidence, the 31% of the people who are not poor receive about 52% of all social spending.

The government also targets many of its projects to women because of their high incidence of poverty - and vulnerability to poverty. Another reason is that increasing the well-being of women often has a directly beneficial impact on the entire family. The Plan of Action for the Advancement of Women (for 1996 - 2000) is being integrated into the national poverty programme, with UNDP support.

An evaluation of previous poverty programmes, done during preparation of the national poverty programme, indicates that the most successful initiatives have been community health centres, community schools initiated by parent associations and village savings and loan banks. But some of the poorest have difficulty in using such facilities as health centres because they have to pay for services or travel too far to reach them.

Beneficiaries of the earlier poverty programmes were generally unhappy with them. A major finding of the evaluation was that programmes could have been improved by involving beneficiaries in all phases of activity, from planning to follow-up. Particularly disappointing was the low participation of women. People pointed out that programmes should rely on existing organizational structures, not invent new ones.

They also put a high value on access to credit. As is often the case, women appeared to use loans more effectively than men. And given Mali's arid climate and water problems, people encouraged the government to put more emphasis on well drilling projects and to locate income-generating activities close to water supply points.