I ~ ~ ~ -- 9 ovlerPtV educti6 E e 1.~~~~~~ D)':,>X . !', I t l, * t44 < , handbookt Poverty Reduction Handbook The World Bank Washington, D.C. O 1993 The Itanationd Bank for Reconsrucuion and Development /Te World Bank 1818 H Sotr, N.W., Wasbington, D.C 20433 U.S.A AU rigtsrseraved Manfacured in th United States of Ameica Scawd pinting Apri 1993 This report was prpard by the staff of the World Bank and first circated in April 1992. Tnis sond and unrected printing is the fist im the document has been for- ma_y publisd. Thejudgments exrssed do not naessarily reflect fte views of the Boad of Executive Directors or the goverments they represet. ISBNO -8213-2356-3 Lirivy ofCoegru Caitlea--Pulicaie DBa. Poverty reduction handboolk the World Bankl p. cmL Inludes bibliographical references. ISBN 0-8213-2356-3 L, Economic development projects-Mnageme_-Handbooks, manuals, etc 2. Boonomic developmentpocaec-Evaluadon-ndbooiks, manuas, etc 3. Poor-Developing countries. L Iternatonal. Bant for Recosution and Development HD75.82P68 1992 33t9'068-dc2O 93-41655 -CP Foreword Sustainabl poverty reducdoin is the overrching objeciwve of the World Bai It is the benchmark by which our performance as a development inEftUioB will be measured. Our approach to povrt reduction has evolved over ime, d in raing the lessons of expece. The latest stage, building on the 1990 World Devlopment Reo on poverty and the 1991 Board policy paper 'Assistance Strategies to Reduce Poverty, is the Pverty Redction Haduook and Operationa Directive. In preparing these documents, we have benefitted frm comments by the Board, our member governments, other UN and donor agencis and govr l izatims. The priority nDw is t ensure that these policies are fiuly reffected in the Bait's operatns. The Operational Directve and Handbook are designed to -tde and stengthen our work m lein, practical ways, the Bank's commitment to poverty reducion. Lewis T. Preston President, the World Bank Alisira-ct 'lTie Woirldl Tank':; ovenirchini! objective is to reduce poverty in tie de veloping wurkd. To do so, tde lLuik buildls uu lesions le'incdl fronm oprmtiomns and rcsenrch. TMe lessons were set out in the World Devclrpmenct ltenrt (W DI) 1 990 £311 poverty mnd in thc pl.nicy piper. Assistance &raregivr ro Reduce J'owvrry. T'he Jovery Redaiclion lkundbook Lakeso tis approach tlim next ste. World Development Report I 990. Basedl OIL an oumalysu of wuntry experienwcs, UDR 1990 urticulated a two pronged strategy for sustalinnlble poverty reduiction. First, broadly based ecunomic growth generates efficient incomze-'rnhilng uopliornunities ror the poor. Swondl, improved aexes.sto edumation, he:lih care, maid odier sucial services hielpxs the poozr Like audvantige of these opportunities. RnIh elements me: ule%ign-Ad In develo; amid use effsetively the poor's. mnu:.t ubundant iu;sct their habor. Ihe strategy lNso includes a social 4afety net for die vuluenublu. Policy Pamper. .4.vui cv' Srrt'g irvs to Reduce Povemy showedl how die WDR appiuacl could be applied to operations. It ar'ued su:tl Rink country awsislannc strateries should supoirt aid complement country effoi Is to reduze poverly mLLmd b: Ixhued on am ;ss;e:sment of country policies, public expenditures, and instiftinns. H:mimmdhuk. 1The Poverty Redurrtin 11landbork survqps Bank L!Aperie Xu amid provides guidmiCe to World Uank oier.:iounal :i;k mninai en; almu " good-lprz,tice" opicrliotaml appiouachie. 'lme suaiin recioninmeudatiwis are to: * Anrlyze l-x3li-V, putilic lanhmditImrtS. mid iMMtituMiOHs laImI a pouverly rehdtlliwm lxNlr tive, roclluinig oni (a) time fic -lkcy ul- invenimihe liolaici; (1)'dc euct-elbcxtiveness or public exjmndiiure1';, in ii-rticular, ill developing tlmc Iuinamu callilal of die pour; anld (c) die tost- eflxiliveuess oh'tim sufltv net. i* Iaine pnrgraisamd iUiti jeLis that sulpilapnd rn eidaunm£! cAountiv elfln1% to rm.lucc lvelty. * lorm us se.lr woi k to develop nraLk-gic that lirosmtrle pozverty reiAliclion and In prridcentily mi'*w projnicis ¶!;mn mimiuilrammetiusly yieldl iil metirirs IILd benelit tlihe 1-mor, wilh pairticmimir ;IIII-ttnionmi ;if:Inj:r IthL. wold11 min Ix ulniir-.uir liL it wtiaild 1K done less well, willi less ofi :' liVelly lius wiltliolit 11w Iberk, inr t0l.hu pionirar ipprovache that c.anie I repliztled in wlLher public II1.ve2,l1IcIdt. * Arldreis impilemimillht;£lioula nlmitimtorini! :andl evalimflion at the proiject- nr pror:ain-desi;tn st:r.p.-eCst4il hiug .a tkzmcliiiiak LIai ls I4tStr d1:1-tcriuiin diiiming implementaiion whether alit proiject or prl'niiii iS u iitr-ick alus plruvdUig unlUieill 1eziIiJIity i; desipn It sI.4hap the lin)jt%cI or prh;lranEiii :as wraniaittd. * Inwoliir iNixi' £!lit-'il '111l in lpnmj-t/prngr;im iilCintilriflflnn, design, iiplei.enit:atioii, and 11m)JiI;ii til?: ii1iai eu:hlalioin. * InumIu'e Inuj_d .uild pmi:ain P11erfiim ancn Ihrrmiish scn;itivo and limely Icarniiig alihaut cl.aiigiaig ciujd . 'ijz1l expci icaice, imide1 iualx;mp . 1111owed 1y timtylv action. ' Monirtr country pcoil nia.in.e onm 1pzove:ly iWuetioa includin- prongres on sochil and ecnoinOic indir;oiirq-*nd tIn: fl( Baik's cxuiiti,ula ill11 thai umtuig roli'yY di:ilogue :nd lndling. * ronrrdiremt.v wilh nther J.m%ncies to shart: exprarieites anid treziuthlie:m die IleUwivenzxs (if'. uhtvelopmeni ai'istanir' for pov.:rty rrcrlhrtinn. * lkJ1b coumitrics ininruvu: dLata galtering, bv ftcusing on user-drivell systems Und affr;inginje vwhere neaedd HiaLlincial suppmir ;mnd :tehnicil ar;sisq'utnco. Oprwrationamml Directive 4.15. ilne directive, Poverty Rrucrdon, situlrn:riyes tetk paoiedurw% .InC gdiciines fnr nlplm'tiouis n l ovUci Ly Iedutiiiii. 'llie I Iuidlok amid time directive are c ummnxpnlikmn docnanir ntc.I Content Boxes xi1 Abbrevations xvl Handbook Notes xix Prefae xi Introduction 1 I. Audience and Scope 1 H. Orgmnion of de Handbook 6 m. How to Use de Handbook 6 A. Boes 7 B. Bibliogaphies 7 C. Checkiss 7 PaM I - Anafyzing Poverty zChapter 1 Poverty Lnes, Prordes, and dators 11 Introducion 13 I. The Poverty line 13 I. Poverty Profie 16 A. Wbat is a Poverty Profile? 16 B. Darn for the Povery Profile 18 IIL Poverty Indicators 21 An1tated Bibliography 27 Chapter 2 Policy Framework for Poverty Reduction 31 Inroduction 33 I. Menu of Policy sses 34 H. Policies Affecting Growth and t emand for Labor 35 A. Inceive Policies 35 1. Tariffs and Trad Restrictons 35 2. Specific Taxes 36 3. Price Conals 37 4. Agricural Pricing 37 "ui B. The Regulatoy Framework 38 1. Wage and Employme Policies 38 2. Industrial Regulatons 39 C. Macrec Policies 39 1. Comparative Stadc Anaysi 40 2. The Impact of Adjustnent 41 3. Adjusment Postponed 42 m. Policies Affectg the Accumulation of Asses 14 A. Humn Resources 44 B. Financial Capital 46 C. Land Policies 46 D. Enionmental Polices 49 1. How Does Poverty Affect the Evionment? 4 2. How Does the Environment Affect Poverty? so 3. Implicadons SI Anotated Bibliography 52 Chapter 3 PbliEc Expenditures and Poverty Reduction 55 Inrducdon 57 L Framework S8 A. How Much is Beig Spent, on What? 59 B. Who is it Being Speat On? S9 C. How Efficient are Public Expendine Aimed at Poverty Reduton? 60 D. How Effectively are Services Being Delivered? 61 E. How are Expendin Fmanced? 62 F. How Effective is the Social Safety Net? 63 1. Targeting 63 2. Disaster Prevention or Relief 64 H. Sectoral Issues 65 A. Agriculture 65 B. Rural Water 67 C. Rural Traport 68 D. Urban Iftutructure 68 E. Family Planng 70 F. Health 71 G. Nutrition 75 H. Educadon 77 Annotated Bibliography 81 Anex 3 Social Sector Public Expenditure Reviews 85 Chapter 4 Country Poverty Assessnts 93 hInroducton 95 Diagnosis 96 A. Poverty Profile 96 ix B. A _mcn of Country Policies, Expendiures, and Insuions 97 1. Polcide and Regulations 97 2. Pubic Lxpenditures and Instudons 97 3. IToSafetyNet 98 I. Prescripion 100 A. County Poverty Strategy 100 B. Stasical System, Evaluation 100 Abot:ted Bibliography 102 Annex 4 Poverty Asseens 103 Pat II- Designing Country Assistance Strategies Cbapte S Designing and Coordinating Country Assistance Programs for Poverty Reduction 119 Intrduction 121 I. Poic Dialogue 122 II. Economic and Sector Work 122 ml endin 123 A. Volume 123 B. Composidon 125 C. Stance 126 IV. Coordinati with Others 126 A. Bilateral Donors I26 B. UN Agencies 127 1. IMF 127 2. UNDP 128 3. UNICEF 130 4. UNFPA 132 5. WHO 132 6. IFAD 134 7. ILO 134 8. WFP 134 9. UNESCO 136 C. Multilateral Development Bans 136 1. African Development Bank 136 2. Asian Development Bank 137 3. Caribbean Development Bank 137 4. Inter-American Development Bank 138 D. NGOs 138 Annotated Bibliography 141 z Chaptrn 6 Poverty Reduction and Bank Lading Jnstnnetls 145 Intoduction 147 1. Adjust Lending 147 A. Stucura Adjustment Lon 148 B. Sector Adjusmen Loans 150 C. Addrssing the Social Cost of Adjustm 153 H. Invement lendn 15 A. Canceptul Framwork 156 B. The Retal Approach 159 C. The Wholesale Approach 159 D. Social Costs of invesmn 159 m. Designing Sutability Ito Poverty Projec 19 A. Financial Sustinability 160 1. Recurrent Cost Fnancn 160 2. Cost Recovery 161 3. Fmcial Profitability 162 B. Insdttiona Surtaiuability 163 1. Decentralization 163 2. Popular Pardcipaton 165 3. Technical Assstane 167 C. Environmental Susmainability 168 1. Agriculte 168 2. Forestry 169 3. Population 170 IV. Deiging for Succes Imp ta 171 A. Project Monitoring and Evaluation 17 B. Implementation Strategy 172 C. Supervision 172 Annotated Bibliogrphy 175 Chapter 7 Sectoral Issues in Lending Operations for Poverty Redudion 177 Inoduction 179 1. The Private Sector 179 A. Agriculure 179 B. Foresty 184 C. Industry 184 11. Ifiastructure iR A. Rural Infrstructure 186 1. Rural Water Supply 186 2. Rural Roads 187 B. Urban Operations 188 m. Human Resources 190 A. Population, Health, and Nutrition 191 B. Education 194 Annotated Bibliography 197 xi Anex 7 Poverty-Focused Project Summaries 199 Pad IH - Measung and Monitoring Chapter 8: Improving the Measuremeut of Poverty 235 Intoduction 237 I. esting in Poverty Me ent 237 A. Why Do We Measure Poverty? 237 B. How Do We Assemble the Data to Measure Poverty? 240 C. How Much Should Be Spent to Improve Pov Measuremet? 241 I. Household Surveys 244 A. Overview 244 B. Single-Topic Household Surveys 244 C. Bank Jntiatves 245 1. LSMS 24S 2. SDA 248 Annotated Bibiography 252 Chapter 9: Poverty Monitoring and Progress Reports 253 Introduction 255 I. Institutonal HIsty 255 A. The 1970s 255 B. The Early 1980s 256 C. The ate 19S0s 2s7 U. Prgress Reports: Looking Ahead 257 A. Evolution of Poverty Indicators 258 B. Evolution of Bank Programs 258 C. Countables 258 Annotated Bibliography 260 Annex 9 Evolution of the Bank's Approach to Poverty Monitoring and Programs of Concentration 261 Bibliography 265 Internal World Bank Documents 277 Opertional Directive 4.15: Poverty Reduction 287 Index 311 xii Boxes I Poverty Reduction Handbook-Leons Leamed 2 1.1 Tbe Vocabulary of Poverty Measurement 14 1.2 Pitfalls in Drawing Poverty Lives 16 1.3 Poverty Profile Checldist 17 1.4 Ghana-Poverty Profile Based on Household Survey Data 19 1.5 Malawi-Developing a Poverty Profile Prom Inadequate Data 20 1.6 Priority Poverty Indicators 22 1.7 Sri Lanika-How to Idendfy Indicators of the Incomes of the Poor 23 2.1 Poverty Policy Analysis Checklist 33 2.2 Comparative Advantage and Poverty 36 2.3 Price Controls 37 2.4 Zimbabwe-Analyzing Minimum Wage Legislation 38 2.5 Tanzania and Sri Lanka-Constraints on Small- and Medium-Sized Enterprises 40 2.6 "low Does the Stance of Macroeconomic Policy Affect the Poor? 41 2.7 Bazil-The Costs of Non-Adjustment 43 2.8 Bangladesh-The Rights of Woman: law, Custom, and Human Capital 45 2.9 Bolivia-Reforming the Law so the Poor Can Get Credit 47 2.10 Rural Credit-Can It Reach the Poor? 48 2.11 Sub-Saharan Africa-Communal Land Rights Work Well 49 2.12 Poverty, Population, and the Environment 50 3.1 Checklist for Evaluating Public Expenditures 58 3.2 Brazil-Evaluating the Incidence of Social Expenditures 59 3.3 Bangladesh-Evaluating Incidence: Looldng Behind the Spending Aggregates 60 3.4 The Effects of Changes in Social Sector Expendites 61 3.5 India-The Safety Net Better Targeting through Self-Selection 64 3.6 Food Security and Dinsters in Africa 64 3.7 India-Evaluating the Incidence of Agricultural Subsidies 6; 3.8 Evaluating Demand Creadon in Family Planning Programs 70 3.9 Evaluating Equity lswes in Health 72 3.10 Ecuador-Evaluating Institutional Capacity in the PHN Sector 73 3.11 Evaluating Health Projects 74 3.12 Nigeria-Evalualing the Quality-Quantity Trade-off in Health Care Delivery 75 3.13 Evaluatng Early-Age Complementarities in Nutrition, Health, and Education Expenditures 76 3.14 Evaluating Nutrition Interventions 77 3.15 Mexico-Evaluating Investnents in Education 78 3.16 The Social Returns to Female Education 80 A3. I Boliva-Improving the Poverty Focus of Public Expendiures 88 A3.2 Brazil-Redirecting Social Expenditures 89 A3.3 Costa Rica-Consolidating Equity and Efficiency 90 A3.4 Guatemala-Reshaping Public Expenditure Priorities 91 A3.5 Honduras-Rethinldng Social Expenditure Prioities 92 xiii 4.1 Dignosis Checklist 98 4.2 Padstan-From Poverty Profile to Prescription for the Social Sectors 99 4.3 Prescription Checklist 100 A4.1 Bolivia-Poverty Assessmnt 105 A4.2 Egypt-Poverty Assessment 106 A4.3 Mdia-Poverty Asessment 108 A4.4 Indonesia-Poverty Aessment 110 A4.5 Malawi-Poverty Assessment l11 A4.6 Malaysia-Poverty Assessment 113 A4.7 Mexico-Poverty Assessment 114 A4.8 Venezuela-Poverty Assment 115 5.1 Indonesia-Poverty Reducdon Strategy 124 5.2 Targeted Poverty Projects in Country Assistance Strategies 125 5.3 Central America-Donor Workshop on Poverty Alleviation 127 5.4 Mozambique-Poverty Reduction Framework 128 5.5 Bangladesh-Donor Coordination in the Population and Health Sector 129 5.6 UNDP-Human Development Country Initiatives 130 5.7 Madagascar-FAO-IDA-ILO-UNDP-UNICEF-WFP Collaboradon 131 5.8 India-Bank-UNCEF Cooperation 133 5.9 UNEPA-Developing Prototpes for Bank Financing 133 5.10 IFAD-Multilateral Colbboration in Building Capacity 135 5.11 UNESCO-Children and Family Environment 136 5.12 African Development Bank-Zimbabwe Economic Structural Adjustnent Program 137 5.13 CIDA-Working Tbrough CARE Canada 139 5.14 Ghana-NGO stance in Project Design and hnplementation 140 6.1 Adjustnent Program Design Checklist 148 6.2 Structural Adjustment and Lving Condiions 149 6.3 Malawi-Making Adjustment Work for the Poor 150 6.4 Ghana-Poverty-Sensitive Adjusutent in Agriculture 151 635 Central and Easter Europe-Saety Net for Emerging Poverty 152 6.6 Nutrtion Protection During Adjustment in Latin America 153 6.7 Bolivia-Social Funds 154 6.8 Senegal-Enlisting the Private Sector in Mitgating the Effects of Adjustment 155 6.9 Uganda-Merging a Social Action Program with a Social Fund 155 6.10 Country Prospects with dhe Bank and wiftout the Bank 157 6.11 Shoud Resource-Poor Areas Have a Lower Rate-of-Return Test? 158 6.12 Idonesia-Addressing Adverse Effects and the Social Costs of Investment 160 6.13 Beneficiary Assessment 164 6.14 Rapid Rural Appraisal Techniques in Agricultural Project Design 165 6.15 Indonesia-NGO involvement Gives Voice to Communities 166 6.16 CIDA-Tle Importce of Participatory Processes 167 6.17 Philippines-PopuIar Partcipation Sustains Irrigation Program 168 6.18 Tunisia-Popular Participation Regqires Nurturing 169 6.19 Bangladesh-Technical Asnce Actually Assists 170 6.20 India-Moisture Consertion Technology Reduces Risks for Poor Farmers 171 6.21 Guyana-PPF Fmances Baseline Survey for Measuring Progress 172 xiv 6.22 Poverty Reduction Projects-Details Matter 173 6.23 Supervising PHN Projects 174 7.1 World Bank-Experience with Rural Development 180 7.2 Tbailand-Property Rights Increase Value of Agricltural Land in Poor Areas 1s1 7.3 Nigeria-Women in Agriculture Program Takes Root 182 7.4 Bangladesh-More Accessible Agricultural Markets Boost Rural Incomes 183 7.5 Benin-Unwisely Designed Project Impoverishes "Beneficiaries" 183 7.6 China-Land Reclamatio; 184 7.7 Indonesia-Market-Based Credit for Small Borrowers 185 7.8 India-Rural Water Facilities Sustained by Community Participation 187 7.9 Guatemala-Urban Upgrading Helps Squates 189 7.10 Brazil-The Rich Subsidize Water Consumed by Urban Poor 193 7.11 Reaching Poor People in Population, Health, and Nutridon Projects 192 7.12 Nigeria-Population Project Supports Policy and Institutional Development 193 7.13 Mexico-Support for Primary Health Care in the Four Poorest States 193 7.14 Indonesia-Nutdtion Education Changes Behavior 194 7.15 Mali-Hybrid Tilts Public Spending Toward Primary Education 195 7.16 Ghana-Education Sector Adjustment Promotes Equity 196 A7l1 China-Healih Benefits and Irrigation in Shaani 202 A7.2 China-What Works in Irrigation 203 A7.3 'The Gambia-Improving Women's Status 204 A7.4 India-Watershed Development Projects 205 A7.5 Mali-Literacy Training and Rural Development 206 A7.6 Philippines-The Participatory Approach to Irrigation 207 A7.7 Thailand-Benefits of Secure Land Tenure 208 A7.8 Indonesia-A Successfil Approach to Small-Enterprise Credit 209 A7.9 Sri Lanka-Shifting the Focus from Welfare to Productive Activities 210 A7.10 Bangladesh-Improving Rural Roads and Markets 211 A7.11 Colombia-Rural Investment Program 212 A7.12 Gham-Introducing Intermediate Transport Technology to Help the Rural Poor 213 A7. 13 India-Combining Rural Water Supply, Health Education, and Environmental Sanitation 214 A7. 14 Mexico-Regional Targeting for Poverty Reduction 215 A7. 15 Indonesia-Kampung hnprovement Program 216 A7. 16 Mexico-Restructuring Subsidies for Low-ncome Housing 217 A7. 17 Nigeria-National Population Program 218 A7. 18 Guinea-Involving the Community in Meeting Its Own Health Needs 219 A7.19 Mexico-Addressing Basic Needs 220 A7.20 Pakistan-Providing Health Services 221 A7.21 Colombia-Community-Based Child Care 222 A7.22 India-Combating Child Malnutridtion 223 A7.23 Bangladesh-Population and Health 224 A7.24 Malawi-Addressing Sectoral Policy Reforms 225 A7.25 Zimbabwe-Multilateral Cooperation for Project Formulation and Fnancing 226 A7.26 Bangladesh-Providing Educational Opportunities for Girls 227 A7.27 Jamaica-Reducing Subsidies to Higher Education 228 A7.28 Paistan-Increasing Prinary School Enrollment 229 xv A7.29 Yemen-Dmand-Orientd Basic Training Fund 230 A7.30 Jamaica-Increasimg dte Equity and Efficiency of Social Sector Expendtures 231 8.1 Morocco-Data, Analysis, and Public Policy 238 8.2 Governance-Strengtbening Statistical Capacity in Africa 239 8.3 How Well Can the Prevalence of Poverty Be Esimated without a Household Survey? 241 8.4 Are Social Indicators Based on Observation or Estimates? 242 8.5 Jamaica-Household Sveys Help Make Social Programs More Cost-Eflbctive 243 8.6 Pakstan-LSMS 24C 8.7 LSMS-Country Costs 248 8.8 Kenya and Zimbwe-Supporting Country Efforts 249 A9.1 Evoludon of the Bank's Approach to Poverty Monitoring 261 A9.2 Programs of Concentration: Coding for Poverty in the MIS 263 xvi Abbreviai;ons ACCISCN - Administrative Committee on Coordination/Subcommittee on Nutrition ADB - Asian Development Bank AERC - Applied Econumic Research Center AfDB - African Development Bank AGSAL - Agculbural Strutu Adjustment Loan AIDAB - Australian Inntiiadol Development Assistance Bureau ARD - Agriculture and Rural Development BAAC - Bank of Agriculture and Agricultural Cooperatives BESD - Bank Economic and Social Data CAM - Country Assistance Management CBS - Central Bureau of Statistics CDB - Caribbean Development Bank CEEs - Central and Eastern Europe countries CPP - Core Povert Program CG - Consultative Group CIDA - Candian ernational Development Agency CPI - Consumer Price Index cso - Central Statistcal Office CUDP - Calcutta Urban Development Project DAC - Development Assistance Committee DANIDA - Danish nternational Development Agency DHS - Demographic and Health Survey DRD - Development Research Department DRI - Itegrated Rural Development Fund ECA - Economic Commission for Africa EEC - Euopean Ecom ic Community ESF - Emergency Social Fbnd ESW - Economic and Sector Work FAO - Food and Agriculture Organization of the United Nations FONHAPO - National Fund for Low-Income Housing (Mexico) FY - Fial Year GB - Grameen Bank GLSS - Ghana Living Standards Survey HIBI - Home-based Child Care Facility (Colombia) IRSSD - Human Resources and Social Services Department IDB - liner-American Development Bank IBRD - Iternational Bank for Reconstruction and Development ICBF - Colombian Institute for Family Welfare IDA - Iernational Development Association IEC - Information, Education, Commicaton (loan) IFAD - International Fund for Agriculural Development IFNS - Interagency Food and Nutrition Surveillance nFPRI - International Food Policy Research Institute ILO - Intemational Labour Organization xvii NIP - Kampung Improvement Program (Indonesia) LSMS - living Standards Measurement Survey MIS - Management Information System MOH - Ministry of Health MOS - Monthly Operational Summary MSADP - Multi-State Agriculutral Development Project MSF - Medecins sans Frontieres NBER - National Bureau of Economic Research NGO - Nongovernmental Organization NHSCP - National Household Survey Capability Programme NA - National Irrigation Administration (Phiilippines) NIPORT - National Institute for Population Research and Training NORAD - Norwegian Agency for Internafional Development NPP - National Population Program O&M - Opeations and Maintenance OD - Operational Directive ODA - U.K. Overseas Development Administration OECD - Organisation for Economic Co-operation and Development OED - Operations Evaluation Department OMS - Operational Manual Statement PAF - Populadon Activides Fund (Nigeria) PASSPA - Basic Health Care Program for the Uninsured Population (Mexico) PCR - Project Completion Report PDS - Public Distrbution System PER - Public Expenditure Review PHN - Population, Health, and Nutriton PHO. - Population and Health Office PIHS - Pakistan Integrated Household Survey PIT - Poverty Income Threshold FOC - Program Objective Categories PPF - Project Preparation Facility PDIP - Rual Development Investment Program lFI - Rual Finance Insttution SAL - Structural Adjustment Loan SAP - Social Action Plan SAR - Staff Appraisal Report SDA - Social Dimensions of Adjustment SECAL - Sector Adjustment Loan SECIL - Sector Investment Loan SID - Social Indicators of Development SIDA - Swedish Intertional Development Auffiority SIF - Social Investnent Fund SIL - Specific Investment Loan SIMAP - Social Impact Amelioration Program SLC - Survey of Living Condidons SME - Small- and Medium-Sized Entexprises SSA - Sub-Saharan Africa SSATP - Sub-Saharan Africa Transport Program STATCAP - African Statistical Capacity-Building Exercise xviii T&V - Training and Visit TA - Technical Assistance TINP - Tamil Nadu Integrated Nutri6ion Project (India) UN - United Nations UNDP - United Nations Development Programme UNESCO - United Nations Educational, Scientific, and CuIWal Organization UNFPA - United Nations Fund for Populadon Activities UNICEF - UnDed Nations Children's Fund UNIFEM - United Nations Fund for Women UNRISD - United Nations Research Institat for Social Development UNSO - United Nations Sudano-Sahelian Office USAID - United States Agency for Internaonal Development USDA - United States Development of Agriculture VAT - Value-Added Tax WDR - World Development Report WFP - World Food Prgamme WHO - World Health Organization WIA - Women in Agriculture Handbook Notes During the Board discussion of dae WDR 1990, many Executi Directors raised questons about theprocess of operaionalizlng it. Theyfosed on dtepreparation andpresenation to e Board of a policy paper on poverty reductionw The Board discussed that paper, Assistance Strategies to Reduce Poverty, on Januwy 24, 1991. The pper has recently been published. In endorsing the paper's recommendatons, the Board stressed the urgency ofputting in place the operational framewrk-throgh a Poverty Reduction Handbook and Operational Directive (OD) 4.15, Poverty Reduction-to make poverty reduction entr to thefJormulation of the cowuiy assistance strateg. The OD was preparedi n tandem with the andbook Tedraft OD was discussed a a Board seminar on December 13,1991. The OD s issued at the end of Deember. It contains practical gudelinesfor the Bank's operatonal work on povey. The discussion draft of the Handbook was also discussed at the Board Seminar. It had been the subject of an earlier seminar wish UN agencies. The present document reflects the inputs of and comments receivedfrom Execudve Directors, UN and donor agencies, and NGOs. Preface 1. The World Bank's approach to poverty reducton has evolved over ime. In the 1960s, the Bank focused on economic growlh as the key to poverty reduction. In the 1970s, attention shifted to redistribw on with growth and a more direct role for economic policy in rural and urban development and in promoting equitable income distribution. By the late 1970s, sadsfaction of bask hua needs had become an increasing concern Each of tese temes has left its mark on the Baek's approach. Cumulatively, they have increased recognition that growth alone is not a sufficient objective-or adequate measure of the sccess-of development and that investents in human resources help to increase icomes and reduce poy. This recognition was central to the World Developmmt Report 1980. 2. In the early 1980s, the Bank paid a_ntal attention to problems of adjustmen, as borrower counies faced senious external and iermal macroeconmc imbalances. Aldhgh dtis shift may have temporarily overshadowed the Bank's poverty reduction objectives, policy-based lending enabled the Bank to deal more effectively with the relationship between poverty and policies. Poverty reduction became 2n increasgy important public ependitr during adjtment lendn. Miing this, other aspects of adjustment lending increasingly addressed poverty reduction, as did invesment lending, research, and economic and sector work. The reemphasis on poverty was reflected in, and strengdted by, task torce reports in 1987 and 1988 on poverty reduction. 3. The World Developmen Report (WDR) 1990 and Assistance Straegies to Reduce Poverty incrased the momenum The WDR's two-pronged approach for ssainmble povert reduction consists of broadly based economic growth, to generate efficient income-earning opportunites for the poor, and improved access to education, health care, and other social sevices, so the poor can take advantage of these opportnities. The approach includes a sodial safety net for the most vnerable groups in society, who camot work. Assiuace Strategies to Reduce Poverty showed how the WDR approach coud be applied to operations. The document provided a conceptual famework for moving from the WDR's emphasis on counny instrument-policies, public expenditures, and institutons-to Bank instruments, such as economic and sector work, the policy dialogue, lending, technical assistance, and donor coordination. The paper also emphasized (a) the assement of country policies, public expenditures, and insfitutions; and (b) the design of Bank couny assistance to support and complement country effors to reduce poverty. 4. The Poverty Reduction hnadboo and Operational Directive 4.15, Poverty Reducion, take ese initiatives the next step. The Handbook surveys operational approadhes to poverty reducdon mosdy within the Bank and provides a framework for (a) analyzing poverty and preparig country poverty assments, (b) designing country assistnce strategies that support country efforts to reduce poverty, and (c) measuring and monitorng progress. The Operational Directive provides pracfical suggestions for strengt the focus of Bank operations on poverty reduction. 1 Introduction 1. The Poverty Reduction Handbook surveys World Bank operational approaches to poverty reduction. It is based on a 'good practice" review of Bank operadons and economic and sector work. It relates Bank operafions and reports to the World Developmnnt Report (WDR) 1990 and the policy paper, Assistance Stuegies to Reduce Poverty. It complemens Operational Directive 4.15, Poventy Reduction. The princpal lessons leared in the lndbookl are mmurized in Box L. 2. The Handbook was prepared in a collaborative way. Bank staff members provided inputs and commenas. Executive Directors commented on the Handbook during a Board Seminar on he Hndbookl and draft Operafional Directive in December 1991. UN agencies, Nongovernmental Organizations (NGOs), and donor agencies also commented, and in some cases staff members of ffese organizations prvided inputs. Those comments and inputs are gratefiuly acknowledged. They improvd the Handbook. L Audience and Scope 3. The Handbook is addressed primarly to World Bank operational task managers. It conins informadon t help them design and manage their tasks. It sets out the main points to be addressed in poverty analysis and operatiom. It gives the task manager an idea of the skddis needed in fielding a team for the oempletion of a tal It provides infrmation on the kinds of work on various tics being conducted elsewhere within the Bank, and to a lesser extent outside the Bait 4. The scope of the Handbook is broad. It provides an operational context for poverty analysis and the design of country assistance strategies. It pulls together for Bank staff, facts, lessons of experience, and analyses usefil for their work. It discusses poverty profiles and poverty asessments. It covers dte treatment of poverty reduction in country strategy papers, adjustment operations, and investment projects. It reviews the continuum of sectoral and macroeconomic issues that preoccupy Bank operaional managers. Because the Handbook covers a great deal of ground, its treatnent of individual topics is abbreviated. 5. Although the primary audience is within the Bank, the Handbook may also be usefil for pracdtioners outside the Bant The Handbook should facilitate the dialogue between &t Bank and other UN and donor agencies, as wei as with member governments and with NGOs. It is hoped that the Handboolk will be part of a process of facilitaing consensus building on operational approaches to poverty reduction. 6. Future editions of the Hlandbook will reflect the ongoing dialogue and the evolution of thinking about operational approaches to poverty reduction. Suggestions for future work on topics covered in the Handbook should be directed to the Chief, Poverty Analysis and Policy Division in the Department of Population and Human Resources. Comments on the current version should be r4'rected to the Economic Adviser, Central Operations Department. 2 BOX I: Povefly Reduction Handbook-Lessons Learned 'Amntedeots': World Development Report .R) 19. WDO 1990 howed dial rapid :indl pIlitivally sustinab6le:pwgre.;s in reducing poverty lad been aeliitvedhy camintries pursuing a strategy that has two eqpally imnortant parts. like first oleienit prtirnutes the proLductive use of the poor's inost abundant asset-labor-through policies thtIL harnzes mnarkat incentives, wsoil and political institutions, infrastructure, anil tocinolopy for lixiid based economic growth. Second, the sIraten pImvides basic saidal wrvies to the poor. ramily planring, nutritiou, .aKd prizn:uy healdim re ui i and Aducation are especially importint. 17uw even if this twopart str:tly is adlopted, imanjy ul the poor-dihesick, die oild, dthse wlho live in resource-poor regionS, and oViaer% --will xuziirnue lI sill er suverec.deprivation. Many others will have ILnipxoway sudhacks iiwiin' lI suiwannal variations in income, Ioissof the family lieadwinunier, Ilnirii, o)r :lvurne niicro:cnnfm(rnic shocks. A comprehenosive pappiroach o pciverly reduction thus includes well-tirgeted Iransiirs and .safely nels to co:npmleinini the hasic strtlegy. As,sixaincer &urrt gies to Reduce Poverty. To implemient die WI)) 19W) litgy, Haiu: Hmk policy palper, AssiAvance Stre'gies to Reduce I'overty, 'recoznends an approacih' diat codbines: ' Analysis of whether each countxy's piulicieh, prui MLa11a 11ul inshiiufions arc tucnsislent with poverly reduclitii, ;azud a Design of IL-ink pr'i3r:rIuI% to suipjixirt and cxioanplement counuy eflbrts to reduce jwxVwI Ky. Operarionai Directive (OD).4.15. P'overty teduchion. (3) 4. 15 provides piractic:ul guuitlAincs foir imlplementing the BLank's lpverty reduction stratery. WL)R 19M), Ax4kMlnrr Struregits r ltUr dure Poverty, and OD 4.15 uidrlie the 1'ow!riy RrduftioriiHn d T rbvok. Analytic Framework EtKonlkmic Plairaiigm: Stustainable povcrly reduction is dic B;auIk'h veiu:; .:hiug *il vi-eiive. CiG n the scarcity of resources, inoae pxvw:rlv rueiluiuiill cani lxt a:ulievvl if rursued through eIulIoi deCally Il;iic;nt pulicies, irogrnins, aInd investments. AMOltIhou t1ere are ainy ccmmplemnentiritics letween economic eflliciezicy andl pxoverly nrduction, hade offis inevitably a. ise in choosihig azuning altlriiutive. :Ictivilies. gnltieiularly in the short-nun. In advihing gcivernlntails, !'ae Barinkgeerally rcommendste selecti6nof the activity wilh tIbhle laesl tts -mtn li- n.liurn. Ilrxiritures from this rule should hx transparently jusrihied] in terms (if (a) redutcin! poverty, pnwiding a safety |nct, vr meeting another .social golal, .such ;1S woxmen in deveolopmlient. ozne (I:) :ucr.unlb.hing ulilw 1tID9 goalsl* at die lea;st cost. As wid u tiedr iuuterverkmuL's4, tisral. and adnmiiistraIvc fcasibility are essential. 0)d I 4.15 indicatles hat Baiink 1iminncd poverty reduction prqjects must pxsL the sanec ecnnminic thts tIltL apply to other projects. Rather than relaxing the standard inestment cijieria liw laruk timcing of prijects, greater olper;tiruitl attention should be paid to idexiuti(y,, pr7jecis .,nid prqject desi::ns tIhIL h, h benefip thepor andk iave high retunus, wheer zllNtISuLd eadpl;lliL!iIy i1 t:Irnlq u1u:111 mSn0lOiniC ralte of return or inpqlicidly as Ior lhunsim; rminurcs deviolopment. (See below: fdenifirarion.) _ _ . ...~~~~~~~~~~~~~~~ciinr.... BOX I: Contiued 1_~~~~~~~~ 7 7 _ 7 = ---- - ...... _ ._ 7 . . ..... ........ ..........._.... .__......._... _ .......__........_ Ir"nt rerrcipli iarj Approac. TM ecom ic fkaine wr ore analyzing poverty notwidlsL. dingdg povdrly alsn risuIlts from a mix of cultural, sociologicali; iid jIlitical Iachzrs.. Anrilyi;is4of ihecultural constraints, sociological. context, anld/or political dynamics in. which: pxyearly pOrsists: threforec| conhuibute to understinding die procss of poverty in a pntdcuiar country, to adssiink the1 likely csvts Lanlzld b-eleriLS oraheltlcladiv anieures uo reduce poverty, nn Ino drsigning efccive. interventions | kh.laviorall Mr;des.s 'In evaalin, Itie isn'pict fpzolicie prolgrams, and projects on poverty, it ist eekueaati:al Lu build intoi the aanmlysis'hehavior:al miodls of poor men.icnd',woidn:and diho wh6 iaintenic. willi lheim--surhl ai s heir bxtter-off neiihborsi; potcnlial cmployers,; providers of credit, landowehilrs, and governient ollieials---lo enusure dlial the projectled outcomres anfl) realistic. Rtik Analysiv.. (Givenithe vuIlnrajhility of the poor to downside -sljoclks, risk analysis is especially imnrzdant in piverty analysis l.. p.:i liciilin IXoa Llie poor's hehavior andl the likely cons:quences lbr tie poor of pulicy liauugts.. Policies Affecting E`conomic Groweb and the LJeinfuad for labor : Thade. Policies. Tarilis and quantitative restrictions shill thc COaxiotion ir output fr,:n mn exlports o.) ilnpoirt'su6stitutes. 'UIndier the assumjnioiLs of the:pure theory of iniernatiaoiuil trade, stikl s shil will rednee the lemandfor unslillcdiabor-amal adveely aflee the jiuor.: iii a ltllmr aijundwid e(coIno)my. Ellnpiric;ld results tnid to suplport dils hypotiesis. However,viriations rom the miodel's a.4tnlllipli(iTL': may We;aken its :applicahility in some jior countries;: "Ior example, rather tian labor, tim: abtibmal:ani" ivictr inay lIe special %cil amndi climete condition:s for producing primary Cunities. Reguluatory wud PrirLng Pollcies. I Uepislatioa and regulalions intendied to proticu tie poor often -do Eit work as plaIiniled, lIee:iiisi they 1.iil to take inin aceonunt the rcactions of other inrket actors. In lile filulI alullysis, lieu n!salils typicailly hielp smile. xxor people: but hurt otlhers. For axzarij,Ie, mniaiwuaulin-wage:re?gul:ataaaais lhelp Ilie iaXxw whos have jobs, bthur llt those wh(i do not. Rent cuntrol lhelps dtuse witlk aceL:It to rentrcoaatrolled housilag, hut by constricting the supply of new uslSinf, hulrFs thos whto lack access. Intkresl rate ecilings tipically adil lo hielp the pxir, as lenders ration eredits to tihoe witl tIae least risk typ;ic;aily ItuLse with time Iet.%S ctllkieral. Price controls reduce supply; ixprallel miuuket.s develolp, withi sirere j)ricxe.% highekr than Ihey would lulII withomitUI controls (to compensate vendlors fo die risk o0 ilecxtitmim). Many mxxar people pay inure. : I;irnugciu Policies. ulaaiLeaal aid extermicl 111mln1ee1 is k prrcquisLtint frir sustained longl term growtlh and poverty reduction. IlisCMi, nionletary, amndl exVllnlgeU IMte p(dlicies therefore need it aimI at keepfing doume:slic deaiaaia inl tine withl availalble icesoinec:s ande alju.stiigr quickly tox externall SIKCks.| lPolicier Afsuetiig die Accwnvmolian owd Sursainuabilify ojf Assels Hunicui Resources.. Laws, rugulaLitIIs, public izStitutuins, ajnd public spending, comprist thae I;kmcawo)rk affecing, the potor's access to nutrition andf lhriily planniing services, andJ primnary.hwalah awnl udduration. All need to be lookde al in a.ssessi:Ig the lpolicy franietoi k. lor Imtimalla resutirces| developminet in a countlry. Arersxy to Credtir. Successful credlit progranis lor dic ptor stressac cscs.1 cliedit. 'lly chairgr. mairkct-hlased interest amtcs; encourage muual guarantee associatiuns in whicil social pressures encoairage repxyinelnt; and link repamyiments to futLire lending. Tlhc relaxation of laws restricting tell use oif snmr kinds of collatenal may redutice the risks associated with providing credit to tIhe pour. confinulwc.. 4 BOX I: Continued Acet..- tf: bd.; Lad rcIra-in bes ottraater of tlvnendhip' rights-is a potnt- .' i'n.strimc nt 'for povehly .'redocdlon,' aldibuthl poplidcal feasihiIiH y iuiakeC it Cr'r. NWevertheler, opporinitries ftir larid reform-and for &larifictliion of die tenure rights of ihe poor--must beI snught . wihtever jirilile;1 . ls.ss cdifricult 1rcliicully','changes'in du rekulatozy ftiinewurkto chirify tnum and ownership 'rights can improve efficiency and create income-euarning opportunities for the poor.' . . . .. ... .. ... ... . .. Envirrnmen.. 'li-lio Iort suflbr the largest conscquences of envin,nrnental dej'.radatiozi. Me.anwhilc, tlir limited' resources, and.dick limited access Iicredit, constrain. their abilily oo' maintain cbnziunipdcr n levels in tlhc face oftdownside shocki to incmxe, .causing tiem to mine eavioninieild reTS,uir!Cs mont intensively than better-off groups. The' polifcu S INIdhl Ilherefire bxe oin inllproyi ii tiredlil markels and investing in risk-reducing technologies aril infras6u6turc, even ..as the WDR 1990 poverty reduction SIraclfgy rnwiii& hunnIn capital dpvciuopnent plus siaiy net is pursued. : :. . . . Atyktneriit 'anid loveny. Redtiedon . : uAdjustiiwerf PoliciiLv.;. As az Tflens fof resltating infirru& l anid external Ixlanace, iadjusiniento tylpkally .invblves a lightelning of ltmncial policieks tn equtitiate all.Jrttj':ite demand with available, resources, and currency lepreciation to eLqllrilnr:ilt tihe mnarket Air foreign exchange. .a Tese arei uissential sRJLq Ibr stabilizinj the ecoiniriy as a Ixtsis lor lie resunilption of siLudlinhle growtlh and . |poave:rty rdtio:n, 11131 firal altrinj@ eiativc price; as a basis &lit the zovvimaieiii ur&siources from lhe IlWC.Iuc:i0n or nt 11tratkLbles to Iradubles. lniri1ct emn diel P6xr. Over tiaiia, the ixx)r will gain from the restoration or stusrained griirwth .ltithat Itemslts fi'rm saicemssll adjustment. llow adjustment policie:s a3liel tli INKIiri. orTt iriimecliately is ani empirical queistion dlint the lpoverty profile wili ellf to ansiwer. On the prucuditon side, die out|conie deLiens mostly inn whelther Ihe pxwwr are nut prxodulcers of tradables or of nontradaldles, sidne , adjulslincait tendus 10z r.aise relativc prices, wages, anid employment in die Itliaalcs sector. On the consumnprion side, the outcomein dependls on which scat'egries of' expenditures arc reduced. So.kial CostS oJ Adjuunmet. Regardless ti' lhw dith pxr Nis ; grnip fare in the f(ace of aduisimrcnt, somc poor jicoe will be lhurl by adjusrlinid piolicies and their short-term c[eects. 01) 4. 15 Ilmrefore indicales that1 lkank *supported adjustmenit programs sliould include tpublic spending mnd. othvr niua..nn .s ti protect ihe most vulnerable froin declines an cojnsumplition and suta services-witf particular attention lo fix)u anI nutritionail seLCUrity. Adj'.stmentf or Povcrty Reduction. Country circunLstances mawy .;ug,est the neel flir'specilic policies and measurcs to help fioser . tip participalion 'of1 tst- imixr in. the cconorhic growlh to lLe generated hy adjustmuet. 01) 4. 15 indliCales tliat in such circumrstance, Thank-s.pportcd adjustment oilperations should fiticus more specifically on p)overty r1eductiulo by mkdlressinig distortiosw and'. reguilalions thatu isduvyntige die poor especially and by supxtifin-l, (a) a reorienlation of public expenditures loward infirasiniltre. and sorimal swrvices for the poor and (b) isLstitutioniil aulom-ii In ensuen tllial tlhe. bienefits of the piolicies reach the px)r. co, ','4edZ.. 5 BOX k: Condnued PjIrpwijj and lnahmentadon of Pnagrams and rojens. Pardlcipafion. .IlffecIie plov6rly reduction progr.ans. and projects require theparticipation - of he pnor thrci&ghout the projeclcycle. Ide/tiJicatukm. Econmiric and sector work icL importint in pmrject preidentificution. To de&elop prioject prulpinils daLt hiae high retirms anld benefit the poor, it shmold fowus on the geographical aras whlore the poKvr live, in i thtt lxls and services Ilu poor coIusuu aivJ pridue, anl on thd comstirains the poor fuaCou. . L)Dsizn. ('rograias and pwujects Iar die xxior need to begin with a beh:wiorml model of dxc poXr as decisioarnmakers. tLilin-, inio account die constr:ints, inci iaives1, andi risks they face-and their needs anid prererences. Asse.vdlss Demandifor Projeri or IPiogrona Services. 'ro CI5UsE tie suilned dema:nd fiar proicct services-ind 'die complalLiiemientry private investmeriI dwht is oflen required for proj et sciccesc.-produclion-orietIed pwiecuLs, riar exampl1e in agriculture, need torconsider dhe likely linanital rettirns 10r poor pAIrLicipantL,: taking into acCLutEl dIe risks associated with participating in the prqjecL. lor prIuj:cts and pnjra,;msdesigned to enhacae tine litr's human resuirces, demand facters are even inure ceidral. - BXneaIiL9 will not acrnime if the project/propraz does not ice: client dendinul. WInstpknnrwk)ir.. Monitoring tmid Hva(wluun, and Sup ryvision. Benchmnarlks smodb he. estabhlitidd (fcr onilUlitoriug andi evalwatiang implernerntalion. to determine whinher midcoirse currecthras ar' needed. B3ank aupervisiou of poverty reduedaiin pro!jecs shouild inclnir fiace-o-face contact with clients lo asm%seW servie delivery. rf*nirel A.sisanre in a MuldA-Doror Set i"iR. Success iniimulddcaiamr tchnical assistance rnmgramns i mon! likely when dnnors anti die goveriiienal gree on11 program priotics andi approxc.hes; the Pank. or aodacer agency provides hards-onig !uidaanrc and suIprvision - with a strnng field presence; maud capaicily- aual ilsuiaiLiill building are emphasizmi. Improving Country Dla I)rmatnf-IMiven iata Sysrwewr. InyveLient; kIt imupiuve tIa oni poverty anu on prnogrss on prve'rty redUCtinn s1ulid e ba.set d Un cust-elfecdveness, zakn whether they kdvelvip indiginous statistical ;lnpacity. To lx: financially and insLtittinmilly suslinaale, Ithe investmintS muslxt e demaid- dJriven Nrid ui.srarieAnted. Moniforing Mewufirn iank BI inpw. hlie Baink's Inltr imrportint onmiribution to poverty reductiuin is through the country policy dialogue trioug h enenuiiniging, the adopftisn orpolicies to} reduce poverty. Blut the effects of the policy dialogue and BILad iaograins *m pxverty reduction are difficult t) measurc. CIuntry perfo rmance oiilv pardy ritllcts Batik intervetidols, henmc a measuaru of (mitenmes may rnot he appropriate. Meanc hile, nma.y Biwuk inpuLs affict pxoerty nrtluctinn inldirectly, throutgh thecir iml;iant on growth and tither outcomes, hence a measuae ol iziauls aimned 'wily at rcdlucirig pverty directly will he incomplete. Te ITandclbck deiscrilI)s a mullidiincisionul alplpuiaci Ia tiackiiag and anialyzing thte v:ai'iq ficeeL nf Rink country assistaice prolgrarLs. 6 H. Organization of the Handbook 7. The Handbook has ftree par. Part I covers the preparation of country poverty assessments, including ie country poverty profile and the analysis of policies and public expenditures. Part II deals with die design of Bank country assistance strategies, including lending operadons. Part M discusses investments aimed at imnprvig country poverty data and monitoring Bank programs. 8. Part I first discusses poverty profiles and indicators (Chapter 1). The profile is a snpshot of the poor. It helps determine the priorities for the policy and public expenditure analysis. The indicators allow progress to be tracked over ime and compared with other cuntries. Chapter 2 sumnarizes the relevant macroeconomnic and microeconomic issues for analyzing the impact of the policy framework on the poor. Chapter 3 corsiders the analysis of public expenditmes from a poverty perspective. The annex to Chapter 3 conain summaries of social sector public expenditure reviews. Building on the earlier chapters, Chapter 4 treats country povenfy assessments, which are recommended in Assisace Strategies to Reduce Poverty, and are needed for all active borrowers. The annex to Chapter 4 contains summaries of poverty 9. Part II fist focuses on ountry assistance strategies, which are ouigrowts of the assesments. Chapter 5 discusses the Bank's operational instruments-policy dialogue, lending, economic and sector work, and donor coordination. It also oudines the role played by UN agencies. Chapter 6 looks at operadonal policy issues relevant to adjustment and investent lending. It discuses the teatment of the social dimesions of adjustment and recent developments on social fimds and social action programs. The chapter provides a full discussion of the operational framework for investment lending for poverty reduction, including the important role of sector work in preidenifying investment projects that both promise high reurns and benefit the poor. Chapter 7 examines sectoral iss relevant to adjustment and investment lending. The annex to Chapter 7 contains summaries of projects. 10. Part m first discusses investing in the improvement of poverty data (Chapter 8). It emphasizes the need to consider the likely oDsts and benefits of such investments in select the appropriate straty for improving the data. It argues that the strategy for improving poverty data must be filly grounded in country statisdcal implementation capacity and that country data users need to play the key role in designing data systems. Chapter 9 discusses monitoring the Bank's poverty reduction effort It traces the istitutional history of monitoring poverty reduction. The chapter also discusses the content of progress reports for the Board on poverty reduction. IEL How to Use the Handbook 11. The Handbook has been designed to facilitate the flow of infornation within the World Bank. A key objective is to infrm operational staff in one part of the Bank about relevant work that staff in other parts of the Bank are doing. To facilitate networidng, the Handbook identifies staff members by name. Checkists smmariz key quesions tO be addre2zId 12. The Handbook is not a cookbooL It recognis that county circunstances vary widely; that appropriate responses need to be tailored to country circums; and that those circumstances are a complex set of political, economic, and social factors. The Handbook therefoe does not provide rigid formulas for poverty analysis and operations. Rather, it highlights -od practice eampes of dealing with a particular issue-as a way of conveying to the task manager the dimensions of a particular problem in a specific operational or analytic context 7 A. Boxes 13. The core of the Handbook is its good-practice boxes. They cite relevant experiences from research and operations. Most boxes are "signed" by their authors-to tell readers whom to call for fiurthe infoadtion on the technique or project described. 14. More exensive boxes, containing focused summaries of economic reports and projects, are provided in the annexes to Cbapters 3, 4, and 7. The annex to Chapter 3 contains summaries of social sector public expenditure reviews-for Bolivia, Brazil, Costa Ric" Guatnmla, and Honduras. The annex to Chapter 4 contains eight sample suwmary poverty assessnaa-for Bolivia, Egypt, India, Indonesia, Malawi, Malaysia, Mexico, and Venezuela; these give a picture of what the conclusions of poverty assessments look like. The annex to Chapter 7 compiles thirty p,oject summaries, illustrating poverty reduction projects and components in different sectoral and country contexts. 15. The annexes to Chapters 3 and 7 are each introduced by a matrix showing the main points covered in each annex box. For example, in the annex to Chapter 7, reading across the rows of the matrix on page A7-1 shows that Box A7. Ion Nigeria-deals with popuation and illustrates cofinancing, monitoring and evaluation, and NGO and popular participation. Or, the reader looking for project examples of NGO involvement can simply look in the matrix for the projects wiMh checknarks under the heading "NGO.' B. Bibliogrhies 16. Each chapter contains an annotated bibliography. The entries include one- or two-sentence summaries of key papers and books. A more exensive, but unannotated, bibliography-at the end of the Handbook-includes references suggested by other agencies. C. Checklists 17. Most chapters contain one or more checldists of relevant questons. For example, the Poverty Profile Checklist in Chapter 1 provides the questions to be addressed in developing a profile, a checklist in Chapter 2 covers the issues for policy analysis, and a checklist in Chapter 3 summarizes the issues for public exenditure evaluation. Part I Xa°' Analyzing Poverty * Part I discusses the poverty profile, the analysis of policies and public expenditures, and the linkages among them. These topics are embodied in the poverty assessment. e The poverty assessment identifies the main povery problems and links them to country policies. It helps to set the policy agenda for reducing povery. Chapter 1 Poverty Lines, Profiles, and Indicators Povey is conentionaoly measured by the income or expendiure level that Ga sustain a bare minimun standard of living. Povery can be measured in relative or absolute terns. WDR 1990 used an upper poverty lme of US$370 rn 1985 purchasing power parity doUlars) per cqpita as a cutoff for absolutepoverty. People whose consption levelsfal below that level are considerd poor. The WDR also used a lower povery line, of USS275. People whose consumpdon levels fall below h level are very poor. When discussing povey within countres, the WDR used contry-speficpoverty lines. But poverty is not just measured by income and consumption. Health, lfie expectancy, access to dean water, and so on are central dimensions of welfare. For tds reason, the WDR supplemented consumption-based measures wah others, such as nutrion, underfive mortaliy, and school enrollment rates. The Handbook does likse. It captures these measures in the poverty profle and the priority poverty indicators. 13 Chapter 1. Poverty Lines, Profiles, and Indicators Introduction 1 Poverty lines, profiles, and indicators are building blocks for poverty analysis and policy design. The poverty line is a measure that separates the poor from the nonpoor. Those whose income (consumption) falls below the line are poor; those above are nonpoor. The poverty profile portrays the extent and nature of poverty and the distinguishing characteristics of the poor. Poverty indicators summarize the income, living standards, and social conditions of the poor. They provide a basis for comparing poverty outcomes (a) across time-to monitor the effects of policy changes on the living standards of the poor, as during adjustment; and (3) across countries-to help focus attention on specific areas where there may be a divergence from comparator countries. 2. This chapter discusses these issues. Section I introduces the poverty line and other basic concepts for measuring poverty. Section II discusses how to assemble information about the poor into a poverty profile. Section m discusses income and social indicators. Later chapters follow up. For example, Chapters 24 use the poverty profile in assessing country policies, institutions, and expenditures. Chapter 6 discusses the use of the indicators for monitoring poverty during adjustment programs. Chapter 8 discusses the evaluation of the adequacy and quality of poverty data in the country. I. The Poverty Line 3. There is a literature devoted to the methodology for quantifying the extent and severity of poverty. Box 1.1 introduces the vocabulary and concepts of poverty definition and measurement. It outlines the three key issues in poverty measurement. The first concerns the yardstick to be used in assessing living standards and determining who is poor and who is not. The second concerns drawing the poverty line-the cutoff living standard level below which a person is classified as poor-and counting the people whose income is below the line. The third goes beyond counting the poor to measuring the depth and the severity of poverty. 4. Poverty lines are the starting point for poverty analysis. They are usually based on income or consumption data. The proportion of the population below the poverq line provides a quick indication of the scope of the poverty problem. As noted in Box 1.1, the poverty line should be based, when possible, on the concept already in use in the country, since policymakers will be familiar with it. As also noted in the box, good practice identifies an "upper" and "lower" poverty line-the latter indicating the boundary between the poor and the very poor. 14 BOX I.I: Te Vocabulwy of Povefl Measurement The Stanidard-LivinzngYaWsiid: :. . owshould the standard of liigbemeasured?. There are twu equally important aspectz Vof living standirds: incomc'and social I...n practice, consumption data are a good proxy for-theKlivingl: standards deriv.ed from incoMe. Consumplion data tend to be more reliable indicators of current livin,:: ...standards. than income. dlita, particiularily when incones vary over mii in uways-that households ca predict and hence deai with ihrough their consumptioni-smoothingbehavior; Miasures of consumption .spending should include the. imputd .valui .* consumption from own produe;tion and should .be ...nornialized o6rk differences. iin housdihiold' size: and compositidn 'and adjusted for dirrereiices in .ocal :. prices But. m,any'.,apects. of.houseiold.well being: arnot,adequately capiured' by income or.... ~> consunmption-biaied measures; Henci suppliementar. infomation on social outoomes.'and access to. ..social services may be: used.. This information includ..life eptancy, in int mortality, nutbo'n literacy, .and access to p:niary schools; helith clinics,. or.drinking water. While such: information is neededfor a fuller: understanding of poverty because of problems. of iggrengation amd conparability, .most poverty tliues arcb ased solaly on income or COnSUmptime. . . . . D rwing Poverty Lines f:.':~~~ar a:. j;^r::r.l ?A"pove4y: ineist p6m urigverty"' 100st eryli .. .. pindit:: l a6con t4a~p:rirni eAUOJJUYjLAeIib are ibsed on incomeor consumption data Ple are counte as por whe their mcasured standad of living (usually in'come or consumption)o is blow.a.minimum'a..ceptable level-known as tie poverty::. lin&S .Yo4ertjrhnes can b s relati've or absoiute t'erms Rekaive poerte r t the psition of .aen individual household compared withthe aveage :income in the.country, such s a pverty line .'set t one-half:of e mean income ':or attihe i40th perntiie olcdiedistribution: Rilative poverty lin.' yawill v.arywikthe levet of averageanc6omo,; Absoteoveryrefes to. th position of a indi,id r h6ousiehold in relation to-a poverty. line: ioe ril .value'.is hixed"over-time An absolutepoveryw li is bai,i.sed oii > cost of a mimum cnsumption asketbsed on te food. nec r a recommendtufcaloriu intake f.:lu Ii.po.veriy line is then augmntie by an ailowance for.nonfood neids i . s consistent u;ith the speniding patters of ee .poor. ,, .. if t aher psva poverty line already in u.e in thie coimry7 Ii'most'cases, it-is prefcabIe. le touseepovery oe nealredy eiu the ount-,if there'is ond..Since allpovertylline'apI | inherently arbitmu theliitionil poverty cutoff line' li-Wtlidvanrdgethatd mstic.resarches and:n 1~~~~~~~~~~~~~~~~~~~~~~~~~~~e owever,ry....e-.t..... ....... ;d .. ., ....... : ,..... .........,.. ... | <. polucymakers are already familiar with it; T Ihere MiUbscases- however wh.ere a.ternative definitions Lam prefu.able if>the existuig ones ,lak.'oj>era iionaLrelevarnce: or se'riousy' tort m uren . pvesy.For example, a poverty threshbold abovemiinimina.baic~ hiiirnii:ui&ds may,.result rn an pcov n #fp.e!IY.;t!14 is. oolre.ope rationally heft! palc.ry- ndsinngsci:.ty y :. * . el tr * - * '- * ": . .* : - :d- s **- --- N : ..... x *: mal. bi','h-m...a=-,Ine .na:!rs *t ..- .*-*...... wra. q m.fIere rey n10 -poVy linearady inuse: ie couowy' A common ff ¢. set,iing the>,absolu,te.,pov. ertyf .line proceeds by :iixing a ftod intake in calories and then finding th: casumption expenditure or income level at whichV aperson typicaliy ataiansi food.intake. . A ' .v>iaruitio onie meithodd.i.s to first find:the.minimum ost ofa foodu dl ich s en 'intake levld,;and then divide ithis-by thes'hae of foo in thictota Lexpenditure of some group of ' households deedlikely o6be-poor InJmaysuring.absolute poverty in one cuntrt povrtyiner i- OU : .:. ' U -'-Ctc h- .I : ' ;" - '*' * ----nd6 - *ime. *F ' * ' '** ** ' " *- - *-i ikent s k;.should have thcssamc .value,acro>ss all groups or regions, and over time; Fo:oetyassiens 1 concep ofabsolutepoertys pefe bieauseit faciitatesj ompt anayis ~' - * : Ai x A . .,; . ., e -;-g; ,. v« . contued.- .. *; . ....-* 15 BOX 1.1: Continued . Darn bwioh.rei~w the -Pown Dneh tThe severity of tepovert pr ~dep-nd""i'n'ho'wi'h'e"poorta dtrztetdteOlbw h. Ea', WO >tilej rfsQd1. n vOW dite Clusi igof the p or jut:bepo;t Slnes I ss oii a.d;iitr ution where :h9: PQYgo4f Vl have income (or conumptiotui ;f larb low thejp6verty . edistnbutonofindme or cosumption eow the .also Heds.the sbnsitiity of:easuredpover.tyotc ofI tepovcy n oo f P:considcdratAleast two possiblepoverty linesanupperand a lower povertyy he inter able as poor . and veaor. to.ascertain theirretive anmpaon meare povrty . : . .C:ng .gthe Poor.The headcountmindex is thej oportionof-thepopltn o measure. standarof hvapg nsumption) is. 'tsszhan the poverliin.> While un1I as a quick indication of . .1 th Escopp ..For exampleameasured povcrtySiwili be unaffected by:aratnsferfrom,.a r peron to .som who is. very.. poor The mes u'is tsoritive toe.distnbubonamong th poorY; , - - o -, .C..--'M ;; N.-; ..' -.''. ';-;... ; .e ;.-@; . ;;-:;.-.-, ' C..C ..: '-. . - ... ; ..Dastrnlb.u.rsoaSndtsuWe aMeasuslres.:`These measurego bend countin.g opeople' t6ilt1 t -Uatdastributbn of livingstandards amng the poor: Asrming dint society.places a great value on he.lping the p.oret, hem. measure-is weiihtedito reflctthtWextent that individual(orhousehold) incomi1( f ils ldowthe poverty line. .[ he greaete weht u .t x the por tn re5aon to the not-sob-porqF 't he afore%nstive as the :measure to severe pavertyjt {.(F:o5x>amplej- the F.oster CrerThoibekiae: Inde ... . . . , ,- , * - . ..*. fC5 . .. ... .. . emof dffrenktdvegres ofJ poverty)r .; ...: : : .S eominance hisconcet c ernnit: assc 9ese abyutwhelr pve has.increased o .dereascil over time aor with and without y soe policy change, regarless of te povery line.or poverty measurci*eleetdid lt i sb ona compKrson ofuuuae income distri utionsat twotimesnIfthe - ..uwula tives di~bution of icome for the later. date lies z5iere above that for th fredate the ;povertyhaso unambiguosly fllend this isocillep tlii& frg aorder dsuofauhic.e coditio I; f the c.umulative distnbutions cross, the issue is more;.Lomphcaed When thie crossover(s) comes at an .. ..income level at or above tht:poverty lane, fist oerdoiince still prevails But if the crossover. comes argiai:ncome lvIt'bei the povety lne,;th tion iswch .;di tnbation hO the l i.J.cumulative frequency. Trhis is .oie:d thesecond ord d.mnance condo: n: J P I'ove . .U A: s o .:.cIS e:: ha bedeveloped to esLi at..the s A; s.ic distri%ut onedaita. itspcaist.-' ituiŽf 6 gfr with -respect.mt6..liapo*tty liie-andsimiilntions-for exanile with respect. to distribuiionally.:neutra. .4.PovmttCopatriiunus: AGuidc to tonchepos adnirh Worldtk LJa gori.p . 5 The poverty line is the value of income or consumption necessary for (a) the minimum standard of nutrition and (b other 0necessataes." Estimating necessities is not straightforward. It has a strong judgmnental and cultural element. Even within one country, tere may be important rural and urban differences. Moreover, relative ibod prices may be different in rural and urban areas. 16 6. These elements all need to be factored into the construction of poverty lines, which should reflect differences in the cost of living across dates and regions. The various rural and urban poverty lines in a country must have the same purchasing power. Otherwise, comparisons of absolute poverty across regions, sectors, or time can be misleading. Households at the same standard of living could be deened poor in one place but not in another (Box 1.2). BOX 1.2: Pitfalls in Drawing Povery Lines in drawing--a-. poverty ine the goal is to dfine an, income (consumption) level that is lsufficient:to purchase the:minin standard' of nutrition and-'ot neessities. One ofthe most- .oAt oerylhsp_ro c-eesb firsixing: c- ommon mahbds iiscl fdr:detemrriining:te qpositon of absolutei'.tmesds --firt n wa minimum 'calddic intake, and ileii finding the.expenditure od.iiome]evel a which a p n tyIca : attains that caloric intake A variation on the method is to first find the minunum ost of afoobdbundle ..th.itha-achievs the aloric intkc,: nd drtvde tthsb theshare off 1bod basesii t-ota l e nitures of F>household d e d to be poor.:.- . . .:..i..But the relatioJLshIp between caloric, intake and iucomt#or consumption is not the same.across.. r:..egions:or.time; It shifts according o differences in tastes,aileves,;reative price, pulicl pro.vided goods, and so on. Diffeences also will an i in the shreo jncome spent on..food by.. dillerent groups and in different locales. >-. Typically in developing count ries t c rglationship enc i e and incme vaies :bcwwn urban and ur.l areas.. Caloric intake atnany given duii igr in rur "areas. The . u; rban poverty line shoupldlms be aboe the.nirarlpvehjline. Buti b w muc h If eur *Cs ood:nonfood ratio is uscdi to: scaM up urban food cxpenditure IntWa4:utban po.vertylie, the latter- *:villbe too hig.,... .. .. rTius rural urban difference -can cause serious measurement problems when there is rural-to- wbaWn maigration....Supuxs* someone who ls just bbav the povertyi n6 th eiru moves o urban sector and obtains a job thr What if th job causes s i'- De r incomet b b l *::65ftha:n the ihlTfference .in poverty lines betwecn:rura.l and .uin areas. . Though themigrantwil be;. biter.oft, povrty *as maisured by the hadcount ir.ndcx wil incr.a.e-as te person wi be s> deemed poor in the>.urban area....:Indeed.,. it is possible thatecononii dvelopmentitough urba .nlargement >.m whiih none of the pooare worse off and at eastso :are better off-would result .in an Lncrease in measured povery;.:.. C ~~~~~~~~~~~~~~~~~~MorninRavallion'- Poverty Coiuipairisons: .GA ou!delo CoamLL wd McLhodis. WorldBank LMWorkg Paper8, 1992. ~~~~~~~~~~~~~~~~. .. . .. . . . . ... UI. Poverty Profile A. What is a Poverty Profile? 7. The poverty profile is an analytic device for summarizing information on the sources of income, consumption patterns, economic activities, and living conditions of the poor. It starts with a definition and measure of poverty, based on one or more povity lines. But poverty lines capture only the income or the consumption dimension of poverty. For greater policy relevance, data also are needed on how the 17 poor live and the econoniic environment in which they operate. Thus the profile places poverty in the country's economic, institutional, and social context. Box 1.3 provides a checldist of the main questions addressed in a poverty profile. BOX 1.3: Poverty Profile Chedls Tle poverty pfile iddrsses the ibllowing:questions:* / What is the poverty lint (upper and lower)? (flTow many pe6ic a&c oand cxtreelyy poor?. | Hdow largeis the poverty gap? | i What i tedistributi: vingtadads among the poor?: | /i Are-thepoorpredominantly:urban or rural? l g Has the~~~~~~~~~~~~~~~~rc recentdy:.becn migration of the poort ra nas iiis the, e . pr to ~urbanaes % How is povety correlated with gende; racial, and etinic characteristics? :.Whntare the main sources of-income of the ppor?-. r./ What products&or servces do they sell (tradabics/nonxadablcs)'.:.. l/ How large a facitoris unemployment or underemployinent? / Which are the-important goods inistb consumption basket ofite poor? / What is the educational, -heahih, and nutritional status of thie poor7- . / Wat are the frrtility:charabtristics of the poor? / To whatjpublic services do the poor bhae aweIss What is the quality of the servicei7 ./ What assets-4aud; housing, and financial.Zdo.the poor ow? -.. [ .: . if HowP secure iseiir access -to-ankor lenure o'ver-tua resourcs?..v-.>i / . hi 'are thee environmental dimensions.of 'povertyn'-; l/ How variable are the poor's incomes? What risks do they face?. B. Where information is available, the profile should identify the major production and consumption characteristics of the poor-whether the rural poor farm their own land, are agricultural wage laborers, or work in various nonfarm activities; whether the urban poor work as wage employees or as microentrepreneurs, in the formal or informal sector, and in manufacturing (tradable) or service (nontradable). Data on asset holdings by the poor are relevant, as are their production technologies, use of inputs, and access to social and infrastructure services. The composition of poor people's consumption, including their access to public goods, is identified. Indicators of the living standards of the poor-such as infant mortality, nutritional status, literacy, and life expectancy-are needed, as direct gauges of poverty and as measures of the degree to which the poor lack access to particular opporunities and services. A breakdown of the incidence of poverty by region is useful, preferably noting any special productive potential and/or environmental features. Finally, because of the particular vulnerability of the poor to downside shocks, the risks they face in both production and consumption should be identified. 9. The poverty profile is a snapshot of the poor. But changes in the characteristics of the poor over time and behavioral responses also need to be considered. For long-run changes, such as labor migration or an increasing dependence on wage labor as land becomes scarce, this may mean simply updating the poverty profile every few years. But, often, the short-tern behavioral responses of ihe poor are also important. As certain consumption goods become more expensive, the poor substitute other 18 items.' Substitution in crop production also may occur as price incentives and technology change. Thus the potential range of goods that may be produced and consumed by the poor needs to be considered. B. Data for the Poverty Profile 10. Poverty profiles are constructed from a variety of data sources. While more data generally will improve a profile, for most countries, a usable poverty profile can be assembled from information that is fairly readily obtainable. The objective is to assemble the infornation in a way that will be useful for policy analysis. This approach requires adhering to a clear definition of noverty, and consistently applying that definition across data sources. As indicated in Box 1.1, in most cases, it is preferable to use-where available-the poverty line already in use in the country. 11. Household Surveys. When available, household surveys provide important information about individuals and households-their income and consumption levels; employment; occupational status; production; location; household composition; education; nutritional and health status; and other individual characteristics. The surveys provide a comprehensive data base from which to assemble a profile. As with all data sources, their findings should be cross-checked for consistency against observable indicators, such as market prices. Box 1.4 provides an example of a poverty profile constructed solely from household survey data on Ghana. While it may not be surprising to learn that the poor are mostly rural, the regional decomposition of the data permitted the survey to reveal that they are concentrated in the northern savannah region where no cocoa is grown. This wvas an important finding, which had major imnpicetions and which has been followed up on in Ghana's agricultural sector adjustment program. (See Box 6.4.) 12. Community Suryeys. A number of the most important components of living standards relate to community facilities and services not specific to the individual household. These include markets-for labor and for the most important commodities produced or consumed by the poor. They also include information on the availability, quality, and use of the most pertinent social and economic infrastructure. Community surveys (see Chapter 8) offer a logical starting point for analyzing community-level systems. When a community survey is implemented in conjunction with a household survey, the combination enhances understanding of the constraints and opportunities that influence living standards. Administrative records and institutional surveys (of schools, health centers, markets, and so on) also are useful. 13. Eclectic Approach. For many countries, up-to-date and comprehensive household data are not available. For these countries, judicious use of existing or readily accessible information may provide the basis for the poverty profile. Partial data, such as micro surveys in the various relevant sectors or markets-agriculture, and urban and rural casual labor-may provide rough estimates of incomes. For asset ownership, land cadastres can be used in some cases. Qualitative assessments of poverty made by those familiar wth the country can provide a usefiul check on these numbers. The Malawi poverty profile (Box 1.5) was constructed using many of these techniques. In addition, the Bank commissioned a quick sample survey to gather information about one important group of the poor about whom no other source provided such information. But even Malawi's data are good when compared with some other countries in Sub-Saharan Africa. For them, analysis may need to be based much more on qualitative assessments and on the indicator approach described below. 1. Sec, for example, Matin Ravallion and Dominique van de Wale, 'The Inpact on Poveity of Food Pricing Refonrm: A Welfre Analyss for Indonewia,T Joun.a of Polcy Modeling, 1991. 19 BOX 1.4: Ghana-Poverty Profile Based on Household Survey Dwa I - -- - - ; ..................................................................................7 .. . . . ... .... .. -. i . The Ghana ij,vcrtlyprorzl is buscd.on.hbus'ehold survey data from thcfirst yeatr. ofthe Ghuna Living Staidards Survey (GLS),. which was conducted by thc Chana Stalistical S&ti&c.wvidl. :'We support If the World:LBank. Thisrrsinted a.major advance, in Ihcinforniation b ich consisted.of limiodsurvey'r that were more hnnl5.9ears-old.:: |T. fl br aiolute p6ve lin6wr drawa, oie of Wiicii w ei sal twolthirda: of aver-g rpet. 'capia consumption. .'The other was seL>aL une-third." of uverage per copitip consumption: Using th ipper povertv line-yielded the fallbwing p6vLrti prdfili:. * Poverty, is overwhelningly:rural.' Tli 'urban pior are fewer, and:arein ecrai Ics poor hiani tiheir runi Fuountcrpxir. Accra haLs the lowest incidence (4:prlnt). and intensity of' poverty, according, to headinunt nnd poverty g:p measures, respectively. * Poverty incidence varies significantly by region. It is.most concentrated in the suvannah, Vulta: Basin, and' midcoast regions. In tuirn; this variancereflectseiiinimtic di&terences, with :thcbetterWoff:areas able'to:harvest two crop per ye~ar, id s c niipourundedl by the piorer aruas>.transport rj ble a;nd lower educatio'nal lev6ls , . i . . , ,,,. ......nrnht...........i...c . : . . .. : * Farming is the main sourcc otiincome for thep oor. The'poor ar mostlfy smailholders who. .: trcly oi iheir peuductionl or ioods, but di) not dominatelhe ' roddctibndr proce.ssing ofahy ', crop or livestock. : ' , , ' ' P6ivrtyhis of o ip nlikm ofw pmductivity. amonak thc self-einpIoyed (inostly farirns) rulier , , thL of open unemployment. ' Indicators of e ducation, health, and nutrition are worst in the rural arcas oFf highest poverty 'niflcricerA, and gcnerally worse in rural aueas thain in urbin' areas. .; * Consumptioni pattern% soiw that loud is tie utajor expedlitur iornw pein''for the poor (69 percent of total expenditures) and nnnpoior (66 percent). The poor di) not dominate tbe ' amsumptinn ofilm,y iinsiorlalit l;ioulstulT.', '''' .' ... . ... ...... ...... . . .aretp/en Mink. a. E. Oti Bualeiig. Kodwo Ewusi, Ravi Konbur and Andrew McKay. "A Poverty Profile for'Ghma; 1987..8."~ WorldHitnk SDA Working Paiper 5. 1990. 14. Social Indicator Data. Much social data from sectoral ministries in the country and from secondary UN sources is included in the Bank's Economic and Social Data base, which is maintained by the Socio-Economic Data Division of the International Economics Department (IECSE).2 Relevant data are summarized in the annual Bank publication, Social Indicators of Development (SW). SID incorporates information from several UN data bases, such as those of FAO, UNESCO, ILO, WHO, UNSO, and UNICEF, and from country sources, as well as demographic estimates and projections from 2. IECSE also maintaims files available on PC diskettes, such as: * an environmental indicatozs data base incorporating from World Resounes Inslitute and other souc; USDA data on food security and vulnexability; * some USAID/Wesuinghousc Dcmographic Health Survey tapes; and * Intrnational Comparison Project dat (froxn 1985) for approximately 65 countries, containing detaild information on prices and expenditures with an urban-niral breakdown. 20 BOX 1.5: MIawi-Developing a Poverty ProfiJe From Inadequate Data TheMalwim :povrypolt construcefo the oseodtps:snlodeiett workers, and n ibanhouseolds. For s lo r,n>agrIcutri' census and yarly updiat piioidbi 6nn: o incom`Oconpositiont (iAfer:valuing owA`ddt and consmption) andfamily. size information enn:in wame::c"hi noh si other ta income group :which | iitroducedisexverel biasses.: Asamplc survey providedfdata or-expenditure composition. For Maate | workers, . the Banik comiisiii6nd a smiall survey: because ofl of alternative datasources For :uran xsehL a national arbn iicome-tpenditure survey although dated, Was. available heb population dAstribution by subsector mhLs, ubtaincd fromthe 1987-census and updated to 1989. ... m Based on a pove.rtline defined by minimum tona: reuiremt: and iain:ng . fobdnonfood expenditure:prefetenees,b the poor conser.vaively encompass about half ihe populatio.I 1 hec. poverty gap is only about 4 percent of GDP, buseof the relativelylow level of income | Sestablished asythe: poverty line; Fr. opmtina l pueoss,the core wer defined as the poe 20 percent The core poor. * a5preg pminantiy rural and ovenvhelminglyntheCsallholdersector- other severe poverty I groups (...aogetat elabo ian par farew . :r |- diproportionately reside: in femalc-head& uolds;more women than men contribute ... t w thc incomes of the poo st h6useholds; ::rely on home agricultural production for pecent of their income,.veisus 85 perent for thnoncore poor, caal fann and nonfarmabor well migrant remittances -ar morey' :*.ip - t-nt incoti s ourcs for the c ore oTta t e other poor;i6. * <. devot.e mnore than 65 p1ercent nf.household expenditures-including th imputed value of homegrown produe -:to tood; . * *;. . > . * efdce.gter.ribks olnma lutrition an the norhnerl rgions, whcit land is of lower quality; and: ..... . ... . . h*-iaVe limited access to basic social services, byb-Saharan Africa standards.. . *_____ *___*__*__-___-__*-:__.:-:*.: . * -,:. '.-*: . - . * . - *- n. 4rMalawi. GrowthThroigh Poverty Reducrioa. .World 13ank Report B1-Mi -March 1990. d(Thi is an isiternridociimient with restricted circulation:) b; Using different ratios for nnnfrdod share bIsed inn urban aid rurailexpenditur:dat& . 'd PHR. SID focuses on key aspects of human and natural resource endowments, income and income distribution, expenditure patterns, and investment in human capital, and its poverty focus is being sharpened. IECSE's work program for assisting country departments prepare, upgrade, and maintain relevant data bases is being strengthened. 15. Social and Infrastructure Services. In addition to household and individual variables, the poverty profile includes indicators of the quality and accessibility of various social and infrastructure services-such as water, sanitation, health, education, and transport. Such information can come from administrative records and data bases maintained by line ministries, such as health and education; sectoral surveys of institutions, such as schools and health centers; or community surveys. Information generated from these sources can be useful both to monitor what social and infrastructural services are being delivered and to which areas, and to map the level of services and amenities available in different parts of the country. 21 m. Poverty Indicators 16. By tracking what happens to the poor over time, poverty indicators help guide the implementation and continuing analysis of country policies and programrs-where progress is being made, and where there are serious lags, regressions, or newly emerging problems. Indicators thus are selected on the basis of their ability to facilitate the continuing analysis and monitoring if poverty at the country level. They also provide a basis for inter-country comparisons. They serve as indirect measures of poverty when direct measures are not available. They quantify the consequences of poverty-as defined by low income or lack of adequate public services-such as high child mortality rates. 17. Priority Poveny Indicators. Box 1.6 contains a summary list of priority indicators, which will be useful to include in the text of economic reports and other documents. In addition to the upper and lower poverty lines and respective headcounts of poverty, the box includes income indicators and social indicators. The income indicators track the income earning opportunities of the poor. The social indicators track the provision and outcome of social services. The short-term income indicators, and a few of the social indicators, will be available with greater frequency than the other indicators. They can thus be used as a basis for indicator monitoring during adjustment. This use is discussed in Chapter 6. To the extent that data are available, the priority poverty indicators should be disaggregated. Nevertheless, the idea behind the priority poverty indicators is to keep ihe list small, and to focus attention on the changing dimensions of the poverty problem within a country and the comparative dimensions across countries. Research is needed to refine the indicators,3 and this should be a high priority task for a collaborative effbrt among agencies and nongovernmental organizations. 18. Income Indicators. For policy analysis and design, short-term income indicators are an important complement to the static information in the profile! These indicators are identified from the general analysis of country characteristics, combined with the poverty profile, and show the incomes and living standards of the poor (or selected subgroups of the poor, such as the urban or rural poor). An additional strength of such indicators is that they provide a timely series of information for monitoring the status of the poor. (Box 1.7 illustrates how to identify the short-term income indicators of the poor in Sri Lanka.) Possible indicators include the income-earning opportunities of the poor as producers or employees (including relevant output prices and wages), and the availability and prices of pertinent consumption goods. Other key income indicators include: * Rural Terms of Trade. For many countries, smallholder farmers are the major poverty group. Their main income source is the sale of agricultural produce. Their incomes depend mainly on the prices of the crops they produce compared with the prices of goods they consume. The rural terms of trade thus indicate how much these people are being helped or hurt by price changes. It requires information on the goods bought and sold by rural people or, more particularly, the poor, as well as the relevant prices. * Unskilled Wage Razes (Urban and Rural). Unskilled labor is often the major factor of production owned by the poor. Even where the poor own land, they seldom have enough to 3. Some of the indicators arc clearly better than oths, in that tXv provide a more accurate picture of the movaments in the underlying variae; in miat caues thes differences reflcct direrences in the availability of data. This iuue is discussed fuAther in Chapter 8. 4. The use of intrmediate indicators sugeted in "Ie Impact of Macroeconomic Policies on the Rural Poor. Analytical Franmework and Indicators," UNDP Policy Discusion paper, 1989; and Assistance Sntegies to Reduce Povery. 22 BOX 1.6: Prority Poverty Indicators 9. . 1,9Q ,980 19899 .1990 j99 2000 |tippler Povesry Li ne! eoadcoui ta Lower Pvertvy lirne : lIcndcouint |dernorand,um temr GD' PMer Callit' 1o) I 7(! J9Yl( ION ') I*9 *I9T" .Short-Tenn Incumoc Inlicatoni) 1 Wage (I InskillwI), CPI (Lower Incomiae)" Rural Ternas h' Tradu 2... .... ...... .... . . _......... ........ ....... ..... ......... ........... ....... ___._ J960 1970 19K0 198 12)Q 1921 ..?W Social lIdicatore Shartr of hublic Exprnitlnnm tOfW 1SUic :SoCiald Scrvie.s ill iLl' NetJ Piama:uy allaaiua:I' * UlJaLk!-lIve M[balaIilyt Immunizalioll' Child M;aIauritioall Famale tu-*MaIe Lire Expetancy TItllil Fertility RaLwc Materna:l Moalilily a. lme uupper liiveCi hy e Iiri LIa caliT Ir lime lp ihar: lm Itawer paowmly liiar is tlie cmloiiT fiir tihe very paur. b. vuamialfy .jad amiami acaml-r:. saWl ci cvaailalclc qumulerly duals liarIlic.imadciliarsx icilitkiman aamititnmrisag dairii igiCjLllimllNtCI. e lJriaiaia imatl rnirinla. ivumlirimime. l: Whlere. alvimmimm H 11 r mif l,mI nam j: ukl x111'1al1lr 'bz Iiamfbual islam tlaam,Lke . Wimeme am'Sl amysilalaele, CPJ (mar ri ami Enaawlly. a. Indicaaaiveaaarg.ean fit ab c yawr 10.55 may nIisn he presenledl. linr l'I:lk, Iarget yenr; dmnalwith ciumiatade wEil 11we ploglamma pea mod. iiu lia Iyeamm 7CN)O* luau gcLl% m ini limit: wiaJi UNiCIAPa sNamliwasia Prugnimams arAcdlmma developed umader ihe fnm.wme k arkeaim Woirld Sumnmil flir Cliilslren. f lFemIale mmd Male g. Atecadamauce dain arc. jrcflrreal, il uavaiilaidhe. h. Ot alenrative smeasure ol mainuvrition. 23 BOX 1.7: Sri Lanka-How to Identify Indieators of the Incomes of the Poor ' Intermendiate variables that track the'incomes of te'ppoor can be used to assess trends in poverty in yars when honiebold survey data are not available:. Changes in these indicators can also be usel to cstimite ihe impac of public policies on the incomes. of the.poor.. Distinct indicators should' be. selected for groups with different income sources. The poverty profile for Sri Lanka provides thi&basis'for identifying indicators of. incomes of: the poor. According to this profilc; pnverty in Sri:aiika is mnialy rural, and there is a' Iiigh percentage of wnag employment. Thus, conditions of rural employmenit, sucli as real wage earnings, are.'te mainindicators. . The: indicators seleted vary acrss the four main groups of he. por,. identified by'primay. l source of income. The key income indicators for esW. group are: . * u ualfarmi laborers: real agruc't:ural wages. Wages in paddy agrculturN and in trce . crop agriculture (coconut, rubber, and tea) can be: used. Sel-emiployed agricultural rnmalTholders: real producer pn'c-eofpaddY. For sel f-employed'..'l workers, the inns o,f trade: for peasant agricu-lture will be more importaiit Lhan Wsuwaes . i*, e akriculnratWorkrs. real minimum '1'rari. workers arid 'I a' Estate wagesfor plantation .a.iorie!s and re4a vrageq age in rea produdion. Estate agriculturei is 'heavily regulal and minimum wiges Pre .stictly eiforced, so these wages should'reflect the incomes of the pbor 'plantation workers.. Urban unskilled workers.- rea: inskled wages in connrucrid'n.: 'oie uirba-i pco-r'aire';.. unskilled-workers in manufact'uring, construction,:and -srviceWs; . L3cause wage series a're.::'| ' ioi availajbe fbr all of thesc industies, the wage forN' rkiled co'nstructionwoiIder chn j,. .ue. ........... . . .> ... .:Since poor hoolds'.allocate, on av .'t, et oft eir.:o epniturson food,.a food'price index should be constructed to deflate.wage indices. lhis' idex is mnre rellctiv,e of the consuinption! pattes of the poor than the genel consumer. price index.. Allernavtiyelyy an:.. .uno'fflcialpricc index for the poor can be constructed to deflate wage data. Since poverty is. pnmarily,. rdra, the price and wage indices should refer to rural .ireas. : . ' : ,' , Anne Masiaad,' support their households. The very poorest people are likely to be those without any land-or without enough laud to meet their subsistence needs-and without secure or regular jobs or other income sources. Because such people tend to move in and out of the unorganized, casual, or "informal" labor market, the wage in this market can be taken as a barometer of their incomes.5 Where there are barriers to labor mobility, or where there are seasonal or other cycles in the demand for labor, information on such wages should be location- and time-specific. Pertinent wage data from the informal sectors are rarely available from the official system. Given the nonmaruket nature and the rigidities of unionized, official, or minimum wages, data relating to them, which may be the only data available, are not good substitutes. S. In mou couitria, cetain 'formal wtor wages, such M the daily consuction wage, has the nme muaningg featus The md question my be the cxtent of job-aioni and dualism in the releant hmaet-whethe hat wage is tuly availble to the maginal work. 24 They do not carry the same information about the employment or earnings opportunities of the poor. Where data on market wages are not available, simple wage surveys may be required. Where labor remuneration other than cash is involved, such surveys typically require placing a cash value on payments-in-kind or other arrangements.' * Lower Income Consumer Price Index. Nominal income indicators should be deflated by a price index that reflects the consumption patterns of the poor (usually a subset of the CPI basket, more heavily weighted toward food and fuel). If no such index is available, the regional or national food price index is a second-best, and the CPI, a third-best. 19. Social Indicators. While many social indicators are country averages, they do provide information about the poor. This is because the nonpoor usually have access to social services before the poor do. If the percentage of nonpoor in the population is less than the percentage of the population with access to social services, some of the poor are probably being reached. At this point, most of the movement in the indicator will reflect changes in the living standards of the poor.7 For example, primary school enrollment ratios are generally higher than the percentage of the nonpoor population, whereas secondary school enrollment ratios are lower. Thus movements in the former are more likely to reflect changes for the poor, but movements in the latter will generally reflect changes for the nonpoor. * GDP Share on Social Sector Public Expenditures. Social sector expenditures, broken down to show expenditures on services used by the poor, also can be important poverty indicators. This is because there is an overall positive relationship between levels of social indicators and social sector expenditure shares.' Although adequate spending on social services is a prerequisite to improving social indicators in many countries, it is not a necessary or sufficient condition. The efficiency of social spending allocation and the institutional framework in which services are delivered are also important determinants of social outcomes. In countries where there is significant private provision of social services, this relationship can be further weakened. * Net Primary School Enrollment. Achievement indicators such as literacy or completion rates are often preferred but they reflect current educational activities only with significant lags. Enrollment rates are available much sooner. They show the proportion of the relevant age cohort attending primary school, when corrected for repeaters and overage students. But problems of attendance, distribution, and the quality of schooling may not be picked up by this indicator. It should be supplemented, where possible, by information on student-teacher ratios, drop-out rates, number of students per school, and public expenditure levels and trends for the pertinent grades and locations. Gender and regional differenc;s should be explicitly noted. Ministries of education and finance generally are the sources of such information, especially for spending data, but in some countries NGOs also m.y be .nportant.9 6. Sharopping angements present particular difficulties for racis of both crop and price variability. 7. It may miso reflet better satistical measurneent trugh extended data collection. S. The cour&ies that have succeeded in prviding pnmary education for the poor are those that have commted resources to primaryceducation. similarly, health care expedturs agngal ly pcorlated with health indicator. It is widely recognzed t in a situation of excess demnd for, for example, health or educational eYices, there ii a strong tendeny for the poowat and moat powerless people to be excluded. As a consequence, epandiigtfe auppy and covesme of d services is likely, at the margin, to disproportionately reach such people (with con disproporonately excluding then). 9. UNESCO cmpil country da on educational expenditure., enrollment, and selected literacy eaimtes as secondary sources. UNDP esimates mean years of schooling, using UNESCO cnrolmnt data. 25 20. children in Development. Children's health and nutritional status also is a key poverty indicator. Three indicators are often useful as "leading indicw ors." The underfive mortality rate is viewed by UNICEF and others as the most complete indicator of changes in children's health status. Because the target population changes from year to year, immunization coverage can change significantly if programs are not effectively maintained for whatever reasons. And malnutrition, especially among the most vulnerable family members,'0 is generally a bottom-line indicator of family welfare. Imnmunization and nutritional surveys (the latter often location-specific) are conducted in some countries with international support." These surveys can capture short-run variations in the welfare of the poor arising from budgetary problems, policy, or adverse economic events. * Underfive Mortality Rate. This is widely viewed as the best indicator of changes in health status. It is more sensitive to hort-run economic and climatic variations than is life expectancy. It gives a broad picture of the health of children. It is not susceptible to the cultural biases, such as the age of weaning, that affect the infant mortality rate. However, there is a problem: Extrapolations and interpolations are commonly used to fill gaps in the data, compensating for delays or unavailability, so that the critical rate-of-change information is lost.12 Supplementing underfive mortality rate (U5MR) information with immunization and nutritional data can help provide explanations for the figures." * Immunizion. These data report the percentage of children immunized by 12 months of age and are an essential component of primary health care. Because the cohort of children to be immunized turns over every year, trends in immunization coverage are a good proxy for tracking short-run changes in access to health services."' * Malnutrition. This is defined as the percentage of children, usually one through four years old, of less than two standard deviations of the reference median WHO standards. Inadequate 10. This issue reflects findings from some countries of inequitable distributions of consumption goods and assets within households, such Ihat straight per caDita average consumption may overcmphasize the zea living standards of some household members (usually women and chi drn). It also raises questions about the quality of the nutrition data, which in some instneus relies on estimted 'data" rather than observations (sce Box 8.4). 11. Information provided by certain NGOs and other agencics, such as UN[CEF, can be extremely useful in that these institutions have often focused on mattCrs relating to the poorest and most vulneable groups. Such agencies frequently carry out spo surveys to identify specific needs that they may be planning to address. In Chad, for example, Medicines sans Frontieres survyed the nutritional status of a c groups badly hit by drought, and OXFAM also has sponsored such surveys. Relevant informnation on the situation of vrulnesle grups, particulady on women and children, is genemlly available from the UNICEF reposts entitled "Situation Analysis: Women and Children" for each country in which that agency operates. 12. A useful source for underfive mortality is Hill and Pebley (1988). They carefully clean the UN data base by excluding figu not based on actual obscrvationD They also include additional data derived from the Demographic Health Survys. The =njftje data with many incorplete series, covers 67 countries. The UN data set coves msany more countries, but trcnds indtihisata olin movc mechanically with time, reflecting the statistical models used to genermt a number of them. 13. Other paticularly impont health data for poorer people relate to the performance and maintenance of primary and peventive services, particularly i; the rural aras. Aggrgate expenditure, for example, is typically dominated by more sophisticated curative services that may be relatively insccessible to tCe poor. Hcalth center resources-staff, meodications, and so on, and resources directed toward the maintenance of public health are likely to be mnor pertinent. 14. Immuizadion dat asir typically collected by ministries of health in each countyv, ofen supported and compiled by WHO and UNICEF. District-leveUldata gencrullv ae gathered monthly or quarterly and forwarded to the central government, which compiles the data annually. WhO Expanded Immunuization Prgram began in 1974 and immunization coverage has increased dramatically since then. Thc.program hs promoted the dcv=flopmet of routine mnonitoring to provide information on inununization coverage, disease incidence, and vaccine qualiy. Between 1977 and 1983, more than 500 surveys vwre carried out to esima immunization coverag. WHO has funded a number of program reviews, which include an evaduation of immunization coverage surveys. They have also sponsored wesearch on the development of iroved survey techniques. Data from such immunization surveys are likely to be sensitive to the admiisratve and mri capabilities of the health systems in a count~y, and to budgetary problems thUt may affect those systems. Progrss achieved in different regions emphasizes that rapid increases in immunization coverage are mot easily obtained where the health infastmeture is already developed. According to WHO, the management skills neess for effective inmuuniation services also help in managing other aspects of more comprehensive health programs. This implies that other aspects of a broader primary health care system cn be monitored tough the data on immunization coverage. 26 weight-for-age is evidence of wasting, a symptom of undernutrition in the system. This indicator is most useful when used to measure trends in the population and not the level of malnutrition in the country. These data are sensitive in the short-run to economic and policy changes and thus are useful for tracking immediate concerns of the poor.'5 Data on children relative to height and weight norms offer evidence on whether observed malnutrition is the result of transitory (wasting) or chronic deprivation (stunting). 21. Women in Development. Because of the critical role women play in the survival strategies of poor families, their status in society and access to services are important indicators of family well-being. Priority indicators include: * FemalefMale Life Expectancy at Birth. This ratio tends to be a good summary measure of women's status in society. Normally women outlive men. In high-income countries, women live an average of six years longer than men. In low-income countries, they live only two years longer.16 Thus, the indicator needs to be viewed against appropriate norms. • Total FertGily Rate. This represents the number of children a woman would bear if she were to live to the end of her childbearing years and bear children at each age in accordance with prevailing age-specific fertility rates. Although there is a correlation between fertility and poverty across households within a country, and the profile includes fertility characteristics of the poor, here it is meant to capture inter-country differences. So the aggregate rate is used. * Maternal Mortality. Among poor vomen, the most frequent cause of death is unattended childbirth. The maternal mortality rate is an indicator of poor women's access to basic health services. Although not included in the table, female literacy should also be monitored where data are available. Adult literacy is associated with positive social, economic, and personal effects. Women's literacy is directly associated with welfare benefits, including better child nutrition, higher immunization rates for children, and higher primary school attendance rates. 15. Nuition dat ar collected by national anc, often with technical and other support from UN agencis. Data on children's nutional status are gee g cfrom heal centen or clinics; these data, however, arc often sbject to changing slction bias over t me. iTere i the additional concern that the res of site-spcific nabtion suyw my not bei rulble. Other data sources are xpeat ss of the population or cular subpopulations, ora blend of hakh-system aata and survy data. The Administative Committee on Coordination-ubCommtte on Nutrition woiking gpup has also initiated an ineagency pmgram (FAO, WHO, and UNICEF) to strengthen food and nutrition surveillance in a range of developing countries and this has, mn a nunber of cas, impmoved the quality and acoessibility of country data. 16. Note that in Bangldesh, Bhutan, and Nepal, lifc expectancy at birth is higher for males than for females. 27 Annotated Ribliogmphy Boateng, E. Oti, Kodwo Ewns, Ravi Kanbur, and Andrew McKay. "A Poverty Profile for Ghana 1987- 88.' World Bank SDA Worldng Paper 5, 1990. Describes the pattern of poverty in Ghana in terms of income distribution, expenditure patter, and basic social indicators, using the Ghana Living Standards Survey Data. Galloway, Rae. "Global Indicatrs of Nutritional Risk." World Bank PRE Worldng Paper 591, 1991. Summarizes available weight-for-age data for children in developing countries. Glewwe, Paul. 'Improving Data on Poverty in the Third World: The World Bank's Living Standrds Measurement Study.' World Bank PRE Working Paper 416, 1990. Descrbes bow the Living Standards Measurement Study (LSMS) began and how data are collected. Fuids that most of the poor are in rural areas, and that heads of households work in agricuture and have a low level of education. =. ""The Poor During Adjustment A Case Study of the Cote d'Ivoire." World Bank LSMS Woring Paper 47, 1990. Using LSMS data, assesses the effecs of stutura adjustment on the poor. Parallels the Peru study (see below.) "-.''The Distribution of Welfare in COte d'Ivoire in 1985. World Bank LSMS Workn Paper 29, 1988. Examines the distribution of welfare as measured by per capita consumption expenditres. Using LSMS data, it describes urban and rural poverty as well as household composition. --and Denns de Tray. "The Poor in Latin America during Adjustmt A Case Study of Peru.' World Bank LSMS Worldng Paper 56, 1990. Uses LSMS data to identify key socioeconomic groups and their production and consumption panems and assesses the impact of stabilization and supporing policies on their welfre. _ and Jacques van der Gaag. Confronting Poverty in Developing Counties: Definitions, Infomation and Policies." World Bank LSMS Worling Paper 48, 1988. Examines commonly used definitions of poverty. Proposes a definition based on welfare economics and contra it with other definitions commonly used in empirical studies. Using household dta from COte d'Ivoire, it finds that different definitions identify different people as poor. Suggests policies to reduce poverty concentrating on agricultural prices, primary education, low-wage employment, and health. Kakwani, Nanatk "Poverty and Economic Growth: With Application to COte d'Ivoire." World Bank LSMS Working Paper 63, 1990. Explores the relationship between economic growth and poverty and develops a methodology for separating the effects of changes in average income and income inequality on poverty. Addresses the issue of poverty within subgroups, and examines the li between adjustnent policies and poverty and tbe most efficient way of allocating expenditmes for poverty alleviation. Kanbur, Ravi. "Poverty and the Social Dimensions of Strucl Adjustment in Cote d'Ivoire." World Bank SDA Working Paper 2, 1990. Presents a conceptual framework for exanming ffie distbutional effects of adjustment programs. Who are likly to be the losers? Are they already in poverty? If so, how can the adjustment procems be manged to protect them? Addresses these questions for COte d'hoire. Concludes that redistribution away from export croppers to the average Ivoirian wil tend to 28 increase national poverty; policies to effect a general increase in the price of tradable goods relative to nontradable goods wilt benefit export croppers who are poorer than average, but they will also benefit formal private sector households who are richer than average; government subsidized pubiic housing does not benefit the poor; and the poor suffer from a lack of basic amenities, so govemment projects to provide these should be encouraged. Lipton, Michael. `The Poor and the Poorest: Some Interim Findings." World Bank Discussion Paper 25, 1988. Summaizes findings of four worldng papers dealing with nutrition; the control of and returns to labor, land, and physical and human capital; and demography issues. Finds that sharp differences exist between the poor and the ultra-poor. This does not prove that policies aimed at raising productivity among the poor do not help the ultra-poor, but suggests that the ultra-poor may require different policies, in particular "calories and health first," if their productivity is to rise. Maasland, Anne. "The Identification and Measurement of Appropriate Indicators of Poverty." Background Paper for Asristance Strategies to Reduce Poverty, 1990. (This is an internal document with restricted circulation.) Elaborates the approach to data collection and monitoring developed in Assistance Strategies to Reduce Poverty, using country examples. Ravallion, Martin. 'Poverty Comparisons: A Guide to Concepts and Methods". World Bank LSMS Working Paper 88, 1992. Surveys issues that need to be considered in answering quesdons such as: How should living standards be assessed? Is a household survey necessary, and it is a reliable guide? Where should the poverty line be drawn, and does the choice matter? What poverty measure should be used in aggregatng data on individual living standards? Discsses various applications in poverty assesment and policy evaluation, and the tools of analysis that can facilitate poverty comparisons, recognizing the uncertainties involved. Makes recommendations for future applied work - and Dominique van de Walle. 'The Impact on Poverty of Food Pricing Reforms: A Welfare Analysis for Indonesia." Joumal of Policy Modeling. 1991. Estimates the effect on poverty of a change in the administered price of a staple good. Incorporates behavioral demh ad responses by households to changes in food prices and incomes. - and Monil;a Huppi. "Measuring Changes in Poverty: A Methodological Case Study of Indonesia During an Adjustment Period." The World Bank Economic Review, 1991. Outlines two techniques to analyze dhe effects of policy changes on the poor: stochastic dominance conditions, which can facilitate a robust poverty raning of distnbutions of living standards, and a decomposable poverty index which allows measred changes in aggregate poverty to be disaggregated into their vrous components, such as the changes among population subgroups, and growth and redistibutive components. Illustrates these approaches using household survey data from Indonesia before and after extrna shocks and the subsequent stuural adjustment program in the mid1980s. Finds that favorable initial conditions and a pro-poor pattern of growth enabled Indonesia to inaintain its momentum in poverty alleviation during te period. United Nations. Update on the Nutrition Siaton: Recent Trends in Nutriion in 33 Countries. ACCtSCN, 1989. Describes trends in nutrition in a counetry-by-country approach using selected indicators. Concludes that nutrition does respond, negadvely or positively, both when economic, food, and/or health conditions detenorate; and when measur are sccssuly taken to improve these conditons. van der Gaag, Jacques, Elene Makonnen, and Pierre Englebert. "Trends in Social Indicators and Social Sector Fnancing" World Bank PRE Working Paper 662, 1991. Examin whehr worldwide increases in per capita GDP over the last three decades have resulted in better quality of life in developing countries as measured by evolution in social indicators ealth, education, and nutition), private consumption, and govermnent expenditure on the social sectors. Concludes thathealth indicators 29 showed sable imprvnts in all regions, but Africa's rates were slowest; ofal athe social indicators, education registered the greatest g but net enrollment ratios actually decreased in the 1980s; while developing nations as a group enjoyed imprved indices of undernutition 196545, tde degree of undemutrition worsened in more ban one-third of the Sub-alaran African countries; Africa and Latin Ameica and the Caribbean saw decins in average per capita private consumption durin die 1980s; and the share of tWal governent expenditure on health remained stable in all regions, but tat for educaion declined in Africa, South Asia, and Latin America and the Caribbean. World Bank. Malawi: Growth Through Poverty Reduction. Report 8140-MAI, March 1990. (This is an intenal document with restricted circuadon.) Constructs a poverty profile from a series of small surveys and idendfies six major factors exini why people are poor, namely, limited employment opporunitdes, low physical producivity of labor and land, low levels of human capital, limited access to and and economic rents, minimal income transfers, and rapid population growth. Social Indwctors of Development. 1990. Synthesizes social data from UN agencies and country sources. Chapter 2 Policy Framework for Poverty Reduction WDR 1990 demonstrated that brad-bsed growh, which maks we of the abundant labor of developing countries, causes poverty to decline more rWidly tan growth based on distortedproduct and faormanku. It sowedtatthepownty-reduig ctofgrowh caolvmamiedby a dces minimize resrctions on th access of the poor to labor, product, and facor makts. The WDR outlded a growth strategy for poverty redacdon emphasizing policies designed to create a klv playig fiUe throughout the economy. In ths strateg, prices and wages woudM reflect underlying scarcities, and invesentswould be aproprately geared to the economy's labor intensity. Efficent, labor-uing growth would ensue. Meanwhile, public expenditures and instiutions wouldprovide complementary goods and ser'ces, especialy those that enhance the human capital of the poor. The would increase the productvi of labor, and in turn the scope for market-deang increases in real wages. Public nstions would also provide a safety net. Thss, of course, is a general straegy. It applies to all cownries. It becomes specific and action-orented when individl couiy characterstics, drawnfrom thepovery profie and an assessment of the key constraints facing the poor, are considered In facilitatng at assessment, tis chapter considers the vanous insentsfor affecting the inceniveframewrk and discusses ways of anlyzing their imnact. The dcapter takes the countrypovertyprofe as apoint ofdeparture. But the linkages are two-way: The analyticframework developed in this chapter, as it applies to dierent coutres, influences the choice of variables to be induded in the county profile. Nor can the linkages with Chapter 3's analysis of public expenditures be neglected in formudating an overall assessment of the povery implications of the policy framework. 33 Chapter 2. Policy Framework for Poverty Reduction Introduction 1. The policy review produc recommendations for county policymakers about shifts in approach that can promote poverty reducdon in an economically efficient and financially sustinable way. The review provides the basis-along with the povery profile (Chapter 1) and the aalysis of public spending and institutions (Chapter 3)-for the poverty assessment and the Bank country assistance strategy (Chapters 4-5). It also contributes to the design of adjustment operations (Chapter 6). Because the relevant policies trandate into a full menu of issues, priorities must be set for the review. These should be denxmined in collabocadon with country officials. The country's special problems, and the types of changes that are practicable, will clearly influence the scope of the revierw. 2. This chapter bas three sections. The fist overviews the policy issues. The second considers microeconoiic and macroeconomic policies affecting growth and the demand for labor. The third considers human capital, financial sector, land, and environmental policies. The chapter emphasizes the need to (a) set priorities for the issues to be addressed, (b) acquire ihe facts about the policy instruments being used, (c) analyze how the policy instuments affect key parameters, (d) relate these to the country poverty profile, and (e) quanify the likely effect of possible changes in policy instruments on the poor. Box 2.1 contains a checklist for evaluating each policy. Its simplicity reflects the need for a disciplined and highly focused approach to a complex topic. BOX 2.1: Poveny Policy Analysis Chewclt In analyzingffle impact-ofpolicy on poverty, the following questions are relevant: i What is the official poli4yJand jis ratiiale? - What isahe specific InSiWJmeWU of policy?l * Taking ;to account the reactions of all market actors,I what does the policy actuanlly:do?u:7 / What are the efficiency and growh imiilications-qualitativc and quantitative? * / What are the distributional and poverty implications-qualitative and quantitative? Whit are the poli&a i ind otier: constnaints on shifting die focus of policy toward -poverty reduction? 34 L Menu of Policy Eisues 3. A cental concern of Bank economic work is the effect of the incentive framework on the demand for investment and labor. From the poverty reducfion perspective, the concern is the effectiveness of economic management in (a) promotng growth that makes efficient use of labor, and (b) enabling the poor to respond to opportunities to improve their well-being. Important issues are the impact of macroeconomic policy on unemployment and the distrbution of income between urban and mral househDlds-and between nontradeable and tradeable sectors-in relation to the poverty profile. Other issues are the incidence of direct and indirect taes, which may be regressive, and the efficiency of labor, capital, and land markets and their impact on the poor's employment and other income-earing opportunities. Special attention is focused on regulatory barriers in labor markets that may dif&frentially affect women and the impact of land ownership and tency arrangements on the poor. In the context of adjustment, reform programs move economes in a dicion consistent with poverty reduction over the medium to long term. But efforts to stabilize and restructure the economy can have short-term costs. Analysis of these issues-and their distributional impact-provides a basis for designing compensatory programs. 4. The menu of policies to be considered in the review, therefore, includes the following: Polcis Affectdng Economic Gnnwula and the Dmandfor Labor • Incentive Poces. Relative prices affect the demand for labor and prospects for poverty reduction through employment. Tariffs, excise taxes, subsidies, price controls, and quantitative restictions all have well-known efficiency implications. They affect the size of the social pie. They abo affect relaive prices and wages and the dibution of income. The analysis investigates the extent to which trade, taxadon, andlor pricing policies introduce biases against the demand for unsidlled labor; distort relative prices in a way that constrains efficient employment growth and raise dte market prices of goods consumed primarily by the poor. * Regulatory Policies. Market-inhibiting policies often are rationalizd by the objective of protectng the poor. But labor market regulations, minimum wage legislation, and job security regulations can raise the cost of labor, and thus reduce employment, especialiy in die formal sector. Legal or regulatory constait may prevent some groups (women, for example) from competing for jobs. Industri reguladons can raise costs disproportionately to small firms. * Macroeconomic Policies. Sound macroeconomic policies are a prerequisite for sustined growth and poverty reduction. But beyond this, macroeconomic policies have specific distributional effects. What is the distribudonal impact of monetary and fiscal policy on the poor's real wages and employment? What are the distributional implications of variations in aggregate spending power? Polis Affecting the Accwnrdation and Sinil of Assets * Policiesfor Human CapiL The poor wil need access to investments in human capital to enable them to take advantage of economic opportunides and increase their earnings. Establishing the policy framework for such investments goes beyond public expenditures. Do kw and regu Rlons provide an adequate framework fbr the poor to obtain basic education, health, and family planning services? Are national priorites for ihe social sectors appropriate for improving the soca indicators of the poor? 35 Policies Goveming Financial C4pital, Land, and the Envrounment. Access to financial and land markets is critical fbr increasing the poor's ability tD increase earning capacity. What does the regulatory framework look like? Are there idenBfiable costraints that lock out the poor? How do environmetal affect poverty? How does poverty affect the environment? 5. Evaluating the relative importance of changing different policies depends on the ability to measure their comparative effects. This is typically not straightforward. Nevertheless, where possible, quantifying is desirable-to convey to polimaks the magnitude of the costs or benefits being discussed. Without quantification, considerably more judgment will be needed to evaluate alternative policies. II. Policies Affecting Growth and the Demand for Labor 6. WDR 1990 established the importance of sustined growth for poverty reduction, and the importance of sound macroeconomic policy for growth. Even so, policy distortions may affect growth differendy from the way they affect poverty. The poor may face bariers to entry caused by existng institional structues or reguladons; inadequate informadon or discrimination may limit the poor's options. Aldtough the inpact on aggregate growth performance of some of these distortions may not be substantial, they may result in high costs for the poor. In establishing a specific agenda for analysis, product and labor markets are a good place to start Do tariffs distort prices and wages in a way that hurts the poor? Are the prices of the products the poor produce depressed because of trade policy? Do price controls help or hurt the pooc? The labor market bears special attention. Are there regulatory constrains hat prevent would-be workers from competing for and/or getfing jobs? Is there substantial unemployment or underemployment? Is an overvalued exchange rate costining export production and depressing the demand for labor? Where possible, the analysis shDod identify the actual costs of the distortions and suggest ways to avoid or reduce them. A. Incentive Policies 7. Policies that direcdy affect relative prices of products and factors involve trade, taxation, and pricing. Through their influence on relative prices these policies affect the pattern of growth, and the prospects for effective poverty reducdon. The objective of a poverty-orented analysis of the incentive framework is to identify policy biases against factors and products sold by the poor. 1. Tariffs and Trade Restrictions S. The theory of international trade provides a framework for analyzing the distibutional impact of trade policies.1 Under this approach, the "abundant" factor of production benefits from trade, and loses from restrictions to trade. Restictive trade policies raise the relative price of import substitutes and returns to factors used intensively in the production of import substitutes; conversely, they reduce reatums to factors used intensively in export production. In most poor countries, unskilled labor is the abundant factor, while capital, both physical and human, is scarce. Accordingly, trade tends to be poverty-reducing, and restictions to trade tend to be poverty-promoting. While the theory provides a useful starting point for analyzing country data, it needs to be applied carefully-as crucial assumptions that underlie the analysis do not always hold. (See, for example, Box 2.2.) Indeed, a key issue is identifying the "scarce" vs. the abundant" factor. For commodity producing countries, for example, the "abundan factor-tat is, relative to domestic demand-may be special soil and climatic factors. 1. See Wolfgang F. Solper and Paul A. Samuclson, "Prouction and Rcal Wages.," in Rewew of Ecoadc Stidies, 1941. 36 BOX 2.2: Comparative Advantage and Povefly | I ..I : : . . :-.. .: :. . . :. :.s- - . ...... ; Sidiideisiof'intt.ru.atona tradeioa n early thnt liberalzation offoreign rriincreasss income of rherIu ifonfactror relatively As iive dJexpor sector and-, con& qa i4adintag c, n 'Mst ibatn inrthe ceonomy elp :countris, the implicaton of'ibe Stolper-Samuelsooutbooicm Lis dit 'openni:s to forign traide favors'. i:i Cowplhcuitin ft j': th&, -ire ta-n 0tatt J returiA, to.A' ,'io'ar:o've'r:'-. offal.,' 0 plns "' to ie ' fcory.a atha-,in :cWo-fit 'to. 1hq.- '' assaitions,-th arm mon. than two factors o'f prodlction, notably'human'slgis idid naztal resources. that ftors are not filly:cmployed'and are nflly- mobile acmss sactors;nd that'there:. ,,c arc ;lrBimpe ns. A 'pady'aaalylical approach doki not produce unambiguous answers.. But little empirical work 1iws been done to asess the impact on incomre distribution bf restriints; ' , on trade in devdloping countries. Sclhflt. cstimated the functional relationship betS& tbelevels of cffcctive';protccti6n ,jivdi to. iidusiries' iii Cotb1ibiia`nd the 'iniowites of" anic' eii es and male 'einiiloyen; H&oizuxnluddl thdt the itructure of iffectivc proteciion in Colombia in l970i k incrcased th.'inefdity:6 f'personal.income'distiibution.and'hat'protiion to manutacturing increasee letoj-r :-ad'milojce ifiu m ianutiactuiig, but incrna&ed employer income more.- Moe reeutly; an: ,. ... .. , . . ,, , ... ., ,, . ... . .. . . . : .. ......% OiECD SiudyF of six dvcIo g conimtuics wncluded that (a)' te devalopment.of expo p bysmall- and mcdium'-sized:fuirms niluce.q:ubSiitenci6 fanminig; 'wliich i; uslually associatdi wihpovety; (b)tihe i'' ind trie a *rWi- u ymplyoe 'urban 'an4d SU s rural labor, .and*(6) protedonism iucrae. inconMe inequality by its,bias tdvnwrd atpi d-intcnriv ipu ttution iiidtstric.,AthesiLmvaiuntuj;c6iis position given lo importers, andl the unofficial earnings dfti&a civil servants r46sponiblc for granting import liknse:s'or foriign currency where tlhere are exchinj',"-"ntroisY .This is'a topiq..wherz more iriearch is cla rly warrintd.'.- ::: "= : - * : .s>>isoRe .more ir . .. .. . . . . . . ........................ . ggSsi RefikErzaon a. T. Phul Schultz . "Efetive Protection and Ith Diistribulion of Pcrsonal Income by Sector in Coloinml,k`.in AnnKruegcr 5pd.); lrzkandE qyxloysnietsrlDeveloplngComrries: Facior Supplysand Subzsrkidn. aCicngu: UniWversity of Cbca1o b: F..DourguiXawu :mdC.?.f Mrring. u-eg Trad adricowDismibadew, OF.CD Development Cint eStudies, Paris, 1959. . 2.: 5 1'To chic.Ii& C. Whlei& tUb uaeh6o&vy pwyutd givc practical reaults for Iicy p itpos, in iSa 'conann aszs.ce cc on t.i. pushible impaLtoarindirect, paenal equflihriuueflects, is tvouldbe highly desirhicto corplcmnnttkc study with coiputic .ee uilihriurnsiu:iimlnuions. See, fur etauple. F. 13ourg.ui gun WN. Brenson, mmiii. dec Mdo. ?Adiaintmatandl Income 1tribution: "A Micro-Macica Modlk lo Silew llAnalysis. JournnlalfDvelopment Ecoomlics, 12 9. Customs duties may also involve a large direct tax on the poor, if levied on an important good in their consumption baskeL The poverty profile should indicate the broad characteristcs of the consumption and employment of the poor in relation to the export-, import-ompeting, and nontradables sectors, so the individual country assessment can be made. 2. Specific Tax 10. Fiscal policies can contrbute to broad-based growth through efforts to broaden the tax base and lower average tax rates across the economy. The tax structure should be reviewed for its efficiency and eqtuty implications. Distortional trade taxes can be reviewed against alternative consumption-based taxes. In particular, a value-added tax tends to be preferable to a cascading tamnover or manufacturers' sales tax because it is less distortional.? The poor can be protected from the regressive impact of a VAT by exemptions for consumpfton items important to the poor. 2. Its also more easiy adminisered tha an 'optima t" See Lessns of Tc Refor, 1991. 37 3 Price Controls 11. Countries may rely on price controls for some goods, justified by the need to keep down the cost of living for the poor. However, even if die controls are backed by producer subsidies-which are Ikemly to create fiscal problems-excess demand is likely to result as the suidized product is increasingly diverted to other uses, including illegal exports. A parallel market will develop in the controlled product. The street price will rise above the unconstrained equilibrium price, as producers will need to be compensated for the risk of penalties from selling at above-the-controlled price (Box 2.3). The quesdons to be analyzed are: How do th poor fare in obtaining goods and services subject to price controls? What price do they nay? Answering these questions will require survey work in the county. BOX 2.3: Pce Conrol .u- Price... ....... P .c ... . . . : Equilibrium PIL . Ni Contrdelkd Price 4. Agricultural Pricing 12. ln many developing countries, fth poor are farmers-smallholders or tenants of some sort, agricuturwal Laborers, or rural nonfarmn workers. Agricultural policies, accordingly, strogly color the poverty picture. One of the main policies that affect agricultura performance is taxaton. In quantitjing the net impact of taxation, it is important to include, direct and indirect taxe, including the impact of an overvaued exchange rate and trade policy. Beyond taxation, any nmwber of sector-specfic interventions can affect agricultural performance in general and, by extension, the rural poor. Thes include price intrvntions, such as export taxe and markftin restrictions. Price policies may be biased for or agains produc:tion of foodstuffs or export crops. Product pricing may favor large famers. Price distortions can be analyzed using a number of tools, rAnging firom simple comparsnsm of domestic and world prices, to calculation of effective rates of protecton and effective subsidy coefficients, to more complicated modeling. 38 The equity impact of pricing policies can be detennined by disaggregating the analysis by region, crop, and, if possible, fiirm size.3 B. The Regulatory Framework 13. Ihe ability of the poor to participate in gbrowth is influenced by the regulatory policies that affect the efficiency of markes. Although much legisladon and many regulations are developed to protect dte poor, these attempts often fail. Frequently, they make it more-not less-difficult for the poor to access opportunies, by replacing merit-based systems with influence-based systems. Becas the poor lack influence, they lose out. Thus, the impact of regulatory policies warants carefil analysis. 1. Wage and Employment Policies 14. Although well-intentioned, many labor market regulations may not benefit the poor. Minimum wage regulations are common across counties. When enforced, they raise the cost of labor to employers and therefore result in less employment and ewerjobs. They thus help some people-those whose pay is higher beause of the reguladons. But they hurt others-those who would be employed if employers were not constrained to pay at least the minimum wage. Data limitations often limit the scope of the analysis of labor market regulation to quantitative models, but in some cases, quantitative analysis is possible. (See, for example, Box 2.4.) BOX 2.4: Zimbabwe-nalyzing Minimu Wage Legislation A sudyu of the labor miarket in Zimbabwe cmploye c lonometriLc. aaIaS ot waget dletenrination:to evalutie the etThct of minimum wage legislation on eniploymcnt. Aftr evaluating the effects of wage policies on Zimbabwe since indepndence, the study uionc,hded that cirnint policv * rcstrmins wages ovimil; adthnugh snme .wge difTer6ntials 're atfected. The analysis of the claiticity 'f employment with respect to the real product wage shows tlhat, for agriculturc and for the whole formal sctor, the incrcasc in wages duo to mzinimum wage legislatidn.lbd to a decline in cmployment. The report concluiks thal existing policies toexpaind education and training are a more apprnpriate wny to. increacs cinpIoyment thain wav . pnlicies or job s&xuiity regulation. Peer Fallon * Die ALber Markt ina Z.mmlaabauh HiihIricIll Tremd. viwi nl Evluniumim or Reveat PotiLy," Worl Bank DRD Di"cunion. Paper 296. 1987.. 15. In the same way, gender-based regulations may discourage the employment of women. Man counties have protectve legislatfon and regulations 'bat limit the hours women can work and the kinds of work tey can do. The limiaions can backfire, however; and reduce women's attractiveness to employers, thus further decreasing their job opportunities and income. For example, minimum wage regulations, combined with legal or social pressures on employers t provide materity leave or other special treatment of women, make it more profitable for employers to hire men. 3. See also Chaptw 3, pargrphs 20-24, and Box 3.7. 39 2. Industrial Regulations 16. Complex controls and incentive regimes to remedy market failures may cause more problems than they cure. Such regulations require costly administrative bureaucracies. They impose on enterprises high transaction costs in dealing with the system, in the form of lime and uncertainty. Potential gains from successful lobbying for privilege divert attention from productive endeavors. Costs of circumventing the regulations are lowest for existing enterprises following long-standing routines. They are highest for new enterprises trying to do new things. 17. The Infomnal Sector. The informal sector has special relevance for poverty reduction policies. It tends to be more labor-intensive than the formal sector; it is often the entry point into the formal sector. Many small-scale enterpris survive at the margin, providing low-cost products to low-income clients. They face particular constraints. (See, for example, Box 2.5.) The per-unit output costs of complying with regulations governing product and workplace quality, business location, terms and conditions of employment, registration and licensing, and so on, are higher for small producers. At the same time, snall c:zzrprises are less able to take advantage of economies of scale in the use of certain essential infrastructure services, such as power, transport, and communications. Hence an effective policy toward the informal sector concentrates less on regulation and more on the provision of infrastructure services.! C. M naroeconoiic Policies 18. Interal and external balance is a prerequisite for sustainable long-term growth and poverty reduction. Fiscal, monetary, and excdhange rate policies therefore need to maintain conditions for sustinable growth by preventing the emergence of macroeconomic imbalances-by keeping domestic demand in line with available resources-and by adjusting quicldy to external shocks. Similarly, starting from a disequilibrium situation, financial policies to restore internal and external balance are a necessary precondition for a resumption of growth and poverty reduction. There are a munber of poWible sustainble macroeconomic equilibra. Broadly spealdng, they are characterized ty a stable or declining ratio of government debt to GNP.' In unsustainable situations, the debt-to-GNP ratio rises contmnally. 19. Within the set of sustainable macroecononiic outcomes, domestic financial policies also affect income distribution and poverty directly.6 There are two broad issues. One involves the labor market-particularly the impact of the stance of macroeconomic policy on the poor's wages and employment. The other is the impact of the underlying variations in government spending, taxes, and credit on the poor as consumers. The poverty profile-of whatever degree of sophistication-is the point of depure. This needs to be matched to macroeconomic policy choices using a conceptual model that summarizes the econowmy's workings. The model need not be formal. But it should have some foundation in the behavior of the labor market and its interaction with aggregate demand and the structure of production. Critical parameters are the degree of labor mobility across sectors and the flexibility of wages. WNith these parameters, and the poverty profile, the tradable/nontradable model can help in the analysis.? Such a model is used below to illustrate how the poor fare under different sustainable demand scenarios and, in unsustainable situations, how adjustment-and postponing adjustment-affects the poor. 4. See Urban Poliy and Ecoondo Denlpmast An Agda for the 1i9Ss. A Wodd Bank Policy Paper, 1991. S. See Stianey Fisher and Will'm Easterly, 'The Econmics of die Govenment Budget Conamintz," The World Bank Resach Observr, 1990. 6. See Omotundo Johnson and Joanna Salop. "Distrbutional Aspecs of Stabilization Programs iu Devdoping Counie," PW SW Papers, 1980. 7. Not 1 1 for amlzing tdic policies, the more useful distinction may be betwen exports and import subsdiue. See, eg., ppbgWs 8 and 9 'above. 40 BOX 2.5: Tanzania and Sn Lanka-Cswt its on Sml- and fediwn-Sized Enteqnises - yrar. _ . inflL.- - ... . * .; A.rownlt. puper' dnalyZed Ihe contsireints.o0. :an meilum-sied' entirprises (SML , in iSi L.inka ab T'azandt *7. hee.nnalyeis ui xp oo-nd iAnteniea; at curveys tn learn from SMFA the: operatiorxs andCexjlinsion;i(:lntwIaWmia wern conducted in threo subsectorn in each coutuj."-furnitire, co.nstructioin:,and horticulture in.Tanzania; and leather piodmcts; ceahii6s, aniid giiiei& eali6inkiion Sri lanic& One lubsector kesch couni-y-funiiure inTnnzania: and le.ather p in Sri.Lanka-WUiis irge.en tghia ipenqn iUiiwtive ianlysis. Ansilysis in the ¼' .:An initiul-of inutrviiews suggested .corLstrains in four hmudcatcgdris: (a) Inancing; (b) rmgulatiowt; (c) lechnical, niaWtilig, aid oilier noifiiuinia inuLus; i (d) coss.. ror etch dndusi, entrepreneurs WW 'aikd'lo rank the constraints oa scale which was tbdn used f6r,' cardinil measure- or'ike dilative.severity of rMb constrat. ' . ' : . t'£ong raWeontii'oll Isccms to 1rgeIs the." e60ing nnprice constraint on SMI:s in btxh. ...oeauhtrien, ihough with .t; siunifidmiany higlier abmolute .cor:i-n TmazaniL. RcgulatIoy clstrintilmts- changwilrin I.LL.s8litutLes,bumliCratiC procedures, lailxr re:iuliitio l policy !incertainty. lack of access. to inulustrial sitem-.were siijniflcantly nuirn hindiing to.Toarizaninn SMW; than to their Sri Lnkane. counter;NIrI., Cunstntintbi on lccess to nonlinlncinl inputis we ididv into phiysical illputsf;(QLa:kulr ikit sn.daierisil's, sixmirrts, wood, iand 4euipmont) ad JecSgicaI an4.mazkeLiij inputs (scarcity of :un:lsmrx~te wikls o lack ctmliikal ak4ls, milnot enough domestic byers). 'fue WtfIflts tended to :i u-ect6r"ip6ifioe; Cost counstrnints-codst offinntioe, moterials,..and equipment-also scOred. re:latively hith lor.hboth indulstik hin: this problem~ io not interpqreted s a government -r market hipledisciiok.. : . . .. ;. :Ihaclrhi Deeloping . . . -. ;. . ..; iBr iin te mist ; ; .. ' ' , : L Comparative Static Analysis 20. This section begins with the set of sustainable macroeconomic outcomes and looks at how the poor fare with different levels of domestic demand. It also begins with the basic proposition that the poor will gain when the price of the goods, assets, and factors of producdon that they supply rise relative to the prices of the goods, assets, and factrs of production that they demand. The issue is-abstracting from variations in the level of employment-do the poor gain from a structure of demand (and output) that is externally- oriented, or fiom a structure of demand (and output) that is domestcally-oriented? In other words, are tbe poor producig exports and import sbstitutes (tradables)? Or are they producing services (nontradables)? Using the approach laid out in Box 2.6, the poor tend so benefit from a more expansionary stance of policy associated with greater domestic absorption if they are in 1ie nontradable sector. (The explanation is straightforward-higher domestic absorption increases demand for nontradables and raises their prices.) Conversely, if the poor are in the tradable sector, they benefit from a more conservative financial policy stance associated with less domestic absorption! Exactly how poor households are aflfcted by macroeconomic policies thus depends on their roles as producers and/or consumers of tradables. These are questions for the poverty profile. . Ir the poor as unled labores, - te tmtabundant factor of productio and predominate in the export sctr (in line with pamgrb ph. tbq7 wig td to gain fom a4juantL 41 BOX 2.6: How Does the Stance of Macroeconomic Policy Affed the Poor? 'low poor households arc affected by m.acrocconomic policies depends to a large extent on . how policies affect die prices of thie good, asseLs and iactorsof producton that they supply. What do. ia e poor supply? This is a quesiion forethe poverty profile. With tat knowledge,. one can tse : 'the'standard lrablclonndable model of the impact of macroeconomic policy on the econony to | analyze the impact of macroeconomic policy on the poor.. . .. .. le tt-ad;&bie/nontricdibldw ddel stirtsoniihe prcnse tat domestic prices of tradable goods are deterziiiiedi±ssentially by world price.s (hru0g dcichange rate aid as filtred through domnesic commdrcial policic.s), while those of nbrntradables are dte'rmin:d primarily by domestic supply and daknnd.. Fiscal and monctiry policies by determining prices of nontradables, thus determine relative p-ries of tradabies aand nontradableis - . . Alternative labor rnarket assumptions are jpossihic, but the mast relevant is when labor is 'nor .pltfecily mobile." . Unider this: assumption, waages. do. not equalize across sectors-or at least equalization takes longer:in response to a shift in demand. Higher domestic 'demarid translates into. ::aghIi. prices and nomiiial wages in dte nontadable sector.-:This will raise ie: cost of living, and :rduliie real wages in the:tradahle seclor. AitenMad`veIy jff iominal Wags ri.se: produccrs will not bi .abl pass on the resulting cost increases to forcign buycr,s. Intk2ad, jii&J6ers. will shed workers. ,j>:h either cbk;,:wokert 1in:the tradable secror tw;cfrom d c expanawn. ii . T g .This dicds tohe tllowin t resills of thc labor uidrkneffiz oxpaasionary policies:' i . To. die cxtent diail:oor: households are cngaged in production Or tradLibecs-as,. for .:example, in smaliholder agricultnre-they will tc.ad to be jud by expansionary.domrnstic policies. ' . .If the poor are clustered ia nontradables-for example, in services orcoistmciion-.they beneft froin expanmsionary domcsiic pnlicies.. ..The convihrseholds for contraction, that is adjustmenit. Ihe poor i a group will ain ifdthey. am,prodtcers,of uradables andlo'se if ihey are prodicers of,.nontradabl6cs a. If labor is '.perfwccy. mobile acros6 6mcrs; wages rend to eaialize across the economy and emerging unemployment or. unaderemiployiaeneLtends to evaporate quickly. :Larger domestic demiland means bigher prices of noiuirdablea. (And vice- Vers.). I also meaws. Iighier iaominal wingeg in both monurs. The poor are belier ofT ir tiey huy.4tradcl gooxld; tbey re worse off i they buy nontradables. Unde'r Llcsc assurmpLioris labor mobility the poor's consuimption basket is decisivc il sncklerintndiny Ikiw uIvDrly VfiriCi Wit: ilie hanflc of pcolicy. :Whmre die poor sia cniplayyd is 'irrelevimt in detcrmining the dintributional impact of different levels of aggregate demazid., 2. The Impact of Adjustment 21. Adjustment typically involves cutbacks in public spending and tightening of credit poicies tD bring domestic absorption into line with available resources, and exchange rat depreciation to raise the price of foreign exchange. Over time, the poor will gain as sustainable growth resumes. But adjustment polices also affect the poor more immediately, througb their impact on the poor's wages and employment; on the prices of the products the poor purchase; and on public expenditures on social services (and other public exptures) that benefit the poor. The analysis requr a carefi. assessment-based on the povertY profile-of 1he activities in which the poor are engaged, what they are consuming, and how the prices of relevant products change with the exchange rate or other events. It also has to be liriked to labor market conditions and to changes in public expenditures. Even if the analysis shows that the poor as a group benefit from adjustment, some poor people will be hurt by adjustment policies and their short-run effects. They will need protection from declines in consumpfion and social services. Hence a safety net is essendal. (See Chapter 6, paragraphs 7 and 8.) 42 22. The Effea on rte Labor Maiket of Contraction. The effect of adjustnent on the poor via the labor market depends on the extent of integration of ihe labor market and bow flexible wages are. As domestic demand contracts, demand for lbor in the nontradable sector oontracts pari passu. Unemployment will emerge. Over time, resources will flow from the nontradables sector to the tadables sector. Intervening wage and price adjustments may mean tat less real resources actually need to shift. Alternatively, in the face of nominal rigidities in wages and prices, currency depreciadon is a useful complement to restraint of demand; it not only raises the domestic price of exports and import substitutes, thxeby providing incentives for the ewxansion of output in these sectors, but also, by reducing the relative price of nontradables and domestic factors of producion, induces a shift of domestic demand toward these goods and factors.' However, devaluaton cannot circumvent real-wage rigidities. Nor can devaluation-or perfect wage and price flexibility-filly subsdtute t'r the real movement of factors of production in response to a change in the oDmposition of demand. And the shift from nontradables to exportables will involve dislocations that are a real cost. 23. he Distributional Effects ofAdjusmnt-Relaed Spending and Credit Cutbackl. These are relatively easy to trace when the measr are directed at particular groups or activities. The impact of public sector etrnhens or restraint on government wages is straightforward. If spending on basic health and other social services is slashed, the poor suffer. But, adjustment policies can be designed to protect-and even promote-the interest of the poor. Expenditures on basic infrastructure and social programs can be protected, or even expanded. The equity and cost-effectiveness of social expenditures can be increased by curiling blanket food subsidy programs that leak to the nonpoor and by adopting a more targeted approach. Nevertheless, in some countries narrowly targeted programs have failed because they were unable to maintain broadbased political support 3. Adjustment Postponed 24. Sometimes countries postpone adjustment-despite a shock that makes previous consumption levels unsuainable-maintaining preshock paterns of spending instead of undertaling serious adjustment measures. Some countres may preciptate a crisis by increasing spending beyond susainable levels. Postponing adjustment may bring short-tlm benefits of increased consumption. But the future costs, peraps prolonged economic stagnation, may outweigh the short-term gains. (See, for example, Box 2.7.) Such a finding, of course, raises Ihe question of My pursue unusainble policies, a question which, in uan, introduces politcal economy coniderations and the distbutional impact of teb costs and benefits of the various policy options. The underlying issue is dte constituency for unsusinable policies versus the consdtuency for adjustment. In trn, this choice has two principal dimensions that are relevant for poverty analysis. First is the labor market question. Among producers, who benefits fom epansionary policies? Second is the public expenditure or credit-availability question. Among consumers, who beefits from qpwnuionary polcies? Because the poor's interests often do not figure as importandy as the interests of odher groups in determining policy, if unsustainable policies are being pursued, it is unwkely to be because the poor benefit. 25. Political Economy of the Labor MJset. In many countries, public sector workers are politically powerful. For them, policies that reward nontradables-expansionary policies- are advantageous. Such polices raise the value of public sector wages relative to prces for imports and exports. Moreover, 9. In nimny cointica, the export uetar is o culwu-based, and in teo terefore will tud wo p from adjustmet as toxchang rmte deprecaion ban apart demn. zut even though the agriclrad sector -ay gam, this wIl ake time. Mcanwhi, agricultural wages may reqiond slowly to rim in agriultal prices, and the rural poor may lose in the transition, to the at they ter czommoDn of Food products. Alternatively, although the urban poor may ose in the first-round effets of adjustment, the recovery of urban employment may be strong enough to outwcipgh real-wage-reducing effects of exchmge rate deprecation. Soe, for example. Martin Rall and Moniai7ihHP, IMeasurng Changes in Poverty: A Methodological e Study of JInoneusi During an MEjuaent Period," The Werld 7Drt Economc Reiw, 1991. 43 BOX 2.7: Brazi-7he Costs of Non-Adjustment : .: Following BrWals economnic macnthe 7 growth-dliiedshaly in the .1980s. A >. :debt service paymentstrose in the face of:rising foreign intbresti?ates, -the joveniment iuidallyteduibl spending and pursued light money policies, but did. not funIainentilly compress the size of the public sector. 'The democratic transition m dien-0 :of"tbi. debrbught res to restore spen ang to the 1970s lerel,hiuclh: weraccommodated.. Airoeeout the .1980s, Brmzil financed public consumption throtughincreased domestic debt (ith increasqi:gly higher real interest rates) and inflation, crowding outinrveshment w.hich coiild have fu"eled spplyiside growt.. .... .. Although Bzil jus tifiedmaintaining public consumption 1hroughout the .1980s as necessary: . to :protect the poor, the .poor. suffered mo.st. Tight. money and higher, interest rs bienefited Athb financially nimble' Depite an avenge annual increase in G.DP percapita of more than!l. percent f6rK : the'dccade.;as.a..wbolcR:th e of thepoorsti households stagnated.and their share of income: : declined. If, inAh stabilization of1.981-83- Brzii.:had?und&rake niao effecive fiscal adjustment, . :. allowing real interst rates btuwouldbaveen 15 percent higher. by 1985 and wages. w,would have7beeni75 perceothigherW.Aid Biazintoday would have the resourses .toads its s cprblesnsi lcudiug one of tihe lowet literay. nd.highest infnt moraity nt; .Insthead, .oa decade'of stl-ai -o.nplici&1left Brazil enterng the 199Ds.with an even moen difficult.stabihzton and ustmnt iproble . . . ...... Substantialpover ety in mp Braiin eco ic mirale o s mpmariy be. employmet adg r m3heendg frmal pvat tor. lnei 6 .inkages between the fom.al and informi2l sebtss :mantIet 'grot 'a the omid setrnsinly bee *e informal * ector incomes- as well In uthe 1980s xpnvate and forma s,ectrgrowt stagnated Theilessn is ckarn Pove diion and eonomic gotcn g band -hd in.Bil and both : -require: maintaining of macroeconoiac inib ium:; . . ..... .M ou oaS Maicy.Wo padth BDilAduimentd iPo ry 9.Wo Irng | .Paper b4S,:1991, and ZPovery Alleviation irn Brazil. 1970-37,w L.AC Region Internal DisCUEIIOli Piper072, July 1990. (ThanS: s n internl documeatwith rtri ciri'ulion.).: '--'- ..... S~~~~~~.....YT 3..... . .... unsustainable macroeconomic policies may necessitate controls on the foreign exchange market, creating opportunities for rent-seeldng behavior in connection with the rationed access to scarce foreign exchange or import licenses. In other countries, where exporters' interests predominate in the political arena-an undervalued exchange rate policy may be pursued. Such an outcome could also be in the poor's collective interests, as the "abundant factor" and in turn as producers of exports."' 26. Poliical Economy of Public Spending. Complementing the labor market analysis, an additional question in evaluating the political economy of expansionary policies is: Who benefits from the spending power that would be cut it adjutmen were to be pursued? If the expansionary public spending is for primary health care and other basic social services or for inftastracture in backward areas, ithe poor will tend to benefit fromunsustainable policies, and will correspondingly lose from adjustment-related cutbacks. More likely, ususnable financial policies reflect spending on public sector wages, economywide subsidies, or, in some cases, large, prestige projects, with the bulk of any resulting gains absorbed by better-off groups. There may be an increase in credit to the large-scale manufacturing sector, from which the poor do not benefit. In many cases, the picture will be inconclusive, with some poor groups gaining from the expansion, and better-off groups possibly absorbing most of the gains. 10. Sec: paragraph 8. 44 IlL Policies Affecting the Accumulation of Assets 27. Prices may be right. The regulatory climate access may he favorable. Macroeconomic policies may be on track. But, if the poor cannot access capital in its various forms, little progress will result. Policies that encourage broad-based growth will have a greater impact on the poor if they have opportunities to build their own human capital, if ihey have access to financial services and land, and if the quality of the land is sustainable. Therefore, the analysis of country policies needs to consider the scope for accumulation-and maintenance-of assets by the poor. A. Human Resources 28. Social sector policies affect the poor's ability to accumulate human capital-the surest escape route from poverty. These include policies toward education, health, nutition, and family planuing. Because poverty jeopardizes health and nutrtion, safety net policies should focus on providing health and nutrition services. They should also help assure that children's opportunities for schooling are not sacrificed to families' needs for income. 29. But-referring to the checklist in Box 2. 1-what are the iwnsmnu of social sector policy? To be sure, most of the specific instruments are public expenditure or institutional issues. These are discussed more svsematically in Chapter 3. However, an assessment of the government's policy toward human capital development goes beyond public expenditure issues. Here the primary policy instruments are laws and their enforcement, the overall regulatory fritewn*, and public injfrmaion and education through the news media and other methods. These issues have gender, racial, age, and etic dimensions, which often correlate well with the poverty profile (Box 2.8). Consider the following questions: 3SdaioL Is universalprimry educaron a serious policy objective backed by specific actions and spending to achieve it? Are students' tights to education proted by law? Are those laws enjorce; Is the desirability of education publicied by government? Arefemales and minority ethnic groups encouraged to attend school? Are they recruited for teaching positions? Does the government accredit schools and monitor quality? How do regulations affect the provision of prvate education? * Health and MNrition. Does the government try to iqfmnn the public about health and nutitional problems and about available solutions, such as campaigns or programs? Does it set standards for health care, food bygiene, food additives, medications, and infant formula (to encourage breast-feeding)? If so, does the government adeWatly monitor providers of food and medical care to assure compliance with those standards? Does it make consumers and patients aware of dteir kgal rights and their recourse in case of violations? * Family Planng. High fertility is a poverty issue. Poor countries have ighe feridlity rates than other countries. Poor families have higher ferdlity rates than better-off families. How does public policy address this issue? How important a priority is it for the govermnent? How available and at what cost are family planning information and services to poor famflies?11 In looking behind the informational or legal framework at the underlying economic issue govermng 11. See Nancy Dirdull and Charles Guiffln, 'Population Growth, Extmalities, and Poverty in Mwhael Lipton and Jacques van der G(hg (ads.), Incldung Sk Poor, fonhooming. 45 BOX 2.8: Bangladesh-The Right of Woman: Law, Custom, and Human Capital A rejtound that, on thisurthee;.th loga status of women in Bangladesh appears to be. .almost on a: par with that of men; l: he Coistitution ensures. equality of the sexas, but also adcioiwledgsinequai status by :mtring the right to make.special provisions for women; including.. :employmqenitqudtas. ..Whilc the Constitution cmppwers.the government to take affirmative action for women, civil laws affording women protecdiont-endo reduce women's status and mobility. ILbor aW s ; providc women rmany benefits, butwiomen enjoy few. Laws reladng to marriage, divorce, child .custody, iheritance, and maintenancc ore governed by communit religious laws and, io certain caes nen have grcator rights than womine. A woman generally exchanges the right to inherit for that to visit th' 'parentAl home a few times a year after her parents die; .D6ory is prohibited by law' but fines and. :iimpisdinent arcnot cffectively enforced. The. report indicated that,. by custom, the life of a woman, in Bangladesh is. shaped[by the .patriarchal, ..iineal, and patrilocal :social system.> Hcr reproductive role is emphasized by social, cultural, and religious traditions.. To filll this role a gil is wiarried at puberty .and immediately l1ockeidinto kith4fertiIity patterns. :The various elements of the social sybwm thus interact to make .. wo men dependent on: :menor at risk whc'n deserted-and to produce. a ngid division of labor and a labor market higljsegrcgatcidb9 gender. The household is tle primary.production and consumption : unit. Mei generaly own.d m--anage fiimily land and income-and women s labior Women's ability.. to acquire new ideas, skills, contacts, and employment outside tie home is restritted. As arsult, men thave generally beei the main beneficiaries of economtaev hpment, wie.women have remainedi lga y unskO rsem skilled.' .... Th....:.:>.. reportconclddthat most of the concerns'iiut development inflangldesli cannot b effectively addressed wiiouL :ogasin tlie constraints. fa&bjYwomeniit respet tohumn and : productxvee;rsouace development. Without appmopria.c investment in: omien's education:, and heWlth {ard .incteased female participation inoproduction'hunian capitalwill continiue to.. remain undeveloped aand the e nomy of Bangladesh will .ffe:iumenc ly .t- e...h uencinterms. eof forc e acprductidir.dimin ished family welfare (*ticuiiroiF tlie poor), and idplatioirgrowti.:. .. .Vt . . .-* ^ :--; a. B.gladesh iStrategies farEnhancing the Rnlcarwoniea in EconomicnDevelomc. Word Dank, 1990. the demand for children and family planning services, what rights do children have? Are children valued for the work they do, '2 for the old-age security they provide for parents? Is their access to education protected by conipulsory educaton law? Are they enforced? Are female education and economic opportunities, which are associated with declining fertlity, social priorities? Safety Net. What is public policy toward those who are chronically poor because they are unable to work (because of age or handicap)? What about public policy toward people affected by shocks created by economic recession or natual disasters? The issues concerning transfers and safety nets include ientifying the groups in need of assiae, and the means of ageing asistance to those groups cost-effectively. Are tese questions for public policy, or are hey adequately addressed by the traditional family network? 12. Sce Ram D. Singh, Economics of td Famly and Fannng Systam in SubSam AJHcw Dcvelopment Perspecies. 19U,. 46 B. Financial Capital 30. The financial sector plays a pivotal role in resource mobilization and allocation. Interest rates are a major determinant of the choice between savings and consumption. Financial markets determine which private investnents are financed. They are thus central to growth. For the poor, access to credit is important for financing investnent and, in turn, for boosting productivity and income. But, credit involves the use of resources for a fime and thus commands a price-the interest rate. Credit also involves transaction costs and risks of nonrepayment. These costs and risks lie at the heart of the problems the poor face in obtaining credit. 31. Lessons of Experence. In light of the poor's notoriously limited access to credit, donor and govermnent efforts previously emphasized subsidized credit to poor farmers, on the theory that high market interest rates made credit inaccessible. These subsidies failed. They weakened the financial sector. Better- off farmers and entrepreneurs preempted the lion's share of the subsidies. Credits were not repaid. Reflecting this experience, there has been a shift away from subsidized credit toward alternative financial service programs for poor people. More recent programs have addressed high transaction costs for lenders and borrowers, colloerl requirements (Box 2.9), and low levels of litemrcy and arithmetical skill among the poor that constrain their access to formal sector loans. These programs often stress mutual guarantee arrangements whereby social pressures are brought to bear on borrowers, thereby increasing repayment rates and reducing lender risks. They charge market-determined interest rates, establish deposit facilities, and target poor clients rather tban nonpoor sectors.1' Meanwhile, informal creditors continue to cater to the poor. They are segmented from larger, more formal markets, and offer litde by way of term finance. Nevertheless, informal financial agents tend to know their clients, which reduces information costs and risks to the lender. 32. Rural Credit. Smallholder farmers-especially females-often lack access to institutional credit. Trausaction costs to such farmers are often high because of formal loan requirements. Special collateral regulations may restrict access of tenants. And interest rate ceilings, combined with high costs of administering small loans in remote rural areas, may make such lending unattractive for profit-oriented institutions. In practice, ceilings have been associated with credit rationing, with available credit allocated on the basis of political connecdons, in some instances, or of recovery risk and commercial considerations that the poor cannot meet. In addition, subsidized interest rates can encourage premature mechanization of agricultural production, cutting down on rural job opportunities (Box 2.10). C. Land Policies 33. Policies to clarify land tenure arrangements and improve the management of common property resources can create opporunities for the poor in rural and urban areas. The discussion should include analysis of: (a) the existing legal framework and pracdces can help identify inequities in ownership and access; or policies that distort land values and price the poor out of the market; and (b) tax and credit policies that encourage capital-intensive agriculture or exensive use of land and thus limit employment creation. In identifying opporuidties for reform, the politcal implications of changing policies that govern land use must be considered. 34. Land and Land Tenure Reform. Land reform is a potent instrment for poverty reduction. It can take many forms-reform of rent contracts, rent reduction, or land to the tller-with or without compensation. All forims represent some transfer of ownership rights. IDR W1990 concluded that success in implementing major land reform has been rare, and has only occurred at times of major social or politcal upheaval. Nevertheless, opportunities for land reform must be sought wherever possible. Land tenure 13. See Sharon L. Holt and Helena Ribe, Developing Fnancial Institutions for the Poor and Reducing Barriers to Access for Women," World Bank Discussion Paper 117, 1991. 47 BOX 2.9 : Bolivia-Refoning the Law so the Poor Can Get CreSt *A study' in LAC slars fiom ithe premise that loans require collateral-either physical prop or a convincing promise to repay. In Rnlivia, the only Iegalcnllateral market is real cstate. Ura: poor, who do not own .ea estate, and rural poor, whose land cannot be sold under L'c tcrms of.the laid refurLu, camiot borrow in the legil market. Thcir other physical possessions and their human capital cannot secure loans. This is dte lu the structure and administration of BoliWiM= law. Physical equipment caimot. secuie loanLs in Bolivia. First, registry sy.stums for claims against such equipment cannot, pracically, he searched. Second, cburw procedures for:foreclosur.cmnidmg.on for years, confronting the ;c:dit..= with the riskc that pledg&l collaleial: will .be worthless when. r*claimed Pawnshops are illegal, and wage attachment procedures are so Lengthy that wages am 6ieess -as collate.ra 1a.l . Ile. poor, withoiatL.realestate, at the most possessing: novable gdoodsaiid hunan ca l. .typidally nmust cnter the extraleg`l market:to makemutuallyproftiible deals withlend&rs. Sometmes these dcals. work out: But sometinies they do not. Lenders evding thc law, 'chargc higher rates to ? . compensate for 'b& isk of evadi.ngthe law and to exploit the monopoly power that such evasion conveys. Boxrowers, ..evading the lwl pay higher rates,;geL less credit and forsae cthe mirniml protecatie provided 'by e law. :..;;..1.... .. . The study recommends. that BoliTviansubstantive and.priocduraI law. be changed to% faihtatt| more transactions socuted by collateral other thanreal estate, that laws be changed to permit consenting -partics to contnc:o bypass updicial procodures and repossess coilateil faster, that registres f intersts -ia collateral be computerzed. ad indexed and thejucacial procures be speeed up b -intLroucing cdmputers and steamling the manage t of cases in the court system.... a. HeHwood Fcisig. Juan Carlo& Ag.uilar, ad Nuria de li Pens-lacdoilt, ."Law, Legal Piocedures, and ihe VEinsof- Collatcrial The Cae of Bolivia,' November 1991 (Ihis an internldacumcnttwth restricted circulatin) systems also influence patterns of development, and prevailing land tenure arrangements have an immediate and direct inpact on the welfare of the farm fmily. Thus, the effects of the structure of land holding and tenancy arrangements on the poor should be reviewed. In many instances, inefficient land markets-inadequate registration or cadastral surveys-and regulations goveming purchase, sale, or inheritance of land may be easier to change than current tenure arrangements. Opportunities for reform through changes in legislation, infrastructure invesunents, or aid to assist land reallocation-perhaps to be effectew in a phased program-should be identified. 35. Sharecropping. Sharecropping arrangements-whereby the Landlord receives a share of output as rental payment-are subject to frequent criticism. In its simplest form, the argument is that because the farmer supplies all the inputs, including labor, but receives only a share of output, his/her incentives are constrained and the arrangements are inefficient The economics literature1' suggests that these possibilities notwithstanding, sharecropping may still remain the most efficient way of organizing production-in terms of getting credit to the poor and sharing risks, given transactions costs and the existing distribution of wealth 14. See loseph E Stiglitz. "Economic Organizaton, Information, and Development In Hollia Chenery and T.N. Srinivasan (ads.). Handbook of Development Eonomics, 1988. 48 BOX 2.10: Rund Credit-Can It Reach the Poor? __~~~~~~~~~~~~ . _ . . . ....__....... .. _..................... . . A recent paper' reviewed the overall perfonnance of four mral Fn: g i an diteo developing countries: -he. Bank of Agricultmre and Agricultural Coopetives;: iD M i, n G1ramneen PAuk; in Bnladensh; mnd the Badan. Kredit Kecamatan and the Bank' ly Indonesiad Uni | esa, both in Indonesia. . . The lbur pogranms have many features in commono All four isli tutions have apliedon->: lending interest rates that are positive in red terms. Thesc intcrest rates compr foibltohe iDforifia interest rates..Tlhcsc. data confirnmi findings in several airlicr rescirch'studieisho(wing tha"ti'-t is the access to credit-not the subsidv indthe negLative interest rates-fhat hus bein so ipota foe Aultimale borrowers. All four rud finance institutions have loan collectio .s th is g -| E from nmist traditioi, oborly>e nng, supply-led credit ps T performance -s mainly becau.eJll have ued financial incentives to encourage promptirepayment mid s have,disbursed funds nefficintly and rpidly but hti' 'nstituiions diffeti the s.tru of their l approval process. Some institutions have used a centraHzed procdure andooa modentalzl :.proess but all have.use per goups or the local village ledenhip- ii sel an b >horrowers and all emphasize.staff taining and incentives. The types of loan>securit d so hv g|..erally been nontraditional, ad'have been similar to those used in informa cit markt | . Etern tatoahave uenced:the institutions.:success. A in fourstitutio ha * idrsta-ble"economic conditions, in"7countries with annual inflation rates ofr. d 0percenit; . ThEis4 h .a rduScd uncertainty atdnsk.i It raiiztion of financil mnarkctg bas allow adequate png th opemalions im ndo,isi`aiMd has encouragdi Thailand tb decrease its subsl6idydeendence.- 1 :. X :.:. . :,:;- -.. . b ...'. sa~~~~~~~~~~~~~~~~~Jcoo: YawW -' ..: JacobYaron, 'Rural Financein Dovcopig'Countricr,¶WorldBakPRE WorkingPa 1992.. . and land. In country analysis, the focus should thus be on identifying possible modifications that can reduce disincentives with specific problems with sharecropping arrangements and/or preserving the benefits. 36. Common Propeniy. Common property or land use arrangements may be an important factor in rural poverty in some counties. Rights to land use often are shared pardy or filly with members of a village, clan, or family. In some areas, comunal land systems appear not to have interfered with investment decisions, even as they kept farmers from mortgaging-and losing-their land. (See, for example, Box 2.11.) In other instances, however, where communal land rights are less firmly anchored to individual families, the typical "tragedy of ibe commons' results obtain, with the well-known, adverse consequences for the environment-including increased risks of impoverishment. 37. Urban Land Reguladons. Changes in the citywide regulatory framework governing markets for land and housing in urban areas can lower the cost and expand the supply of housing, infrastructure, and developable land, and provide business opporunidties for the poor. Laws and regulations such as zoning regulations and building codes can impede the development of private affordable housing. Inefficient systems for obtaining legal title to land, tanskrring land, and obtaining legal approvals can increase costs and drive private providers out of the markeL Meanwhile, unresolved land tenure issues can male it expensive and virtally impossible to resolve upgrading and housing issues. 49 BOX 2.11: Sub-Saharn Africa-Conmual Land Rghts Work Wel Mlaniy land lenure neginles in Sub-Saharan AIificai ffilllbelven privaie ownership and common- Uaixzss systebni. While lund ownerhhip traditionally nrsides with the village or tribe, firmers long have been Ls%ignld use rights over specific lrcels ol iland. These rights prmvide Dttess;Iry securily bar growing crops and, bhxause they usually CaQ be bequeuthed tu chiliren, they provide a long -teim .initersL in LIe lund. Ilowever, larmen.' LighLN it) trataslbr anud exclutde others from their hind iire more limiled. Traditionally, they cannut sell or mortgage laud, a3d even leaing or giving land may nxluinr permission from family or village elider. Oilier farmers may have supplenentiary use rights oiver the s:ime lavd-tor ex;imple, Ithe rig:hl tu g,rae die laiul during die dry SCL'Own, oir ihe rijhL tI collect wond ur lIve fruits. A recent sLudty found that restrictions mn Iurmern' lanai rights dn not aprpeir to have nny silpnificant cifeel on lhrmens' investments in land inipnivezneniis or on the prodietivity ol their lund. Morwuvea, :ii laiud Ixcouies scarue and incresingly valtuible becnase of pulapiiion growth ind CLIIilAi.i?iaLlithiusi, farners' rights over land are hexuiming increasingly priva:i7rd. TIhe indigenous teurc syi.temn% appear sullicienily flexihle tio evolve with the incrensing sc;urnirv of hand Hnd coiilnlenwUi:t nee ror grueter seculity tl lanld right%. At the samine tiie, the retention of swiue Coninalufity euiiliul oiver land ownership ha. pilaye at uii im rkiiit role in preventing both alien:nilu of land and laidlesi:esis. In Rwanda, fr example, which IIiCa th uilme m ral.uticin density :ns Snith India, lanidlesn-ssns is narly nonLexisinL, whe1reA. .U perLent of rural ilICelaol1dq .Dr Ildnless in South11 Indlit. G tivelihe. complexity, apparentt:efficitency, and evolving nature of indigenous land tenure systems in Sub-Saharan Africa, policymakers should be cautious abouL intevening. Unless indigenous entire sysiems are w (for example, by civil :war or -major projeac interventions): or aem -nonexistent (as in new. settlement areas), land tidling i unlikely to be worthwhile, and may lead to. unneussar landlessness. Policies to:strengthen indigenous tinure sysitems may sometinics be helpful, -such as prtcedures for ooluntarily ecotding contractual arrangements related to land, but care must be taken not to introduce. rigidities. that limit further evolution of land rights and land markets in respouse to changes. in factor pn.- : Peter HazeDl * -Si, Shem Migot-AdholtaCL ad. 'Indigenos La tRigh Systems inSub-Sfnaran frica: A Consutint on Productivityq. ',e World Bamk Ecnomuc Reverw;J nuar 1991. . . . D. Environmental Policies 38. Poverty has important environmental dimensions. The linkages are two-way. Poverty affects the environment.?' But enviromnent affects poverty. Two economic issues warrant speial attendon: the apparent relationship between low incomes and short-time horizons, and the association between poverty and exposure to survival risks. 1. How Does Poverty Affect the Environment? 39. Short time horizons lead individuals to mine env l resources at a more rapid rate than may be socially desirable, and can be a disincentive to invest in land resources that yield returns only after a number of years. But short time horizons are not an innate or exclusively characteristic of the poor. Rather, 15. The focus on the eavironzmnedpoverty nexus reflects thc Handbook's p concer with poverty and poverty reduction. There arc clearly many public policy and other causes of environmental degradaion. Sec World Development Report 19 Development mi ie EnWronmenr (forthcoming). 50 they are the consequence of market, policy, and institutional failures, some of which are associated with poverty. For example, with little access to credit markets, the poor often have few opfios for coping with the risc of starvadon associated with income shortfalls, other than more intensive extraction of their own or of open-access resources. 2. How Does the Enviromnent Affect Poverty? 40. Environmental degradation contributes to the nisks of impoverishment. Because the poor tend to have access to more enviromnentally fragile naural resources, they more often face higher levels of resource productivity decline through soil degradation, loss of tree cover, and so on. In the case of soil degradation, not only can it reduce income, but it also can increase income variability because soil moisture retention capacity and drought resistance will be affected. Or the poor may switch to crop residues and animal dung for fuel, thus depriving fields of organic material needed to prevent soil degradation. In the case of tree oDver decline, ihe poor's labor productivity is affected by ever-increasing time spent collecting fuelwood for household needs. Environmental degradation may therefore reinforce some of the links between poverty and rapid population growth (Box 2.12). BOX 2.12: Povey, Populon, and the Environment * * A recent papee analyzed the liiiks among piaverty, population, and the envimnment. a stwed with tie rclationship b6zweei poverty and populatipnpuairoon, a nvirom Itsracte d of poor households contribute to hii ferplation groy. h. It noteducad anud imitedb incofmch -eara ing *possibilities' of poorer.wome lower the costs of foregobe.economiic opportunities while'the women bear 'and taise chlldret. Poor parents ire iess likely to have access to marlits or mechanisms that provide old-age sciirity, and tius rely on having sufficient children'to ensire that some survive-to adulthood *to provide this. Children in poorer households also can pfrovide labor that has an economic value to :the houiseh6ld, at the same time that limited azcess to education and halhhreduces tLe costs of raising- The paper indicated s envimental degradation appears to riinforce several of these lirdnt between poverty and high fertility.'. )Degiidaion. of aIid r'sou'rcs workd, by. womenr reduces the women s prodxctivity and the econumic advantage of wvorking the laud. Degradation of tree, range, aid drnlin- water resources- increases the time needed for fuel-wood gathering, livestock pasturing, and water fetching-tasks that cuildren can doZ-which increases thebchildren's valuc to parcut3. Thcse aiku are potentialy strongest in 'easwhere female fertilit is aread high.. S;ephen Mink a 5;'mepenMrnk'Pwn;V. Populazion. sui ach hivkouimcnt' 1991.- Background Paper NO. 23, World Deve!opmem REorr i5 g?:MW;ol*d B'anzkv, l.592.**- --~ ~ ~ 9 . . 41. The healdt of the poor is disproportionately affected by environmental hazards. Key among these are parasitic and infectious diseases borne by polluted water that is used for drinking and bathing, and respiratory dieases brought on by exposure tD indoor air poilution from burning biomass for cooldng and space heating. In urban areas, the poor have less access to sat water, and are less able to afford cleaner fuels and housing quality that would reduce indoor air poilution. The health and productivity consequences of these environmental hazards are substantial. They perpetuate poverty. 51 3. Implications 42. There are two broad implicadons: (a) increasing the poor's incomes and assets will lengthen their time horizons; (b) targeted intervenfions in the shorter term, such as food for work in drought-struck areas may alleviate pressure for the poor to overexploit natural resources in order to avoid falling below minimal subsistence levels; and (c) policies that encourage rather than suppress informal credit markets, since these provide an alternative to resource mining, and that promote access to formal credit through legal and institutional approaches that reduce the costs of reaching the poor, are important for poverty reduction and environmental protection. 52 Annotated Biblogrnphy Birdsall, Nancy and Charles Griffin. "Population Growth, Exnalites, and Poverty." In Michael Upton and Jacques van der Gaag (eds.), Including the Poor (forthcoming). Reviews welfare economics of programs to reduce fertility. Concludes that well-designed programs must leave the poor as well-off, in their own eyes, as they would be without the progrm and with more children. Cleaver, Kevin and Gotz Schreiber. "The Population, Environment, and Agriculture Nexus in Sub-Saharan Africa." Africa Regional Technical Paper. World Bank, 1991. Explores muhtally reinforcing nems among rapid population growth, agriculturaL stagnation, and environmental degradation in most Sub- Sabaran Africa counie in recent decades. Holt, Sharon L. and Helena Ribe. "Developing Fiancial Institutions for the Poor and Reducing Barriers to Access for Women." World Bank Discussion Paper 117, 1991. Invesfigates barriers to women's access to financial services and explores informal and quasi-formal alternatives. Suggests the greatest scope for policy action lies in replicating successful informal systems and further promoting quasi-fornal programs. Mink, Stephen D. "Poverty, Population, and the Environment." Background Paper No. 23, World Developmet Report 1992. World Bank, 1992. Explores the links between poverty, population, and the environment with an emphasis on the impact of environmental degradation on the health and productivity of poor people, the circumstances tdat contribute to "short horizons" of the poor, and the environmental effects of population dynamics (scale, rate of growth, and migration). Concludes that, while an appropriate macroeconomic stance enables growth of incomes of the poor, targeted interventions that reduce ris and insecurity of tenure to natural resources are also necessary. Social programs in educadon, health, and family planning are integral to providing families with choices that allow them to manage their natual resources with a longer-term perspecdve. Psacharopoulos, George et al. "Woren's Employment and Pay in Latin America: A Regional Study." World Bank LATHR, 1991. Ivestigates empirically female employment issues in 14 Latin American countries. Finds that female participation in the labor force has increased relatively quickly and that the probability of employment increases with educadonal qualification. Schultz, T. Paul "Women and Development: Objectives, Frameworks and Policy Interventions." World Bank PRE Working Paper 200, 1989. Reviews economic research on how women influence and are influenced by economic and social development Concludes that the private and social returns are high on investments to improve women's economic productivity, particularly educadon. Squire, Lyn. "Introduction: Poverty and Adjustment in the 1980s." the World Bank Economic Review, 1991. Explores the debate on what happened to the poor during the 1980s and whether adjustnent policies intensified poverty. Suggests two areas that require further worlc the distributional consequences of public expenditues, especially on basic health and education, and, examination of the effectiveness of programs designed to protect the poor from the adverse effes of adjustment. 53 Walt, Michael, "MacroeconmiC Policies and Poverty." World Bank, 1990. Considers whether different responses to a macrCOnomic crisis afct he poor in developing counties. Concludes tat the choice of macroecnomic policies makes a difference, through influencing inter-tempoal and inter-group outcomes. World Bank. Making Adjustm Wo*tfor the Poor: A Framewo*rfor Poliy Rejirm In Aflca. 1990. Provides the concepual framework for the Social Dimensions of Adjustment Program by establishing how the macroeconomic processes initialed under adjustment affect households and de microeconomy trough their impacts on marlet institutions and infastructure. Implications on data collection, data analysis, and project design ar described. Chapter 3 Public Expenditures and Poverty Reduction Wiereas WDR 1990 dealt speciJficalty with poverty, WDR 1991 addressed the broader issue of economic developmnt In revewing countny experiences, Itfoujd dt a relxively undLtortedprice system, other things being equal, had a better duance ofpomtng growth than a heavily distorted one. The evidence that considerable gains can be acheved by reducing interventions In the market led to a reconsideraion of the role of the state in development. WDR 1991 concluded; ...govwnen need to do less in dose areas where markets work, or can be made to work, reasonably wel ... At the same tie, gowrnms need to do more In areas where markets cannot be relied upon. Above all, dis meaws Investng in people, building social and physical Ifrastrucre, and protecting the envirownent. It also requires a strengthening of poliical and economi instituions and more effien poliesjfor income redistributon and grw. These conclusions have portant iplicationsforpoveny reduction strategies. They reilorce the view t governance-s reflected in sowud and acouale public Instilions and public exenditures geared to addrssing markt failures, providing public goods, and reducing povert-Is essential. Against this background, the capter discusses poveroriented public expendiure reviews. Good prtice revews assess the appropriateness of the intersecroral and intrasectoral compositon of pulic expenditures in relation to thepovertprofile. The reiews also assess specfically how thepublic expenditure program-in its design and implementation-interacts wih the incentivefrwork. 57 Chapter 3. Public Expenditures and Poverty Reduction Introduction 1. The public expenditure program is an instument of economic and social policy. It has macroeconomic and microeconomic dimensions. The main macroeconomic issue is the level of public expenditures as it relates to fiscal policy, since sound macroeconomic policy is essental for growth and sustained poverty reduction. The microeconomic issue is the appropriateness of the level and conposition of expenditures across and within sectors. Consistency with sector objectives, and the strategies to attain them, are key evaluation criteria in public expenditure reviews. In trn, the finding of public expenditure reviews help to refine sector strategies. 2. Reviewnng public expenditures from a poverty piertve entails assesang the intersectoral and intrsectoral composition of public expenditues in reladon to the poverty profile-and in relation to the analyst's model of the dynamics of poverty and of poverty reduction. Public expenditure reviews assess how the design and implementation of the public expenditure program reinforce or alter the distributional outcome implied by the incentive framework. They assess the effectiveness of expenditures in helping the poor access public goods and services. The assesment also considers the adequacy of the social safety net. 3. In principle, all sectors would be assessed in a poverty-oriented public expenditure review. But country circumstances determine the priorities for the review. The poverty profile, prior country and sectoral work on public expenditure and strategies, and judgments about the authorifies' receptivity to advice and analysis will influence dte choice of sectors for concentrated study-and, within sectors, the focus of attention. In all countries, the social sectors should be analyzed, because of their key role in the poverty reduction strategy. (The annex to this chapter contains summaries of good-practice social sector expenditure reviews.) But infrastructure and agriculture will also be important in most countries. The review will clearly take exisdng country and sectoral strategies as a starting point, even as it helps to refine the strategies. 4. The chapter addresses tiese issues. The first section outlines the specific questions to be raised in poverty-focused public expenditure reviews. The second section introduces sectoral issues, including publc sector policy and expenditure issues in agriculture, infratructure, family planning, health, and nutrition, and education. In analyzing the interplay between public expendirs and poverty, the chater emphasizes the need to (a) acquire the facts about the distributional impact of public expenditures, (b) evaluate the benefits of the expenditures relative to their costs, (c) analyze the effects of the expendiures on the poor's income- earning and consumption capacity-through the direct impact of expendis targeted to the noor and the indirect impact of the balance of public expenditures on growth and poverty, and (d) relate these to the country poverty profile discussed in Chapter 1. 58 1. Framework 5. The ultimate objective of the review is to produce recommendations for country policymakers regarding possible reallocations of resources within and across sectors that will promote the reduction of poverty in a cost-effective, economically-efficient, and sustinable way. The intermediate objective is to see how wel sectoral spending and institutions fit with the incentive frtamework to constitute a coherent sectoral strategy for growth and poverty reduction. Box 3.1 contains a checklist of questions for the review. ROX 3.7: Checkltfor Evaluating Public Expenditures 6iThevnlatngte ol pblio rcditure pgm aid the individuii 6=tor progrms, the C followingsf is need to bea ed in esiablishing the information bise for the analysis: 461wn..' e: .: ....: i-.. i: 6"ii . ihii : : .-*:.e.-........!: on . ..... na yi>...s *:- '*.* '. t*.Ye l-bw much. is ng be enti onwa?i ..>I Whos itbzgspent on7i. s X X X C; ; X X X ; i X~~~~~~~~~~~~~~~~~~ .. ..... Xt~Howbfficxnt an, cost-effetive are 'these! exeditures' S--; &fl6ivI`wsmrIcs being -IlLver9 ;; ./ iherca role for thepnvate sector and/or nongovernenvtalorganizations? ||~~~W .. i > ^ H z j: ;: .D .1=?'~:: sS -t.Hq -* 'ifri'f:? xp ' d. -ei ben fiacd Am? the ..u....anable?.. 'XI theetaafhietysi?w al 6 In formulating a public expenditure strategy, the analysis needs to start with ihe broader macroeconomic framework in which the pubhic expenditure budget fits, to ensure that excessive spending does not undemine the macroecononic and financial stability needed for stined growth and poverty reduction. Where possible, it should quantify tradeoffs in public expenditures across sectors, with a view to indicating areas where spending reallocations would clearly make sense. In this context, it should note the impact of nonproductive expenditures, such as military expenditures, and nonproductive practices on poverty reduction. After tking into account the scope for possible reallocations and reductions, it should inihcate whether additioLal resource mobilization efforts, including higher levels of taxation, are needed. 7. Evauadang Public Ependfrure Tradeoffs. For some sectors, economic cost-benefit analysis can be used to evaluate alternatives. In some other sectors, the crteria for intrasectoral evaluations are less well- defined, but, even in these sectors, cost-benefit analysis provides a discipline for thinking about the relative merits of alternative policies, investments, or recurrent expenditures. 'hus, in tieory, one could treat the public expenditure review as an excise in allocatng available resources across programs and projects based on the highest retums. In practice, however, assembling the infrmation to answer the questions oudined in Box 3.1 will absorb a considerable amount of time and resources, and a filll economic analysis wiN be possible for no more than a handfiu of programs or projects. This puts a large premium on professional judgment, based on sectoral and country expertise, and short-hand techniques for evaluating costs and benefits. 8. Effciency-Poverty ReduWflon Tmdeoffs. Further complicating the analysis is the possibility of tkadeoffs between economic efficiency on the one hand and poverty reduction and other social goals on the other. In advWsing governments, tbe Bank generally recommends the selection of the highest retum activities among alternadve intervendms, and that departres from this rue should be justified in erms of reducing pover or providing a safety net for ie vulnerable and of being the least-cost method of accomplishing these goals. In analyzing such expenditures, a conceptual model of how the poor benefit from public policies and programs is usefil. Before reviewing the intersectoral allocation based on efficiencylrate of return comparisons, such expenditures would be deducted from the overall resource envelope. 59 A. How Much is Being Spent, on What? 9. Consolidated Public Sector. The initial step in the review of public expenditures is to establish their level and subsectoral composition, including the breakdown between capital and recurrent spending. Spending responsibilities in many sectors tend to be divided across levels of government-central, state or provincial, and municipal-and public enterprises. In constructing the factual picture on expenditures, complex inter-governmental transfers often have to be sorted out to avoid double counting or undercounting. This process is also important analyticaDly-since the distribution and design of inter-governmental transfers often affect the poor's incentives. Ministerial or departmental responsibilities for program areas also may be divided. For example, curative health services may be covered in part by the ministry of heal&h and in part by a social insumance scheme, even as community health services are covered by another ministry or by local governments. Carefil sifing of accounts wiU be required to ensure that aD relevant expenditures are captured-anid counted only once. B. Who is it Being Spent On? 10. Measuring Incidence. There are several ways to measure the incidence of public expenditues. Household survey data on the use of public services, coupled with detailed budgetary information on the cost of providing them, are the best approach. Estimates of expenditures by age distribution of beneficiary can also serve as a distributional indicator, since the poor tend to have larger families. Where available, gender- coded data can be indicative, since females-and female-headed households-tend to be disadvantaged. In countries with important regional dimensions to poverty, estimates of expenditures by region or political unit, or even the urban or rural distribution can shed light on equity issues. Fmally, a subsectoral or programmatic disaggregation of sector expenditures may indicate a bias in expenditures toward services less likely to benefit the poor-for example, university education, irrigation services, or curative health care (Box 3.2). Some caveats: (a) Expenditures are input measures-aggregates or averages may be biased indicators of the distnbution of benefits, since differences between the services received by the poor and the better off may not be filly reflected in program costs; (b) esfimates of public education or health exenditures per child or household often assume uniform unit expenditures (for example, a simple mean- per-child expenditure level is computed), when acual per capita expenditures may be higher in wealthier areas (Box 3.3); and (c) in-lind subsidies will often be valued less than cash tansfers-the possibility of resale or of private transfers adjusdng to public interventions might also affect the incidence of public transfers. BOX 3.2: Brail-Evaluating fhe Incidence of Social Ependiures ..A report iudicaed that, forlBrazil, there are no.qdefinitivc, data on the extent to which pple or households of differentincomes aiud regions benefit from governmnt social spending. Ho. tet information from household income uJ a jituje surveys can be ODobinIed wU.*h informationonlie. . distribution of governmentspeng: aCTbss different programs ta produce a picture of the probable distribution af social progranbenefits across income groups. Such an analysis reveals ttiat 19 peicei:nt. of the population,.with per capita annual:income below USS180. benefits from i6 perornt of.socialI expenditunas. whereasi top 16 percent receiv i of soci al ex0 ..penditures'. Walliam McGree.. a *: Brmil: Public Spending an SocialPop.us. lin acd Opir ions, I.cdd Hair Report 70SBR; May 1983. .liis t an :intera docLmntwith r wsuttcd cmmcu a.)- 60 BOX 3.3: Bangladesh-Evludaing Incidence: Looking Behind the Spending Aggregates - .;-' A:Ircpo..on iBanglaides foun& that, while the comwosition of public expenditurs appea.r broadly consistent with poverty reduction, households above the povertv line reap mo.st of the benefits | of social programs. Tn educaddn and henlth services, the poor have limited acess. At evry level of kthe cducational system, enrollment rates ame lower and drop-out rates higher for thc poor. Most. ! .benefits froni income transfer prgrams accrue to the ionpoor. In the government's riral development:. and agricultural incentive programs; the b6nefits are largely a fnction of land size and access to irrimgation: Until recently. the subdies implicit in the public fbodgruin distribution system also went ,to the urban population and the nonpoor. lhe report concludes that gives Bangladesh's current fscal constraintis, it would be prudent:. t h trengthen ongoing p0yert .u on progr&tay nprovng toffie f :resou allcati aund. :the. targeting, of transfers ..Furthermore, the oppomnuties for greater domestic resounce- n,mobiliation,. improvd use of aid reso ru es ing ofdivelopmentexpeaditures. to address .thie:needs. of thie poor, and intensifying colltion with and promoting thc involvement of nongovernmcnt and informal organizationis should be examined in view.of the.larp number of potetia .beneficiaries that remain to be reacbi by povrtye educoi initiatives. -- ;Z*-l->;<-<....*: ;-...i> .-.-- d*.*-. W&he be*-:.-re*.<*n- *- - .The anlysis of t fieenericanes of public spending. iiigleh distngishe btwee. :otypesof..expend tures on. goods and sezncs (a) those tht could be tred atd lly delinete <:beneNiczarzu, such abs educpt'on, ::health 'transportation and transfet: paymenis (which could be c> considere n .iiniometaxe), ai (b) those that weri iivisible or uiiidimeified by seific subgroups, such asnation desnd a nistative ices Tahe autudy cused sentially. on the:- first g oup ofexpndi`ureby emphaizing expenditures odhua uS- dopetc health,and:family planning), and diirtand indirecttnsfes (subsdie ndr ief,nluding thefi . . nnmnw'- us,nntm tliidicry -grpop -wp for..wot.progp).:19c r1 . .voiY bine. ba i usgo u t wn u.. n r as .. ehilf expen.ditures are made, fir examp, for.h ehby4,ply iliztion rsfor.publiftdiiti; ( tb): b 'iefvve acst :of proviij the services td. c.up,ad (a) the distribion .ijejidanije . by incornetagories. The estis wee b npublibexpidi .d at . fo .1986 afid tliresult- .of t`iet198546": ouehol6 Expenditure Survey us ewmlasui,ieientaUy;survcvs..on.aeion . enlmt ahat. hciiu . t. ont y h od ne categori i. .n .Rqpoa794&fl: rJanuwy4t19-90.:.W .. is.-.------a-. iy zhrWca) 4 .:: .:: ;-. C. How Effident are Public Expenditures Aimed at Povaety Reduction? 11. Measurement problems notwithstanding, an asssment of the economic efficiency of public expendiures is essental. Nonproductive investments and subsidies crowd out productive mivestments in infrastructure and other programs that coudd increase the inoomes or living standards of the poor, or both. To a large extent, the questions are broadly the same as in any public expenditure review. For example, what are the relative returns to government investments in agricultural infrastucte and education? Are health services cost-effective? What is the appropriate balance between new investments and new expenditues for operations and maintenance? Between salaries and supplies? There is a logical sequence to approaching this issue. First, are the expendiures that appear to be directed to the poor being directed to high-rem activities? Second, in the broader public expenditure program, is there scope for efficiency- related cuts that would free resources for poverty reduction? Tird, are public expenditures being directed at public goods and seices that promote broad-based, efficient growt or are they captured by special 61 interest groups? Some sectors are more amenable than others to standard measurement of the economic rate of return. However, each sector has a conceptual methodology for rankdng and evaluating interventions. It is especially important that these standards be followed for poverty interventions, to ensure that the limited resources available are used wisely, and to protect well-conceived budgetary components from arbitrary or unanalyzed cost-cufttng. 12. Socia Indicators as Measures cf Effectiveness. Expenditure data can be mapped against relevant social indicators for regional comparisons. Such comparisons facilitate the formulation of initial judgments about the adequacy and effectiveness of sectoral expenditure programs. For example, trends in the level and composition of government health expenditures can be mapped against health indicators. Health indicators and expenditures can also be compared with those in other regions and in relevant comparator countries. This type of cross-secdonal analysis has severe limits, however. Ideally, programs are placed where itey are most needed. Thus, an inverse correlation between expenditures and indicators does not signal program failure. Meanwhile, time-series analysis, involving as it does, only gross indicators of input (expenditure) and output (social indicators) and, in particuar, ignoring distribution, yields only the most general indications of potential problems, which then need to be investigated further. Deteriorating social indicators-for example, infant mortality-could be associated with rising expenditure levels, perhaps indicating inefficiency or pockets of extreme difficulty, signaling a possible need to raise outlays. Differential male and female indicators may suggest the need to rebalance social programs. International comparisons might reveal that the country spends relatively more (as a percent of GDP or in per capita terms) than a comparator country-albeit, with inferior results, suggesting distribution, implementation, or efficiency problems. In some cases, the juxtaposition of spending and indicators raises questions for research-as in much of Latin America in the 1980s, where the social indicators improved despite cutbackcs in spending (see Box 3.4). BOX 3.4: The Effects of Changes in Socia Sedor Expendtures A recent sttuy' traewd pulblic social secor expeiidliurcs for nine Latin American countries in the 1 980s. It found tat real per capita public social spending on health, education, and social security Ell during somc part of the 19898s in every country in the study. Thc share of health and education cxpenditures in total government expenditurcs also fcli, evcn as that of social security rose. In spite of lower funding, and no apparcnt incr.xescs Ln cquity or efficiency, social service indicators gencrally improved in the 1980s. Possible explanalions for this paadox include measurement error, time Logs, the current reaping of the benctits of past investments in women's oduication and in water and sewerage. l systems, technological change, the growing role of nongovernmental organizations, and the response I of the market-oriented private sector to enhance expectations and demand. I Margaret Grosh a. "Socik! Spending in Lazin Aicicuicn:c Th Sayryorzthc i98," World Dunk Discussion Paper 106, 1)90. D. How Effectively are Services Being Delivered? 13. Designing and managing spending programs aimed at the poor is complex. Reaching and communicating vnth large numbers of scattered fimilies facing different economic circumstances is difficult Effectiveness requr strong instiutonal capacity. A central part of the review therefore covers the inutional framework governing the delivery of services. What official agencies and NGOs deliver services to die poor? How are services provided? What provisions are there for meeting the special needs 62 of women? How do the poor claim a share of services offered to the general population? How do the poor influence, and secure changes in, the services offered? In more specific terms, the review would collect information about systems and procedures for the following: planing and budgeting, including the capacity to relate allocations of annual budgets to long- term development priorities and to maintain balance between capital and recurrent outlays-and in recurrent outlays, between personnel costs and spending for materials, supplies, operations, and maintenance; • overseeing administration, maintaining balance between central and local control, and organizing the involvement of communities, beneficiaries, and NGOs; * identifying clients, providing access to services, and adapting services to local conditions; * selecting, training, motivating, and supervising staff, and designing realistic and achievable individual work programs; and * monitoring program performance and providing feedback to managers. 14. In analyzing the infornation, one major institutional issue is the scope for building alternative sources of services (introducing competition and choice). This demands a vision of appropriate areas for government involvement, and what areas or services could effectively be devolved to the private sector. Indeed, given the scarcity of managerial skills and administrative capacity in most countries, and the efficiency gains that could be derived from transferring some decisionmaldg power to implementors-it is important to critically review the roles that the various levels of govermnent, NGOs, private enterprises, and communities play in te above. In most countries and sectors, such a review will point simulbteoly to the need to (a) stregthen the ability of cental ministries to providepolicy and programmatic orientation and (b) decentralize the amniruraon of budgets and operations, giving users, NMOs, and private providers greater responsibility for the production and delivery of services and for quality control. F. How are Expenditures Fnanced? 15. Financial Consideramons. The intersectoral analysis needs to address the broader macroeconomic fiamework in which the public expenditure budget fits, to ensure that excessive spending does not undermine the macroeconomic and financial stability needed for sustained growth and poverty reduction. Widtin sectors, key questions concern cost recovery, user charges, and the earmarling of taxes for specific services. One important consderation is the financing of recurrent expenditures, particularly for human resurces, where recurrent costs loom large in total sector costs. In many countries, inadequate financing of recurrent expenditures is TlE major problem in the public provision of social services, with staff costs absorbing most budgeted resouroes. Budget-financed programs also tend to be susceptible to arbitrary cutbacks. Beneficiaries can contribute to financial sustainability by supplementing government revenues. In many sectors, cost recovery issues are germane only to services the poor do not use; thus, an increase in user charges may benefit the poor by freeing budgetary resources. In other sectors, the need to sustain services is the critical issue. In some cases, while higher user charges may have a negative impact on the poor, lower user charges may be even worse, in that they cause excessive dependence on the vagaries of political and budgetary processes to maintain services. For example, low electricity rates benefit those who use available lines, but starve electricity companies of investment resources, thereby freezing service levels. Or, worse, maintenance is not performed, and generation declines. Low water tariffs have a similar effect 63 on irrigation, as do low interest rates on supplies of credit. Still, within the limits of sustinability, it is important to ensure that the poor are not excluded from basic social services when introducing user charges. F. How Effective is the Social Safety Net? 16. Even after policies and public expenditures have been configured into a broad-aed economic growth strategy, some people will be unable to talk advantage of the economy's income-earning opportunities. So, the review will need to assess the coverage, efficiency, effectiveness, and appropriateness of the social safety net. Principal issues will be provisions for meeting essential food, health, and shelter requirements. Here, there are two issues: (a) safety net provisions for individuals who may be in chronic or temporary need because of their own circumstances, and (b) safety net provisions for the country or a region in the face of disaster, such as drought In both cases, special attention to safety net provisions for children and women is warranted. 1. Targeting 17. In terms of reaching individuals, a central policy question is targeting. Targeting public services to a particular group, rather than making them available to the entire population, reduces the budgetary resources needed for producing the service. But it tends to increase the per capita cost of administering the program. There are also economic costs or benefits: targeting reduces the scope for distortions associated with giveaway programs; at the same time it introduces deadweight losses from people trying to get on the target list Weighing the costs and benefits, targeting tends to be more appropriate, the smaller the target population relative to the entire populadon, and the better the institutional capacity for identifying the groups. Even wSih improved cost-effectiveness, in many countries sharly targeted programs are not politically sustainable, because they lack a sufficiendy broad consfituency. But, because of weak administrative capacity, it may not be possible to devise an affordable nontargeted safety net program. This would then heighten concern about policies to promote broad-based growth and human capital development. 18. Screening Mechanisms. Two principal targeting mechanisms are used-indicators (for administrative screeaing of applicants) and self-selection devices (for inducing applicants to screen themselves)-for sorting members of the target populadon from nonmembers. * Screening by Mdicatorst Targeting the poor on the basis of income indicators derived from household surveys is oftn recommended. In the absence of such data, proxies such as geographic location or demographic characteristics can be used. While administration of such approaches is simple, benefits are not effectively limited to the target group. * Screening by SeV-Selecion. Self-election devices that discourage the participation of the nonpoor through program and project designs (low-cost dweilings, low-status foods, low-paying jobs, or simple water and sanitation facilities), and which make the service desirable only to the target group, can complement regional targeting schemes. An attraction of rural public works schemes is that they have the capacity to screen participants even as they raise incomes. Self- selection is achieved by enforcement of work requirements and the payment of relatively low wages. Such wages avoid attracting workers from pursuits in which opportunity costs may be relatively hiLgh. Work on these schemes can stabilize the incomes of the poor, and provide some insurance against the short-term effects of macroeconomic adjustmnent (see Box 3.5). Nevertheless, ensuring the quality of work requires close and frequent supervision. Self- selection is also useful for food and nutrition progams. Often based on foods consumed only by the poor, innovative schemes also rely on higher-income groups' predilections for special packaging and other services. 64 BOX 3.5: India-the Safety Net: Better Targeting through Self-Seledion 4 ...Rece R nt rcsearch uiggegstsi widi tho limiited set of jolicy inksruments lypically available in ,o :rral octors of developing olntries, imperfcct coverage of' die poor arid leakage to the nonpoor must be expected from even the most well-inthti6onedpoverty:ireductioni scheme. One way to better reaci.- the poor-even as the fiscal 'cost is contained-is to build inceatives for selCselLction intm the scheme." l ahor-inctnsive rural public works projects haive the potential to both screen andprotect the poor, as>y - welI:as to create and maintaii rural infrastricture. The limited cvidence ror Soutl Asia suggests that, if the wnge is low relitive to the work reiireinent, few nonpoor will want to participate. Meanwhilei, benefits to the poor can be sizable. However, deitiLi of project selection, design, and financing Irc -crucial to success in poverly reduction, both in the short and long term. Benefits to the poor ca ibe ;4 Y d]`dhissipated by 'a lidly conceived and executed project. Martin RavwlliUon;"`c a. 'Reaching tme ['oor througih Rural Plublic Enmploymrent: Arguments, Evidcnce, mad Lessons rio. South Asia." The World :Bank Reseach (bser. 1r99 . 1. -9i. 2. Disaster Prevention or Relief 19. For countryvide disasters, the issue is the level of preparedness and how public expenditure programming reflects the level of risk. The most important issue here is the question offood security in drought-prone Africa, and the vulnerability of the population in other disaster-prone areas such as Bangladesh. Given the recumng, albeit unpredictable, nature of these disasters, an approach to public expenditure or investment management is needed that takes into account ihe expected outcome, even as it makes contingency provisions for the worst case (see Box 3.6). BOX 3.6: Food Security and Disasters in Africa A recent paper' revMwed the impiat o drouughts and related disasters on the fbod securily andi ddevelopment prospects of Sub-Saharan Africa. '11IC paper points tc a relationmship between drought and-, 'famine in Africa, where irrigated.agnriculturul production is less than 4 percnt of the total. But the: puixpr argues thia the failure of rains alone docs not caume fainehr. Vuluerability tu Flauine is decrleiiinid hy .rut poverty, envirunmental degradation, and trends that influence overall cconamia<:: produclivity, levels of'savings, anid-the diversity of income sources-factors that Metermine how wetrl- a populalion pin. cope wili dtought aid ollier ilsocks.. Weakness iu goverinment ecoIIolici policies,W which havi'contributed signiricantly over the past two decades to poor.economic performanic nd- 'detcrioratiig social environiment in:Da iumber of African eountrics, is an important contributor to vultdezir'bility. Civil disonxler and war are evenzinuiore imporarint wntrihiliing factors, allowing or causing;. droughts tos turn intofainie.. . ... The paper poiints to the, nedi to bIild, into the domestic policy framework ways to tackle the.- employment or income issuo. at the household level. The paper recommends that the Bank strengthen thlcway it dcals with the.developmental consequences of dr-ought and drou ght-relalled disasters ia its ciuniry aisis, re.gular lending activities, economic and sb:ctor wnrk, and public expenditure reviewq as well as influence in`a:constiuctive way the:actioins of governments and the wider international community. to achieve greater pvrlatreduess agaiLst Ilieseteveuts. . . . . . : . : . . Harry Wat'r a'. 'lod Security aiud DisaLsters'in Africa': AFIramewnikl tor Action" (dm1ft), World Bank AFTSP, June 1991. (This is a iitcniaid document witl rcstricicd circulation.) 9 .' '. . ... . . . ..... ....,.. , ,;,,K 65 IL Sectoral Issues A. Agriculture 20. Overview. In many countries, the majority of the poor are farmers-whether smalfholders, tenants, or agricultural laborers. Hence, raising productivity in the sector is an important conduit for reducing poverty. But many costly public policy and expenditure mistakes are committed in agriculture in the name of poverty reducfion: subsidies are granted, the public sector intervenes in the pricing of inputs and outputs, and subopfimal projects are chosen. In the event, the beneficiaries of these policies and projects are typically the nonpoor. This points to the need to analyze carefully the distributionl impact of expendiures in the agricultural sector. Often the distributional impact of expenditures wil be clear from a geographical analysis of the beneficiaries. But there will be limits to this analysis. Poor communities include people who are better off, and understanding the relationship between them and the poor is important for analyzing the likely impact of programs targeted to ese areas. Therefore, in evaluating the impact of actual and proposed sectoral public expenditure programs, it is essential to start with an understanding of the poor-including the constraints and incentives they face-and their relationship to better-off members of the community, and a behavioral model of how both groups are likely to respond to the opportunities to be provided by the expenditures.' 21. Equity. The nature of expenditures-and the distribution of access to publicly financed goods and services-needs to be examined. This can be done on the basis of region, class (landWess versus landed), farm-size, agricultural exteDsion, or gender. The composition of the budget-the proportion spent on subsidies, on productive infrstructure, and on services-also provides imporrant indicators of the distnbution of benefits. To the extent that key services or inputs are subsidized (such as ferdlizer, water, or electricity), the distribution of benefits can be broadly assessed by identifying the prmary users. Because the nonpoor tend to capture subsidies, special attendon to their distributional impact is warranted (see Box 3.7). Subsidies also tend to crowd out expenditures that could be more beneficial to poor farmers, such as infrastructure development in remote areas and research and extension services. 22. Efficienc. Measuring the economic efficiency of public expitures is more straightforward for agriculture than for many social services. It is usefil to detemine in broad terms the rates of return to infrastructure investments (certain types of irrigation may have both higher economic reatrns and impact on poverty reduction), to research on different crops and different regions, and to government-supplied services (animal health and tractor markefting services, and so on) compared with commercially supplied options. Environmental costs and benefits should be factored into the analysis. At a more aggregate level, it may be usefill to analyze the relative returns and distribution of benefits from expenditures for subsidies compared with expanded productive capital, and to incremental recurrent spending compared with capital expenditures. 23. Instiuonal Issues. Agriculture traditionally has had extensive government involvement, which often preempts opportunifies for private supply of services and infratructure. Yet, government services are often inefficient, high cost, and badly ruL. They may not serve the interests of the poor well, if at all. The review should address the following quesLons. First, how strong are sectoral institutions in delivering the services traditionally covered by the public sector? Here, an essential coroLary question concerns research and extension and the links between them. How is the research agenda determined? Do poor farmers have a voice-through local extension agents-in the choice of crops, pest control, or culdvation practices being 1. See FAO Investmeot Centre, uideineson SogologicalAnalysis nAgrulural lnvesmwProjeaDesign, Drft Technical Pwr No. 9, 1991. 66 BOX 3.7: India-Evauating the Incidence of Agdc,dwul Subsidies In Ilidia, agricultural subsidies totaleted R. 135 billion (USS7.5 billion) in 198HO-9, mom than dhc amount nf public inverstment in agriciulnirr. A recent irp'om? izidicatai tLat benelits ei'Luin agrictIlnITrl iniput suhidies liave gwaie overwhliliaiiagly to wealthier ind agriculilundlly dsdvanced rgions| and 1to l:rger farner.;. Suhsidies therefmre have not boeeL in eiTeolive anti-pwverty iaslimument. If iotal investimcit conts in irrig;ation are included nq a benefit, Pualnij.reccived iesnefitb of RNs. 1.027 of r ruts mrinllpel sura. oil 0vIrr.ge, in 198U-87, cumupazed wilh ani all IndiU average of Rs. 511 per herfarm. Haryann, Tamil Nadiu, nnd Andhm lradeash also recrived per hectare lxianlits ablxve tlie atLionlmI avern.ge. ULrger aiaid wealthier I;.nners, who h:ave access to irrigation, grotuadwaler. and credit, aaid who uvo higlher levels oif le:tiUer. receive tdie gritc;t proportion of subsidics. Benefits have a:en-wdl In more qdvnnced reginans largely because thlee Ml: tdie regiuos will| hiirC iraig;ation ZirzaiLlrdlurc. lhiit¶er levels cml' input use, and, timus, giWer miarkewLhie surplulws. Subsidies ha:ave allowed i.anners in these st:atus to maintain their incmine trmns or traek! in liar Ive 0f falling cummcdlity prioes. Stires with low iniiput tiw andl low productivity liave utl beexn IU. Iirtuaaie, and are tub jet 1o dLxiltl"u terias of trade. While falling commtxlilv priceHs AnM good1t4 for net tanl| pul h:L%ems, fiod purchaser; in delicit sltais-nrid xirticularly in easktru linlia-were nEnile worse oull by rLici intevenition uianl subssidy ljoliciat'. MAOI plices slayedL h)igh in Itioid derLfiil slats, liighier thai: the all-liadia avcaage. A. ilhc Publi: DbAtribuliun Sysinm dlid nut exicaidl tn rural nrlxis, sndl parurticildrly maclt tu emataern [ndi:m, these rrnumil; vWre ncl compengalvl. Nior didl rastemia Ind11i;i rMudi1terai 1e1eta laUI odvanclicLd teclaaUk9ty ur ilnrastimuluru fr tieir re;gina. hlieir coSt!. ivrnained Imiglh and yields lnw. A | ilinput andt haed subsidies hav;e grwn, pulblic invesitmenis in 'r.wtil-inducing Ilhildiogy, infasiniclurn and services *.vitnl tto hnnsting panldictinai andinj iacimins-h.ve shiaun.lted. with ua pLILiculJuly deletelri.us anT I ol Ilthe putr. P'eu,wela Coix a. India; Ag, i. ;liam:e mmmIarr aigr. ama fqkr uuilikrmmuih, w i1I G imAk (EM Repa.rt t 9124EN. Volume ll. Muuch 1991. (rFis is nmn interial documcn: wmim renrmctcl ciacmelalmnn I recommended? Are crops grown by the poor, and in particular by poor women-such as root crops and vegetables in Africa-researched as thoroughly? What percentage of extension agents are female? Are women's land rights and access to financial markets clear? Second, where the government supplies or controls services (input supply and output markedng), what impact does this have on the poor, including their access to services or rights to grow crops, the returns they get, and so on? In many countries, public monopolies for the marketing of crops, justified on the basis of likely increased returns to poor farmers, result in lower prices paid to all farmers. Third, what is the scope for private sector provision of currently government-provided services? Even where govement legitumately takes a lead role, for example, in certifying seed quality standards, there are ample opportnities for private sector involvement in related areas, such as seed research and production. 24. FinoncIng Issues. There may be limited scope for direct cost recovery in subsistence agriculture. But there is a strong case for full cost recovery in cases where the output is marketed. If the services and activities provided are efficient and profitable, farmers should pay for them. If farmers cannot pay, it suggests either that the services are inefficient (irrigation water does not reach the fields and thus output is not increased) or that other constraints are binding. Indeed, poor agricultural producers will be epecily sensitive to the food security and other risks associated with new production techniques, since the implications of downside shertfalls are so severe for them. In any case, the inability to repay points to a 67 problem with the underlying investment concept or designs, which subsidies will typically not correct. They will also be very difficult to target only to the poor. B. Rural Water 25. Overview. Some 60 percent of the world's rural population lacks access to safe water. This has implications for health, productivity, and quality of life. The poor suffer most. Their productive potential is reduced not only by the time and energy spent in obtaining enough water to meet basic needs but also by time lost to illness. In many rural areas, women walk long distances and spend much time fetching water. Improved access to water frees them for more productive work. By reducing use of unsafe supplies, it improves health. 26. Equity. In most countries, public investment in rural water is low relative to its potendal impact on the quality of life and productivity. As with other public expenditures, there is a strong tendency for better-off areas to claim the lion's sbare of outlays. In rural areas, villages closer to water sources tend to be served first; ihese also tend to be better-off agriculturally and therefore richer. Large landholders are often able to make sure that publicly funded wells are on their property. Assessing the local distributional impact of expendintres requires detailed survey work, but the poverty profile should help in a regional assessment. 27. Instiuonal Issues The review should evaluate the insttutional systems charged with (a) determining the location and design of investments in water facilities, and (b) ensuring the operations and maintenance of systems once established. This will require a review of central systems and the complementary systems in place for villages and small fairms. Analysis of the interface between community organizations and the center-and the role of NGOs-is essential. The center will need to provide technical assistance for major maintenance operations and regional training and design. Reliance on local maintenance requires that systems be easy to operate and repair. For example, pumps must require minimal roudne maintenance and have few parts; the parts likely to fail should be easy to replace or repair, and there must be someone in the area who can do iL There must be a clearly identified local unit responsible for maintenance of the system. 28. Efficiency and Fiancing. Fmancial sustainability typically requires a policy of full cost recovery, at least for operations and maintenance. This is also important for sector efficiency. Experience suggests that rural water investments without cost recovery involve considerable waste, underfunding of recurrent costs, and poor service delivery.2 This has important linkages with the sector's institutional arrangements (Who ensures that maintenance is performed?) and its economic viati:lity since, without maintenance, economic returns decline sharply. Meanvible, wells need to be relined and redrilied, with the pumps replaced every seven to ten years. If communities cover only operations and maintenance requirements, govermment-financed development or replacement programs sdll will be needed. Experience suggests that users should contribute to capital costs-to demonstrate community interest in the investment and ensure that incentives in govermment agencies covering costs that the communities do not, are not distorted. Investment designs that minimize future capital costs usually entail higher recurrent oosts. 2. Sce John Briscoe and David de Fcrranti, Watr for Rural Canaunwides: Helping Peopk 114p henwelves, World Bank, 1988. 68 C. Rural Transport 29. Overview. Rural roads stimulate agricultural growth. By improving access to markets, they affect the prices farmers pay for inputs and receive for outputs. They improve access to extension services, credit agencies, healti services, and education. Identify,ing high-return investments in rural roads in poor areas is a key to poverty reduction. Such investments can have particular benefits for women who, in many countries, bear the major burden of transporting output and household supplies such as fuel and water. The kdnds of vehicles that travel the roads are also important. Design standards for simple vehicles such as ox- carts, bicycles, and bicycle trailers are an important consideration. 30. Equity. The major issue is the tendency for better-off areas to capture a large share of expenditures. In analyzing the issue, the poverty profile's identification of the location of the poor is an important tool. 31. Efflciency. Traditional appraisal methodology relies heavily on savings from existing traffic in the measurementof project benefits. However, other techniques are available, although more difficult to apply, that take into account the value of time saved by women, or agricultural potendal, or both. But it is also clear that roads have significant external conswnption benefits that are difficult to capture easily in conventional analysis. This may require consultation with the community about the appropriate location of roads and the standards required. The efficiency of the investment is also affected by costs. Rural roads are often overdesigned for the job at hand, using design standards and construction techniques that are too elaborate and costly. But labor-intensive techniques require high levels of during-construction supervision and postconstruction maintenance. Potendal enviromnental costs also need to be factored into the analysis and design. 32. Instulons and Financing. There are two central questions: (a) Who decides which new roads will be built? and (b) Who maintains them? In many countries, responsibility for construction of rural roads is divided. Budgetary allocations for rural roads are made centrally, but decisions on location are made by local authorities, with or without popular participation. Inappropriate location or standards can doom community involvement in construction or maintenance. In the public expenditure review, it is important to consider these institutional arrangements, and to review the criteria being used to decide on the location of new roads and the construction standards. It is also crucial to consider the responsibility for road maintenance in light of experience with community involvement. D. Urban Infrastructure 33. Urba Services and the Poor. Urban populations are growing rapidly and, along with them, urban poverty. The physical manifestadons of urban poverty are evident in all cities in developing countries, but urban poverty has become particularly problematic in countnes undergoing adjustment. Reduced subsidies (for food, water, transport, and energy) in urban areas, coupled with the transitional unemployment associated with shifting demand from nontradable public services to tradables often produced in rural areas, have reduced urban real incomes. The challenge of urban management is therefore to improve labor productivity while directly alleviating the growing incidence of urban poverty! An important first step is 3. Road standards, cost of construction (and labor intensity), and maintenance are interelated Highec-standard roads are more expensive and more difficult to construct with labor-intensive methods- Lower stadard ronds often require more and more continuous maintenance. Inadequate aintenance is a critical problemn in many countries Organizing a local community to maintain a road, even when the benefis of the road are clear, runs into the same "free-rider problem that makes mainteuance of rural water so difficult. Experience suggests that it is easier iF the community haa been involved in the citing of the road. See dso Chapters 6 and 7. 4. See Urban Policy and Economic Developmnc An Agenda for the 1990s. A World Bank Policy Paper, 1991. 69 to address public policies affecting the demand for labor. City governments should pay particular attention to the regulations and infrastructure deficiencies that impede the growth of productivity of urban entrepreneurs-particularly in the informal sector-and should provide greater incentives and improved services that wili enable entrepreneurs to take advantage of opporunides within the urban economy. 34. Ifrastucture. Cites in the developing world have been unable to keep up with the demand for power, water and sanitation, housing, and tansport. This reflects serious supply-side constaints. In most countries, the dominant role of central goverments has starved local governments of financial resources. Meanwhile, financial dependence on central governments has undermined local commitment and capacities to generate and maintain public infrastructure and services. Individuals and firms in the private sector can provide their own electric power, but they forgo the economies of scale that would accrue from systemic provision. Such private services are often beyond the reach of dhe informal sector. This inhibits the demand for labor, and growth. For water and sanitation, artificially low tariffs are typically a major constraint on system expansion. Govermments tend to keep tariffs low, to keep services affordable. Because the tariffs do not cover operations and maintenance plus debt service, large segments of the population, mostly the poor, remain unserved. 35. Housing. Given the large unmet needs of the urban poor, the keys to broadening the provision of sustainable, low-cost housing are affordable standards, cost recovery, and improved instituional capability. The sites-and-services progams of fte 1970s and 1980s reduced the costs of shelter and infrastructure, but they did not usually reach the pooest househds. Nor was cost recovery achieved. Squatter-upgrading or slum-improvement programs were more successful in providing benefits to dhe poor while ensurng security of tenure. Cost recovery also worked relatively better than in the site-and-services programs. Intead of subsidizing sites and services, unserviced settlements inhabited by the poor should continue to be upgraded. The review should consider all subsidies including those providing land, infrastructure, and credit at below- market prces, since subsidies tend to restrict the supply of resources for urban investment-and better-off segments of the population often preempt benefits. Meanwhe, since improvements in housing policies and regulations are crucial to the sustinability of urban infrstructure for the poor, they should also be discussed in the review. 36. Urban Trnsport. Efficient urban transport services and well-naintand urban road networks play an enabling role in economic development-and poverty reduction. Often the poorest urban residents live far from job opporunities, and spend long periods of time traveling and waiting for infrequent and unreliable bus service. Public providers are often inefficient and encumbered by debts, and there may not be sufficient profit potendal to sustain private providers. These problms are often compounded by the lack of feeder roads into poor areas and by poor maintenance of city street networks, causing delays that reduce the productivity and efficiency of vehicles. The basic requirement is to define and sustain the institutions and regulations necessary to provide other basic transport infstructure and services. In most urban areas, the roads will remain a municipal responsbility while the provision of bus services should be left to the private sector, possibly with targeted subsidies for poor users. Improvements in efficiency through relatively low- cost traffic managementrequire a crain level of institutional capacity, and improvements in public tansport require institutional coordination. Where such improvements have been undertahn, they have yielded very high rates of return, significandy reducing delays, fuel conswnption, road accidents, and vehicle emissions. The scope for such improvements should be considered in the review. 70 EL Family Planning 37. Overview. Family planning programs can help to improve family health (especially female health) and reduce ferdlity. Ihere are two facets to reducing fertility-making services available to those who want them and influencing the demand for services. The experience of the past twenty years indicates that even in poor countries a process of firility decline can be inidated by a typical family planning progamm that fous on the provision of contraceptive supplies, services, and associated information. But there is litte evidence that such programs can do more than meet the needs of those predisposed to family planning services.' Supply-oriented strategies thus need to be complemented by social and economic changes that reduce desired family size and encourage birth spacing. Female education and job opportuniWk. s are dtus important complementary measures. In reviewing country programs, the demand factors therefore have to be considered in the evaluation (Box 3.8). BOX 3.8& Evuating Demand Creation in Fmly Pinnng Programs 1 -e~~7 F-anmily pl;winizg prograis depend on the availability and the accept;uac of modcrn cositracqYtion. Tihe prulnims themselves noed lci create dImanid Its well us provide servtice. Dem:nd crnjrticn cnn be divided ilitil IWl tylpes: indiret uind Lldiuet. Indirect JIwnand crennion dlependl generally 1on sciail wad econonmic development, issues within the domain of development lplanning genes-aily and niaional social mobilization. Among specific elfrts in this domain am uctivities that improve general edmucaliunl .,f the peolile aid eqiecially those wihich eznphinsizre woiten'sl edualicia, wwnien's mobilizajtion and the impmve.m!nt in the st;Iatts of womien througbh various activilies;: he thlew activilies develnped as direct projcts for fujily plunning programs or activities clevelopd frain other programsr but relating to the improvement in die tMilus ol women or: improvement of their economic ppITttImiztJeS.. SUeII plUr clan11 Cal indihectly lead wuimen to) sek and accept .nore readily ast&utnce *o ucontrnl their fertility. Tnhir impact can 1. st'l:ietlrneaiJ wlell accus i)iomtiicd by special mews;ges or informatioin and commnunicatioLs nctivitiL: aimedl at highlighting IawaIrInCss of the women atbut die unportance of I'ertility regulation fiur their lives. In educalion generliy upportunities need to he ltken fnr e.inhaliting ilie interrlsuliwisliill letweell IpouX)I.latiten and re.jures and poplaidation adilcl te c*ivrinment. Pipulation dynu;iciis need to be a p:rt of evcry school progrum in devehzloing Countries at die present lime. Girls nind young wonziea must ulso learn at an early Jagt ie consuxjurnces of high ferLility fin their uwoi liealti aLd weilare and tiht or their childrein. Thle sectnd approach to demand crwtiun Is ihat incorplorated in infminnatinn, cducation, and cnini cainutiain (IEC programs wticLt provide infornn.tion speific tJ family size jireferences or liawily planning anal cE1tn.rnelpliul ta:hniqlues andi services. This ani ltahk nuaiy lurms, f(rin anasq4 media cuilnlwIgns tor a1 Scries of smaller inure- directed elltirts. All availl1ic let?l;ods 1ul cUiiimiuliiCaitqin 1lLly be usedl roin u variety of ministrix; and agencies, Minisidies ol llealth, of Youth. of Womcn's Athirs, Dlbensc, Industry anid Agiicullure, to name a few. All of these need to go hand in hand with progrumS fur the distibution of cAintr;acvpti%e suppiilies. Su.tan Caexlrane M. SUML& CAlcmirce acid Frederick 1. Sari. tli-tNH Ierildiy.* Wii flau& u ik lcaiai ScLr Pui.rilic. Review. 1'1. 5. Sec 'Population and the World Bait A Review of Activities rnd Impacts from Eight Cae Studis." Wodd Bank OED, 1991. 71 38. Equity. In assessing the equity of government-sponsored programs, it is important to know how the fertility patterns, atttudes, and practices of the poor differ from those of the general population. In the absence of government programs or government support of privately provided services, the poor may either not have access to family planing information and services or may have to rely on tradidonal practices dita are unreliable or can endanger health. This is especially relevant in rural or other areas unlikely to be serviced by private, for-profit providers. In some countries, the entre rural population may lack refemal or follow-up services. 39. Insfturons. The delivery of family planning services needs to be in harmony with prevailing cutural norms, providing high quality services based on clients' perceptions of needs. In many settings, family planning services have been most effective as part of maternal and child health programs. In other settings, vertical programs have proven more successfil. The one thing that has been learned is that there is no best delivery mode. Important though clinic-based progmms are, their outreach may be rater limited, especially in communities where health services themselves have restricted outreach. In such situations, there is a need to bufld social marketing or community-based outreach programs which involve the users directly with the family planning programs. Regardless of the form of delivery system, it is desirable to have back-up medical services with trained staff for clinical contraception methods. Such services also provides a basis for referrals, and for training of staff for other programs. 40. Economic Efficiency and Fiancing. Family planning programs are often highly subsidized. This is appropriate as long as it does not endanger the program's financial sustainability. Indeed, it is probably essential if the program is to succeed in changing behavior.6 But the need to subsidize end-users does not mean tat the operational efficiency of programs should not be scrutinized. On the contrary, funding patterns of public family planning programs strongly affect heir efficiency, as preemption of fiunds by complex administrative structures and higher-paid health care workers can restrict training, transportation, supplies, and information and education for potential clients. Nevertheless, ascertaining the cost of government programs may not be straightforward. Budgetary data may not be wansparent. Sociocultural and political exigencies may lead governments to disguise their roles. Or, because of administative complexities, total expenditures may not be immediately evident. When family planning services are pt of the health budget, fbr instance, it may be difficult to apportion fixed or persomel costs. F. Health 4!. Overview. Improving the access of the poor to health services is important both for increasing the poor's income-to the extent that illness reduces people's capacity to work-and for raising living standards even if income remains at poverty levels. Valuing the latter is beyond the scope of economics. For the former, although gains in productivity from investments in health are difficult to quantify, nunerous sudies have establisLrl the relationship between bealth-including nutrition-and learning, and, i turn, between leaming and productivity. Healthy mothers produce healthy babies, healthy students learn more, and healthy workers work harder and longer and produce more. Improved health reduces the waste of human and physical resources that results from bearing and raisng children who die before they reach productive ages. Short life expectancies reduce the gains from schooling. The gender issue is important in health. More than one-fourth of all deaths of females in their reproductive years are associated with childbirdL Almost all can be avoided with basic family plamning, prenatal care, and help with childbirth. The two critical questomi for the review of public expenditure in health are how to reallocate spending to better improve health outcomes and how to assure that the poor share in the gains. 6. See Bird! mad Griffin, op. ciL 72 42. Equity. In 'many countries, curative health care has been emphaized at the expense of preventive care, and urban health care at the expense of runl. Public fimding of hospital-based curative procedures crowds out cost-effeccdve basic health services. Hospitals are inherendy expensive and, when their services are "free, " they entail high subsidy levels. Even in well-functioning systems, hospitals primarily serve urban residents. Meanwhile, most poor people in rural areas lack access to health care. Even where rural health care facilides exist, they are typically not equipped to deal with gynecological emergencies, which are responsible for a significant proportion of matenal deaths. Some developing countries, by emphasizing primary health care including immunization, sanitation, and early treatment of diarrhea, have been able to reduce sickness and death to rates closer to those of developed coutries. Building on this experience, countries have broadened coverage by adopting strategies that chamel increased resources to basic health care delivered through decentralized networks of lower-level facilities supplemented by outreach programs. Public health expenditure reviews should assess how the country compares with similar countries in providing universal access to primary health care (Box 3.9). BOX 3.9: Evaluadig Equity Innes in Health _ , .7 77 -77. . -. .--- .. --- *r Aiirce d "itn6i ': spn ing:ohen th: ibThe study's painit of | . . depairture ~ .ta wbfld.. ..rirsi,j&:gevienimei is1iO jrihury:lagent. Or ristribition in the"health %eLtsr; :jf it:Iails; to? tarp,et-its spending :to. tli poori that :failn is unlikely: to bi:made up by other sources of funds. Sicond, in targeting the poor, egrahy m atterrtsgoveraneiit spendinig targetedt l ..to bighni:ortaliiyr n!c? ivectors. .tiiULitimittirig disenc ase cntrolled and the communication of r rWerbOjne.jdiseascs.iS maged uughj 6 water sniation,estion that heailth .c. tnil inprnvc lar abl& nndcwadit:ofrehaget ia individual bhabiibr. Moreover, int&ventioni sucf as| oonf a driin nterad -escragc facilities, and discs ;po'rL'"poo woiol'. Auedcjx.'r.ei' . reguladnf air p-llutioi an tbiefithcdiepoo more, thatwthr c14 if wdy bew use die poor u e.les . ...able t:.njcornpe.nsnte .for.:.i nSjuieuaitj,ublkK; invest inetni td,&e zas:~ :hlinost ao isiporUi paibhio :. iuvestmtuts in; healtb canb bc;d. geogrnplikilly, izs ucCug thenfasibily.of directing tnuC .. to imp.overished acias and disadvii opultion group. -: . .. e findings eonI targeting bfr public xpenditure on heiltW to.e thpor.iii AAiai omit;ije are.. not tncoumging, however. . reor the cninties .forwiichidlata could be assembled, .there is lille evidence . .of suich targeLznfi, euztir .by 'income group or geographie4 ar; .The4 *O suggest that thec samec. iijfcctious and parasitic diseasesh lhave iten idling people in: Aia Thr*cohtiiescontinue to do so. Thec situation requires govetuments Jt orient Themslves t proim at.givo.chiidre&a healthy start. in life and ensure that their. lives wi.bci liiid in enivironments relatively fe .from.. preventable liIW' tltateaiung or-debilitating d Thg wo bia are,th less dthey can spend on hehitb iei the poorer teir herilib DutoODI, the rnethe:bmphnsis2sho4d be on public- alth ::. -~~~~~ ''" - Jeef'eng Ta n.| :Fil11110xc Ai h Aia,"l,ANia RegiomItSeles, D, Interna. liDiii 6, X i990; (i is an e ' '.: MailOcmo ihXti¢elg -j. ,*.:. So*--S . : . ... . , Au i 43. Indinlons. The solution usualy involves a health care system that is more comnitted to prevention, closer to those who need it, and more responive to their demands and problems. Community health care requires special atention to the selection and training of health workers, the supervision and sipport of local clinics and health workers, and the admiistiaton of buildings, vehicles, and drugs. To be effective, the approach requir community paricipation in decisio making, finance, and organization of the local sysm. This meam giving greater financial and management autonomy to local units in the system. Local units would have greater reoibility for plann an budgetig, colectg fes, and detrming 73 how collected finds and government transfers would be used. This would improve incentives for fee collection, incrase accountability, provide signals about appropriateness of services to the center, encourage community participation, and minimize administrative costs (Box 3.10). BOX 3.10: Ecuador-Evaluatng Instutonal Capacity in the PHN Secdor :. : . . .. . . . .. . :. . A populati6n,Nhenth, anhd nutrition sector review for Ecuadort included a complete institutional .Jrsessment, along with an analysis of policies and financing. The instilutional assessment included an: organizational nnalysis-identifying which instilutions did what in the sector'and.how.lhey intemcted; iiig the organizational culturc the dic e servicdelzveiy sad,cces. The.; i rL.vuew also included a managemcnt audit of the: three agenicies. For the aiaiybis, the concept ot manag_ement. wis?separted into.eight discrete tasks: (a) pling sysms, (b)client' rpopulation, 4) diviaon. of. sefvicis,: (ci logisticis of materials and maintenance, (e financing and budgeting, (I) personnel,.() leadership, and (h) contmrl iyszems. Tis. approach poinLed to two sector pobleins:.. ....;: ::.Srnatural Dienwcn4ies. The lack of :stabl6. long-term policies n Iplementation .: .:; :: I:strategies, the inability to:coordinate andlor integrate the actions"of the" main heialth care . :pmvidrs, hnid die lack of a inational autiority to set priorities aiidalfocate scarce rcsources. * * . ~all prlujde:.thc 4Ost.eheitive development of the seL-tor. . .*lt en, W i.r ewsnibses.: The". lack of pr6tbssional managers and the application of :reaLsonable manigement l)rntices reducx the instilulions' cwapacizy.to execute policies and. programs. This..sh6rtcomiiig :ki cvjleac l y a general l: of planningi.and control ..sysems, uicrdecased ability to implcment programs. wuak logiical supportsystems, and.; an absence:of cost accounting andtimely reportin: of rilevant infoiLmation., Tnut i turin, pointe tfieIway to policy recoimnendatidnso. r'kirEtlod 'i~*hboa.) ' '. s. - * *: .z .Wdlam; ....re.vey .:n. Ecuador PopuIaion* IelLh and Nutriion Secuor.Review.SAR 60783EC, Ji 1986. (Thaisl admtins documcntwimh 44. Efflicency. Ihe link between priority setting and efficiency is crucial for the health sector. Pnonties need setting because of the scarcity principle. As in other sectors, priorities need to take into account benefits and costs. Although quesdons about the overall orientation of health programs and projects are relevant, the most pertinent quesions facing policymakers usually relate to scale. That is, by how much should an existing program be expanded or connracted? The answer to this question requires a margimal analysis which compares the expected change in benefits with the costs of te intervention. A growing economic literature attempts to provide a way to measme the healTy days of hfe concept, the economic effct of health interventions and alternative investments (see Box 3.11). Such evaluations also need to consider the mix of expenditures between incremental capital costs and incremental recurrent costs. In many countries, the balance is wrong, with overinvestment in equipment coexisting wit underfunding of recurrent costs for maintenance, supplies (mostly drugs), and trained nurses. 45. Fknawcing. The review should assess all sources of finance for health services, including general services, earmarked taxes, out-of-pocket user fees, and third-party C(suance) payments. Every effort should be made to determine the incidence-by income level and other relevant characteristcs of patients-of each of these knds of revenue, and to assess, as much as possible, the equity implications of that incidence. Carging users of government health facilities would generate more revemnes an;d-by allowing the collecting 74 BOX 3.11: Evaluating Health Projeds . Measuing cost-effectiveness of different health: programs.andprojects is difficult. Cost 'information is oten not"directly obtainablc and: niustbesnthesized..on:the:bisis"of incomplete or m.inconsiJstinz ac.ounzng recor a.' There isa:darh of epidemiological data. It also is difficult to isolate - the imjact:ofiA individual health intervention on health status and tosumupthe benefits of different interventions across diseases and popuktion subgroups.' : . {. .: The bcncept of k;eal !ysof ea ddrcsses the latter difficulty., Ei is an accounting approach that uses estimates :of incidence, case. fatality, and duration and extent of disability to calculate the number of healthy cays.lost from disease.. Given an estimate of the ieffct of an intervention on the I course of disease, the concept can also be applied to:calculate te number of heiilthy days gained from the deintervtution. An iiportant potential modification to the conceIt s-an adjustment for the quality of hcalthv days. The':adjustinentis ..usually based on 'indicators of disability: and has been used I successfully for aiialysis of chr6nic disease outcomes in developed countries.b Qlidity indicators need tot bc&vclopdcd for the disc-ases md the social environment prevalent in developin countries. "Me henlthy days and quality adjustent conceptsarc imited to evaluating costweffectiveness of alteruk aives: with comparable'outcomes. Recent research suggests that twoJimportantclasses of vals u dgmentiare inh,erent in the application of cost -etiv a is.to coi ongprj m;ithe'hcilth sector-social time preference and produetivity weights.: The research denonstrates that `policy impliciti6ns can be stm6niily affecitd.by ..the se4or omission"-of weighs ftr. time preference and a productivity.. Beyond this','the healthy days approah s to be extended tn combine healthditatus of dirff6raL age groupsadd productivity' 'as' social objectives. s The literature on p:Mj=0f eialuation has: ,:exploirepjossibilities for oombiniig social objectives in'the form ofa s.cial'welf.farifncion e facilitate project choice, but furthereil: is' :nej to make.thiese possibilities pra*icabl and |ea.ily Ivceassblo. for routieeo vbuatiion.: In the meantime, tei smpler.appr6achot healthy davs ,accounting; temtireA4 by thie social sensiivity of planners,. can provide.valuable, iformation as one component'in pnject choice...... `ivioward Bar,nnum:. a. :Ghana Hini h Amacinen NojecTeam (eot preared byuR. oirrowR P. Smith and K. Him)a).: QeMsh& of;Au> aming the Health Impac of Diffeient ) De n LenaDvedoped Countrica. Inrcrnanaiosavwa ofEpidenado8y; -3. 981 :: .: . . . ... . *...... b. :Gw.&minee und D. ieey; utiliticsand Qpityk:AdjustedfigYk 4is,rcindJoaamd om : In HeWah Care, 1989 . . ;. .. . .. . ... . c. How Barn lum, DmyEof lifeuGaiiHd liiom RDnl J'rnjn," Sn iau1fljtacin4J987 . *.-. z s~. ........ .*............. ..-;...i*-*- agency to retain them-permit expansion of basic health services, which are more likely to benefit the poor (see Box 3.11). Expansion of nongovemment services can reduce the administrative and financial burden on government and increase consumer options. The charging of fees for government services encourages expansion of piivate services. Competition among private providers can promote efficiency in the prvate sector. It can also encourage greater efficiency in the public sector. When introducing user charges, it is important to ensure that the poor are not excluded from services. Members of poor communities and neighborhoods can contribute to cost recovery through the provision of labor and materials for the construction, maintenance, and operation of the services. 75 G. Nutrition 46. Badcground Protein-energy (calorie) malnutrition arises from a combination of poverty, ignorance, and infecious disease, including that caused by parasites, which raises people's food needs as it kills appetites and interfereswith nutrient absorpion. Protein-Wcaloric malnutrition is costly in terms of health and productivity. There is evidence of positive effects on labor productivity of improved health and nutrition-particularly among the poorest individuals. Health and nutrition status influence the performance of students in the same way they affect labor productivity. Numerous studies have shown that protein-energy malnutrition is related to poor cognitive test scores and inferior school performance (Box 3.12), although the economic impact of improved nutrition is difficult to quantify. Meanwhile, specific micronutrient deficiencies-especially of iron, iodine, and vitamin A-are just as destructive to health, even though they may not be associated with overall deficiency of food intake. Micronutrient deficiencies may not be limited to the poor, but may reflect inadequate knowledge or attitudes.' For present purposes, the focus is on poverty-related nutritional deficiencies. BOX 3.Z2: Nigeria-Evalatg ihe Qualio -Quantt Thade-off i Heath Care Delivery .A crii subsc~tor s epo sd health enaincing in(Ogur State in Nigezia. Tlio estirmated thc dcmand for outputient services as a function of quality and quantity variables. Tho ~anaI"i.i c6ncluded that:hctfecs would not significandy discourc potential users. On the contrary, assuming thai more.funds would .bo:available;to purchase supplies, maintain equipmnnt, and build un 1 icquatdeinventoryof diugs&, usage woidc lkely remain at present levels or inorcase despite-the higher l foc Te paiper thus jaommrcndcd improved cost recovery. thtough higher foes consistentlj applii Thnc paper also..atpcd that, even if usage of needed health c.reaby.the poor wore not greatly)tff&t6d by fc incdirs&s, tie hn;ciial buidei ondtie poor of paying thefees would be imporant: Tus. any ine o 6 ibhaie tnr f alheath carc sbould be accoipranied by measures tonreduc¢ the financial lpctR brsuch chrigin on the porest p-apl. The inost obvihus apprilach would be lo i&ntify thuioswho0- puor and cxcmnptor subsidize their fteC :: : . : . ; .. . .: . . .. :. . Sifrze~~~~Uajl Denron: ,. . . .. . ., ., . ,~ . . ... .aE. Nigeria: HTaulil Care Cnha,-Finnncing andwl .il iWiini, World Buiic lwii 382-UNIF,Jineol990.. (Tis in nintiwial :::doumwalwiLh.rric1Ed circulatio). .) . ... 47. Equizy. The first requirement for equity in any nutridon program is that the benefits go to those who need them most-to those malnourished or at greatest risk of being so. This criterio suggests that general subsidies for foods also consumed by the nonpoor will generally be much less equitable than targeted programs. Subsidizing food can prot equity only if the benefits are concentrated on foods preerenfially eaten by the poor, and even then the benefits must not be large enough to attract the nonpoor to change their consumption. Aiming a program at the poor need not mean costly means tests tD select beneficiaries- Many self-selection mechansms exst-such as patronage of public health clinics, the type of packaging of the subsidized product, or residence in particular areas. In cases of nutritional fortification, it may in some instances be cheaper to reach the whole population rather than identify tose with specific micronttrieut deficiencies. But even then the selecdon of the grade of the product-for instance, the type of salt or sugar of wheat flour to be fortified-can alter the effAct on equity. Equity benefits in nutrition are not limited to 7. CDta-fective food fortification or 'capsule progrusa c-m be promotod or iiplcmcntod by national or rcgiond agoncic. to ovcrcome micronutricut dcficiencica-mach as for iron, vitamin A, and iodine-nd rank at the vey top of all intetrention investments aimed at healthy life-year gsa. 76 food or fortificant transfers. EffeCtiYv nutrition education has been found to go a long way in compensating for a mother's lack of schooling wl,en it comes to safeguarding or improving her children's nutrtion status. BOX 3.13: Evaluatng Eawy-Age Conplemenaardies in Nutrition, Health, ad Education Fxpenditwws . .. This papeCe evalia:ted the significance seveal empirical indings. rst preschool childre of the lower socioixonomic groups in-developingcountries perform substintially worse in tests - M' cognitive, development than children from higher-income groups.: Second, a large part of this :differnc&e can be attributed to malnutrition, lack of sanitation, low levels of psychological stimulation; * and other envirosmental deficits surounding children in poverty. Third, earmings fiuctions-relating. earnings' to levels of schooling and early ability scores; if ivailable-show that.early ability has both an indepndet cffect on future earnings and a synergistic effect on the marginal product of additional schoolng. 'The: analXsis concluded that the productivity-and .effectiveness of utuire investments in' . schooling could be highly sensitive ito prest public policies to ah poor preschool-age children. In addition, to Ithe exent huit the demand for schooling by fainilies depends on the perceived edication, these interventions could increase the icentives for additional schooling> I:isbhor these o actions, increasing the leve of early oogtntite development of poor childitti, could (a) increase the productivity of a given amount of scooling ind (b) generate additional benefits by indLcing dcmand for additional schooling..: ... :.:.:| Maicebi Seloursy ; LNuWfioii, n.et and Educloniy IThe EcNoDCiC Siugificmanc& ofCcmplamcnwrticsof Eary Ago.- Jtlowaafoffelopw Econodcs 1931. 48. Efficienc. While the importance of nutrition is accepted, the question is how to evaluate food and nutrition intervendons? (Box 3.14.) First, the review should consider the cost-effectiveness of eachprogam in reaching the most vulnerable groups of the population. Here, the issue is how effeidvely the program is targeted to the nutritionally vulnerable group. As noted earlier, there tend to be two main approaches to targedng-indicator screening and self-seiection. The former is more institution-intensive. It can be useful when food distrbution programs are attached to health facilities used chiefly by dhe poor or to schools in poor areas. Self-selection involves, among other things, the judicious choice of foods-foods the poor consume most often-for distinbution or subsidy. The review should also consider the balance between different kinds of costs, including those for health care, education, beneficiary screening, and fortification of foods. One issue is how the programs' administrative costs compare with actual food costs. This is not an easy judgment, as the best programs also involve instituion building-raining, supervision, and evalua_on-which adds to cost. 49. Inimuons. The available evidence suggests that some health delivery systems-including users' organizations-are adept at selecng beneficiaries (selecting in and out), certifying their eligLbility, and monitoring distrbution. A well-run health system can do a good job in nutrition, but running an additional program can overtax a weak unit. In any case, health clinics are seldom cost-effective in dealing with the logistics of food procurement, such as transportation, stoage, and distribution. This suggests the desirability of program designs in which entitlements are determined and provided through the health system-for example, as vouchers-with the actua food acquired in private markets. 77 BOX 3.14: Evaluating Nutrition Intervenitions |.A rcent udyffi revieWed 100 food iand nutrition piograms:, chiafly tliose that fliBd preschool- or school-age childre' or provide food for hom M:consumption, in 18 countries of Latin America aid. the Caribbein; The three. questions' of inetwere the magnitude of malnutrition as indicated by wainungor untig,.thc nature and f rcs the form of food distribution or.subsidy` * programs. and their connections to education::'and health care efforts, and the rmeults: of these A:interent1ici ill iniroid.nutritional status or othctrbcUCfits tr the populations affected. . . :.j'ho many.pcsidble benefits :omplicate evaluatibn. :Butvtvey few evaluations kave been attempted. Thepxistence of few wil-rnipn sic d interventions combining supplemtental....l food with education and heWith services can subztamiiall;`r&uce infant and child malnutrition and death, . while contributing to.better school aitendance ind pfdrinancea .C They. also suggest that..simply 1 cheapening or giving away food does dnot necessaiily hiveany such good effect. athe absence.of informationni..ouutcomes, most of the ysis treated oily inpuis, particularly ihedtrie fundamental |vanables of benefi ber*-:v of food distributed, and program costs.. These data show :.Iargeevariations in costs per unitoffood infood per bneficiary,'and in cost per beneficiary, variations-. Awhich cannot be associated'with. differences in' reiuits... Programs also vary substantially.ini how much - they target poor or nutritioally vuhicrab. ncficiaries, and. in how much .they provide effective. nonfood inputs to improve health or change bior -Z... .Both -bureaucratic. and buinmtanan motives expaivte aiur t . < programs;, many programs depend on foreipg aid in the firm of importcdl.iftiiffs or charitable .:organizationss unaccustomed to cost-benefit thiuing. Inconsistent political suppo.tt or inconstat.a Iobjeclives and budgets are serious. problems in sonic countries, as are confusion of objcetivs. and the tenency to t rt the distribution .of Thd e an- e in itself The* more succcssful experences,| however,. show what. can be accomplished to bencfir childr'n and their mioers, :in particula, at expenditure levels which, while rge in the aggregate,, .wuld beave Y sniall shareof natonal income .| :in all:but the. -coutes:,... .. . .: ... v.; . ....'.. ... .Phiao:M .ghili . Poad and Nutrition PijgnusK antain America and lime CarIbbesn :An Analyticl Suirvey," Rcport9526-LAC, N.ovcnbcr ml. *'19. EiS wl al intt rnl d c W esrcirculaion..C * - * ~~~~-- .- :-- *-- . - * -- v H. Education 50. Overview. Primary education provides people with basic skills to improve the quality of dteir lives.' It improves productivity in the economic activities in which poor people are most involved-agriculture and the informal sector. It has positive effects on health and nutrition. Policies that expand acces-especally for girls-to primary education of reasonable quality contribute to poverty reduction. In some countnes, special attention may also need to be given to community preschool programs. Such programs can help reduce the differences in educational preparedness between rich and poor children of preschool age and also help reduce the concentration of child care costs on women. 51. Equity. Most reviews of public spending on education focus on the distribution of spending between primary education, on the one hand, and secondary and terdary on the other. They judge equity by the "equal opportunity criterinm with the benefits per student at each level of education set against the proportion of children from families of different income levels who gain access. Most students in S. Sec Pffiary Edwado,. A World Bank Pblicy Paper, 1990. 78 postprimary education come from betoer-off families, which in part reflects the fact that they can best afford to forgo the student's eamings during the added years of schooling. In this context, skewing of expenditures toward higher education is therefore interpreted to indicate inequality, and to suggest the appropriateness of allocating incremental public expenditure on education to primary education. At the primary school level, the principal equity issue is access-which can be gauged from enrollment data. Low overall enrollment rates almost always reflect underenrollment of the poor. This can be cross-checked by school attendance data generated by household surveys. Inequality of access to primary schools often has regional dimensions, an urban/rural dimension and, in many countries, a gender dimension. The time, place, and language of schools are also factors affecting the participation of the poor; these can be reviewed against the poverty profile in assessing the poor's specific access to schooling opportunities. 52. Efflciency. Virtually every study of rates of return to education indicates that expenditures on primary education yield substantiafly higher social rates of return than those on secondary or higher educadon. For this reason, in most countries, efficiency considerations corroborate the policy recommendations of equity analysis, suggesting the appropriateness of an emphasis on primary education. (See, for example, Box 3.15.) In primary education, spending on textbooks and other educational materials tends to have the highest returns.'0 Thus, the level of spending on books and supplies per primary student tends to be a good indicator of intrmal program efficiency. Dropout and repedtion statistics also are useful indicators. High dropout rates reflect the combined impact of poor quality of teaching-and in some cases the unreadiness of students to learn because of poor nutrition-and the opportunity costs to the parents of BOX 3.15: Mexico-Evaluatng Investment in Educatio A reccut stlud evaluatLxl die latest available data oii eaniiuvg an costs c by level of ediucation in Mexico. . Quantifying theureturn to educaLion at different levels, it showed thdt primary schooling is thle I1OSK eficiewut iinresrnaent. Social rates of retirn for primary education werc 32 percent, comparod wiLth5 to 6 pcent for secondary, and 14 pLrcent for university.' Primary educationi also appcain to he an equitable intervention. There is a strong invescorrelation betwvA primary school compl4otion and the. probabiliLy uf a household being in the bottom .20 percent of tle. inlliciu distribution. T:he study.showed that, atthc margin, piovidiingprimary education to one illiterate person bringli the weight of die inucome distribution closer to the mean; so primary cixicatidn helps reduce. income inequality. By the same token, providing a university education to one secondary school gr.aduatc make. income di.stfiution mor unequal. Thcstiudy conclded that education, in generl, and primary education, in particular, is not only a bocially'prulitable investlmeni but alsi uLs strong poverty redluction el fects. Pending the naynilability of more recent dat, it concluded thitinvesiineiit in primary edu.atiin is a higilly efficicnt and equitable intervenltioi ixn Mcxic'. Geo.. reC Pfacharopouas a. 'FAJuic.ria.uaItluveaEmentPriorkieainMexio,'WoddldnllLATHR Repurt. Alril 1991. M'is Li mAijusmleial ckIc-IlicIJlwtili restricled cir:u:ntion.) 9. In addition to the equal aoportunity criterion, there ae two other criteri for evaluating equity: payment by benericiury and ability to pay, which shoud so be tken inut account in arriving atajudgment about the equity of the distribution of education cxpenditures. See aaorge roBpuos and Maren Woodhall cadom forDvelpmat An Analysis of lrvesanenr Cliick5, World Bank, 198i. 10. See Marlaine E. Lockheed, AdrianP M. Vepoor, d al. Inproving Prbnary Educadon In Developig Cowar,s: A Revew of Poliq OpCions, Oxford Univerity Pm, 1991 79 the students' time. When parents doubt the quality of education and its value, they withdraw their children from school. External efficiency can be gauged by the links between the educational system and the labor market. However, the evidence requires carefil analysis, since part of the association between higher-paying jobs and years of schooling reflects factors other than skldls acquired in school. 53. Instiutional Issues. There are a number of country-specific insitutional issues in education. Tbe analysis starts with local and central government budgeting. What are the implicit and explicit criteria for resource allocation? What regional and local issues and imbalances-of region, gender, or income level-are most pressing? If local governments are responsible for education, what is the nature of this responsibility? Do local governments have real income-generadng and decisionmaing authority, or are they merely pass- throughs for central goverment resources? Putting the locus of control closer to the community can improve responsiveness to community needs and standards. However, it may aggravate regional disparities. Looking beyond officialdom, what is the role of NGOs and parents in providing services-not only through private schools, but also school meals, and the construction, operation, and maintenance of school facilities? In many countries, the private sector plays an important role in providing educational services, especially to nonpoor families in urban areas. Is there a voucher system from the budget? Or is private education fully funded privately? Other important institutional issues are the adequacy of teacher training, the role of teachers' unions, and government policy on hiring of teachers. Teachers' unions that control work rules (such as class size) or salary structures can limit the scope for efficiency or quality improvements. 54. Financing Issues. Public expenditu reviews should take a position on (a) the adequacy of resources allocated to the sector, (b) te potential for nongovernmental resources to be mobilized in the sector, (c) the adequacy of the intrectoal allocation of budgetary resources, and (d) the efficiency of public management of sector resources. The reviews should point out inconsistencies between sector objectives and current financing priodties, and make recommendations based upon a solid analysis of sector financing. For publicly funded education, the main issues relate to the intrasectoral allocation of resources to the different leve.s of the system and to the split between recurrent and capital costs. If public funding priority is given to the lower levels of formal education, private financing can be used for cost-sharing for the other levels. This can help with recurrent costs which often are shortchanged in education-as in the other social sectors. To some extent, the problems with insufficient budgetary financing can be addressed through cost recovery. If there is excess demand for school places, fees can be charged and the revenues used to expand services.'" However, caution is required on cost recovery, since it may affect enrollment rates of the poor and of all females-especially in countries that attach a higber social value to the education of males. Targeted subsidies especially for girls' education may make sense, given the hLgh social reurns (in terms of improved health and reduced fertility) to female education, where the opporunity cost of girls' time to their families is ver Lijgh (Box 3.16). As in other sectors, there is a strong case that Fhe government should not pay for programs where the benefits are almost entirely private. This is true of many vocational and technical skill development programs such as secretarial training, and computer operation that are widely provided by the private sector.'2 There also are financial and efficiency arguments for dharging school fees for postsecondary-and especially university-education, for which more significant proportions of the returns tend to be captured by the individual studenL Public resources-in fellowships and loans-could be used to help the poor. 11. Sec Psacharwpoulos and Woodhall, op. cit. 12. Sec Vocationat and Tecincid Educaon and Trainng. A World Bank Policy Paper, 1991. so BOX 3.16: The Socds Retmns to Femae Education A recent pui&:jzvnilyzed the benefits from female education (who gains and in what ways) and thc cdnstmainti-direct and opportunity costs-reflectingw economics and tadition: It argues that the ocononmic: and social returns to: education for women are substantial-on the whole piohably greater tRan iltose for men. lt notes that by cducating its'women, a country can reduce poverty, improve. tproductivity, easc'pop'ulalion pressure, and'offor its children m better future. Yet utany countries invest lIs sin educating women than they do'i&}.edsicating ren. .. he pape r:pointst. diTereac bechtween social sad private costs and benefits or fe:male educition. Given dic fiminily's economic perspective nded the tradidons prevailing in much of the world, malne ucation may seem a better investment to parenLs iliaa female educationa. The paper argues that if;pisrents incur greater costs to educateTirls but society reaps greatrpgaizis, governments ought to consideir special iilasurcs. ind 6rgetd..subsidis to he!p girls aitend school." TIlhe pper outlinies: appruachles libr expanudingJ remab education. Acknowleging -that the demsrnd for female educlation can be strengthened gradually through economic and sectorml policies, he papr.r ocuses on more imlediate actions to lower costs, improve quality, and increase access to education in ways that will allow more giuls to naend school;: It i epnrts cviden66 of effectiveness nid Aivei examples from projebts:inu*lvingtiM World Bainlk: It notes 'dua, especially in poor couatries, project.sasucood ehst.when.they inclide a ppacknge,pproachw to address what are typically multiple and powexrfal cositraints lo femLale education. lsle'paper calls for incraseds monitoring and testing the cost-olTectiveness of the kind of innovatvi. packnges now belr. ried in seveml deiveloping countrics. Barbara 'leaz a. DBubim tlen, a al. "Letting Girls Learn: tromiaing Approacies in Ptbnury and Secoudary Educition." We.-Id DBnik PHRWD. 1991.. 81 Annotated Bibliography Barrett, Richard. Satisfjing Urban Public Transport Demand. Sub-Saharan Africa Transort Program. Proceedings of the Urban Transport Worldng Group, 1991. Reports on Phase I of dte urban transport component of the Sub-Saharan Africa Transport Program, covering case studies in 12 African cities. Shows that over the past decade the supply of urban transport services has either decreased or stagnated while demand has increased significantly, with more dtan 50 percent of daily trips in African cities made on foot-often involving long distances. The high cost of public tranport services and low productivity of parastatal agencies have contributed to the decline of public sector provision. In some counties, tde private sector has increased its share of the market. But where the realignment of the exchange rate has been severe, the cost of new vehicles has sometimes outpaced the ability of operators and the community to pay. Briscoe, John and David de Ferranti. Water for Rural Communies; Helping People Hep Thenmseves. World Bank, 1988. Reviews country experiences in providing rural water. Based on successful examples, articulates a community-based approach to ural water delivery, in which the community is the primary investor, maintainer, organizer, and overseer. Enphasies the importance of cost recovery to sustainability and efficiency. Carlson, Samuel. 'Mexico Labor Rerining Program: Poverty Alleviation and Contribudon t Growth." World Bank LATHR Report No. 6, 1991. Assesses the efficiency of the labor retraining part of the Mexico Manpower Training Project to deernine its effect on poverty reduction and draw some lessons on labor retraining programs. Concludes that the program is successful, though costly, for poverty reduction, but oniy with carefilly chosen trainees. FAQ nvestment Centre. "Guidelines on Sociological Analysis in Agricultural Investment Project Design." Draft Technical Paper No. 9, 1991. Reviews the role of sociological analysis-which refers to anthropological analysis, beneficiary analysis, and social impact assessment-in the design of agriculural investment projects. Ferroni, Marco and Ravi Kanbur. Paverty-Conscious Restructuring of Public Expenditure." World Bank SDA Worldng Paper 9, 1990. Focuses on the pattern of public expenditures in Africa during the adjustment decade, particularly in the social sectors. Emphasizes the collection of household budget and consumption data as a prerequisite for policy research on the determinants of basic needs satisfaction and the degree of overlap between the paterns of government subsidies and the consumption habits of the poor. Fisher, Stanley and William Easterly. "The Economic of the Govemnment Budget Constraint." WorldBank Research Observer, July 1990. Summarizes ihe simple analytics of the macroeconomic effects of govemment budget deficits. Shows the importance of the ratio of government debt to GNP as an indicator of macroeconomic sustainability. If the ratio is projected to be rising continually, fiscal policy has to be tightened. Gill, Indermit, Emmanuel Jimenez and Zmarak Shalizi. "Targeting Consumer Subsidies for Poverty Allocation: A Survey and Primer of Basic Theory" (draft). World Bank, February 1990. (This is an intnal document with restricted circulation.) Discusses the need for targeting available instruments and their costs and benefits, and ways to meae the effect of ttrget on poverty reduction. 82 Concludes that a cost-effective, low-cost alternative to means-tesing may be to target by location, and that self-targeting and providing in-ldnd as opposed to cash subsidies may improve target effectiveness. Improved target effectiveness should be weighed against ihe "fiul cost" of the subsidy program-that is, the sum of fiscal costs, deadweight costs, and administative costs associated with the attainment of the social objective. Glewwe, Paul and Oussama Kanaan. "Targeting Assistance to the Poor Using Household Survey Data." World Bank PIE Working Paper 225, 1989. Presents a method for targeting when income is not observable but other characteristics correlated with income can be observed. In COte d'Ivoire, such variables include per capita floor area, ethnic group of household head, level of educational attainment of household head, and household ownership of car, bicycle, or refrigerator. A possible problem with this approach is that the cost of gathering information may outweigh benefits. Grosh, Margaret. "Social Spending in Ladn America: Tbe Story of the 1980s." World Bank Discussion Paper 106, 1990. Traces social sector expenditures through the 1980s for health, education, and social security (in Argenina, Bolivia, Brazil, Chile, Costa Rica, the Dominican Republic, El Salvador, Jamaica, and Venezuela), and examines whether improvements in the efficiency or equity of the provision of social services outweighed the reduction in expenditures. Also, traces social indicators to examine the effect of change- in spending levels and patterns. Finds that real per capita public social expenditures have fUllen and there is no evidence of substantial improvements in either the equity or efficiency of social spending, yet social indicators have improved in most instances. Reconunends ways equity and efficiency can be increased: priority for primary health and primary education, targeting, cost recovery with exemptions for the poor and for preventive services, decentralization, institutional development, and better management and monitoring systems. Mend, Lemma. Poverry Reducdton Through Putbic Expendiure Rstrucuing; A Review and A Framework for Improvement, 1991. Reviews public expenditure reviews in health and education in Sub-Saharan Africa. Discusses issues related to improved public expenditure management for poverty reduction: identifying target groups; defining medium- to long-term goals; the need for a macroeconomic and intersectoral framework; investnent programmig and project selection; formulating annual plans and budgets; budget implementation and expenditure control; and desired institutional changes. Paul, Samuel. "Accountability in Public Services: Exit, Voice and Capture." World Bank PRE Worldng Paper 614, 1991. Analyzes the problem of public service accountability and ways to strengthen it. Argues that public accountability is strengthened when the government's hierarchical control is reidforced by the public's willingness and ability to find alternative sources of supply ("exit") or to exert pressure to perform (voice) to balance the phenomenon of 'capture'-the tendency of those who manage and control the allocadons of public seices to seek rents and not serve the public interest Psacharopoulos, George and Maureen Woodhall. Edcaton fbr Development: An Analysis of Investment COoices. World Bank: Oxford University Press, 1985. Presents the analytic and research experience of the Bank in education and the lessons derived from operational experience. Shows how economic analysis of investnent choices may help dentrmine investment priorities for education and help in the identification and preparation of investment projects. -- Keath Hinchliffe, Christopher Dougherty and Robinson Hollister. "Manpower Issues in Educational Investxn.nt: A Consideradon of Planning Processes and Techniques." World Bank Staff Working Paper 624, 1983. Considers plnning techniques and prowesses for educational projects in search of a methodology to approach manpower issues. Encourages use of a wide range of analytic frameworks and emphasizes the need for condnuity of manpower analysis beyond the identification stage. 83 Salrnen, Lawrence. "Institudonal Dimensions of Poverty Reduction." World Bank PRE Working Paper 411, 1990. Addresses issues that have plagued the implementation and sustainability of poverty-oriented projects: weaknesses in project design owing to lack of understanding of beneficiary populations that result in disinterest or rejection of project components, and difficulty of reaching poor people through traditional formal organizational arrangements. Concludes that the first obstacle can be overcome by a learning process that allows for a mutually reinforcing interaction between the institutions promoting change and the enviromment being changed, and the second requires supporting institudonal pluralism or interlocking formal and informal institutional networks. Schacter, Mark. 'Improving the Poverty Orientation of Public Expenditure: An Operational Approach." World Bank AFTSP, 1991. Outlines an approach to the design and implementation of a core public expenditure program that includes a way to determine the core's contents and integrate the core with the budget. This approach makes it possible to isolate and protect funding for core services in the face of fluctuation in revenues, and provides for procedures to monitor overall progrm effectiveness. Schwartz, Antoine and Gail Stevenson. "Public Expenditure Reviews for Education: The Bank's Experience. " World Bank PRE Working Paper 510, 1990. Examins Bank experience wit-and ways to improve-the analysis of education issues in public expenditure reviews (PERs). Recommends that PERs focus on the sustainability of reforms and te ,olitical and institutional (and economic) impediments to stinability; include all sources of fina.cing-public and private, local and central government-in the assement of the adequacy of sector funding; address the imbalance between recurrent and capital spending and personnel and nonpersonnel spending, and follow up the sectoral diagnosis with concrete policy options, focusing on intra- and intersectoral reallocation of resources. Selden, Thomas and Michael Wasylenko. "Benefit Incidence Analysis in Developing Countries." World Bank, August 1990. (This is an internal document with resticted circulation.) Surveys the literature on benefit incidence, focusing special attention on the methodology and results of benefit incidence analysis in developing countries. Contends benefit incidence analysis can offer an important perspective on the budget by combining data on household use with data on project costs. In particular, benefit incidence analysis can help illuminate the distributional impacts of proposed reallocations of government resources among projects. Selowsky, Marcelo. Who Benesfsfrom Govermment Expenditures? A Case Sntdy of Colombia. Oxford University Press, 1979. Reports the results of a countrywide survey of households in Colombia which was designed to provide household income data used to classify the beneficiaries of government services in the overaU distribution of income. Shows that specifically designed household surveys can provide relatively good information on the distibutive direction of a large portion of government spending. Walters, Harry et. al. "Food Security and Disasters in Africa: A Framework for Action" (draft). World Bank AFTSP, June 1991. (This is an internal document with restricted circulation.) Considers what the Bank can do to reduce the impact of drought ano related disasters on the food security and, more broadly, on the developmental prospects of Sub-Saharan African countries. Suggestions for the short term are: (a) developing the factual and analytic basis for quantifying the economic costs of droughts; (b) identifying with greater precision appropriate and economically viable drought and famine preparedness and mitigation interventions the Bank could implement in Africa; (c) further developing the methods for Bank interaction with the United Nations, bilateral, and NGO disaster-related agencies; and (d) developing a better internal system for drought monitoring in Africa. Taking a longer view, there is considerable scope for strengthening how tie Bank deals with the developmental consequences of drought and drought-related disasters in its country analysis, regular lerding activities, economic and 84 sector work, and public expenditre reviews-and influencing constructively the actions of govenmments and international agencies to achieve greater preparedness against these events. World Bank. 'Food and Nutrition Programs in Latin America and the Caribbean.' Report 9526-LAC, November 1991. (This is an internal document with resticed circuladon.) Surveys food and nutrition programs in 17 Latin American and Caribbean countries to collect information on program objectives, mechanisms, criteria, beneficiaries, food distributed, complementary services provided, and costs. --. 'Managing Development: The Governance Dimension-A Discussion Paper." Sec M91-820, June 1991. (This is an internal document with restricted circuladon.) Reviews issues of governance in the Bank's mandate. Defines governance as the way power is exercised in the management of a country's economic and social resources for development Concludes that good governance is central to creating and sustaining an environment that fosters strong, equitable development. This requires effective public sector management; systems of accountability, predictability, openness, and fairness; adequate and reliable information; and a legal framework for development. Recommends that the Bank's approach should be to continue to exploit opportunities to improve development management by breaking monopolies and removing controls and other avenues for corruption; encouraging beneficiary participation; integrating development management concerns into a long-term perspective of a country's development strategy; exerciAng selectivity in terms of the range of activities tat may be supported at a given time; and addressing county commitment issues in its country strategy and dialogue. - . Urban Policy and Econonmc Development An Agendafor the 1990s. A World Bank Policy Paper, 1991. Analyzes the fiscal, financial, and real sector linkages between urban economic activities, the iformal sector, and macroeconomic perfornance. Recommends measures for improving urban productivity, alleviating urban poverty, and protecting the urban environment. Annex 3 Social Sector Public Expenditure Reviews This annex contains examples of poveny-focused public expenditure and social sector reviews. The contents of these renvews are organized into eight subheadings which follow the specific issues raised in the chpter: L Level and Compositon * Incidence * Economic Efficiency * Delivery of Services 3 Fnancing and Sustainability * Sofety Net D Sectoral Issues * Recommendations 87 Matrx of Chapter 3 Anner Boxes BOX: COUNTRY AGR MDU REA NUT P RWA RM UW NCO TAM RCF S A3.1: Bolivia r' or / r' r r A3.2 Brazil se we if _ . .4' A3.3: CossRica m e .I/ = == U .of A3.4: Gualcmula J V _ I _ _ r _ _ 4r A3.5: YTonduras _ _ . _ o e I *I Legend: AGR: Agriculture FP: Fanily Plaing NCJO: NGO luvolw*m EOU: Educafion RWA: Rural Water TAR. Targatiag HEA: Health RTR: Rual Tfamapont RCF: Recurmt Cost Fnaqig NiUT: Nubimion UJN: Uran Jnfrasimucwre SS: Social SecurQy Note: The discussion in the boxes of this annex refer to the period covered by the report cited wi the respective box sources. 88 BOX A3.1: BoUvia-Improving the Povefy Focus of Pulc rpeundturea . Levl -nd Copan on; Tlo sizca' Bolivia's piablu seior: begs to be minced followning thie I9S economic prsgram. .he goreromineut.utazcs humt its commiiud to ftimher diminishing teim ofth o public sectr ove"al, whuk. unpvang soial serices and intastructum. lBu Ithe fundamntall spendi4gtis fdnisind d to zrnplmeo tis .bir teey;u ,, n yet w ., . . . bicidevace. lnrdsirunctur distribution.in the hquiih:tr-is quitbeo. l fe r. q iabl :Tqdare fewer pol e cstbishmiX1eni:un the poorer (ninl):praoviui6e, hut rural::centfs have pon~r utaff,n in 6 4 Hlowever an ci[s on :curtive care combined wiith bi8 re of costrecovery las uahd ne e; dis&ribuitioual CO.S? Education spending favorn the urba ;ysytem; imidicator are worse in rini And, a iarge pex!i e of thg education budget is earmarkil o unito nities although primar t educution problems Temain unsdived. . . ; Econowc EJen.w Pnior irurai aieas: are as ncost-effieient as udban centli when approprjA¼ technology isiysedd. Grater spendiag on apjxopriai.e equipment and staff:in: malhealthcen iie6ded 6fricieng in pdrmary health aue. ..: Education spriiding; is" very inefficient.: , ryetitionn.teu are very high,.wheoireh childspds, on Wage, nuoihana i a alidj pMgrsaonegde. ilid puhlic educi y ;enp toze.han i10 times more per child than In'rest NGO:.which provides lihiguality Mualion. . : . :Deliye oqf bStke. In beIhia s N de liei the most bieti iost:sorvie. In e ucati4 si.veratbbommunidots haYo asked tba larget; ~NGO: io manaj their public scbiooling,..indicaling &< perc6iv6d,6 lP- quality education offered by dilthi NG, cve vwit much highcr tiude6t:tahor mCt2 in NUO schools. . ; Safety Ner. Bolivias Emergency Social Fu ind was estnblished to reduce the social costs of ecoinomic crisis. A Social. Investment Fund %was cstmblished in:1991, lbuilding on the posmti experience C othc .mergeicy tncGI una. . : .Sectors! Issues; Jiglli, educationl; and social security are.oowrod. Then health sector .suffi:is fra k i;ckc of coordinand O LIXtou levels bf public ng id :Education: dmop-out aid ceiitioii rites ire m yf high.:: Thic j~li4h compntent of the. s6cial sec.rily syslem lias .hiah`ediisIaiive'oust% aul ava only a smll putof te wpop ion . ..:: :. .5:::: :Recommmrnndadom.- Bvivizi ca :j 'ncmra s:itsi soc cmp'4ture t6 .l the' saime . s'ha'tre of gws{ dnmestic product as the averige of middl-income countries, but onl by severely .etucing the sl i spent for other secton-by keeping defnse expenditures consba or failing in zeal terms. Bud' procedures should be strengthened in. the. ath SWctor. The social suritystem should be unili to lower costs and allow the'.intr&iucion of cross-subsklies o improve rquitjt Subs;dies from t1E CdITCIou lshoud h eliminatcd. and cdnvik nffcvcd'tu" t population. Butse,. in publi&n 'L ehucintio meltcd. 04we" igntsbouldwnsider"living m=gementcontnlcto .when :comminuxliiesv cust wuption., Bonus aysarnc.iishiimd c tod lDesiaNi ntiaets: t tethcm tb edu a:thcinse1vas:ind.to lpwea the,.shidaSt:tea ci&r . i:p t.. I. ncdnsce. 'Te pors 19 peren of. the; poplaion reeves only aout6peenofsca rbenefits. A large sharm of socu cxpenchtarebenefits highiereincome group&- Regional inequalities are . - * *- - ~~~~~~D. . -. j-*N. -.- . .* . . . * *I also, sdvere. .:- Economic Efidency .Infficient spending zis indicated by strikgly low socalndicors'.. .(especially.in 6health and education). A large share of soial sseud[i- g 'pays fcryprivate iher than . : public gbds. Por:example, an estimatbd:78 percent of all health sector public spendig is devoted to high coat e.uzitive:hospital ary.sices; only22:.percent to. all forns of basic preventive health .ca-despite the fict thaiths latter is mora-cut-e`iiVe to :he&... -ind potenti quity.of if&:. Deligery amSe &uw .porly managedin encis n gmms, with sly. :: hIgh administrative ndp nesone sts. i . : ..Financing. and Sw:aua~biacy. The financuig of sogial prograis contribues :to nustargeting ad zinefiency 'Tbe large share ofrevenues earmai to p lar.f eeralAe ajnies or.activitisj gcillyh blt mpires m_d imd the rtion allti of rte Hey rln on pay '.aea-wfiicli e rgressw-ndpayr socil coibutions hu a distortedte enomy The Ause of adhoc agrem (nveios) o renuetranfers c u i c iesb d start spedindg.pattes adiabitrary allocation of fuids* Ther o is in uate use of direct cost ... recover -f cial sers: .-.:--e* . af _N .. -the s-pcipr ;. ................e..... ... ...... , i . . .......~~~~~~ ~~~~~~~....... epr s;............... e>. : '*.' .''S'.S- an d Wotiisg and urbn ; ser ioetcludliing.~ an:fd ~amitaij:tao.n): :*- : :ei | Y~~~~~~~~~~~~~~~ ... . ;. ..sR :ARŽcornni daon.r Improved srvices fort-he:poor canbe achievedi by bettrtargetin, .:-:decentrliion wi ic lc accuaag iwbahty, new approaches io financing .nd.eXpansion of the :eeral jrolej in quality orLtroand csumer pection.Tagting ould be improvd by finig e: phsis win a s t r pg s at hep he poor- and .:wayfmprograms t :..subsidize"the middle class and teJ. nch Mehani9mi to improve targeing include use es, . snc d mosumer infonnd deguslsoneofpric o iravi . . in. :nd effiiecy zof 'some: al rprgrams can be::: improved thwuglf>:more deniralzzao .of.: rsonsibility o the stae fle finncn of socaprgms .ca be imprved'b zeu;ing rea ..ringa.iicEyt.swid...wi:m~~~~~~~~~~~~~~~~~~~~~~~~~~... ....a.- c'~iv#~li lx i ad mreasana,eliance :on incomec value-added, ad coprtepoi taxes,"ad grate locl cs:rvr pin t teghntef&a jtenm t jcdatrole inqalt onrl nu 1 cval uw blic and private socialsemecs More rsoendy, the gofvernmrent has been addn some:. T *Tof these jasues in respone e o the r'men. ' *..'.a ' F -: uWil McGreaey`.:. ... B. hbig ~qm bS h: . . . .......... . . . . .... . ...... D P::ev*u- .ublic Sendg o S.s - s > n Ot, , . , j - a me ;~~~~~~~~~~~~ * ~ ~ ~ ~ ~ ~ ~ ~ ~ 90 BOX A3.3: Costa Rica-Consoliadig Equity and Efficiency Level and .CqMPOiW6on Costa Riits' social sector-spending-asa shar: of GDP has beon hither tlhawin oiher L!atiu Americacountries- 17 percent of GDP. Expenditures on health and nutrition-6 percent of GDP-are:the largest component. Education is the second larglest component, a: about S percent of G.DP.. - Incidehce.: 3Total benefits are fairly evenly. distributed amon income groups. This is the result of twoopposiug an4 compensating forces: tb regressiveness of die distribution of ducation benefiLs and theopirogressweness of the distributio'n of health benefits. . Also, progressive. progrms largely benfit frural areas and regressive programb provide nmore beinefits to urbAun are'as. Taking uccoun.t of state :pcnsions, however, social progamm benefits per capitai are 62 percent higher for the richest 20 percent than foi the poorest 20 percent of the popiulation. Economir rfificiency: An inefricieni allocation of resources is shown by disparities in rates uo return to cliftTreul levels of educatiou, estimated at 19 percent for primlary, 12 pervenS for secondary, :.:and only 9 periet for higher elucaLion in 1988; Although health: sector policy provides a widi: disiribution of benefits among th&population and Ilrgely bIenefits thc poor, this is not[ achieved at the lowest possiblc cost due in part to excess consumption of services and inelucieat allocation of stalf beiween health centers. . Delivery of Snrvices. Nutriton prognims havebcu-nmiisLargeted, tbus beinefxting.soome middlc- and : high incomc grcujis but not reaching all groups at risk. Family plaUniug scrvicies arc not getting informatior to dnougb medical professionals or polential clients. .Fminancing wnd Sustainabilizy: The social security system is inequitable.. It also generatw unsustaunablk financial burdens. The simultameous increased life expectancy itId lowering of retirement .age.have shurply increased the number of years during which pesion benerits are received, makiui the time period roughly equal to the number of years worked. Another factor is the government's 'repeated failurm to pay its contribution. Excess demand in the health and education secors is likely . to createfinanciam ibalances in the future. Safeq Net. Targcting of benefiis in die social sectors provides a good safety net. Reccnienfdationr. The education sector urgently neds to put new emphasis* on the quality of primarycdMucation and to counter the current trends away 1rom equility of opportunity. Tnis can be achievea by increasing resources, revising rho incentive systen for teachers, and cr.ating an appropriate scholarship.policy and student loam bak. inefciencies in the health sector can be corre&ted b;y modifying tie cur-rit system of paying, doctors, introdui6ing partial arid selective cost recovcry to linit esacess consumption of services, strengthening the capacity of clinics and increasing traitrnimWng possibilitics, crcating incentives for an in*reased sipply of nuirses and more. efficient allocattion of staff in the.scctor, and simplifying the financing:systemn Nutritionl targtetting can bc iilprtuvd by more:areful screnuingl of beneficiaries. Social security policy changes should extend the increase in retirement ae tS die s';pecial fiinds and hiirmoni7ze the. financi'ig; eligihiliiS conditions, and pnsion benefits of the various ich&eInCis. Privatizimtion sd'ould b& Ldnsidicred. 'ITe: iniurmnaLion campaign fior .. faiy plamn:shiuuld be etLended; appropriate Lruningtu nurses and docoms shouid be jruvided, and . m attention to sIngle: women and teaongers should hc. incrc.scdd.. ;.:.:.:Mi/efie'feUlbod. :o Raic: Public SecLor Sociil Spanding, Rcport:3519 CHi, Octo6ci 1.90 ('Ib ii an intemil documcat with resTricTed ..circuiaiso) i?: .... . :.:.. 91 BOX A3.4: Guale ia-Reshaping Publc E&penditure Priortes * Level and posinon. ;Gatemala's oviall level of public spending is low-about half the level of other countries with similar. per .cupita income... The share of current expenditxwes, particulalyl wages, appears to be hih ai comparison with flie limited coverage of basic services and the smal nsize tof the public sector investment effort. Total spending for the consolidated public sector was pMjoct c. to increase slightly from about 14.5 percent of.,GDP in 1988 to 17 percent. in l989-91, with public sector investment inctcasing: from so estimated 2.8. percent of GD1P in 1988 to an avrage .of .. percent of CDP: Infrstructure receives most of the investment while invcstment in the social sectois. is smaIl. . . . . Incidence. Urban areas benefit disproportionately from health spending. Urb areas and thie r nonpoor receive most education spendiug. Economic Efficiency.. Poor-project executioni is a serious constiaiit to public sector. ivestment.:.. *Deficient project preparaton zis a bottleneck in government ddelopnient effrts. Shifts flom n :.overamphaisis oen curative health care towaid pr~eventive, health: care 'and towar primiary.cduic.aton. would be the most cost-effective ways to improve Guatemala's human resources. Delivery of Services. Basic..social..services have been iniequately prnvidix:ii . .nang a rcnruiding ptinary.health care personnel ond redeploying more staff to rur areas wuoud w inprovl. delivery totbose most in need. .Ed.ucational service deli.ve`rycan be:improved by :beftr supervision. -of teachers and'an increased;sharc of resourcestallocated tb :sup.plies. ...... * . .Fnancing Siinzbilry.-- The reltively.IowlevP of public snding results orom an eully- low level of resource mobilization. Guatemala`s tax bWideiniremains one of the iowest in.'the world.> . Safety N nmproved targeting is a maJor issue. . SetoraUIssnles. All .sectors are covered; lPublic spending should be increased .fort culture the .setor employing morerthan half of the woit force Investments m iznfistucture--power, transport,, telecomm'umications, and watcr supply account for about 55 perent of totl public sector inv.estmeni programmed for 1989-91: The overall content of -the' investmentprograum.i :in fiia ed.ctu...r is satisfactory and noma.jorckanges arerecomimended;. :The social sectors-health, education housing an d inumerp deve lopment-ned mom resources. . .... . .Reconm4ndarions.8>Guatemlaashould increasc the mobilization of domestic rnsourceiswhile carefully using additional exeialassis ance-b The pattern:and:or.entation of public expendituh shiould :be adusted. ..Although the::allcation of investment will :continue to have a: heavy .infratru. component, the governients nmedium-tint objective should be to increase the sba investenl theic social sectors to at least3pen Th health sector shol4 focus o piingredeploying'stF -to rural areas, improving: targetng, and.preparing an expinded.inyesent program. that..emp... . pnmarynheaIthcare. .The sbare.ofresources.all6caIedtoprzimary education needs to be increiZsed'vle: the share allocatcd to higher educaifon may be dedteas&. fle 12 g.secior nee ds teased . .u.-. :.;setorinvolvemet in. financeand in the proi sion of hiin-fortheJurba poor.:i These' appro.ahes should focis mWor on self-help and housing habilitation, and also taclde land tenureissues;& Wate rrsupply sit.z4ng.wi a shai~ of 61)r ' sh6uld doubie tCi iO' n.t;; -Spendinii.g pnorities.in.agriculture 7 s; hould be adjusted to nr he shareof resourcesfor extension, smllr-f and ver- - uction activities; -Access to agricultural credit.should be improve Fd securit needs more attention ; r,~~~~~~~~~~~~~~~~~~~~ .. .r..: .... ..*r > .S * * - R <; .M . ,-y o,''2 ...................................................................... ... .....'. _uatemala PubliStor ExediureReview, Report 7473Ut,ay 1939 (Ths'3 -an'aumni -doin-thidi redetod .~~~cjrculaLmoa) ~ ~ ~ F D 92 BOX A3.5: Hondwurs-Rethinkitng Social Expendi*wre PnIFioCS Level and C6pzpk6.Pbimpndn n'uaWci~ih ur~n.fe,and sntation in 1988 *sccOunted for 10.3 percent orIGDP ThiS "ompares6 fdwnbiohYJ those6 i'n-otherc:ountries of die. regon.Hodurarrnuili.A inbte middle- of live neighboing -countrics. in health expenditures 'a a piFenw ge& of government nadituhre and nxuts at~ th;tp Jicidence. Most' soczai '.pj1j5:s b"ene pr il mdlecluisa'ttpSKp di' onr curative hospital:care, pension' benaifs, and higher educdation, Soii..r ding pays fr- serica that migh be. financed by'-the privatpe sector. *.:... Deve f SeMrvic. 'The delivery of services is bisdtwifhe, nonpoor.I h dcto sector spendng perpupil is tenk tine igi catheuizsty levevl,4chsre the - curbanmide .income groups- thna h rmr coilvl liKmil e deizan an uini poor. Inth health .sector, socia secrt beeiire4eceive a larger subsiAd ym ta'v&rage whae rael'Jpoor.. Effia s ~:Finadng an SmawabiryThu~fCintue. ofrsure shur by overspendan on hiher eucation;.:excessivelvels of personnelci ew~dre nheah, and -an o.ve-rcmp has o 7'c'u rai~ve 'c'are.-The financing of -social services also causes some. iefciaency and'ine'quilt"y" 'Thie". povis4ion of one-fifthi of pubc helt ser-v:ices thjoug a social secuLrity syskn flune b wg tax" Icadnq:o: .dupati?on6feffort.;:By.earnpdkong. a btdget' sar~efrkihrduao.tegvnmt permits inefrc-iencyn.Dna,.uversity.,adxnanistration.. '. ... S6O Ve. A e~egecy scjd ' iin fbn ..t**gs1c~ ..r..::fllA 990 *. iAmoact of *mijor ecoonomic. reform.porm wads.i ticl to canne reore int quik-di&busigi employment gepneaing infjtucucprojects' Ho*eweversocial services cuirretyare not tirgeted -to the poor, the yo)ung, the..alor.heagd. SetrdIssues.' PopulaionhelAii.ith,ntition;aad .education.am coee Spe ifipoblemns --confronting public, healt caeicueigj 4k~gshg hsca aaies,~ inability. LW. institut the integrated lclhatsytm taeyanqetisofoworalocate -resource: low~ pgjiinay health care %se`r'v:ice-s- :'-* m"ajor i'ssue' in" pbic.:educaioni :s: tat theigh le'vel of: liliterAcy, school'desertion, re~~peion;, and undernourishment'observedi in runs!armw is dietly lne to: the' -unrfnnigoruascol Thmaoisusisoilscrtartelw level of coverage of thie popuation, theinequiabl anid regressive sgystemi: tejlac of investment opporumac fuir pension fund ,the serosfinancia problems of bkthe mainm scaseuiyPMran anddefrst -ckiak. a national health system'and umf the eniescaeuiysse .--R4mcjiendafl.. OveralI, h goverment ned oraloaem tian inreas its .u....ry :sup.port forpimgr.msini biasir-educabon'and primary health ..c are A taeg rsrctrn the social". sect6rkbutlied Th steps e toprepare an aged tFo> c lprogrAms. efteeut o njr&6n1i6fiig tihe .Ageda~ of reform re:iduce, te: DE:rnu of revenues to IspecAfl:po m increase-resoures%for . * l pldn rmayhalieaead targeted r.uurfIon.. programs; reiew taffing'requirement for' tad e.rs:: ajd" hei..AlW wrkrstoinrasiefiiecyi delivery f service and9 ehneonlotor've th atyad'deJaveyvtociaL services'w commnities. and'- -'NGOqscan ply rle i service'delivr financed by goveirnmn rerces .. ini... combzn.iou wih userfee and voluntary ctrliiOns.; ..... . .... ~~ 3 V.. rtoaurasSoca1SernP~gmuR 3an9093-HO, November 1990 _,rWS manonio nafd eiccduclsua 'V~~~~~~~~~~~~~~ ........ . .. ..... .. . .. .......... -~~~~~~~~~........ r~'3 Chapter 4 Country Poverty Assessments Assistance Strategies to Reduce Poverty recommended (and the Board supported the recommendation) that the design of Bank programs be based on an analysis of country policies, expenditures, and institutions. It said that Bank lending should complement and support countyy efforts t reduce poverty. Bank programs thus are designed using assessments of cowutrypolicies andprograms. Indeed, Assistance Strategies to Reduce Poverty caoledfor the preparation of assessmentsfor all active borrowers. The poverty assessment covers the two-part strategy descibed in the WDR 1990. The objectives are to idenzzfy the policy, public expenditure, and instituional issues tha constrain effective povery rMeuction, and to develop an agendafor government action. That is, the assessment should analyze and make recommendations on (a) the effectiveness of economic management (short term and long term) in generating growth that makes efficient use of labor and (b) the adequacy of government efforts to develop the poor's hunan capital. In addition, the assessment shoidd euxnine the extent, reliability, and affordability of the social safety net. Assistance Strategies to Reduce Poverty also calledfor an evaluation of country poverty data and a proposalfor improvW them. In many cases, it wI be practical to combine the evaluion of the statstical system with the poverty assessment. he evaluation should identfy gaps in the data base, and propose means tofill the significant gaps Data priorities should be determmned relative to a minum set of indicators, and as needed to shed light on a country's key poverty probleems. Measurenent issues are discussed in Chapter & 95 Chapter 4. Country Poverty Assessments lintroduction 1. The poverty assessment provides the basis for a collaborative approach to poverty reduction by country officials and the Bank. It helps to establish the issues for the poliRcy dialogue. The assessment analyzes the relation between the poverty profile and public policies, expenditures, and institutions. It also evaluates the effects of economic and social policies on the poor and makes recommendations for the consideration of country policymakers. Topics covered include the overall policy framework, the provision of public goods and services, and targeted transfers and subsidies. (mmples of poverty assessment -mmaries are provided in Annex 4.) 2. The scope of the poverty assessment varies across countries, dependig on the contry situation, the government's commitment to poverty reduction, and the nature of available data. In countres where poverty is narrowly concentrated, the analysis should clearly be more focused on the specific determinants of poverty and the design of targeted solutions than in countres where more widespread poverty indicates problems with the broader macroeconmic and sectoral policy faimework. In counties where the commitment to poverty reduction is less, greater attention should be paid to establishing the causes and implications of poverty as a basis for the dialogue. To this end, quantitaive analysis-where data are availab!e-can help sharpen the issues for the policy dialogue by providing a sense of the costs and benefits of policy alternaives. In countries where data are not available, the analysis in the poverty assessments will necessarily be more qualitative. For them, developing proxy variables to identify the most vulnerable groups will have high piority. 3. The poverty assessment draws on the material descnbed in Chapters 1-3. Although the focus, topic selecfion, and phasing of work for the poverty assessment depends on country circumstances, in most cases it covers the following points: * Povety Prowle. The profile provides data about the extent and nature of poverty, and identifies relevant subgroups of the poor by their disdnng characteristics. The profile is used to identify poverty trends and guide policy analysis and design. * Icenmves and Regudaions. The review of country policies is intended to identif biases that limit the efficient use of assets owned by the poor or constain the poor from acquiring human capital, land, or credit. Policies to be examined include those affecdng the patterns of growth and labor demand: the incentive fiamework govering relative prices; the regulatory framework; and short-term macroeconomic management Policies affecting the poor's accumulation of assets-human capital, financial capital, land-and interactions with the environment also sbould be considered. 96 * Public Expendures and ntinautons. Public expenditure reviews deteine whether the composition and structure of expenditures-and service delivery-supportmacroeconomic and sectoral policies cfficiently and cost-effectively. From the povety perspective, the objective is to identify possible reallocations of resources-within and across sectors-that wili expand the access of the poor to physical and social infrastructure. * Safety Net. An analysis of the extent and mature of poverty, and the extent of the poor's vulnerability to natural or economic changes, should identify the type of safety net needed-and its scope. This analysis should be combined with an assessment of the extent, effectiveness, and affordability of existing safety nets, and of the existing instittional capacity to implement any recommended changes. * Country Poverty Strategy. Based on the above analyses, the strategy should lay out priorty measures that the government should take to reduce poverty. Objectives, institutional arrangements, and a timetable should be specified. The strategy should take the country's implementation capacity and any political constaints into account. The strategy should specify the options and the recommended choices when tradeoffs between objectives are identified-such as between poverty reduction and economic growth or protection of the environmenL 4. In addition to the poverty assessment, Assisfance Strategies to Redce Poverty called for an evaluation of country poverty data and a proposal for improving them. In many cases, the poverty assessment and the evaluation of the statistical system can be combined. Data measurement is discussed in Chapter 8. L Diagnesis A. Poverty Profile S. To prepare the assessment, the first step is to use the poverty profile to identify the country's main poverty problems. The profile shows the extent and nature of poverty-starting with a poverty line, counting the poor, and identifying them by regional, edtnic, gender, age, and other relevant characteristics. The profile also describes the poor's sources of income, social indicators, access to services, asset ownership, and consumption patterns. The profile builds on the most recent household survey if one is available and other market and conmunity data. Although the quality of data always can be improved, the poverty profile for the inital assessment generally relies on existing data sources.' 6. The combined poverty profile and trend indicators guide the policy review by identifying where progress is being made, and where serious gaps remain. Some income and social indicators may easily be used to illustrate what has happened to the poor over time. Examples of income indicators for the poor-or subgroups of ffie poor-include unskilled wage rates and the rural-urban terms of trade (see table, Box 1.6). 1. In some countries thUe arm base my be so week as to precludc meaningful ovt analysis. 1In these cas, priority surveys may be needed before te work begins on the esse See Cbristisn rootMert and rmoty Marhnt a alt, -he Social Dimension of Adjustment Pri'orty Suq An Insumet for the Rapid Identification and Mcnitoring of Policy Target Groups," WDrld BaRi SDA Working Paper 12, 191. 97 Some social indicators-such as imnuti of babies and underfive death rates-also are subject to short- term variation, and may thus readily provide feedback about the effects of policies and programs. More difficult to come by-but instructive for the diagnosi-is information on the evolution of land tenure or ownership, and access to other assrts. B. Assessment of Country Policies, Expenditures, and Institutions 7. The second step is to link the poverty profile and trend indicators with information about the instruments of public policy-to identify the policies that constrain poverty reduction. The oDmplexity of the analysis will depend on the quality of the data and available analytic resources.2 Building on an understanding both of the cultu!, sociological, and political problems of the poor and a conceptu model of the behavior of poor households, the analysis should consider the likely effects of proposed policies on the incomes, humat capital, and living conditions of the poor. Where relevant, the effect of adjustment programs on the poor should also be considered (Box 4.1). 1. Policies and Regulations 8. Long-Tenn Economic Management. The analysis is intended to identify impediments to the poor's ability to accumulate assets and to benefit from opportunities created by growth. Trade policy may depress the demand for unskilled labor. The poor may be disadvantaged by particular institutions or regulations, or be disproportionately affected by inadequate information, discrmination, externalities, and so on-that can iimit their options. Lack of human capital or of access to land or credit may shut tie poor out of income opportunities. Although the some of these distortions may not substantaly affect growth, they may bear heavily on the poor. 9. Short-Termn Economc Management. Here the main issue is the impact of the stance of macroeconomic policy on the poor. Is inflation a problem? If so, how does it affect the poor? Are financial policies biased toward the production of nontradables? If so, how do they affect the poor? In addidon, the likely short-term costs of adjustment need to be considered in the design of any adjustment program (see Chapter 6). Asssmets should also explore if-and how quickly-the poor can take advantage of newly created opportunities and, if not, whether special programs are warranted. This analysis will provide a basis for choosing among safety net oplions to limit the transitory effecus of adjustment on the poor. 2. Public Expenditur and Institutions 10. Expendinures. The evaluation of public expenditures complements the analysis of long-term and short-term economic management. From the poverty perspective, the objective is to identify possible reallocadions of resources within and across sectors that will expand the poor's access to physical and social infastructure. The analysis should cover actions to increase potential spending while maintaining fiscal balance or reducing the deficit-for example, through tax reform, improved tax collection, or elimination of waste in government expenditures. Another imporaint topic: the effects of public expenditure cuts and restructuring on the poor. When spendig cuts are needed, the analysis should consider how to protect the 2. See Anne Muasland, Mcdthods for Mawuring tie Effect of Adjustment Policies on Income Distribution," World Bank PRE Worldng Paper 474, 1990. 98 BOX 4.1: Diagnosis Checklist 2.>. J How do macroeconomic and sectond policies affect .the demand for ukilled and unskilled| labor?. . To. wVhatt do.labor market regulatibs impede labor mobility and absorption? . To.what extent do regulations bout and or fina'ncial markets discriminata against Ihe poor?| /.1 :. . it .How do reglations iffcdt die growth of.urban employmeat? o/ How do agricultural taxes affcct rural employment and incomes? :/ How does policy affect thie unsldUed wajge or te prices of crops produced by the poor? . . .'How are other Antermediate.indicacon of povert afficted?' . i Howwucliaccess do the poor lVC to pructiv a mid s h:>luman Capital . h. ow much access co the poor have to basic social servies? / Is the balanco in public social expenditures appropnate-basic and higher-levl services3 : . capital and recu;rmnt, salary:and nonsaairy? ; / How. appropriate are the institutions plainning and delivery capacity? How severe are.. | shortages of skilled labor?. Saety Net e1 How extensive:: are exiting safey finet programs ding traditionil. d. other. .nongover nental arrangements? . . / Are they cost effective and well-targeted to ihe most . vubiita:leE /.. If there is no safety net, are ihe.ountr's in'stiutiions dvelb6pdenougb to implement safety net programs? expenditures most important to the poor-in particular priority recurrent spending and invesmennts in the social sectors and ifstructLre. 11. Insrfwions. The effects of institutional capacity governing the implementation of public policy and service delivery must be evaluated. A paricular issue is the mechanism for communicating the poor's needs and preferences to government agencies-especially in the social sectors. More generally, the question is how do national policy and spending priorities reflect the importance of improving the basic social indicators of the poor? The answer requires an understanding of (a) public sector planning and its role in setting social sector priorities, and (b) institutional arrangements in the social sector ministries, and its effects on the poor's access to social services. An understanding of these processes is necessary in formulating sectoral strategies and recomnendations for changes in social sector spending (Box 4.2). 3. The Safety Net 12. The social safet net is intended to provide for those among the poor who are unlikely to benefit from economic growth or human resources development. The safety net includes income transfers for those chronically unable to work-because of age or handicap-and those temporarily affected by natural disasters or economic recession. Different types of safety nets are appropriate to different countries. In countries 99 BOX 4.2: Pakist-From Poverty Profile to Presenpdon for the Social Sectors PaldStan'3 povet pfoile ad pove4ly indicatrssgs that-despit :sustane gSWthi 80s-I9, ndicators for litl, Nxpectancy, infant mor-ality, and -lliteracy continua to Ula behind ftose of 'health,,, care. ,, shox6,.iages. of pn dialstaff, (esecally, , females ) in rura aa, an :deut fud for; :;.dnas; and lac of local vofvemenz in natal wae anzd as, Itai,ou-n Xot mp ~io,- opraion Th stuZ6dy proposed a social action prorm, conisting of:. i. 1;Ee < * Planing. Set realistic peiformanco goals and associated investmenls, conI~ ih N governent policies formtb social sectors; introtiLce a tireeyea expenditure progra . : (investmert and cuTent); clrify.procu and criteria for ing prje withinand acos sec>tors; an;d improve the daabas for heah and education. . *; {So1a Wecor Finance. Incrs die share of expenditue for baic soial:wi especiailly for rocurrent items; consider user fees for some: senices, and reie pn.w< str regulations. . . . . .. .: | : ~* 4vrovet Servie Delivery. Revise regulations and incentives tot recruitment and service.- to: ttract suitable. stafes pecially wmen-to rura ara; strengten thie mngralE. |e ~~cape.ity of district-level managers (for example, with in-service training and iicras&. . ~~finacial autbority); ad emhsz quAity of srice deiverytocliants l :: Litt^oral Prioriries.. Increase resources for* educatioial wlaterials; devlo01ps ealth * ~~operntions plan to deliver family planning servicca througb all health care faciities; epn . ~~rural water and sanitation programs; and introduce, community-based management and ful || reovery of op.ion md:uijtefluce costs. .:. yrS e .. . . ~~~~~~~~~~~~Helena Ribe and Nanc:y Gillespie. . A. L . Pakisnimu: A Profileof Po'ven,"RcportU4Si-PALKAugust 1990. (TWin is an iziicmaldouwlirsiceci - *s; iTowuirdf&aSocialAh lionftofor Patnkta: lmpodimmints:o Program and Options for Reform? (Greoon Cover Itp4iot} Rcpot 919PK, cloe *1.(TIhais isv an ictrasi document watli rcstr.cwfd circulation.) . . .. .. ... :. . . ., . ,, ; , ,, , . . . ,. where poverty is confined to specific pocket, and is readily identifiable and targetable, transfer schemes may be warranted. In countries where poverty is widespread, but acute crises arise cyclically or because of natural disastrs, schemes that can be qtickly activated and deactivated may he preferable. In countries where poverty is widespread, and institufions are not well-developed, no safety net ray be feasible, and the emphasis should be on fostering broad-based growth and inesting in human capital. 13. The poverty assessment analyzes safety net programs for cost-effectiveness and coverage of target groups-including the institutional capacity to implement any recommended changes. In the context of economic adjustment, it addresses the efects of restucturing of public ex penditures on the living conditions of poor households and on the design of affordable public expenditure programs to benefit e poor. The level of transfers within the community and the effects of traditional redistrition systems should be considered. For instance, ipn Sob-ar Africa, traditional-extended-fhnrily-safety nets remain strong, but could be weakened as developmnent proceeds. Helena Rib~~~~~~~~~~~~~~~ andNancy~~~~~~~~~~ 100 IL Presciption 14. The agenda for poverty reduction should indude two Wpes of recommendations. First, the government will require a plan specifying the agencies respondble-and the key steps-for implementing the proposals. Second, identification of the key gaps in the daa-and ways to monitor the data-should set in motion the improvement of data availability and quality (Box 4.3). Bor 4.3: Prescdption Checklit ..i.& pvy .;a'su umnet shoo ,nIould prpose a aod fbr actiox on iadividual policy, expnwilure, and institiadonal.retrs&addSsed in the preVIOUS chape a. I also should consider likuly 11Ove - induction: What is inq ma-uccon imnic policies am neede to supportbrouad-bad kruw and cncoumgn officient labor deai ? . ; What specific chines in micoecnornoic. aid' sectoral policies am need io eusum the poors aaess to. "ponumutiusa . . What inslitutionz`l$iirrangeunLnts A!2 neaedW4iiiclud1iig possible znedlumiu to ianceisse;: pauriciSpaon by fit poor in prognm desigu aiid evalunlio?: .~'Z i0 What public expniture or cecior ifms am neoedd to ensure access f6r die poor tisocial, sery cs. n economi opportunii ' .... .low s eushould safji eg cted? lLeinantic rtloniloding ame nreedd * 't|Win' improvemeni in poVerty dcllecsion nlanion r:_' . : ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~_ . __ . _ _ , A. Country Poverty Strategy 15. The assessment makes recommendations for govemment action, iseluding a phased program of policy reforms, public expenditures, and institutional development to reduce poverty. Indicative targets for improvements in the social indicators are included in the table of Priority Poverty Inicators (see Box 1.6), to help convey the broad dimensions of what the proposed effort is likely to achieve. The prescripfion is based on a realistic assessment of (a) the government's capacity-both finar`ia` and institutional-to implement poverty-reducing programs and policies, and (b) political econonmy considerations. The assessment should provide a sense of priorities for government programs and policies, and not be a wide- ranging and unfocused description that lacks specific policy content or is inconsistent with the resources likely to be available. It should pinpoint government policy acdons to redress the worst manifestations of poverty among vulnerable groups, for example, high incidence of child mortality, morbidity, and malnutrition. B. Statistical System Evaluation 16. An important by-product of the poverty profile and trend analysis of intermediate indicators is an evaluation of the adequacy and quality of poverty data in the country. The evaluation should idendtfy gaps in the dat, and propose means to fill ihe most serious gaps. The most important data are those needed to prepare a minimum set of indicators-and thus to elucidate the key poverty problems. How adequate is the country's statistical base for monitoring poverty? How can it be improved? Toe proposals for improving the quality and reliability of poverty data, which are to be made in conjunction with country countrprs and relevant UN agencies, should include: 101 * an venmory of relevaut social, adonal income, and household data collected-with respect to frequency, backlog, and qulity; * an evaluation of national implenenadon and absorptive capacity; and * specific proposakl for improving die stadstical base (quality coverage and implenmentation). These issues are examined in Chapter 8. 102 Annotated Bibliography Gillespie, Nancy. "Selected World Bank Poverty Studies: A Summary of Approaches, Coverage and Findings." World Bank PRE Worldng Paper 552, 1990. Reviews recent poverty studies from 28 countries. Concludes that many studies have too narrow an approach and recommends that poverty analysis should focus on the determinants of poverty, not only the access of the poor to goods and services. Khan, A.R. "World Bank Country Studies on Poverty: A Review of Some Recent Reports." April 1991. (This is an intenal document with restricted circulation.) Reviews 10 recent World Bank country studies on poverty (Bangladesh, Bolivia, Brazil, Egypt, India, Indonesia, Madagascar, Malawi, Morocco, and Paldstan) and analyzes both their approaches to the identification of the poverty groups and the problems encounteed, and the range of policies recommended. Recommends that future poverty-related economic and sector work be improved by subjecting national data to carefil scnrtiny and using all available indicators instead of focusing on a single summary measure. Suggests including in a poverty measurement methodology an absolute poverty income (or expenditure) threshold; social indicators; "causal" characteristics of the poor; and-where possible-supporting refinements, such as the measurement of the distribution below the poverty threshold or die hierarchical division of dhe poor into categories of different intensifies of poverty. Recommends making at least a qualitative estimate of the likely eff ct of the total package-and various combinations of components-on poverty. Annex 4 v Poverty Assessments This annex contains exz-vples of recent poverty assessments. These assessments are organized into subheadings that follow the format of this chapter. The subheadings are. v Poverty Profile * Safety Net * Ircentive and Regulatory Framework * Poverty Strategy * Public Expenditures * Statistical System 105 BOX A4.1: Bolra-Poveny Assessment ?ovenry Profile.: The Bolivia poverty eport" found that, the poorest of the poor are rural:'- smaliholder farmers, agricultuul workers of Indian origin, and women. Crop production and prioes"- hmave AIle. since 1976 .and, witbthem, the relative position of poor rural areas. : Incentive and RlOgGatory Framework The study evaluntes how jmblic policies affect te economic.- participation of dhe poor-via the effects of stahilization policics on the poor, the scctbral ailocation of public resources1, die incidbnce of public expenditures, and the cfficiency of resource allocation. Tbe study finds'that while the macroeconomicdpolicy framework is g'enerally conducive to labor-intensive:1 growth, macroeconomic policies are too'blunt an insirnient lo further reduce povert. Tbe poor also -- ' hiive limited employment opportunitics anad viritailly no access to credit.. ...*.. . :'. '0 'c .) re :i . *. . . . PUblic Experndtare. lTe study iaso linds that the very poor have benefited little from public qi:cxnditures.... they: have little or no access to infrasiLuclure or social services'-stuch as health care,l :educatio, mii tiraining... In parl dais reflecls Tle urban concentration of publics seri and':, infristructure.. (See Box, AI.6. lor public sector expenditure rcvie4. .. p s and S5fciNe.N ': Boliv'ia' economic crisis in the early 1980s severely'affcted the living sta of he' poor. Already low social expenditurms fell to almost nil. Until the i.Bginmg of te Einerg Social Fund (ES1P).operations' in 1987, many remote areas or the countryb.ad nevieriseen. centfil or. -.- | regional. government iuterveutioIk in clinics, schools, or social programs Tle ESE, as a fundinjj agency .indpecndent :of the existing government burcaucricy, ;suppard socinl 'and em pom gencration programs with participation of NGOs and community orgmzations. Since 199O0; blowing:. the completion of Ike ESF, the IBankus' been supporting the Social Investment Fund-ti i;i& p idvelofr .mudium4term' social ilevelopment projoclt-by strengthening the capacity ot existing &ial sector ministrietC.: f -* e Povme Srraregy. Tho study: proposes that macroeconomic policies remain cndicive' top..nvate sector developmentj. Seclor.l pnrorities for'human n:source deveopmnept uhool'd focmi a,s` effi iency:: un quityjimprv-cmunts. . EfTortS to incrase sissets held by the poor should include.Imnroed land' Ititling and rural credit schemes. Public exlenditures on infrastructure mndlter servi&es cai.le rrallocated to better .serve Wlio poor, withouit sacrificing clliciency. :The.n emphasis or pu,blic K scrvice delivery is that it he demand driven, building on the success of.the'ESF. Ethnicand :gend *discirninaTtionzmust be addressed-at least, the legal and regulatury codes ushuldobe r&isd to remove- institutionzd discrimination. ..' :Sradaical SysmeiL:. 'vty data in .Bolivia are very walc. The last n ,ationil mcenss |'nacide' *Yut in 1976. 'in the' absence of reliable data, the study ocusud bi.examwringl the ci sticsof 6targut grrupsk by location, occupation, gender, and racc 1rm calcrlating eztlie- and .the absolute number of the poor. Bawed on coniplemctary surveys conductedn recetyears-ty e ih;&sdy dbnclu&dd that chaiacteristics of 'the poor" identiried in .1976 nimlined valid YTh&BaiilOis epingl die Nadoinal"ln'stituitoof Statistics imipluriemit a Living Standards Measurment Survey. . Steeni Jorg me aL..BolivuLPovn Ripy6rt, Rq)or 3463, Ocwbc, 1990. ffluh La'in hiaicraui documtwib rcnccdiruiia 106 BOX A4.2 Egypt-Poverfy Assessment POverty Profile. The -1991-W,rdBank -Re6ort nO A.- gPovety-During Strutura Ad t found that20to25 pentofEytianihouseholds toa ar o-dt a *.long-term governmen,ot,commment to social development and- pverty '& :radica. The plight- ofthe p-oor; h. .b oeng lathe cofa rapid population expasion, a detey. ., a. n I i poor. are- in industria employment or srices,paricuarlythe' lowestraksof governmet. -The poor:--. Inc 'u r'on-fourth tsonehird of Egypiyou lare poi pio'n-of, woeW the -.'eldeYrly, and femalehead 'of'household.-i :: ' - '"'"': ''' '' ' I,~~~~~T ... ...., e i - - Ii-s j . B 2 .. =*ocl:.. .... i,,,,IC th t unemploymen as a symptom tbf< siss Si .Pi E mcrof ---s VMis jncetiw~d egzdroi Fmerk. Th5eotpints to -growing , ,a, fa of diffie bioicts in lcorifmnd tflynan markets Th public ctrsuf6s from: over sota: t ngf -The I acesstocpiloynent for tuniversity ra an an,adin istimed wage systemn loiv M III z g lo M earonnsfrom t prbductivity jobsr mareto conditiomns1and bav&crited ini1he cficia bsrie 'aot pqeand un xplyet can erac untolack access"! poy W ehslas lacome eandito t&patucitys aof soltdativ:ources tof,g stady ...or Them | . .... . .c.hp .... t. .... .. ... .. repo.tr mablic rxeconi ndatios secgond fimp-yearovang .198i48 to 1991-F) -r a tbe gobniefit those in urbai areas. : .: POVATve5 Stratey.. The report's yropos4d'strategy for reducing poverty draws 'a distinction between the poor and the very poor. For the former, the repor.recommend&.institutional reforms and allocation of public resources to increase the permannct demand for unskilled labor and the returns to land. It ailso calls for efflrts. to increase the accs's of the poor to cducation and other infistructurc. For the vrery poor-the poorest 10to o 20.perzentk f 'die population-the report ptoj ones directly targeted programnsto reduce fertility, il!ness,'undelriutrition, andinfiant mortality. Recognizing the interictions >: ~among interventions, the report argues forlspecial centers thst would simultauneously deliver nutritious food; healthhcare,.prevcidve medicine ad rel I . ,"n eated eucation.'. . S=aisteal'5ysreL The report'S'main source of data is a i984 nationwide: houschold expenditurc ::isurvey . The*reporl noes -some of the wdak'esses of this dataa.source and. pleads for better and more frequentsurveyst-V A 1989 survey is be ing roessed. Tiere' is no,definition of the poverty liDe in M e* - ico. - . :' . .. '. . . ..... ' ' ' ~Sandiag6 Levy *: . Mtexico in Transitinn:, Towardsa New RnIe rTr ihe Public Sectur, Rwn8770, May 1991. (his icN nn indernal documnnt w-u cshrriied circulation.) ' 115 BOX A4.8& Venezuela-Poverty Assessment PoveX }VroJGc. 04; rocei Woddrlhnkstidy' fnd iiduit pOverty'io Ve "7efa is primarily urbnn. Altbougb'theiicidieoe d poierty ishdgiger inj ruial areas, more than three-quarters of the poor amr urban dwellers. Of particular concern are the deserate conditions' of the residents in ihe squatter settlemenis surrounding major cities. This is widely attributed to the rapid increase in urbanization in Vcnezuela and the incapacity of government services to: keep up. Incentive and Regulatory Framework. ,Thestudy -used primarily on assessing the government's> two-pronged poverty reduction strategy: promoting sustainable growth while cxpanding targeted social programs.. Paiticular emphasis was plicea on health, nutitioi, and education praogms. 'For IS years after the 1973-74oilp'ncenc reases, iie country lived off the rents generated from oil revenues instead of finm a growh in productive cappity. Poverty reduction efforts were concentrated mainly on geeral. tood s,ubsidies, yet middle- .and high-income treilies consumed nearly 60 percent of the subsidized goods. Social development maggM.anid poveFny increased.* Because of the inefficiencies in these cconomic and social! policies, die*refonn progamm introduced in 1989 was designed to trainform tdie economy fro,m one b..sed on c,onsuumption of oil:re.tS tO one based'on growth in.productive activities. Jt .inbiuded 'ftdiimetal exoCbnge,i:', trad fioancial, and fiscal refonns. For the social secturs,; a key; refurm wasl to ebiminati all generalized food subsidies aid redirect funds 'tSb rget the poor. Public Expenditures. Venezuela has consistently devoted elatively high expenditures to the social tectors compared with other middle-incomc coumtrics. about 40. percent of consolidated government expenditures and10 to: 14 percent of GDP sincethc 1970s.. Further, during the 1980s crisis, when nearly all other countries.In the region decreased thir social sector spending, Venezuela maintained its impressive leve Yet,although its social indiciators have improved, the level ofIacieveiLenL is1ir less than what might beexpd eta country wiithhe highCst GNP. per capita in Latin America. TID fact, some indicators are typical of.a lowincome country. And some indicators h recent years have deteriorated,. paticularliy those relate to the nutritioial status of the most vulnerable groups: ifaits, children under age six, aind pregnant and nursing mothers. The study concludcs that-in the context of relatively high social ...expenditures.obvious questions: emerge regarding the approprateness and efficiency of the policies pursued to date. These issues a.m being partly addressed by the government's :new povertv reduction strategy, but the study notes that greater attention should be paid to improving the efficiency: of traditional social sectbr services. Sa;fery Net. The. fiit phase of dfie gover'nment's poverty:reduetion strategy includes a number of innovative safety net progrms, wpported in part by the Bank-finianced Social Development Project. The study fobutsd on :ftju of.the most pronincnttt (a) the Beca Alirwntaria, a nutritional grant program thit provids a direct csh sutisidy to: families of school chid living in ow-uicome areas, (b) Salud Maircno4njamiZ, a ainateruil'iind chikldheiiltlif&ding progrdM that aims to expand primary health coverago and improve heilth service 'ivry by distributing food to vulnerable groups seeking preventive health: cire..(mainy pregnant and nursingwomcn and children under the age of six); * (c) Hojam des CdcidAdb Diana, a community-based'day care program directed at children of working mothers" in low-income. neighborhoods, and) a p Irschool erpanwn program targeted to poor nruAl and urban areas. Because these programs are so new it is difficult to assess whether they are fully providing the safety net required in this difficult cconomic.transition. Neverheless, initial results indicate they. are. proving.nltiatvely eff.ecti6c in reaching their .target groups, and many have been expanid .beyo6id initial plans.' . . : .. . . . . . ... . ~~~~~~~~~~~continued.. a. Veezuela Povenr Studyt :From Oncialimdg Sub;sidiest. Turgeted PrIlra.ls. Rport 9114-VEf.lune 1991. (This i an. internaldocumantwmci rcidcirc ulatcin).': 116 BOX A4.& ConiUaed . PO-W an cny onGrutcg. the goem reduc a btegyi based on .a sound ecoiic ralional: INot'nly doeo ii T presen a moire driciont use of ezisti ' resources, but utitlso attempts oo Airect tbose rcWuow4e to groupsit -need them: most or are leost ablei pays for tcm; The sWd concludes ths,`de:;pite;thes promising mwasures, 4n ruber of usues: ar ti unresolved. Most of the poverty reduction proi ns arb. new and tend to fial outsid the thidan social service channel. Consequently, the oldereppramnus inheulth, nutrition, -d education continue to be highly inefficient, and have not yet inorporaed some of the fundameuthl princip:is of targedng and cosi-effectiveness that lauve driven the new prdgrams. Tbo study concludes that a second phasi of tie sratey should be developed lo improve the effecieness and quality of estublished social ser0ioes.. It provides... .spdci& recommendations in six oa egories: (a) stop and phaing of the seoond.pbase of the poverty reduction strategy ) targeting and resource allocation, (c) private sccwor pdzticipation,. (d) insttutional development, (a) coverage,id (f) decentralization. Staiwistal-Syim.. Althouagh Venczwla has.a iiveJ i usophiuca systepofhouseb id surveys, it bas not ben used w regularly monitor social prograu or infqrm social poicy. Cooseq ly, tbe government Ias recently decided to enihance its system of monitoring zdcI' conditions, based on the appr .deeloped: by. the Bank's Living Standas MeuuuremnentSurv :Pr6gram; This will build: on the ezxiisin :household survey, incorlporatng* new sOc?oI -on- healt, including. wamen'a reproductive heulth, children's healuh, brasctfeeding, and fcrtility; lucafion; inoome and oxpeziditt s; anthropometrics;.and so on. Results will be ainalyzed regularly bywormng groups with mmbeis -comi those institudoiis in charge of fornulating or implementing social. pDlicies and prognums, as well -as fiom research institutes:. I ... . . d .. ............ it. Vcenda: Sociai Dcvdloprnct Projct, SAR 8941-VF, Qcmober 9909.Mil is 'urn intcr,d dXuauult with rciMn | cmuutaioa.) .. . .. Part II Designing Country Assistance Strategies - The objectve of Part H is to show how to incorporate poverny reduction into Bank country assistance strategies. The strategies build on the poverty assessments discussed in Part I. * Most of Part I discussed ESW. The emphasis in Part II is on lending, lending instrunents, and sectoral issues. Chapter 5 Designing and Coordinating Country Assistance Programs for Poverty Reduction Assistance Strategies to Reduce Poverty said Bank efforts should support and complement counry efforts to reducepoverty. 7he report-which carries the Board 'sfil endorsement-recommended that Bank programs be based on arn alysis of counrwy polides, expenditures, and instizons. Tanslating is focas into Bank actions requires consideration of the major constraints on povery reduction in a country, and the instruents ilabke to the Bank to help loosen those constraints. The Bank's instruments are economic and sector work; lending, incuding for technical assistance; and mobilization and coordination of external assistance. When integrated with macroecnomic and sectorao issues, these instwnents constitute the Bank's couiy assistance strategy-the overall county work program. The strategy is articulated in the policy dialogue. 121 Chapter S. Designing and Coordinating Country Assistance Programs for Poverty Reduction Introduction 1. As a parter in development, the World Bank does more fian lend money. It also helJs build expertise and knowledge in developing countries, so they can better manage their own development Much More than a purveyor of bricks and mortar, the Bank is a catalyst Fostering change is the pont of departure for countuy strategy formulation, Ahich builds on and responds to a country's own economic and social objecives. 2. In firmulaig a country assistance stategy, the Bank first detrnmines te direction tle economy is taking with respect to growth and poverty reduction (see Chapter 4). This asemen needs to be coupled with information about institutionl, cultural, and polidcal constraints-and information about the views and likely inputs from MP, other UN agencies, the multilateral banks, donors, creditors, and NGOs. The point is to determine where the payoff to Bank analysis and support is likely to be greatest 3. The Bank country assia strategy is embodied in four instruments-the policy dialogue, economic and sector work (ESW), lending, and coordiuton -nth donors and international agencies. * Poliy Dialogue. The dialogue focuses on the key elements of the poverq reduction straegy and implementation issues. It is a dynamic exchange between the Bank and the government on policies, spending priorifies, implementation issue, and financing. For the Bank, it represents a key part of the articulation of ihe country assistance straegy. * Economic and Sector Work Timely, well-focused economic and sector work is needed that recognizes the political concers of country policynakes As much as possble, the analysis of the effects of policies on poverty should be quantified-to give policymakers comparatve information about the costs and benefits of alternative acfions. * Lenig Progrmm The lending program is used to support policy hnge. Government' responsiveness to the needs of the poor, and their wilngns and ability tD make appropriate policy adjustments, is an important factor in determining the size and composition of Bank hdiDg. 122 * Donor Coordiation. Given the scarcity of resources for country work, and the importance of coordination of donor efforts, Bank efforts should be pooled with those of other donors, with each focused on its respecdve area of comparative advantage. These instruments are discussed below. L Policy Dialogue 4. Country circumstances shape the policy dialogue on poverty reducdon. The policy dialogue incorporates the findings and recommendations of the poverty assessment and other relevant economic and sector work (ESW) and embodies the results of country project experience and country implementation reviews. Reflecting the severity of the country's poverty problems, the policy dialogue establishes priorities among the relevant policy issues-such as the macroeconomic and regulatory framework, women's role in the economy, social sector policies, and the funding of recurrent costs in the public expenditure program-and focuses on the most important issues for decision by government, including those affecting the most vulnerable groups. It articulates the respective roles dtat ESW, lending, and donor coordination can play in supporting and complemening country efforts to reduce poverty. The govemment's commitment to poverty reduction influences the nature of the dialogue. Where comnmtment is stronger, the focus will tend to be on solutions to ageed problems. Where comminiment is weaker, the focus will terd to be on the causes and manifestations of poverty. 5. Justainable poverty reduction is the Bank's overarching objective. But other priorities compete for attention and resources. These include the environent, population, the private sector, women in development, and debt and adjustment. There areman complementariyes between hese issues and poverty reduction. But, on the margin, tradeoffs are inevitable. In practice, governments may face tradeoffs involving economic efficiency and poverty reduction, inter alia, in choosing among policies, programs, and projects. These tradeoffs are not easy to evaluate. For some sectors, economic cost-benefit analysis can be used to evaluate alternative projects. And even where interventions are not amenable to quantitative cost- benefit analysis, it provides a discipline for thinldng about the relafive merits of alternative courses of action, whether they involve policies, investments, or recurrent expenditures. In advising governments, the Bank generally recommends the selection of die highest return activity among alternadve interventions, and that departures from this rule should be Justified in terms of reducing poverty or providing a safety net for the vulnerable and of being the least-cX - method of accomplishing these goals. As with other interventions, fiscal and administrative feasibility ae essential. II. Economic and Sector Work 6. Economic and sector work provides the analytic foundation for the Bank's advice on policies and public expenditures, project development, and formuladon of the country strategy. All ESW bears directly or indirectly on poverty reduction-because susaible poverty reduction depends on economic growth. ESW should identify, devise, and support policies, programs, and institutional reforms designed to promote efficientuse of resources and help male more rapid growth and poverty reductionpossible. ESW improves poverty reduction programs by providing (a) knowledge about the nature and extet of poverty; (b) analysis of the linls between overall and sectoral growth patterns and the incidence of poverty; (c) understanding of the equity, efficiency, and efficacy of existing policy interventions and public spending pattern; and (d) evaluation of the role of human resource development programs and other interventions in reducing poverty. 123 7. Econonmc Work. A centr concem of Bank economic work is the effect of the incentive framework on the demand for invesunent and labor. From the poverty reduction perspecdve, the concern is the effecdveness of economic manageuent in (a) promoting growth that makes efficient use of labor and (b) enabling te poor to respond to opportunides to improve their well-being. Important issues are the impact of macroeconomic policy on unemployment and the distibution of income between urban and rural households-and between nontradeable and tradeable sectors-in relation to the poverty profile. Other issues are the incidence of direct and indirect taxes, which may be regressive, and the efficiency of labor, capital, and land markets and their impact on the poor's employment and other income-earning opporunides. Special attention is focused on regulatory barriers in labor markets that m differendally affect women and the impact of land ownership and tenancy armangements on the poor. In the context of adjustnent, reform programs move economies in a direction consistent with poverty reducdon over the medium to long term. But efforts to stabilize and restructure the economy can have short-term costs. Analysis of these issues-and their distributional impact-provides a basis for designing compensatory programs. 8. Sector Work. Sector reports address the impact of sectoral policies, expenditures, and institudons on the poor and on the design of sectoral strategies to reduce poverty. They assess the institutional framework for the formuladon and execution of sectoral policies and the delivery of services, including the role of the private sector and nongovernmental organizations (NGOs), and the involvement of beneficiaries. Particular attention is paid to the inpact of sector policies on poor women and children, food security, rural credit, and land tee issues, and the links between environmental issues and poverty. Sector reports on human resources development assst in the formulation and implementaton of least-cost and susainable approaches to service delivery. 9. Public Expendiure Reewe. IBy focusing on intersectoral and intrasectoral tradeoffs, public expenditure reviews contnbute to the dialogue between the Bank and cs untry officials on how to restructure public expenditures to better promote poverty reduction. The reviews examine the equity, efficiency, and effectiveness of spending plans in the conte of the macroeconomic framework and sectoral strategy. They serve as a basis for determining whether additional resource mobilzation efforts, including higher levels of taxation, are needed. They note possible imbalances between capital and recurren spendig and between support for basic versus more specialized serices. They also note the impact of nonproductive expenditures, such as mlitary expenditures, and nonproductive practices on poverty reduction. Public expendiue rviews analyze safety net programs for cost effectiveness and coverage of target groups. In the context of economic adjustment, they address the inpact of restructuning of public expenditures on the living conditions of poor households and on the design of affordable public expenditure programs to benefit the poor. HI. Lending 10 Asszsance Strateges to Reduce Poverty reaffirmed that country policies for poverty reduction-and other factors-deten the si and composition of Bank lending. The paper said that many factors-political, insdtutional, and economic-influence program design in different country ck t . It did nor prpose lending targets in the vanous setors. A. Volume 11. TIe volume of Bank lending is influenced by a country's macroeconomic prospects, economic perfrm ance, exteal capital requrments, and creditworthiness. It is limhed by the availability of IDA fiud and by Bank exposure guidelines. Economic performance includes government efforts to reduce 124 poverty, as demonstraled by economic management, social services, and the safety net (Box 5.1). Assistance Strategies to Reduce Poverty noted': If a cownty 's policies, progmms, and insttut are broadly consistent with the two-part strtegy, sheprimafJciecaseforsubsialBanksupportisstrong. Theevidencein WDR 1990 shows that etenal assistance is most ffective in such countries. *fa cowatuy is no: committed to such policies, enemal assistance is unw ely to be effective in eitherpromoting efficient growth or reducing povert, and significant flows of Bank assistance cannot be justfaije Intermediate cases would warrnt intermediate kvels of assistance. 12. The volume of lending is linked to country efforts to reduce poverty. Stonger government commitment to poverty reducton-as measred by the adequacy of the policy framework for growth plus hulman development and/or willins to reform-warrantsgreatersupport; conversely, weaker commitment to poverty reduction warrants less support. Country IDA allocations reflect performance on (a) short-tm economic management, (O) long-term economic management, and (c) poverty reduction effort. Poverty reduction effort lakes into account government eforts to improve the social indicators and policies and programs in education, health, nutrition, food security, family planning, water supply, housing, labor market reform, and efficient employment generation. Poverty reduction and economic performance are distinct performance criteria, albeit mutually reiforcing-particuLarly in view of the close linkages between economic growth and poverty reduction. Risk and cred in considerations set the limits for IBRD lending. Hbwever, within these constraint-, lending allocations reflect the country's performance, including-as for IDAborrowers-governmentefforts to reducepoverty. In indonesia, for example, poverty reduction and social development constitute one of the four main objectives of the Bank's country asstance strategy (see Box 5.1); he government's good track record on poverty and serious commitment to poverty reduction warrant large leding programs, including for poverty reduction. In Pakistn, on the other hand, BOX 5.1: Indonesia-Poverty Reduction Strategy Thc recent lbionebia couuitry strategy pipxe iidicateW thaL invatling in people will continue to. he critical for improving human health and welfare, slowing population growth, anzd enhanucing Lhe skills, productivity, and employment prospects of the labor force. Tleie inveastmenis not only will provide vital support for more rapid growth, but also will contribute to more equitable participation-by women 155 well as men-in development. Rapid growth alone, however, will-be iusufficiol to CILsure cnntinuod red4uction of absolute poverty in Indonesia, especially in the easn islands, and the more disadvantalpd grulps and within resource-poor areas in Java. . The paper indicited that, in addition to the exxpansion of basic infrastrncture and social services, xreatr attention will bi nUeEdd to improve the access of the poor to key social services-especially health, family planning, nutrition, basiu' education, and sare water and silation, with particular attention to the necxcL of poor women mid feimale-headed households. At lcast as impurtant, fih poor neeo greater access to productive -rsuies, thrughII more baland regional growth and developmeat progrnms aimed at pockets or poverty. Spxcial attnation should be givcn to increasing the opportunities for income-generating activities for women in the informal smecor, and their prospects for employment-at reasonable wage rates-in die formal sectors of the economy. Richard Ozikins *. IndanecUa: County SmteyPae. J*ue 3991. ([fhi is am inlm! documtwilb renhictd circulation.) 1. S. page 9 of Ascstance Szrarwgf ro Reduce PomFy. 125 performance on the social indicators has lagged. The Bank has related the composition and the volume of lending to the government's progress in implemendng a social action program. (See Chapter 4, Box 4.2.) B. Composition 13. The composition of lending supports and complements country efforts to reduce poverty. The balance of payments and the strength of the government's economic program will determine the choice between adjushnent lending and investment lending. The type of intervention, the choice of sector, and the design of operations are determined by counuy circumstances. In counties where poverty is narrowly concentrated and impiementation capacity is good, targeted programs can be an important part of government programs to reduce poverty. Where poverty is more widespread and implementation capacity is weak, broadly based growth and support for basic social services may be the must cost-effective route to poverty reducdon. These differences in initial country conditions affect the mix of Bank support (Box 5.2). BOX 5.2: Targeted Poverty Projects in Country Assislance Strategies 'rhe Assistance StrateSies to Akedte Poversy:not&I that the reliance on targed versus bmadi-..| bm nd approwrhcs to poverty. rcducti6onwl:dpendpon id degrth e ocfoiienition o w and thc | country's implementation y:it argu:d In many low-income c is y isvdesfd, affecin fiy or sixty pcrcent of the population. 'At the same time, tbe administrativepacity to . impkemct finely targeted pgrnis Amitn n rsuch countries-h and1 . % . Imlamw, for examplefor t . reduce povety shiould be fsse. -on.. improving the aconomymd of incentivecs and secaoiou poles and on the widcsptedd provision 'of phy ical Infmstr"'ire:and basic socialis But in middlc-incomne couiiiti'ih.M`cidcnce of vct isznickiw lr-only seven percent in Ltmn'Amqncaccordmg to theo World Development Repot .. 5. dfiliiion of povet. Moov,v i oenoi and the capacity to implement largeted programs much geater; n these circumstnces, there as a much stronger jusiatio ftee intervention wtin the conext of Af .appropriate maroeconomic.famwork . Mexicu pruvid mp iyn bst of Chiapa.^ Guerrero, Hidalgo, andOuaais higher than the nutonwade average andw togeuer the four staLes ao 'nt abor : abu 20. tpercent'of MexiLa poor in ;the i, immediatc future migain is noCgoing toS lveithe:problem. AccordinYgly, thef".. Bank is focusing a x.e0o projcsDntmhztaon.:: and cg.on .. Development, Basic flcE itars.f anld Nutrition, and ic duction-n t statsto pro'bide them4itbaicinfrastn,ctreadsocial services Theprojects" redrss Fast imblann Ti:--,-ding ad a unde in the ontext n1 graitr dMiCti&i otuuhny- lo of governmet *. Tis> approach illustrates howcr.fldindtfication of conentrtions of poverty can incrise the cffcxtivene--tc4iublieq spnding-in l -re9ag te6 por; lnp- ;,..,,:OP . ;-...... . ..... e __ ~~~~~~~~~.... ..... p l l . -.7- _ :- - ..: _._. _ - 126 C. Stance 14. The overall stance of the Bank's country assistance strategy for poverty reduction is judged by the mix of Bank lending talen in conjunction with country and donor efforts and the other components of the Bank program, such as ESW and aid coordination. To maximize effecfiveness, the composition of lending needs to encourage the authorities to advance their own poverty-reducing efforts. This means the Bank should work with the government on iheir endre poverty reduction program in light of developments on the poverty and social indicators. For example, if the incomes of the poor are increasing rapidly but their access to social services is stagnating, the Bank shouWd work with the government to emphasize providing social services. This could be advanced by additional Bank lending to these sectors, or Bank lending coudd be linked to appropriate actions by the borrower to correct imbalances. Within sectors, Bank lending can be used to influence the pattern of public investnent and spending by emphasizing programs most likely to benefit the poor-infrastructure in rural areas and the urban informal economy, agricultural programs that benefit women farmers, basic health care centers, family planning programs, primary education, and so on. Clearly in developing the Bank lending program, complementarities with donor financed projects and programs also need to be factored into the equation. IV. Coordinating with Others 15. Interagency coordination plays an important role in the poverty reduction strategy. Given the scarcity of financial, analytic, and managerial resources in donor agencies and recipient countries, it makes sense to pool them and work together for a common purpose. Coordination prevents duplication of effort. It facilitates learning from each other's experience. In poverty work, it is especially important, because so many donor agencies are involved. The need for a coherent approach is therefore vital. To this end, regular consultations among agencies make sense. 16. To maximize donor effectiveness, the consultations should strive to achieve broad consensus on the approach to poverty reducfion and, as much as possble, a division of labor among agencies, based on the agencies' comparative strengths. The consultations should consider the specific donor- and nationally supported programs, including technical assistance. They should assess how each of these progams fits into the broader conception of policies and public expenditures. (Box 5.3) A. Bilateral Donors 17. Consultaive Groups and Round Tabks. Country circumsances determine the most appropriate tpes of interagency consultations. But in all cases, some centalized or organized procedures are useful to prevent system overload and confusion. ITis may involve interagency meetings in the country chaired by the Bank resident representative, die UNDP representative, or both, or visits to other agencies or organizations coordinad by the Bank's country department. Or, coordination may be formalized in an aid consortium or consultative group. Meetings of such groups can provide an opportuniy for a futl discussion of poverty issues, governmen strategy, and donor responses, ideally based on reports jointly prepared by the government, the flnk, and donors (see Box 5.4). 18. Cofincing. Where project cofinaning is contemplated, discussions should be held with potential cofinanciers early enough to enable them to participate fuly in project preparation (Box 5.5). In these discussions, recurrent cost financing typically warras special attention, because-for many programs and projects-recurrent costs tend to be underfunded, even as capital costs for some other projects may be overfunded. Where donor cofinancing for adjustment operations is contemplated, close coordination on the 127 BOX 5.3: Central America-Donor Workshop on Poverty Alleviaton S.cial indicators m Suve, G emla, iwdHonduras: arc among tie worstin atin: A.ienca, reflecitig. derested tiuctiral poblims neglected i the is and cmpounde by` the ,evere economic and politlicl cnsis tia atiacted i6ntnd Ameica in the: last decade. In e tyr the governments of these tunineb baive bebme mocre awamreof the md .t6'increast'r eff&tto .reuc poverlty hod: as a'devlopmentgal :aid as a means to solve the ro's sitt political.an social tensions. Accordingly;eachgovemet has initiatescil sectr reforms and isbeginningt :implenent new. mechanims designe to improve die deliyery of socil services.. . / ... 7.h&e. otzhop on Poverty Alleviation, organized -within the consultative group.frmework, provided the three Central Amencan governments with an opportunity to. brief the international. donor :community about their new poverty reduction programs, and permitted an in-depth exchange of views on issues of poverLy reduction) NGO representatives. also were invited and.attend6d the workshop.. :.Tbe thre c.ountry delegations disiributd -sparte documeats that descibed their governments' social sector strategies and plans for reducing poverty. e Dank report served as aba cground document for. the workcshon; . .; : ........ . Bbgr a. ZSocinl Investmet inGummaia, El Salvador. and Honduras Workshop om Povcruy lie mL3aidc Social S4rvicca fand :Social lavetmnt Funds within the ConsulIaLiva Group Framewcrk," Repot 8922-LAC, Juno 1990-. (.Tbi is an intenal. documenitwithl restricted circulation.).: 11. . - . . : . .' . ', .- ,.' ,.:'. ,'''~~~~~~~~~~~~~~~~~~~~~...' i';'' .... ' : . ' .; ; ....''"" ......, nature of tie program and its implications for the poor is essential. Donor financing can increase the government's room for maneuver in program design. It can provide direct financing for social programs-perhaps by cofinancing of a companion social fimd (see Chapter 6)-and can help protect key public expenditures and reduce die risk that funds for these items will come from progrms for the poor. B. UN Agncies 19. The Bank works with the various interational agencies on different aspects of the poverty issue. Coordination with the IMF maindy covers financial poEicies and macroeconomic issues. Interactions with other UN agencies mostdy correspond to the human side of the poverty reduction equation. In all anti- poverty programs, the Bank aims at coordination consistent with the comparative advantage of each agency. The dialogue among international agencies now centers on the need to translate the broad consensus on ideas into a consensus on implementation. The Bank is pursuing proposals to coordinate work with other UN agencies in specific countries in tde preparation or foliow-up to poverty assessments and human development assessmr.nts. 1. [ff 20. The hiternational Monetary Fund's central mandate is to help member countries pursue sound macreconomic policies to maintain or restore sustainable economic growth with internal and external balance. Sound macroecnomic and structural policies are needed for efficient and sustaible growth, vhich is, in turn, a prerequisite for lasdng poverty reduction. Because some groups of the poor may be adversely affected in the short term by policy measures-such as subsidy reduction, the Fund has been paying increased attention to the implications of such polices for income distibudon and poverty. While recognizing that it is a country's prerogative to make social and distibutional choices in its adjustment, growth, and development processes, the Fund has advised member countries on ways to use macroeconomic and structural policies to promote poverty reducion and to protect the poor and vulnerable groups during 128 BOX 5.4: Mozambiqne-Povefy Redaction Framework ..At the 1989 ConsuktativeoGroup meeting for Mozambique, therevwis strong and widespread disacgreemet about the appo ri!aft role of povety reduction in theMoumanbique development program, parculorly its importane to te program's growdi objectives. To forgo a consensu, a famewolt was prepared, to ilusuwe how poverty and growth fit togcetcr. in Mozambique.' -In preparng paper, a concelrt: effort was miad to draw on relevant studies prnmzvd by donor and govermenl :agenci:s and:tficBan0C. Avery roughdzradLo fdieapuper was Onrculated to the govemment aul to) di'e he1adqualiers and field oims of all dinors to allow for commenis at an early suge. T'he Bank res.ident misiion playid an active role in soliciling conlments and in coniveniing roundtablc donor meetings on dra-ds of the paper. These wer tiindl to coincide with visits ot beadquarters staff dot ling th apuwr Comments received were systermatieally-ancl visibly-incorporate in thoe riial versions. The final paper was used fnr thel 990 mecting. It pulled togcthcr the vanious economic and sector analyses to. (a) develop a poverty profile for Mozambique and examine causes of poverty; (b) demonstride the ties between macroeconomic policy reforms and poverty mduction efforts; and (c) recommend specific dirnctiuos for development cif smallholder agriculture, nonfamn job creation, nnd soial. scrvice -delivery, consistent with gro%wth and poverty reduction objectives. Following the discussions, donon;rand government have shown' increasing willingness to adjust investment pauerns in a number- of sectors, proide greater support for recunent expendituies in key scthirs (including, in some iaswincs, throug h morcflcxibility in the 'use of counterpirn 1funds), and reorient existing. projects to hbelter serve poverty reduction objectives. Nee.a Sirur. : .......~~~~...... ..... : . a.: Movmnbiquc: Poyvty Reduction Frmnework Pnper, October 1990. (lhis is mi internal documcntwiLh rcatricted circulatin:) adjustment. The Fund also has been gathering informaton on poverty in several member countnes, to discuss with the authodties the identification of poor and vulnerable groups, how policies affe them, and ways to strengthen positve effects and mim any adverse effects on the poor. 21. To ihis end, the Fund is encouraging member countries to improve tie mix and sequencing of policies, so as to strengthen the positive effects on the poor, and to introduce targeted expenditures and social safety nets where appropriate. The Fund is also making efforts to disseminate information about relevant country experiences-by directing technical assistance activities tO providing selected member countries with advice on the design and implementaton of cost-effective social safety nets. Meanwhile, Fund staff have been worldng with Bank staff at the country level to ensure consistency and coordiation between the two insbttutions. 2. UNDP 22. In conjunction with its Human Development Report, the UNDP has launched an initiative to heIp governments formulate country strategies for human development. This involves documenting their resource and investment needs and how much of these could be met through restructured domestic prorities and how much would have to come from additional resources-domestic or intermtional (Box 5.6). The UNDP initiative has ties to other UN activities, especially those related to goals for the 1990s. In many countries, UNICEF, WHO, UNFPA, WFP, IFAD, and other agencies already are involved in consultations and preparatory work to meet long-term goals and objectives for women and children, especially in health and education. The human development initiative builds on this work, and strengthens its social and economic undepinnings, by clarifying the budgetary and social implications for reaching fte goals and objecives. Preparaton of the UNDP country strategies could offer an opportunty for coordination with the Bank, 129 BOX 5.5: Bagladesk-Donor Coerdnliaton in the Populdation and Health Sector -le IDA-lcd Bangladesh PipuLation and elcaltfi C6rsortiuin, consisding of lS.ex ie l sdonors: and three UN agcncics1 (UNFPA,: WHO, and UNICEF) provides some US$450 million for.1bc Banglaacsb Fourth Populadon :ind Health Project.' out of a toul prpojectcost of US$605 million. Recentdy tb iAusimnD Mielopment Disk joined the consonium, bringing: the total of combined donor: input to aln$st USS500bmiilion, &idzth US$16S million pmvided bydhicGovcrnmentnof Bangladusfr anu toW ofm US$650 miDion. to]. i l ,atolofUS.X6inillioa. flhis. the largesl population and heulth project ever financed by theBak. Dudng projeotT9ormulation, th;e gvernmcnt and donoi6, lod by.lDA, held several Bangliadesi.. d6nor woikshops in Dhak and a special conference in Geneva, which were instrumental in forginga consensus on population iuid health strtegies. The consortium approach cables the.gvernment and the donor community to agrme un:an: ovemlhl sactonal stratcgy and .t.wtri out a consisitc fina.cing plant fur die scctor. Il"e counsorium openates on. the. basis . of strict equaity of all uf its parziters-tindtTendnt orthe size&of thie financial contribution-and is tiht seuse, tUe consoltiu'm is ledl us much by the Asian Development Dank, Kingdom of Norway, or WHO, for instazice, as by lDA. Ru addition to stDcgIheiing Bingluilaeh's population programi and iLS family planning service deliver;, sysoe, dic consorium was to reorient the healdi cwm system toward public health including maternal hcalth, to make basic' svices more casily.: acccssible.to the. poor-rural. ai urbai. Accordingly, the project suppdras the governmenL's eCfortis i ato the qualit;dve;and quantitative population aad. *a1til lbjeclivesbidl out in heo gvrmer t's fourtl five-year plan in tenns of (a)- ducedilily levels gain inczw in contriceptive pre.valence frmm :45 to 50 percentl (b) reduced rites of illness and death in childrcn under'age five; (c) safer deliveries and reduced nirnaa moritality from tlhocurrent 6 to: 4.S per i;,000 live birlhs; (d) reduccd disability; illncss,adid dlati f.m common poverty w l ited discases, such as tuberculosis and leprosy; and (e) improved nutritional ititis * of women and children. ... . ... .. .... . . .. .... a. Bpan ladesh: rT:minti lPulalianfnd ilaIillmPhject, SAR 9400-D, May I.991. .i iB sn imiaeriodo cumenmtwkh restricted 1 elruliltion.] particularly vis-a-vis the Bank's country poverty assements. A common strategy for data coLection also would prove useful to avoid duplication, conserve resources, and prevent overloading of fagile administrations in developing courtries. 23. Meanwhile, UNDP continues to collaborate wit the Bank in a variety of programs. There are tiree main types of Bank-UNDP collaboration. UNDP finances preinvestment (micro) sudies, macro studies to identify follow-up investment, and direct ivestment in the form of cost-haring (cofinacing). Recent examples of Bank-UNDP collaboration include UNDP financing of technical assislance for a social sector projert in Zaire, which prots vuleabb groups from the social costs of a deterioratig economy?' For a similar project in Uganda, albeit in the context of adjustment, UNDP is helping to strengthen the Miistry of Planning in support of the social dimensions of adjustment component? And a UNDP project in Indonesia served as a basis for estimating the social development and extension services stffing requirements of a Bank project focusing on basic needs in a large urban region.' In many cases, when UNDP is involved with the Bank on a project, other UN agencies also are involved. (See, for example, Box 5.7.) 2. Zaire: Social Sectnr Project, SAR 911O-ZR, November 1990. (Ibis is an internal document with restricted circuation.) 3. Ugand: Alleviation of Povety and the Social Costs of Adjustment Project, SAR 817941G, January 1990. (Ibis is an intcrnal document widt restricted circulaton.) 4. The UNDP Comm"n i Water and Sanition Project (EN5158/005) sewed as the basis for bidonesi: Third Jabotabsc Udra Dcrdopment Ptoject, tAR 8397-IND, June 1990. (Thus is an intral document with restricted circulation.) 130 BOX 5.6: UNDP-Humwn Development Coawthy InitJvas A central theme of UNDP county initiatives is sucussfil integration of coonoanic and social concerns.' The objecives are to: * produce an updat6d national human development profil-highlighting pust achievemenls, the continuing deprivation, regionl and social dispurities, and intended goals and objectives-uddrnsaing CaNCers such as child mortulity; maternal mortaliy; hunger and imalnutrition; proportion of the population living in slums or below the poverty line; access to drinking matr, sunitation, and primary health care; unemployment and underemployment; tLe status of womeni and children in society; extent of illiteracy; and envi-onmeutal degaduLaion; * summariic, usinc de-velopment and investment plans and otier deveLopzenL polcy documents, the conntry's most important priorities for human developmnent ir. lhe next decadc, and hdp make these priozilies muor specilic and operational, keping in mind curent levels of human developmnat and tihe most erious deficiencies in the relevant subsectors, aSs rwflectd in the human development profile;- * smmarize or identify additional measures needed, including iplicy, iust1tutiunal, and legislative measures; * nrview or Propuse- hbased on the above-realistic national goals for human development for the remnainder of-the decade in light of global goals; each goal should be realisticAilly costed, with a list of alterative means of implemicunution; a identify optious lbr restructuring national and subnational budgefts to attain these goals; * identify any additional rcsource requirements, domoestic or external; a assist govermnents in finding wrays and means of j'encrating the needed resources, induding achievement of greater efirciency in resource allocation, and to this end encouraging tle submission of the strategy document emlbodying the analysis to donors thuoughi the Consultativc Group or Rouidmable firamnwork; aid u* eicuurage tie ubC of the strategy document as a framc of refcrcnce for political ckcisionmakers on development issucs. lle primary focus is Lu be toi budget issues-including ncurrent costs*- in an effort to prepare realistic clSt etlimates !lir social goals and to idntmify interectoral and intrasectoral shifts in priorities, as .n:ll ::as ddiiowiia resource needs, ting intoaccount actrvities fthat iould Ipromoti in thC.private.tor, .'incluing.community initiatives.: .; _ > inv"FX . R8 {d). iXl~~~~~~ ~~~~~. . .. .... .: 3. UNICEF 24. Global goals for the year 200D adopted by UNICEF (mcluklng many shared with other UN agencies) and endorsed by the World Summit for Children-wing 1990 as the baseline year-are as follows: reduction of infant and underfive deadt rates by one-third or to 50 and 70, respectively, per 1,000 live births, whichever is less; reduction of matrnal mortality rate by 50 percent; reduction in malnutrition among children under five by 50 percent; universal acoess to safe drinking water and sanitary means of human waste disposal; universal access to basic education and completion of prmary education by at least 80 percent of primary-school-age children; reducfion of adult illiteracy by 50 percent, with emphasis on female literacy; 131 BOX 5.7: Madagascar-FAO-IDAILO-FJD?-UNIW-[ WFP Colaborion A i:recent mulisetoral prit in Madagascar, aimed at protetbing disadvantd and vulnerable groupsduriig a mjusmt,involvd xcnsiw 3Bankl-pN coflaboration." UNICEF, WHO and T3NDP provided cofiaancig and heip wih .project prepaation. UN: a asisedin zaVhing. UNDP, UNICEF, dmifiad:and 'parided a preliminary.list f social intervenons to .ddres in die short term, he plight of th moat disadiadjand vilnar.U& group. .Appraiui .was:based an coad- effeiveiesm, tim_,m sad feasibilityi:of the ineentions UNDP was tthrou te social dimenuibnu of adjustment progntm.. UNICEF assisted in targeling needy childre. ILO was involved in the rldeployment of workers hurt.by adj'ustmenft; UNICEF also helped ip targeted.ployment goneraoioa by woiting wilh IDAL toidentify counties where agriculturial emploiment pportunities are limited. and bibor-intensive ruraliroad cohstuction, rehabilitation, nd maintenance would be. nceded most; : The food securitycoumpon also involved subtaotial collbortion. Upstram work by .UNIC:EE .ledo:project design tenures iuch as targeeid feeding, crop marketing loanm, and nutritional intirvenaons. The World Food Pro me .(WFP) was iAvoRed in food stock managpment UNICEF; prvided taining and evaluation support for the duildfceding progrm, and the Fod ad Agncuklrc Orgrnzation' of the United Nations (EO) and W collabaed in supporting pilot opetons to target tb&lsubnidaes among Dthermuiitraoll inrevrions,; . .. .. ' , Z.,F ; ............ , : .'. .F . .-j. , . . ;* -'- a.. Madasacar EcononuIc and Socl Actiora SAR 7410-MAU October 193B: (Tbis m a lttc ;documem widi ced cucuaoa4 . t.: *. .. . .. improved protection of children in difficult circumstances. UNICEF hc:ps governments set priorities for achieving these goals. 25. Specific UNICEF-supported programs are highly selective. In most country programs, 80 percent of UNICEF resources are allocated to health, nutrition, education, and water and sanitation, and the remaining 20 percent to cross-cutfig concerns such as women in development, and basic urban services. Use of low-cost, high-impact techniques of proven effectiveness, combined with massive social mobilization and encouragement of long-term self-reliance, are at the heart of the UNICEF approach. This involves (a) giving priority to programs that can be replicated nationally; (b) targeting the most uu-Ierprivileged groups; (c) reducing disparities, with special attention to underprivileged groups and communities; (d) encouraging community participation and social mobilization involving national and subnational leaders, NGOs, local groups, the mass media, and religious and other organized groups; (e) increasing the access of women to education, training, extension services, credit, and income-generating activities. UNICEF is building on ffie achievements of universal child immunizaion, using its strucures to deliver other -nealt and nutridon interventions. Community financing and community control of resources are also encouraged. 26. UNICEF and the Bank have collaborated on a number of recent projects. Often this involves the identification and preappraisl stages of the project cycle. But UNICEF's on-the-ground presence also gives it a major role in implementation Recent examples inchide the Venezela Social Development Project, for which UNICEF initiated the nutritional component of the maternal-and-child health care program in healtlh centers.5 UNICEF also helped identify the countries most in need of investment in rural roads. UNICEF and UNDP participated in a National Poverty Task Force in Guinea to study the social dimensions of 5. Vmezuciw Social Devdopment Project, SAR 894 I-VE, Octobcr 1990. (This is an internal documeat with restricted circulation.) 132 adjustment leading to a social fund that was being established.P The recently approved Health, Population, -id Rural Water Supply Project in Mali exemplifies IDA-UNICEF cooperation over the project cycle.7 In this, as in many projects, UNICEF's in-depth involvement means that grass-roots issues can be dealt with more thoroughly than they night otherwise (examples include staff motivation in community health centers, or transition from one organizadional and financial model to another). In addidon, because UNICEF operations are more decentralized and flexible than the Banks', UNICEF is able to flU unforeseen needs as they emerge during government-donor reviews of implementation. 27. Several lessons have emerged from Bank-UNICEF collaboration. First, it is critical to clarify differences in policies, objectives, and approaches as far upstream as possible and to be sensidve to perceptions, with each institudon treated as a fidl partner having its own valid agenda. In short, the earlier that coordination begins in the project cycle, the better. Second, the cooperadon should take into account each institution's comparative advantage-for example, the Bank's analytic capacity and firnncial weight, and UNICEF's presence and experience on the ground. And, at each stage, there should be consultadon and a complete exchange of ems of reference, information, and evaluations to improve the effecdveness of ihe relationship (Box 5.8). 4 UNFPA 28. The United Nations Fund for Population Activities (UNFPA) views the population issue as an essenial element of poverty reduction. It stresses that 15 to 30 percent of families in developing countries have eight or more members; but 55 to 80 percent of poor families have eight or more members. UNFPA thus is particularly concerned with disadvantaged groups. The UNFPA Program Review and Strategy Development exercise was developed (a) to help governments develop or strengthen national population program strategies within their overall development objectives, and become self-reliant in formulating and implementing population progams; and (b) to help governments, UNFPA, and other donors delineate programs. UNFPA programs take into account the critical links between resource investments in health and education and efforts aimed at poverty reduction and environmental protection. UNFPA collaborates on Bank projects, often by providing prototypes for population activities (Box 5-9). S. WHO 29. The overriding goal of WHO remains the Global Strategy for Health for All by the year 2000. At the country level, the principal instrument is the development of health systems based on primary health care. The characteristics of primary health care are its countywde nature, emphasis on prevendon rather than curative actions, cost-effectivene, and accessibility to health care for all individuals. Active involvement of communities and the role of women in health development receive particular attention. WHO envisages that intersectoral approaches are reqpired for the promotion and attainment of health, involving issues such as population, food and nutrition, housing, water and sanitation, the environmenc, education, employment, and technology. Collaboration of UN country teams is thus essential not only in developing and implementng the intersectoral components of integrated health programs, but also in sensitizing decisionmalkrs and economic planners to the need to mobilize human, financial, and matial resources for such programs. However, for effective implementation of all health progras at ihe country level, governments need to exercise responsibility boD for the programs' adoption and implementation, and 6. Guinec Social-Economic Devdopment Support Project, SAR 7448-GUI, March 1989. (This is an interl document with restrited circulation-) 7. Mali: Second Health, Population and Rur Water Supply Project, 1991. (This is an intemal document with retited circulation.) 133 BOX 5.8: India-Bank-UNICEF Cooperation fPojlowing India'i adoptiomol universal immunization -s a nadonai priority, coverage rose from abo u1 15 pesrcent 1o about 70 percent by 1990. UNlCEF a-ssistnce played a very major role in tdiub achiievemenit. Two yeua ago; the Indian govremment docided to build on its succss with immunization by attmpting to boost the'covcuap of seveal oihr key mother and child health interventions. It approached IJIAEiank for.assistance, since the program costs would be greater titan it-or UNICEF and UNICEF's traditional blater cofinrnciers-could elasily provide. Negotiations were successfully coicluded in August 1991 (era mother and ciild health prject of more shan US$600 million, finanied th die lndian' govermuent, the ink, adUNICF.' . . K;affA Ie cooperative rclatioaship between t.he Bank and UNICEF. was extremely good:drin project identilicaition and preparaton. 'Ther were probably four reasons for dhis. First, both ageacies: could soe benefts from an enhanced paudnerhip. lbhe Baik benefited duoing preparation ftom the technical expertise of.UNICEF's large DlIhi staff, anud their close working relationship with th&. goveroruenx. UNICEF's rield pLesezice will also be inporrant during project supervision; saw die Bank's financial commitnent as necessary for die program to take off-and as soue gu in :.that governmeat funding fior tec program:would besustained during difficult fin'ancial times. i co* cooperation betweethe Bank .n i UNICEFas forged initially through.warm pensonal relati i between. the Biiik's aid UNICEF's Deliii-biascd staff. .e personal fhetor in building mu confidence striehitid agincy'bb)iciei iiout..cotenition. :lie rlatioshiip betwLeen fieldi stL..gicn UNICEM's doncrnualizedd dcisionmiking, ws tewardiiik.. ThiLd, it was impoilant that the rela in he fielil. was ccomnted. at hadquatrs with cxpresions of commitment [ron manaJtemLa agencies.: Fourlh, the Bank at h&idquar*s aad in the fiedd--recignized the lead role of UNICEF in this major iuitervention. Ricch'rd e ,. ...... .. .......................... . ,............ a.;--..-- S. India: Child'Survival and Sire Motierhodxl Project, SAR 9459-1N; Aus.i 1991. (Ilnih iao interull docut w restricted circuluhion.) . . . BOX 5.9: UNFPA-Deveiopug Prototsypes for Bankinnng A recent project in Indonesia highlights the comple a coliaboriaon between UNEPA and -te Bank, and other multilaterW. donors involVed in the populadon sector.' Although there was no . formal UNFPA - cofiuaning in this: prtoect, the agency:su'pported portions of various program components, and its field staff colaboiated extesively with Bank inission staff. U:NFPA initiated the 'work on the informaian. edwcadon, commnkication (JEC) component that later received Banlk financing undr tlie: projct. UNFPA developed p pes of ort films on po ulation and financed an evaluation of this activity. Italso-povided a pilot foraBank-fiinced subcomponent stressing youth involvement in population education by establishing youth centers and conducting training. .ydia .. araviglia a. Indoncsia:. Finlh Pbpulaion Projea, SAR 917IND, Fdbruay 1991. (lrh iz - internl document wiLh rmuiczd circulation.) for the coordination of internal and external resources. This requires fill integration of the health sector into the socioeconomic development framework of the country, the inclusion of the health sectr in national policies and budgets, and a guarantee of reliable partnersip by the donor community. 134 6. IFAD 30. International Fund for Agricultural Development (FAD) resources are focused on the poorest groups-those facing food shortages-in the developing countries. WFAD mainly supports projects to increase smallholder firmers' access to credit and inputs, extension and research services, and other institutional support (Box 5.10). IFAD pays special attention to the needs of rural women who, in many counties, produce most of the food crops. Potential beneficiaries help identify needs and-with grass-roots organizations-help manage projects. IFAD increasingly is integrating poverty reduction and environmental preservation. Projects are combining short-term crop intensification with longer-term participatory environmental rehabilitation, such as agro-forestry, small-scale irrigation, and conservation-oriented farming practices. Support for off-farm activities and microenterprise development is another priority, designed to open to the landless ecologically sustainable forms of livelihood. 31. WFAD and the Bank are collaborating on specific investment activities that address key poverty problems. The first phase of this collaborative exercise covers C6te d'Ivoire, Bolivia, Honduras, Pakistan, and Zimbabwe. In Bolivia and Honduras,the emphasis is on agricultural projects with a poverty orientation. For CBte d'Ivoire, the exercise builds on the considerable work that has already been done-by applying the methodology jointly developed by the Bank and WFAD in studying the impact of adjusment on smallholders. In Pakistan, the collaboration involves the identification of investment activities directed toward poverty reduction. For Zimbabwe, the collaboration involves helping the government design a social dimensions component for its adjustment program. 7. It 32. ILO's poverty reduction strategy emphasizes (a) special employment programs (SEPs) comprising labor-intensive infrastructure and mral workc schemes based on local resources, local labor, and local capacities; and urban-based SEPs for infrastructure construction and maintenance, artisan activity, and community service; (b) social or employment fimds oriented toward emergency and relief measures and/or ained at employment generation or poverty reduction; (c) upgrading the productitity of the working poor in the rural and informal sectors; and (d) technical cooperation and policy advice in the above areas. ILO emphasizes the need for technical support and training for the ministry of labor, and other ministries, in employment policy design and implementation and in new measures, methods, and instruments for responding to and positively influencing labor markets. ILO recognizes the need for policies that both allow for moreequitable outcomes within the framework of a sound macroeconomic policy and establish a supportive environment for employment creation. The Bank works extensively with the ILO at the country level and has benefited from ILO's specaized knowledge and experience, in particular on employment issues. 8. WFP 33. The World Food Programme (WEP) approaches poverty reduction through food aid. Aid takes the form of direct provision of food; support to government health and education centers; and food-for-work in setdement, agicultural production, and community development projects. This is consistent with the WDR 15!10 growth-plus-human-capital-plus safety net strategy. The overall challenge for WPP is to use food aid not only to alleviate the most severe symptoms of poverty, that is, hunger, temporarly-but also to help overcome the underlying causes. Tempory measures-emergency food aid for refugees and victims of natual disasters and feeding for the chronic poor-constitute safety nets. But WE? also mobilizes the labor of the poor to construct rural infrastrucure and undertale other activities required for economic and social development. Under the modalites introduced in 1989 to provide food assistance to long-erm refugees and dispJaced people, WFP endeavors to link provision of food to these groups with possibilities for introducing 135 BOX 5.10: IFAD-Muliblateral Colaboraon in Buidng Capacity : . The Agriciliurl MMa mena Triining Programme for Africa (AMTA) was conceived by'. . 7AD win ilaboration with theiAfrican. Dieielopinent Bank and the World Bank. TFhe program aims | : to train minagmts and senior technical staff in:line management positions to reduce constraints to. effective penf6hnaixce of the agricultal setor and projects.: he program's objectives were to: | develop curOula, training materials anda training approach for use by training institutions in. Africa; . .:increiase: the number of traiined and experienced. manageus in the sector;| * impro.ve lhe imple=enataion: df agricultural projects financed by the tiree sponsorngi I. .. institutions. . .en., han the capacity oftraing institutions to plan, o andconduct re ir shoirtte courses, scmiars and wr ops onthe managementof nuI pr6jects` and'' | >.-. increase the awarn:ess of senior govement officials of the policy and itiiStrative issues _;that.affect projet implementation.: Bte .1984: and 190, IFAD Tedinic.d Assistance grants financed four cycles6f AMTA m .ArIca; Project staff from: 27.SubaSiharra countries:were trained, and management trainers from| .. nationaltraining uisituttes. Agriculture sector officials-have-attended national policy sbeunars to., . deluenteth procedural .and strua6tiM constraints to program implementationii. :Very senior .oficials h;.ave,asso attended the Lh-Lcvel-:Policy ermini organized by E IAD todiscuss issues ra-Qb project managersan senior offils. .:. ': li AMTA: prgramm has developed curricula and tining s in .Engi sh aud French in :b8. ans.of extension, *ct 'M procuremeot, credit,-marke.ng. financial maiageinct and training ^. of triner. It;his .:ef vdy d a tWM cng metodlogyd a hich b .S. iw iIg onC the AMTA eiperiepe IEAD aId ts p=ui are.piing s8ij .p ui-- f(ii f::AfUU~fs2I Ai N~ilAllaregions tot the lusophouc: couintries :of . :.bi .iorcountrie: of --Ii Ndde'. alnd N*oh :.Ar6 gin for. ...... Afnva. i,w,axd for sel6 cted:co i Sou nd o Asia--e.:. . ;.,;,;........... .. ...- ..............l Sa.dn amining activities aimed at finding a more durable solution to their poverty. More generally, in emergency operations, WFP seek to achieve die greatest possible compatibility with development objectives. Not only should emergency food aid avoid undercutdng deveiopment (e.g., through shifting resources away from ongoing development to short-term emergency activides; providing free food alongside food-for-work; attracting people away firm productive activities to feeding points to a greater extent or for a longer tme than necessary; interfenng with development-oriented policy negotiations), but every opportunity should be taken to link emergency feeding with further development (e.g., through food-for-work; resettlement; recovery and rehabilitation measures that are in line with national development plans). Cooperaton between the Bank and WFP has kn place in three main areas: (a) cofinancing of development projects, (b) complementary assistance in stuctral and sector adjustment programs and participation in Consultative Group meeting, and (c) collaboration in food security plandnng. 136 9. UNESCO 34. UNESCO views basic education as an essenial component of poverty reduction strategies (Box 5.11). This was one of the guiding principles of the 1990 World Conference on Education for All, which was jointly sponsored by UNDP, UNESCO, UNICEF, and the World Bank. UNESCO has prepared and executed projects in basic educadon in all regions of the world. Many projects are concentrated in rural areas, are community-based with emphasis on popuar participation, and contain strong components for promoting educadon for women. In addition to formal schooling, educational acdvities include literacy training, health and nutrition education, skdlls training for income-generating activities. Beneficiaries include children, adults, disadvantaged groups, handicapped groups, nomads, and minority groups. UNESCO-Bank collaboration has talen place in project identificadon, preparation, and execution. Since 1984, UNESCO has held annual consltations with NGOs worldng in the areas of literacy and adult education. More recently, UNESCO has begun to decentralize Ihe consultatdons in order to reach smaller but committed national and local NGOs. BOX 5.11: UNESCO-CW-en and Family EBamnment [As part of its work on baiic education, UNESCO has undctz baseline desciptive and analytical research on factors influencing the capacities of Sub-Sabaran Afiican fhmilics to provide for the basic neads and uelfare of prol and school-ag children, especinlly under pmvailing connuons of economnicausterity. Prom this fidd mear6h' UNESCO has developed a methodology which allows fr an examniabon of key issues relating to: existdng definitions of povery (e.g., bEased 6n social, economic, cultural, political, administrative criteria, ec.) and undersanding the aulity of thesdeflnitions in compiling profiles of sekded nual households; * the tiliiy of households (of differnt social definitions) to access basic needs and serwces, including their ability to provide adequate and nutritions lb toteir families, health care, and preschool, primary and ohder levels of education to their offspring; b how the health aid nutrition of children of poor households affects their general welfae and especially their access to, regular attendaiz at, and generl performance in early childhood development progiunn and thieir effective participation In primary eucation; and - how processes and ciircumstances in which: houseiolds make deccisions to educate' (e.g., decisiorns to send children to preschool or toprimary schoul, or to withdraw them) and the policy implicaon along gender, ethnic, regional, and 4rcc linUs. I :: - ; . ~~~~~~~~~~~~~~~Susan;r eir yncka. UMSCO C. MulWateral Development Banks 1. African Developmient Bank 35. The African Development Bank's (AfDB) main mandaite is to assist member countries in Africa to formulate and implement development strategies aimed at improvig social and econormc conditions. Together with the UNDP, Af1DB and the World Bank cosponsored the Social Dimensions of Adjustment Project (SDA) for Sub-Saharan Africa during the 19S8-1991 period, for which the World Bank was the executing agency. Since 1987, Af DB has cofinanced with the World Bank structural adjustment programs in member countries (see, for exmple, Box 5.12). 137 BOX 5.12: African Deveopment Bank-Zmbabwe Economic Struc*wdl Adjushnent Program Social and povWtyconcerns wem fully integrted ink ihe design of Zimbabwe's Stiuctunil Adjustment Program .(SAP'. wbicb is: bing cofinanced by the. African Deveopment Bank and tie World Bank along with ovc enLs of die U:K., Ge.miny, 11.S., jad Sweden, and die EEC, and supported by the IMP.. The rran iims at Improving the ovcall policy enviromnient or prvat investmeat and exports, ini a-view toward.incremasing eonnomic growth, by grdually replacing direct administztive mechanisins with market sigMinals. As pait ur the SAP,au Social Development Fund (SDP) has been established to cupport social welfare measures und employment promotion-us a way to belp the poor pIrticipat uclively in the ecunzomy during the adjustment process. The SDF will be finance friun a videly of sources, including contributions from donors. It will providec suppolr to labor-intensive public work.s, the niinftinunl and imall-scale enterprise sectors, and raral resctlemcent proguras. Ihe SDP will also bI used to finance avariely of training activities. The main obj ctives ul' the SDF ure to promote: . ; * poverty assessment and monitoring; .: * skills development among poor and vulfc.nhlegrouips;. * *insttutiowuilstrrezgtheng for bvcial policy formultion, and : * income- aind emnployrnent-gcnerating mUicoiprjects.. One : .a:3re of te SDi)is the active participation of dte targeted population in tho.daAia, .. imnphmentation, manngement, ed mnwitoring of subprojects. A project proposal for funding under SDF can'be hsubmitted either directly bly an individual or through a. financid institution or. NGO. IElii1ible :siprojdcjt address gender and environmental issres, in addidon tb. poverty cbncerns.t:.. :.a:Deng.D , B/D a: .Zirnbsbwc: Economic Structund Adjiumient ogrn(rlm (r.SAP), A IB SAR, Dcemblwr 1991; 'md 21mbabwc: Structural - * Adjustent ugram (IHRD/IDA) P-56842!IM, 1Desmbr 1991. fIbis is an interal document with restricaJ circunldiOn.) 2. Asian Development Bank 36. The Asian Development Bank (ADB) has developed a comprehensive action plan to ensure that its increased concerns wth poverty alleviation are fully integrated into operations. Poverty issues are now considered systematically during country strategy and operational pro mm exercises. Additionally, an icreasing number of projects are targeted to meeting specific poverty alleviation goals. The need for direct initiatives to reduce poverty is recognized, as well as the need to pay special atnion to poverty alleviation when formulating and implementing conventional projects. The ADB is incasingly conerned with developing projects to increa income and employment opportnities for Ihe poor and improve their access to basic social services. It supports policy adjustment to involve the poor in the gwwth process. Economic and sector work is increasingly focsed on poverty alleiation. 3. Caribbean Development Bank 37. The Canibbean Development Bank (CDB) has sought to conibut to poverty reduction by facilihtaing job creation for unskilled workers, hrough the financig of investments in basic physical infrastructure and lines of credit for labor-intensive productive activides. In 1979, CDB began to target low- income groups more directly. With the assistance of USAID, it began a Basic Human Needs Project, with the objecfives of increasing the productivity and income of the unemployed and underemployed in beneficiary counties and of assistng temn in repairing and coneing the stock of economic and social infrastructure 138 essental both to fute growth and to the provision of basic services in poor communites in these countries. The Basic Needs Trust Fund was establisW in 1984 as a follow-on facility. CDB is intensifying its efforts in direct poverty reduction by developing a small-scale enterprise development program and assisting borrowing member countries in developing poverty reducdon programs based on poverty assessments. It is also giving greater consideration to die social impact of projects to ensure a more equitable flow of benefits to the poor. 4. Inter-Ameriam Development Bank 38. The Inter-American Development Bank (1DB) has adopted a new program-oriented strategy to address poverty reduction in a multi-dimensional way. It builds upon the IDB's objective of allocating 50 percent of the lending program to benefit lower-income groups. To this end, the 1DB is increasing lending in the basic social sectors to projects that benefit low-income groups, and innovative methods to deliver social services are being supported. Poverty reduction is also being supported through lending operations that benefit women and that accelerate microenterprise development. The IDB has approved an Action Plan outlining the steps it will take to carry out its Women in Development activities; women's employment activities have been a particular focus of its small projects program. In addition to support through lending, increased atention is bng focused on strengthening institutions that are implementing or supporting poverty reduction. The IDB has entered into a dialogue with member counties and other lending institutions in order to advance u ding of how to approach poverty reduction programs and to strengthen the targeting of social sectors' support for the poor. The IDB's research agenda includes the analysis of the exnt, severity, and economic profile of poverty in the region; the impact of adjustment policies on the poor; public expenditure policies and targeting the poor; and the role of human resources investments in reducing poverty. D. NGOs 39. Nonernmental Organizations (NGOs) can be particularly helpful where asessment, community involvement, or both are important to project and program development. NGOs can provide an important source to help improve the quality of poor people's lives. Because of tir on-the-ground presence and firsthand knowledge of the needs and interests of the poor, NGOs often provide a critical link between official planners and project beneficiaries. NGOs repeatedly have shown that their programs can reach tbe poor, often more effectively than public sector-managed profjtams can, and often in remote geographic regions. They can be a source of good-practice information in targeted projects for the Bank and other donors, for whom they often administer programs (Box 5.13). 40. The Bank views NGOs as parters in its poverty reducdon strategy, and an increasing number of projects reflect NGO involvement (see, for example, Box 5.14). To encourage early NGO involvement, the Bank compiles a biannual 'List of World Bank-Fianced Projects with Potential for NGO Involvement" which includes over 250 qpcoming Bank projects. The List is distibuted to several thousand NGOs worldwide to help them become aware of specific possibilities for interacting in Bank-supported operations, preferably in the early stages of project design and preparation. In addition, the Bank regularly mails its "Monthly Operational Summaiif (MOS) to more than 200 NGOs to keep them apprised of the entire pipeline of projects that the Bank may finance and, in particular, to encourage their cooperation in helping investigate and mitigate any potential social or environmental impacts which some projects might entail. The MOS flags projects tat may fall into this category. Policy discussions between the Bank and NGOs have intensified in recent years, particularly on issues related to poverty, adjustment, the environment, and popular participation. Through policy dialogue with NGOs in a variety of forums, the Bank seeks NGO 139 BOX 5.13: CIDA-Working through CARE Canada One CIDA' project whichl liis)icen adminislered hy CARE Canada, is tie,Worien's Roidl 0Mainycoanen :Progrananie iin Bangladeslh. 'Sjarting in 1983,: it'was funded thougih the 'nonetizttion or ufood il. The project employs 60!,000ext-emely poor, assuitless womeno 1u mainlain 60,000 miles or unpoitant runr' fmnn-to- arket roads near tieir villages. The project targets the poorest of the poor by paying a salary. low Snough so- as not :to divert from moro remuncrative endeavors. One of the'flrst visihlebenels, besides maintiining sigilificant part ofthle rumn! infrastructure -.and benefittiuig farmcrs-rich and :prixrJii enhancillg the trdnsportatioil Of f(ann produce, was lUlt it ,avc very poor women some status, improved Their self-estem, and gave them a stronger voice in -'Svillagohffairs. This is partly attributed to the fact that th: entire village benefits from their work. In addition, a reccntcvaluation concluded that, whcreas in 1984, 67 percent of'fiho crew members reporled ..not having enough food boeut more:than six montlis.of the year, the corrcspondiug figure fr 1985 was 0'l poereut.& Average :anual expenditures on health'cari. and primary school enrollments for children of crew members;incrcasd significantly. lhe current phase if die program luid ds in development aspects to ensure that women will not grevert to tficir :frmcr statc o 'destitutio'n onc they, havc left the program; A, recent. cvaluation-of Ce'anadian 0fod aid in Bangladash concludes that the programn.qan only be sustainable if Ih:r. is:a shift .'.s^in management 'responsibility trom CARE. C&iad to th . sustainle thr is :1 shio reommends tlut CIDA pairticipation should he contingent on increasing govermment financial support. ,-- A . L. ..............;inda Enl6ish, aDA * CIPA, An Evuazlion tif CIDA s fwdsA Aid PrJgrewuvne s Bwaglade.8h, 1990.. advice on development issues-at the nicro level, to draw on their often unique perspecdves on the particular circumstances of the poor in developing countries, and at the macro level, to bear how international issues such as debt, adjustment, or trade can influence the poor. 140 BOX 5.14: Ghan-NGO Assstace in Project Design and I eeation 'ie Ghana Seond Healbh and Populatiun Project aims tu incse. the acce;s of fumily plwnoiog evics ad cuntibute lo a prugissive impmvement in the quality and coverage of lhealih wrviea, eehdly primay. health care in dh throe underscived nonhebumost regions.' Oilier multiliseral damor hae aimo Its involved in population, hmau,h, nutrition aivktirs. lbo tiNF:IA ha. financed population interventions. INICEF bas empbasinzd immunization al other aqxtcb of umtenal anid chil bealth. 1: may provide vaccines and simple medial equiplent. WHO ha rnuaud specialized lechnicul assitance aund UN)P h'- h fu.u. thnicld swiusbce in heakh planning, aitaisbus, uanoanization ad manageaenm. NMOQ, including die Planned Parenthood Assaciation of Ghana. the National Catholic Secreturiat, and dte Prebytedian Church of Ghlna, play a significant rule in population and health. In the population aor the Planned Parenthood Association of Ghana accounts far 32 pemrent nf ntoal fiumily planniig clicta thrugh it 46 clinics and in the health sector, ciurch missionl facililies piuvide 35 pasce of outatical cam and 30 percent of hlspitl beds mu inpatient adnisaionas. NGOn pWrticipte ii tho 1988 IDA mview uf the populaiurn.health, unu nutrition actonr. In April 1989, key compownts of the prject were identified with the help of NGOs. Between June 1989 and January 1990, wilg the assistanee of local consultanins, Minisbry or health officials and NCOO designed die project in detail!, NUCiOs will alw contribute Uo dhe implemcntation and monitoring of three projec cnmponents: 1he iuallaiation, rqxeir, and maintenance of vital medlical equipment in district huspilals; the pruvisInU of tfnuily planning materials and services: amd the trAining and equipping of MinistLy uf Healdh and NGO district bealih magngemei klean in primary halth cur. Several NOOs will cutinance the project They will have wceas to grnis for the purchlse of hospital and fbmily planning supplies and equipment. Mese pmjes componet hbuild on extedsive NGO expenene and the fornmal MOO Ministry ot I lealith armageents will -mnre as nmxoels for furthur expansiojn to other rgions and activities. D.I... il.. n. Ohnaau: Secadllraihund ln'puElanNejec,SAR POZ9-;H, Nunulw 190. (tb!. kmS inlcndocummuilh rcsxicwd CixcuilSbmn.) 141 Annotated RfihIogn4phy Australian Internatonal Development Assistance Bureau (AIDAB). "Poverty Alleviation Through Austalian Development Cooperation.0 Inbrnational Development Issues, No. 15, 1991. Examines current intertdonal thining on poverty alleviadon and how the Austlian Development Cooperation Program assists in the reducdon of poverty in developing counies. Concludes that more can be done to reduce poverty ftrough policy dialogue and increased emphasis on targeting exisng programs to the poor. Chu, Ke-young and Richard Hemming (eds.). Public Exenditure Handbol A Guide to Public Poicy Issus i Developing Counres. Iemrnadonal Monetary Fund, 1991. Provides guidance on dte level and composition of public expendius. Covers health, education, and social security, as well as major efficiency and macroeconomic issues. Fscher, Wolfram (ed.). Where There is No Parton, G:Z, 1991. Articuates a participatory approach to development and poverty reduction. Argues that projects shoud target specific units, such as households and groups, rather than be onented more broadly toward entre regions. Gupta, Sanjeev and Karim Nashashibi. Poverty Concerns in Fund-Supported Programs." Fince and Development, Sptewmber 1990. Reviews the goals of IMF-suported adjustmet programs and their effects on poorer grups. Rs identfying poor groups and quantifying the ipact of policies on them in order to design social safet nets. Intematonal Labour Organisation (ILO). iblogmphy of Pub!sled Research of the World Employmae Programme. Geneva: ILO, 1991. Lists publicatons of the World plyment Programm on topics including, among others, rural poverty and employmen, women workers, the informal sector, and basic needs and incm distributon. --. lhe Socioeconomic Ipact of Teduical Cooperaon Project Conceming Rural Developmnt. Geneva: ILO Advisory Committee on Eural Development, Eleventh Session, 1990. Assesses the socioeconomic impact of technical coaton in the area of rual development by investigating the objectives of projects and how approprate are the means used to achieve the stated objectives. Concludes that technical assistance projects alone are not enough to deal with poverty and underemployment, whatever may be their positive contbutions and that a broader stategic oudook is necessary. Joint Consultative Group on Policy. "Poverty Alleviation-A Global Challenge." Report of the 1990 High- Level Meeting. Sumnmizes the presentions by five UN agencies-UNDP, UNFPA, World Food Programme, UNICEF and IFAD-on poverty reduction. Krantz, Lasse and Eva Tobisson (eds.). Anthopology in Swedish Development Cooperation. Development Studies Unit, Departmt of Soci Anthropology, Umversity of Sckholm. Special Issue 13-1411989. Descrbes how an los have worked with the Swedish International Development Autoity (SIDA) since the midl970's. Organizion for Econoic Cooperation and Developmtnt (OEC)) Development Assistance Committee (DAC). Develapment Cooperaion in de Ifl2r. Paris, 1989. Reviews the prorities for development cooeraton in the l990s. Stresses promotsustnble economic growh, enabling broader participation of peopk, and ensuring iomn lib . 142 Sadik, N. The Stae of World Popukltion 1991. New York: UNFPA, 1991. Focuses on family planing and the measures needed to slow population growth and establish the universal right to choose family size. Recommends balanced population growth, improved family planning services, contraceptive technology, promoting te status of women, social development, and doubling of fuiding for family planning programs. -- (editor). Population Policies and Programmes: Lessons Learnedfrom 7lo Decades ofExperience. UNFPA: New York University Press, 1991. Analyzes three sectoral studies on population policy development, maternal and child health and family planning, and population information, education and communication, and reviews population programs. Recommends international cooperation and coordination for effective use of resources. United Nations Children's Fund (UNICEF). Children and Development n the 1990s: A UNICEF Sourcebook. UNICEF, 1990. Provides background information and tables on the health of mothers and children; nutrition; water and sanitation; basic education; children in especial difficult circumstances; and girl children, childrei and the environment, and urban children. --. The Stone of the World's Children Report 1990. New York: Oxford University Press, 1989. R-eviews Current trends in the state of the world's children and major low-cost opportunities for protetng their lives and health. Encourages a new commitment to pnmary health care and primary education and recommends increases in aid to support measurable improvements in the survival, health, and nutrition of children. -- . Strategy for Inproved Nurition of Children and Women in Developing Countries: A UNICEF Policy Review. New Yorlc UNICEF, 1989. Presents a strategy, based on previous nutrition-oriented programs, to reduce and ultimately eliminate malnutrition in developing countries. Proposes a methodology for the identification of appropriate actions in a given context through a predetermined set of technical inteventions. Central to the methodology is a concepual fiamework reflecting the mnultisectral nature of nalnutrtion. A community-based monitoring system is key to that assessment. United Nations Development Programme (UNDP). Humn Development Report 1991. Oxford University Press, 1991. Focuses on public spending for human development, emphasizing the lack of political commitment. United Nations Fund for Population Activities (UNFPA). Anste-dam Declaratin Intemational Foumm on Popuulion in the Ilvey-First Ceniwy. New Yorlc: UNFPA, 1989. Presents the declaration adopted by the forum on the most important population issues in the 1990s and beyond. Calls for additional resources for family planning and other population activities as well as increased political commitment ". Report of the Executive Director on the Programming Experiences of the Fund in using the Exiing Set of Criteria and Suggestions for Modification of the Criteria in the Designation of Priority Countries. New Yorlc DP/1988138, 1988. Reviews the evolution of the system of designating priority countries; analyzes trends in resourceallocation to priority and other counties; and provides an overview of statistical differences between priority and other countries in tenms of program sectors, funidonal categories of assistance, and nature of budgetary support Endorses revised criteria for determinung the priority status of countries based on GNP per capita, annual increments to total population, gross reproduction rat, inant mortality rate, agricultmal density, and female literacy. 143 United Nations General Assembly. "International Cooperation for the Eiadication of Poverty in Developing Countries." A1461454, October 2, 1991. Reviews ihe causes of poverty and the experience in eradicating poverty. Suggests improving dte international economic enviromnent and reorienting official development assistance. Williams, Aubrey. "A Growing Role for NGOs in Development." Finance & Development, December 1990. Examines the role and performance of NGOs in development, the collaboration of the Bank with NGOs, and government-NGO relations. Concludes that the distinctive strengths of NGOs are their grass- roots presence and humanitarian focus, while the Bank's main strengfts are its international character, broad perspective, and economic experdse. Cooperation between the two can make NGOs and the Bank more effective. World Bant How the World Bank Woda with Nongovermmntal Organiadions. 1990. Describes the nature of NGO-Bank cooperation by highlighting collaborative projects. Concludes that the Bank seeks more active participation by NGOs to strengthen the poverty impact of Bank-supported activities. "-. Cooperafion Between the World Bank and NGOs: 1990 Progress Report." World Bank, Extemal Affairs Departnent, 1990. Examines Bank-NGO cooperation in two broad areas-operational colaboration and policy dialogue. Finds that nearly a quarter of Bank projects approved in FY90 had NGO involvement; most NGO-associated projects were in Africa; around 80 percent of the NGOs involved were grass roots organizations or indigenous intermedary organizations; implementation remained the most common fimctional category; and policy dialogue between the Bank and NGOs was particularly active in poverty, environment, and popular participation. -. Assisuace Strategies to Reduce Poveny. A World Bank Poliey Paper, 1991. Shows how the two- part approach for reducing poverty outlined in the WDR 1990 can be fully integrated into Bank operations. Emphasizes that, because afl public policies and programs affect the poor directly or indirectly, the Bank's efforts to assist countries in reducing poverty must be comprehensive. Targeted interventions, albeit important, are only part of this overall approach. Recommends assessing the consistency of each country's policies, programs, and insfitations with the reduction of poverty, and using such assessments as a key input into the design of Bank assistance strategies. World Health Organization (WHO). Priorityfor dte Poorest. 1990. Highlights actions taken by WHO in response to ineqities in the health sector. Chapter 6 Poverty Reduction and Bank Lending Instruments Assistance Strategies to Reduce Poverty artidulated a progranmakc approach to Bank support for poverty reduction. Adjustment lending-with Its emphasis on policy and Insttional reform-serves long-term povert reducion goals. Invesnent lending also supports poly ard institutional reform. It focuses on specfic infrastructure or human capital needs of the poor, but must be considered in the context of the overa pov-reducdon effort. The key qestions are: Where is the highest payoffto Bank sWpport, and how can Bank lending complement and support county efforts to reduce poverty? Agaist this background, the chapter stresses the importance of economic and sector wrk and upstream project work in idenifyung policy and investnent opportnities that both are efficient and benefit de poor. 147 Chapter 6. Poverty Reduction and Bank Lending Instruments Introduction This chapter addresses the treatment of poverty reducdon in the context of Bank lending. The chapter begins with adjustnent operations, which support broad economic policy and sectoral reforms designed to foster growth. At the oher extreme are individual, retail investment projects and technical assistance. In between are wholesale operations with a greater secoral orientation; they may be for adjustment or investment The chapter looks first at adjustment lending and investnent lending per se, and then at sustainability and implementation issues. I. Adjustment Lending 1. Overview. Structural and sectoral adjustment operations support macroeconomic and sectoral policies consistent with efficient resource allocation and accelerated sustainable growth. These policies are essential to poverty reduction. Country circumstances will determine when individual adjustment operations should focus more specifically on poverty reduction-by addressing distortions and regulations that disadvantage the poor especially and by supporting a reorientation of public expenditures toward infrastructure and social services for the poor. Such operations help foster the participation of the poor in the economic growth to be generated by adjustment Institutional and public expenditure issues are important for all adjustment operations. Istitutional reform and development should be supported as necessary to ensure that the benefits of policy reforms reach the poor and, within the overall spending envelope given by the macroeconomic framework, special efforts should be made to safeguard, and increase where appropriate, budgetary allocations for basic health, nutrtion, and education, including programs that benefit the most vulnerable groups among the poor. OD 4.15 requires that-subject to administrative and fiscal feasibility-all adjustment operations should provide for safety net protection for the most vulnerable. (Box 6.1 contains a checklist of poverty-related issues to be considered in the design of adjustment operations.) 2. Role of Poveny Profile ad Indicators. The poverty profile and short-term indicators of poverty discussed in Chapter 1 can help in the design of reform programs and systems for monitoring poverty during adjustment Because the poverty profile indicates who the poor are, where they live, and their economic activities and social condition, it can be used to establish a baseline for monitoring during adjustment. The profile can be used to identify the key indicators that are correlated with the incomes of the poor and that can be measured readily during adjustment A similar approach can be used to monitor key social indicators and access to public services. 148 BOX 6.1: AdJustmnt Program Design Checlst Thi. owng qions should be asked in t di6sign ofadjustment qerabomi: s Now dois the weny outome differ urder alerinav t seadjustiieiin acriou . BHow di wiagesand cmpliynenz of unidlled worers differ r t sce :. ....S. r How mobile is libbr bewae ib nradablepnd mntradable ccto ::`:? . Hlow .fkedblc arewages innominal tiems? In- erlens?.-.;.. . .. / AMng :*hidh patiist dceumd for unSlled labr greae? .... . .. .... How do pdeswofd pro flcouiinued.bytopowr differao p Ihesepadrn? . .t. wf1w muchidouaesdc demand contraction is necessary to restiecra balianco? : . Wh ii the likely distibulionl Impact of lhe bontraction?... I. What hvecmc rilik$undr he program bear oan poor? ../ Wbicgroups are likely.. t be"adveriely affcbl.? I How cx ie porest and PlOSt vulnerable pi.be pmtcted. .: What are die trade-offs wiih fiscal aaee ................I q.9 1aaedit tf managemehi? H WIdequ'te.zSde n sgsystem for traciag chinges ie welQareof Dp darng adjustment?" : ; Whit fiddipi-ino-shn1r ari3 waninitd.to facilitate it por's.participation in ecouomzcgrowm htbe gencrated by adJushtuWi? ....; . 3. Monitoring. According to OD 4.15, die short-tm incoe indicators in the Priority Poverty Indicators table (Box 1.6) are to be monitored in Bank-supported adjustment programs. Where available, such indicators should be fllowed for each relevant subgru of the poor, dassiied by main source of income. The feedback from monitoring can be used to adapt the program during ilemention. The OD notes that the social indicators should likewise be monitored, aldough they are likely to be available with longer lags. (Box 6.2 dscusses the findings of a sudy of the social indicators and adjustmenL) A. Structural Adjustment Lmns 4. In many cases, the broad policy framework needs to be cbanged to reo growth and the climate for sustined poverty reduction. However, the precise way in which adjustment leding supports policies for poverty reduction will depend on the specifics of the underlyig problem. For example, Uhe major problem could be unsuinable macroeconomic policies, with the poor sufering along with e rest of the population from Uhe resulting slow gowth. In such cases, an adjusanent operation might focus on the deminats of broad-based growth, and not specifically on the poor-except for addrsng Use social costs of adjustment (see paraph 7). 5. Alternatively, the impact on tUe poor of inapproprie policies could be more direct For example, the por may work in te exort secar, while an overvalued exhange rate is depresng activity Uere; or tie fiscal picture could be overly dependent on trade or commodity taxes, restricdng labor demand and bearing heavily on the poor. In such circumsces, adjustment lending would support specific measures to reduce poverty. (See, for example, Box 6.3.) Meanwhile, the benefits of adjustment to he poor could be enhanced by focusing reforms on the removal of the instituional or regulatory barriers the poor face and addressing dtons that disproportionately affect the poor. Adjustnt programs can also support a restructuring of public expenditures with a view to reducing poverty. Priority should be given to protecting 149 BOX 6.2: Strucal Adjushuat ad Living Condiion .. ..A review' of trendsi. In social indicators did ;roi: rveal a discernible difference between adjusting.and nonadjusting countries.' hough .within-group variadon is large, he'overall trends in health indicators are impriygfor all.,ountygrilpp: declines'in infant and child mortality rates are condnuing; ismiizad6i cove.rapge A increasing;.and, by and large; nutrition indicators: are positive except. in Africa, `wlire he dgee of umidrmutrition worsened between 1980 andv 1986 in about oned-tird of the Sub-Siuarn counties. Sinillatly, tends in education indicators for developing countries are improving: 'primay enollment rates are increasing and siudent-teacher ratios are declining. A notable exception is the record of declining enrollment ralios in 1980-1986 in some adjusting countrics. In summary, the paper found tat, regardlcs of adjusutrit status, developing. countries aclieved progr esin social. ifdicators during the 194Us. . Progress ras slowest, b6wever, 'in countries:that already had le ,worst social indicators. .. ,: :buadw. Although the sitidy,bud a no,evidence that adjustmcnt policies per s lhd an adverse effect oin any of tie social indicatr a he aggregate level-with the excepion of declining primary enrollment in 'somc adjustment countries-it hJso (bunt! W eViIIICe that adjusstneuit accelerites social ppOgreg.; Te review fbunid thf ildx boghtheBan!k's ireatmeni of the social costs of adjusunt has ,progressed, be cuffe,tipproacb appearsadhoc. wi,thoutsufficicit reference to die fundamenital flaws in die ,scial sectols. The study therfore recommcnds deflstemfatic' integration of long-term poverly r6dticti6'n-aLocial indicalor. iuiprowvement-oijecidves in .the adjustnent process. Despite the social progress otserved, the unacceptbly high i:±vds'of mortality and malnutrition prevailing in many developing cnuntries raisc 'he question of wheiher inure cari'be dIone to impove social conditions evenuaing tho. tranion peiod ofidjusinent. 'I'he reoord t at social' pro,gress can be chieved and rintained urxr auslere econic conditions. Given the. inefficiencies in the social sectors, ihe social. indicatols. could be inipruved without. large budgetary conscqnences. 'lie .stludy concludes hatCcompcnsatory interventioni.are needed toreduce the tranrsitory social CoSIS of iadjustment on readily identifiable groups. However, it also dcoflnmfflCs that greater. attendon be devoted to sthen ing ttie analytic und*rpinnihg;se0f these interventions. Furthermore, - & Zzng wii t short-t6rf icmpWnsatry interv6ndow;,. longr-b:rm 'social sector strategies-through econonii aiul secl wor rk and'social sector'lending -sodd b empisized toh guaranlee sustLinable success against the coirelates'of poverty.: ..n .. . .. ~~~~~~~Elene Makonnen it. .'S¶iucilu.l Adjuanueait and l.ving Conditioun in Developing Courteris,' World Bank PIRE Working Itpr 467, 1990. b.: The report group. counuriua cording to the number of SAL. and SLEALs they raccived [nuni the Ilhk.d or enhancing the level and efficiency of expenditures on basic infrastructure that benefit the poor, and on the social sectors, especially for basic health care and education1. 1. Se, for cxnmplc, Mark Schatr, 'Improving the Poverty Orientation of Public Expecadiwrc An Operational Approach." World Bak ASrSP Report, 1991. 150 BOX 6.3: Malaw-Maing Adjustment Work for the Poor A'recent analysis of structural adjustment in MalawiN followevd up on a poverty assessment B(0x A4.5). The, analysis focused on expading efficient labor demand, promoting technological .clinnge among smallfarmers, expanding financial services, and brdadening access to basic social services. It found that adJustment has restore economic stabilit, reduced fiscal crowding out of the . iri*t sector by public boirowing, ancl geneilly im-mnprve pric4 onalsiaat preruisits lto poverc * JW oesco 3pUh. f5EUA*j II.U8 . z...unr s wy...n rducdtion;:. Philprivate seclor responses conie to be inhibited by market rigidities that also tend. to exclide die poor disproportionately from t marllet. Th key issues are investment and regulatoy biatrols, Imperfect financial markets, indequate public expenditres for human resource. development, and Ubb market regulations. Thlli World Bank is assisting lie rforms b s o tin tp a apit *.:4kii Adjustment Credit.b The proposcd credit aims to spport regulatory, zoing, administrative, .i4lpolipy mcasures to reduce investment delays; reorient land use and reduce impedimens to szial. :.nd microenterprise developnmetit; furdLer liberalize the import and export trd, such as'for used ckihing conasumed mainly by dhe poor; rlcbnl monetary policy and bankcing, including the lowering of-entry barriers for new domesLic and foreigninstitudons;: reorient pubic expenditures toward basic. social services; and reform minimum-wage egultions - .e'*e Krw;m -.: Rick Scobey, 'Adjurcexs and Cosagaind Rctporse alawi ai dac Teshold iSuanSd& Growz Wt d Basic. lnduaty and Energy Scria Paper 41, 1990. bh;.. Malawi: Enlrquirrnerrrhip iiil Capilal MaLrks Adjn a Cir (r Covier), pril1992. (is -: internEl , document with restricted circulation.) B. Sector Adjustment Loans 6. Sector adjustment loans (SECALs) also support policy changes. Poverty-oriented SECALs are typically in the social sectors or agriculture (Box 6.4). In education, reforms might include the limination of special subsidies for universities coupled with the introduction of a stdent loan program The resultn savings might be spent on basic education. In agriculture, sector adjustment loans typically support the elimination of marketing boards, price controls, and input subsidies. The net effect of these changes is typically to benefit the rural poor-at the expense of the urban poor. In many cases, agricultural sector adjustment loans include programs to improve food distribution, the targeting of food subsidies, or both. C. Addressing the Social Costs or Adjustment 7. Aldtough the poor suffer from the effect of overvalued exchange rates on employment-and bear the brunt of odter policy distordons-they also may be hurt by the transitional costs of adjustment policies to correct those distortions. Initial efforts to correct internal and external imbalances may depress output, employment, and consumption (Box 6.5). Reallocation of fiscal resources across sectrs and activities may benefit some groups, such as farmers, while penalizing others, such as urban wage eamers. IT any case, the very poor tend to be the least protected by safety nets. For ffiese reasons, Bank-spported adjustment programs should include measures to protect the most vulnerable from declines in consumption and social services-with particular attention paid to food and nutitional security-in the context of an agreed public eenditure program. More broadly, government implementation capacity must be faly talkn int account in desigdng safety net programs, recognizing tat in some instances only the simplest medhanisms will be administratively feasible. 151 BOX 6.4: Ghana-Poverf-Sensuiive Adjustment in Agricadturn The Ghaa. iagricWualhn ector adjust t program"isdesgn t ds regulatory imptdiiients in ffie secr with a view to en c pros . Te D 3ain.goils'4r- to liberaiuze agricullural prciin ma g, andIputsupply; and strengthen .qfliicUiltur sector coordination and managemet. T: first s ig : virtually dliminate the. public. sector iole in price de:trmination, allowc tv tad i idtural inputs and. outputs, remove external de recto for all a i des ept -and thereby :create conditidons for increased private investment istorage, in sly, processing. The ;.eond gl provides for a more efficient allocaton of publiiresoirces and increases the focus of thihe public wctor on perty eac ion a e CDviroDUCnLn The progrm was predicae on'the a o ii e to he desn it mn* .awareness of die major factors that prevent benfitsf ing hepoor.:Regnzing that policyi:' refo&.rmis may not bring tie intended behavioral nses, te preparation iniiude -an analysi of ways; tD uSe ititutions..aind markts as incenties.h Iw questions.were addes:. ... * hat are. elik?ely effects of the policy reforms on the poor? : . l * , f . . thit erp eforrmss,ould be insfta i die'poor are to benefit substantially *f3i1 th '-e ce t0ars in.Iuthegricul' e sector7-?- . ;.. The nsqu6iom d hel to Sste policy dehatc on poverty reduction* .*.. .. . Under.. hepr,ogpam, measures are to bcirpiened to ensure that agr,icultural polices and ghiilc, experiditure programs :rypod to the ncds.of targgroups (te poo, and women) Such programs include expenditure on extension and research for roots and tubers, crop rotation and:sod fertiliq;,impr.ovement, and pstharvest.improvement. The government has begun to :focis on the ..* spaWaldisthibutin of public expenditure in relation to the poor and is identifying povertyed .;bprograis as a basis fot.preparing the 1992 budget.: :Acions fur.the11993 bidAet. are to-be-a.iid i ,-f. -,........... ;* *---- * * ... * * -- S-.... .. .. Sdb Buinya*iand SeaeACon tin*--. -* ¢ . x . g . * * ** , . . ........................................... - : ** * g * : . -. .... . *... a. '-'hafCt. AgViufl Sector Adjui C.ae.: P5523-G1, endmiw I1M. CThi ii is documt wif erct d cu a3. :> .. .. In.eamr&nfln an ac Miid. PtwciyAlkvAl a fAglnual So* Cham PWaU.' Wo Dnk AFSI VWding Papr. 1991. S. Food Pnces. Special attention should be paid to changes in food prices during adjustment Most of the poor may be consumers instad of producers of food. Even relatively smal changes in the price of food staples may affect the ability of poor con -urban and rural-to meet nutritonal need. Sharpenig the cost-effeiveness of subsidy programs by more narrowly targetng benefits-for example, by restricting food subsdies to products consumed exclusively by the poor-is one way of protecting the poor even as fiscal balance is promoted. Nevertheless, in choosing appropriate targeting mechanisms, the fi's21 costs of including the nonpoor should be weighed against the administrative and political costs of e.cluding tbem. Components of adjustment-or complementary-operations canbe designed to deal directy with poverty reduction and protect the poor from adverse short-erm effects of stabilization and adjustmet (see Box 6.6). 9. Social Fzud. Social funds, a wholesale financing mechanism pioneered in Latin America, were designed to accompany adjustment programs (Box 6.7). Social fiuds mobilize financing from several sources-from the budget donors, and the Bank-and direct it to final users, typically local communities. 152 BOX 6.5: Centrl and Eastern Euwrpe-Safet Nefor Emcrging Poverfy l1i countiis &f centrnl mid Eastern Lurope.(CEEs), peic..piia incomes declined in di 1980s.- But living standards. were protectedby guaranteed universal employment, a compressed wage :inicturej and qcai transfers o households (on averag4,.I5 to 20 percent of household icome), .couplid wth' suibsidized hbosing,;artificially low prices, and state-provided' social services.-: . Neverdtless, hionic povphy would have deeloped-especialUy in the poorer regions-even without- refbnis in te 1990s tor esart economiic growdth. . iThe tansDon to.a market economy now undr way iiit coutries involves major short-.. term dislocations, as enterprises arc restrucued or hquida, and as p t hts e key to a market eDoxnmyare established.: n iost CEEs, the output decline caused by these dislocations has exacerbated the decline of already weak economies, and ineonies-arid living standardi-have faIlen-; submtandially. Povrty ptobiems are emerging. .... . C Qnstu s i: niew saifety netx ill he difficult Some needs are obvious and immediate, such, asm urnploymentinsurance and retainin. But sustaii ngsocial services in a pericd of transiionally A.. lo.e .ioe an Ioe .. ...ng. -u .p ... ..j.. . ..- lower in'ornes and lawcr:government revenues *il .mean hard chices. o Meanwile, the emergings profile'of tie poor is unclear. It is&diffaicult: predicthoW houseboldscwilf riespond :to th nw ,>enivs-.(Will Mosehold ly m. less-as ges re - Will sing - prices PrQ d s'ds and hid :care: cause :secondary earnes I leave the laboforce n k at tome) . Cbo izhii these:issueuiis the tendency for he new.ly elected governments to see decentralization of social proroi .f-.ax 4 of~~- swalp:giixsle l8 local Revel funed by# local unas a panacea for ll the ills- of centra p, iiis.Wah oee rpees be dosed if dieypmE tdah basefr ini-n i eses tie faciltia for deiven a i sin poor: Darea9.: . .... .. .--.*.Is sues urgently needr ion to protect die most ns oiet to lessen'the riskffihat ad nt t iitl&l iae;d byave lical iXI social ,sactions. Th BMi 9is .building..safety net support into its rogrsiwiih all C EE_s The includ est adljeflnent lending to B,ulgra Czecislda l:H a P an< aiical' .:. ni fij nci in 1lulria, Hungary, Poland, and Romaina ' ' ' - - -- e .:. < ............................ ,. ., ., f ........ ..... . , .; f., . . ,..... ... b . v :;. x -: :e f ' *; * - f.; : s :x ....................................................; . . .;;;.;f. : ; f .; . . . . | .o. Plalnd- Structural djusamcat Los; USS300 M;llln. PRrocoPbr2941 July 1990; Nhmd:- l o I.and Scrvks ProjecL SAR 9408-POL, Miy ................1991, C znSl oReplch ittl Adunms. 1 ISS450Milliongaejr,tP-5583-CZ S:n uetural -djuMumelSruan ussusAdA½s%Mriomn U I May, 1990; Hungon _ozu ostn o ; iiRto P-5St3i9.RM' :1991 }ug u"- 'Resour6ca Phiica SAR:S9183, Uarch 1991,Bir: Structusl Adjustmenwr,US5 aw - R.P s8sIII E 1Bulgria: TechnicalAsmismncc P.ojeczforEconomicRefo.r tP-5540.Juo 1991. andRo. TcEmI AuuidasccCriticnl Import Loan,:SAR-9652, June 1991.. (bhese ainmmdcni with restricted ~~~~~..'..:.. .. :. ........ Social finds cannel resources to small, demand-driven community subprojects, often targeted to poor beneficiaries. The funds can quickly address the concerns of a section of the population-and help generate politcal support for reformL Their operational speed reflects the fact that they typically bypass existing breaucratic systems and procedures in he country. Funding commitments are based on the evaluation of project proposals according to selecdon critia agreed upon with the BankL The selection citeria need to be fully able to ditnguish project proposals with likely high returns from those with low reurns, and to ensure that subprojects encourage participaton by the poor. Mechanisms to ensure adequate supervision and monitoring of subprojects are essendal. 10. Social fiuds are risky-precisely because they bypass procedures. Thus, they are only as good as heir capacity t choose the right projects-which depends on the famework for project selection and on the quality of the social fimd's staff and independence from political pressures. These issues warrant careful 153 BOX 6.6: Ntriion Protedion Dwing A4JrneWt in La America In Ihe last thre yeau, the Ltin Anieica and the Caribbein Region has bee. increasingly integrading food and utriton objective. into adjustment operations.. 'nlese operations include the FY89 Venezuela Sneturil Adj atnatLoni, ihe FY91 Mexico Agricultural Seca Loan lI, and the FY91 El Salvador Structural Adjusent Loan. The VYaciad SAL supportd a comprehensive reorm program thit included exchange rate unifiizWon and. the reduedon of significant subsidis to agriculture and agro-induslries suct as fridlimiz, and inputs fortcat.andpoulty industris. 'These subsidies were deemoied infiient and iueqnitale L ey. eavilysubsid the consumptinofmenacmssiheentimpopubaon. 7 SAL suppord a program aimed t replacing general subbidies with subbidits targeted toward the most vulnerable groups, direedy financed by the budged. The tugeted progncms. included (a) gnwts-cash and food vouthers-to school-ae and prmchool-age children to be provided through schools in low- incoime neighborhoods, (6) school feeding programs for schoolage children through schools in low- income neighborhoods, (c) nutrilion and health care for pregnant women and infimts in low-income anxis, (d) improved nutrition of preschool children through .an expanded day cure ryslem, and (o) improved housing and public services-such as water, sanitalion, and power--in theaarios. h M e, a study of food and nutrition programh supplrted byAGSALJI found widespread undcrnutrition: among pregant and lacating women and children under age five cspecinlly in mral areas. ¶lbe study's rcommendations were later used in the Mexico Basic Ilealth Care Pr6ject to design a nutrition intervetion as port of pre and postnatal care. lhe food consumption component of AGSAL 1 also builds on the study results. It supporls the reallocatioin of food programs to improve their targeting of the includig a pilot project to addes the needs of children and pregnant and lactating women. El SaudIor his sarted a compehensive conumic btLilization ad structural adjustmcnt progamm, while providing a safety nd ror the most vulneable group. The SAL sugppodtspmoviding a targeel.nutritional assistmace program and an increas in the share of governmental expenditurcs for hewlh and educatiun. Tlb improve the nutritional satus of children under 12 yearsu-Jd lactiating mothfers prdcularly. the government is introddcing a pilotnutrition program-planned with the World Food Program-to distribute nutritionally fortified cookies to school children. This is to underlie subsequent prompa expansion, introduction of infant foods through health posts, and initiation of a. pilot projeci to distribute fiodeooupons to the most vulnerable groups. Marcelo Selouwsky Source: 'Pmtsaneg Neurtisn Stdur in Mdjaiitmcs Ptogrm. Recen World Bank Activitiea and Projcns i Latin America Prcata:nto the UN Subcommitceoa NuiriLion. 1991. atteon during project deign and supervison. Attention also should be paid to the integration of social fimd activities with sectoral porites-and to financial and insttitional sus bfflity. Here, te tradeoff between achievg ible results firly quicldy and involving the poor in a partcipatory process, warrants a carefil watch Social funds are the subject of several Bank studes,2 which cover institutional anan (autonomo or intated structes), the mix of support for short-term and longr-term developmental progams, and the advantages of a multisector approach over a single-sector approach. 2. See, for exmple, Robt Sklkinp, Alcndr Mar ad Romn aMkone, SDesig of Socia Acio Pcgmms under S_rcan Ad,tmUCSm (Yellow ce reot), Mach 1991. See also Th Third Report an Adjutmeat Lending: Privaz and Public Resoumre. fr Gwvn, WooBuDk R92-47, 1992. (rhesm inna doum wih r d cion.) 154 BOX 6.7: Bolivia-Social Fwad Following tho;odl d of the DoliviaEi g E y .Social Fund ('S), ou aunchled social funds.5 Social fiunds igcmasingly are bbing used alongside :adjustment opriws to -address poverty.. Social.find resources.aro typically divided moong (a) service provisiou in nutition, ..health, and education; (bj infrastructure creation in nutrition, health, education, housing, urban . development, roid maintenance, irrigation, reforstation, water and sewerage, and so.:: on; 1. , (c) "productive.ati.vitaes, such as: the;cpztabization oL.small rotating creditsha emes or of'small . businesses'and tep uion of inputs used in to infrastoicture subprojects, i istituonal supp lio the requesting agencies, and (e) administrative costs of *io social funds. 'Most social funds 'o multisectoral. . ... .. .The objectives of these operitions are similar to,those in the Bolivia 2ESF, which cr ated a. mechanism bj. which he goverment. could.iddress flexibly the.socil costs of adjustment. . Since the: on. onginil. ESF,' social funds a.so .have becn'ousod o. support interventioins with..a longer-tr., payoff-improvinginructure an soci :scrvices targe to.poor communities A good exaiple- 'ist.he olivia SociaSIna vcstmnt Fund, which took'over from ESP I nd. H 'a teD sesof eon6mi: . emergency gave way to.a Jlonger-t&n, &evclopient-onented perspective.. .: .Because social funds a wholesale operations, cntena for subproject selection are agreed ,upon with tih Bink. .For:su6rOjects fur which'a ratclbf rbi is feasbi-such as the water, sewerag- and druiinep..subprojects in. the. Honduras Social .Ives:titnt Fund-a cutoff economic rate of retuiVn.- t:typically is estblshed.. Othersubprojectctida:kclu cosrffiaven eaching the la povt py .gwp, like 5u4ilb j, cOmlmunlity. uivoliiient, and nistcy[wi ovletl sr te.i. . . : .. .. . . -.V 1?-;; - - - . --.-:..,...up.,s..x * . 4 -;y . - .R;... . .. ....: . Margaret (kwhandToneeai : a; Bolivia. Eimcg.Social .Fund Projct, k.cpor P-4594-BO, Junc 1987. (flhisis interal document witb re > : circulation)a . i .l...:s>.....o; b. Blivia. Second Eme"ra '' Soc!Fund Ptoj.t RepiP- 7066- O. Februa y192.8 Guinea. SocLaecoaohicDevclopM Support Project SAR 744CGUI, March 1929; Sao 'Tome and Principe: Multisac:ir Projet, SAR 7663-STP. Mav1998f Bo.. lkivia Social fuvesuntFund Project, SAR 824-BO. March 1990,lbnima: hploylrentad lriinuFmud,.SAk 1630-. . TUN, Juir i9SO;.llmw: .Econoic and Social r.Fnd Project,. SAR: 9058-1A, l990; and undur. rSocia .:IDValmeot F und. Project.BAR 94-HO, Februaqr 1991. '.These arc ioterna document wits reatiwed circution i 11. Social Action Programs. Developed initially for counties in Africa, social action programs share several features with social finds. First, they are targeted either at the chronically poor or at groups facing deteriorating living standards. Second, they are designed to have an effect in the short- to medium-tenm. Third, they are implemented in conjunction wid economic reform progrms. But whereas social funds are typically public, quasi-financal institutions, social acton programs cover a broader array of institutional arrangements. Some social action programs are administred and delivered by quasi-autonomous project units; odiers are integrated into sectoral ministries. Social action programs typically focus on the delivery of basic social services and employment creadon, alihough the components of such programs have been diverse. These include labor-intensive infrastructure schemes (Box 6.8) and public works, upgrading of social service delivery and infrastructure, and direct tr s trough measures such as food stamps and infant nutrhion schemes (see Box 6.9). Like social fimds, social action programs raise questions about insttutonal and financial sustainability and consstec with sectoral strategies. They also raise questions about possible tradeoffs in subproject selction between employment generation and the productivity of the resulting investments. These questions should be explicidy addressed in project design, with adequate safeguards tD ensure that, in promoting employment, high return activities are selected and effectively implemented. 155 BOX 6.8: Senegal-Endistng die Pdate Sector In Mitgatng Ohe Effects of Ajustment When AGUETIP (L'Agence d'execution d: travaux? d?interet public contre la sous emploi) was cre*tbd in Senegal sonie two years ago,' it was seen largely a:; vehicl for emp!oyment creation, N mitiating the eLioctst ofadjustruent. Experienco so far suggests that the approach can also have salutary effects on prujoct iupleinenlation. Estiblished as a private, not-for-profit company, AGETIP undertaklisgencl contnactingofinfrastnaetre works for municijalities, ministries, and other entities. In the first full year of IDA financing, AGETIP uiidctook l19 projects uing 78 private sector firms and creating almost 2000 person-years of employment. It also=undertook 50 percent more projects using othelr'funding sourcs. The AGEIP .approach brings private sector mangement ise and practices to bear on public works contracting. It contnsls with finus, and henee.with:labor, on an "as needed basis, thus. avoidling conlribuling to the oversbalring problemn of public agies. li:bypasses the cumbersome: prncdures mandated by.the puhi blsector, while maintaining a high standird of rigor and discipline. It SuWets subprojclts to cost-benofit and labor-intenity tests.: Incgiindt audits ar carried out every six months.. .AGE1Ph1 s hbad mtultiplier cffccts, as the workers hIr6e tended to sn their wages close to * hom4. aiid. its ceiciency has bad demonstation cfects frother Senegalese agencies. AGEP has spawncd:siznihir agenncies in Niger, llurina Paso, Mali, and . Similar operatons are set up in Mauritainia and are being eavisaged Sb: Malawi and Papu.s New GGuinea. Chid has eatered into. discussions with AGEPlP about implerncntixig a nunmber oallcd infrtctre operations in Chad. Xiess <\{vo esliPea. ; , ,, , , ,, , , ,..o,,,j.,S...s.e..> .s.'., 's.,....,, : '~~~~~~~~~~~~........ B. WSencjnk .Pulic Wodrk and'EmupIymeat PAojeet, .S SORl-SL N b989.( i an intera docunt wilb resrmcteulcircmiisioa.) * *. . ....ffi.. .jj:: * :....:. :..- . ..:. - BOX 6.9: Uganda-Merging a Socal Acdion Program with a Social Fwad : .; > A recent project inUgaadt :comtxiMiI whe ficing inechanism of a social dth fraimwork ofaB sia i program The piojec: finances: pt of the Prmgram Pir th tAleviatiaon of Poverty and I Social Costs:of AAjusten4 which addreat the n&d4of Ukanda's most vulle : groups affected by the Economic Recovery Program. As with oe socialaco progams, mostof th.;eUganda program's activitiiies are predeteanmied Thus contrasts with the social fucnd approach, hi which sobpret proposals arprepared and e nng plmentai on .;:.. a The bwl s cale infrastructure reliabr btioni componen of this projct hever uses tbe social - i fund approach The subprojerts to be financed are not :p temed only criten for suibprjeet econ are dcided Subpjt pae p bycmmites,whih a t as is etwee v igoffials and' he loca pution, help fria NGO . n ig ~~~~~~~~..-. .... ?, ..... . .... , , ., -. ....... ., .. . .., . >..................... mmnnus.and :vutagews trough the resxstmmccommdtees ensres. thAt'subprojects will be da driven. .Unilikeost sOcia iifud,t miisW.pCatclaerfundj i .t insul,-.SAR ted from goenmn ancy, -* .. .. fj. ...S.... 156 H. Investment Lending A. Conceptual Framework 12. Overview. In line with Assistance Strategies to Reduce Poverty, and as discussed in Chapter 5, poverty reduction is the predominant theme of the Bank's country assistance strategies and lending programs. Every Bank-supported invesiment project need not have a specific poverty-reducing thrust or component, however. Instead, Assistance Strategies to Reduce Poverty recommendeda programmatic approach, in which country policies, public expendiures, and institutons determine how poverty is addressed-and the Bank supports and complements country efforts. 13. But some Bank investment operations do focus on povert reduction. Such operations aim to (a) ncrease te poor's ownership of-or access t-physical assets, mainly by establishing or regularzing land tenme rights; (0) rise the productivity of physical assets, by providing infrastructure, credit, technology, and related inputs; (c) develop human capital by increasing access o-and improving the quality of-basic health and education services; (d) improve living oDnditions, by providing basic infiastrctxre and social services; or (e) provide safety net protection, through social action programs, and nutrition interventions. Recently, in respone to the grwing awareness of the many links between poverty and harm to the environment, projects have also begtn addressing resource management and other environmental issues in relation to the poor. And gender issues are increasingly addressed, because women typically are the most disadvantaged. 14. FWagib'lity. Fiancing is fungible. In most cases, the Bank, by supporting a project, frees gvernment resources for another project. (Tbe exception is when the Bank finances a project that otherwise would not be done.) If the Bank finances a poverty-reducing project that would otherwise be financed by the domestic budget, and thus enables the government to finance a project that hurts the poor, the net effect of Bank lending could be harmfiL Thus, Bank financing should be directed to support (a) projects that would not be done without the Bank and (b) policies that improve the overall efficiency of investnent, including imvestents not directy financed by the Bank. Such an approach maximizes the Bank's developmental effect on sectoral policies and broader public spending priorities. 15. Sector Work and Project ldemficadon If poverty reducion is the Bank's central objective, staff efforts need to be directed working with the authonties to develop new project proposals that simutaneousy satislfr the Bank's investnent criteria for high economic reuns and benefit the poor. The appropriate operational emphasis is dtus on refocusing sector and upstream project work toward that objective. BoK 6.10 illustrates the country's marginal-efficiency-of-investment schedule, wit and wihout the Bank. Acoding to the ideal portrayed in the box, because of economic and sector work, the country has more high-retum investment prospects. If staff focuses upsteam efforts on interventions likely to reduce poverty, the new project opportunities similarly should benefit the poor.3 To mximize effct, in choosing among competing project proposals, Bank support should favor projects and programs that can measurably affect povert outcomes and can be replicated. 16. Sector Poucy wad JttinFrwnework. Te diagram in Box 6.10 also helps to illustrate the effect of policy on the productivity of inestments. As compared with the point discussed in the previous paragraph, which refers to new project opptutes, awnoier issue is the chance of increasing the returns 3. Noe dust the improved inaWct proct-unlu fully cornpcesaed for by increasod availability of financing-will raise the aiy cost of capital. Some project that priouely would hae passed theeconomic tc no longer will. Assuming ha the of such projn is broadly balanced i . of impoact on poor verus nowr beneficianes, conscious effors to 'prove- nowpr s beefit the poor will incrase the numer of prjets b g the poor. 157 to individual projects from an improved policy framewort The evidence4 is compelling on this score, and clearly such policy improvements warrant Bank support. However, the specifics of a country's fiancing needs will deternine whether such support should take the form of adjustment or invesunent lending. Dank support for the elimination of policy and institutional biases against the poor is clearly appropriate. BOX 6.10: Cowntry Prospects with the Bank and witbout the Bank . ;-;-|E; Dncine Financing . Z:~~~~~~a Interest vai vaiabe ltato .: . - wrtahour BakMit Bank. ......:.. Mar nlicienc o investment wah ... :. f < . .:: : .... . . .Bank EAW and ......>......:. : * dentilreation -V'work':-. Marsnal ciigey of investment. ..... r, 8 : .-::,without ........ ... and dentfi tk. 'Investmen t 17. Economi Analysis. Projects to reduce poverty must pass the same economic tests that apply to ohr projects.5 Depending on the sector, a project must have a satisfactory economic rate of return,' be cost- effective, or both. Instead of relaxing die Bank's standard investment criteria for the financing of projects (Box 6.11), the key Bank action for implementing the poverty reduction strategy is identiig more projects that both beneft the poor and meer the standard investent criteria. For sector investment loas, in which a local institudon approves subprojects, the design encompasses the crieria that the managing insttution will use in appraising subprojects and its capacity to conduct the appraisals. For targeted safety-net projects, the analysis should focus on the proposed delivery mechanism as compared with alternative methods, searching for the least-cost project design. For the human resources sectors, the Bank has no single methodology to evaluate the benefits of these projects, although the Baik's quantLitative evaluations tend to focus on the least- cost approach. But the evaluation should use research and operational findings to estimte returns for the proposed interventions. The economic analysis should also consider risks to institutional, political, and financial susainability, which could jeopardize project benefits. 18. Targeting. Some developmentprojects are designed to reach thepoor, and t exclude thenonpoor. The underlying philosophy is that if te project were not exclusionary, nonpoor beneficiaries would crowd out the poor. But in choosing the appropriate targedng mechanism, the fiscal costs of including the nonpoor should be weighed against the administrative costs of excluding them. Targeting beneficiaries on the bais of income data from household surveys is often recommended. But such data are rarely available, and means-testing for benefits is difficult. Alernatively, screening criteria such as geographic location, access to land, migration status, nature of actvity, or demographic characteristics can be used. Although these criteria are administratively simple, some nonpoor will inevitably be included. The use of muitiple criteria can reduce the inclusion of the nonpoor. Project designs that by dteir nature and content discourage the participation of the nonpoor-such as very-low-ost dwelings or simple water and sanitation facilities-can 4. See Danid Kaufnana, 'Tbe Forgomm Rationale for Policy Reform: Tb. Productvity of hncstment Projects." B3grund Paper for VDR 1991, 1991. (hius is an internal documcnt with restricted circulsion.) S. See OD 4. 15, Povn' Redwaon, 1991. 6. Notc chat OMS 221, The Economic Anaysis of Projects, is under review. It is likly that OD 10.40, Ecarc Cftria in Invesmna Operations, to be issued, wiliwclde the concept of the social raIt of rctun based on distnbutional weights. This wuggest dtt a lower economic rate of reumrn will not be acceptable for proJct. that disroportionaly benefit the poor. 158 BOX 6.11: Should Resource-Poor Areas Have a Lower Rate-of-Return Test? . .iZ *? Q D W- - -~~~~~~~~~~~~~~~~. . . . . . .. . . Assume ttamca whr oor pollihafepprtiicfor profitabl investment. -. 5Should.-the- rate-of-retlrn test.to determinepwhether theaces a project-b lower for that area, because of the government's desire to re=distriu incm to.' aA lower cutoff .- .would permit..more public investment pj&ts-inZcld anced public investment-in the r *tan if te ecnomwd standardwreaplid. >z Ther aretwo choos ofthouht othis Oneschol,' mphaize hat -income dist n-butonw i,.:Assues really cannot be separated.from investment decisions: Thus, a hi-yielding project that beneits: - the ri.ch Is"les irble ath atow-yi.n projethat benefits 'the por if (a) the government wan.t .to redistribute icome foter o or, d () cot of,taxn the rich-or altrai collecting interest or-dividends from int a flanSmar bidizng e poorisg :than the'differenice.between likely" reun rme 0l ftetw rjcs Som rpoet ofthsve :support the use of =_socialie pro ais approach yields consistency of acsprojects. .l .w.e'ver m.any proponents of a lower -cutto. rate of return for:poverty, poj rje u of o iginat`.the bs individual contributions of economic .vesus distruon fa in -b p-toutc . :f : b . . O:N SS:::s- .>;-N S S; S - : E -: - : -... S .... , . Th,,e other schooltfocuses on the, dynamtc`spet-`bf--eAn 'decision. Itspits tb th need for a straegy for aLtaii ig long-term; yibiity- and tie i ce Of vesm s in hmacpil for such a strategy.? It notIs that the 'important issue Wt. iniprve'iv i oppwtfo the locale, but for-te people who live there. It s at ital improve the ,.investment oppornities of those people; in rng octivityoia capital witi ,which they -wo,rk.. Acording to this vi, i. ..didt with'n o w unsatisfactory.. projecteid economic rate-of rctuun could varra it'lusiii..... bli Jn eaa part of '.a tsition strategy that would eniphisize hum ital d m et-including the. possibility that :,ihe, solution may involve out t '?residents or their .descendants. In a public'investment,.review, the.a&ol& goniithat any such I ''projects should constitute the least-cost method of acconlisfihing die specifially'identfied social goals.' 'Jn such circumstances, Batik financial support would focus on the comple human capital invesnhlents. R. See, for examplc >Ln Squire and Hernu van d5t Tak Econoyc AnalysisofPro/jen. Worl anks 1975. :-b. Se. forexnamplc, WDR 1Y90, pp. 72-73. tc. Sec OD 4.15, Paerjy Reducufon, para1uphw7 ind 28. promote self-selection. To ensure that project benefits reach target groups, effective mon g during implementation is essential. A final consideration is that targeted projects tend to be cost effecfive in providing benefits to the poor, but may lack the widespread political support needed to ensure sustined support. 7. See Helen Ribe and Soniya Carvalho, TTargwSud Povery Projects Supoxed by the World Bank: An Overview of Operations Apprved during WS5-9," 1992. (Ihis is an ineal document witred circulton.) 159 B. The Retail Approach 19. Specific investment loans (SILs) create new assets-physical or human-that increase the flow of output or services from existing investments or ensure adequate maintenance. They tend to focus on the technical, financial, and economic viability of specific investments and those aspects of the sectoral policy and institutional framework that directly affect the investment's productivity. The rationale for Bank support for these retail projects is primarily to identify and develop viable project designs-in some cases based on ideas and proposals initiated by local NGOs-so donors and domesfically supported efforts can replicate them. This is not to say that donors are not often in the lead in developing project concepts or ideas, but only that the Bank's role in a particular project should go beyond providing financial support. C. The Wholesale Approach 20. Sector Investment Loans (SECILs) are wholesale operations.' They focus primarily on sector expenditures, the balance between new investment, rehabilitation, and maintenance; and on institutional capacity to plan, implement, and monitor investments. The detailed appraisal and supervision of subprojects are done by the borrowers' sector agency based on agreed-upon criteria. This approach requires the identification of priority areas in the sector for poverty reduction and the design of appropriate policies, institutional reforms, and programs to shift public, donor, and relevant nongovernmental resources to these priority areas. The reallocation of public resources to poverty-reducing sector activities, with the support of extnal assistance, is a major objective. Such approaches tend to be feasible and effective for poverty reduction in agriculture, family planning, health, nutrition, education, and urban development. They presuppose the existence of-or the ability to develop-national institutions able to implement coherent sector strategies and handle project work. D. Social Costs of Investment 21. The social costs of adjustment have an analogue in some investment projects. Notewortiy here are water resource projects, which may entail the forced displacement of setders from a dam site. Experience suggests that these people-unless compensated, typically with land-face severe risk of impoveriment. Accordingly, viable resettlement plans need to be devised, to enable ihe displaced to attain a better standard of living dtan before displacement' (see Box 6.12). Participatory approaches to the planning of such projecLts are essential. III. Desig-ing Sustainability ito Poverty Projects 22. Project sustainability has three principal dimensions: financial, institutional, and environmental. Financial and institutional sustainability are closely related and essential considerations in poverty projects, because the domestic financial and institutional underpinning may be weak. The institutional framework for a project must be stong enough to maintain operations after the project is completed-the implementing authorities must be able and willing to execute the project. Similarly, for financial sustainability, a project must have a champion-to win over other claimants for scarce budget or donor funds. Or, if costs are to B. SECALs vs SECILs Compared with SECAUs, SECILs tress the investmcnt program more than thc policy aspects. Howevcr, in the social secors the dividing line has often been the possibility of trancing SEMALs and fmancing non crmental recurrent com. 9. See OD 4.30, Involwuay R1skmea. 1990. 160 BOX 6.12: Indonesa-Addressing Adverse Effects and the Socil Casts of Investment : Water rcsource development brings large benefits: irrigation, energy flood control, drin v water, anid beiier navigation; Yet such prog s Mso generate high risks of impoverishing the pep disloca:d by reservoir submergence. "Most'legA1 systeins provide cash compensation for people whose .- .akiUd and homles..are expropiated for a: project. . But beciuse displaced: groups lose their prodcn' Zsysems, cash compntion is not enough for most people, except perhaps for the beiter off. The Ike to reestablishing economic sef-sufficiency is producion-based resettlement. Po pieces in somzoaivolunnry resettIement progams show how this can be effectivcly... For resetdement from the Sapling rservoir. in Indonesia, several relocation options w. > I!set, with illrxed elts, Te simple cash campensatioa.approach,. used forta considerable number' .:!Df people; lickfired'badly for tih hmilies living on what became thc: shorline: they saw th.t landholdings.nd incomes reduced to about half the former level. .This result was similar to negative : expeineacca elsewhere with: cash compensation alon. However, rcettlement through transmigratir :ofth Saping population to new lands in the .OuterI&lands appas, from:first reports; to lhve been; c.;onsierabily moir etctive, although sytmic eation is not ye aailable.. The mos innovative and'successful reestablishment was achieved at Sauling . thro a' .o.land based option: flozUi'ng-nt aquocaurc. .Under. conditios of hijl population density and ld scarcity, tiis resettlement option.made economic.use of B`iew, prjOectakd.r source: the lake. M - appraisal, it:was estimated;that 1,00 displac n families coud benefit from reservoir fiuheries wiin <: five,ears ofysrf impodziiient. Perfbrmance to da. inidicates that this stimate will beachieved. >EBy midl987,. two.yearsaer a ueimpoundment,.some 550 fiiiiilica, owning more than 1,200 floatingoft if.init,: wereproducing .a ax a p at of more tha -,0 oi e f¢Xa -value uf US$6 m Miiual;.. -Signiticandly.1he mait6tialue of the reseroier'sfish productio'n exceeded by fiE x lee *R f thec *nw .produc in thie rmroir pnr b.to fillin.b .. :-s< M'ihael M. C .ta .lndoamesma .PcrnsaahnU mu,m Lktik Nea Thkiatridi Power Projct, SAR 4356IND,May i9113. (flin is an itea ..documcutwith rcsictedcircultion.): ....a..s. ..a.ewms.V. .D.nlmra. b Farmore dais, ce,MichaelM. Ccirai. Penny IaLr kr Waaer ReosoIrc p.r HArvard Unwnniy, HID/DZP 355, 1M . . be recovered from beneficiaries, they must value the goods or services being provided, and have a sense of "ownership.' Environmental sustainabiity may also be an isse in poverty projects, especially in fragile ecological zones.'0 A. Fuidncial Sustainability 23. Financial sustainability bears on the implementadon and operational sustainability of projects through the financing of recurrent costs and cost recovery for public sector projects, and finandal profitability for projects with private sector beneficiaries. 1. Recurrent Cost Fuiancing 24. To be sustainable, a project must have enough fmds to implement and operate it But in many developing counties, recurrent costs tend to be underfinded. This is pardy because of the greater political 10. Sec OMS 2.36, EnvvimwmlAspec ofBet Work. 19B4. 161 return to new projects compared with maintaining old projects-and pardy because of donor policies.' The dilemma for poverty reduction is iat human-capital investments tend to require considerable recurrent- cost financing. 25. It is thus increasingly argued that the Bank should finance project recurrent costs as well as capital costs-especially for hunn capital projects. Proponents of the approach argue that recurrent costs, such as teachers' salaries, are investnents in the human capital of respecliw cohons of siems-and are thus more akin to serial, one-time capital investments than to recurrent expenditures. The proponents argue urther that such expenditres tend to yield high rehtrns. Critics of this approach counter that, investments or not, the expenditures recur and tend to loom large in overall budgets. Ihe critics also stress that borrowing for recurrent costs creates debt in foreign exchange and requires income generation to repay the loans. The question becomes, if the government cannot currently pay recurrent costs, how will it be able in the future to generate both the recurrent costs and the debt service? Thus, suszinabke financing nee to be assured. 26. Balancing the desire to facilitate implementation on the one hand and sustainability on the other, the operational guidelines12 permit the Bank to finance incremental recurrent costs on a declining basis. In such a case, Bank financing facilitates implementation, while the phase-down provides a smooth tansidon to full financial support from local flmds, thereby increasing the likelihood of sustainability. Meanwhile, in practice, Bank investment lending is increasingly linked to developing a country strategy for financing sector expenditures. This may take die form of an agreement with the boffower and cofinanciers on (a) the allocation of resources to priority areas, perhaps for long periods, subject to regular review; (b) an agreed- upon financial framework for the sector, fiuly grounded in the broader macroecononic and fiscal framework; and (c) provisions for ensuring sustainability after external support ends. The financing can be assured by agreements on the sectoral public expenditure program, as well as on sectoral strategy and policy issues, as part of adjustment lending and donor coordination. 2. Cost Recovery 27. The operational guidelines1' indicate that pricing of Bank-financed services should be in line with the dictates of economic efficiency-in other words, prices should equal marginal cost-subject tofiscal and income distibuaion consideradons. Whether efficiency pricing results m prices that are less than, equal tOD, or greater than full cost recovery, depends largely on the cost fimction-whether marginal cost is rising or filling-and externalities in consumption or investnent. in many cases, unless there is full recovery of opera ng costs, including maintenance and replacement costs, the project will not be sustained financially. 28. zheory. For goods with positive extermalities, "too little"-from the perspective of the social optimum-wilI be demanded if the goods are priced according to marginal cost. Thus, on efficiency grounds, the government should fuind at least part of project operating costs. For goods with social consequences, Bank guidelines permit a govermnent to suibsidize tie poor's use, or to price services to permit rich users to subsidize poor users. It should not be assumed, however, that user charges are inimical to the interests of the poor. A carefillly designed and executed system of user charges can improve the govermment's ability to target subsidies to those who need them most. In the final analyi~-- judgments about 11. See, for eample, Jacob van Lutsenberg Mans, "Th. Recurrent Cost Factor in the P1HR Sector," A View from IATHR, No. I1, 1991; and Peter Hdflcr, "lMe Underfuancing of Recurrent Development Cost," Rnw,ce and Dcvdopmenr, March 1979. 12- Sce OD 4.15, par 34. 13. See OMS 2.25, Coa Recovery Poicies for Pabuc Sector Projects: Genra Aspects. 1977. 162 the appropriateness of, and scope for, Bank support for a project will need to rest on the feasibilDy and sustainability of theefinwncing plan and, in mn, the importance of financial sustainability to project success. 29. Social Settor. WDR 1990 advocated the provision of free basic health care and educadon, with exceptions as necessary. Empirical studies show that demand elasticities for social services are lower for the rich than for the poor, and therefore cost recovery could differentially limit the poor's access. Nevertheless, because health and education tend to be underfunded by government budgets, particularly for the recurrent costs of materials and supplies, cost recovery may be desirable as a way of ensuring suslainability. Bank practice has been to establish cost recovery in the better-off areas and for services whose benefits are almost entirely private. Such financing can help finance basic services for the poor. In health, differential pricing of medical services according to type of disease, cost of drugs, or nature of treatment is possible. In education, tuition fees, textbook fees, and labor and materials can be raised from those who can afford them. 30. lnhlunrucmure. Sites and services-squatter upgrading, rural development, and rural water-may offer litde scope for efficiency pricing. Charges on beneficiaries depend on income distribution considerations, and the administrative feasibility of cost-recovery. In water supply projects, for example, the Bank supports recovery of at least enough revenues tro cover operadng expenses and debt service. Cost recovery measures include connection fees; block, flat zate, or volumetric tariffs; and contributions of labor and materials for construction or operation and maintenance. Recovery of operating and maintenance costs may be a realistic near-term objective for communides that recover less, but should not be the uldmate goal, because replacement costs would remain uncovered, leaving the project vulnerable. Where special provisions for the poor are needed, there are several options. Block tariffs allow the poor to obtain some minimal "block" of consumption for a very small fee with consumption beyond that block charged at a higher rate. Another way to protect the poor is to serve central locations at low rates, while serving moreconvenient supply points-such as yard taps-at higher rates. 31. Agricudure. In agricultural projects, where the output is to be marketed, cost recovery measures typically include fees for inputs such as irrigation water, seeds, and fertilizer, and taxes on marketed output-to cover recurrent costs and part of capital costs. If the output is largely consumed by the producers, who often are quite poor, the Bank generally does not emphasize direct cost recovery. 3. Financial Profitability 32. Projects with a private sector orientation must be financilly profitable. Otherwise, clients will not demand project services or make the necesary companion investments or activities. To be sure, economic appraisal of a project is essendal-using economic prices as appropriate to correct for distortions in estimates. But financial evaluation also is critical for gauging the acual incenfive effect on beneficiaries. For example, an agricultural extension project in a country with an overvalued exchange rate could show a high projected economic return, based on the use of a shadow exchange rate. But since farmers, responding to financial incentives, will not adopt the new technology if the actual (overvalued) exchange rate makes it unprofitable, hypothedcal project benefits will not materialize. Analyses thus need to identify die types of risks that impinge on beneficiaries, and the options for reducing vulnerability to impoverishment as a consequence of natural calamities or economic shocks. This diagnostic work needs to be linked to the larger issue of asset-creation as a means of improving the resilience of poor households in the face of external shocks. This is essential to ensuring a sustinable impact on poverty. 163 B. Institutional Sustainability 33. Perhaps the most critical issue for anti-poverty projects is institutional design. Insufficient attention to the institutional aspects of project design leads to problems of implementation and operadon. And worse, too litte analysis of the institutional environment of the poor-who often are in remote areas-leads to externally imposed institutional arrangements that will not be used or valued by poor clients. Instead, local institutions and the opportnities for client participation should be carefully considered. These may involve existing institutions or new ones tailored to the situation. The often-limited influence-or voice-of the poor makes it vital to increase their pardcipation in all stages of the project cycle, and to solicit their views directly through new local organizations or existing indigenous NGOs. In addition, ways might be found to increase access of the poor to needed goods and services by privatizing and liberalizing previously monopolized supply or procurement, by improving the flow of information about markets and prices and thir rights, and by identifying local NGOs known to be effective at meeting the needs of the poor. 34. Poverty-reduction projects, or project components, must be designed with sensitivity to the social organization, traditions, and values that can affect project feasibility, implementadon, or operation. Sociological and anthropological analyses can contribute to project design by identifying (a) the sociocultural and demographic characteristics of local beneficiaries, (b) the social organization of productive activities of the beneficiaries, (c) the cultural acceptability of intended project activities and their compatibility with the behavior and perceived needs of the intended beneficiaries, and (d) the gender division of labor, spending, and control over resources, and the possible differential impact of the project on men and women. Sociological analyses can help formulate the strategy needed to elicit and sustain beneficiary participation. Institutional arrangements and technical proposals should not only be consistent with the social organization, traditions, and values of the target group, but should be designed to widen the access of the poor to technical advice, inputs, credit, and supporting services in a way that is compadble with the long-teri suswinabiliry of these insttutions. 1. Decentralization 35. Devolution or decentralization of decisionmaking and responsibilities to local institutions or organizations, public or private, may help assure access for the poor-as long as local elites are not positioned to hijack project benefits. Local organizations might be closer and more responsive to local needs. The desirable degree of decentralization or NGO involvement, however, varies across sectors and countries, as well as projects. In projects that depend on collective participation by many beneficiaries, and require regular maintenance and supervision, beneficiary assessments (Box 6.13) and participation can significantly add to effectiveness and sustainability. Rapid rural appraisal techniques can help improve knowledge of the socioeconomic condition and farming systems in agriculturzl project areas cost-effectively (Box 6.14). 36. NGOs. NGO involvement can enhance the social and environmental aspects of operations financed by the Bank, in part by helping to strenghen popular participation in development planning. To be sure, where NGOs have succeeded, they have often done so at relatively low oost But NGOs are not simply low- co'. service providers. Indeed, in the absence of much practical grass-roots experience among Bank staff, regardless of their country of origin, NGOs can provide valuable insights into culture, practices, and attiudes. Often too short of funds to do their own research and data analysis, NGOs can also be a source of good-practice information in targeted poverty projects for the Bank and other donors. NGOs, reflecting their private sector roots, have an innovative and entrepreneurial approach to development and are often used as advisors and resource groups. NGO projects, even when they are small, can be replicated regionally or nationally, as the Grameen Bank has convincingly demonstrated. 164 BOX 6.13: Beneftciwry Assasenwt : Benericiary :pWaPiet is a largely qualitative method of .inquiry., hat seeks to sensitizec decisionmakingto the1 piuts of iew of key actors in devdcopment-beneficiaies, service providers, :i umanag T rs h le objective is-to p96duoe sustinable projects and policies. Sice 1981, beneficiary asswismemts have bde6 conducted for twenty-six World Buk-financed projects in seventeen countries. .AssesnMents have so far been 'coDducled in agricultural, uan, family planning, heilth, educational, iudustdial, anid, enery projs. Assessments are done by, loai perunn.eE, iwth orientation provided. by Washiington-based Bank staffor cons`tantsi . . ..: The approch involvaes interviie uitha i sampla of beneficiaries foflowedhby one to three mondis'.resideut observation of ptoject beneficiries. Piojet mangers or plicy digers participa in the asscs&meDt from the outset.. Interviewers are trained.to be ptecise3 based on a preformulatid guidc, tvo iacilitate quantificadon of flnding:: Findings from beneficiary assessments conducted to 'date include:. rentirs in a squatter upgrading project in La'PNz, who had not been provided waler and sewerage connectiois,mcoiedusnig itial ways,..negadng for the entire area the value of the improvements; all isibeuent upgrading covered all residesits of a sit&-homeownens and renters,:v:.<. -X x.... . :.: *ridentsin diverse i areas- Burundi Ecuador and Thailand-jected long-term loans for piped wsrrand- home improvements; techcianis` had estE.the ability of -these people o pay for betterment on the basis of average monthly income, but the people considered huuch long-tem co itmenits too nsky, fearig that, during uiemployment, ty woulduot be ible to affordmthe montihly payment; the residents jnferred praying rent or the :: . hi nmilcs f6r:tniclked'ialci; 'so loan terns were restructured to better accommodae th irlth&m o:nicke waer conmodatanthe .iealitics of beneficiiries' -living :* prents irn mral Mali, whiere onlyj 1perent ofpiiprary-sbboolUge hildren were in school; valued formalnedcdation: as a stepping stone 'to.pulic:secior:employment, for wliich there has becana rapidly diminishing demab;Ian iiformimonal campaign is being- -codud about the befibc th families' aricultural pr6acticon.: . . -:..: :.. . . Lawmence Salmcn a. SIcAlwreanclcSNdI:en,Literaw Ppk 'PiarddpanrObseradorEvalaarafonofDevdolpnmmPrvjec,s. OxfordUniversy Ncm. 1987; aiad LaWLtncC Salmea, De-nfclwryAsscswe. An Approh Deacnbed. Wodd Bnk APISA Woikiig Paper No. .... 1992. . . 19: 37. NGOs play many different roles in die project cycle (Box 6.15), but the Bank's policy is to increase involvement in project planning by NGOs, partidularly grass-roots groups of the poor. Because of their on- the-ground presence and firsthand knowledge of the needs and interests of the poor, such NGOs often provide a critical link between official planners and project beneficiaries. Not only do projects benefit from NGO involvement, by the greater voice that NGO irvolvement affords project beneficiaries, but NGO involvement in a project may help to strengthen their role-and popular participation-in other areas of public service delivery. However, the Bank must take care to operate widtin the relevant government's policies regarding NGOs. OD 14.70, Invotving Nongovemmental Org arions in Bazk-Suqporned Aaifles, provides both a useful summary of the strengths and initiatives of NGOs and Bank guidelines for involving them in Bank-supported acdvities. 165 BOX 6.14: Rapd Ru Appmad Teddqaaes In AgncdiuAl Project Design .. nujrn.eds iiuiiiW sov ciae eq ypr red oce 'pmvyinust bedciigned wiih an understanding of- the undeilying' causes of low incomos:of pote project beneficiarnes,. and of possible means to increase these incomes.!.Most ag Ipiojecus must, in addition, baveta good analysis or the eausdng farming systems.-id`dparticularly of.bte constraints under which farmes operate-against which to test vanrous assumptions biout possible.interventions. Only with such data can a proper analysis of contraints'bi wade'and:£ valid technical strategy designed. :Rapid rural apprisal tjpicallyis done early in poject formulation by membens-of the projet desiju team, and 'governument>staff and mission 'mmbers; lu iril sociologists and ngrcultunlists play' akey ro!e but, depending on the projecl, other discipines may also be involved. .The study can usually .be 'complectid iin. 'four to sii we depending':oan thie :likely coverage of the project. |'Interiews-typieally in fifleen tothinly vilag r conducted with local leaden, residents (formally and inforriily),.and'headsiand otlrmibmbsuof frig housebolds. Some interviews are also conducted with pgovenmmet oflicis,:especially Ihosc working in th6 suport rices in the selected ;.. :villiges. :The acriulturmlist.suppiements:these intvciewvs widi field visits-ideally including a walk:.- across thi village lindto dvelop an ppreciiiion of ihe lind resources available to the conmunity and to individuils. : .Where the aim is to throw light on the natur and causs of social differentiation (when .this .:. is relevant to project desig), respodetmaye deliberately sought from ."rich," "medium," and'. I !poor' villages, and-in each seld vWfageffromhouseolds tht are leal.perceived'as "rich," medium, and"poor Stricrditerviewscareiuseda to g aparive quanitative data. Ihe n...mtrviewers, however, da fr om the pared interview questions to.probe dewer into issues that ; :. emerge during the study and are consied relbvant to project disign. A total' of forty to sixty households migt be intrviewd .Because of the necessarily'small and purposive'smpe, rapid ral appraisa does not geneate * i1formaticn of statistical significance and ;ths dcs' not provide accurak baseline 'data against which : poject performiimce can.subseuendjbe ealiiated. .Care mus always be taken in extrapolating from .:..findings, and qantiative interviewcshould be:interpreited cautiously. -Nevertheless, the studies provide muc eer and-more reliable information relevant to project design thuanless structured field. .vi%iL% aind uly be-canried o tho ue proj formulation period. ITe modest additional.costs, however, need to.be buidgeted as part of project preparatioun ..... ....FAO'In.ment Ce..re :a.FA . ideli for...*... ....... . ......: 38. Rational. Projects that d.irecty affect a larg :nuber of beneficiaries and require regular maintenance and supervision are likely to benefit from strong local participation-beginnig with project identification and design and continuing through ipeetto and monitoring anti evaluation. Indeed, viden has been accumulatingabout thenegatlive effectsofnoconsutng th theaffectedpubc. OED's first sustivability study in 198514 s atrssed insituton factors, incuding the involvement of beneficlary organizations, as the key to project sustainability. Although all projects should be grounded on a firm 14 "Suuininabiliy of Project Fnst Review of Epcriencc, World Bmak OED Rport 5718, 1985. (his is an inteal document with restricted circauaion.) 166 BOX 6.15: Indonesia-NGO lnvolvement Gives Voice to Communities The Bd ppoc ThirdlJabowtbck utN e oin n bilo4& IUppo!tsfthe 2U5-yW-Ok!dKpUlngIovenen Pgmi letbcmm | {i upgnadinjpFnram intbe:world. :lt has lelp& impr ovetheI living coditionsof aut 8 mili l | income residents in somo00 citifes and t*ns hroughou ndnsa Te itioaIPw ver effective in quickly providing basic infristructure. But inauate investments were made in isanton. - and healt education; the communities were not fuly involve in plg ad loing citie; ad l:opcatioio ad mainteance were poor. There also wgm community'-bsed program to respond dirmely to community concerns-including, for example, loans for :individual and group sanitation facilities; bomere improvement; advice for sma businesses; l>strengtened~i itation and public halb components; and" com yco tr on andcos 'cove fo ,osolne com ponents. .:.' Under the new KIP, MOOs-mainly lndonesian .develoia N -re 'woti with k :puag(Jeigbbrhood) commitlees to' inform the community of the 'prJect dtlis .evepme: action grus identify community needs r ou discussionsa r w d'.' w"i th kagpung committee,. dvelp. kampuig improv.einnpla an.d negotite fwidi '.it ... uniplementiTigwiits; organize and train water and sitiion user associationsom e d a public sainitation facilitic, home improvement oans, 'and .business coopertives; and'inonitor' implementation of project components and failities. At the end of project implementaton, it is: expected thit the new ,community-based approach 'of K.' will: have been established with the help'of NGOs, and that 1N'GOsas community.:devlopment consultants iil beaccepted as full parters with. govermnment in otheir-ope~rationos. l . .. .... . Dir Marts.. a. ludoncak Third JabotabecUrban Developmcat Project, SAR 1397-ND, June 1990I' (Tis is an interal document with.: rcatricred circultion.) -: . : understanding of client demiand for project services, participation is most critical to success in projects that depend on cost recovery or that may entail changes in the poor's behavior. For cost recovery, individuals, households, groups, and communities are more likely to have a stake in, contribute to, and maintain projects that respond to their needs, knowledge, and initiative (Box 6.16). For behavioral change, clearly an understanding with the project's clients is essential if the project is to succeed in anticipating the knds of service delivery that they will seek. But popular participation is also valuable for large-scale projects, even if participation in such projects tends to be more consultative than fully participatory. The Bank's experience with environmental issues and adjustment loan indicates that public consultation and information sbaring can improve the design and build public support for large-scale investnents and policy decisions. 39. Experience to Dote. Participatory approaches have most often been adopted in projects designed to help particular communities-agriculture, especially irrigation (Box 6.17), forestry, and livestock; urban development and rural water supply; and population, health, and nutrition. Social investment fiuds also have usefully incorporated a participatory or consultive approach, particularly for commuiity-initiated microprojects. A recent review suggests that, in virtually every participatory project the Bank has financed, participation has contributed to project effectiveness. However, participation needs to be carefuly planned, managed, and supervised, especially if there is little eWerience in the country with beneficiary participation in public sector projects and service delivery (Box 6.18). Given that the Bank's role is not to subninae for government, but to work with govermment, the most important tack the Bank can take in a popular participation initiative is to help governmental agencies become more responsive to the public. In nearly all of the Bank's participatory projects, the project agency has worked to improve interaction with its cliens. 167 BOX 6.16: CIDA-The Impodance of Par*idpatory Processes -Betwee 1973 ad- 1981, the t. Wa :Utiliion Project'inGhhant -istalled2,700 boreholes and. PUMP: in 1,0 poor vilgs . wi ppulioins f .600,000 peole. I soon b revident thiat residents :usedthe wells 'onlynwen other water was not available-well water did not taste -the sa d as longVa the pup d dn illages on xeluctantly would agre to repir thepumpsbecuse they viewedthem as Canadn -or goverment pps-not theirs. Th-..e gprc egn to improvein te 1s projectJfcu wshifted from technology to community development. T'he participation of fthe villagers, particularly women, and -a : pubfic health education component, using public -radio broadcasts,: were incorpom-.cel. An estimated 75-percent ofthe ruralpopulation in this area nowlhas access to safe water. About 90percent of te s ae w:ng and hialth st eimpved; te incidence of gne worm and driah have dec and women use leseffortto ollet . From thisM piojc,teCIAhsralzdta the learning.perio can belog: and that apoect. -must e alW indd evol e.: epjat did not succee unti the beeficiaries wer active partnersan d illy. he -prjeCt today is vast y :di iwas rst bi hed The improvements ve reuir flexibiity and a fin ia commitment frm CIDA. N;!. '::, X ' . .... . . .. . i..' . . '.. . . . : ; X i _ '_i- The currentphase ofthe project will expandthenumber f elsandhan pumpsiclu alvills intereionandrelace tepump with a more apporiate: model mauifctied i . There is also pressure for rthi project to exnd :ino r e s. My art <'projec soul rean-focsdon ae i nd ha the nex stag should betoshift repnility ..s . .... . :s:::. : = .fi -:--. s- . : ; s -; to Ghnais -an encourage the go¢vernent to ;adopt-sili appoce in oterprt of the country... The ldatterapproach seemsto be the mos t eo o sihe a-it would result ina ing of e fixed .s.e.tup -costs w , as n , he be s ematit a at 6 h Id"~~~~ind Engsif h JD* CIsDA; 27w WaertllianPoecs: ADR Caser StdyanaWaerad et EductoPret,19. s'-'s'V ' -f'' ' '-s E - s- 't--.-a-o -- simi- E ; ;nCo er- sts-o uiDA~~~~~~~~~~~~~i WA-sp o a-m rea i- g 40. Learnig G;roup. The Bank is pursuing a modest program of learning and acton-supported by the Swedish International Development Authoioty (SIDA)-to strengthen te Bankc's understanding and use of popular participaton where this would contribute to ste development effectivenes of Baki-related operations. The Bank is studying twenty operational projects and programs that have been exceptionally participatory. Individual case studies are being stressed because few large-scale participatory development projects exist in the developing world. It is important to learn in what situatons participation is worh the effort, and, in those cases, how the Bank and borrowing governments can most effectively promote participation. While grappling with the problems of makng government implementing agencies more people-centered, the study also is focusing on ways the Bank's operational practices can become more supportive of participatory approaches (Box 6.18). This study covers skills/mixc and budgeting issues as w. 3. Technical Assistance 41. Project decentralizaton and the involvement of NGOs or beneficiaries can strain he professional and technical resources of lower letels of grovernent and local agencies-and thus typically require training. Most Bank projects therefore include components to strengthen the implementation capacity of concerned agencies by providing technical assistance, training, and equipment (Box 6.19). Such technical assvslance faces different problems from, for example, technical assistance in engineering. For most poverly projects, he people side is critical, and thus requires vastly different sklls. For many poverty projects, the emphasis 168 BOX 6.17: Philippines-Popular Parficipuion Sustains Iigation Program farmer ':-Ea luionso1fthfir . iigatiop `hiVolV te p cipation of b~Jr ener ire n-lpbssoc4ecpuiig~dsin* osrcio,cnlddtat phciphonproducedconszSted~O:v rcult hekcalnal uizd stutres ,_Were viewed by''the. . .:pi - =a W c'- - . . ;- .-.. . -:;=> . e: !'R:' ti': 1 .- XC ..cM.:-: - Y; ;. i:i::: ::: . -.en a mon bon ^e- ;i-i c " m n-riceyields': -r arr-inersas .more neon s m was.. m d W e P and inirritate areas i th&ryseonTh iriato ~sscaonweemrlilyt use water: distribution mtos assurea gr et atN ndw more lkely -to use sound financi m metpc s T _u m cons ion cos at the time of strution and gbsequatly p aa ir loa due; Ye - paricipation ad theri o ..perent n. recently. approved :p oJ .>ti t s-;* * rjet oninues Bark upporfrth kga P ,a>hi lwmns nt- a .b.~.:- Phidippine6 Conmn Inilwgatiox pnmtPrnject, - A 3-PH, MaySAR 1990. ithUm iatni2 wcwl documenth icthd rstrmcud auienato) also is on institution building, where sensitivity to local conditions is at least as important as technical know- how. For other poverty reduction projects, the technical assistance irvolves worldng directly with the ultimate users, who may be numerous and lacking in literacy and arithmetical skills. In yet other projects, the training is key, often with an emphasis on helping the project-implementing agency improve interactions with its clients and enhance popular participation. Such technical assistance will continue to be important to Bank poverty projects, but it needs to be carefully designed, mindfid of the difficulties associated with reaching-and teaching-the target group. Increasingly, consultants may include sociologists and anthropologists, schooled and experienced in systematic beneficiary assessments. C. Environmental Sustainability 42. Poverty-reduction and enviromnental sustainability isu intersect most directly in some agriculture, forestry, and population projects. 1. Agricuilture 43. Many questions of environmental susainability involve agnicuture. Narrowing the focus to poverty- rtlated issues narrows the scope of the inqiry to two important issues-land tenure and risk managemenL Many poor people rely extensively on public lands, which they-as would most other economic actors-exploit more intensively than the optimum. And like other econanic actors, poor farmers, when they possess secure land tide, do tend to invest for the long term. But even if the poor hold secure access to the lands they cultivate, they may exploit them faster than farmers who have access to credit markets. Such overexploitation occurs particularly in the face of negative shocks, which in the extreme may involve survival, because the poor have few financial assets or other reserves to draw on. Overuse tends to be a particular problem with drylands and in rainfed agriculture, where variable weather conditions introduce a large element of uncertainty about a given year's output The critical issue in both reducing poverty and enhancing the environment is to develop technologies that reduce the frequency of negative sihocks and to provide alternative sources of livelihood for ithe poor. Faced with morecertain prospects, the poor will be less likely to mine the environment and more likely to make longer-term investments (Box 6.20). 169 BOX 6.18: Tunisa-Popular Pafidpation Requires Nuuraing . T lhe North West lRural )evelopment Projectm was launched in 1982 to help the Tunisian government finance, a five-year slico of a fiften-year development program to tace the problems of the backward and depried North West where the poorest mral population lives. The project has sought to rnduce pove6ty; improve .r.ultinon, health, and educaLion, reduce soil erosion; curb tha decline in agricultural productivity; and docrease siltation of the Sidi Salem dam. The project also pmvided for extension; research; rural credit and livestodk services; soil con'sevation and forestry. activities; and intfnmstucture, including buildings, water supply, and vural roads. A special feature was beneficiary participation throigb producer groups that would eventually assume rsponsibility for mnaintaining some public services, suchI as waler supply, milk-collection centers, aid inpUt supply. In retrospect, it is clear that project objectives placed too much emphasia..on ort-term achievements, most notably in agricultural production. The time needed to develop thonewm.iodel of rural development that relied heavily on the purlicipation of local populations wa und.- And' die government was more reluctant than expectAd to abandon the tradidoial :topdown approach *toruul devdlopment; orly following, a midterm review. was the government ^wil1iug t test. the participtive approach, which has suixsequently proved successful. As a result, heproject's effect On agicultural production-and on erosion-was less than projected. In contrast, the projoct achieved most of its infrastrucLural objcctiveswhic:h ave. for example, improved access to water and tci backward aeas; theeby facilitating, In t ticvities,:i.u dcdlivery of inputs, caltdicare, und administrative servi6eiC Thc attainment of these taJrgts isunportant because it will allow tho successfuld velopmeatiofinput and output services in.ib reaining pes. of the flitu.n-year programz The infrastticiimr sucixsesZauwd thi geueraIi-epn` of t participative approah-should lay tho groundwork tbr other project work in the.. a. rea. , Clealy, projets eliciting local participuon require longor-than-ino ar-upperid.: T first five.year slicewwas really only the intellectuilwund infastrcturil basis forAtsw fliuetreo&e4. appraisal projections --such as increasws in production - Mtbat require such partieipation to b much more realistic... . . . . . ... x ,, .. . ~~~~~~~~~~~~. . i f f.... .. .. t-ttf fv.:f§ a. Tumidi: 4ortiWcstRurml DnlopmentNojet.PCR 1997-TUN April I9BI. (lsai .. doD.c circumlatnn.) - * . ~~~~~~~~~. . .. ,* * S ;-AFQt: 2. Forestry 44. About sixW percent of the forest area cleared each year is the result of agricultural setdnement, with the balance split between logging and other purposes such as roads, urbanization, and fuelwood.' In addition to loggig and concessio policies, incenLives to cut trees include weak property rights in many foret and wooded areas, high discou rates especially among poor people who encroach on the forests. The Forest Policy Paper argues that the poverty-deforestation interface can be addrressed by (a) incasi the agriculural productivity m poor and densely populated areas, (b) exaning nonfarm employment opportmities in areas next to forests, and (c) regulazirg customary land rights of forest dwelle-to protect land agaist encroachment and encourage sustable land management Stil, in many cases, there will be a tradeoff between protecting the forest and the near-term living stantdards of tie poor, who would suffer, for example, if prevented firom felling tees by steps to fence off the foresL These issues need carfu 15. The Forest Sector. A World Bank Policy Paper, 1991. 170 BOX 6.19: Bangldesh-Technical Assistance Actually Assists The tr N of th ppula'tion -an dfaily. hea p in Bangladesh' is in its fifth yer of implementati b anks i to eff ve use -of tehi sie am has --important .strides .in providinghealth and family planning outreach. In turn, the:overall program has co.,ntributed .t .a' dline'in fertiiity- more than 7 in 1970 to 4.9 n190-and a rise in the contmoeptive prevalence rate from 3 percent tolmosta 35perCent in 1991. Technicalassistance is-:supp"-orting the rengening of (aial caaiy Of the) Ministry of. Hlth and Faimily Welfarethrougb:a managementd evlopment 'unit, (b)' training by 'thel .*' National'-Institute fior'-Population Research and Training; (a) women's programs, (d) the. Population -- velopment..Evauation Unit in the Pl ing Commission, yan (e) ncial procdu . u Tre hnic a.. sita 'ha benus'ed t op (a) ilyplannin management infornation systems at,t e vi age . 'or district 'level, (b) maternal and c..'hild hl strtegiest ru terna 'eaths, (c) -m,anement.system s,d(d)' 'idinaon d evaluation sy ist of W-OO.pro' s Tecnical .:-,-assistance.also has' su'pporemedicil -and faimily planning quality assurance, theupgrading of medical: -educa'tion in! angladesh medicalocolieges,. and ocal produictiou of oral rehydration salts, and essential * drugs. Tstenical assistane ,resule :mailrm *' an expli consensu:acin on aon gdo .r arid the govenment abo ut: t national .,priorities anld the -skategici approaches 'need.to lower fertilityand improve health;'with -assisac rmIA h edro h oo osrim government- coriaino ; ."f,- - ','Xsi. M" 'ori' ''US ination: ; ..ws.program rxesources'- aussworkd6well; - hd-o, g e a - sutvsionyh cank facilitatd bythe creation o a special; :P*-.--tioxi a''-thndHeat Oficein the an'sriden ission inDhaka: fin ancdby IDA a-d ~~~~.. -. .T- 1 64. .'t- e'P o a t qn.d . ,H l ...... . ... . .. . a' . ffi : I N ' r s .e n s i a i n tM . .......... ~~~~--: e'- on. '--..-S- .t' t <..O pU.0.i-: the other dors the: Ppuationr andHealth Offic helps with proect Sim plmen tation and supervision wit -the project tea in Washingtonpoidn.bc-p anOlic guidance; an th Ban efort-lbet rsoure itensve-as sccededin antiin g donoro suport w&ffithoeu- which thesan operfato e'rt o~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.... .. ..... ..:..:. . .. ... --: . - ...: e A---:.:.. :-:-: * ..:.: . *~~~~~~~~~~~~....... 5. Iastwuons. Public sector implementation of agrcultural policies and services has tended to be weak in many counties. Rural instittions are often starved of the experts and fimding needed to be filly effective. Moreover, problems of institutonal coordination are especially obvious in rural development, where several agencies and groups-agriculture, forestry, water, rural infstucture, cooperatives, credit, and processing or markedng-may be involved in a project For these reasons, agricultural projects should be designed with sle insfitutional needs that, in un, rely on existing lines of command. This may be done by working through line minisies and agencies, where possible, and strengthening their activities and investment programs. Beneficiary groups should be encouraged to participate in project design and implementation. Service-based projects should ensure that the interests of the poor are taken into account and that there are strong institutional links between research and extensior for poor farmers. One example is the need for research on the crops grown by the poor and on the processing technologies they use; in turn, this requires that extension agents contact poor firmers, including poor women frmers (Box 7.3). 6. Public Expenditues. Setra public investments include irrigation, from large dams to groundwater development; rainfed agriculture; commodity-based projects; area development projects; credit; research; forestry; fisheries; extension and livestck services; and education and training. Many project designs can accommodate the interests of poor farmers without focusing exclusively on poverty. For irrigation, key poverty-related issues include access of poor people to newly irrigated or rehabilitated land; access to water from public wells, for example; water charges; and protection of the interests-resettlement and rehabilitation-of people displaced by construction. In rainfed agriculture, an important issue is the existence and development of tehnologies-seeds, culfivation techniques, and watershed protection-for farmers in poorer and drier areas, which often are neglected by research and extension. Projects may need to address access to water or the avamiliity of tansport and marketing infrastucture in poor areas (see Box 7.4)- The locafion of area-development projec clealy can affect poverty. 182 BOX 7.3: Nigeria-Womnen in Agrculture Program Takes Root Agzidultua ion sevsdeveopedsine in Nigeriatohelp.women'far me . .cearly uc .Tp with a seie o o ls that tdte system's shorcomings. i .eaching omn. P.:;ilot .its, - tetig diffenad o. . ;.. pioneeriug-approaeswe ltred' i e s Thel supporte die~e rorm. TheWoenx AgW ricltre WA rgamwsbr. pOvid4i die 6tl : basi i;rmoim ,,fi ",S1 p-'- .o'' ..yii tb-- .l , ,, sAs F-; incresing number. oftat liuitiaed- WIA actitis it be,-me dea tha the ' participants would benefit from exchanging- expeiences ian-d p .'lain.A workhop dun'was hed m "aOB in June:1989 to disc i. . - ts attended from- al" -:state d the f a d,s agricultural ministries. Participants worked arund the clock to::develop te- r WI Action . plans.which outlined broad objectives and strategies, and- a dieiled program :for eacpryear. The progrms coveiireataffadtn- nelsrganizaiol'strctz,andap itechnoloy -for rural womn. Th:ey optimied te use of he f women extension agents inth-e Mos areas i north, to ezwble,them to reach women fanners. To help implement the aition plans, a female Nigerian: ugriculturalisiwaishired to w'ork.flail tim e sin die Bai's" jesident mio i , o .o, * N f- - - ~~... . f. -,. .... .. ***- .: Thbe WTA-piogram's considerable :progr 'was' obvious' at the second woop, is February .l 9!9l-whc thiuimber of WI agents hadincra'sied 4om 425"at hetime of tho firis workshopt *..804 l'Thc number'offemal contact trmers has more than tripled, t prcularly-large increases' in the northern states. -ber' as :aiso bern a%conceted e fort. to hel': womesgroups.become:. I . reg istred cupeitives'tfcilitae 'access tolbank credit. Lack of transport for agen e'merged as:s ,' pmblem bcause'womene are less inclind to rde large motorcycles, the'main ehicle of male extenson. * ..workern. So seeal satespuichb laAdyccyc (mopeds)Acess to abor-savig technoogies .also: :was a problem.;Thtcnologiesexist, but are not, locally prduded or widely distributed.inirural .areas. Such technologies were demonstrated at the second worlcshop.. Their wider distributioin is being addressedL throughth r y approved National Agriculturia Technology Support P- jecLW i The edeal griueFdltal as now established senior-level positions rv.Ev WIA coordinators-,one m itseaquates.ad ie rs in ii e reion a '> hemoffiie.:S Te1 feea-. ..is taig dfie fdin 'mthe prorm, whichi ha en inerae imo.,the mai extnso sytr...:-..,,. . '; ; .. .......................... k e .... . ..o :. '. NiKcri SccandMuIESiAgriculIturi1 Di:dop:cznt Project, SAR 2988-UNI, August 198t. (his is an intirnal docur nic with rctrictAd circulation.) Nigerin: Third uci-StcAgricuiral DevaopmcntProject, SAR '7373-UNI.,A ri 1r99. (his is an int=d document with - l restricLed circulation) . l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. . .... . - ' 7. Susraiabiltry. To ensure the continued demandfor project services-and the commensurate private invesutent that is often required for long-term project sucess-production-oriented projects in agriculture need to consider farmers' lilely financial retuns from project activides. Realistic assumptions must be made about the applicability and cost of new technologies, and the higher yields that may emerge from them. For example, new planting methods may raise yields, but may alsa involve considerably more labor than a poor farm family can provide-or they may entail more risks dhzn the farmer feels comfortable with, given the projected benefits. New technologies may use inputs that require cash outlays beyond what poor farmers can raise. Without access to credit and inputs, poor farmers will not adopt new technologies. But providing credit to small borrowers is costly, and the poor-particularly poor women-cannot often meet requirements for collateral. Unless hese problems can be solved-in a way that permits lending institutions to operate on a financialy sustaiable basis-the proposed project design, no matter how appealing on paper, will not 183 BOX 7.4: Bangldesh-More Accessible AgricuIturl Markets Boost Raral Incomes This project is supporting the improvement, maintenance, and upgrading of irur rad ad physical facilities in mner ghtditi in nortwest Banladesh. A study of B1angdsbi villages revealed hat better-market .access.-wvas -associated -with signficantly- more productive** agriculture, a gre r ai f m ,a ter vary of goos ns d pr smnaller diffierences betweenproandposthav pri of g , hier ges, and hiher fy incomes. Ihe upgrading of ma-ket: ceters is.an important complement to impmved tsport betwe :fe.m audmarkem . It-winreduce:trafficci and spoage and mroea n pdueby prbviding Clawtean sanitaryfacifities., produXbpX-cei-td-s-.'¢'. ;'::---:-'--- 'FrancisMitchell a a: d: Rrads - and Maker Imovem a Mo 7101-ED,-Juno 8.- survive in ihe field. Project design also must consider local traditions and socioeconomic and cultural practices of poor frmers, including minorities and women. Poor clients should participate in project design, to ensure that their priority needs are accommodated (Box 7.5). BOX 7.5: Benin Unwisely Designed Project Impoverishes aBenefic tiai Oma Bank-supported project,'.now long-closed',' aed to develop:fficient, moden system :.to replace.the:'shifting.cultivation" tradition in Benin. ;'Participation of farners-in:the ignated a .Xswas.mandatory. epand was eropriated from smaliholders to form communalblocks 'Projec idesia was ptEdicd.on theassumption-which:could have' been checkd b c awito . groops-thata large part of "fallowv land would be farmed. However,-much of thatland was air dy- ,being used by women for'farming-and crafts. .The uncultivatedjlancwas'a important'.wayof .. maintaining the fm.gile SDil's frtility. Under the project,' yield fell.' The areamovedintofoodeficitL' .~ ~ ~ ~n .: ::. ..: * . it.. . . .: ., .... y..;......... ;a.% World Dankn Impact EialuationReport Bciin-Hivi AgridclturutProject, Rtport 5029.Aprit 184. ( mThh iada :dcwucnt.with resicd ciruation'.) .- .- * . .. .-.* * - . .- . - SS 8. Environment. Agricultural projects can enhance the sustainability of te naxural resource base in the face of pressures on the land caused by population, livestock, and so on. Ilnvestnents that ca increase farmer productivity and promote sound resource management include soil conservation tecologies, afforestation, water logging and salinity control, and irrigation or agricultural extension for degraded or marginal lands. Land ture improvements can increase poor peoples' stake& in land and encourage the adoption of better and more sustainable tedhnologies. Watershed development projects can protect soils in a watershed, while improving farm productivity by building bunds and retining moisture. Land reclamation and drainage can put waterlogged or saline lands-often abandoned or allocated to the poorest-back int production (Box 7.6). Towever, many agricultural policies, programs, and projects introduce environmental risks. The risks are prominent in irrigation and livestock projects. But area development projects that fail to take into account fragile conditions also pose environmental risks. These risks need to be addressed in the project's envirome assessment, and factored into die project economic evaluation.' 1. Soe OD 4.01, EisfWrou&maef Auessmen and OD 10.40, Economic Critia Jor hravcsnr Opera ons, to be issued. 184 BOX 7.6: China-Land Recamation Fr centries the red soils region of Chinas b defo and ubjetoctiuo -firewod collection, communal grazing, and overfhring. Under ihisupporte project, the land owned by tows governments, is leased to fSaiers for renewible oontracts of up to twenty years. T1 .he leases-ar-- expected to incree poor faimers' stake In l:land and provide incentives- for investments''and betrchnologies. The,farners e proided improved infrastructuc; land devdlopmentl Itilitiesvthrough teracing, contour planing, O-fX irrigadon, and drainage;'farm machineryand in'puts; pmcessing factorics; and improed extension systems tbrough research and training-. Project implemientation so far has been satisfhetory. i demonsas that poor people can bie -resettled onthe iasted-,commons, and earn subst ilyhiger invo without damgig he- envirnment iffproded with secure tenure, auics, soil conservation mehos _ d , Xsml-s,calirgation... .. ,: - : '',l..',.t:..., .. ...... ... . ..... .' ...... . ; .S---o-n '* - , .., ., , ... .. ., .. . a. !: . - * ... .. . . 0 '~~~~~~~~~~~~~~~~~~~~~~~ . ....... -.--Chui. CnRSoils; idopArma evLntm Prtject, SAR 6072CHA, Augus £96. (Thu s aa hitemaldocwumenuiAsicict-d *.' circulation.)'.--:,.','-,:..: "0 B. Forestry 9. The Bank's recent forestry policy paper2 emphasized the Banc's role in supporting projects and policies to achieve sustainable forestry management systems. It also described the continuing reorientation of Bank support for forestry toward popular participation in tee plang, noting however that past social forestry projects had mixed results. Past projects sometimes gave little attention to traditional uses of forest areas and benefit sharing-or relied on commumty groups that were not motivated to work collectively. The active participation of indigenous people and community groups in design and implementation is to be built into ftumre projects. 10. Women are major players in forestry. Forestry programs what do not plan for women's needs can miss opportunities to increase returns on forestry investmens-and can worsen the situation of women and their famiGies. Women's participation and progress should be integral to project objectives, strategies, supervision, and evaluation. For example, women's tenure or usufruct rights to land and newly planted trees typically need to be strengdtened, and women's groups should be helped to manage their own plantations and rehabilitation activities. Women's direct involvement in management can reduce destruction of forests for fuel and fodder. To encourage women's participation, their earning potential may need to be substantialy raisd-by links to wider market channels for forest product and by access to inputs and technology for processing primary forest products. Better technical forestry training for women is often needed. C. 1ndustry 11. Industri lending instruments include direct financing of industial projects; directed or general lines of credit channeled through development financial insttutions, commercial lenders, or both; and structural or sectoral adjustment operaions involving policy reform. For poverty reduction, structural and sectoral adjustment operations keyed to support reform of the structure of incentves for industry-and their second-round effects on growth and employment-are likely to have the most effect Such projects can 2. The Forcst &ctor. A World Back Policy Pape, 1991. 185 support rationalization and reduction of industrial protection, privadzation, export promotion, industrial restructuring required by policy reform, and the deregulation and encouragement of domestic competidon. By encouraging both more efficient resource allocation and patterns of production in line with a country's international comparative advantage, such operations enhance growth and job creation. 12. Credit Lines. Bank lending for small- and medium-sized enterprises (SMEs) has had little direct effect on poverty. The average subloan size for projects completed between 1973 and 1989 was US$35,000-far above the loan size associated with direct lending to the poor. However, because the SME sector tends to be labor intensive, the loans may stiU be creating jobs indirecty. Because lending to industrial projects may increase the demand for labor, such lending also may indirecdy help the poor.? 13. Microenterprise Support. Few formal financial institutions are interestd in making small loans, because of the high fixed costs of loan appraisal and supervision. And some laws and regulations, by resticting eligible collateral to certain asset, add to die poor's difficulties in obtaiing loans. Recent SME projects have included initiatives to broaden credit lines and technical assistance services to include mucroenterpnses and promote female entrepreneurship. Some projects include pilot programs relyiDg on risk pooling, whereby borrowers cosign for each other's loams, to enhance the "bankabilityf of such lending. There have been some notable successes (Box 7.7). The successes confirm the importance of market-based interest rates and measures to reduce the risk of lending to borrowers with little collateral. BOX 7.7: Indonesi-Markt-Based Creditfor Smal Borrowers Market-based interest rates, acces, and the aviiiability of savings and lding m ents assist in ebtablishing finmnciaUy viable, self-sustaining credit, programs for small borrowm. Bak Rakyar Idonesia's' (BRI) Unit Desa. system is a nationwide bang:Snetwork that oobilie resources and provides nonsubsidkedcredit to creditworthy small borrowers. Despite the small loan size-. minimum of US$14 and average of US$4002.and relatively high effective onlending rates, loan collection rates have been very high. The excellenit collection performance is attributed in large part to an upfront fee that is returned if loans are repaid on time, and close supervision by. bank staff who receive annual bonuses based on the profitability of their respective units; Proximity tb clients enables BRI's staff to proess loan applications efiTciently: leading decisions are g y we in two weeE and loan amounts are based cn the value of available collateral, a review of intend fluhid use, and an evalution of the borrower's abilily to repay. Chariles MigAs :. Iraunesia: Secoad BRS Small Crdit Project, SAR 8644-END1. July. 1990. (This is an interl documnt with rcsrir.ed circulation-) . II. Infrastructure 14. Infrstucre imvestnents-rural and urban-ae needed for grwu and can be targeted to poor regions. Within a geographic area, infasuctre project can be targeted to the poor by the judicious 3. See 'World Bank Support for Smal and Medium tbduqtzy in Sdected Counries," World Rank OED Report 9530, 1991. (Fis is n iernal documcnt with rcstricted circulation.) 186 selection of a service standard that upgrades what is currently available to the poor, without attacfing the better-off. A. Rural Infrastructure 15. Designing poverty-focused rural infrastrucure projects, such as those for water supply and roads, poses difficult insfitutional problems. These projects often serve populatons scattered in small towns and villages and may therefore comprise many small components or subprojects. The projects also may involve several levels of govenment, and often have to rely heavily on weak and inexperienced units for operations and maintenance. Frequendy, because of the number of subprojects, some form of large-scale coordination or wholesaling must be devised, giving operations some characteristics of sector investment loans. The selection criteria for including areas or communities in a project or program affect how much the poor benefit. Both the ability to reach the poor and the potential financial sustainability of an investment should be considered in the selection t I participating communities. 16. Insuuon Buiding. Because Bank interventions in the sector are intended to develop a country's capacity to evaluate and execute projects, among other things, and-because the Bank usually cannot take on the responsibility for evaluating large numbers of components-some division of responsibility between the Bank and borrower is necessary. First, a judgment has to be reached on how much responsibility the local institution can assume. In some instances, the borrower can prepare all the economic and financial analysis with minimal Bank support. In others, the instiution ;L z! ' require considerable strengthening before it can conduct any of the analysis. Most cases fall somewhere in between. Thz govermnent unit performs dhe appraisal, closely monitored by the Dank, under agreed-upon guidelines, and with varying amounts of technical assistance. Most projects of this kid support institutional strengthening-reorganization, taining, office equipment, and vehicles-and consultant services to meet the need for appraisals. Much of a project's success depends on the ability of a local govemmemt unwi to manage operations and maintenance, and collect charges, or both So the Bank often needs to establish eligibility criteria for participation in the project Because subprojects may be widely dispersed, guidelines are established for the implementing agency to monitor the implementation and finances of each project-subject to review by the Bank. L Rural Water Supply 17. As with other sectors, the success of rural water projects is tied to ihree inter-related factors: community participation, adequate provision for operation and maintenance, and cost recovery. is. Commwzky pardcxaon helps to ensure understandi of the benefits of the proper handling and use of water and of sanitary faciities, to ensure that provided facilities meet social and cultural values, and to ensure collecton of charges necessary for upkeep (Bo 7.8). Women typically collect water and manage £amesfic water and household sanitaion and hygiene. Because women also are major project beneficiaries, their involvement is needed to realize fiul project benefits. Women can provide labor for constructon and maintenance, and participate in planming. Training should be provided in pump repair, assembling locally manufactured equpment, managing water systems, and collecting fees for metered supplies. 19. Operaions and Mainenwice. If responsibility for operations is to be decentralized, care must be taen to ensure that local govenments or beneficiary groups have enough funds and technical sklfls to handle the worL In some instances, there may be tension between the financial sustinability cnterion for including communities in a program and the poverty cntenon for being able to reach the poorest clients. Choice of tecnology helps determine wheher given communities can maintin systems. Reliance on simple, standard-design technology for hand pumps and standposts greatly eases maintenance requirements and increases affordability. As coverage increases, however, management and financing become more 187 BOX 7.8: India-Rural Water Facilies Sustained by Communiy Paticipation A recnt frject n? Mharastma lkesid"vantagei of the existence of a ag omnty of. rural Os many IEt hh 'ccntrt on'water supplyor h i duction-o ere ; | o ;; . - -s < . s - . >>, >E-? ;!. a- ,;, . . ...... . . . .. . ..E . . . a..community particiraion-.aed the met of women. A; jnt tat6;NGO tas force is developing: . pan r nit jion a he roleof O.Field staffm the implemetig :agencies-meetw>ithlocAl goi ern officias to discuss the faclities tobe onstructed. Altog the' |~~~~~~~~~~l a100 6 a :...state poilicyitequiiess-II nu'afcommwiities-.to zassume responsibility for operations- and maintenance, te policy as notalwySs b observed... eprojethas d oe a agreements"--contracts- that-pd^aiit the *.rspceb. :resposibilities' o.-f regi age governmentsfor operations, mintenani ic and fla -c. . -. -- .--s<- -i '-. -::-EfS i ..... e . - . KI:i.- I-: I - . - - c s -:- - c . 3 rcric 3cssEllen S'Ido !&.- ;idii:c dhtit.bri a,i:wnale Suspply anid Environmenetal Seiniation Project, SAR 92024KN, Mac 1993.- (This is an untersi 'ocument with ctdc o3S M:2 B ; l. -a. - complicated. With upgrading to piped systems, the problems may become more severe. Demand for household water connections is of te inflated by subsidized water prices. 20. Cost Recovery. Governments often oppose chargng for water drawn from hand pumps and stanposts-for political and technical reasons. But there is clear evidence that poor people will pay-often a substantial part of their income-if the can be assured a regular supply. Private connections should be metered to ensure that local water tariffs cover operational and maintenance costs and contribute to recurrent costs. of the overall system-and discourage wastage. Innovative approaches are needed for billing, such as villages being billed as a unit, with individual rates set and collected by the villagers, according to guidelines. 2. Rural Roads 21. Rural road projects help support agreed-upon programs of construction, rehabilitation, and maintenance. Given their importance in enhancing access to markets and income-earning opporunities, rural roads play a role in poverty reduction strategies. Arguably, the more important function of such projects is to (a) help define road management responsibilities of national, regional, and local authorities, and develop their activities; (b) support policy change, including decentralization of decisionmaing to local governments, and maintenance management, investnent planning, programming, coordination, and resource mobilization; and (c) improve the fimclioning of key institutions. Thus, in addition to civil works, projects often finance studies of organizational syms, especially for maintenance; road fimding strategies; engineering designs, the private contracting agency, training, and technical assstance; and supervisiov of civil works, equipment, and spare parts for maintance. 22. Subprojea Selection. Rual road projects inherendy are sector investment operations. The Bank does not appraise every road segment but, instead, evaluates the institutional mechanism for appraisal and implementation, including the criteria for subproject selection. The complexity and precision of these critenia depend on existing institutional capabilities. Yet local govenments may not be ready-particularly in poor areas-to use procedures developed to idenify and screen road investments. Il addition, in many countries, rouine maintenance is not a priority and is not done according to a continuing inventory of the local roads' physical condition. And cost accounting records may not exist Thus, insdtutional strengthening typically is part of the Bank project The strengthening may include assistance from consulas in setting 188 standards and procedures; providing training for local staff; improving coordinaion among central, regional, and local authorities; and helping the authorities coordinate investment and maintenance decisions. B. Urban Operations 23. In supporting the expansion of urban services and providing them to the poor, Bank operations can focus on individual problems such as housing, water and sanitation, or transport, or integrate them into one package. The operations may cover a single-typically large-city or a group of cities or villages. The operations may expand or improve services for entire cides, benefiting the poor as part of the total population; or the operations may target the poor. The operations may deal only with institutional issues that affect one type of service, or attempt to promote broader policy reform. But because a greater number of components-subsectors or cities-makes implementation more difficult, projects should focus only on a few pmlarity issues. 24. Housing. Regulations on land use, rents, and construction standards can inhibit private sector pardcipadon in the development of housing for the poor, resulting in systematic underproduction of housing and unnecessarily high prices. Thus, shelter operadons to benefit the poor may require policy reforms.4 The Bank has supported changes in building codes and zoning regulations that indirectly excluded the poor from housing. More typicaily, the Bank has supported the provision of sites and services, slum upgrading, and housing finance. Site and service provision in principle is a replicable approach to the poor's shelter problem. But, the difficulties public land-development institutions face in commercial operations have limited the effectivenes of such projects in most countries. land has been difficult to acquire, and the operations bave been subject to political pressures. Meanwhile, like all public enterprises, such entities frequently face weak incentives to serve their real clients. Slum improvement projects have faied better-paving streets, and putting in water lines, drainage, and human waste disposal systems. They have proved effective, low-cost ways to improve the living conditions of the urban poor (Box 7.9). But, even here, replicability on a large scale has been a problem except in a few countries, maidy because of limited institutional capacity to ianage complex programs in land tenure and in building and planning codes. Difficulties with cost recovery in slum-upgrading projects can be reduced by promoting extensive community participation at an early stage, so that there is broad agreement from the outset about goals and methods. 25. Housing Finance. Bank lending has supported subsidized credit lines for housing finance for the poor, and relied on the private sectr for housing construction. In some cases, the Bank has offered private builders an incentive to construct low-income housing-full-cost (nonsubsidized) loans-and simultaneous mortgages to low-income households to ensure demand for the constructed housing. But these operations have not been wholly successful. The existence of agencies providing subsidized finance has undennned incentives to develop market-based housing finance institutions, and has led to undesirable financial market segmentation. Moreover, collections have been low, as one agency has typically been used both to allocate the subsidy and collect the residual payments. Experience suggests that those who dispense subsidies do not make good debt collectors. Meanwhile, some beneficiaries of subsidized housing have rented it out at market rates-transforming a housg subsidy into an income supplement. Although income supplements may be more appealing from a strcdy economic perspecfive, this kind of tansormaton has caused the Bank to rethink its approach to housing. 26. Urban Developmen. Urban development projects generally exclude the provision of housing-investing instead in street paving and lightin, water supply and basic sanitation, drainage, and community facilities. In some cases, financing is provided for low-cost trsport, such as buses. These 4. Clay. such opeatos will also have subsial benefits for dth nonpoor as well. 189 BOX 7.9: Guatemala-Urban Upgrading Helps Squatters . .... ...T. e Ba. ism flnnciig £APio prgrm to proidebaic munica srices and secure tnure~ in five low-incme t coa alsa c the rehabilitan rconstruction ofbasic utiitiesi nlow-incomeresidentialcommuniti ghoutthe mpolitan uare. Th..>'e -pil,ot pr could benefit 6,50 fauilies w th income tow he povet level. SO - . -; V,--e-i Ivesting. i thesquatter commuti initi ne ingove ent support for th u poWor.,nvie.w,oft'oe lacktof experience -wIt such: actvities: in pblic- s r agenci .:importance .of community involvement, the government mobilizedN:'Os for project execution- organizatio na,n d planniaghyth*e communityfbr proj ect i i, implementation, isupervion, and cost ..... Th urban:gh' upgraing effor was :' not: withou 'k The prora was th firs timeth ..,go.v.ernment had sought,-to .regularize land..t.enure ,anld jrovide serv,ices.-on site to ex;isting squatter:.- communities. To . ;minimize the r'sks, this project'component was limited...... U t a pilot-sce eft at- sates' insad ' the 'twelve'sites originally proposed. t i:.-- .,~~~~~~~g. '.V s W, '. ._e grm . . ."''.,.. l s20) udia: Mun t~~~~~~A s je ..tt ................. :B g s asuinQu. . ........... -: .......... ' rice-o si -t e- g ;;s-u! a. Guamtemala:' Munic*ipa Dvieopnstes:riuis A`t 6.....U Jue.t.. i sa itrs dcmn i ece .c::cuinLion) - : - - . . : -. = . .- ...-- -. . -:: ..... *: Y.:-*--*.s-f.f:f-Y:. . -{---. > !* .... .. ... .. .. ;s.. ::-L. .. -.a ...... ... .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~* . .** **.*. … ..** projects may be multiple- or single-city operations, with investments affecting services citywide or in sections where primary facilities are deficient. Generally, a financial intermediary or development fund is established to onlend the resources to the local government. The loans often resemble sector investment loans-with criteria for community eligibility when operations cover several municipalities. These operations support institution building and policy reform at two levels: (a) the intmediary institution, focusing on its financial viability and its ability to evaluate projects; and (b) the participating local or municipal governments. 27. Urban Water and Sanitadon. Urban water and sanitation projects differ in scale from rural project. Being larger, urban projects of*en require development of distnt water supplies and installatdon of infrastructure through city streets, and involve household connections and the disposal and treatment of water-borne waste. How much the urban poor benefit depends on the location of the system-whether poorer communities are chosen or whether poorer areas in better-off cities are served. The main issues for operations are the institutional capacities for planning and budgeting; the design and construction of systems; operations and maintenance; and cost recovery. The Bank supports the recovery of enough revenues at least to cover operating costs and debt service. Cost recovery mea=s include connection fees, and block, flat- rate, or volumetrc tariffs, If special provisions for the poor are needed, several options are possible. For example, because household consumption of public utlities increases rapidly as incomes increase, the block tariff allows the poor to obtain some minimal initial block of consumption for a very small fee with consumption beyond that block charged at higher rates. The average cost per unit to the poor is therefore less than to the better-off. Such cross-subsidization is common in Bank water supply projects (Box 7.10). 28. Urban Transport. Urban ransport projects can improve travel conditiens for the poor even if ffie projects focus nainly on improving overall traffic flow, and reducig traffic accidents and vehicle eisio Road mainbtnance and traffic management-including road safety subcompownts-are required for a wbole city; but providing access roads to lower-income housin is an effective way to target the poor. Projects that assist pedestriam and nonmotorized vehicles also are likely tD bemefit lower-income households. Traffic management measures that assist buses and other mass transport-such as the provision of busways, bus-only 190 BOX 7.10: Brazil-7he Rich Subsidize Water Consumed by Urban Poor Inn orkorn proectiraBrOaid.' ahe -Bank found that the water and sewerage tarff structure' dtifrenate cutom' ss kdenia comril,idsril .n public.:,: Eac6h category pays a 22Si--;~~~~~~~~~~~~~~sv Chug s min] dimum'.' monthly.cbarg m'.inimumconsumpton le vel and phigher aes for :-succeegbloiks of consumption.:The:minimum consumption .level for residential cosumers is levied; ona qutity oter-tf 0 cubic mers Mo uffi t is basic needs meet s iminimum healthi anid sanitary conditions. he price is' set:so that water charges are affordable for even'.. die poorest residents. In addition,.commerci a indust consumers imlicity subsidize resitial consumers. Bcuse sew rat at80percent ofwaterrates-areell above lo-mng-u marginal cost, residential customers with combined watei and sewrage service, who tend to have bigher incomes, subsidiz. those wbo have ony Water sevi;ce. a. Bazil?. Watw Peojoct hr MuiWipakies and Low-Inco eArBc, S IA7083-BR, June 1988. (This uain inJnl doeucumo with reat ri ctcircu on) --i n. lanes, bus stops, and bus terminals-can particularly help the poor, who often must travel the longest and farthest. Other components that have helped the poor include credit schemes for transport operators and employee loan schemes for the purchase of bicycles. 29. Urban Environment An important aspect of urban poverty is the deteriorating environment in which the poor live. Effectively addressing the urban environmentlpoverty nexus requires an irtegrated approach-encompassng water, sanitation, drainage, solid waste, and fuel use on the one hand, and linkages between the services and policies targeted to the poor and citywide services and policies, on the other. Within an integrated framework, projects can support a mix of preventive and curative measures. Preventive measures include a balance of economic incentives-such as the pricing of water to prevent wastage, leading to sustainable resource use and lower pollution-and urban planning meaures. Urban planning measures include land-use and land-development regulations and improved land tenure and land registration systems-to improve access by the poor to serviced land and reduce pressure on marginal lands. Curative measures include appropriate technologies for sewage removal and treatment, solid waste management, drainage, and air and water pollution control. JR. Human Resources 30. The opportunities for reaching the poor-and enhancing their human capital-through social services are enormous in most developing countries. Projects in family planning, health, nutrition, and education, if well prepared and properly executed, are highly worthwhile-for the added human potential they provide and as examples to be propagated. A sectoral approach enables the government and the Bank to see the national significance of model projects-and respond to concerns about their replicability on a large scale. Such an approach would define the most appropriate services to the poor nationally or regionally, aUlocate public sector and aid resources, identify how to reduce the burden on governments of subsidized services for the nonpoor, promote nongovernmental initiatives, and design well-targeted, cost- effective delivery systems. Social sector operations can help correct de generic bias of public expenditures against delivery systems for rural areas where the poverty mcidence is often higher. Projects to expand family planning, primary health care, nutrition, and pnmary education are more hlely to benefit the poor 191 than the nonpoor, who in most instances already have access to these services. Adding a geographic or etnic dimension, or both, to the project design, can better direct project benefits toward the poor. Additional demographic characteristics such as age, gender, or vulnerability to specific health risks can also be used to target activities. Access of the poor to these services can be further improved through differential pricing-subsidies for services consumed mainly by the poor. Setting income-ievel criteria can target services even more narrowly, as in the case of educational loans or food distribution, although finer distinctions inevitably raise costs of administration. 31. Despite these opportunities, however, the underbudgedng of recurrent costs-for personnel and supplies-particularly bedevils investmnents in human resource development, where the ratio of such costs to physical caFital costs is high. Thus, there should be a clear consensus-backed by firm commitments-about the importance of recurrent finding. Bank staff should carefully appraise existing and proposed financing mechanisms-budgetary allocations, donor fancing, cost recovery, and local contributions-to sustain operations after project compledon. Indeed, the full financing plan for an operation-and possible follow-up operations-should be carefully worked out and discussed with the government and other donors. (See Chapter 6, paragraphs 25-27 and OD 4.15, paragraph 34.) A. Population, Health, and Nutrition 32. Investment Operations. The Bank finances freestanding investment projects in fimily planning, health, and nutriton, and integrated projects covering all three activities. Integrated projects attempt to take advantage of economies in the shared use of staff, facilities, and community organizations, and synergies among them-such as linking nutrition to health programs, and maternal and child health care to family planning. PHN projects aim beyond an immediate increase in availability and quality of services-to develop the institutional and financial resources needed for sustinable social sector development. The projects support policies and spending to improve the capacity of the central government to coordinate, plan, budget, and monitor sectoal developments; improve community acceptance and participation; decentralize service delivery; increase resource mobilization; and improve staff skills. Whether designed mainly to support population, health, or nutrition progrms-or some combination of these-Bank operations finance similar packages of service delivery, human resource development, and institional development Individual items financed include construction, rehabilitation, and equipping of centers; essential drugs; and training, technical assistance, and management information systems (Box 7.11). 33. Adjustment Operations. PHN issues may be included in SALs, free-standing SECALs, or hybrid operations. Including PFN issues in SALs offers an opportunity to expand the PUN dialogue and protect PHN programs-including nutrition or food security programs, surveys, and sbudies; food expenditure, consumption, and anthropometric surveys; nutrition strategy development; targeted food subsidies; for e-for- work programs; and targeted feeding and school feeding. PHN SECALs support comprehensive p.ukages of policy reforms, for example, to upgrade insfitutional capacities of key ministries for planning, programming, and management of human and financial resources; improve sector financial resource mobilization; improve quality through plans to rehabilitate infrastructure; and improve staff and buman resource development. They would generally finance imports and be quick disbursing. Hybrid operations combine quick disbursing, policy-based components with investment components designed to improve efficiency of PHN activities. 34. Population and Family Planing Operatons. These increase the availability and encourage the use of safe, effective contraception-often combined with maternal and child health activities and preventive health care. The projects support expansion of physical facilities, provision of equipment and supplies, taining of staff, and technical assistance and development of outreach programs to increase demand for family planning semces. These projects often work to strengthen institutional capacity through upgraded 192 BOX 7.11: Reacing Poor People in Population, Heath, and Nutritn Projects iftudy. . PHN-oetions. no6ted tha t.he needs ...nd-.preferences of thepoor in family . ..wSelfare,jhealth, and Dnut"ii6 widely .&pendingo m i stritui, relision, dh .jop,dlo c d l' ical e th poor ot ysily and so inily distant from. : .opublc secIoriservzw pr vzde9si thalit service jirovidet; do'bt kijow enough about their aebuth For- ,tksetwas6.ons,flTNpwgramksare likely to be6morm successful when the institutions running CAI hive a; wayAto ah 'out tthe poor, leari'about qualitativey, i usehat islearndto age i6t.: *- c * * - l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~el ~ let-a '>::The study' concluded at l3Bank-assisted programs arc -more.likely to reach cliats i the per iphery if the.y9: ;.. , ..... ,::,... .....::. .. ... .... .I 2 /`Emphasizedoutrea ..:ch >~ v ... d Segment,diclient populationd targ at nk clientg Aquir. it iti ci oomation aoutpclinagram '', ..f. '-.'-- .ua.Obtain tauveand quiitative f6edback aout performanic..:e : . 1k-Hve -thcapbxty to vary their delivery strategies,:iiterventions, and inforiatio-euction-on *.,mmu ;.-- :.-..: E<) cstrate gies to 6fit-client-ujipee . .. ' . ~ ~ ~ ~ o m u 6 tb l s . .. . . . . . , ...............eds.................................. . .... .. .^. *-'.:.*' / Develop fincial and/or nin1al pform e incenivesforfield-sff f.* .*: -: *'/.Use NG.O, pnivate sector, and community based service delivery as complemeents or atnivs to he .pubic -sector.-; *--'.-f Richard Heaver. . >K.:. RIng cuple at o gcriperl Cm ahiPWorlo.Ba hpusio,nllcah, ad NhtioaOpcrmaionsDo Bicr?" World |-.::; k PPX- Working 91 8Bw.:: f ..*** --' -* - data collection and access systems; strengiened sector financing mechanisms; operational research and policy studies and improved taining, financial management, budgetary control, and planning systems and processes. Outreach and training earn community acceptance. NGOs and community organizations can be encouraged to help with outreach (Box 7.12). But caution is needed in designing family planning programs.5 Large projects with substantial funding of recurrent costs may strain county absorptive capacity and not be sustinable. Attention tO cost containment and internal efficiency is needed, as well as project monitoring components and evaluation components. 35. Healkh Projects. These projects focus on upgrading and construction of facilities, in-service and preservice training, endemic disease control, disease surveillance, health education, community involvement, and general health services that will improve efficiency, coverage, and service delivery to the poor. The emphasis is on improving the quality and efficiency of the services-especially preventive care-and improving local access. Projects often are designed for the rural poor in areas lacldng infrastructure or the urban poor who have little access to health and family, vnning services. Major project objecdves S. Soc World Bank, 'Populaion and the World Bak A Review of Activies and Inputs from Eight Case Studies," OED, 1992. 193 BOX 7.12: Nigeria-Population Project Suppori Policy ad lntutiond Dcvdelopment ..AnIDi population operutiod builds on several ytars of dialoguc and uttor wo . Nigeia| ..was target for special ak effdrt because uf its siz aund'is very vnpidpopuiaidln groha* and hIgah sand feriihy raz. Pioject preparation took plice ginst a:cbadcgmund otnationel uublic debate..:. .about religious: issues; regional balance;.und women's righis. ...ey lc ey: toy oheraioe n W :te e. adoption dt a. nationa policy. on population. :Iheb cr5dit :mppots i id lo fimnnce subprojecls. to-.'. implement the policy. Thrre will b&dd6igneld and iniplemented by ibderal, state, and kma] gversunent agencies, as well as.NOs :and univeruitibs. Te credit.ilso establishes a research'funid oni the . ..: letnninants of fertility, idmed al developinuactionabie prgtms to roduce family sCit4. Hazel Dentou. a. Nigjria: NIslonal'opuladionlProjcct. SAR 8527-UNI.Apru 1991.: (Thabio htlierau1docu"inciaLidih4idialrucldfulron.) (Box 7.13) typically include decentalization of planning, delvery, and supervision of basic health care services; strengthening regional and distict health systems; improved regional logistical support systems; decentalization of program and supervisory fucions; and training to increase local capacity to operate community health projects. Sustained availability of resources is an importa project concern. Some projects have supported the introduction of cost-recovery components. But several of these efforts have had problems with target setting, enforcement, and pricing (affordability and effect on use of services). BOX 7.13: Mexi co-Suppodfor Primary Heatdh Care in *1w Four Poorest Saes A rcentn healtiai:pwrjectrn supports expnssidn tid iprovement of basi helith carm and.. tinti ition assis¶ance for 13 million uniured poor people in:Mexico's four wt sutes' . .Th focus I is on women and children. The operatioh also supports the Governments.decentralization program by strengthening SltL aind local instiiutions thmugh tnininjejihformation systems, andimeclaanisms to link reseorch with iolic.. and i eVtiluato servicc delivery.: Bcneficiaiy ciamnmnnities ae heliping to construct and rehabilitate the health centers supported by the project. As a result construction costs are being held down, : '1ht communities: become rull partdqrs in :lic project. Thu most suOccssful> .pwuicipatiun s50 fur is in Oamu,: poth ost state. . : Carmen Hlamnann iL Mexico: Basic Health Care Prnjact, SAR 8927 ML Novcmber 1990. (T'hi -is an inlernii ducufnlc wii rcstrikde circuiliion.) : ~ ~ ~ ~ . .....:... . . ..... . * .:,,''::: : ' : ' ......................... ......:..... 36. Nutnion Projects. These project-or componem-inrease the range, coverage, and quality of nutition services to target groups through improved food distribution systems, including pilot interventions; strengthened school and preschool feeding programs; behavioral change irough nutrition education; nutrition surveillance; oral rehydration therapy; deworning; growth monitoring; and die supply of therapeutic foods to the malnuished. The projects may also involve dhe development or epanded production and distribution of fortified foods and low-cost nutntonal supplements, training, research, and other forms of institutional stengthening (Box 7.14). 194 BOX 7.14: Indonei-Nutfion Education Changes Behavior 1: . ' : ; e ^:~~~~~~IF z:g : . s...s. . ' --' .;.. A project completion:.t. for a projectinm onesia conclude-thate nution Fcwtion componet dermonstrmbly im pmte4.;he. uttition status of`atrget faHmilies. ,Wocriug witli intended audiences, and allo!wini thom tory euyteroadiiv and 1nrmulatehew, ones,6i-i, iad&e prject rdckvzwt. As a resultteproje suce vioiing speific ar. One key tomuccesevias th:woik : of a nutrition anthmpologist who lived .in Javanese Ivillges for most ofrhe6fourtcen-month plannng : perio The nutrtn eucationcom n ent objectivs addriesd a few priorities, wer si on wht peopei could and would do,and wervetrnmitd easilyand eff.eively by village workr in home visits and growth monitonng,iessions-c otinfrced by o.z.E T;he nutrtion education oomponent .succeeded beicause:..it trie to undtd peoplei :perceptions and respond to the-by buildiig on:resources alieady:in the community Tbe project .demonstrated for the first time in a large operational iseling that nut2ition education alone can do much .. to .improve nutrition status. It is6 show&d that womens lack. of schooling neeid not pose an insurmountable constraint to improved nutrition. Alan Br a. Indanecin: Nutrition DcvPopmntProjecc. PCi757,Inc 1985. 'si ina.lldocu,nntw.th iricsrcwcrcuuimon.. b. Indoncii: -mi: a of a Nutrition Dcvcdopmend[Projcct, SAR 131iSND, Pcbnly 19f7. (.i'(Ws mainterdocnaume:. ..with p ictd circuftijon.) : :~ ::.... .:: . ... ~.. .. i.. ...... ;. with :=ari . ...,.. . . . .. B. Education 37. The goals of Bank operations in the education sector are to enhance quality, equity, efficiency, and institutional capacity. Within this framework, special attention is paid to education for girls and women, because their enrollment rates tend to lag behind males' and because there are substantial externalities to female education. Complementarinies may be realized tirough education investnents as part of macroeconomic and labor market reform and with health and nutrition programs. All the main lending instments-including hybrids-are used in the education sector (Box 7.15). Although specific investment loans remain the dominant lending instument in the sector-even for promotion of major policy reforms-there is a trend toward increased use of sector investment loans in countries with comparatively strong institutional capacities. 38. Primary Educadon. The broad objective is to provide universal basic education in reading, writing, and arithmetic as a cornerstone for future learning. Bank policies' to improve primary education center on three themes: (a) enbancing the learning environment, improving teacher preparation and motivation, and strengthening educafional management; (b) assuring equitable access; and (c) stengtiening the resource base for primary education. In many countries, additional investments in primary education are of the highest priority to address the shortfalls in access and quality that jeopardize productivity and income-earning opportuimties, especially for the poor. 39. Secondary Educadom In modern sector m ctuing and services, in which the conceptual content of jobs is increasingly high, the broad competencies gained tiough good qwlity academic secondary education contribute not only to immediate productivity, but also to the ability of workers to learn new skills throughout their careers. In general, the importance of secondary education for the poverty reduction strategy increases with quality improvement and progress toward universal coverage at the primary level. 6. Sec Primary Edmauion. A World Bsnk Policy Par, 1990. 195 BOX 7.15: Mali-Hybrid Tlis Public Spending Toward Primay Educion R~~~~~~~~~~~~~~~ A Aeducatio n policy r hrmsand -invlt ez -ab s prjec inba?cobnssctrcn. reform aim- increase spendnxtg d rird, ad Iu e t s anS rri Te-- inVesitment comonent -suprts p aschool:eonstmuctioxa and f tab o. The emp iU on increasn enolet f rural- childz_:andrl.hpojc ihcrportsth mni fi beneficiary assm en.Nv,Rhich'-renedlow schdoo enrollmfients ton Ktii d education,t PZIII1ISrIYIW13 A - .ara¶toIerJs 4)u # Val o4U One pojec innvatin usth itrouction ,df *Biusii-Educsion--_i -4ort FuucQ heBaic - ~~~n Ovst lts- MM - -Eui .on. Sup portFd i funde-- d byd s-iitilly AI atc contribuios ho :p ~ ~ ~ ~ ~ ~~~eaedb eoresfo dgvemment raniztins parent -ociatio, wch al,in turn, ne n go an _.regio development commie. doures:imroye :tn ii iio e f . nstructimon,.eh ilitation iiiformation tss utm :ation& equipmenQt a d aitil T lematcingmitio iy 0 ffmo paentassociatbus,: MGO n, and6dvelopmetwnite avr eedno h at~jy di-pantt Puvat CholiandMol hoos r laefo nd - a if V ifienUm . ....~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2 -MiuiistAjof Edueaion's- pmgoms- and -eguli-ions. - tMali:: EducationiSetor-ConsolidationProject, Rcoz.OOfI Vy189(ussa zcndcumnr-tzs i la . - - _ : - ;--. B fin , R-- _MA - - _x _.- - x --- However, even before universal primary education is attained, students from some poor fiunilies may be enrolled in secondary schools. Famiilies often make considerable sacrifices to educate one or two of their children in the hope that the entire family will benefit later on. These families should be protwted when cost recovery policies for secondary education are introduced. 40. Vocationl Educion and Tawinig. Public vocational education has not been an effcdve measure to reach the poor, who can rn-afford to be out of employment for several years. Moreover, in most developing countries secondary schools enroll a small proportion of the age group. In such circumstances, vocational schools become second-best options for academicaLly well-qualified students who are not necessarily poor. Moreover, vocational education tends to have very high unit costs, which are seldom matched by the associated increases in productivity.7 Refleecing this, the Bank's approach to support for skills training aims at (a) encouraging private sector training by creating a favorable policy environment and by reducing the regulation of privatt taining; and (b) improving the effectivenes and efficiency of public training by setting appropriate objectives, improving institutional responsiveness to market forces in using training resources efficiently, building capacity for policy implementation, and diversifying sources of finance to employers-and taminees, where fees are also charged to academic secondary or poseondary education.3 41. Higher Educaion. The impact on the poor of higher education projects tends to be less direct and immediate than for primary and secondary education projects. Nevertheless, higher education projects can have a positive impact on the poor to the extent that they: (a) train teachers to staff schools that serve the 7. See, for cxample, Geore Pnclmropoulos and William LoAly, Diversied Seconday Edcwation and Devlopment Evidence from Colombia and Tanza=. Johns Hopkins Univarsity Press, 1985. S. See Vocatioa Education zd Tranng. A World Bank Poliq Pap, 1991. 196 poor; (b) establish equtable finanig mechanisms (for example, through cost recovery) and increase access for disadvantaged groups, (for example, through student loan programs); and (c) free up resources for basic education for disadvantaged groups (Box 7.16). BOX 7.16: Ghan-Educaon Setor Adujwment Promotes Equiy | A; magma o0f recast OPCNI±iODt.I1IWO Suow h.a Aw lI alOlEl .aP wIin . Adjus:un ciMres have tees applieduuide pignma icludirg 1* ibclion ist the p r opurl fiR pf secqndr int fjrjt1i oajizuJentr ie n ofu bulk bising sysim ,:kwer ntu.sr,nu c6st.; *edudtions in nonteachinifsftaa; a in the numlxrt of iwciing.ppsts; fein cover thJ:iosts of fbod, exxqrcise hooks,:and texts; and.hititduntion df a 16ani cieine ia; te: 6imiheruity! .lovel.. The gove entalso is attempting 't ion iie:1aIe u'niv'ity sylitean by estabfisfig't iu.i..... norms,. increasig student-teacher ratios, anal cwoibodaitin nugviivable ikbe p~ r td d eml eienu4 're saving :realized thrnugh'the adjusia program Bvs uwiuntrbutedi:' ausubmmibd ancmue in 'bisid, #d¶#"'io cu rlments, improvedallckidondof fiiianciiki reaouracums ulreuhmi dcv*elopwet,bro-based 'at'niimi of Ted ' ,sti ffpmnt hdaupjo: df instructionhal uaaennls awlstreakcned' , .. ral of, te diree. cdits j9 ,a wo;rn:cst-ffbcdire an eitabl ducin .:IPt; uu Ed: -. . .. . Nwh . . :.- .. ,.n af"e&r M,ct*k: n; Ghnu: E8ducatn SeCr tAdj_usirbt Credit,.Report P43411-GI[,.Nmerher 1986; .CUuna: Scond Educeiion Scetor Ad ustmar Credir, rTed P-5244-01,; April 1i5;. 'md .Ghwl Cosrnmunity Scoadary Schools Conwucdion PRject. 1A s6a, May I 1.. ((n Itam insituald docuiie,lauu wil restricled circuleiuE. K 197 Annotated Bibliogaphy Ceua, Michael (ed.). Puwng People First: Sodological Variables in Rural Development. World Dank, 1991. Explores die concept of social organization to identify ways to enhance sustainability of invesunents. Highlights sociological issues relating to natural resource managemen; deelopment of human capiul drough invest in estblishing gass-roots organizations and promoting parwicipatn and adverse consequences of development, such as a risk of ipoverishment for some grous, forced displacement, and involuntary resettement. Takes a firn stand against the heavily technical and economic biases in development work, criticizes the neglect of social and cultua dimensions, the rigidity of blueprint approaches, a focus on commodities instead of on social actos, and an indifference toward grass-roots institutions and orgamizations. Concludes that puttig people first in development programs is needed to accelerate development. Contains project case shtudes. Molnar, Augusta and GOts Scbreiber. "Women and Forestry: Opeational Issues." World Bank PRE Working Paper 184, 1989. Provides guiance on issues to address in each stage of the project cycle, on keeping women's issues in mind when analyzing project costs and benefits, and on how to design forestry interentions. Concludes that involving women in forestry often makes the diffrence between achieving and not achieving objectives, need not be cosdy, and usually produces a higher return on project investment. World Banko The Forest Scnor. A Wod Bank Policy Paper, 1991. Reviews Bank forestay policy, with a specal focus on ways to prevent excessive deforestion and ensure an adequate supply of forcst products and services for te rural poor. Concludes that deforestation can be checked by appropriate population and poverty eduction policies, forest zoning and regulao, he acorring of private in ives through approprate pricing and fiscal poicies, and support for public inestments based on sound e assessments. Argues that ensuing an adequate supply of forest products requie demand-reducing measures-such as encouaging energy conservation and the use of more efficient technologies-and supply-enhaning measares such as mobilizing users' resources for tree plantng and management through extension, taning, improved land and ee rights, and the provision of inputs. Annex 7 Poverty-Focused Project Summares This anwn contains emples of projects-from oll Regions-that emphasize poverty reduction in te Pdvate sector (agriculte, forestry, and indusny); Ifraructure (rural and urban) ; and Hwman Resource Sedors (populaon heakh, nutrition, and educaion). Although many of the projects involve more than one sector, each project is classified according to its predominant component. Most of these projects are recent. However, afew exanples with longer track records are incuded. The project summaries contain the following subheadings: - Objectve * Lessons Lraed * Project Features * Concewns P Poverty Impact * Sustainabikiy Cofinancing/Cooperation 201 Cmss-cuttig Issues Matdx of Chapter 7 Annex Boxes RIUVATE SECTOR COP ENW M/E| NGO P| sco TA UN WID Agricultur A7.1: Chinm le. _ A7.2: China - . A73: hno ambia 1 / of . .s A7.4: ndia 4 A75: Mail = If A7.6: [luippinu se . . A7.7: Thailand of if A7.8: Indanemd o = =_ A7.9: SiLmn h / . . INFRASTRUCTURE COP ENV MIE NGO PP |SO TA UN WID A7.10: Bangladub A7.11: Cloabia Of o I/ o . A7.12: Ghana 5 l . _ A7.13: India r of o o f A7.14: Mexico If Urban A7.1S: Indonelia .9 ._ i t9 A7.16: Maxico . / HUMAN RESOURCES CO. ENV MIE NGO IP |SO TA UN WID PopuladoIn A7.17: Nigeria . ' . ./ A7.18: Guinea . 9 J =' A7.19: Mueico A7.20:PDaa . 5 7 _ .9 Nuritbon A7.21: Cohomdia . A7.22: India . 9 . 5 . PHN A7.23: Bangladesh _ _ _ _- A7.24: Malawi f _ _ 5 A7.25: Zimbabwe . A7.26: Bangladeb f _ f ' Educroon A7.27: Jamnica ' A7.28: Pakdbmn _ A7.29: Yemen J- J PHN & Education A7.30: Jamaica f . ' J COF: Cofimwin NGO: NGO nwolvcm TA- Tednial Awutane ENV: Effvironment - Popur fParlication UN: UN Agny InvoWvm MW- MonitotEvulon SCO: Sml Cred Opesafios W'WID: Women in Deveopmen 202 BOX A7.: Chna-Health Benefits and Irrigaton in Shaanri Obj.cuive. Shai is one oftt pqorest:prOvincei ofixin miaia e by .l6w minfall a.d pe: ..capita incmes 40opcrcentor. mo iorelow Teene. S-aanxi Agriciltural Developme .>Projcct's objictivelis to b6bst rural incomes throug ivs ts thfa xd irrigated areas, aise cropl yields, enable diversdicadon into aquacultu.re and livestock prduction, and introduce new tecnl-o iiifann ing-system and arprocessing. E--'' '-----;-' .-- -'---- ,Tr.ect Feamue One notable feature is die poision of new wer spply ts tr ewhre inadequatea qiitities and contaminated water have caused severe probls in animal and I health Somenie124,000people in one of the poorest areas of die province suffer frim fioridei poisonig-which leads ito crippling skeleial fluorousa. Proision of saf waler by the project could.l-d to significant recovery for about 75,000 peopie and free about.10,000 person-years annually in . preously used tot water collecio .. .L::over Impact. Th project should cspecialy enefiit women,.who suffer from fluo R -acutely; ndwho arc largely rcsponsible for collting waler. Tle. projoct should Jimproveliv .standads and re .the income levels of some 130, 000 mili above curriietaverae incoe r China. The reducedincidence of skicical ffluororns wilt result in an annual garof 24,000 p y . :(vilued :i US$3 milion), atan annual sian hlth c spnng of out US2mil Addationnfly,about 50,000 anamaIs wall beqaved . annually fmm te c ippling etlccts o sta .t.. :fluorosis. The. project. also fmay. generate Fycarrnd. employIment opportunities thrugh double- . .criopping, introduction of fit and livestock fairMi'g, anCd agroprocessing-and ireuce rural seasoa -unemploymn ...L:. .oa Learnied-. The 'Banksexp e m agritur lingin Chi hs bn: poi Existing projects generaly. ar on shedule Management at me central provincil and coun e has been of a higi tsiandrd. Farm households have participat6d in theP pr6jcts enthuis y Agencies i nvolved a.ns projecthave had considerablei..pleme nidon...xerienc.and pic aimd well- durng .prerion. Local fanmis hive considerble exper.ience with the5crops to be growii aid^ liveStock tobe raised. J] OM ;*Concerns J -view'of the positiveo pt experience, thee r o significant eim . -organiztional,finuciai:.or environmentalcncerns... -. .. .r.*. ~~~~***-***..----. . f . .--. Y f..* -Z-.%*f*S 9' ' ' ' .ut ainab jity an' 4ost:and. rent very wouldcome from ter:cag ..:.ares.,, AnnuaoperAsf.and waemaintenu ccosts wonid:ib fiully-recov bgining tw ye ae completion, and a.signhifcat:pft.ofmhe investmv ntn cstshous d iebe' nuy"er during tihe proj e : ~~~~~~~~~~~~~~~~~.' .,.... ., . :;,.....'.':..':.:':.':.;. .......:;:::..1 ;- - o 2 . .......................................... . .... .,* . - o-f...... .............Y> w@>slX .:' Ch'n :han: gnuldra Dedpncirjc, BAR 7475S- ac 99(b: nmAm ouetwt aice 203 BOX A7.2: China- Wwt Wos in Irigation Ojcivceh: The China Gansn Provincial Development Project, Agdcn'itural Component, aims to increase agnricultural producivity and incomes i ono nof China's poorer regions. : ?rojecr Feature: The project supnps complction cf a 57,000 hectmr Irrigation sheme an adoption of an integratod package of soil conserivation nnd iiproved croppiug practices on an additional 76,0DO hectLres of rainfieduplindi. The prmject will benefit 96,000farm households Incdindiig I5,000 farm families to he resettled to the. newly irrigated ires. :..: : Poerty),mpac:: :Averuge iuru incomei in Ganqsu ar, only 60 percent of the national nvcrage; , tvwruplmndreuaFs where&agricultural output isconstrained by low and Intic ainihl. and off-fakrm employment is extremely limited, annual rurna incomes are less than US$80 mnd range betwecn 35 and 50 percent of the national average. At full development, real per capita income in die project's irrigated area shiould be tlinre tines greater than cur-nat levels in the wunt affectki ares. Real income LYs n ie ric'plad ri ilitaion a are projected to at least 4louble. levels ip Ike projaiect'ss ae poUqted Li'ssons. Leairnt:: Suils i GJaasu are highEly suscepi -b ;tu erosion MOd, with iicreased . pxopulation plsJrre, anuch of the land has.beei stripped of its vegetative eover aLnd itisa su&iircul severe. erousion... Past aLtLmpts .io cu-rtct Iheproblem lbave steminimed-soi erusion over limited urAs, hul were unble Lu reverse Ihe uverMll trends of incnrsing poverty:?and envnronmeintl deg radation. Te Bunk-.. suppxorted: pioject uims. to reduce poverly and stem soil erosion by com.bining plhysical acrwns-constructing terraces for crop cultivation, planting of improved pistuit specie-, shrubs, 'an tres"on dseeplyslopd lands, and building soil dami to create cultivable flatlandswith icy :forlws to improve thm c6urity of land.tenure and eliiirnte.uncontrollcd grazing on hillsides. [h additiou,.t1jc. jirnjeci will:fiwilitate.viilintnry rcsettlemcnt of somc farml fizlilics from the worst-alecftWupland areaty:. :where th,c cairying capacity of tllie lanld has bnei nce edd,toishe newly irri,atedl aud Io; be develurup. under tliec Iirnject. Concernv: 'With substanfialugovernment and tankl: .suj:port;,thc project has been highly successful in rehabilitating: upland agriculturl produdion, stemming soil erosion, and incrasing fann inmomes. But popularization of Ihe project's integrated package of sioil conservation tcchniques and improved cmpping pnractics throughout, wider dtretches of the pxor upland areas of northwest C;;IJI, dejiends. iupon expinded' national nimd provincial znvenrninnt nassistl&mannd fiirther proj f.t itieincnt to reduce per unit area iiivc.4incnt costs ind augmient. lIcal.goverumxenf and farziotfiiilir .receptiviiy. SzRusrainabilir At compiction,: per cipita farinm icnom in thor irea will mostlikcJystill ho helow-the critical consumption lcver-c-e-fourth of per 4ita (;NP-thus liuiting thi!cv o.f cashl chaugcs:.dhat can bx. inip6sed on farms.> Some savingD of pliblic fuids i4ill be riualizc however, a project bcneficiaties no longer will iideesi,bsidics for food,tzuel; and watr. .. Alan'Piamza Chi=: amm liovincial Dcvclopmcut Project, Agriculture Component. SARt 6443 -C *A, Apri 1197. (him inm siotimalt: dtocuzmie with rcshricrld cirulain.. .).:. ... . ., , , .,, *,, - ,, -., * ., ...................,. .... . .... .. . ,- -.. . 204 BOX A 7.3: Th GamMa-Improving Women's Status Ob es0. in DTe.qmpment project aim.s to1 hdlpincreaso women's agriculturl -pi-oiuclivity dispusablefinconioa; and. inddme-Seainlng poteitial; lto iprove itil nutriional level of women and children; anduto stringtbrn 'yerninent institutoins!lo enble deni. to'beaer deal witi women's issucs. "lhe project is *x d td : change bociey'u pe ep4qnsofwa.n.aMa.e. Project Features: This- mutidseto:lo prject strategy is to: strenglien aigiculturna.extension services and rhedclistributinn of private sector input; suppwwtowwnen's i ooj e radygrpups; strengthen food storage, preservation, and nutrition exteiisioza;improve die rae o i6slhrviest equipmenl; and begin saving mobiizaton .. geenop tames.qupen; amobegin a savings mobiLization campail directed at women'.. .ThddI6. of riial women:will he made :J,morc mari6la66 by pronti*gbasiqc literacy and iraining activities,. and thc.stagtheiing of women's" groups. .Otberproject components ae promoiion ofsf motplbnning; devloping an.information, cducatiaon, and commij ation stratgy addressing women'.: concecrs; streigthening the Women'i Buiea; ind establisbiiigitiund to be used by NOO for small :!wJetu and.programs to hIolp..wmcan adild:.-| . . will bectcd to womn in . villages selected.. using criterna based on women's n`e&s;':CMimr the long term, wom..ens eiahan lcre. in the country'. devlopmiect efforts o&uld contribute to better o'verail cc perfo manco.u%dd poverty reduction. : rssonsLearned: :The project bau bten designed.to help remodj thy cdistaiits thalimit thdi .efficiency. and productivity ofAhe wurk .of women.: .'lhese includ& limited :asas. to . oduclive resources, li''Miti::traning "ppprtunit"-tho burdlen ofa hi . fiityrte, prevailing attitudes about women's abiliiiesamlndsociocconomic. rpo, and women's lacklcof knowledge=about their righis andthe. resources potentially iavailable to themi. vi .Concerns:T here:ae difliculties n chatging society's: upeuwily ii: servants' pr-epton ;of thc: f e.of wo Md..en[t X:kk:or cx with,projocts of this anture is another conceru. i. SuainabiIit By :- -ihq:`a A. . .- - 1-..- - :i':a* 6- gs < rb°liStmvi: it~~~on ;-A om-eii ib continuig commuthtationdevelop entefrt. Itw dlr niiate existiang sytms oetn 90d perent of farerslivebelowthe ovythrhold.- epre aso ne .toten t -i.mage;nen=t caaities o? de Natioa] Irigaion:Administaio i NIA)i anirgao assoiatins t sustain the irr igatin se-m ..ProjetFeaue: heprpsedfiveyear prJojc would b ainieadw. d (a osn andl rehabilitate about 25,00 hece .of communal in.igaion yses; (b) develop. coimnunl irrigators * associations and train-stat ganiers, and irrgator assoiation me inm em ent, finance, andsy.stems operations and maintenance;-(c) strengthen A i capabilities-fir .: example, upgrade their ability to assess microcatchmcnt hydrology train irgation ticians ad designers, improve lIlA's communaliaccounting system and collection efficiencyi Improve moitorng and eavaluationac of thae Communal IrrigationDepartment,Dand upgrade physical'. facities and equipment of:the. provMcial and regional iigatio offices; and (d) prepare and implement agriculta . - * o:':'.:>. ::;-'A:::::'.5': :..:':.:'t e' ::: ::::.-. :::' ..ed\ . .developmentplans for eac.h ommunalscheme;Fiance. PowertyImpac. Thronugh.its supportorthe government's progran,h pject would direct.l :enhance and stabilizethe incomesof about:.20,000low-incomee fam families, incasing cropping *~~~~~~~~~~~~~~~~~~~- s. *.- * :. -ult:ii su; .. .-:. . ' inteiisitics and output through rel able irgaton and improved agrcultural support services. Indirecly,.I -the project also would i mprove the incomes of small-irrigator families in the nearly 000 NIA-assisted ommunal schemes throughout the county. . Lerssons Learnid and Sua iabilky:: This project benefits frm lessosleadi implementig d te first CommunLualInigation Development Project.b That projec atitibud s a prtieiptry. approach deveiopdi and initiated by MNIA. Preliminary evalukion-of.24 completed:systems'in 1989 : : indlicatedl Ja satisfactory economic rate of return of 25.5 perceat at import parity, in .spit of the drastic . decline in prjected long-term rice prices. Farner beneficiaries of the systems:generally display i. much greater sense of responsibility for their systems than in the case of governent-oiimed National Irig Sstms.- '`The ost of incorporating dhe participatory approac was only.about 3 prent:of the i totalr const on cost. *- Concer:: -The investments tobe made uiderthis prject do not face any ajor skh, a hou .. implementation culd sh- short of expectios in some 'a.reas.'b. b use of sporadic problemsi w .ith.pe ..and:order': ...... 'i ' ' -'. :' - * . ' * *. ; . ' Charles Gunasecara a.. Phiipjii Second Communal Iation Dcvdop'mentProjet. SAR 724-Pf,Aupst 1990.'(Tiis an.ina do ;:.with-rnActcdcirculaion.)- : ... s b. Philipjihies&-CouuakngatrrioR DcvclopniearProject, SAt 3850-PH. May 1982. .(l1i ii an intemal docuncnt.wizh raeotrxc& circWl:tion.) 7 . . 208 BOX A7.7: T7hiland-Benefts of Secuwe Lend Tenure Objeciwv: Thie Second T'hailanid lnid 'itling Prwielt supports a second four-yoar phase of the government's Accderated NaIioziid Cnadastui Mapping anid Land Titling B lrogram. 'Ilie princilial otjective is to pnovide secure, documurented tenmire to runil landholders, tlieeby fiacilitmatimmg their access kh institulional crdilit, rnising agriculmiunl investment, juil ilclCuilmisig oulpfm Iiiad fiimiily ilicnaeas. Cuomplltifin i*f tin improved mudimuil clmdastzc alsia will facilitate Ilind use plianiniig aindl enivimomiuimeniaili proteclmm.: Moncacuna.te iprionalinmiOu latid ¶wnership,vildues, in'! assessmentN will stlrzmgtdlel Ibe fiscakl Systeim. Pndjea Freauras: lThe land Icnure progrimni suppolis the usc of new tomhnologier and . apprnaches to iniprove dlic qiuality ainl slpee of titlinig. Piority hi;is len Livtin to nmral AlML.% wIlaeml Ahsnlute p1 vemly is re.lliVVtivy hil',li, and illSecure lonuie is cmnsidclCred a silnpificant ilcKUlilimehiit to p loululivity litimm. , Poverty InapNc': Approximately 700,000 rural landholdinmg families w6ould be.nefit from the project. Altiough comprehenu.ive dazta on time icumincis of families with undocuineimted land m not uvailablep it is thoiught thnt .0 percent uI those in the historically poor nnrtheast provinces are below the povcrly line. In tIe more urbanized east:ran seaboard awcas, imprnved secumity oh teIuir would suippoil growinig hiadustrial and service industries thiat employ juigrimits fruni lioveaty mlucs. | ' Lcwons Jeained: I)itleiences in lInld vamluie anrd producLivity between dooumented and undocumentel lmnd proviule :e pnny lfar lw b.nefits oJ'die piu,jet. Alihoul!h not amll differenceis in lauld Value cal h aLtributed lU titling, tie dilfbermeccs iam :XI Irrge diat the lbiefits *uxr jualped to be signilicanut. .Socioeconomic studio.; undertaken largely in die rxior iawrIieLat amld odmer lnortenm provinces reveal that Ig;al: title is thc 1m1ost sia¶miiiicimlt lifdtur explIaining dilferences in land values. T'ilked land Was /5 to] 192 prcent mare valuable thnw undocunIe.ted land nnd 1 13 to i 95 percent IllOl'Ce Viluablc tIIanii sIale hind occupmied by squalers. nBorrowCrs aIlblte to ofrer- landI JR eAlalluIeiJl i rccived monic iinisliluutiwil ciedlit (42 tAu 177 peicinl), iiive%tihd umiom- (56 to (IlS crccimu), :aud had large licimnamenalt imdluoulivily gainis (12 to 77 lx'rux'hlt). YWi liar alimrc:t xms,t of punvidimg full title nuiged f(xciii 0.6 leicnitf in 5.6 1rii-nrtnail of the mrketl valiue ja'le. .f ad. Concerns: 'Ithe risks ar miinimul. All lula1iciputing agnencis are committed to diic project. T'ecihinical. innovations in timI prnject have all bocn tested ancl do not present significant training pnhileins. Sustarnability: 'llme pirject is linUiinidlly s;elf' sutilaining. lni tillinal hams emerged as one oif [lie most cost-effictive aneans: of increasing povcrnmcnt revenues without naisinmu will nmtlh of land taxualion amd transfer fites. Oaflrnnanring/Ciop'rr7iaa: A gowmit wuns I'nnivledi lay tIme Aim,atli:nm lileuilopliiimcil Dtvelcapnment Assislane 'llinau (AI DAB). Yw's Wanig lijilinudid ScAudid Land Iu'illimigl Ptjrl,SAR 8533-'1'11, August 1990. (Tls ii. tam inicLudualdxumeitwiih auehJrickxlCilcailiui'u.) 209 BOX A7.& Indor euia-A Successful Approach to Smatl-Enteprise Credit Objectie: 1TheTndonesia. Second lRi/KUPED Es SmnallC0idiiCProject is designed to support and strengthen the Bank Rikyat Indoacia's.iUnit DLea system that mobilizes resources nod provides . nonsubsidizod redii (KUPEDES lo.ms) nutlonwide to'creditworthy small borrowers. i . .: sPvojetv_ Feafurel Tho BRT Unit sasystem is oranized as un autonomous financial entit;y : In iwsl, onle:of IadOeuitS;a l;ie sMaowned.comineclsel banks;..:Today it is$ de single most inporta. : natioiwide 6blnking: netwua lin loduLnesia, comw,rising .2,850 subdsict or vil1agie-bus braches and:: 835 pOidL. st of these have 4 in 10 staffmemrb6s who know tieir borrowers and arc abie to .superise projecw6losely. Staff receive bonuses based on the profit.ibility of their.unit; lhe minimum loan is equivalent to. US$14 and .dh averag is US$400.: Rpayments are generally in: monihly insballmenis Aiver:ajyear, and interestratesalze mar ke! as&d .lLoan repaymen .is encouraged through.. are n:tme House plot 'are: ofte md' .s:4-s lat up- L-oat penalty. 16n1 s' :elurnw if luia aiv ruPa na .collatem Undingdccisions arm us lymadea in two weeks. ::. P.rVy Yrp A USAID study Las shown thit KUPEDES Ibana' havc. ignifican. . l.d.. uc.d povery and have Jlucillitated.acccss of women to credit. KUPTDISES loans ienY&nmainly ndn;iriculturai setors of the rural economy. .Most beneficiaries come from landless or near-landless families. Loans to si all' traders, cottage industrics, and. serVices account for nearly 80 percent of: lending. Only 3:rerrmant of borrowers hae ever had a loan from apriv4te bani: About 25 percent:of the bori"e's;:" at woDizeH aud.32 perent olthe luoa funds 'arc ustid.'by enierp&scowned und upenitel by wuineu. Alxiut lI percent bt ff ie, first-dme borrowers have incomes below the poverty line (which rmnghly cnrrcsonidsto theovenU iiicida nocpvnatmal Ipverty). After:an averae of th years of the progm, oznly 4 pi:cent of die borroweas were still clthw dic poverty line. KUIPEDES loaiis albu contributedl to employment growth. In thb--e years, the number of workers per enterprise incrcased by about 65 perceat...... . .:. ..j . Las jJ: The u eiSthe. Unit. DNa iivstm: has drmunsiuhe die lugre> potential *firmobilizin..smill sivinr s andtlc fea-sibiliy d innrdu:ingSmall sav:'tn iDtha fonnl: banking .system. The sjYstem kadkni6nst6nM the.asiiility of profitible, unsubsidiixd l6ndirig -to small borowers. 'lite success omf ie systein conflrms tic prgram 's underlying preimiise dial, fur snmall.. clients, access to txsic IuLnking survices is mure important than any.subsidy in pricing those services. In addition, BRI's proximity to its clients has facilitated helter credit evaluation and portfolio supervision, resulting in high wulletion ratues. Concernr .This is a well-established nnnnrrn. wih a h :ittrnm..Rank proram- wLb.a.high"idVel - ombetIIf.IZI itakyat: Indonesia's senior management. 'llTe majno rinsk is deterioratinn: in the KUJI'l)IAE.S.loan poLiiulio. A bin ng. slial traizuiu- pomgcam; ihlpedl by advisory suppoIt usrvis, is seen as conributing to continued sound lending and supervision wssociated with a high-quality loan portfolio. Sustainabpility: The Unit Desa system is profitable because of an adequate lending spread; a high quality portfolio; -and firm control. of. administrative and personnel costs. The quality of its paritolin is attestid to liy thc fact that onily 5.5 percent f lons irc'. in arlnCr of mare than onh day. C.'ojinawien,giCwopenzrion: USAi I) provided 1US$1 Imillion intechinical assistance durin, initial' . implementation. ...:... . : . .. ... . . . . :. .. .. . . Cares: Mag.w lIndonesiai: Second BRIICUPEDS3 Small Credit lPoject, SAR 36A4-IND. July 1990. (This is an inerimal documenl with restricted circuladion.). . . ~~~~~~~~~~~.__._ .... ....... . :.. _ 210 BOX A7.9: Sn Lanka-Shiafing the Focus from Welfare to Productive Activities . ObJecrtive: The Sri:Lazika Poverty Allevation Prpject seeks lo ifcease income-earning :opporunitijs.amdng the poor, and improve the'nuritional..statustof children under three years-of age | Ind of pregnant and lactating mothers. .: : ; Projed Feaures: The projet assists the newly created Janasaviya Trust Fund (the Trust):with a governing boardof representacives:frointhe government-,.NOOs,. private sector, and academia Tho ."Trust finances credit operations, .human resource. and .infrasitructure development, and nutrition intervention activities oflNGOs and government organizations. The project will also finance: technical assistance: for an Employment antiPoverty Policy; Unit. in the Ministrq of PoL;cy Planiang and: Implementation.. . FanPv. Impaci:. Abbut 1: million poor are expected to :bieeLfit from the resou v aiLable. under the project over the next five yeaw.. Nearly 175,0 poor households should be i.b -o incroase; &their earning through the credit fund-with womcn.about half of the:participants. The Trust w;ill * .. encourage, participating organizations .: to pide poor. women thd. taining skills and .imicroentrep:eneurial. credit. More th:l0nmillion workdayi oempliyiiuent shoud be geneated from rural works. The'rural works fund should createlong-term:employment for about 45 COOmen and womeon, and build conomiclIy viable.intrascture.s... : .:2.ZLcsso,s Learned: .The.. .Goverment of . Sri a s poyrty.: ltductioD .polices iad programs-food stamps,:sbol nlzddaymeals, .assastamce'to the disabled, nd' most iecently,. the Janasaviya project-anr coumption and ;elfare oriented. 'hey have proved financially 'aid ..cconomi6caly ..unsustainable: and:: have :wot . been w..well-targe&d:.V:: Poductionnoriented`> programs-niiucrocteprip.c development and credit-hive been firgieited taid.insign;fiant.: he:. ;government'has realized that traditional welfare approaches to povt are nsot sustainable and that there IiaL e.ei. o. et: and expand poverty reduction progras Loward piroductive activities. This. would result insn reduction in size or a reorientationof some progmms .. . . .~~~~~~~~~~~~~~~~~~~~~~~~~~ . . .uu ... ..1:: .j * .... .. Concem There is a concern, that ovcr time the government.uld subjc:the pjc patronage. Political interfcrence and bureaucratic controls could stifle thee . vitv and imtiality :of the Trust.: Another concern is that cnthusiasm to do sornethin.g.for the poor might dvcrwhclm the stringent requirem ats that havc:to:be met forltbe credit:portfoiio''tob seIf-sustining, for triaining to be meaningful, anifd f the infrastructure that is created':to.be economically vizb4A.. : Sustauability: Project sustainabilaty is expecte to & ensured by (a) tho goverment s polIcy of financial support for poverty reducti.on, (b) the projectasemphasis on efficient operations and :management by providig. fnr capacity huilding and decisionniakng outside the .bureaucratic contriol- "and civiil .servicr rules and regulations and (c): the iniolvemcnt of a Lre number of \ organizatio s -includinlg NC;Os, which would use their own methodology toDreach the poor.and thc project's provision for an expciimental apprach and shaning expcnence through stng monitoring and.. evaluation.: C:I:iancuig/Cooperanion Some.local cost financing is to be prvide by 'Germany. UN-}DP-: financed projcct preparation is now providing USS2 5 million for technical assistianc to the Tmrst : , : . . : . . a7m Nffhawan: Sri I IzaPovcrzi Allevaionu PmljaecL, SAR 93i6-CE; Apcil.fl9iV (bi; is nn intciiudouli.with r tcnrictd circu iui.)..: pi. 19.. ..ni is .n i...i'6cn%t .. c u 211 BOX A7.10: bangladesh-Improving Rural Roads and Mawets Objec:ives: Thle Bangaleslh Rural Roads and Mrkets: mprovement mid Mninfisnaince ;ect.: aiKis tu increiase agriculuiil pprduction aind incomes by pioviding all-season aii=ess amidreducin" marketing costs in eight districts of noiqhwest Banglidesh ibrough improved rural Inuwsport and market. infimstructarein selectecd'markct centes. . . . . . . . Pr iye4 FWaures: Thas objetisc would hc met lbjimprovirg rciad maintenance .upgr dingr :nind roads,, and investiig in market centers ficilities. Many market centers lack all-season ac6s& to the arterial roads.: In addition, common ficities such as interior roads; walkways, market yards, sales platforms, and cDvCrLd sheds arc in poor condition; facilities lack clean water, disposal, and drainage; perishlable goods arc sold under unhygicnic conditions; and spoihlge is ex"essive.: Te project would reduceotranspost costs tbr agricultural inputs mud outpult; ,rovide alcv acOcss tmiketing:agencics uad support. services; make possible the production of higher-value, moreperisbable crop.; reduce. storage losses; and facililate access to off-.frm jobs. A major feature of the projectis a. fXcus on improving consiruction quality and mainLenance through technical assislancb::and training, and improving the programming and monitoring of works. : : Poverty Impact About two.-hirds of the rural householdLs in the project. area, and in. Bangladesh have incomes below the poverty level. iA recent cross-sectional study of villages showed that better physical access was significanly associated with more productive agriculture,.a larger share of marketed output; jrcater variety in dnnisumption and proluction actdvilies,less:differCnce between prM fmic poXsthnrvest pricess of grain, higher wages, suhstanti. Ily higher houschold incomes, and even signilicantly greatcr ii of lanuity planning .: Lessons iLaedi `PiJiesteipcdence: itsed doubts "abut goverunment comnitment to upgrading. constmction qtality or. iaintiining its roid .network;.* .Ecause :fihse uncertaiiities, the iprject is phasel, with disUrSemNe--is on tmie viIdnoIl iirzlastluclurc.crnilmmclt alboveuSi1 taiiillion cointingnif- on salisfactory proujecl Ie-rorixauIcc; dt'evelopiinent of a pi.ili fior tieret o f die projct; iunplciuentation I f actions to improve ruoul nainitenazci, finance, wmonit3izarng,: amd cvaluation; andnaianwi'Jdc'stwdnrd fur cu j n j gstruiEio'n.Th: imiprjvcnit of tchbnical capacities is proving a grcalcr challenge than anticipated, so the project may ned more technical assistance and training than planaed. C;rrnrerns: Despite tranchiuig arraigemire:nis anud teclumical assistance and traininig components, inslitulional incrtia may impie adtilition of improved cDnstructionI and maintenance practices. Sut tainabilky: Local govcrnments do not have resourest. to maiutuain tie fiwcihities-includinig roads--for which they are responsible.. So the government will havei to piare anml. dopt a finiancing plan-wvitli increalsed rcevnies-to miect. the. abovo-menflonied cdishniunineit condition (due by mid-1992).. . . . . Francis Mrchdl Bangladesh: Rtiral Runds nul Markels Ilniarveinenmi ind Mjinteisnce Project. SAR.7101-IID, Jna 1988. (nlibm interinir dIociument witli reA rictrAd cirrclimu icn.) . 212 BOX A7.11: Colombia-Rud Iuutmenw Pregrn ..: Oecuifs': . The Rural Development Iavestment.Prognmm (RDIP) aims t helip (a) increase thie . incomes of poor farmen; and 'fIsbermen mainly in the'Andea and coastal arcas; (b) improve liviog standards of rutml coimunitiks'.by identifying investment projects such as maintenamce, roads, and * marketing facilities; (c) protect and'develop w.atersheds to safeguard the environment and help ensure I sustainable supAlies of elean'driingwutet and irnILtIonwntLr; (cl),promote involvement of rural. com munlitesin iaentl'ifiugm niaaintuining inv,estment pmjocts,'and (e) strngthein the capacity of the l IntcgritedRural Development :Nnd (DIU)- to plan, prepare; apprmise, and. help municipalities' to administer and cofiInace 'deveopment projects as mindated'in l 9S6-89 decentrdization reforms. * .'oi. P Featur: The EbXDIP supportsthe firstpbase ofatim-slce ofthe DRI's investment . progra-smnaill 'discete,. environmentally sounid :.:prJecs in. 9,000 rurl. conimunities *(602 municipailies). lhscf.projects are in agricnlh1mral production, environmental protection,' fisheries, infnrastirutre,, .echnrilogcal adaptation aidl extension, trainizig, and communiiy orianization suppoirt. As mmnicipalitics become financially stronger, levels of finmcing from DRI would decrease. . These municipalities would be phsed out of the investment progrmu according to RDIP graduation policy; PPover1ly.Inzacti . :.B improving access to agricultiuri technological :package6 with strong . support from:.extecs,ion services and complementary mareting :facilidas, 'iiiil. poverty would be reduceduand employirnent and iuomes would be increased for'some'2,000 poor firmers, fishennen, ,and rual Mmon . Thprogrua aLso would i917pr.ve theiving.couditians of the por in aliut cn,et ming commiungities "by providing'woes to' siifc drinking water, bxtter sanitation, amd roads ohnnecting villags,,with..production and marketing ce. LessaosLe'arnedt Nation*vide projects are imue-consuming to prepareand labor intcmsivu. 'This program became effective on January 31, 1991, but even at'this early stage of implementation it is cler , thiat tie comrnbination of DRl's operational philosophy,-working at the grass roots and"focusing on' liverty. !leviation-aid. tlic wcunywiule devolution ucnder way inas eiibiti eixiUuuiUuiitis 'to: express itheir n3>rstund fully pircip&io in' deiclopment activities, which shiould ultimately improve rurlI stan"da of living..'. .Concrns: . Tch inexpcricuc and limited capacity of municipalitics to objectively select and implement projcts in spite of Dli)'s establisied screening pproieures for each investment is the main couictin;i. l''1.' mannagenment . of cosb-sbauing-cofinancing-and the' arrangements for project , implementition hbween municipalities :and DRI are new 'and may delay, iniplementation. Swsrainabithyw: DIUls to continue to. support the municipalities until they graiuate roam thdie pgrai. By that tinie, it is explecd tliat die xnunicila1itiL9s will luive the experience and financial viability to finance and manage investments on their own. (WD) Coftnancing/Cooperuion: Cofinancinagwasprovided bytheTnter-AmericanDcvclopzaicuzt anik :(11)]3).''', E*I- Ruderfer ard Sanrdra Joss a|. Colombia Rural DvevenpmcutlvestimcPgran,SAR2430.CO.,uly 1990. (rhirsan interuiaidocurinmtwiLh rcaricied ..* .. cir..la.io.. ..... _. _ .. ___ ....~. . . _:. :: ' . ... ' _ ._.. :...:...__... .. 213 BOX A7.12: Ghana-Introdung Intennedie Transport Technology to Help the Rund Poor . . jinclided a pilot pFo :to introduce .^new intLrmediate metm cftrans portO 7..th; e iisddmiddle in mo't Africad tM.poztisystems The purpose was to %lefigugnassoin> d test difft formsp . The desipn.mode1s were to.be: switablv modified 'and -;u:''t ' informa s.ecto .Prj&Fearer- The piot componentfocus&lmainly onintmducinbcycletai d fmir veliicles as an -alternativeto head Ioacluig for the transport of produce from farin o market. . : . PovertyImpaac:. Rurral iwomen haec bcei the main beneficiaries, since head- porterage. is gerallydone by tiem Reception of these IMT vehicles, mainly .the.taUis, h.as beenenthusiastic. The women in nordhern Ghiana `4ho did not previously ride bicycles have talei: to bicycle nidiig .Theyt: use the tailers witi bicycles or as pullcans Introducing MTto the ruril:tiispolt system cii also...: hep increase hnf earnings through redued6 transport costs and wastage ther&ly increasing prduction ..inceaiives. : Lessons: Leae d P6tentialcomrnmercialproducers of vcehicle should be involved frio the: .;foutset Desns shouddbe tse eteivey with feback from iusers. Where bicycles:or aimal .drawn: vehiLc:es are y in use, other possible aidaptabons should be explred. Project ideia can be| :ete&t ind;iie fleid as pilotl ipra, minrmmannMZ the Wn to.pdrdu..massive dat:afor.prject. . pre paion. Te pot j; ay m altu and xdia ad may c n dat p ..Pilot .pwgrain: help generae dynanisism andiecmatavity, .building on local responses and.irnitiativiS.:. Local ?4(JOs line .succssfully served as consultants to collect socioecoi.omnic data in prjc villages;: .provide feedack on design, and subcontract on some projes.. .... .::. .: Cocen Oov.cira tofficias my peCev IS as:astep bakad to theae of bcce f.Resistance csizing tht- ht ing:ot w help oa.the massing midle an t trwansport chai>by.tr4nsfthix a technology still.widely used iymAsia aI by emphdsn 'gtfl benignv 0 environmental. effects of such . les-nd their: grimn,pbpulaiity. evenin developed couries.. starthijvi simQple pilot .EJet ma:t ciirc,wote ob:rwac ::5:.JLOCa* .s *-- i:y e-"- * - a - ' ns*-l' .. . < . ...:: : .f :'*- : slapwiain. mii iubtifr&osliould be:.d6 ocally so the te.bolog wil :ramnaindtienous ad sustainablei;. I4GCls:M u Zs or other loud groups ti mobillie trem#cco ous oiiuntmcy resours V . Bank fguidelines, allow. uind encourage the use.of£NGOs anopermif leiibl&pkcuremenc produres With a per capita annual, income.of about .US$220, the aibility of the ruril poor: toCinivest in a $250; cce- triler. cmbinatinn :is limite alithough This invest men w.ill ines. iD.come for many year A ollow up project,: th&Sco.nd Transport :Rehabilitation P6jEtasiaiiseps:pantkof thc *agh earningls of.' yrural women from Bank-.fSinnceroadt zwortszintosavan,gs schcmes run by NCOs t&fund hurejnutchasc::| .pRorams One Woluon migt bi a dirg ant of init.al:e money to N i s, coopt s, or :transport iiser associats t srta revolving funidsr lreu rase .of vehicles Aso bilatera-.l .. agcnccs sho{uld onsidr funding IMTto complement road invs e tnts.: . ;0 ;..CoflnancingICooperasmalthough this peiot proect was fuendd by:oDAwmany :financing ~~~~~~~~~~~~~~~~... '. .;;. .ii ' .; '~ *-. d ~gt'aes aveexprsse intres an xpaningthisproram hrogh. follow-u proectgs unde cosieation for.a example theeGananatIonly-o Fee er Road Project :Ghaina: Tn.isponerhblNG tsionProjw ,SARt 6912 HJ.1987 and Ghanai StcondTrnanpoftlfbauliaiaoa.SAR 8945.: .Gi, November 1990 (Libeom nu!documnath3rstrricccf.cu.i.gon): .s ~~~~~.. . ;. . . . . . ....... u..: e. 214 BOX A7.13: India-Combiuing Rare Water Supply, elth Education, and Envronmenta Saniaon OIjectives: alic prt poscd Maharihtra lRural Waler Supply und Bnvironment:il S&milation Prdject aims to radise the staudard of Ilving in 10 rural districts in tle slate at alaharLdlatrm in InJAd tlirough imnpzovcd lhealti and productivity partly hy expandinz access to potable rural waler supply systenms anud cnvirunmentall s;anitaition tieilities. Ptowjct Featurny: Mic nrul wvaer supply componeint would include ibout 75 large, regiunal piped waler supply schemes, 170 individuala village piped Wailer sulply schenmes, and the imatallntion uil aboujt 3,000 India: Mark Ill hand lpumps. 'IThe envionme:ital sanitation compznpcm L would promote the disposal of waste waler in village.s that have piped waur sopply thruugh improved drainage and the constructioll of low-cost latrines. Tline healtl cwnmmunicaltions component would cmrnt gaetab:r coinanurily awazezau&s and denmnsd foi improuvedl hygieLne anld envininnaenlnl ianilatioua andl %ouhl gi5 | the Depallmeut of Public Hefl'lh a . reater nile in promoling a ireammier rlaviammrit. rlae IuILjedt would also strungthen tilc w6ater qniality miriiio(ririis %ymtcIn in rina;l macaN 1llllouilaoUt die ,atate. Pivrny Impacr: Women, in particirair, would lxcnelit ri 'un liar prjeer's lafIiSis 43 iffiaproved ancc.r" to dome-tic water supply so)llrWs. 'his, ia tirn1 should give [hlmi inuim dine In paerticipite in economically productive nrtlivilirs. Inswan Learn.cd: AItlatu,i'h it is tox soon to fully evuluate die impauct of similar projects thal DANIDA and the Ne,herlandJ ar ussiiLilg, the JIISWLI digit :nm cmerging from lheir impfrmanelilhatiiu Aniiy he relevant for this pro ieel. Thmese leeoans inciudie! (a) liae taiAl to lwriii scia:l .ciiat nlisus lugeltler witli tAhniciauLs aud e2nainieers lu htitnribethL'n uLiiflflhiiaily Ita1i(ilEifiiai .iIl Elxvwity-alhaucliuan ulbjIctives, (ti) time UIIIJIXII:l iuc ol'aiue aanaaU:I iaig maT Nhali;l gnlalp% in limc ticigma1 1 Waitr &i-lply bChICuiCS, rL) dia wed fai cluse li ison witli lovaIl governamiieint ludcuis, mladl (LI) Inle ned foir cluse involvemnent at NGOO 'in pn4j1a:l liiamiiaic; anti inapleancaitatioa. Concerns and J,S.Ywainabwilary: flar uaaaiaa iwca anv1z:1 is Ilnial th1e caavilatii:izauacaata awiLalton aInd healthi winmi:inicaatiuua inCimplala. aaa:ny lhc livean lmw laricility *-thus limiting the project's clletiveness. AllUther WilCenla iii t It la- cmi'expezienam in wrkinq wilh NMOs, which play a key Role in the plananing il iiaaplviau2atnliaita t,r dile c,tvizunlnetntnl sanitation and health communicaltions c4EnhtInLts. Adequate iaablilUtiEilaaJl iadl runiidiaa aaTiLNgcnlcnIs tin operations and IlIaaiaateaa;aOe 10!' essential (tr sustiaambility.g coftewn.;nLznGIO e'rn:ai"Rn: LNICIP Jas%ihh%d fime IrIC eluaaaIct D i aX19 ualll waler M sUllply ill 11at1ihs thmrouh dietveloanirmt i lae lanli:t Mimak 1I1 a: i lililm iand ils aaa:nintceriamnce systeain, uand a tulbwell drilling. lrrwo aam: 11aaa tla' i aseznt-la :,aad dcvelmp,aaeliL .,f di Ineadian Marak 11 rr;ulled in sian iampioved nodkl, time Incli;. M,iLk Ill. w, icM wa devekloped by tho INlWDP/WoIWrld Ilank Waler Imalde Nogrina witla UNICE:F. I:llen Sdwuan rgold ui1nill: N ,nJ1C ru H1uil Wiari Sijili 1 r:iuia.znrala:a Sqiaaaai.m Prm.n. SAR rriZU2 IN. Mai: I'?1.r91Lt. ha an iaaIcI dimmuuaaczdl withl rcbiriiacJ circutmaijun. a 215 BOX A7.14: Mexio-Regional Targeting for Poven:y Reduction Objective: . he Mexico Decenraliztioa and Rcgional Development ProjecI for Disadvata:gd. ' *$Stntes is designed to inerease access to basic infrastructure and social srvices oE poor and indigeous populations in the lfour poorest states- X.Chinpas, (urerem,.:Ilidalgo and Oaxada. Profe:q Features: 'Te Govcrnmcnt of Mexic has formulated u US$1.3 billion five-year.. investment program for the lour states. 'fle Bank will finance 59 percent of thi cost of corm investment projects. The loan also contains unds1 fr envirornnentL prtection, pmservation.bf arichlaologicol sites, and. strengthening of institutions. The poverty focus of the program Wil bhe: rmuintafned thmough (A) joinl review (f iie aniual operating plaun to ensure a minimum average. investment per capita and per lxxrr person; (b) review of diesectoral comnposirio& of each state's annual : program. using critcria such as the sham of investment allocated for primary oducation, uranl roads, potable water, and other povc;-rWeducing progrms; (c) selection criteria favoring projects that benefi-t . poorer groups, based on a rough evaluation of beneficiaries' incomclevels; (cl) reiview of investments . .,:on conipletion to ensure they meet agri-upon criteria; and (e).ta. matching grant rue' that provides.^ .2Jrwe contributions for projects in marginal regions. SiWies. ail municipaliiies can select sarliler \pjJPCt Oirdugh a sinpie po6it system that weights icehoiciul feasibility and efficiency, behefitswmlaiive- .ib ctitsis, Loverlt. efTe6tsi uind beneficiary coainlitinenl ti 'oeratiou maid inaintensuce. Argcr pntj mu.st m&et mnrm rigorous techniical, rinancial, and econioic standards. Powrry lmpi'n: About one-thirdl opr Mtexicx)os jxor-sevei nuillion penions-live in-esc (our :stits, whlich have large disadvantagcud lidian Ipopulatiolns ana. high conceiztnrions of povcrty among :... `.:women and childrcn. .The;projcet isj Am5d at assisting status to develop, execute, and- finiucc- -investments with a strong poverty teduction focus and to help federal and sule anthorities sttenii:; .;;deentrtiziJd institutions and improve project selection, environmentul asessment, and monitoring.auid... .:evaluation.. Puhlic works financed under.the progumn also will"provide 230,000 pWPoeiIrs.of.. emnptoym'ent. , . *. ' , . ..... ... ..cm ,, .. ,:. :. .lons Learned:. Mexico has considerable experience in rrurl nduiegi6nhi dcvilIpmeut. lle. 3Bank has been involved in rural development projicts on Mixico4since 1975. LssnnN lrned I1i annih; the: hank's exLpwienue wih the diAso Tniet'nt&i Rlral lMimelopmeiit.(PIlDER) alnd.tiher projects insihtade :.f&i; flln,ng . . (a) alhonugh. tile SUCCeSs nite of go)verilmcnt spauisorsliip of smIall socid nd:.. L'itisruotin pmjects is higih, public hector involvemuent 1pmrductive sectois has bcn.lmss successfifi-. .bbudgets arc tigliten, th povelty orientatiou of rural dcvelopuient projects is lost;. (c) greater, sustaind. impact zequirs raisinc levels Of investment per lbeneficiary; (d).creatig :pajillel udministrutivc structures leads to unsustaInable programs; and (e) community paitici aion r h;msti.of m p'onLsibility and authority to lower-leivd jurisdkcofU.A : . t oe. J :: nc:.. .A major concer .is that; dentralidtion may not bo compte. . I implemented. Some states and munLiipalities hve Weak Wdninisttative capacity m plvestinelnty. Ic;isior wel| are subject lo political iifluence-4ad tlius firids could be misappropriaued. . :.Sqstranability: Financial issuroa,nabfls s ircb usote efrmuaorallocatingfdecr' | t:>cs.* staas liavc iw;stan in'c y innad 'c 6sorc ofr:hi1ifi poplillated -or.pirsaes.!l ipsdtutiobalistrengtbeniirg portion of the. loan is, injrprt, designed lt help siales improve.tl eirrevenue.| collection.. .Somi c .nts in fiscal codes an: als! required as as wr.condition of loua effetiveness. . - . ... . ........ ....... . s. . . . . ................ 5u.r. SA.t . . .Ma. . .9 : .... .... ... . .. : AbldMWcs: Merico: Dectabifizaiu and Rieional Dceldopm&ntProjcr hwUi SAR W8SW aS 91; (II& kW.:' -p.n.zminl dncunnut whizi reairiLcd c!ircladmanageMent, envronamental, protection and pollution .control, urban gement:and. monring, and infnstnucture maintenanc . *' . ...TT .P.oyeh ImpT. his Kampng mprovement Pra :cov morn.Ditan40 p of the::::. exitingiand recentlyset-tled low-incomke amigs rquiringe upgaingb ons y iciecis in basic services-and would covcr well over .S million people ... . Lesons raaned ad Ssw i&: :To' dat, beneficm have not been atvely encouw ra to participate,. and. miniance:of facilities: creatediis `suffed te lak of a sense odf community ownenhip:of' rnvctments.Couunumty organization mud sociadevelopment holdthe .. keY,y toevataltang the pnionty program; in JUP'lL The new; community-based deu fothe RIP would address the shoflcoimings.of.r iDuS.phases ;q. Concerns The KIP has suffered from poor physical planmnog and poor linkages with citywide infrastructure Participation by many snallerlocal governments alsojias been eak1: because KP was. u implemented by central govemment agencaie and providd nd withoua ruin( for local S shaXring. :. Thle eavl .:..f.toyerneot grant funding was generally inadequae toprovide .a substantial , zimpr9dvement in conditions. 'Moreover, a lack of multi-ya pla g on comitmn rese in stop .. a: nd- Star pl*ingd-snp implementation.. .... .... ... ...... ....... . .. *9.~~ tnt F. .. .'ah.und i pollution cntrl. .::;:::.. ; i :;. indonesia:.. Third Jabotabdlc Urbm Devalopsut Project. SARt 8397 . June0a(h JIis as aine ral documento wit;. :resicted circulation.) .... .- . .... ..... 217 BOX A7.16: Mexico-Restruchuing Subsidies for Low-Income Housnag , Objc.v Th .eic . ~. *.-..-.->----- :.Oyc- e Mm 'Second vW4DCOme ecti' prtviaesaddibonnl resources to the National Fund for. ,ow-Income Housing: (FONiAPO)i to- expand its program of leding. ; FONIIAPO'does not build houses; it lends, on a colective basis, to public agencies and. privtae sector groups-flUbs, housing cooperatives, credit unions neighborhood groups,n private buide-ta sev ow!-income benefciariies; :.: P: F.:keure Ba'financingjsuppports FONHAPOs onvndo crit ofst homes; urbanized loets n ndhome improvements. .The:i balso support two inbovative programs: s one fiinanced sites and service6 in fast-giwingdcites kldg th'e bordwith deUniied Swea that offer.* l.iand for silem&t of lowmome.borpwers ; thae oltherfinan pga ding in arrguisetcmuents whoa ' there i apla tod regulariz .tenr ad aguarne p atomrovpn imtz meprojct supportis achange ii.FONHAPO's.lending pcoliciea:to Improve cost.recoveryan: iietite targtsubsidy to the'. most needy. '.: U.nder curriiit FONHAPO lez'uig teri, te inimum' wagi used t iniMib. .monthly>paymcnts annd thieloan amount.: .1additin,: FOIrPO loan repaymntsikdniexplic annual i aterst:nle of 3. to 4ppercnt above the adjustment :in the mimimm w.ge.l> mak the ls %affordable, b6ncficiacs' monthly payments are:sct as a fiied perceng ofe nontihylminimum- . . ,wage,ywitl maximum amount not cxceoding 25 'perof the benefl6iui&'*monthlj comeaCthe Ibnie ti66 loan uasma.e .Loan%;xaatiesm tui 14.yeanr Borrowers .arre tr'e ake"a C ' .>~~~~~~~~~~~~~~~~~~~~~~~~~~ . .. ... S.: . .. ... .Poven. Imp'.... eu ari s m s t d < u r .u . . pro'grias and who hav'e i;comes of less:tlian 2;5 times' tmeoiinimumiwage The: tund monthly - income of all benefiiaries has been.onlyt. tims the miuin wae ox one . boms ot t.hose involve in upgrdingsand ei-lot programs have ben 2 to 113 imeh hiimum wage, well below die national median More thn.70 percent'of toS tin smes flnnA und&i this programn arc targeted to.failies whose hieadof housedicd'r less than eminimum'.'wage. Co.. ;ncermn: FON s collect ons performance-with a delinquency rat^ of lcss than 5 pexrcent:.of total FONHAPO loans-and repayment by final beneficianca have h itisfactojtsef.i . of a:wage-bi.:umortgage instrument- has improved rONIAP s cost recoveryoWne&ait4 t '..subborrowets: But, morew loans wuld fIl into treats .under thoe. ind&i' g scheme, ron thc .higherdebt bure ihced by subborrowers. an finalbencficiade% i *.f i i . ... tsznabiiit~~~~.... ...px ..... ....ii. b .aaisquausiu.:...a.e~TrojectshoQU1diitv t&u6ixa ltf FONHAP o "i-~: rcdueing..operting :CJsts,improvg cost recvei; ~~~~- f- 5 --g. -.: ............ a-- i6v *.-* ..*d-6s- .o, *;" ;-rfon-;'P*-S.:* : .;: ; * , S..r*y; , an. .r.....,...,,.....;;;,;......i .. ..... ..MexiC SecontdLow-ncome HousinProject SAR8019ME Novcmbcr 1989 (Ibisitrn :trnldcnmhresticd .circulaton) 218 BOX A7.17: Nigeria-National Popuaion Program :.. .. Objecuve The Piition Project is expected to, streijjthen the nislitutional| framework and expand the experdentinl basis,for undeking a largescale, iritersecloral National PbpulatoioiProgam (NPP) in Niger.ia in the coming decades .* : . Project reaturn:c. The project, whlichi :is expe to become effective in latel .991, will help the government develop an effective strategy for the NP by creating a mechanism to fund and evaluate subproccts. Thcse subprojcts will. be implemented by collaborating: agecies comprising universities,. .CNGOs,-and federal, state, and local govenmCnt bpdies. '.he Pojulalion AcLivities Fund (PAP) will prologanti O qualifiedcelliabdiA-sa .provide granto g ao qualifiedgcies for subprojecis .thy hive prepared. A small Fvies Find Agenoy will be. dqvepied.to assist with the pation of additional- |: subprojects ajd tb appraiso supei ns thetn The project will also stimulate incasive analysis of . ^ socioculturl constraints to fertilit ieduction and review relevant experences from other countries .under. the direction of the Nigerian Institute of Social and Economic Researc Poverty Imact: The proje.c will heip NPP get.oft to an ctave start and.thus cvntuially : reduce levels of fetility. ..is should in turn, improve the status of women.and poor comuiniticsa : Lessons Larn ed. Project desigers were well awn that successful programs involviing large- scale changes ii: the behavior .of individuils nd houehuolds shaire certai characttristics including (a) flexibility ini stegies, (b) heavy emphasis o blic euction and.. bavior. c ge activiti;: (c) credibibty with;cdienis, something NGOs can oiten.provide and (d) the means to dine bpeoial.. cultur4l and social aspects affectingresponsiveness to the program. Inaddition, PAP design was muditI |infleniei by expenei ctlsewhere in Africa albeit fairly recent-anid in L.atin:America w:ith soc.ial. . ...~~~~~~~~~~~~~~. . ..... . . .. Gonewrs: le .proram inew, the -anstittidnflo manage it are ew md the itrveutions.. b:uiij.iwpliiezited are sed more:on:lessons me elewhere solid..localexperience. Other .coicernscikcludeambivanc ong staff and policympke. ibout pi : transitionr passable iff&tlive program.mianagement issues, and in ate. budgctary. sipport. :. ,........ ... ... ..~rW i '.'.e .w . . . d ... .i en . I ... . :. SwrainaitUy' Te poject waddesie to sre the still t ion cooiingii :.body> b pulauoa (th Deten of opialtion ctivities) by bking it;. with th Population A ctivties Fund Agency.A .iA close boid beiween coordinaing and fina&utng:iuctions-and the active .involvement ouffie the o mmunity 'n projecl. design-were.considere impoant rabii a :strng-institutional framework In addition, PAP is set up.v ia.mechai'sni for-managing.funds . .from many; soure-intemational and domestic-l ps to not>dcsoi fo ma assastance . ..... .. ..... . . ... ...... .. .: :: olcgCooperanon NGO% providedsomelocal cost financing IDavid Rade) ; a NaioS *>Popso.n Project, SAR527 J, ASri 1991 1flu, In mnal domcumn wilth rcotr..ctdcluo.) . 219 BOX A7.1& Guinea-Involnag the Community in Meetng Its Own Health Needs Obj.ai-es. .he jGuinea;i U tstinea aejQ istostrengthen g I .. managemenf capcitiesof the Minia$itffSeaibalt Scci Affirs Nanc improve .sic hellth services.s T. e project is.also deuignea t r ommunity prtfcipaixu imtng isow heifltfineeds ~PMjeu Features: o. ' , af i-Hi B½: w i n'eneficiary. atciMW ,rojet p o ,a enive.F, Project. .i~~~~~.w i yis:tr vWda o ::ti;.- he indi e~ipgg appraisal bgc& with sankta-` viisS ec f ecaj,pshalIfcityis,nd meitnu w. it .villagc leaders and potential bIeeficiiil& Five or abc people, iluding one or two women, were: identified t f oru:a regio'iprojtpa s fr ank stff cosiulted witi this tas fore: .-;over time, e a g iingjp osible molutoMt b raisd by a B setor rport and .thetask-force.- B t alorvie 4 solutios pr e bynt hi dudag. -Proetper ato. h xeiae n n ighsoD~a tf hp1v4 project 4ppraIsil rYeport,: jec pa it l?garapot - Fimje I Once the lBank ap-rov6edl heiJoan* db t meMa4o. members of the asic force .Wor *jco jpo:a r :l6cal management preommit, o impl9fieniaitipn. 'tis he mvoM~1 iiotb&pro?ject:v iuediabiA&iiIamoirdisjoz f~ 4leas;t.once, a, yeart, all,: .. of the&oqmuttes .meet exchange irencesnd solve common probms; Others aso. paripaled. in.plning. a ommittefws formed th:mluded~ ershii&fo village s;l £ :gdve e go es . ...... . . represetativesnimd4 6vernment::empIdw6s!I6f.caict ...1raUy .. .. ...... y ....... ijdevelopihg dfiin fi$4-l( referiuiEi care and prmoaiong NSa initativesi in truy planning. J.: : -§i2 Jisso te& d Most Learid heull and popi.ai°rp.roet &Afica emphasized physical f GEv ted l>=~eq,~Di Caei :tswdi facbtis, apinuficGienat&t&obeeld t a~Mil~i ~ pa Ii projecEtisf- imvobcnctijdes8- " esg. ltkpa&-mngcen asbil stron tefis t og tr m=Aa d ste the ;;uinyscap to odte extern.iD[albaid. Th '9is' #hf2aj ;ect wdaŽnot v ie 'ui it took 14. .ond. from- beginning ofe identifia E onpto e copltwantofte-apraisal reoll Zb&ensr~ ]bisjs Ihe tint DA finne habl secoropraio Gina heman oner 9:!: taol1, o ary ot~thsfbnsa S'. t. ...2 . . s . S X i.. n . >%gS--~.% .e .. gO .... ..a n dgP p MMP.eo . Sustai II d: proj ;enounger eio ous 'nvo vm: nt F tCi'S'::'--::* .... . .......... orannaton andgea ta - orwnesnhp. ;A 'eDAt identificto mio f e -min po t bore g&stiinony tadvabeadil ad - a.-Osutfstaenibdd i und e.tirstptj:t ;. fi>O'tiX' '' 4 & -- -;' '~~ {- fi J-l,nu:oi rfichaelAz j(o ~~~~~~~~~~~~~~~a d ~ recsisrw th zest-ctc |2 fqiic Hsc.,,,,...pel!ciopm.URtesw Xtpf CatCUI*.bOnSY.) r (p.. S UM A , C ' >,,' ' . ......' .. .. ......... L A 220 BOX A7.19: MeJxco-Addressing Basic Needs _ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~j r . O&jec: This pr will exteia3 basic health rdryfn amid ad' ettd nutrition asisticane Pto albout 13 million uninsad poortiiu the jroject ureao. t wiil mujtport th busic health car sysem ihroug,h. lustifional improvemcnts &idedeoentnailon rnthe fed&sl level to ihe states. P s s h projet onisti mainly: of a ealhlip . apo w! u much .~: pmaler.insticdonal deveIoPment compoer .. 71 heAlih 6ervicea.eo 1iponentwl Impweot iho lhir .leaLth C&kra :Ps ramDor lhe UnInsured PoaiuoiTA$SP.A): model lPASSPA tanke a targeted . mip,pwak tu basic hl* s.rvl:diycq for beIuninnured poor Ito latiz*ualze: basid ltileh: care . . *: . . - ----- - --- 221 BOX A 7.20: Pakistan-Providing Health Servies popuinicius wms: l j8Palkistml.FiFmily Health Projeoc Aims to improve the health status ofth populations in the Sindh and Norio-West Fronder.Provinces. The project also atims to inrceaae the effecdivenesmof the existini health care netwoik by buil.ing inutitudonul capacity. Proqjct Fe:u er:; The project LS to he: implemented by the provincial governimen th lechnical support from local NGOs and universities. It aims to improve the health status of populatioln geneially, but with special emphbads on high-risk aid underprivileged sections ofti: community.. Women would benceit particularly through improved maternal health servces.T instituiional development componDents would beiiefit the govermMent and pave the way the moreanmbitiois projects. The project funaoces izYestmeot costs-civil works, equipmei velicles, training, technical assistance, and health educational miaterials-.and icre al op costs, such as salaics, dtugs and suipplies,. project maiagnment, for three componeas:: TproEViI health services, staff dcvelopamnl, and manageinent development.: . . PoverIy Impact: M projtc focuses on the undervileged popuion, ely; By project:conipletioan .ie health svics available to somie 80 percent ofthc total population`b two provinces-incluiding 9 miillion women of bhildbeaiug age-should.nimproive. Tti i pregna.t women receivingi some prnaW care should double.. . ieonLearrued:`Expedenc~ from a population project completed inDembr18fis4 aUiention on the imporlance of limiting the numbers of provinces involved, simphfyingproed!eignp providing redlistic and flexible impleinentution schedules, and working throuigh theexisting syu instead o creating separnate project iwnplementadon hierarhies. : . . tte ... Concerns:'i Therea concerns about the limIted implemenaution pity al of. a .:project expariecac of the provincial halth departments aud iv: tlher Iho pinsiit heal will 3 .:.riouity to wm n'hetuinip-blm Sairninabi6iry: The prujojt was deidgned to try to minimize additional reCurrentcd] capitalizc on recent governinent izifrasructurc invesIment; Provision is includcd fo community flilncing of heatlth servics. . cOflnwing/Cowoperaion: The Overscas Dcvelopment Adminisaistration suiddthe Sav Chiildivn Funid chufinmced this project. Rcprcscatati*s of UNICEIpnrticipaited in proj&f prertc i migsiout The project design builds on the continuing work of:UNICIIF and WHO ui areas tiining of traditional birth:attendants, health education, .aind management devdopmnt - Pokiztan. r-iumily H wiil Proj5:t, SAR 93454AIC 4April 199 1. Chs iann intemildocumcatwith her _~Pjt (f..._..._ ...................................__...'' 'i'>- g 222 BOX A7.21: Colombia-Communty-Based Child Can Objective:: The CoombiahildNtii. Project supts a ky pa of.the . Goernment of Colombia. povcrty.. atio3progmys tren theninjan existing program to create ~ inexpensive, bome-based child care facilities, kiown as H13ls. The project provides training and tcchnicil support to the Colombilan Intitute fcrFamily Welfare (ICBF), which has broad responsibility. for the project 'Proect Feres e lID! program con bite feeding of preschool children in low-income urban nughborbodswioth community-managed day care and presdhool learing activities. ICBF social > workcers identify clients, targeting the poorest neighborhoods. Thereaf:e participationi sselez.tLd.I Groups of interested parets choose a "community mother" to car for about 15 children In her home. ICBF provides initial training, educationdI malerials, moet stipends to communiity mothers, home: . equipment, and nutritional supplements-and aangs loans to enable community moth to upgrade -:their homes to minimum standardsfor day care.; The prog is managed by parents'.associatiaos . s whic -also make a small fin ncial coribution to opetmg cost. Te pojc is t serve the . estimated I milion children in the lowest .income. deciles in urb areas. : P;..P ay Impact:. The govenm ent aoptd t 10 mod in 1987, since then . 32,000: g child care homes hsae ben designate, seryin gabut 500,000 children of the urban p. Thepret g wall rougly douible the Sfipaei*:ver:theljve.yeam ning in .14.A It.wl als ittiie nh healt bygiving:sade-homunity hmothes morentraining :unproving tbelinks between government ei th'sei:xaid. t .iohild hom and by building up the childdd veopment actviti. S' ;Le ;sson.Leared:.. T7h6e project repouAd to. criicism thitdison of n IC fac.ii6teWas Ot bocpensive, dAd not seive theor and .did.not ivolve thecomm uity. the praes I. programwas developed after broad experimentation assisted by UJNICEF.and Save the Children.. ::. Conc"rns-ard4 Saswnalnkry Presue to exand:tkf& REV pm'gtrAM could .ou4tstrip ICBPs ~& a nigisrak. fmad. mal capacitie. Manageial impprvement su orte by 'th ptec a : critica to its :contitied ss. IC1F:is financed yWa 3 p payroli tax o top ofa. ariadylig . % payroll ti. EI'en swi.eating the costs ofe re ocation lCBFresources ay fom its tiWdy care progsn i may b id by ICBF's m 1dio s benfijawn Coflnancm .'. . :5.zg/ope n: UNICEF helped ei the RN progam. f , . .' . . -. *- .... ....o .Sch- mf olomi:: Communiky Chid.Ca. and NutrifionSR 8025-COC, May 1990 (im i's an intcm.i document with . circulation:) ; o '- S '' *'. S.' ' < -S-' '- -'~~~~~~~~~~~~~~~~.. .. . 223 BOX A7.22: India-Combating Child Mautrition Objrclivc: The lIAdia Tamil Nailu Inigr'nl NUtluitioun PrOjt l(TIP ws approvedhby the World Bauk in 1980. The project's goal w 1o nm,vc nutriliun mid haealh w 'ittoiioi of cbildr n-wila emilplhasis on tlluse aied 3 mundis to 36 miuitils-and of pregniaui and nursing wumen. Thle project had very umliliOus targets of a 50 pcrceni reductioin in tie inicidenLce of proleih-energy iialnutrition, a 25 pejen-t reduction in infant mortality, a reduction of the incidence of vitamin A :.deficiency from about 25 percentto 5 percent, vind u roeduction of the incidence of unmia in pregnant and miuiting womnew from about SS to 20 percent. . Prject Fuatures: The project provided nutritione ducationand primary health care to pregnant .iid lictating women and to prcschool children. Childrea's growth was monitored and supplementary .X66ding and intensive counseling were pmvided when growth faltered.: The program was managed by an ew cadr of part-tirncpara-professional women, assisted by local :women's groups and'existin health outracih and referral services, which were strengthened under die projict.i *Pavwry Itmac:: The project approximated its goals in reducing seriousi mnlnutrition and contributed to t significant decline in infant mortality. lBut the project was less succeistsul in achieving its other healLh objecives, mainly because of inadequate coonrination amonng health and nutriion *service.s. Lwzons Learned: TINP demonstrated that closely targeted feeding prograuss.combined with nutrition education have .a substantial effect on severe maklnutrition for far lesIs money tiian universal feediug; Pioperly trained and supervised vilidge workers alo ban bd an effecive fbrce for nutritional uimjovement. Key ftatures of project success includ6d carerully defiiingirecriitment criteria -for kc4l .workers- limiting field wrirkers to nan.ageable and hig'i-priority asks, specifying daily ad rmionthly work ioufizcks,. -dcentraiizing training, using locul womcn's groups to suppoit projoct'activities, openly displaying pertbrinncc infonnation to clicnts and wwoers, and usinjmanagcmentin10niwtionsystems that rapidly detuct performance below nonns. ConcernLs: This type ot project, with its heavy emphasis on monitoring children's growth, may not be as cOst:dccctive iii settings wheromalnutrition iscnmd&imic And this approah, which requirems sclecting.among potential beneficiaries, may not be politically acceptable in other settings, especially as the snle state-sponsored nutrition intervention. : . Sus:ainabilify: ;rTNP is irostitutio'nally and financially bsusia"nab".: From sciatch, the project creatie a nutrition infnestracture with excellent outreach thr6ug,h a skilled and motivated staff. 'lme recuirent cost of tie pwiject is only 5 percent of the state's nutrition spending. Th'ei state continued funling the pvijwt witi its ow resourees aller closing. A second Bank credit is finanicing time ex amsion or the pro,:t into a statewide program. Richard Hleaver' . India: Tumil Nadu Inlegrmcd Nutrition FtojcL, PCR 9259, Ianuau7 1991. (his is an intmrl docunment with reshricted circulatinn.) . . . 224 BOX A7.23: Bangladeah-Populoion and Health Objective: A five-yair population and health project in Bangladesh focuses in improving the quality and delivery of family planning and health-especially maternal and child healib-nnd related nutrition progrms. Project Features: 1his project, covring. 1992 to !996 of the Govemment or Bangladesh's development program in population and health. has four major momponeds. Thefru component aims to improve accss to family planning services by providing outreach mnd supervision, ensuring contraceptive supplics, enlargiing die saltllite clinic program. and enhancing the quality of clinical services. Training activitia;, including the training of traditional birth attendants, will be expanded. 'te project also nnovates and construCts new family planning and maternal anid child health facilities and supports provisiou Df contraceplives thi-rough the private sectr. he swcond componen will strengthen healLk services delivery by helping to establisb maternal and neaoal healih caue as a govermnent priority mioa, reorient nursing and medical education toward cuimuniiy ad public health, anid satntrgthen critical-disease prevention programs. Progradis fur urban and school health will be skirted. Existing maternil and child health icilities will be relnv.ated and new facilities constiucted. A special effort will be made to improve the use of health care ficilities. The third cowmojent strengthens management information for fiamily pl-nning and health, widi pmaticular emphLsis tin collecting gender-specific data disng.gregated enough to permit meaningful analysis of policy issues for the women-in-development strategy. It aLso focases on impjroving managcrial and finnnciall capacities in both sectors; and expawdinig community support for family plunning and health seviccs. 'Ihis component highlights the importance of NGOs and innovative approachcs and pmvides technical assistanLc to specific projet suhcompnnents. 7hefourth conipornn. will fund Lhnx women'siprogrmm in family plann.ing and matenal and child health. It also will support the.strengteaing of the National Nutrition Council as a potential countrywide coordinatinn of nutrition proams. . rPrverty Im;act: The pruject finances fillmiy planning and health services mainly to the poorer segtracits or the population. Lesonts Learned:. A rmcognition that fh.mily planning and population measures cannmt bc ettoctivr without concurrent improvement in thc health of women and children. led. to coordinated strategy for family planning and mother anid child healih. Ccnccrns und SwtnabilUy: The mnin concem is the government's potential inability to fully implement the extensive reform progrpm in the health sector. Another risk is the possihle weakness of the health sector's management capaciry, although the financial alborptive capacity is expetd to be sufficient. Cjziancing: Project cofinanciers include the Governments of Australia, Belgium, Canada, GQrmany, Japan, thc Netherlands, the Kingdom or Norway, Swmdun, the U1nitud Kingdom. and the EEC. Banglndesh: Fourth Pcpuluisiu msid I leuth Project. SAtR 9400-BD, Mkiu 1991. (This l. an inernal documcnt with renrar.ed .eirculstion.) * 225 BOX A7.24: Meaaw-AdWduing Seeteral Policy Refons O ZyZi Ihe bpulab u,HiEkt, and Nulition Soctor Credit has. boen designed to implove! ual,racccss, ilefficiency, and e&fiitmess in population health, and muttidon by strengthening basic prograis and support sevices, anid ciig:support to die social dimensions of adjustment intialive of the Goverment of Maiwi. Projec Feoarwi: Sitrngtfhening of baicprograrm focuses on family plianning, primary health: care, atmnnI and child health :are, malaria cointrol, AIDS progms, nutrition interventions, and women-in-development.: Strengiheniag of spporrserics focuses on saff raining capacity, personnel manageme,t, district heath admiziurration,: pharmaceuticals, and. informatiici education, and wnmmuacaons. Improving efficienc focuses on managemen strengthening, cost sarniig, budget reform, and rduci:ghospital cowding and cost.. . . . . . Pow mry nac The .redi ould produce mgmficant results fDr ali segments of die population.' The targetlof.an i-ncrease in contraceptive prevalence to 6 percent by 199Z and to about 10 percent by 1995-96 :should be aittinable. . The nutritioni component targets poor women and children.. Improved peripheral health services and the women-in-development component should. pecially benefit poor rural Snthes.:. LeusoiLearned. Attention needs to be.E!aid to cheoveral rocnt budget allociiton; Om budget shortfalls preend staff firoii bhing hired for new rural chinics Becae bf budget constraints, special efforitne needed to contain:hospital. costs. Decentralized ma and administraion cuuld improvestc(toral efficinc. .; . oncerns: Because ofthe couny's fiscal diffilties the heilth budget may not iease fast enough to permit timely completin of .the investment plai and adequate funding of the heth cuare system. Thieacceptability of cost-haring measures and their effect.on demand for health servioes isn-* rural areas is-anothet concern, as ii an inability to adequately staff perCipheal filities. . ;. Ssrafabifiy. Efficiency imprvemeaits,. increased triing capaciy, cost containment, and government commitmeit to a steady increase in the ealth share of the budget should kelp ensure sustained improvements in health seices. CofnacnrigYCbooperaton: .Cflnancing was provided by the Europan .Communities. the Netherlands, and the World Health Organization..: UNICEF fint developed and testel a conmunity-: based food sciuirity. approach and a micionutrient deficincy pruogram that will be used in this projtct's nutrition component.: WHO. fnac:d a shodi-tem plan that established. the Malawi. AIDS Control .Prdgram; an AIDS compo ntjuis i duded mii this projecl.; lhis project fliances pitni of the govienient'slHealth investr it Finamng lan ini which secured'UN: agencies e involved' :UNDP: is supporting die strengthening of the Community Health. Depiitmeui of th& medical school. WHO is supporting the primary.: edalth care. program through provisLon of ciean. water; drugs, in-service tr.ainig, aid tehiil assistance.: UNICEF is assisting ia:the traiing of traditioisil birth attendants, d*rheW diseasc conIrorl, and related activities-nd is: suppOrting thw mater ald child health: progrm.: UNFPA is fufding a healith adviser and develpin follouproje.t also provides cntraceptives for the child spacng pogam and supports health education in schools. . .. . .. . . . . . : :: Io7y De Be7w uawi: ~P,uldtuian, FIcLkh mdNuiLiNtu Lior Crel;i.:SAR 903.. (hs ua- ituanl dams with curiwad circiUlit.i I :.; 226 BOX A725: Zimbabwe-Mltilatend Cooperation for Project Fonlaion ad Financng 1~~Ojcie -h Zi;. --.w-' Seon F-; . - '':f i.ji0ectivd : ee Zinibabwe Second Family. Health 'Project is tliu culmination Or" Jong period of iritoration betwoied IIe Bank, the' Government: of Zimbabwe, and': other miullilateral and bilateral kd6nt.Th projecl supports the government's five- yiu iDvestment program for population, bealth, ind nutrition. . . :r ..Proiect Fearuaw: P:rparadioa of diis jrojeci Involved a :br6I-baied, paiuticilpiory process empbasizing Zimbabwean iipts. Ibe project 'pmrsudon comritte'itlud&l represetatives (Ir a wide .ran,go of departmlents, prxuvincial officials, iand the Zimbabwe Nation'm2 Famiily Planning Coznnission. 'rlie committee set planning' guidelines, including a preliminary oitline of:projcct components, cost,, and financing;. ..Usin 'thcse"guidelind, proposals wcr: prepuard by district and provinciuliauthorilies, die Ministry of nealt, arid Zimbabwe National Family Planning Commiselon. Prop6sals'weie itviewed by the pmjec preparation commiliee, theflanik, and olhcr donc'ns-and then: revis.ed a ucoZsted Officials of the Ministry of E:ianecete,onomic Development, and Plannini also played an important role' 'maing sure the project was Consislanl.with nationa planning guidelines and 'develoment policies. . ... '.: Poverqt 'ipact:' Thc project will direcdy benertliow-ilwome housiholds,. especially womeu and children.. Zimbiabwc is about to enter a periud of'econumieidju.siment that will include siending adiis.. lim. pmrjt ewill"hep'pr poor d vulnerable houseolds from some advrsc effets of adjustmeAt. by mobilizing idditional resource% for' human rmsource ddcvlopment and improving the equity and cificiency of spending prigurams.. Cncerns: 'flseau are two conecrns: the local construction industry's ability to manage largo- scale hospital and clinic upgrading, and 'the goveinment's ability to recmil skilled 'midical personnl i light of stiff omnpetitibn from the private &ector. . Skstainabilfry: Serious eftorts have been made to minimicW the ecurrient costs associated with it. 'project, and. to ensure that they will' be affbordabl within the highly consTrained budget projted for the Ministry'nf llcalthi during-nnd'beyond---project Jife. llicse aforts include (a) careful revie-w arid modification of hospital and clinic. desigins to minimizwnxinruntvcosts Without compromising the quality of hcalth cav; (b). limitin 'tlie' number or. new staff posts in the Ministry oft Hidldi anid lirC 'Zimbabwe 'Nalional Fuxinily PlainningComnmission to a handful of high-level managers and technicians and critical outreac h workers in scriou.sy undcrstafftd arcas, and (c) .rstricting investments in transport and equipment to c:sential itens. "The project 'also.would support increased cost recovery, and would "'sttn:gthen the Ministry of IIcale's 'capacicy to plan for future ilvetzineit ine healti seclor consistent with piojctcfd nixure&nt budget irsources. Thbe institutionlti'sustainability of the project, and eslpecially its povety-f.ocued activitics, would lc ensured through an explicit goveaucnt commitment to deploy more community-levcl nutritibo ind family planning wokers ovcr the next few years, and exp&nd technical and 'mianigeri2. a-Aining for'nurses,'midwives, and community-based workers. ':.CoJacing/Caoperaion:' The project r9eceivod c6finmncingfionm the DANIDA, the EEC, the' "'Netherlunds, NORAD,M and the'. United'Kingdom Overseas Development:Administraticiit Project Malbvities weru decsigned b complement iniUy l ,ai acuiviiies.ftiuzidedl by IJNFPA in Zimbahwe. .. Rober .le ... Zirulabwt. Second H:ami ealty l'roject, SAR 931&ZDM, April i991: (This sh M interal documnct witb resrinur . .......... '' ''''..' ... ' 227 BOX A7.26: Bagldesh-Proviag Educadod OPPortuntiesfor Gils * Objec.ves:e. ei iducai t fora ad it oir css tpi md e choli cd to.imprve the;quaity of. cnmu,> textbooks * . ,''MM i .~ ..& .. . t;, ng~~~~~~~~~~~~~~~~~~~~~~. ; .. ...... .. ... . :. $. A'.. ...EE- - SE ..;S.:E :L * Pnyeci Feaneret -Toadchieve i'ts" o1bjectivM, ,the prdjc lnoroaW mes `e ep ec poor:children, esecially.:gis.: ::To increase Iheaaabzhty of classrooms,t project finances t constricion of simple Wadure, to ed w the help of telocal connmmunities at only about percent of die usual cst pfs odl buildings Tbngcho cde ud comitie and involve parents andicommunity.:meniS :de project:aisom wil fnaice ot satlite`scholsan-id nonformal primary e t rui>hi h.ikoA.bfthe r oul n d ifiocC curculum:is being introdiced t tl re t to ihe duldnenysronment ad ensures thir actidve dn participation in classrom .learing ... rased: eniollment of gids is. g proted by itg. 50 percent:.more womezn thanimen. ;epimtg tepach in their -pw 1 io igmore w ashing; iatrine, recreational'ankI sdo.anii3ry :filiti Or ivomen n.;giining PId1utefil Ischools; rcmo!i gendr icrmaoy. lankuace, illlustraions, ece an straining inr stitutes; hitwiibg hEaldi, envrironmSental, Ipop.ulation- .&iciiin and ish.iauo, fro textbookgs; .C4q M . ! . sr~ . .. ...... . .... . ,.;. ...... .,,. , A41 ... .,,, ... . ...... fiitrodi~e,~k'h6lth_ _6M&htnen thB. :curriculum, n xedn~ successful pilot secondary sc1soasip og mo rls : : Povert Impawct: The poor' success to eid tiob~i likelyb :iiiiiicit1cih .iiik FWiiq.f .... .. .... . . ........- .c . . -school Inrolmchn will inreascl bY..aboiitrd .pcew w peur.::a, Iwi MLry. Poor-epcI. St *. I. ..'...* ;* . 'i2tO***t*$ . zSSOAS F ..-lSik:'EC=:ei Wr ... il ;TW mg Wnois h ve. Cevits i i :to..-x expand riteiacs a cto«ls ..E.uc .mt^.a.d ipo..I. J .a1 e..Y. ..... tyi. .E 0 education. Th pno*pl mAittionaize of quality inpi incuding rtiv ierniniagmateials, aAinid t r ig.. E . e e . T * * *r . .........~~~~~~~~~~~..... ....... ... ..... . . . ....... .. ... T.. .. ...... < concern -s Sicindpnenea1971 h oernmen of Banladesh hias ruggle to Met tie basir educational needs of ;he nation agan h asof t verty i and h.igh uaop growth Despite some progress, access to education remains low andineuitablvy distributed. Th. education provided-is largely irrelevant t e scial and. economic nes of: mosudents. 'TEd Ucmu ; | opporhey: mavwslesf urb an dwel l ofers and chldren oppo favors;'zhW*-:'***4 bette-off fmiles Rlitinc.Ilude -tb-:~ rontud=: d develb.pznet.[.of. teecherist poor managem.ent .of classirom&nconstruction,imi 4 .;$intre-imup pressure: t ince c a sup for p chool dolle teachers;.., . . * , :, . :f; f . . ., :. f . ;.; : ~~~~~~~~~~~~.. ;.... . ;. .f.f**T**-.*-.:c; ... pj.. ct.is .. third iof eac. of evt sigific.: resourc: to inaititii detolowentOn. ;the financial'idc the'..... ...i.ma Riln on . *- :fiasnbee faxd sbte ihamineap zsalschedule. w'i bh 'from *~~~~~~~~~~~~~.. ..nn. ,.gj-..................;- f Rf .... -. ^ ........ .:f :....; f - Y .....- - .gownneut: : Cnc;ng/Ziperaiion: :The: Govermentsm of t Nethedands: and.Se are financing the .ateilite. school cumponezta and the .nonfornal ucation cmponen UNICE is supporim ong o-r curriculum and textbook reform UNDP .s providing Wchn'a1 assistanc ii textbooks, teacher trainig and, curriculum fo UNEPAis ..providig support fort.he governmt o icud po atont heathh aFind d ion inrimae andseonda educatn The Xinom of Norayis helping Bangladeshnprovide scholarships for the wseconday education ofpoor, is .:. . . . . .. : :: : * : : : :::.::: : * :: . : .: ..:: ...... .. :f:::;. . :;.. .;.:..; T . . ... ....... ..... ...... cc - > ; Y ** ; Y- : . N:v is hep: Ban .. .. :.. .. : a .:Sf Y*:.:::f>.>f;* -: ............ :Y a, u:c.c:, :.Y : .16 ; :^u.x pS ....... Y: - ..... ;x :....*. f... : -g. .... * 'gmdesh: ., :i E..... . ... ;: : i.: fc. . . . : .'. : .n.: :.: .: ... .. : : Y .n .. Z:f ... ........ .... ... * ..T.-........ 228 BOX A7U27: Jamaica-Redudcg Suwi to Higher Education Oj ectw Jamaica' ducadouPagi it and Stdeit LaPrjetinclda: comprehnOsive tiichnical sisanc packcago to help the gorvernmet prepe a proja tr the- rdabiliahon of tusic educatidn. This project also. fnmd ap *pmad&l prgam of atudit loans: Projtt*teauire. lecmse odf iwOresiag financial consuaital ts 'Gwcman o begliing&imth the 198637 sademic year, imud boding gra In a teiaUy institutions subsuently jSr6docdsUudent fees for higher alhcton. T"ose unabe o finane tlio n and other costs from their own resources are nbi@ible ff:loansLnnd a limite m ofacadekiii sc holarshis mu euawilaibk eistudent loangb futim d c linitie pubLic aeptance. of tbe | government's dedsion tar teainiate bogding.grnnta and introduce feeiai d %ill iIIso h1elp fina. *. Adihbt edncadonA . ihe project includes a comrdaensi ereview of baii ic ducaio curric lum and |fndistudies thit nie.the eprosed cDmprelhnsivc ieform of lzsic aiio.~ |.; Poi Impact lhes bT:loan. P ic designed to belp: overeome financial constrais by inrcasuiqg costrecovery in hi beredueiaioi. At td sanie timeit ensures that iJ-welt-off students Will be: abe to conifiue thir edluci in. Stuet loan for.bi*he i edicatoin e tareted to th poorer- segments of the popula-don; Iie student loan component ksipedto'offaet the impact on the poor . of the goverrnaoens cobst4covey policy: in pousecond.iy oducatou. The progmni should injpve: the qualit of the first uc grades uf education, particularly gtades 7 the equity ofd.ucaitional outlays.: .... ... Leons Lanid: Jimaica hasq6 t an educaio dt poam for more thai a decade. i But the program had a poor record of loai reovery and insufficient capital.to meet forecast demu More vigorous Joan cofOit effoit.1ave yielded a subs incilas in repayme:... Concers: it is simoriant thu te mai fr student repayment be e6forced .hs requiires continued politica cointmeint.; ' Suuba: bilky: Increased collcior rates are essentiato the e&ciivcnems and sustainabiity. of the pagrm.. Acoordingl;the Stiditns' L;n Bureaui will ttempt to k a fesb duinisrn slart by wridng old accounts and cn nm i oni more rocentarrears, using a coltinageny. The government hiowill prepareuilmuiitidve or legal measures or both to ensure thit pqople do. not emigrate without remying or .aranging to. repay their: loans. h go men so is prmparny legislation to nmMdate slr dtions from.loan btieficlaries in the i'Iil hennoc and is requiring: private sector employers to tihhold paymints from siades of individuals.who do not arrang to iPZ: Ochir debt. .n a.e .m' , .. . . ,, 'e .. * > - . - . C.cuka VaidaEso Jms':cir Ed.caaom:ftopam Preparatioen and eLon Propn,SAR 633M, Dcesba 1987. rThus - an-al documet wih rewtrhzod carulanon) 229 BOX A7.28: Pakuta-Iaeauing Piaay Sdheel Enreiuent Okjecaiie: A major objectivo of dic Siidh Primnary Educion Developpment Progmm ii to increase primury school enrollment in Pistan's urbaun siimis ani niral areas, pmrlicuiirly for girls. -At prese.it, pdn.ary school is attnd&l by only abont 50 pexrceni of he age cohort. EInrollment of aumrd feualies is pirlidularjy low, with le.s diim 1 prcent still in schaol at age 14. Projert Fnurns: The project encourages enrollment by consIructing an rehabilitilling schools aind increaiuing incecnlives. Priority is givent to recOnstruction of dangerous schooils; consIruclio:l of classrooms for schonhi -"H-.erc no building exisdL but at least 50 studenls are enrilled; consIrution of addition.d classrooms kt accutuiuaodate girnb in mosque ichools; andl cninsruction o1f chools where none Li available and dIer are weIW childreni live to nine yearii ld in a culchment area.of 2.5 kilomctLri for boys.or l.Silumetrs for ghti. Sd:hnol rehabilifalion includks construction of boundary walls wbich are inpoiutat in nrassuring linents Ihal girls are being properly piotected outside the home. Low-coaL * waler asn isanitaLion are provided lur girl.' and niaed schools. Basic furniture lsbo is provide and scholrl maintenanxe budgets have been increased. To encourage more earolinieut, the schoul calendar wans adljmlcd and truaLer flexibility was introduced in setting hours and vacation schedules t met die needs or runil ommunities. On an ezperiment4 basis, tin use of tests fur poauWtioim thiuugh grades one to diree have been cased. Scbool uuiforms hive been abulisheL in rural armn. Seholanihipi are gmranted lto al girls wwo complete p-ale five and wis6h tIo exiinue to secondary school. Decause snortaget of female taLcher.; have been identilied as an impiortant impediment to earollment of girls, the project alsu nnppor;t' imprvements in ncuitment of women, including raising age limits for entiy, giving syeciual urecgnition to outsnding teachers, anl-where shortges persiat-reducing entrance nrpfiremeuns. Poverty ympon Tihe prsject targets umrc a24 percenl increase in ocveall courllmene and a doubling of mrul feisale enrollment in five yers. Lesarn Learned: IDAb suplpwrt for primaiy edwuciatiun in Pakihtun has shownv the value uf single pnovinc operanLins lur streamlining implemenitation, die importance of clear management systems and lines ol' ctnmunication, ihat the iune requinre for innovaLion is longer thua originally expected, that testing and eviluation of "sofRwar" is important antd thal construction slandulrds und methodi must be familiar to local culntnnctmn. QMcCrnvL ane Szaiainabillty: The major isk is cutbacks in govcrnment cxpenditures on primiary lucaltion or a govenment inability to implement the physicad or institutional componcatLs. IIowa:ver. the. IFY92 education budget for Sindh lProvince shows a nnminal 21 percent increase. O4financing/CkmipErad.n: 'The Kingdnm oft Nomriny and the Ulniled Kindgom provided ci>|IaIinciaig., Jaiean Sc*iawlnr.| Nkiman! SinWIh Primnary FitnMrwhnin frveleipmnw Prngr.m (I:Y91-9%), SAR H7I-M'AK, r;-f1unry 10. (lhW. iU mi imaiciil documenl with rtwncled circlatmnn.) 230 BOX A7.29: Yemen-Demand-Oriented Basic Tniming fiWd Objercive.s: Yemen's Second Education Project attempted to address tbe ctucaiiomil naois 'if rural communities. Ilie prinary objectives were to ininxrlice nsmorenivevanm trininiii pnignims in primary teacher training inltituftX, aoinoLmc ilia vleveloiniiienl ancl exktnd hisic training tn remole mirni arenas, expand vocational training tn help nrct the shortnae oft iled labor in the countzy, and raise the qiuality of insiniction by prodncing suitable instiuctional iiatc iails. Projeci Frarares: Alihough Aleniwvional ohjectives were. realiAcd generally, enrollments in voictional tnrining centtrs were disappointing, and a specialis.t and fellowship tr.miinag progran. cVuid not No implemented because ol a shortage I LINDI1 tundtt. Une veay succeisslul conipllwiet wa4s ihe creation o)1 a $1 million bisic training lund. It Wa;Liis usl to0 finanLe. couirtnicoin ti umn equipmenit to Ceitle smaill training c.enteri ii naomil nvua. Village Irtining progrnis have proved a flexible tool and If milajor inte!nfiv to Inlodl development grouips. 'lhe prgriuns' responsiveuess to the coznawziiinS' neeils, the Ithct that tlh: type of training was ideitified by the targ,e Iplpulations, inod die siiuiid oconomic prospectis for traineees have nilI cointribulted IU sigiific;ait dslemadLl Fur the basic training, scheme eslabli.hejd under the tlin project. Pnverry lr,wacr: 'rhe degree to which ile lasic uaiuiiini prurgaiu tulfilled uisLb4 clenuind isi cvident in ennrilhlment increamse: Ili l'.Iicipntin in fite-ncy anmId skill h-aining prognuns incrnEiL'd frnm 2,21XU in 1919-M), to} lO,(XX) in 1 981-H2, iadie lo 15,000 in 1982 .13. Enrullments in all skill categories diihwrAl dlranialii inwr%n'es, inml driup-nul ndl fhilure rakts of only 6 percent. l.r.vhdns LDwalnd: Lulier alleuilits ;at skills ftining tuld tlkeu (ie Tnou tuadlilionwl approach o1 constructing voralionajl !;i1o0l viear uirai aur:as. This propct.t's de:centraliLcd appnrach mueun that distric; tr fniininj rAir prgrnuns couiild b coistiunly diapted Lou mt: locadl needs. Wilh the demonstrable efticacy olfa comn auuLity-oiented alIppruJmli, 1novern-men nn pre:entLtion on hIC district councils: aind unaiuzami bualud becauie less a ctriiiI l nlh:ini:.rn and morc a symbol of the veniure's ,Lj;tuaz.fi,Gvc IiZEltliC . nwerlLv andSustainability ol existing effoyrt and eAl:NIiuii plans depends un the continuing, ecmitrment ol insti uctkmm% willt rclevanLt sklls amid nrs.%nue maliliznnion. Cq!fin:nringiCrn'pe iou: IJUNDII provided telcnicadl a%sistnce. LaIrencr SISalmcn YGmenA rab Ztepbliic: Swomd Educatin PNtjcxi, I'It Soll. Mimy P1IX4 (Ihi- 4s urn. imiriraqd atuaLjal will. nrAlitld | £irmLmtuuik'i ) 231 BOX A7.30: Jamica-Icmasing Oe Equiy and Efficiency of Sucil Senor Expenditures . . Objecuives: The Governmcat oflJammica's Iman esources Developmeat Program supported by IhcEBank-financed Social Sectors Nvclojmcnnt PIojcct wis introduced in 1988 to aaddress social sector development and poverty rduction priorities within the constriints of Jamuica's econamic * agjusuneiit program. It. main goals (urta) reo erse iectsetbncks in humm resource development thrmugh renewed' investments in education and health, (b) reduce the WorSt efecs of poverly through.' bfrffr-targeted programs,.and (c) implement 'policy aud insiliuLional reforms in the social sectors to improve the effectiveness anul efficiency of social services. The priject was designed !o address' mounting probleins-4eep culs in goverznment social speniing mnd detcriorating quality of and capacity . to deliver 'social services-by providing' i policy 'fnmunework to guide andn monitor the government's social sector sitraLegy and .luar: private investmcns within that firamework. Projecr Features: . The progin1 cecom&sses 1i? poject designed to iWice pxweriy, fqcu.hmue on nutrition and employmcnt,' public health, uned duication. The major policy commitments involve'. "(a) tddiret'cta social spending in favor of.hcalth andeducation services that are more cost-effective and euncst likely to reach the poor, thus empiasiidngyprimary health caren and preprimnry and primary. : Oud6!in; (1) iinproved targeting of nutrition aid to benefit the poor at a lower cost to'tho government; (c).cost uavin, ix the delivery of certain health and education servicz;Jthrough measures 'such' as sbective cost recovery in public. hospitals amd.secdndary schools, divestiture of 'nonmnedical haopiti services,:'communhy paLticipatiwi iii inschIauid health clinic mainlenance, and impwvcc *cuciment,. storagea risoribution.of'dnigs; (cjajiproved budgeting and fiancial :uanegement for health and.. -educalion' milistries blror bcllrcost 'containment; aul (a) iinstiutional strengthening and. impacL: imtlin Aghe twnagrenl a,.monitoring; aud policy.fonulAtiuon of die sucial. soctors has b6rn the introduction of periodic household-based assessmtls of living taiandal"Wi,ombiueL' ..with improved 'statistics on pulblic health and' education -inierventions,' The project. t _7nances. rnaq. health care .development,naedicaL equipment, liharmaceutical supplies, upgraiding preprimary, primary. and .elementary-ige school, 'a primary textbook projgraim and health and education institutional strengthening.. . . .. . .'.,.;PoIM '.InWact:"' The primhry'health cars and preprimary and'prinmary education program: 'would imprve .the poor's access to these services. The targtet programs3uis 'to mitigate the worn:. .effects of povcrty for the most vulneable 'goups, c ially womn 'and axildr @a;.. .'". * Lessons Learncd: Pat cxperience widi'diec educu'uc projetLs and t wopopulationaiad heath- .':prj:cs':-:has demonstrad ''the i.npoltinc' ofr iik :. involvemwct-e-_specially . daring "initial' 'implemnenabtion. 'AzIkljio:Iuxly, g reater attenliwiu shouldl be pixd to .suciolakical factors ini project design,' adequaLe provision of' recurent expendilun:s in schooli, a clThi' hierarchy .pj objcetivs with" 'iouun. for Ilexibilily, and emphtiison iistitutionil'and buraiumtic' Angeimts. .... " Svstonabilir: .. irogress is being moitored'tbrlou'h.a" annual Bank-govcrnmcnt review, with the paiticipation of'othdr'donors. Th'hc pojectcovcrs five yearcs... Jeausicnf the success to -diii... 3aniik is now preparing aifolloi-up project, to continue its policynind fin'ancial u`pport of the roforms. .. .''.'..C) ancinMg/Coperzion:' NP is financing astitional OM aff. UNICEF is assisdng . ii reitring existing 'mdcbanisms for monitoning instittion-based service delveu l Svey sstics..''."' ..~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ . ..... 'liitai&" S6eiai Scirc Divelopra'nt Pis*; SAR 7573-3M1 June 1989... (Tbisiu an 'inleaniml ducuinwaeut wilk natzicted.... circulation-) ': . .' ..*.' Part III Measuring and Monitoring * This section discusses the investment in couwzy statistical capacit to improve data on poverty. It also addresses how to monitor the Bank's effort to help countries reduce poverty. Chapter 8 Improving the Measurement of Poverty Assistance Strategies to Reduce Poverty called for the completon of country poverty assessments for all active borrowers. These assessments are to be accompanied by staistical reports-prepared with county counterparts and UN agencies-with proposals for unproving the quality and reliability of country poverty data. f the proposals are accepted, the Bank also helps arrangefinancing and technical assistance. The statstical reports should include: an inventory of relevantsocial, national income, and household data with respect tofrequency, backlog, and quality: * an eYalion of national implementaton and absorptive capacity; and * proposalsjfbr improving coverage and implementation of the statical base. Priorities to enhance data gathering should be detennined, reflectng an assessment of demand and potenati demand by policymakers, and the couwwry 's implementation capacity. The ain is to provide a basis for analyzing the country's key poverty problems, tracking them over tme, and formulating and implementing well-conceived strategies to address themL 237 Chapter 8. Improving the Measurement of Poverty Introduction 1. Thi chapterdiscusses ivadng in inroving die measurementofpoverty. The immediate objeedve is to provide backgound for the preparation of the data evaluations and proposals for improving their quality and reliability called for in Assuance Strategies to Reduce Poveny. This chapter encompasses the income and social measures discussed in Chapter 1. But it also builds on the intervening chapters, which address quandtative poverty-related analysis. Those chapters provide a basis for knowing what questions quantitative information can help answer. 2. The chapter has two sections. The first addrsses why and how to mease poverty, and how to decide wbat level of resources to invest to improve poverty measurement. The second section dismisses household surveys, methodologies, and costs. The chapter emphasizes that invesments to improve poverty data should be (a) evaluated for cost-effectiveness, (b) viewed in the broader context of developing indigenous statistical capacity, and (c) demand driven-if the investment is to be sustainable. Indeed, ivesments in data gather and processing require the m ost-benefit scrutiy that is applied to oiler public investments. L Investing in Poverty Measureent 3. Measurement of poverty is an investment. It is not costless. The magnitude of resources to be used to improve the quality of poverty data should be determined based on the likely benefits. Ibis decision must be based on country circumstances, the state of the statistical system-and how the data will be used. Knowng details of the poverty problem can sharpen the analysis and improve th cost-effectiveness of policies and intervenidons aimed at reducing povert. If there is no interest in analyzing or actively addresng poverty problems, ive ing n asu t will have litte short-tenn payoff. But even if intervenfons are not lily in the sbort term, tie information may help tilt public opinion and policy toward poverty reduction. A. Why Do We Measure Poverty? 4. Policies or programs designed to reduce poverty require, first, a clear understanding of the nature and extent of the problem-and the economic and social caiss of the poor. Once policies have been adopted, inforation is critical for evaluating their effectivenes and for fine-tning their design during implementation. in specific terms, measurement of poverty is needed: 238 * to gauge the mnagnifude of a country's poverty problem. (How much of the population is poor? Where are they located? How poor are they-in terms of incomes and social indicators? Is the problem serious enough to warrant moreintensive investigation, and a more explicit policy and program response?); * to provide a statistical basis for analyzing the nature and characteristics of poverty and for systematically monitoring trends in its incidence. (Is poverty increasing or decreasing? How is it related to particular policy interventions, or to the nature and rate of economic growth?); and * to influence the design of policies and programs, whether they are deliberately in place to address poverty problems or they have significant-if unintended-consequences for poverty. (How do country policies and programs affect the poor? How can information about the socioeconomic characteristics of the poor be used to improve the design and the implementation of such measures?) (See Box 8.1.) BOX 8.1: Morcco-Datar, Analysis, and Public Policy ~:i...n JM6rocoo, limited national capacity has afficted the collection and aualysii of data on poveirty ad social kiues.I Itumr, this has:hinJered the domestic debate and deciionmalding as well ::'i\h&sdhiloguuiitwi tbhe Bit :For example, drawing.on government-finunci1 studies, a 1986 reportr- on agricultiral . incentives :pi*-t6 a'detailed and thmough quaititaive inalysis of the incentive:: ::stricture aiid agncultural efficiency, which helped to sharpen debate over the direction of incentive.> reform. :But the report was silent on the impact on farmers and wage laboreN in different parts of the: :country-di, &dispitc tbe rport's di buision'of distributional consequences"of goverment policy, :albeit iiagenemi fshion. :. in a.enbn hi . ... . . . :.An SMSb surycy has recently bSee completed. These data should [uel p Thes daa shuldbelpokecy-oriented analysis -of poverty, partlicularly lhe impact of public spending anid incentive changes (not least subsidy remova) -ondifferient groups. .:Meanwhile, tlhfirst :stagkeofthesec.ond skuctural adjuastment.loan to Morcco.. >:IS supporng broad changes i public: spendiig-4in favor of primary s*oal services and rainfed . agriculture. Meanwhile; the LSMS ta and other information will be uis6dD undertake studies on the. direct and indirect incidence of.public snding and selected incentivechanges. These will include (a): the incidence ofEagricultural price changes and public spending on ruial inftastcture and services; (b)` : thc incidence of public social spending, including the dcinants of the useof publcsrvices; and, (c) the:coverage and effects of transfer schemes-including school fe.ing and public spending policy .... ...... f. . . ... .... . .. .Maealton. a. ;. Morcco AgniuralPiceS andlincenzwer Stdy. Reor 6045-MOR, May 1986. (Mhi is an t cumen wads b LivingiSindasdUMseurc-t Suirve See pars. 1927 below; .... .. lb *S;X -t >-e Sf- -.- ':x''*:.*y 5. The efficiency and accurate targeting of poverty-oriented interventions is important in the formulation of sound economic and social policy. Countries have introduced policies and programs in the name of poverty reduction. In some cases, these interventions have involved large economic distortions and budgetary costs, more often exacerbating poverty than reducing it Better information on the achtal impact 239 of policies offers the prospect of (a) reductions in wastfiul and mistargeted subsidies and spending, and (b) enhanced growth as distortions are reduced. However, the infoination bas needed to achieve moreaccurate targeting also has a cost, which must be weighed against prospective benefits. 6. The measurement of poverty has a govenance dimension.' Public accounabiliy for poverty outcomes begins with accounting. But the collection of information will not by itself lead to accountability in the absence of organizations and mechanisms that analyze and disseminate information. Thus, much of the Bank's effort in poverty measuement centers on assisting governments to improve the collection, analysis, and dissemination of socioeconomic data. And, increasingly, the Bank's focus is on helping to build the local capacity to undertake those tasks (Box 8.2). BOX 8.2: Governance-Strengthening Statisticdal Capacity in Africa The Addis Abiba Plan of Ation for Statistcal leimetin A. frica in the 1990i was fi;rst,.. proposed. at the 1990 Joint tonfenc. of Aftican plamners, satiis; a mophr . Te IECA's Council of Ministers later adopted it. The plan proposes an mtensiv&aidinatdsp progran to strengthen statistical capabilities:in Africa. The program would be i&re&-tiecd iiompnsing national rinal, and globrI activities. : .s a cm oribution -t theprog , the World `ant hprepared, A Satgyfbr E ci SrtclqCpdcidand njbnnu ManagentS inAfr:ca "Th-paoutlis a se n as STATCAP, to make national statistical systems mo3rneffectieb.y focusing.as muc:honthe deiiaaz:x side and the statistical users, as on the supjiy .id >STA C i the D .insitutiona. capabilide in :ee :key complemntrta da llction a p ssinlie relevant analysis, and mior zion straje and: dissemhiatioiC.4t it& die gee sttoimtire &C jinkaiges bltez die supuliers ad the users of statiics. trougthe ute ge i.. of.s.atitica advis.r- groups and informl working goups. Athou t 9s ou de, epha i o tvea:to the need to pit vido regial suppot 6ir tnng,techical s":st st 'th 1vo of .approprite m odbloges. . . p at.. 0 0 ~ ~ ~ ~ ~ ~ A~ Th- ;mtisil stae of tie axg il s f ' on: tming a conseUs needed appr onesan .on puamg ci expene in specific countries. e" 5if ;tb 'th co.ntiesUi. :Activities will includ. formation or gtonnefi ? 5 in es&and ies-- ubsequent implanentme on. Sc;ne monitarable activitieswd e (a)singporiid de i- idat needs,:(b) "establishing a tmdabl. abrc dvnt thie statistic system d.. a (c) agreeing on a unifiedxdonor- governent thrb6zto-fib,yer ltep turb iuid fiuanin 'pl'u. | . :... sos. m: fefltgO p 0 O3'7 . *..... ..... ... ........................ essons learned: fromt the first gro upof &untrie:s will h iKi o xaudn h {-f''strategy. oters.-. These.lissons wall be dseminatcdiufraniall. w .orkshops awl Ps * '. u:s,- i' rD tugh-egona confnce or p Maihan .... ........ .rh . .a...g .. .. ... y . 1. Sce *Maging Developmcnt Thc Govcrnance Dimension-A Dacusuion P SccM9l320, June 1991 (Thi is an internal document wih restricted circulation.) For a brief summar, see page 328o the Handbook. 240 B. How Do We Assemble the Data to Measure Poverty? 7. Data for measuring and monitoring the socioeconomic aspects of poverty are collected in various ways. At one end of the spectrum are populaion censuses. At the other end, are ad hoc surveys on various topics, sdtched together into quilts of varying quality. In between, are household surveys. Household swveys, for example, LSMS or SDA surveys, offer a sysmdc approach to collectng data with greater frequency and less coverage than censuses-although a weil-designed sample can represent the entire population. Because no single source of information wil provide all the answers, the secret to an effective informadon system for die various dimensions of poverty is to combine instuments. These different apprcaches have their own strengtis and weaknesses but, when used together, provide complementary information. S. Censuses and Household Surveys. Censuses and household surveys differ in scale and coverage. Censuses typically take place every 10 years. Five years may elapse before tie results are known. The censuses provide the most complete coverage of the population. But the scale of the exercise may limit a census to collection of a few demographic and socioeconomic variables. Because of the ime lags, censuses are not appropriate as monitoring tools, but provide a frame from wbich smaller samples can be drawn for difF6rent household surveys. Household surveys cover a broad range of inquiries and may use large samples or email. The surveys may be single topic or mulitopic. One of the most powerful fiatures of household surveys is that, for the most part, they use probability samples. Ihese allow accurate esfimates of the proportion of die total population haviig the characteristic being measured and estimate the lielihood of error of the esimate. Nevertheless, unlss the sample size is large, esdmates for small areas or small subgroups of the population cannot be generated. 9. Communiy Surveys and stincional Records. These include sad-alone surveys designed to collect miformation on the institbons, socioeconomic infrastructure, and community services within which different household groups may be living. The group includes institional records that may be part of a sectoral information system-such as health center records compied by the ministry of health, or similarly, school records maintied by thenmist of education Finally, they may include sources that provide community- level information on prioes, wage rates, and so on. These are all important sources of information for helping to understand the envmntal or community constaints that may influence poverty levels. To the extent that commuities in an area may be homogenous, commnmity-level indicators may be especially cost-effective. 10. Eceefic Approach A variety of sources of information and less formal approaches to collecting data provide usefil complementary iformation and are important sources i their own right. These include small surveys using nooprbability samples, case studies, and sociological and anthropological studies. These approaches can provide a depth of undstndig of the issues associated with poverty that the more formal and statistically valid approaches may not This class of smdies includes the increasingly popular tehiques of rapid and participatory rural appraisal and beneficiary assessment. Indeed, with a little digging, informtio on the poorest groups can be pieced together from project, sectoral, UN agency, academic, NGO, and other sources. However, such n approach does not provide a systematic basis for monitng poverty over the long haul. Box 8.3 coneys an idea of how well aggregate inoome and social indicator data "predict" the level of poverty in the absence of a household survey. 241 BOX &3: IHow Wel Ca= the Prealkwe of Povefly He EBdased wWeoata Hoessehold Suwy? poribcSuppose orne does imat have aocces to a laonuelzld-levcl bndllu or iowme suirvey. to it .dll potsible lo.esimate the prevalene of rovety id a onounty an tbI6 bsls ouly of readily availhable aggiregate economiu uki bicinln indiaotos? Rneentl tuin addrmvsed hi.s luestiofn. Taking epunotries for which household KurFys sind aggregate indicaukini exist, the paper kt;.velqdl crnnerlntionu he.ween Ilme two for 22 cmunrities, mind thn extnpolatd he results for countries wiLhout Jhousehuld surveys. An estimate of the head count ini eacb country was first made ftom bousehold sUrvyL data. Th available aggregte data were then uimed to. pnsict th lve at poverty in asda country by using a regresoa moe for eanch country estimated for the ooer 2i countries. 'The results indicated that the two cslunancs were positivey cundal (the condatioa octfdicieit is (1.87), bul that die absolute emirs in proeuic¶ig UNh prevaleno of poverty wer quite lrge. Indeed, dhe avenage absolute emrr as a percertage uf the originail survey esimale wus 49 percent: There w.as aLso buhstunitml misidentificution of he rak onler of countries, alhuugh dhe Iwo cwlintries with the highest incidenee tf ixpverly were cLirrmtly identified without Burvey dais. Tho disarepwncies airic for two reasons. Fiat, the exient ur inequalily wiales froin ecuntry tus cxounlry. The extent tof iincjuality is difficult to pick up without disinihutioal d:ta from a buuwmhold surve.y. SKamld, cowntries dilfer in the relatiornshir betwern smcial inlicators and cunsumption-as-ed poverty ineasures. Some countries wher. poverty is exnsive, have favoabtc soial indicators such sis low intant mortality (owing to effective public hcaith care). lbese differences among countri mauke it ha:ux tts IL;sems tie extent of poverty withiout the benefit ot a survey. I lower, the readily available cwnomnic and mocial aggregtes can give a very rough measure of lhe prevalemnc oul porty in a county | btBur~~~~~~~~~~~~~~~aia Ramlilohn l~~~~~~~~~~~~~~~~~~~~. ................... ** *Itivrffj Itwuj.arimunr A (fmoinK Ccaacwezr Imad Mreaures,^ World Dankl 15.41 Workingl Papa 35 47............................................. PEW C. How Much Shodd Be Spent to hnprove Poverty Mt 11. Country work aimed at generang informaton for poverty analysis must start with an inventory of what already exists. In some cases, the social data necesary for muting most, if nt all, of the key indicatrs for trackig poverty are already collected, perhaps regularly. Howewer, even in these cases, it is usefid to assess data quality, based on an evaluation of the methodology used to collect tem and the timeliness of reporting. What may be neded is not a lare influx of additional data, but help with improvig the collection and analysis of exisig data, identification of the most important gaps (complete with proposals and assistance as to how tD fill dm), and guidance in formulatng te poverty profile and the appropriate set of indicators (again, ensuing that the mechanism for thi regular monitoing is in place). In other cases, the basic data may not be collected. Although data entres are provided in intenaional yearbooks against various indicators, these may be based on simulaiEons, exalatations, and guesses, rather than acual measurement (see Box S.4). 12. The critical middle step in analyzing the scope for im in poverty data is an assesnt of the country nkpemeffon capacity andssasfical system into which the collection of statstics on poverty fits. One-time efforts to survey households may be justfied as a means for esblishing the baine for formulatng a profile and identiying the income indicators for m fu monring. But, broadly speaking, the approach to imprving the availability and quality of pov data shoud take plac within an overll stegy for country sisical capacity and indiaion building. The objective must be to establish 242 BOX 8.4: Are Socal Indicators Based on Observation or Ersmas? * . * .*,** ; .. ..~. . . *.A .`. :. paper by die UN 1isearch '-'tute f- Soci Davelopment poined to a major probbi withx |>social idic iors i1:d6velopingcoi iltdei.| it argued that reliable,. observadon vedstaticaldata for |a`p iuibeir cr o o Ihizg socaia inb* icaors, do not exist in a many countriesisd hbave little . pstof 140milg iauill)leso,,usi.ug cuarent methiods of data colleotioD..: Pod IMPowt. oc r.- natolltrt lntemrationFkl pub.,uicatiDs issue data on such importint social indicators ILS infant s mortality oft and life arewhmcy fo neiirly every country in the world.. But, he. paper rgued, .the ..ffirs given .in Ccse publicatiops for most developing countries a not obserational counts but efirneam made inVl natonal o:r inernuionai offis using daisuln lans and u L The miites serve either to correct reported but nbviously erroneous observationaL data or to fill gaps where n direct observationul data . exist. l:.l1 sq.esimatcd figun,:e piper noted, may differ mnkedly frn one esdmator:sourc to :nother for tc same country. . : : Ihepalper arguedl Xt csdinaied fikures LUI play sin important role in giving die best available quantitative. asscssment of a cou!ry's sociald conditionw in a- paiicu field and thereby call atetaion. to the need -or iotiwai uitd. 'Mey canuot, howeyer, be used for andylic purposes (for exmple,. to... identify causes or affecs), nor. cao they be used to monitor progrens in developmental elforts-natioual or internutional. It makes littlc tense, for cxample, lorelale a:increase at five:years hu'life.expeclancy, over i 10-year pezidd, to i health program or:any othe factor i a develping counpry when the increment in question is n6t an observed rigure but is.'lAkenlromh a iniel that .projects that amount of improveimenit for countrics at a cumparable level of developmenut. . . . :.Thie paper:ailso uoted that estimates, identified as suchjin tlbo origiinal publiications, are ohen overlooked by data users or tend 1o lose identification 1as estimates as they..ar pickod up and republisihed by other orgainizationLs or individuals> Scholarly works have announcod discovery of ::.inportut rilin about .social dovelopienit. in delvelo'ing countries when.in .6* they have discovered only ihe assumptions of the modelmakes pr&ducing tho estimates. a. Dliairmn Glii, Michad HFlokina and Donald McC'rmDan. le'o Rtllection lluinan md Scial Iddicalom for Devccpneal,p IJN Rcvamruh lunailIu. for Social HdciognaDiuaassivll Paper, 1988: a basis for systematic monitoring of income and social indicators while strengthening local staistcal capacity. This will pose a dilemma for many countries. The actions needed to improve capacity take years. But, in the meantime, there will be pressing short-tem data needs. Each government will have to arrange to meet the intem neds2 13. Building on the inventory of what exists and an evaluation of capacity, the next questions are strategy and the imvestment decisiorn How ambitious should the govenment be in working out an action plan for improving the data? How much should be spent on improving the quality of the poveny inforimaon system and, in particular, should resources be comuitted to building statistcal capacity as a complement to what already exists? This decision depends on dui, improvements in the information and analysis that can be expected, and, in urn, on the likely impact on program and policy design. The appropriate level of investment, then, depends on the additional value expected from incremental expenditures. In some counties, for example, major policy and program improvemenincluding significant efficiency gains and cost savings-have resulted from well-focused surveys and analysis. (See, for example, Box 8.5.) In other 2. See Rmash Chaner, ainformadfn Syntma and Basic Stadttics in Sub-Sahamn Afica? World Bank Discusion Paper 73. 1990. 243 BOX 8.5: Jamaca-Household Surveys Help Mute Sodal Programs More Cost-Effectie i : (hd Jamaicu Survcyof Living Conditions (SLC) was designed and instituted to sere as die monitoring mcchunisuM for tho. Human Resources Development Program ffRDP),:u mutifacted,: multisetoral initiativo to .'revitalize the social soricea deliver .sys3tem in Jamnaica. Analysis'of th&S dS ai'was used in ltireview of Jamaica's nutntinn progmmos. The 'dats showel thut benefits'fr general. food ,ubsielid:s were rogressive while those fmm the food stampa progrim.-and from ti6 school feeding progrmm wcre.progrs&iive. Kinder the 'IIRP, genenal food subsidies hanilbeen phaLsbd out and targeted prngamms expianded. 1in refonrulating tile food stumpwi. progmrm, SLC djata were used, twice more. Pirnt, daLi:warn usod lo cnnhirm the choice of public health cliniics as tbh food stamp delivery system for raching children under age five. Ibere'liad been concern thaI malnourishod children mihlt not have access to lealth care, and would therefore alsc iniisr out on the fod stips prograsn. SZ data showed that malnourisled children werm, in fact, rmaching clinics. Increasing !bcii paxticipation in the food stamp program could be accomplished by making registration procedures easier, and not necessarily by introducing a new delivery mechanism. Secoznd, analysis of the SIC, cxpndihire data was used to deterrine the revised eligibility ctite.ri.i :for rize means-lasted part of the pr,ograiza, aud benefit levels for t1ie 'whule prigraum. Benerit levels were. double. T'he eligibility criteria weLw niHde sensitive to househuld size, and the threshold level of incume was raised. wore than' twofuld; T'lhi SLX tool is being used in a variety of olier programs iad policy. deisions sueb as' a titboi program, :rAwing pUverty, idetLifying Ceamin-headed households, projecl impact evaluation,' formuatiun'uf a ust=' fee policy fru&heth catre.: and cost-arfitidntid etudies of educational invswamot ahci:rnatMes;.' To ensure d,t SLC's fullest use, h6' Government of Jam.iica is emplnying :.scvrnJ'dvrenucs of analvsis.j' Some analysis is undcrtaken by government stiff, someby thc locad acadmiziii community commissioned by government, and some by interational rwsearchers under contnmct to die Jamaican g overnment and paid with external funds. In-house analysis is being perfonned by the staft of sccvral of the multilateral and bilaterl developmeni agencies. 'Th government haus madc the data available to private researchers. This morn open and aggressive policy of data analysis and use is critical in ensuring that invesstment in the survey is fruitful, anmd lthait it naffects policy. Margaret GrosJh Source: 'The HouseEold Suvey esa Tool fol Picy Chmge: Lessons from dhe Jumaica Survy or Living CondiLions," World' I,iik LSMS Workiuig Panpx ZO, I991I. countries, however, incremental data have not been analyzed or used. One way to ensure that the data will be used is to include users in the design phase. 14. Fmancing is also a key question. UNDP, UNICEF, UNFPA, and bilateral donors have been important providers of financing for updating data collection systems. Bank-IDA financing also is sometimes used-in freestanding technical assistance operations or as a project component. 244 H. Household Surveys A. Overview 15. For poverty analysis, household surveys have the advantage of providing socioeconomic indicators, including measures of income and spending for diffirent subgroups. The surveys make it possible to analyze the distribidon and the deph of poverty in a given populatdon. The analysis to which the survey data can be subjected wil depend on the size and design of the sample and the scope and coverage of the questionnaire. Large samples are needed to address the distributional aspects of poverty, and lengthy questonnmaires are usually necessary to analyze the key deteminants of poverty. Household surveys can extend from the small-sample, very intenive inquiry to the very large, extensive survey. The suvy design is larely a matter of tradeoffs between these two competing demands. B. Single-Topic Household Surveys 16. When the United Nations and its affiliated agencies were established in the late 1940s, considerable attention was devoted to establishing statistical systems for monitoring economic progress. The dimensons to be monitored increased over ime. However, because these data were ofen aggregates, they allowed litle analysis of income distribution. During the 1970s, as attention turned to distribudonal and welfare issues, household surveys began to assume prominence as a way of quantifying the severty of poverty. These tended to be single-topic surveys, along the following lines: Household budges (or income and expenditure) surveys are conducted every five to 10 years in many countries. The prnmary objective is usually to recalculate weights for conmer price indices, but, depending on the methodology used, these surveys also can be used to construct poverty profiles. * Laborfbrce surveys are another potentially useful source of poverty iformation and can be used to examine the relationship between occupation and poverty. Their main focus is esdtmadng employment and unemployment Depending on their design, they can provide useful data for gender-specific analysis. * Agricuural swrveys can serve a similar function for the sector wbere the poorest segment of the population is generally found. But the surveys' main puqpose usually is to gadher production, output, and cultivatd-area datL * Demographic swveys have had wide international support and generally aim to be comprehensive. Their focus is on age, fertility, contracepdve use, death rates, and so on. * Other social surveys may be regularly conducted or may be ad hoc. They cover a wide range of issues such as nutidon, literacy, and health, and can contribute critical data to the Understanding of poverty. 17. A number of counties have been involved in the UN National Household Survey Capability Progmme. This program gives assistance to countries to establish the necessary infrastucture-including a national sample frame and staff training for field emnmerators-to conduct a wide range of household surveys. Although ostensibly agnostic about the types of surveys undertake in this program, the National Household Survey Capability Programme has tended to encourage the implementation of consecutive singe- subject surveys. A typical program might consist of an income and expenditure survey in year one, a labor 245 foroe survey in year two, and a survey of population change in year three. Program designers hoped that the accumulated resuts of the stand-alone surveys would allow for cros-sectoral and time-series analysis. However, this effort has encountered major practical and methodological problems, which have so far prevented fritful analysis. Incongruities across the various samples have been a major problem. But insufficient domestic resources to fund the required effort also have been a factor. To some extent, this reflects the fact that such efforts have not been demand driven. PartEy as a result of these problems, in recent years diere has been a strong resurgence of interest in the use of analytically based nukisubjec iyuegrved surveys. 18. A number of important internationl statistical iniliatives have supported the implementation of national survey programs. These include the USAID-supported Demographic and Health Survey, which superseded the World Ferdlity Survey; the Inter-Agency Food and Nutrition Surveiflance program, implemented by the FAO, UNICEF, and WHO; and a number of smaller country-specific household surveys supported by bilateal donors. C. Bank Initiatives 19. Although their origins differ, the living standards measurement surveys (LSMSs) and die social dimensions of adjustment (SDA) surveys in Africa use household and community surveys for poverty and welfare analysis. The Bank-developed LSMS and SDA programs have specific objectives to meaure welfare levels for different population groups. They have been developed as multisubject integrated surveys deliberately to permit the analysis of a number of dimensions of poverty, and the interrelationships among a variety of social and economic factors. A comprehesive analydc framework underpins both programs? Both rely on personal-computer technology for data processing, which reduces the time lag between collection and availability.4 The SDA has also developed a shorter household survey, the priority survey, which complements dhe more ambitius integrated survey (which is similar to dhe LSMS) by providing a quick means of identifying the poor and vulnerable groups and monitoring changes in key socioeconomic indicators. In both cases, however, the final instrument is carefully tuned to country circumstace and to the policy or other imvestigative goals of the analysis. The two programs strongly, and increasingly, emphasize local capacity building in data collection and analysis. 20. The LSMS began with coverage of Africa, and Latin America and the Cadbbean, but now covers Asia, Europe, the Middle East, North Africa, and Latin America and die Caribbean, often working with Bank technical departments. While the data are used in a variety of sectoral and economic analyses, the LSMS mandate centers on welfre, mcome distibution, and poverty. LSMS activities are based in the Poverty Analysis and Policy Division, Population and Human Resources Department The SDA initiative focuses on Africa and, as its name implies, was initiated to address welfare issues related to adjustment. In recognition of the longer-term nature of adjustment processes and poverty reduction efforts, however, SDA's mandate now extends to the broad range of issues associated with poverty-measurement, analysis, and the design of povert reducdon progams. The SDA is the central activity of the newly formed Poverty and Social Policies Division, Africa Technical Department, which provides a link between OSP and the operatonal activities in the Africa Region's Country Departments. 1. LSMS 21. The LSMS approach relies on three kinds of surveys for living standards analysis-household, communitylevel, and price. The household survey is typically the largest and most lime-consuming of the 3. Scc Paul Glewwe, 'proving Data on Povaty in the Third Wodd: flu World Bak's Living Standards Me _wreat Study," World Bank PRE Working Paer 416, 1990, for L5MS. Sec Maing Adjnr'en Work for abe Poor: A Framewok far Po Refom ia , World Bank, 1990. for SDA. 4. The ISMIS/DA ddevers dat in six to amino monthl, compared with thrce or more yeas for the alerative technology, as tbe processing methods are based on tch uwc of mainfasc computing. 246 ree. It is executed separately or through modules added to existing household surveys, where suitable. In an independent survey, questions are asked about a broad range of topics: spending, household composition, education, health, employment, fertility, nutrition, private tafers, savings, agricultual activities, other sources of income, and so on. (See, for example, Box 8.6.) If executed in conjunction with an existing survey-an income and budget survey, or labor force survey-only a subset of questions is asked to complement information that may already be included in the larger survey. BOX 8.6: Padstan-LSMS s ITe living Standarl Measurement SUrvey in Paistan is being deloped In close coordinaion - with the'regional se -or work on poverty. Itm w ovill proeimportant iu for dv g theot > action plim for PaKistin.'. The Pakistan Integra-taed fliotsed Sv(PIS)is designid to adilrusdi] .numlb of important plicy questions, incluij, butnot lite to, pe vel and . l of the poor,. women's role in tlhe economy, factortsinfuecig 'scool enllment, le of eV . miiuteitibu gneral accss to social services,--' ticipationa-n leve ofunmoyme and * access to credit'and genemi savings.behavior. - * . The lIS houoschold questinmnaire inl-uIdesthcoredemographc,sp ing,andin *.modul ...and a full complemcnt of additional o.u md as employment,het cil tiutritioni oducation, family planning, housi, oia vings crdi i has been extended to collect additional dlata ou:.qierole~ of woinenl Toili f atei aigatheiing,mal u.iand femaleintenrieweus arc active in Ihe tl4elildmlin& tp primarily. .:to 1mjale! memhers and femde intervie.wers speak a- e .iei bsol q ucpszionztiare; community, price, health fii, andprmr ohiei are i to measure. access to and quality of basic ser in tho Ait. An. moduloehas been included toloullect infonnVi forh -Baks iugea n hoisbD lCdL-- ;,Lor in Pakstan. . * In:addition to the policy ques eaoyy ueydltwill be s to eip - research program on povery in Piakistan.. This researcli.dte jijyby the World n,the- IMP, the Intenrutiouna Food Policy RLsch I ad pie& Eonom t C at the Univelsity 6rfKarachi-providas a etlehc tenz.i of the-por in ais,a t ofy. l change in povey levels, and-an evaluation--of t isibuiona i of-od prcesuii a alrnidive tx 'policy fors. .... , ~~~~~~ . : - .-.~ :': x: f Ze :----- - - --- - -: … - --- 22. The commuiy-level survey is deigued to obtain information in rural communities, although the information is begiDning to be collected in urban communities as well. The basic survey of community characteristics collects inormation on conditions common to all households in a locale, especially access of the community to economic infrastructare (such as communications and utilities) and basic social services (such as education and health facilities). The survey also asks about seasonal labor markets, including wage rates and agricultural practices. The community questionnaire is typically administered to the identified leadership of the village or locale. Surveys of health and education facilities located in or near the community have become standard components of community surveys. The questionnaires in this case are administered to staff at the faidlities. Information also is collected on the availability of specific services, fees, staffing, and infastucture at schools and health care facilities used by the community. This complements the access information collected in the community characteristics questionnaire. 23. For price surveys-to measure purchasig power-data are needed on the prices of the most impot purchases and sales by low-income households. These include consumer pnces from local markets 247 for food and nonfood items, and prices of the principal outputs and inputs of the poor. Market prices tend to vary, often quite dramatically, over time, reflecting, for example, seasonal variations in production costs and storage costs, and other-trade and macro-influences. Marlkts also vary by locadon, depending on trnort and other costs. As a result, meaningfiul price information is time-, location-, and quality-specific. For some commodities it should be collected at least twice a month, specify product quality or grade (if significant), and cover critical locations. A number of countries have well-functioning price gathering and price forecasting abilities, usable both fbr their commercial sectors and for price indices and the monitoring of real incomes. These data can be used in formulating and tracldng a lower-income consumer price index based on a basket of goods identified in the poverty profile as being important to the poor. Tracking the prices of the principal commodities purchased and sold by the poor is likely to yield important information about their welfare over time. 24. Survey Results. ISMS survey results first became available in late 1985-for Cote d' Ivoire. The results have been used in generating poverty profiles for a number of countries, in a variety of useful research activities, and have more recently been used to help evaluate the impact of government programs on target beneficiaries. Examples of research activities include analyzing the implications of structural adjustnent for the poor and the effects of raising user fees for health care and education. The LSMS has also been used to examine tfre persistence of poverty over time and to compare different definifions of poverty. The wealth of information provided by the surveys has also made it possible to examine the impact of a range of critical government policies on the poor. For example, LSMS data have been used to evaluate the implications of food stamps, and various other subsidies in Jamaica, and in an ex-post evaluation of employment generating activities subsumed under the Bolivia Emergency Social Fund. ISMS data are available for Bolivia, CBte d'Ivoire, Ghana, Jamaica, Mauritania, Pakistan, and Peru. Work is under way in Honduras, Guyana, Morocco, Trinidad and Tobago, Viet Nam, and Venezuela, and discussions have been initiated in other countres. The dtree African surveys-for COte d'Ivoire, Ghana, and Mauritania-have been transferred to SDA. 25. Access. Thus far, all LSMS projects have been executed under the auspices of the Povery Analysis and Policy Division. Upon request and in coordination with the UN National Household Survey Capability Programme, the LSMS assists national statistical agencies and planning and sector ministries in the design an implementation of the survey. As the number of LSMS surveys increases, they are more likely to be considered standard operational worl. The regional technical and country departments are expected to bear an incmsing share of the responsibility for LSMSs. 26. Cost. The resource implications of implementing LSMS projects depend on the sample size fir the survey, the policy and operational needs the project is designed to address, whether the survey is developed as an independent activity or builds on existing survey activity, local costs, the institutional setting, and the exisfting level of sun ey capability in the country. The cost of building on a well-developed survey capability, as in Jamnaica, is very small; only selected modules of the questionnaire need to be added. In other cases, a separate administrative structure for conducting the survey work may be needed, as in PakstanL Where LSMS implementation requires major institutional development, as in Mauritania, cost estmates are higher. All cost esimates are sensitive to the availability and quality of in-lind government inputs. To the extent that the administrative structure of the country's statistical office is wel developed-and field staff, vehicles, and data entry equipment are available-significant costs savings can be achieved (Box 8.7). There are also resource inplicoiofr the Ba*. The Poverty Analysis and Policy Division devotes a significant share of its staff resurces to supportig ISMS activities. Expedrenc in the Latin American and Canrbbean Region suggests an average of 19 staff weeks per year would be needed for LSMS-related work in a relatively more developed country from the time of the inital request to the conclusion of field work for the fourdt round of the survey. 27. Funding. External fimding sources differ by country. Resources have been obtained for ILSMS projects from the UNDP (for Pakistan and Viet Nam) and USAID (for Bolivia, Ghana, Mauitmia, 248 BOX 8.7: LSMS-Couatsy Cost -. . * Number of Housebbids lnSurvey ~. :. 2,000 3,200D 3,400) 4,800 ...E . .. . ;t.agn ItheuNandu orf -iU. s ottC* i Stud-upUot : :. :7 .. .. S 5 23.:.:. 308 :..... . 568 ;Aunuu Su..y.Co6ts . :%.. .70. 413. .....Cots am iuch swb r lotr 3lnia b moev Of Sa nof esary qwpmnenr (vehicles, comters, ad so cm - alS availablein dieSmicslltNuuiluteofilrmica-. Fordetails.m! M armOda:. "bhe Hm.chsedSurvcy.a lfor Poal Cag,World EW1SSWrkn.hp 0, IM9. Snurce; PoveryaAndysiu and FoliqDivirion; Morocco, and Pakistan). In oter cases, the LSMS has been treated as an integral element of Bank poicy dialogue and included as a component of Ba-financed operations in Jamaica and Venezuela). Discussions are under way with several bilatal donors on fiuding for future LSMS projects. 2. SDA 28. The SDA program incorporates a wide ranp of analytic and operalional acfivities designed to integrate social and poverty concerns into structural adjusment in Sub-Sabaran Africa. Its major components are: * Developmmu of a concepd rl faewor to analyze the effect of macroeconomic policies on welfire at the household level. This is a two-stage process whereby effects of policy on prices, on wage rates, and on serces provided at the community level are measured and the impacts of these effects are then analyzed at the household level. * Developig anatc and mefhodologial toots for data colection and analysis. On dhe analytic side, the SDA has prepared a set of plans to help analysts use data from household surveys and other sources to study the different dimensions of poverty. The SDA also has been worling on models that take into account die social consequences of different policy scenarios. For data collection, the SDA has developed prototype household and community surveys for countries to adapt and use. * Strengthening nafnl capacites to use dtese tos for poverty monitoring and analysis. The SDA Program is supportng programs in more tan 30 Afimn counties. This support covers not just the application of the tools, but the building of institutional capacity to apply and improve the use of the methodologies that have been developed (see Box 8.8). This component of the SDA program includes the provision of technical assistance and training nationally, and the development of a regional traiMng program. 29. SDA activities emphasize the fiul use of existng data sources o identify and analyze poverty. Where existg data are eiher insufficient or nonexstent-generally die case in the counies in which the SDA is operating-it has developed two prototype household surveys for poverty monitoring and evaluation. They include the in-depth integraed survey and the more firequent (anul) large-sample prioriy survey. When suitably adapted to meet local coumty reqirement, thes surveys wil be implemented through national statistical offices, with secific effmbis directed at anhancing the capabilities of those instiutons. 249 BOX 8.& Kenya and Za7babwe-Suppofng Country Eiffoets Zimbabwe and Kenyn have functioning statistical bystems. Both want to atablish welfare monitoring. Rather than focusing exclusively on the design and implementation of household surveys, Bank effortU are addressing toe broader issues associated with th. setting up of properly iniegrated national Sdemand-drivcn" information systems. This entails support for darn collection, processing, storage, anilysis, and disseminaion. Polk7 Releawce. Output from the welfare monitoring systems is to be fed directly to senior policymnakers. In -Zimbabwe, the oveall Economic Redon Program is to be steered by a senior . lnterministeial CoordinOaing Cummitee. A centnal policy inoniloring unil is to act as the secrtar to the coordinating commitbe and is also to be responsible for coordinating the activities of the agencies involved in program kinplementation, including ;be gencration uf mouituring inormation. In Kenya, a similar structure is proposed. The Human Resouraes and Social Services Depaztment in the Ministry of Planning is to ac aus die policy monitoring unli and have rcsponsibility for overall coordination of the monitoring system and information. Focus on Capacity Building. . Ii both countries, the focus is to he on creating suslainuble systcms. In Kezya, the support to be provided to the Centrnl Bureau of Statistics will be not just to implement the ngreed-uipon survey program, but will include institutional support in sample frane * ddvelopment and maintenance, data collection, deentralie data entry, and report production and * pidnting. Boll prograns emphasi7e strengtheuing national capacitibs to . antze and awe data, through worlkshops, seminars, and.a studyfund. The A..aly C rsii C ent. This is primarily executed in the Ministry of Fimnnce (Zizhbibwe) aid Ministry of Planning (Kenya). put some analysis will also be done in line ministries, the central statistical offices, and the universities. Capnncity building will be eng thmrough periodic wo.kshops using the SDA analysis pblns-poverty proliles and so on-as traiing material and, if *requsted, technical assistace ad workshops ir macro- and micromodeliag and public expcnditure monitoring and analysis. Initially, the fncus will be on a fuller exploitation of rxitdng data soilCes. Data CollectdoL This will primarily involvc the Central Statistical Office' (Zimba bwo) and the Cential.Bwciuau:of Statistics (Kenya).. But sectomnl rmo'nitoring aclitics in line ministries alsw will be important sources of data. These are currntly being supported directly through secto programs, bbut am' still to be linked into the welfiue monitoring syuteims. Both cuntries wiU concentmat initially on die establishment of a ligt permanent annual ponitoring .uney (drawing on the SDA priority survey). In Kenya, this will be supplemented in due course with a more detailed integrated hoiuehold budgetsurvey (drawing on the experiences oif previous household sa-veys. the SDA ztcgiu&d Survey, and the LSMS). Price collection and reporting also will be strengthened in both countries;. inforaton PA essing, Srorage; and Difs.nnnad. Thi.i rezrescunL% the generaly neglectal missing link that provides the intcrface between collectors and usrs of data. Essentially, it involves the identification, or setting up, of a unit that will be responsihle for, establishing and mainatiining a socciecouomic data baso that cau beicasily updated and accessed, and for disseminatig information through an annual publication on Social Thetn. In Zimbabwe, a unit is Wbg establsed in tie Central Statisticsi Oflice; in Kenya this functinn -vill be carried out by the hlumnan ResourD aid Social ScrvicesD Dpurmn dMt. . . . 7ln~~~~~~iW Uarehaj and lAwriaV.e.nd. 250 30. The ikegrated survey is similar to the LSMS survey. It is designed to collect, for a relatively small nadonal sample, comprehensive data on incomes, spending, assets, and indicators of health and welfare. The integrated survey aims at providing a complete and integrated data set needed to better understand the mechanisms of the adjustment process at the household level. The focus is on diagnosis-explaining how and why households respond to the mnacroecononiic environment. The topics covered by the integrated survey include die size and composition of the hoLsehold; health; education; employment status of each household memnber; housing; valuations of durable, productive, and financial assets; productive activities, agricultural and nonagricultural; income, transfers, and savings; and food and nonfood consumption. 31. The priority survey was designed with two main objectives: (a) to identify the population groups affected by macroeconomic policies and (b) to monitor changes in key socioeconomic and welfare indicators for the different groups. These surveys are intended to be light-make the minimum data sets needed for the above objectives rapidly available. For these reasons, the following conditions must be met: * the sample must be large enough to ensure that all population groups are correctly represented; * a minimum core of key socioeconomic indicators has to be selected, to keep the questionnaire- and the interview-as short as possible; and * the survey needs to be conducted over a short time, to meet data needs for urgent policy actions. As with all surveys, there are tradeoffs. The prototype version of the priority survey (with a sample of over 6,000 households, interview length limited to one hour, and observations over two to three months) is not particularly good for measuring household income or total spending. It is most useful when combined with other surveys. With a second priority survey, it allows for a comparison of the values of the indicators obtained from two differeut periods and the size of population in each group. With the integrated survey, it forms a basis for a more precise study of the behavior of certain household groups. 32. The objective of the commuoy survey is tD provide information on community-level variables. These include the availability of, and access to, critical social services and amenities, the level and quality of inra r (water, transport, sanitation, and power), the functioning of local institutions and markets, sources and levels of employment, and key commodity and factor prices. The community survey relies on local informants who nay include tradituonal leaders, teachers, local government officials, and traders and other commercial operatives. As a stand-alone survey, it can help analyze the impact of macroeconomic policies on community indicators. However, for studying the links between the community and the households in that community, it should be applied in conjunction with the integrated survey. The community survey also is used for collecting prices and comparing price levels in different communites. 33. Access. The SDA program is primarily geared toward supporng the operational needs of African countries. Much of the SDA program, however, is relevant to other regions, as the methodologies now in p]ace can be used flexibly in a variety of country situations. As noted above, national SDA programs have a strong institution-building orientation-in data oollecion and analysis. The programs are thus conceived of as long term, starting with the introduction of relatively simple procedures and building up to the more complex ones. 34. Cost. The budget required to conduct an integrated survey depends on many factors-including existing data-gathering capacity, the type of survey being conducted, and the local cost of the various survey inputs. The average budget for a national SDA statistical program has been between US$2 million and US$4 million. The cost of a two-year program of surveys (an integrated survey and two priority surveys) with equipment, taining, and a full program of capacity building is US$2.5 million. Such a program has 251 been started in Chad and Guinea. If a full package-an integrated survey, priority survey, and community survey, with computers, equipment, vehicles, traiing, and intenational consultants-is required over fbur years, the cost can rise to about US$4.5 million (for example, in Cameroon and Uganda). A small-scale package-an integrated survey and four priority surveys over three years, with fully trained enumerators and all the vehicles in place-would be about US$1.3 million (for example, in COte d'lvoire and in Zaire). 35. Funding. By linidng poverty and welfare monitoring to the larger issues of economic reform and structural adjustnent, the SDA has achieved considerable success in generating finds for satistics. In the three years since SDA started country-level operations, more than US$56 million has been allocated for stadstical development in Africa. Much of this has been made available trough direct grants from the bilateral and multilateral donors supporting the SDA program, as well as through IDA credits. 252 Annotated Bibliogiuphy Chander, Ranmesh. 'Irformation Systems and Basic Statistics in Sub-Saharan Africa." World Bank Discussion Paper 73, 1990. Assesses the current state of statistical and information systems in the countries of Sub-Saharan Africa. Calls for the establishment of a minimum set of statistical priorities and a national action program for the development of information systems, and investment in national statistcal infrastruture. Recommends improved coordination among donors in the delivery of assistance. Gallagher, Mark and rImmothy Marchant. 'A Strategy for Enhancing Statistical Capacities and Information Management in Africa" (draft), 1991. (This is an internal document with restricted circulation.) Presents a proposal for enhancing statistical capability in Africa. Outlines a strategy to make national statisical systems more effective by focusing on the demand side as much as the supply side. Glewwe, Paul. 'Improving Data on Poverty in the Third World: The World Bank's Living Standards Measurement Study." World Bank PRE Worling Paper 416, 1990. Describes how the Living Standards Measurement Study began and how data are collected. Notes that most of the poor are in rural areas, and that heads of households work in agricututre and have a low level of education. Grootert, Chrsdaan, Timothy Marchant et al. The Social Dimensions of Adjustment Priority Survey: An Instument for the Rapid Idendficadon and Monitoring of Policy Target Groups. World Bank SDA Working Paper 12, 1991. Presents steps needed to implement a survey (objectives, sample design, questionmaire, field operations, and data processing and analysis) that produces basic poverty-related indicators on poor and vunerable groups. Grosh, Margaret E. 'The Household Survey as a Tool for Policy Change: Lessons firom te Jamaican Survey of Living Conditions." World Bank LSMS Worling Paper 80, 1991. Describes the Jamaican Survey of Living Conditions. Illustrates the flexibility of the LSMS approach. United Nafions, Economic and Social Council. Social Statistics and Indicators: Report on Progress Made in the Development ofa Coordinaed Unied Naions System Data Basefor Selected Social Sfastics and bidicators of Common interest and the Development of Related National Dat Bases. EICN.3/ 199U120, 1991. Focuses mainly on developments and experience in monitring the achievement of social goals and objectives and relafzd hulman development concerns set out in recent international mandates on children, poplation, and health. World Bank. The 5DA integrated Survey: A Survey to Measure Poverty and Undersnd the Effects ofPocy Change on Households. 1991. Describes the Integrated Survey, which is designed to study household behavior in-depth. Explains why and how households respond under different socioeconomic settings. Provides illustrative survey costs. Chapter 9 Poverty Monitoring and Progress Reports What is the appropriate approachformonitoring the Bank's effect onpoverty reduction? Given the programmatic approach espoused by Assistance Strategies to Reduce Poverty, whereby Bank efforts support and complement corntry efforts, a logical approach would be to monitor Bank effort by results-as measured by cowwryperformance on the povertyfront. However, exc'usive reliance on such an approachz would be difficult to reconcile with the obvious fact tw Bank interventions, in whatever form, have only a parial and variable effect on county policies and poverty outcomes. Measuring the Bank's operational impact on the country's poverty outcome is as intractable a problem as measuring the Bank's effect on county growth But the povert monitoring issue is fiurther complicated by conceptul diflicudties in separating poverty reduction from growth and other policy objectives. If inputs are measured, what should be counted for poverty reduction? Against this background, the chapter discusses the multidimensional approach that the Bank currently uses to monitor is poverty-reduction strategy. 255 Chapter 9. Poverty Monitoring and Progress Reports Introduction 1. To monitor its poverty reduction program, the Bank has used methods corresponding to its operatdonal approach (Box A9.1). In the 1970s, for example, the Bank monitored the poverty focus of indiviual projects. That focus increasingly gave way in lhe 1980s to a more progranzmatw emphasis, paralleling the evolution of te Bank's operational approach to poerty reduction. The logical extension of the trend woudd be to monitor Bank effort by results-as measured by country perfimance on the poverty font. 2. But exchlsive reliance on such an approach woud be difficult to reconcile with te obvious fact that Bank intrventions, in whatever form, have only a partial and variable impact on country poicies and poverty outcomes. Indeed, measuring the Banks operational impact on a country's poverty situation is as intatable a problem as measuring the Bank's impact on growth or other country outcomes. Mitoring Bank effort is complicated by conceptual difficulties in dis i puts directed at poverty reduction from other Bank objecti, such as growth, wicih are necessary for susained poverty reduction. The questions are: Which inputs shoud be counted for poverty reduction? Only projects designed to reach the poor direcdy? Or should the count also include growthand g intevnons with an indirec-albeit important-poverty-reducing impact? 3. Agast dis background, dtis chapter addresses monitoring the Ban's poverty strategy. Section I dismsses the institutonal history of poverty monitoring. Secdon II discusses the conent of progress reports on poverty. The relevant parts of Operational Directive 4.15, Povefy Redution, are paragraphs 50-53. L Institutonal EHstory A. The 1970s 4. Concem about the need to monitor the Bank's poverty effort parlleled the Bans adopto of poverty reduction as its main theme. This grew out of dte work of the urban and agricultral sectors, the man conduits for the Bank poverty reduction efforts at the time. In the urban sectr, the Bank tried to reach tie poor by finanig sites and services for lower-standard housing and slum upgdig. The agncultural sector focused on rural development projects. These were intnded to ncrease productivity and to give dze rumral poor greater access tO public servces. 256 5. Monitoring systems for the urban and agricultural sectors developed on parallel tracks. In agricultre, to qualify as a rural development project, most benefits had to accrue to the target poverty group.1 This was defined in absohae terms, as the population below the minimum standard of living, which in tur was determined by the value of food and nomutritional essentials. Similar criteria for estimates of povery thresholds were adopted for the Urban Poverty Program. Monitoring in the urban sector had initially talan the form of a qualative analysis, by a central unit, of staff appraisal report. But as the approach became increasingly quandfied, guidelines were issued, requiring that SARs include (a) the percentage of total project benefits accriing to the urban poor and (b) the proportion of each subsector's spending that benefits the urban poor. B. The Early 1980s 6. A major Poverty Task Force report in 1982 reviewed the Bank's approach to poverty reducfion and proposed a new system of poverty monitoring. It downgraded the focus on individual projects and upgraded countrywide approaches. The report also introduced the concept of the poverty income threshold (Pm.2 The theshold was used to measure the proportion of beneficiaries in the poverty groups; the proportion of benefits accruing to the poor; and the proportion of project costs benefiing the poor. The new system called for identification of poverty groups based on a measure of relative poverty and annual country-level reporting of Bank poverty reduction work. Once every five years, a comprehensive analyss of poverty in each borrowing county was to be prepared. The povert reduction stategy was to be included in each country program paper. However, aspects of the old poverty monitoring system remained in place. Project reports were to continue to identify expected beneficiaries and the distribution of benefits for those below the PIT, and the separate urban and rural poverty monitoring systems also were to continue. Urban reports were integrated witl Bankwide poverty reports (see below). The rural monitoring system monitored poverty from 1981 to 1989. 7. Bankwide Poveny Reports. The first comprehensive annual poverty report, "Focus on Poverty: A Review of Bank Operatins in FY84,'1 recommended that the direct effects on poverty, particularly qualitative indicators of poverty orientafion, be measured for all projects and be included in saff appraisal reports even for hose sectors not directly poverty onented. Until then, tis had been done only for the directy poverty-oriented sectors. The report reiterated the importance of systematically calculating PITs. Anmnal reports were prepared in FY85 and FY86, with the qualitafive aspects of Bankwide poverty monitoring increasingly stressed instead of the quantification of benefits for individual projects. 1. This dfinition VAs quantifed in 1979 - follows: For a project to be considered ural development, morn than SO percent of te expected bencfit had to go to the poverty tarp group or more than 50 percent of the expected beneiciaries had to be in thc poverty trget group. The prototype of the Ancultnrc and Rural Devdopm t (ARD) data ba ws developed in 1978. But the data bae s not fully fioning until 1981. It was the most quantified system for poverty monitoring developed by the Banc in any sector. The monitorinm was done by the ARD Moniitonog and Evaluation Unit, which screned each agriculural saff aepraisal report to determine if it qualifid as a rural development project. Projects were then extensively analyzod to determine taexpoprion of benefits accruing to the povery target group and dth proportion of beneficiaries in that group. The data base coy rual deveopment =wiirnarily povery oriened) and othr agricuurl (primarily not poverty oriented, because povey reduction was norlied to tbe former category. The da bsewasused to provide annual agricultural andnlatr yarc, Bakwide rcports to the Board. 2. PITs were selcted so that the poverty trget groups would vay rougbly from about halfof the population in low-income countriie to about one quarter of the population for couim approaching Bak graduation. 3. This is an internal document with resricted cicuation. 257 C. The Late 1980s S. In April 1987, a task force recommended that a new system for monitoing the Bank's poverty focus be estblished. Meanwhile, in a parallel development, OED's report on "World Bank Experience with Rural Development, 1965-1986," was released in October 1987. It stated: The quantitative monitoring mechazibra set up in dhe Bank to track progress of the rural development strategy, based on estimates of target beneficiaries, was simplistic. It did not capture the real intent of the strategy and encouraged an unhealthy cynicism about the Bank's real intentions. A qualitative system is desirable, which contibutes more directly to the feedback process and focuses explicitly on progress toward long-term sustainable development goals. The mandate of the 1987 Task Force was taken up by the 1988 Task Force on Poverty Reduction. The report of this task force introduced the concept of the Core Poverty Program. This wvas an attempt to move away from the focus of ihe 1970s and early 1980s on poverty reduction in individual projects toward a more progammatic, county assistance strategy approach. 9. Core Povery Program. The Core Poverty Program (CPP) emphasized poverty reduction as integral to the Bank's work. The CPP rejected die previous quandatve approaches to monitoring the Bank's poverty effort, and instead recommended a more qualative approach, based on the purpose of the particular project or study. The CPP concept was used in "Poverty Reduction and Bank Operadons."4 For this exercise, each Region defined a set of directy poverty-reducing activities belonging to the CPP and a second set of poverty-related activities. The regional CPPs included projects and economic and sector work, where the prhnmary purpose was poverty reducdon, as well as all population and family welfare projects designed to reduce population growth rates. Projects and econoniic and sector work conaining significant elements of targeted poverty reduction-but with other primary objectives-were listed aspovert-rekated. U. Progre Reports: Looking Ahead 10. As sketched above, the Bank's approach to poverty monitoring has evolved-from the qualitative impact of individual projects, to the quantitative impact of individual projects, to the qualitative impact of Bank programs. This evolution, while mirroring other Bank developments, has given rise to a diemma about how to moniltor the Bank's efforts. The dilemma has been intensified by the greater emphasis on a programmatic approach. At root is a logical inconsstency between a conceptal approach that stresses Bank support for cowutry efforts and practicable ways of measuring Bank impact Isolaing that part of country performance specifically attnrbutable to the Bank, while concepually appealing, is almost impossible. There also is another dilemma. Clhanges in poverty result from a country's overall strategy. Because poverty reduction, growth, and other country outcomes are sD closely intewined, how can efforts for poerty reduction be isolated? 11. In this context, a mutidinal approach to monitoring the Bank's effort is likely to prove most useful for progress reports. It would include (a) information on what is happening to poverty in coumties, including progress on key social and economic indicators; (b) an overview of Bank efforts in different countries, based on the poverty assesments and operadons; and (c) cOuntS of relevant "counables" 4. Report No. 9491, April 1990, EAS. (This is an intemal dowmt with cstrictcd ciratio.) 258 recognizing that, taken individually, each gives a limited picture of the Bank's overall impact. These are discussed below. They would fornm the backbone of the progress reports to Management, the Board, the IDA deputies, and the Development Commitee. A. Evolution of Poverty Indicators 12. Because the Bank's fundamental objective is to reduce poverty in the developing world, the Bank direcdy tracks progress in poverty reduction. For the progress reports, the disussion would focus on the priority poverty indicators discussed in Chapter 1. The information would be compiled countyby-country and then assembled in a multicountry framework, to provide an overview of changes in poverty for various country groupings. Poverty information and analyses included in country poverty assessments also would be reported in the progress reports. B. Evolufion of Bank Programs 13. Poveny Assessments. As noted, there are inherent difficulfies in measuing the contribution of the Bank to actual poverty reduction in counties. These difficulties notwithstanding, if the Bank's assistance strategy has been fonnulated with poverty reduction as a prime objective, the strategy and its implementadon can be monitored. Based on the results of the monitoring exercise, it should be possible to convey an impression of the magnitude and direction of the Raks efforts in different counties. To this end, the discusion in the poverty progress reports would cover the assessments done, their primary findings, and a reflection of their findings in country assistance strategies, including the policy dialogue, technical assistance, and lending. In this way, a broad qualitadve picture of the Bank's poverty reduction effort can be provided. C Countables 14. The Bank's programnmnatic approach to poverty reduction notwidtanding, monitoring for accountabiity inevitably focuses on counting individual operations-or lendig amounts associated with individual operations. Thus, projects need to be cassified by whether or not they are poverty-reducing projects. The Bank's two counting methdms are descnrbed below. 15. Program Objective Categories- One system used to monitor the Bank's efforts derives fiom the Bud-,et Process Task Force paper issued in 1989. That paper noted a need for lidking objecdves and resource use in budget formulation and monitoring. For this purpose, the Task Force classified the Bank's prmcipal strategic objectives, into nne program objective categories (POCs), including one for poverty reduction. For budgetary and monitoing purposes, all Bank operations are coded for their primary POC. The total value of projects for which poverty reduction is he prmay POC gives a rough idea of the magnitude of Bank lending for poverty redution. However, it is clearly not an oveuall measure of the Bank's lending for poverty reducton, even narrowly defied. Since each operatio can have only one prmary objective, projects with important poverty-reducing effects-for example, in human resources or rural infrastructure-may be excluded. Nevertheless, the primary POC measure is useful as a quick indicator of broad magnitudes." 1 S. For some purposes, i may be approprite to use the combined value of projecs coded for either poverty reduction or human resources as yrina PC, as tae measure of Ran Ieding for povuty reduction given the importnce of huma capital devwdopnc- m tEhe lF)s povrty reduction segy. 6. Up to four secondary POCs can also be designted for an operation. However, because secondary POCs involve subantial double counting, they are more ambiguous and less useful as a measure of thr BDank' povaty reduction effort 259 16. Program of Targeted Intervendons. Assistance Strategies to Reduce Poverty dubbed the class of poverty-reducing projects the Program of Targeted Interventions. It proposed that targedting, albeit broadly defined, determine whether a ledig operation is dassified as poverty reducing. The report proposed that such projects meet one of two criteria: The project includes a specific mechanism for identing and reachbng the poor. Or, where no such mcnhanism is used, the participation of the poor In the project significantl exceeds the countrywide incdence ofpoveny. The paper added that Examples of projects failing within this definition include-projects designed to increase hie producdvity of groups such as small and marginal fdrmers, landess laborers, and slum dwellers; provision of prmary educadon, basic health care, nutrition services, water supply and sanitation to those, especally women and dhildren, who lack access to basic services; projects confined to regions of concentrated poverty; compensatory programs introduced as part of adjustment operations; and projects or project components concerned with safety nets for the poor. According to OD 4.15, the Memorandum and Recommendation of the president for projects in the program of targeted interventions indicates how the projecs meet the program's criteria and how they fit into dte overall country strategy for poverty reducton. Such projects are coded as part of the program of targeted intervendons in the Bank's management infomation system (MIS). 17. Targeting Criteria. As noted in Chapter 6, and as is clear in the project examples in Chapter 7, targeting can take various forms. Means testing is one opdon, but it is rarely used in Bank-financed projects. Other forms of targetng-by indicators that are closely correlated widt income, such as location, or by self-selecion-are more feasible and more typical. Most poverty-reducdon projects-for example, basic health care in rural areas-do not contam an explicit mechanism for dist i the poor from the nonpoor. However, such projects are purposely located in geographic areas where the incidence of povt is significandy above the nadonal average or the projects supply a service used dispportionately by the poor. Although adjm t lending may benefit many poor people, it is genrly difficult to establish that adjustment operations are targeted to dte poor, precisely because their effects are meant to be economywide. However, dearly a social fiud or some other safety-net operalion that complements an adjustment program and is focused on the poor would be counted. 18. MIS Coding. The specific implications of dhe above for operational monitoring are to count in the poverty lending program the value of * projects with a specific mechanism for targeting the poor; and * projects for which the share of the poor among beneficiaries is significandy larger than their prWortion in the population. To facilitate aggregating the data, projects in these categones are to be coded as part of the program of targeted iterventions in the Bank's Management Information System (MIS). These projects would then form a set,to be tracked over time, comple the picture provided by the indicators, the assessments, and the POCs. The Program of Tareted lnterventions would include projects coded for poverty reduction as primary POC, and human resources, infastructure and other projects that meet the above criteria. SALs or SECALs focused on eliminating distordons that affect the poor and that support a poverty-focused public spending program would not be coded as part of the program of Targeted Iterventions, but would be given special treatnent in the progress reports. 260 Annotated Bibliography World Bank. Foca on Poveny: A Repor by a Task Force of the World Bank. 1983. Argues that a balanced strateg of gmwth combined with poverty reducdon is the best general framework for development in the 1980s. Suggests i ments i the Bank's basic approach to povertreduction. -M-.g ity Reducdon and Bank Operations.' Report 8491, 1990. (This is an internal document with resticted rculadon.) Reviews the core lending and economic and sector work in the Regions. Finds that the concern with poverly has become intgral to the Bank's operations through the Core Poverty Program, protecion of the poor during adjusutent, poverty profiles, and new-style operations such as social fun. -. Proteag the Poor During Periods of Adjusymem. Development Committee Pamphlet No. Thitee, 1987. Discusses the social costs of adjustment. Proposes measures to protect the poor by redrecing social expenditu and by direct compensation. --- - . "Report of the Task Force on Poverty Alleviation." RBB-183, 1988. (This is an internal document with resticted circation.) Recommends the creation of a Core Poverty Program in the Bank's lending program. Finds the need for ibility in lending techniques; preparaton of poverty profiles for borrowers; st ng of sectoral approaches to reach the poor, especally in agrculture and the social sectors; and a review of the Bank's position on subsidies for the poorest graups. "The World Ban's Support for Poverty Alleviation. " Strategic Planning and Review Department, June 1988. (is is an ineral document with restricted circulation.) Reviews previous Bank reports, and describes lessons led. Stres areas needing fiuther attention to s gthen the Bank's poverty reduction efforts, indudig social serice financing, beneficary partcipation, longterm sustiabilty, and cost-ctfcfive metods of servce delivery to the poor. 261 BOX AM.1: Feoludon of the hc a Is Appmach to Povety Monitoring 1973-1: Urban Pverty. Moitorg Sst (liuter known uas the Urban POveRty Program) aM&oliiii ey f nc a's reflected in staff appmisal repori . Unalid 'to' X rmino ibs' lukt ap"iilve poverty. levels in target areas. ...,De finirion oif Pv4ny Iic tabsolwtejmeny Icuewl was d on the cost of a minimilum bakLt o o and nontridiontil easendals (fr rurn}arid abdn ars, with a costofliving corrention sulting Iin' slightly..higher ciuoff fio urbha areas). This apProaci defined the relatimw.-pverty kvel as tie boto 4O piercent of ihe populationm.:.l Tis de.flnition became the standard for monitoring. -.nf.o wcw &ivpwrbIe .for M6koijri:,: UanOpiu dioins Support and Review Init (laterknownias te UrhIn lOperations Risvicw Division).... 2 1981-89: AricutlturLl Devdop nent Data Bfse Wiat ais Monitoreo: r Based on the analysis or nirul devoapmeut tail other agriculture proju4hi approach monitored the proportion af b*ElAts e peecl. to azmucr Lo the poverty tiWrget group d proportion: of beineficiaries inllhe poverty targel group.K .. . . j- ..Defiitwn of Poverty: The a4aird definitions or relativ and absolute poverty were used A prjc .:was -defieda us niu .dwv]6opmv nlt ifmore tban 50 percent ofexpected bendLits accLued. t the pOrty, target bgrup, or more tljan 5u percent of fth oxpetd eneficiaries. were in the poverty target gU : Who w Rsponsiblefor M oniftorng: Agriciltre and Rumi Devdopmen epartment. 1981 83: Two-Tiered Urhbn Sy.Sem4escribod by urban sector guidclinic in 1981) Wha:twzs.Moniored::. Urbn projects weie monitojed to detrmine 1he percentage of overul.pjc xpendit it and thc perctage 0o c Uachsu 'S enditr dvoted to tie ulrban poor. .)bjfir6f vf Pove hne.standard deruiitions of relative uiul absolute wuban Ixiveity were usd Wjo4, w Raineyptsijlpzjj ifrMonijoring: Urlban Operations Review Division. .:1983:87: Annual Danwid Reports to the;lar (rescried by Opeationms Pnlicy Note 2.07) Who twns m fMimonired: Thais sipach monnitored poverty work in all regions and soetors. |.Dsfinzirin of Povet Th y loverty Income .Thtcshold derineud the poor, based on the thre usual *.|mcastiremcnts of.povty fri&ntation. (a) thpeirentage of benefiLs expeLted to accrue to the poor, (b) ihe percentage of expecied beneticiaries iin the target group, and (c) the percentage of prnjmct costs * expected to benefit the poor. WJho was RespoqnsibleAr Mrniznoring: Country Policy DeLpartmnent. . 2 ...... ..... . . . .. ...co wedJ. 262 BOX A.1: Continud 1989-Present: The Core Poverty Program (also known as the Program of Targetod Interventions,; and refined in the povelry policy, paper, Assistance Sirasegies o Reduce Pover) .Aa1W ii Mofitored: Bank investment and adjustment lending and economic and sector work are analyied to determine which tusks belong in thfe core program or ue poverty related. Defintion of Povamn: A shift from qntiariative measures of poverty led to an emphasis on qualftadive. measuores based on the purpose Bndior objectives- of a project or economic and sector woik. ihe standard definitions of poverty are used. The povety policy, paper later emphasized targeting by, for . example, gender, geography, income, or age to reach ithe popuLtion below the absdute poverty line : and to screen the nonpoor. Who is Responsibe for Monitoring: Individual task managers. 1989-Present: Management Infornatiom System (MIS) Monitoring System (derived from hce Budget Procs Task Force Paper in 1989)* Matr is Moniored; All Bank processes and products arc analyzed to determine their primary and *secondary program obJective categories (-POC). Most relevant, two of the nine POCH amr povegty reduction and.humann resources. Definition of Poverty: Tle sadard definitions of poverty atemused. | Who fs Responsiblefor Monitoring: Individual task managers . .bneenw llaq 263 BOX A9.2: Programs of Concentration: Codingfor Poverty in the MIS *. 'TheProgram Objeclive Categories (PO.) are: r SS Stmctunnl and Sectoral Adjustment . iustment and Debt TR Trade . DM bIvbt Management FPoerty Reduction PA Povert Alleviation.' : l ~~~~~~~~~~~FS Fuodl Securit .: . : . HA Healh, Nutritiou, E ED Education .luan Resotr-ces Developent .PO Population liwna. Resources De.elopmet D Women in Development' . IR. Multi.Human Resource Sectors .... '. .. . Priwae and Public Sector I PV Privatte Sector Development Refom PB Public Sector Management :. .... . ... H.... Fflerj4aJl hatennedlatIon* {. Fl [ . . Environment and Fowrs;y . i E. Envirunment N.atural Resources. NR .o s:ry Basic Inf r re . 1U ... : :and Urban Development . . Economic Management EA: 'Th CAM manuial indicates thal, for each tait, a priiiiamy obj3t:tiv6" W identified and up to four other secondiary objecLives also may he listed. For cxanplc, for a project with a primary objct:ive .f oYer. alleviation (PA). which also is targeted on health (HA) tad women in developmnit W))1 fPOvCdala. wuld b:coded with PA as the primary POC, and iith HA cnd WD as secondary. POCs Taskmanagers are responsible for ideptifyrtg pr objoctives in POC dthalfor projecs liey aw. managing; Division chiefis arm responsible for t6viewing POC data. . The CAM msniial recogni7es that sCICCting one pimnary objective fr each iask is jidgmentul .nnd qualitative. The manual suggests that-in making this choice arinng a number of potetially overlapping progrmm objectives task managers and division chiefs .consider the following: . i.. Would the project he viable if the components and investments contribuiing to the objectivc: e... w removed, or arc' dtcaddons with an iodependent cost estimate? .~~r o.ee ..... .. . . . . * ** . ...................... . * ~niits: : *Would youfed pcoifortable defending this project to the BLoard or senior mn lent ns .contributingl othis POC' . ... .CM Manual .. Thii is a. isternal docunicatwiti rctricted irculation. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. , . . .:.*. .. . . .... ... . . .. ...... 265 Bibliogrphy African Development Bank (AfDE). 1989 Annul Report. 1990. Alderman, Howard and Chrisina Paison. "Do the Poor Insure?: A Syntei of the itlerature on Risk Sharing Ensfitutions in Developing Countries" (mimeo). World Bakr, 1992. Asian Development Bank (ADB). Annual Report 1990. 1991. 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Review andAssessment of Global Popukion Prblems and Action-Oriented Policies (forthcoming). New York. United Nations General Assembly. "International Cooperation for the Eradication of Poverty in Developing Countries." A1461454, October 2, 1991. van der Gaag, Jacques, Elene Makonnen, and Pierre Englebert. "Trends in Social Indicators and Social Sector Financing." World Bank PRE Working Paper 662, 1991. van Lutsenberg Maas, Jacob. "The Recurrent Cost Factor in the PHR Sector." A View from LATHR, No. 11, 1991. Verspoor, Adrinaan M. "Lending for Learning: Twenty Years of World Bank Support for Basic Education." World Bank PRE Working Paper 686, 1991. Walton, Michael. 'Macroeconomic Policies and Poverty" (mimeo). World Bank, 1990. Williams, Aubrey. "A Growing Role for NGOs in Development" Finance & Developnmnt, December 1990. Wunpenny, J.T. Vote for the Environment A Guide to Economic Appraisal. Overseas Development Institute. Her Majesty's Stationery Office, 1991. World Bank. The Ago Khan Rural Support Program in PakfraL A Second ,interim Evaluon. OED, 1990. Assisance Strategies to Reduce Poverty. A World Bank Policy Paper, 1991. Bangladesk trategiesfor Enhancing the Role of Women in Economic Development- 1990. 'Cooperation Between the World Bank and NGOs: 1990 Progress Report" World Bank External Affairs Departnent, 1990. - Egypt Alleviating Poverty Durzg Structural Adjustment. 1991. "Evaluation Results for 1988: Issues in World Bank Lending Over Two Decades." OED, 1990. FoCUS on Povery: A Report by a Task Force of the World Bank. 1983. 275 -. The Forest Sector. A World Bank Policy Paper, 1991. How the World Bank Works wth Nongovernmmenta Organizadons. 1990. India: Poverty, Employmen and Social Services. Report 7617 (2 volumes), 1989. Indonesia. Straegyfor Sustained Reduction in Poverty. 1990. Lessons of Tax Reform. 1991. - Making Adjustment Wo*kfor the Poor. A Frameurkjfor Polj Rejbrm in Africa. 1990. - Ncpal Povery and Incomes. 1991. Operational Directive 4.00, Annex A, Environmental Assessmnt. 1989. O Operational Directive 4.00, Annex B, Environmental PolicyforDam andReservoirProects. 1989. Operational Directive 4.01, Environmenral Assessment. 1991 O Operadonal Directive 4.15, Poverty Reduction. 1991. Operational Directive 4.30, Inoltwary Resettkment. 1990. -. Operaonal Directive 10.70, Project Monitoring and Evauaton. 1989. ---=. Operadonal Directive 13.05, Project Supervsion. 1989. -. Operaoal Direcfive 14.70, Ivolving Nongovernm tal Organits in Bank-Suiported Actvits. 1989. O Operational Directive 15.20, The FAOIWorldBank Cooperive Program. 1991. -. 4Operational Manual Statement 1.21, Bank Financing of Reaurent Costs. 1985. - Operational Manual Statemnt 2.21, Economic Analysis of Projects. 1980. Operational Manual Statement 2.25, Cost Recovery Polciesa r Public Sector Projects: General Aspects. 1977. O Operational Mnual Statement 2.36, Environmeal Aspects of Bank Work. 1984. TPopulauon and the World Bank: A Reiew of Acivities and Impacts from Eight Case Studies.' OED, 1991. . Priy Education. A World Bank Policy Paper, 1990. Protecting the Poor During Periods of Adjsme. Development Commitlee Pamphlet Number Thirteen, 1987. 276 -. "RulDevelopment: World Bank Experience, 1965-86." OED, 1987. -. 7he SDA hiegrated Survey: A Survey to Measure Poverty and Understand the Effects of Pol}cy Change on Household. 1991. -. Social Indicators of Development. 1990. Urban Poliy ard Economic Development: An Agenda for the 1990s. A World Bank Policy Paper, 1991. Vocionl and Technical Edcadon and Thinng. A World Bank Polcy Paper, 1991. ' .Women n Development: Issuw for Economic and Sector Analysis." PHRWD Working Paper 269, 1989. -. World Developmenr Report 1990. Washigton, D.C.: Oxford University Press for the World Bank 1990. -. World Developmet Report 1991. Washington, D.C.: Oxford University Press for the World Bank, 1991. - . World Development Report 1992 (forthcoming). World Health Organiation (WHO). Priority for the Poorest. 1990. Yaron, Jacob. Rural Fmance in Developing Countries." World Bank PRE Working Paper 875, 1992. 277 Internd World Bank Documents County Repoes and Documents Fourth Population and Health Project. SAR 9400-BD, May 1991. General Education Project. SAR 8015-BD, February 1990. Poverty and Public Expenditures, An Evaluadion of the Impact of Selected Government Programs. Report 7946, Jamnary 1990. Rural Roads and Markets hnprovement and Maintenance Project. SAR 7101-BD, June 1988. Third Population and Family Health Project. SAR 1649-BD, January 1987. Benin World Bank Impact Evaluation Report Beni-Hinvi Agricultural Project. Report 5029, April 1984. Bolisvia Emergency Social Fund Project. Report P-4594-BO, June 1987. Public Sector Expenditure Review with a Special Emphasis on the Social Sectors. Report 7746-BO, September 1989. Second Emergency Social Fund Project. Report P-7066-BO, February 1988. Social Investment Fund Project SAR 8248-BO, March 1990. Poverty Report Report 8463, October 1990. Brazil First Norheast Basic Health Services Project SAR 2699-BR, May 1986. Poverty Alleviation in Brazil, 1970-87. LAC Internal Discussion Paper 072, July 1990. Public Spending on Socal Programs, Issues and Opinions. Report 7086-BR, Vol. 1, May 1988. Water Project for Municipalities and Low-Income Areas. SAR 7083-BR, June 1988. NOTE- These are intefnil docauns with manerted nrciradon 278 Bularia Sflctural Adjustment Loan. Report P-55B8, July 1991. Technical Assistance Project for Economnic Refonn. Report P-5540, June 1991. Clue Social Development Progress in Chile: Achievements and Chalienges. Report 8550-CH, October 1990. China Shaanxi Agricultura Development Project. SAR 7475-CHA, March 1989. Gansu Provincial Development Project. SAR 6443-CHA, April 1987. Red Soils Area Development Project. SAR 6072-CHA, August 1986. Colmbia Community Cbild Care and Nutrition. SAR 8028-CO, May 1990. Ral Development Tnvestment Program. SAR 8430-CO, July 1990. cas Rica Public Sector Social Spending. Report 8519-, October 1990. Czech md Sbvak Federal Republic Structa Adjstme Loan. Report P-5583-CZ, June 1991. Ecudor Social Sector Strategy for the Ninedes. Report 8935-EC, November 1990. Population, Health and Nutriton Sector Review. SAR 6078-EC, July 1986. Egpt Social Fund Prect. SAR 9561-EGT, May 1991. The Gambia Women in Development Project. SAR 8457-GM, April 1990. NOTh These are infeli docamems with resrictd ciruaadon. 279 Ghla Agricultural Sector Adjustent Credit. Report P-5523-GH, February 1992. Community Secondary Schools Construction Project. SAR 9556-OH, May 1991. Education Sector Adjustment Credit. Report P4311 -GH, November 1986. Second Educadon Sector Adjustment Credit Report P-5244-GH, April 1990. Second Health and Population Project. SAR 9029-GH, November 1990. Second Transport Rehabilitation. SAR 8945-GH, November 1990. Transport Rehabilitation Projecte SAR 6912-GH, January 1987. Guatemala Municipal Development Project. SAR 6410-GU, June 1988. Public Sector Expendiure Review. Report 7478-GU, May 1989. Guinea Health Services Development Project. SAR 6679-GUI, May 1987. Socioeconomic Development Support Project. SAR 7448-GUI, March 1989. Guyana SIMAP Health Nutrition, and Water and Sanitation Project SAR 10146-GUA, April 1992. Haiti Economic and Social Fund Project. SAR 9058-HA, December 1990. Honduras Social Investment Fund Project SAR 9148-HO, February 1991. Social Sectr Programs. Report 9093-HO, November 1990. HIungar Human Resources Project. SAR 9183, March 1991. Strutur Adjusent Loan. Report P-5337, May 1990. NOIEr- Thes are internal docwnean with restricted ciruon. 280 Structural Adjustment Loan 11. Report P-5569, May 1991. India Agriculture, Challenges and Opportunities. CEM Report 9412-IN, Volume fl, March 1991. Child Survival and Safe Motherhood Project. SAR 9489-IN, August 1991. Himalayan Watershed Management Project. SAR 4317-IN, May 1983. Integrated Watershed Development (Hills) Project. SAR 8202-IN, February 1990. Integrated Watershed Development (Plains) Project. SAR 8326-IN, April 1990. Maharashtra Rural Water Supply and Environmental Sanitation Project. SAR 9202-IN, March 1991. Pilot Project ffir Watershed Development in Rainfed Areas. SAR 4561-IN, November 1983. Tamil Nadu Integrated Nutrition Project. PCR 9259, January 1991. Indonesia Appraisal of a Nutridon Development Project. SAR 1318-IND, February 1977. Country Strategy Paper. June 1991. Fifth Population Project. SAR 9178-IND, February 1991. Nutrition Development Project PCR 5757, June 1985. Perusahaan Umum Listuik Negara Thirteenth Power Project SAR 4356-IND, May 1983. Second BRIK[UPEDES Small Credit Project. SAR 8644-IND, July 1990. Third Jabotabek Urban Development Project. SAR 8397-IND, June 1990. Jamaica Education Program Preparaton and Student Loan Program. SAR 6933-JM, December 1987. Social Sectors Development Project. SAR 7573-JM, June 1989. Korea Distribution of Income and Wealth. Report 9281-KO, March 1991. NOMT These are internal documen with resricted circuaion. 281 Madagscar Economic Management and Social Action Project. SAR 7410-MAG, Ocober 1988. Malawi Entepreneurship and Capital Market Adjustment Credit (Green Cover). April 1992. Growth Through Poverty Reduction. Report 8140-MAI, March 1990. Population, Health and Nutrinon Sector CrediL SAR 9036-MAI. Malaysia Growth, Poverty Alleviation and Improved Income Distribution in Malaysia: Changg Focus of Government Policy Intervention. Report 8667-MA, January 1991. Mali Agricultural Services Project. SAR 9073-MU, March 1991. Education Sector Consolidadon Project Report P-5OlO-MU, May 1989. Second Health, Poption and Rural Water Supply Project 1991. Basic Health Care Project SAR 8927-ME, November 1990. D3ecenralization and Regional Development Project for Disadvantaged States. SAR 8786-MEl March 1991. Second ILow-Income Housing Project. SAR 8019-ME, November 1989. Mexico in Transition: Towards a New Role for the Public Sector. Report 8770, May 1991. Moo Agriculture Prices and Incenfives Study. Report 6045-MOR, May 1986. Mhambique Poverty Reduction Framework Paper. October 1990. Nigeria Helth Care Cost, Fmancing and Utilization. Report 382-UNI, June 1990. NOIE: These are inernal doans with resiud cirdlaon. 282 Nadonal Population Projct. SAR 8527-UNI, April 1991. Second Multi-Stnte Agricultual Development Project. SAR 2988-UI, August 1988. Third Multi-State Agrictural Development Proje. SAR 7373-UN, April 1989. A Profile of Poverty. Report 8848-PAK, August 1990. Family Health Project. SAR 9345-PAK, April 1991. Sindh Primary Education Development Program. SAX 8178-PAK, February 1990. Towards a Social Action Program for Pakistan: Impediments to Progress and Options for Reforms (Green Cover Report). Report 9619-PAK, October 1991. Paraguay Public Expenditure Review: The Social Sectors. Report 10193-PA, February 1992. Philippines Challenge of Poverty. Report 7144-PH, October 1988. Communal Irrigaion Development Project SAR 3850-PH, May 1982. Second Communal Irrigafion Project. SAR 8724-PH, August 1990. Poland Employment Promodon and Services Project SAR 9408-POL, May 1991. Structurl Adjustment Loan. Report P-5294-POL, July 1990. Romania Technical AssistanCritical Imports Loan, SAR 9652, June 1991. Sao Tunc and Principe Multiseclor Project SAR 7663-STP, May 1989. Public Works and Employment Project. SAR 8032-SE, November 1989. NO2E: Thes are iternal documents wish micded cirulation. 283 Somalia Agriculure Sector Adjustnent Program II Report P4995-SO, May 1989. Sri Lanka A Break with the Past: 1987-90 Progam of Economic Reforms and Adjustment. Report 7220-CE, 2 vols., 1988. Poverty Alleviaton Project. SAR 9316-CE, April 1991. Thailand Second Land Titling Project. SAR 8588-TH, August 1990. Tunisia Employment and Taining Fund. SAR 8630-TUN, July 1990. North West Rural Development ProjecL PCR 1997-TUN, April 1981. Uganda Alleviation of Poverty and the Social Costs of Adjustnent Project SAR 8179-UG, January 1990. Public Choices for Private Inidatives: Prioritizing Public Expendituw fDr Sustnable and Equitable Growth. Report 9203-UG, February 1991. Venezuela Poverty Study: From Generalized Subsidies to Targeted Programs. Report 9114-VE, June 1991. Social Development ProjecL SAR 8941-VE, October 1990. Yemen Arab Republic Second Education Project PCR 5086, May 1984. Zaire Social Sector Project SAR S; 10-ZR, November 1990. Zimbabwe Second Family Health Project. SAR 9318-Z3M, April 1991. Structural Adjustment Piogram. Report P-5584-ZlM, Dwember 1991. NOZ.vo Tese are intewl doauneu wit ruied cidOZIdIL 284 Otier Internl Documents Fleisig, Heywood, Juan Carlos Aguilar and Nuria de la Pena-MacDonald. 'Law, Legal Procedures, and wh Value of Coilateral: The Case of Bolivia". 1991. Gallagher, Mark and Thimody Marchant. -A Strategy for Enhancing Statisical Capabilides and Information Management in Aflica" (draft). August 1991. Gill, Indernit, Emmanuel Jimenez and Zmarak Shalizi. "Targeting Consumer Subsidies for Poverty Allocation: A Survey and Primer of Basic Theory" (draft). February 1990. Gillespie, Nancy. "Developing Country Assistance Strategies.' Background Paper to Assistance S&roegies to Reduce Poveny. World Bank PRDRA, 1990. Haq, Toneema. 'Poverty Monitoring at the World Bankc An Insitutional History" (mimeo). 1991. Kaufmann, Daniel. "The Forgotten Rationale for Policy Reform: The Productivity of Investment Projects." Backgrud Paper for UDR 1991, 1991. Khan, A.R. "World Bank Country Studies on Poverty: A Review of Some Recent Reports." April 1991. Masland, Anne. "The Identification and Measurement of Appropriate Indicators of Poverty. " Background Paper for Assistance Strategies to Reduce Poverty, 1990. "Tracing Poverty in Sri L anka." Background Paper for Assisance &trategies to Reduce Poverty, 1990. Psacharopoulos, George. "Educational Investment Priodties in Mexico." World Bank LATHR. April 1991. Ribe, Helena and Soniya Carvalho. "Targeted Poverty Projects Supported by the World Banki An Overview of Operations AppMved During FY85-89." 1992. SeMlen, Thomas and Micbael Wasylenko. "Benefit Incidence Analysis in Developing Countries" (draft). World Bank, August 1990. Skillings, Robert, Alexandre Marc and Roza Makonnen. "Design of Social Action Progams under Strucural Adjustment (YeElow Cover Report). March 1991. Walters, Harry, et al. "pood Security and Disastes in Africa: A Framework for Action" (draft). World Bank, AFTSP, June 1991. World Bank "Annual Review of Evaluation Results 1990." OED Report 9870, August 1991. "Focus on Poverty: A Review of Bank Operations in FY84." CPD, 1985. NOME T1hewv iar ernad docuuas wfih reticted circuLt 285 "Food and Nutrition Programs in Latin America and de Caribbean: An Analytical Survey." Report 9526-LAC, November 1991. "Health Sector Financing in Asia." Asia Regional Series, Internal Discussion Paper 68, August 1990. "Managing Development: The Governance Dimension-A Discussion Paper." SecM91-820, June 1991. Operations FY92 CM Handbook. April 1991. "Poverty Reduction and Bank Operations." Report 8491, April 1990. "Regional Briefing on Economic and Development Issues in Asia." Statement by Mr. Karaosmanoglu to the Committee of the Whole. SecM90-151 1, November 28, 1990. "Report of the Task Force on Poverty Alleviation." R88-183, July 1988. Sixteenth Anmal Report on Implementation and Supervision-Fiscal Year 1990. "Social Investnent in Guatemala, El Salvador, and Honduras: Workshop on Poverty Alleviation, Basic Social Services and Social Investnent Funds within the Consultadve Group Framework. " Report 8922-LAC, June 1990. -Sustainability of Projects: First Review of Exnerience." OED Report 5718, 1985. "The Third Report on Adjustment Lending: Private and Public Resources for Growth." R92-47, March 1992. 'The World Bank's Support for Poverty Alleviation." SPR, June 1988. "World Bank Support for Small and Medium Industry in Selected Countries. " 0ED Report 9530, 1991. NOMS There are internd docwnents wvth restined circuadion. 287 THE WoRW BANK OPERAnONAL MANUAL Distribution: Opeationa Maua Recipients Manual Transmittal Memorandum December31, 1991 Operational Directive 4.15: Poverty Reduction 1. Please insert OD 4.15, Poverty Reducion, in the Operational Manual. The direcfive summarizes Bank procedures and guidelines for operational work on poverty reduction. It incorporates (a) the recommendations included in the policy paper Assisuance Sategie to Reduce Poverty, which was based on the 1990 World Development Report on poverty and which the Board endorsed on January 24, 1991, and (b) gudelines on poverty work covered in other directives, modified as appropriate to reflect current policy. lThe Poverty Reducion Handbook contains exnmples of good practice analytical an4 operational work and is consistent with this direcdve. The objective of tbe directive and the handbook is to strengen the focus of Bank operations on poverty reduction. 2. Following Assistnce Strategies to Reduce Poverty, the direcive emphasies the assessment of country policies, pubic expenditres, and institions as a basis for the design of Bank wountry assistace programs to support and complement country effort to reduce poverty. Under tihs approach, the measure of the Bank's poverty reduction effort is the totality of the country assistance strategy-including lending, economic and sector work, aid coordination, and the policy dialogue-in the context of country efforts. Within this broad programmatic firework, every Bank-supported operatdon should be consistent with dte poverty reduction strategy; and subject to administrative and fiscal feasiility, all adjustment opetions should provide for safety net protecion for tbe most vulnerable. Country circumstances, as analyzed in the Country Strategy Paper, determine when individual operations should focus more'specifically on poverty reduction. These may take the form of (a) adjustment operations designed to address distortons that especiaUy disadvantage the poor and support a reorientation of public expenditures towards infrastructure and social services for the poor, or (b) invesment operations that spport interventions designed to raise the productivity of the poor's physical assets, develop their human capital, improve their living standards, and/or provide a safety net Changes in Procedres 3. The poverty assessment is introduced in panas. 15-19. It forms the analytic basis for the design of the county assistance strategy (pans. 20-23). The initial poverty assessment sould be accompanied by an appraisl of country data for monitoning poverty and a proposal for mproving the data (panas. 47-49). 4. The directive emphasizes the importance of focusing economic and sector work on gt. s',gahical areas where the poor live, on products and services the poor produce and consume, and on assets the poor hold-in order to pre-identify projects that botd realize hi returns and contribute to subsantal poverty reduction (paras. 11, 29). 5. The monitoring of Bank operations takes place through the program of targeted interventions and progress reports (par. 50-53). Ti d&rcet wwp%raprI deZ gfdeof ffof di World B*i adr am uwanly a cmpkra n-e ofw se an# cov 288 THE WORLD BANK OPERAnoNAL MANUAL Distxibution: Opertional Manual Rdpienbs Manual Transmittal Memorandum 6. The directive specifies the poverty content of the Policy Framework Paper, President's Report, Memorandum and Recommendation of die Presiden, and Country Bribf (aras. 54-56). Addilondl Guideine 7. Additioal guidance is included in. the Poverty Reducion Handbook. The bandbook discusses in more depth the topics covered in this directive. It also contains good practice examples of economic and sector work, poverty asm ents, strategy formuation, donor coordination, and project designs. S. Existng operatil dietves dealing with various aspects of poverty reduction contain further guidance. They are cited in footnotes throughout this directive. 9. QOestions on this directive shoud be referred to the Director, Central Operations Deparment, or the Director, Populadon and Human Resources Department. 10. To request additional copies, please send an EM to the Direcdves Unit (If you do not have electronic mail, call ext. 37075.) Attachment 7 idbfctw wapreparelJfr*eSpiea=qfwJqf twh WU Benk and It mwiceusafy a compvmcax of the abjar covwni. 289 DHE WORLD BANK OPERAnoNAL MANUAL December 1991 OD 4.15-Table of Contents Operational Directive Operational Directive 4.15: Poverty Reduction Table of Contents Para. No. Introduction .................................................... 1-2 Policy ...........,............ 348 Responsibilities and Procedures .9-10 Country Economic and Sector Work .11-19 Poverty Assessments .15-19 Country Strateg Work .20-23 Adjustment Lending .24-26 Investment Lending .............. 27413 EconomicDesign. 29-31 Fmancial Design .32-36 Isidttion Desiign .37-39 Project Design. 4-43 Aid Coordiatn .444 Inproving the Monitoring of Poverty .47-49 Monitring the Bank'sEfo ..........................E50-53 Documentaion for the Board.S4-56 Annex A Guidelines for Poverty Aement S ies Annex B Priority Poverty Indicators hut dhwcif mm p mp rar de gSses ofs4fi Wat Bo* ad r nw* ara omepLass ceams of is atfl ear THE WORLD BANX OPExRnuA NAL MANUAL 291 December 1991 OD 4.1S Operational Directive Poverty Reduction Introduction effectively the relationship between poverty and the policy enviromnent. In 1987 and 1988, the 1. Puwpose. This directive summarizes Bank' primacy of te Bank's poverty reduction objective procedures and guidelines for operadonal work on was reemphasized in task force reports, which poverty reduction.2 It incorporates (a) the recom- included proposals to strengthen the Bank's oper- mendations included in the policy paper Assist- ational approach to poverty reduction. The WDR ance Strategies to Reduce Poverty, which was 1990 and Assistance Strategies to Reduce Poverty based on World Development Repon 19901 contributed to a firther reaffirmation of the (WDR) on poverty and which the Board endorsed Bank's commitment to poverty reduction as its on January 24, 1991, and (b) guidelines on findamental objective-as well as to a broadening poverty work covered in odter directives (cited of the Bank's approach. herein), modified as appropriate to reflect current policy. The Poverry Reduction Handk-k contains examples of good-racdte analytical and Policy operational work and is fuly consistent with this directive. The objecdve of the directive and the 3. The WDR 1990 showed that sustainable handbook is to srengthen the focus on poverty povery reduction could be achieved by reduction of Bank operations. (a) broadly based economic growtL to generate efficient income-eaning opportunities for the 2. Background. The Bank's approach to poverty poor, and (b) improved access to education, reduction has evolved over time. In the 1960s, nutrition, health care, and other socil the Bank focused on economic growth as the key services-to improve welfare direcdy and to to poverty reduction. During the 1970s, attention enhance the ability of the poor to take advantage shifted first to redistribution with growth and later of the opportnities described in (a). The to satisfaction of basic human needs. Cumula- approach also included a social safety net for the tively, this evolution increased recognition that poorest and most vulnerable segments of society. economic growth alone is not a sufficient objec- tive of development-or adequate measure of 4. Assistrnce Strategies to Reduce Povery success-and that investments in human resources showed how to apply the WDR approach in an contribute to increasing incomes and reducing operational context. It emphasized the assessment poverty. This theme was a central focus of the of country policies, public expenditures, and insti- World Development Report 1980. In the early tutions as a basis for the design of Bank countqy L980s, policy-based adjustment lending over- assistance programs to support and complement shadowed the Bank's poverty reduction objeceives, country efforts to reduce poverty. Its key recom- but eventualy enabled the Bank to address more mendations were as follows: I .'Bank' includes IMA; and losnns include credit. 2. T'he tem "povery" has absolute and rdarive meanings. Absolute poverty is uefidly defined by a poverty lin that is fixed over dme in real terms and is county-specific, based on local consumption patterns and price. Relive poverty is meured by a poverty line tht vwries over time wih the country's per capita income (such as a poverty line set at one-half per capita income). For county povey analysis, a absolute mewsre of poverty is preferred-and is used in this directive-because it pemits in_ertemporal comparisons. An intenuatally cont absolut poerty lic can be used for cross-coury comparons and aggregtion, but becau of diffcrcnces in local cots and cumption parns, it is lcs useful for country povety nalysis. 3. World Deelopmnt Report, 1990 (Washington, D.C.: Wodd lank. 1991). This dfrecdv wes preparedfor ike gddoce ofinajofike Wodd Raek and is no ceessacy a copkre eweas of su ,bjects cevL Ti WoRLD BANK OPERAnONAL MANUAL 292 December 1991 OD 4.15 Operational Directive (a) Periodic assessments of the consistency 5. Country Focus. Folowing AssLrsance Srute- between govenment policy and the gies to Reducc Poveny, the approach to poverty reducton of poverty should be prepared reduction adopted in this directive is county- and presented in county economic focused. Wfithin the growth plus human develop- reports or similar documents. Given the ment plus safety net approach to poverty reducdon progress to date, dte first round of such outlined above, country conditions determine the assessments should be completed for appropriate country strategy for poverty reduc- almost aU counties within three years tion. In turn, analyses of country policies, public (see parns. 15-19). expenditures, and institutions determine the opportumities for the Bank to support and/or com- (b) Bank assistance strategies should reflect plement country efforts. Country economic and and be consistent with an analysis of the sector work, lending, and aid coordination are factors determining poverty. The volume velicles for the policy dialogue, which is the key of lending should be linked to a country's Bank instrument for promotmng poverty reduction. effort to reduce poverty. The com- position of lending should support 6. Fwrdamerwal Objective. Sustainable poverty country efforts to reduce poverty (see reduction is dte Bank's overarching objective. paras. 20-23). Since the complete range of programs and policies affect the well-being of the poor, there are many (c) The Bank should discuss its analysis of complementarities between poverty reduction and poverty and coordinate its program of other operational priorities. Private sector assstance with other donors (see development, for example, promotes growth and pans. 44-6). income-earning opportuides for the poor. The burden of poverty falls disproportionately on (d) In the context of the first round of peri- women; so it is essential to increase their income- odic assessments, Bank staff, together earning opportunities, their food security, and with country countrparts and relevant their access to social services> - Maintaning the United Nations (UN) agencies, should enviromnent is critical if gains in poverty reduc- prepare a proposal for improving the lion are to be sustained and if future increases in quality and reliability of data related to poverty are to be avoided. If poverty reduction is poverty. Where a proposal is accepted to be sustainable, institution-building and by a country, the Bank should undertake investing in local capacity to assess poverty and to to organize appropriate financial support analyze, design, implement, and finance programs and ;tchnical assitance for implem- and projects are essential. tation (see paras. 4749). 7. Tmdeoffs. Recogizing these complemen- (e) Docments routinely presented to the tarities does not eliminate tradeoffs. In practice, Bank's Board of Executive Directors governments may face tradeoffs involving eco- (specifically Policy Framework Papers, nomic efficiency and poverty reduction, inter alia, adjustment loans, and the first investment in choosing among policies, programs, and proj- operation of each year for MDA countries ects. These tradeoffs are not easy to evaluate. without adjustment programs) shoiud For some sectrs, economic cost-benefit analysis indicate how the Bank's assistance can be used to evaluate alternative projects. And strategy supports and complements the even wbere int. .entions are not amenable to country's own approach to reducing quantitative cost-benefit analysis, it provides a poverty (see pars. 54-56). discipline for thinitg about the relative ments of Th datsUn wacpas pmphdfrr s ddwwe of saff of Ow Wom Bmt mad Is no necesswiy a cemnplne groan: of se ad,jecz cavereIL THE WORLD BANK OPBRAToNAL MANUAL 293 December 1991 OD 4.15 Operational Directive alternative courses of action, whether they involve consistency with the Bank's policies. Regional policies, investments, or recurrent expenditures. chief economists are responsible for determining In advising governments, the Bank generally that a poverty assessment has been satisfactorily reconmmends the selection of the highest return completed (see para. 19) and for advising on the activity among alternative interventions, and that position of the poverty lice (see pana. 17). Other deparutes from this rule should be justified in specific assigrnments are natters for Regional terms of reducing poverty or providing a safety discretion. The directive spells out specific net for the vulnerable and of being the least-cost procedures for poverty assessments (see method of accomplishing these goals. As with paras. 15-19). For other country economic and other interventions, fiscal and administrative sector work, lending, and strategy work, the feasibility are essential. procedures are set out in existing guidelines.5 8. Interdiscipuinmy Approack The economic 10. Responsibility for monitoring poverty work framework notwitstanding, poverty reflects the and sector and operations policy is vested in results of, and complementarities among, cultural, Sector and Operations Policy. Procedures for sociological, and political factors. Analyses of monitoring poverty reduction operations and for the culral constaints, sociological context, and/ preparing progress reports are provided below or political dynamics in which poverty persists (see paras. 50-53). contribute to understanding the process of poverty in a particular country and to evaluating the full Country Economie and Sector Work costs and likely benefits of alternative measures to reduce poverty. Such analyses also contribute to 11. Country economic and sector work (CESW) the development of the overall country institu- provides the analytic foundation for the Bank's tonal framework for poverty reduction and strt- advice on policies, public expenditures. and inst- egies to build insdtutional capacity to analyze tutions; country strategy formulation; and project poverty and to design interventions to reduce it. development Existing guidelinee on CESW indi- These analyses add to the cost of interventions, care that country econmic work focuses on such but they improve policy, project, and program questions as the causes, manifestations, and design and sustinability, and reduce failure risks. treaunent of poverty. They indicate that Country Economic Memoranda (CEMs), at a minimum, Responsibilities and Procedures review trends in poverty. Since poverty reduction depends, in the first instance, on sustained 9. In line with the framework established in economic growth, and since poverty reduction is other direives, responsibility and accountability a task for economic poliy at large, the entire for operational work on poverty is fiully vested in range of CESW bears direcdy or indirectly on the Regions. Regional vice presidrnts (R'VPs) are poverty reduction. An important objective of responsible for ensuring adequae consultation CESW is to pre-iden4fy high-rentm projects for wita other concerned units in the Bank, IFC, and widc the poor are direct beneficiaies (see MIGA. In approving analytic and operational para. 29). work, RVPs look to country department directors as the senior managers responsible for ensuring its 12. Economic Work A central concern of Bank quality, its development effectiveness, and its economic work is the effect of the incentive 4. Scc OD 2.00, Cowty Econmic dSector Wt; OD 2.10, Cowy Strtgy P s (to be rcissued); OD9.00, Procesing of Insenenr Landing (to be rcisued); and OD 9- 10, Procesing of Adjune Lending (to be issued). 5. Samc above. 6. See OD 2.00, Cowny E.nomic and Sector Work. Ahis diredve ws preparefor shc gddwce ofstaff of sie Wd Bek wd Is nr necessarily a compkese weaemw of dh subjwcts cowee THE WORLD BANK OPERATIONAL MANUAL 294 December 1991 OD 4.15 Operational Directive framework on the demand for investment and expenditure reviews contribute to the dialogue labor. From the poverty reduction perspective, between the Bank and country officials on how to the concern is the effectiveness of economic restructure public expenditures to better promote management in (a) promoting growth that makes poverty reduction. The reviews examine the efficient use of labor and (b) enabling the poor to equity, efficiency, and effectiveness of spending respond to opporunities to improve their well- plans in the context of the mactoeconornic being. Important issues are the impact of macro- fiamework and sectoral strategy. They serve as economic policy on unemployment and the disti- a basis for determining wheher additional bution of income between urban and mrual resource mobilization efforts, including higher households-and between nontradeable and trade- levels of taxadon, are needed. They note possible able sectors-in relation to the poverty profile (see imbalances between capital and recurrentspending para. 17). Other issues are the incidence of direct and between support for basic versus more and indirect taxes, which may be regressive, and specialized services. They also note the impact of the efficiency of labor, capital, and land markets nonproductive expenditures, such as military and their impact on the poor's employment and expenditures, and nonproductive practices on other income-earning opportunides. Special poverty reduction. Public expenditure reviews attention is focused on regulatory barriers in labor analyze safety net programs for cost effectiveness markes that may differentially affect women and and coverage of target groups. In the context of the impact of land ownership and tenancy economic adjustment, they address the impact of arrangements on the poor. In the context of restructuring of public expenditures on the living adjustment, reform programs move economies in conditions of poor households and on ihe design a direction consistent wit poverty reduction over of affordable public expenditure programs to the medium to long term. But efforts to stabilize benefit the poor. and restructure the economy can have short-term costs. Analysis of these issues-and their Poverny Assessments distributional impact-provides a basis for designing compensatory programs (see para. 25). 15. The poverty assessment provides the basis for a collaborative approach to poverty reduction by 13. Sector Work. Sector reports address the country officials and the Bank. It helps to impact of sectoral policies, expenditures, and establish the agenda of issues for the policy institutions on the poor and on the design of dialogue. The scope of the poverty assessment sectoral strategies to reduce poverty. They assess will necessarily vary across countries, depending the institutional framework for the formulation on die country situation, the goverment's and execution of sectoral policies and die delivery combuent to poverty reducton, and the nature of services, including the role of the private sector of available data. For example, in countres and nongovernmental organizations (NCOs), and where poverty is marrowly concentrated, the the involvement of beneficiaries (see pars. 39). analysis will clearly be more focused on te Particular attention is paid to dte impact of sector specific determinants of poverty and the design of policies on poor women and children, food targeted scolutions than in countries where more security, rural credit, and land tenure issues, and widespread poverty indicates problems with the the links between environmental issues and broader macroeconomic and sectoral policy poverty. Sector report on human resources framework. In countrnes where commitment to development assist in the formulation and poverty reducdon is less, greater attention should implementation of least-cost and sustainable be paid to establishing the causes and implications approaches to serice delivery. of poverty as a basis for the dialogue. To tbis end, quantitative anlysis-where data are 14. Pubic Expendit Reviewy. By focusing on available-can help sharpen tue issues for the intersectral and intrasectoral tradeoffs, public policy dialogue by providing a sense of the cost Ahis Sddv we pmuparedfordw ahpduce of staff of & WorJfAok sd 1 5a necmway a camp/kk wraas oft /xsubjemts ronv THE WORLD BANK OPERATIoNAL MANuAL 295 December 1991 OD 4.15 Operational Directive and benefits of policy alternatives. In countries available social indicators (child mortality, where data are not available, the analysis in thle nutrition status, male and female literacy, fertiliy, poverty assessments will necessarily be more maternal mortality, etc.) and income indicators qualitative. For tem, developing proxy variables (per capita income, unsElled wages, etc.). It to identity the most vulnerable groups will have indicates the poor's ownership of and access to high priority. assets, including land; the food security and other risks they face; and special environmental issues. 16. Content. The poverty assessment typically It provides a baseline for identifying poverty starts with a poverty profile (see pan. 17). indicators and monitoring their trends. Iden- Although the specific focus and concentration of tifying those groups most at risk, for which urgent the assessment will be determined by country actions need to be designed, is a priority task. circumstances, it normally (a) analyzes the effectiveness of economic management in 18. Cowuwy Povery Strategy. The assessment promoting efficient, labor-intensive growth; makes recommendations for government action, (b) evaluates the adequacy of government efforts including a phased program of policy reforms, to develop the human resources of the poor; and public expenditures, and institudonal development (c) examines the extent, reliability, affordability, to reduce poverty. Indicative targets for improve- and cost-effectiveness of the social safety net for ments in the social indicators are included in the protecting the most vulnerable groups and the table of Priority Poverty Indicators (Annex B), to very poor (see pans. 12-14). Finally, it recom- help convey the broad dimensions of what the mends actions to strengthen the impact of country proposed effort is likely tD achieve. The pre- policies and programs on poverty reduction (see scription is based on a realistic assesment of para. 18). Further gaidance is contained in (a) the government's capacity-both financial and Chapter 4 of the Povery Reducfion Handook. institutional-to implement poverty reducing programs and policies, and (b) political economy 17. Poverry Profi&. Because the poverty profile considerations. The assesment should provide a used in the initial poverty assessment typically sense of priorities for government programs and summarizes existing data on the poor,7 its policies, and not be a wide-ranging and unfocused statistcal content vill vary vwdely across description that lacks specific policy content or is counfties. It starts with an estimate of the number inconsistent with the resoutrces liely to be of poor people.' Depending on the availability of available. It should pinpoint govermment policy data, it identifies the poor by gender, age, and actions to redress the worst manifestations of ethnic characteristics, where they live, and how poverty among vulnerable groups, for example, they fit into the consumption and production high incidence of child mortality, morbidity, activities of the economy. It swnmarzes the and malnutrition 7. The ansees should also contain proposas to improve poverty-rlasted data a a basi for mcaningful policy analysis and design. See pans. 4749. 8. Peoplo arc counted as 'poor' if their standard of living fails below the poverty line, dta is, the amount of income (or conswuption) associad with a mninmum acceptable level of nutition and other necessities of everyday life. Te poverty line is ofte estimated by the levd of income at which a peyso typically -ina the minimum nutritional intkre. Within a country, thr wy be variations in the cost of living across time and regions. Thes variations should be reflected in the consructio of individual intra-cuuntry povcrty lines which mun aUl have the samo purcbasing power. The country poverty line is the epression of tha purchasing power in ums of a particula basyear md locale.) The poverty line for use in Bank operaio wor is determined by the country dcpamet in coonultt with die Regional chic! economisL Whenever a poverty lino consen with the abave indicators is already in - in a country, it should be used. Howevcr determined, the country povery line defmes povcrty for purposax of this directive; the poor are correpondingly those whose incomes are below the poverty line See foonte 2. 3IJs dbadv var preparedfor di gidance of swn of shc We 1 Ba* wd isnes ncesadl a compkse acne of e m.. - %covere THE WORLD BANK OPERATIONAL MANUAL 296 December 1991 OD 4.15 Operational Directive 19. Poverty Assessment Reports. The CEM can country's poverty problems, the policy dialogue serve as a vehicle for the assessment, but other establishes priorities among the relevant policy CESW instruments also may be appropriate. If issues-such as the macroeconomnic and regulatory the assessment builds on several sector and/or framework, women's role in the economy, social economic reports, a single synthesis document sector policies, and the funding of recurrent costs that pulls together the main points covered in the in the public expenditure program-and focuses various reports should be prepared-as a basis for on the most important issues for decision by the country policy dialogue and Bank assistance government, including those affecdng the most strategy, and for informing the Board on poverly vulnerable groups. It ariculates the respective issues. In either case, the relevant CESW roles hat CESW, lending, and donor coordination instrument is indicated by the words "Poverty canplay insupportingand complementing country Assessment' in the tide, such as Coumry efforts to reduce poverty. The government's Economic Memorandum and Poverty Assessment. commitment to poverty reduction influences the It is recommended that the Poverty Assessment nature of the dialogue. Where commitmnent is Summary (see Annex A) and table of Priority stronger, the focus will tend to be on solutions to Poverty Idicators (see Annex B) be prepared at a, eed problems. Where commitment is weaker, the completion of the poverty assessment. They the focus will tend to be on the causes and should be included in Regional submissions for manifestations of poverty. the preparation of periodic progress reports (see paras. 51 and 53). 22. Volme of Lending. The volume of lending should be linked to country efforts to reduce Country Strategy Work poverty. Stronger govement coMnnitment to poverty reduction-as measured by the adequacy 20- The Bank's country assistance strategy of the policy firework for growth plus human reflects and is consistent with an analysis of the development and/or willingness to reform-war- factors determining poverty-as embodied in the ants greater support; conversely, weaker commit- poverty assessment-including the macro- ment to poverty reduction warrants less support. economic, incentive, and regulatory framework, Country IMA allocations reflect performance on public expenditures and institudons, and the safety (a) short-term economic mangement, (b) long- net. Starting with the prescription for poverty term economic management, and (c) poverty reduction contained in the assessment, the strategy effort. Poverty effort takes into account govem- establishes the priorities for the Bank-in terms of ment efforts to improve the social indicators and the issues for the policy dialogue, the volume and policies and programs in education, health, nutri- composition of lending, technical assistance, and tion, food security, family planning, water supply, CESW. It is summadzied in the Country Strategy housing, labor market reform, and efficient Paper (CSP).9 employment generation. Poverty reduction and economic performance are distict performance 21. Policy Dialogue. Country circumstances criteria, albeit mutually reinforcing-particularly shape the policy dialogue on poverty reduction. in view of the close linkages between economic The policy dialogue incorporates the findings and growth and poverty reduction. Risk and credit- recommendations of Cie poverty assessment and worthine considerations set the limits for TBRD other relevant CESW and embodies the results of lending. However, within these constraints, country project experience and country implemen- lending allocations reflect the country's perfbr- tadon reviews. Reflecting the severity of the mance, including government efforts to reduce 9. See OD 2. 10, COny Srategy Pape, to bc rcisuod. lht dirdve wws prepredfor di gudance offfofitc WarM BAk and sr nor nmesmrma a amples brs f oft suz bect etaow THE WORLD BANK OPERAxONAL MANUAL 297 December 1991 OD 4.15 Operational Directive poverty as demonstrated by the effectiveness of sustainable growth. These policies are essential to economic management, the adequacy of social a comprehensive poverty reduction strategy. services, and the extent and reliability of Country circumstances, as analyzed in the CSP, safety nets. will determine when individual adjustment oper- ations should focus more specifically on poverty 23. Composkion of Lending. ITe composition of reduction-by addressing distortions and regula- lending should support and complement county tions that disadvantage the poor especially and by efforts to reduce poverty. The balance of supporing a reorientadon of public expenditures payments and the strength of the government's toward infrastructure and social services for the economic program will determine dhe choice poor. Such operations help foster the parfici- between adjustment lending and investmuent pation of the poor in tbe economic growth to be lending. Within adjustment and investment generated by adjusunent Public expenditure lending, there are no sectoral lending targets. issues are important for all adjustment operadons. The type of intervention, the choice of sector, and Widtn the overall spending envelope given by the the design of operations are determined by macroeconomic framework, special efforts should country circusmnces. In coumries where be made to safeguard, and increase where appro- poverty is narrowly concentrated and implemen- priate, budgetary allocations for basic health, tation capacity is good, targeted pronrams can be nutrition, and educadon, including programs that an important part of government programs to benefit the most vulnerable groups among the reduce poverty. Where povert is more wide- poor (see para. 25). Institutional reform and spread and implementation capacity is weak, development should also be supported as neces- broadly based growth and support for basic social sary to ensure that the benefits of policy reforms services may be the most cost-efflective route to reach the poor. povert reduction. These differences in initial country conditions affir the mix of Bank support 25. Soca! Costs of Adjunment. Although the In turn, the overall stance of Bank operations with poor suffer from economic policies that stifle respect to poverty reduction is judged by die mix growth, they may be adversely affected by the of Bank lending taken in conjunction with country transidonal costs of adjustment policies. Bank- efforts and the other components of the Bank pro- supported adjustnent programs, therefore, include gram, such as CESW and aid coordination. measures to protect the most vulnerable from declines in consumption and social services-with Adjustment Lendinge0 pardtlar attendon paid to food and nutritional security-in the context of an agreed public 24. Smwacml Adjuusmem Loans lSAs) and expenditure program. Sharpeig the cost- Secor Adjusmem Loans (SECALY).? Strucural effectiveness of subsidy programs by more and sectoral adjustnent opeations support narrowly targeting benefits-for example, by macroeconomic and sectoral policies consistent resticting food subsidies to products consumed with efficient resource allocation and accelerted exclusively by the poor-is one way of protecting 10. See OD 8.60, Adjusent Loam SnUcwal Aijumsoe, Senor Adjmanm, ad Irid Loans), and OD 9.10. Processng of AdJmniet Lending, both to be auued. 11. Qucaion ba bcen miend as to wether adjusmnct lending c fnace loca coa, paricularly in the socidl Setors, whem local coas loom large il snoa! budgets. However, tho Bak does ot diy rnanc loa costa in adjustmt opeations, which ae gard to meeting foreign exchange requiremcats. Both SAL and SC ara disburned again8 a posiive or negative list of imports and ame no used to fnace apelfic e diures, local or odwi If local currncy expendiurc for part purpomes air considered eseal to die aucee of do progrm aupposed by the adjustnt opertion, they are asaurd by goverment commitmet ( the conten of the opertion) that the necasary finds will be provided. Like other iuposant loan provision, the availability of adequate local rencing for agreed purpses may be a condition of tranch relase. lhds dZrctiw ws prparedfobr di guldaceof staff of die Word Bank ad is not neenla ry a compket brankw of Si 5b= cvrd. THE WORLD BANKC OPERA7ONAL MANUAL 298 December 1991 OD 4.15 Operational Directive the poor even as fiscal balance is promoted. Investment Lending Nevertheless, in choosing appropriate targedng mechanisms, the fiscal costs of including the non- 27. Since the composition of Bank lending is poor should be weighed against the administrative designed to iupport and complement country and political costs of excludiag them (see efforts to reduce poverty, the measure of the para. 31). More broadly, government implemen- Bank's poverty reduction effort is the totality of tion capacity must be fully taken into account in te Bank program in the context of country designing safety n .t programs, recognizing that in efforts. Within this programmatic framework, some instances orly tde simplest mechanisms will every project should be consistent with the be administradvely feasible. The short-nm poverty reducticn strategy, but not every Bank- income indicators included in Annex B should be financed project need have a specific poverty- tracked during adjustnent, to provide feedback on reducing component. Country circumstances, as the impact of the program on the poor for pos- analyzed in the CSP, will determine when sible program modifications; the social indicators individual Bank-spported investment operadons should likewise be monitored, although they are should focus more specifically on poverty ikely to be available with longer lags. reduction. Such operations aim to (a) raise the productivity of the poor's physical assets and 26. Social Action Progrman and Social Fwud. increase teir incomes, through the provision of Social action programs and social finuds are infrastructure, credit, technology, and comple- investment operations; however, tey typically are mentary inputs and by regularizing de facto land used to support govermnent efforts to protect doe tenure rights; (b) develop human capital by poor during adjustment. They generally focus on improving access to (and the quality ot) basic oie delivery and upgrading of basic social services health, nutrition, family planning, and education and infrastructure, including labor-intensive public services; (c) improve living conditions by works and community-level initiatives. Because providing basic inufastructure and social services; social action programs in many cases have a and/or (d) provide a safety net. The operational multisectoral focus and are administered by sepa- framework for such poverty reduction projects is rate project units, special efforts are required to discussed below. ensue the consistency of the program's subproj- ects with oectoral strategies. Social fimds typi- cally mobilize resources from te budget and 28. Role of dze Bant The Bank's role in sup- donors and channel them to small, demand- portig poverty reduction through individual driven, public sector subprojects, evaluated ivestaent operations goes beyond finacg. according to selection criteria agreed with the The Bank supports sustainable, high return proj- Bank. The criteria must be able tD ensure selec- ects and project components that benefit the poor tion of high-return and well-focused subprojects and that would not be done, or would be done di - consistentwith national, regional, and sectoral ferently, without the Bank Since an improved priorities, the absorptive capacity of implementing policy framework can increase the returns to Mdi- agencies, and Bank country assistance strategies. vndual projects, Bank project support should also Both social fimds and social action programs need encourage the authorities to elimninate policy and to be carefilly designed to provide for adequate institutional biases against the poor. To enhance implementation, supervision, and monitoring of developmenteffectiveness, Bankoperations sbould subpojects, including technical, managerial, and support projects and progrms-or approadhes to financia training for lal implementingagencies, public service delivery-that can be replicated or as warrnte= d They should also ensure consis- that define investment criteria tat can be repli- ency with the financial managementof the overall cated in donor- and budget-supported programs public sectr. and projects. This directie wusprepawdjfrwtde gaonce of staff of die Wl Bo* and 4 not necessanly a ewn~pkew uranu of die -ubj-c covr TE WORLD BANK OPERATONAL MANUAL 299 December 1991 OD 4.15 Operational Directive Economic Design 31. Targefing. Carfiil attention should be paid to any targeting mechanism to be used in the proj- 29. Bank-financed poverty reduction projects ect, recognizing that mechanisms that target better must pass the same economic tests that apply lo are typically more costy to implement and may other projects.12 They must have a satisfactory be polidcally more difficult to sustain. Screening economic rate of retun or-in projects where the beneficiaries by geographic location or demo- calculation of an economic rate of retumr is not graphic characteristics is administradvely simple practicable-be the least Cost way of achieving but prone to niistargeting or leakage to nontarget project benefits. Rather than reLxing the stan- beneficiaries under some circumstances. During dard investment criteria for Bank financing of project preparation, the risks of project benefits projects, greater operational atention should be being diverted to better-off groups should be care- paid to identifying projects and project designs fully evaluated. Such risks can be reduced by that both benefit e poor and have high remnis, project designs that by the nature of their benefits whether measured eqplicitly in terms of an eco- discourage the participation of the nonpoor, for nomic rate of return or inplicidy as for human example in projects that support he upgrading of resources development. Thus, the focus of coun- squatter plots or the provision of simple water and try economic and sector work should be sbarp- sanitation facilities and basic health and nutition ened toward developing new project proposals that services (see also para. 38). Projects not targeted meet these criteria. A sharper focus can be to the poor but with broader benefits, such as achieved by concentrating on (a) geographical urban and ral development programs, should be areas where the poor Live, (b) products and ser- designed to ensure adequate representation of the vices the poor produce and consume, and poor among the beneficiaries; in such cases, cost (c) assets the poor hold. This approach uill recovery mechanisms should be identified for diminish the scope of possHile tradeoffs between better-off households to increase the sustainability economic efficiency and poverty reduction in a of such projects (see para. 35). Special attention project context (see para. 7). also should be paid to establishing a basis for monitoring success in reaching poor beneficiaries 30. Risk Ana4ysis. The economic analysis coz- (see para 41). siders project risks, including risks to insti- tutoal, political, and financial sustainability that Fnacia Design will jeopardize project benefits if project assumptions are not meL Since poor people live 32. Fmancial design covers, inter alia, the Bank's at the margin of existence, downside risks are life financing of local costs and recurrent cost and threatening. Therefore, risk analysis is essential the project's cost recovery provisions. In each for poverty-reducing projects. In agricultral area, there is a tradeoff between facilitating projects, poor people may fail to take up new project implementation and promoting project tecmology because of its perceived riskiness, sustinability. A larger role for Bank: finanidng whereas projects that address risk (for example, facilitates implementaton by making the reqpisite by imprvig soil moisture retention i rafed financing readily available. But in so doing, it areas) may be particulady beneficial to the poor. may undermine sustainability by delaying the gov- These projects may also have important side ernment's need to make an out-of-pocket financial effec for envimental and demogaphic commitment t the project This issue is espe- outcomes, which should be carefully analyzed. cally germane for social sector and other poverty 12. See OMS :.21, EconanocAnaydsi of Projes (to be rvisd ad reissued as OD 10.40, Ecnonoic Creria), amd OPN 2.01(a), Rarr of Retrn Ds Bak Projec Wet*. lifs dicdw wnpnpnrdjr gumc ofq .uf of Ai Wrllu Bnd mis na necsradry a canpinse nam of sc subjecu cernL THE WORLD BANK OPERANONAL MANUAL 300 December 1991 OD 4.15 Operational Directive reducdon projects, which tend to have a high support from local fimds, thereby increasing the proportion of local and recurrent costs and which likelihood of sustaimbility. However, this often Jack sufficient budgetary finding for oper- requires a careful appraisal of the ability of ational inputs and maintenance. The exisdng existing and proposed financing mechanisms guidelines reflect the implementatio/susin- (budgetuy allocations, donor fiMncing, cost ability tadeoff. They have sufficient fexbility recovery, local contributions) to sustain opeations to accommodate the requiremnts of social sector after project completion. The fill financing plan and other poverty reduction Investmts-widtn for the operation-and possible follow-p oper- the limits of sustainability. adons-should be carefilly worked out and agreed with the government (and cofinanciers). It should 33. Local Con Fhancing. The Bank's Articles cover (a) the allocadon of resources to priority of Agreement stipulate that the Bank shall nor- areas; (b) the financial framework for the sector, mally lend only for foreign exchange costs. Im grounded in the broader macroeconomic and fiscal exceptional circumstances, howevet, it may framework; and (c) specific provisions for finance local costs.3 In prace, most borrowers ensuring sustainability after external support ends. have qualified for local cost fimncing. In dtese Budgetary support for recurrent costs should be countries, there is flexibility in the financing of part of dhe dialogue on the public expendire pro- local costs in any single operation, within the gram and sectoral strategies and policies, sup- county limits set by the Bank's cost sharing ported where appropriate by the framework for rules.1' The Bank nomly provides finang for adjustment lending and donor coordination. a larger proportion of local costs for social sector projects, snce the local costs of such 35. Cost Recovery. To promote social goals, the projects typically constitute a high proportion of government may wish to subsidize the poor's use, total costs. or to price services to permit better-off users to subsidize poor users. Under existng guidelnes, 34. Recure Con Fiacing. Balancing the this approach is permissible in Bank-supported desire to Fcilitate implementation on the one hand operations."' However, user charges are not and sustinabilty on the other,U existing necessarily inimical to the interests of the poor. guideines"s permit the Bank, under certain A carefillly designed and executed system of user circum stances, to inace incremenal recurrent charges can improve the govenment's ability to costs on a declining basis. In such cases, Bank target subsidies to those who need them most. financing facilitates implementation, while the And, in many cases, unless there is cost recover phase-dowm provides a transition to fiul finaeial of operatng costs, including maintenance and 13. See OD 6.30, Cos S=awg a.,,Loca Cost Fiudq, to be inrod. 14. See OD 6.30, Con SWn and Local Coanlulfcfg, to be isued. The Buk can rmm project cogs within limits that apply tD the ovceall inacat lending progrm for a country an not to individual projects. The limksm applied to a roling thee- year iveannt lendig progmm enonpasg two prior ycsn and the cuent fiscal year. The cot-sharing limtr are detenied by the country's per cpit income. See Anne B of OD 3.10, Payment Termw ofRD Lama and IDA Crer. owevr, the Bank normaly expects thc borower to makoat leat a 10 perccnt contrbution to t projcct cost demonstrt comi"mcnc See OD 6.30 (forthomig) for a dicusion of exceptons to the 10 percet rle. 15. The ssue of Dan finacing of recurr project cow, espcily for humn capital project, riaes difficult tradeoff aua. Som. recun cors, such as rahs' salaries, consitu invemun in dte human capil of respective chor of sudents Such cocs ay theefore be conarued to be seri, oe-time capital invetents smetioma with high retums, rather tha pure reurent oepdkue. Iveascmta or not, however, the apendurcs recur and tend to loom large in overall budges. Thus, matainable finacing needs to be aumed. 16. See ONS 1.21, Bank Fuwacng ofRecurma Cast (to be reiswed a OD 6.20, Recurrezr Cosrt Fswutg). 17. Sn OhS 2.25, CoarRecnvry Poiciesfar Publi Sectr Ptjecrs: CGenea Apecs (to be reissued as OD 6.00, CastRecovry d se Pricdng of Pbi Goads). 3M, Jrc vew prepsed far t h aMueofas4ffof dhe WorU Bank and & - necasarimy a comple ara of h *jecu cavetSe THE WORLD BANK OPERATIoNAL MANUAL 301 December 1991 OD 4.15 Operational Directive replacement costs, the project will not be finan- appraisal of project institutions-including their cially sustainable. Cost recovery should be estab- operadonal effectiveness, constraints, and reform fIshed first in better-off areas and for higher levels experience-in the context of a broader institu- of service-such as for hospitals and wniver- donal development strategy for the country. Task sides-to help finance basic services for the poor. managers are encouraged to enlist appropriate In investments in squatter upgrading, rural devel- expertise inside and outside the Bank in appraising opment, and rural water, there may be lite scope the project's proposed institutional structure and for efficiency pricing, but special levies to collect arnging for technical assistance as warranted for some fraction of the overall benefits created by institutional development (see para. 40). the project may be feasible. For urban water and power projects, lifeline" tariffs allow the poor to 38. Aftendon to Socal Sructurus. Poverty- obtain some minimal consumption for a very reduction projects targeted to specific beneficianies small fee, with consumption beyond that level must be designed with sensitivity to the social charged at a higher rate. organization, traditions, and values that affect the feasibility, implementation, and operadon of proj- 36. Fincing Land Purchases. According to the ects? In such cases, sociological and antro- Bank's Articles of Agreement, the Bank's pological analyses and beneficiary assessments can resources are to support the creation or improve- contribute to project design by identifying (a) due ment of productive assets and not the transfer of sociocultwal and demographic characteristcs of existing assets. Thus, Bank financing of land local beneficiaries,m (b) the social organization of inprovemev (including cadastral surveys and productive activties of the beneficiaries, and registration of title) that enhance land secur- (c) the cultural acceptability of intended project ky-but not the acquisiton of land-is permis- acdvities and their compatibility with the behavior sible. The Bank also does not finance projects and perceived needs of the intended beneficiaries. that involve involuntary resetlemente-unless a They can also assist in the formulation of the sound, production-based resettlement plan has social strategy for project implementation and been appraised by the Bank and incorporated into operation needed to elicit and sustain benefi- the project In the design of compensadon ciares' participation. packages, the Bank encourages a kad for lad approach, providing replacement land at least 39. Popular Pariucadon and NGOs.2 Effective equivalent to the lost land-because of the high implementation and operation of most poverty- risks of impoverishment associated with reduction projects require the active involvement alternative approaches to involuntary resettlement of the beneficiaries. Active beneficiary partici- pation also should be built into earlier stages of Insdaaional Design the project cycle. Pardcipation is most critical to the success of projects designed to help specific 37. Effective institutions are essential for the groups of people. It is important, for example, in success of poverty-reduction projects. The insti- family planning, community bealth, food security, tutional meanism for implementng such proj- urban upgrading, nutrition, and comnmuniy water ects therefore needs to be carefullly designed, even supply projects. Public consultation on environ- as institutional designs are kept flexible to adapt mental issues and adjustment programs can to changing conditions. This requires a careful improve the design of and build public support for 18. SCC OD 4.30, rnwluaayResenzent. 19. See OMS 2.20, Projec Apprad ral(to bc reissuad as OD I0.10), spcialy Section F, Siologicl Aspects. 20. See OD 4.20, Indgeams Peplep. 21. SCe OD 14.70, Inwvrit Nhownwnad Otgwdza,og s in BW*k.fSaponed4cdes. his £cdwc was prepcredfor die gudae of "stff qf World Batd Is nar neceswar a cwnprle cwawa of he subnje comrcd THE WORLD BANK OPERAtONAL MANUAL 302 December 199l OD 4.15 Operational Directive large-scale investments and policy decisions. In help project implemenling agencies to enhance many countries, die basic institutional processes popular paricipation and interacdons with clients, for reconciling competing claims between socio- including ffirough the financing of sociologists and economic groups are weak. Especially in such anthropologists schooled and experienced in sys- settings, popular participation requires careful tematic beneficiary assessment. planning, management, and supervision; the effectiveness of popular pardcipation can be enhanced by the existence of a social policy 41. Project Monitoring and Eluhaon. Moni- framework. Because of their proximity and first- toring and evaluation are essential aspects of proj- hand knowledge of the needs and interests of the ect implementation.' They also provide inputs poor, NGOs can provide a usefiul link between into Bank project supervision (see para. 42). Not official planners and project beneficiaries. NGOs evezy poverty project requires special baseline have shown that heir programs can reach the surveys to provide socioeconomic data on target poor often more effectively than programs beneficiaries, but every such project should have managed by the public sector, especially when benchmarks and monitorable social indicators for NGOs are brought into the early stages of project gauging progress. Poverty-reduction projects preparation. Subject to government sensitivities, often encompass innovative features that warrant Bank policy encourages task managers to involve review-for possible adaptation-during NGOs as appropriate- particularly grassroots and implementation. Monitoring and evaluation self-help groups among the poor-in project iden- systems should establish the inbformation base for tification, design, financing, implementation, and judging how these features are worldng and for monitoring and evaluation. redesigning the project if necessary. At the end of the implementation period, the monitoring and Project Design evaluation system needs to provide information to assess progress in achieving project targets and 40. TechrncalAssiswance. Developing sustainable reducing poverty. institutional capacity to analyze, design, and implement programs and policies is an essential 42. Supervision. Given the critical nature of part of the overall poverty-reduction strategy. institutions for the success of operations with a Hence, support for institition-building through strong emphasis on benefiting the poor, the technical assistance (TA) is often an important project supervision planl may need a strong insti- project component Because sensitivity to local tutional focus. Where projects include specific conditions is essental to the success of such co- targeting of services to poor people, the ponents, locally recruited consultants have an monitoring and evaluation system should be used important role to play. Partcular care is required (a) to assess whether these services are indeed in designing technical assistance components of all reaching the target group, inter alia, by tracking poverty reducdon projects to ensure that they pro- feedback through beneficiary assessments as the mote staff training and sklls acquisition, as part project progresses, and (b) to identify adjustments of a broader instittional development strategy to project design that would increase its efficiency designed tD promote sustainable development and effectiveness in reaching target groups. Decentralization and involvement of NGOs or These issues should be fully treated m the beneficiaries can strain the professional and tech- periodic progress reports prepared by the nical resources of lower levels of government borrower/project agency and in supervision and local organizations. In this context, TA can mission aide-memoires. 22. See OD 10.70, Project Mon!rring ad EwilZand 23. See OD 13.05, Project Superyiion 7Th dnctdw was prepared or die gpEter of eszt of Ae World Blt eand is n neardY a canplt bneo of&AFsn-Jcw cove TEIP WORLD BANK OPERATONAL MAuAL 303 December 1991 OD 4.15 Operational Directive 43. Procurement. When projects include social the process of preparing the poverty assessment objectives, the procurement procedures and where the country agrees tat this would be use- contract packaging should be adapted, as fuL) The overall impact of the development bud- appropriate, within tie framework of the get-including the various individual projects Procurement Guidelines.2? For example, projects financed by the Bank and donors-on recurrent can be designed for Labor-intensivet construction, costs also should be highlighted in such groups. where it is consistent with economic cost For countries in which food aid is prominent in minimization, and contracts can be packaged to donor assistance strategies, coordination of food encourage small firms and NGOs to participate. aid-including consistent approaches to food dis- Use of simple contract documents and expeditious tribution-and integrating it with overall donor payment procedures can also facilitate the assistance is essential. involvement of small firms and NGOs. In the procurement of simple goods-such as school/ 46. Coordiwaton with Muliloeral Agencies. hospital furniture, agricultural tools, school Cooperation with multilateral agencies on poverty uniforms, textbooks, and street cleaning reduction takes into account each institution's equipment-appropriate specifications may be comparative advantage. Cooperation with the used to promote small-scale, labor-intensive International Monetary Fund (IMF) follows tradi- production methods, where such methods are donal lines. The IMP focuses on the aggregate consistent with minimizing economic cosL aspects of macroeconomic policies and their related instruments and the Bank focuses on the sectoral aspects and composition of those instru- Aid Coordination ments. Cooperation with the United Nations Development Programme (UNDP) follows tradi- 44. Existing guidelines? address the Bank's role tional lines for projects. Preparaton of the in aid coordinato. They not the documentation IJNDP human development profiles and the available, including CEMs, as a basis for consl- Bank's poverty assessments should help to tative groups. However, they do not explicidy enbance collaboration in analyzing country refer to poverty reduction. Chapter 5 of the poverty issues. Project-related collaboration with Poveny Reduction Handbook contains an exten- other UN agencies follows traditional lines. sive discussion of coordination with donor and Project-related collaboration between the Bank multilateral agencies. and the United Nations Children's Fund (UNICEF) often involves the idendfication and 45. Coordinion with Bikleral Donors. The preappraisal stages of project cycles, though objective of the Bank's donor coordination efforts UNICEF's on-the-ground presence may give it a for poverty reduction is to assist countries to major role in implementation. In addition, elaborate a comprehensive poverty-reductionstrat- because UNICEF operates in a decentralized and egy that donors can endorse and help implement flexible manner, it is able to fill unforeseen needs To this end, country departments should share the as they emerge durmg joit government-donor poverty asesments and other reports analyzing reviews of implementation. The United Nations specific poverty issues in depth with donors Fund for Population Activities often collaborates through Consultative Groups, Round Tables, and on Bank projects by providing prototypes for oiher aid coordination groups. (Country depart- population activities. The World HEaldth ments also are encouragedto involvedonorsin Organization, the World Food Programme, the 24. See Guidelines: Procuremen wudr 3RD Loas and IDA Credit (Washington, D.C.: World Bair, May 1985). 2S. Projects typically suited for labor-inanuive cosiuouio are: uban sia and sice. upgrading; rral housing, clinics, schools. and community centcrs; feeder roads, culverts, and wells; road maintenance and minor services; and lhnd clerance and trce Planting- 26. See OD 1430, Aid Coordinadon Gruqps, to be reissued ZiMe directe was preparedfor the guidace ofsaff of the WmrlDeO ad is nos neceuray a cor,rpkfc weabn of Ad sb.fn covward THE WORLD BANK OPERAnoNAL MANUAL 304 December 1991 OD 4.15 Operational Directive Inmteraional Labour Orgation, the United counterparts and relevant UN agencies, Bank staff Nations Educadonal, Sciendfic, and Cultural help prepare a proposal for improving ibe quality Organization, the Internaonal Fund for Agri- and reliability of data related to poverty-or in cultual Development, and the multilateral cases where reliable data is virtually nonexstent, development banks also play important roles in for establishing the capacity for essential data col- poverty reduction and should be consulted as lection. The proposal is based on an assessment appropriate. A shared strategy, involving country of likely costs of implementing the proposal and officials and appropriate UN agencies should be benefits, in terms of improvements in the infor- adopted, wit a view towards improving the col- mation and analysis that can be expected and, lecdon of country-specific data (see paras. 4749). most mpor, on the lfrely bnwc on program and poliy design. If the proposal to unprove Improving the Monitoring of Poverty the quality and reliability of poverty data is accepted by a country, the Bank's country 47. The initial poverty assessment should be department helps to organize financial support accompanied by an appraisal of the country statis- and technical assistance for implementation. tical system for monitoring poverty and a proposal for improving it. The following paragraphs ela- borate these points. Further guidance is contined Monitoring the Bank's Effort in Chapter 8 of the Poverty Reducon Hanbook. As with the poverty assessments, the appraisals 50. The Bank relies on a multidimensional will vary widely across countries, depending on approach to monitor its poverty reduction efforL die country situation, including the degree of This approach includes information on what is involvement of relevant UN agencies. happening to poverty in member countnes, as well as a collecdve discussion of Bank efforts in 48. Appraiil. Appraising the quality of die different countris, based on the poverty assess- information available for poverty analysis starts ments and operations. These provide background with an inventory of social, national income, and for briefing senior management, and for periodic household data-with respect to frequency, back- progress reports to the Board, the IMA deputies, log, and quality. These aspects should be judged and the Development Committee. The fllowing against fe basic data requirements for elaboratWig paragraphs outline the specific elements of the a country poverty strategy, momnng poverty approach. A fuller treatment is contained in trends-particularly among the most vulnerable Chapter 9 of the Povety Reducdon Handbook. groups-and desiging specific policies and pro- grams. Special attention should be focused on 51. Progress Repons. The progress reports cases including inteational yearbooks where discuss the ountry poverty assessments, their basic data are not collected or where esfimates or primary findings, and the reflection of their extrapolations, rather thanactaal observations, are findings in country assistance strategies. They reled on. The appraisal should assess the capac- also seek to assess how effectively the Bank's ity of the country's statistical system to collect dialogue has encouraged counies to implement statistics on poverty, and to anayze poverty data. policies to reduce poverty. Since reducing In many cases, it will be useful to draw on local poverty is the Bans overarching objective, universities and research centers in maling poverty is monitored directly. To this end, the appraisal. the poverty indicators (see Annex B) are compiled country by country as a basis for discussing trends 49. Proposal. Based on the inventory review and in the income and social indicators. The progress evaluadon of capacity and together with country reports also discuw the evolution of the program Id dcw w=s pvrapandJbr die guidawe qfsrff of se Wod Bank and isnot necenad a eoikle enem of tke sabjecti covn& THE WORLD BANK OpeERAToNAL MANUAL 305 December 1991 OD 415 Operational Directive of targeted interventions (see para. 52) and adjust- units, is responsible for prepaning die progress ment lending for poverty reduction. reports. It is also responsible for (a) preparing periodic in-depti evaluations of toe 52. Program of Targeted Intervendows. The implementation and effectiven of the poverty Dank's programmatic approach to poverty reduction strategy-as a basis for providing feed- reduction notwithstanding, the monitoring function back to the Regions and for assessig whether a necessary for accoutability inevitably focuses on revision of dtis directive is warrante;d; and the countable. Assistance Strategies to Reduce (b) reviewing the mechanisms in place for Poverty indicates that targeting, albeit broadly tracling the progr of targeted interventions. defined, would become the prmary determinant The Regions monitor and evaluate toe implemn- of whedier a lending operation is to be counted as tation of the program of targeted intervention in poverty-reducing or not. The specific impli- the context of the Annual Review of Inplemen- cations for operational monitoring are the taSAon and Supervision. They provide inputs for counting in the poverty lending program of the progress reports, including the poverty assessment summares and indicator tables (a) projects wit a specific mechanism for (see para. 18, and Annexes A aid B), and for tbe reting the poor;2 and/or evaluation of the Bank's strategy for poverty reduction. (b) projects for which the proportion of the poor among project beneficiarie is Documentation for the Board significandy larger than their proportion in the overall population. 54. Stmtey &atemens in Credit and Loan Doaunens. For IDA countries, a country strat- The Memorandum and Recommendation of the egy statement is included in the President's Report President for projects in the program of targeted for te first adjustment operation approved by the itrventions indicates how the projects meet the Board in a fiscal year-or if - tere is no program's cnteria and how they fit into the over- adjustment operaion, in th Memorandum and all country strategy for poverty reduction. Such Recommendation of the Preident of the first projects are coded as part of the program of tar- investment operation.?"- These statements gead intventios in the Bank's management indicate how the Bank's assistce strategy infomation systm. These projects form a set supports and complements the country's own Uiat is tracked over time. The projects also com- approach for reducing poverty, as measured by plement the picture provided by the indicators and progress on key economic and social indicators. the ass=esm. SALdISECALs that (a) focus They indicate how trends in the volume of lending specifically on eliminating distortions affeting the reflect, inter alia, counDty efforts to reduce pov- poor and (b) support a public expenditure pro- erty. President's Reports for IBRD structural gram focused on poverty reduction are identified adjustment opertions-and for DA structal in the progress reports, but are not coded as part adjustment credits after the first in a fiscal of the program of targeted interventions. year-also contai discuss of overall country economic policies and strategies. Such discus- 53. R qTpOZilIn. Sector and Operations sion should deal with the consistency of country Policy, in cooperation with the Regions and other policies wit the reduction of poverty. 27. Refes tD baneficiaios of project oupus. 28. Sam as above. 29. See OD 9.10. Proessing ofAdJnsm,m Lwg, to be hued. 30. See OD 9.00, Procesig qfJNIEsDCLSdng, to be rissued. 31. SeC OD2.0, Pocy Fram Papers, tO be rsmed. ar dbrctw was prparedJbr se g8idww of stf of he Wei Bo* ad iswi necar_wtYa coCmrte nfta oft oe abject, cwvea 7aE WORLD BANK OPERAm1ONAL MANUAL 306 December 191 OD 4.15 Operational Directive 55. Policy Frarnew~k Papers. A Policy Frame- 56. Cowzny BrI*. A Country Brief contains work Paper (PFP)l submitted to the Bank's two secions: one on the economy and one on Committee of the Whole should summarize(a) dfie coLunty strategy and Bank operations. Each of country poverty situadon; (b) die poverwy reduc- tho two sections should dscs poverty.'2 Tbe tion objectives to be pursued over Ibe following secdon on die economy sumarims the results of three years; (c) the thrust of policies to achieve the poveruy assessment, wbere available, and these objectives; and (d) the priorides in imple- reports on progress in reducing poverty. Tbe menting these policies. The PFP's key indicators Bank operadons section mmaries the Bank's table should include income and social indicators, operadonal approach to poverty reduction. such as those included in Annex B. 32. Sec OD 2.01, Cosuy Brefs. to bo rewnsuWd. *s d&*w was preparedfir dSc SuWdw of sff of ie WoddI.mk mid ir not ecasw #i a =Vkre maaent of ik mblen comw, THE WORLD BANIC OPTnoNAL MANUAL 307 December 1991 OD 4.1S-Ajmnex A Operational Directive Guidelines for Poverty Assessment Summaries 1. The poverty assessment sunmary is prepared reaching arget groups. ciates programs exam- for countries for which poverty assessments have ined, including basic infatructure, housing, been completed. It is included in the Regional access to educadon, nutridon, family pin, submissions for toe preation of periodic pro- and health services, and subsidies and programs gress reports for the Board. It sucincdy draws targeted directly to the poor. Assesses insndt- from the poverty assessment te most salient donal capacity for formulating and execuing points. The summary is brief (2-3 pages in most policies and delivering services. cases) and includes the table of Priority Poverty Indicators (Annex B). Fxamples of poverty 5. *ny Ne. Describes the major elements of assessment summaries are found in Annex 4 of the social safety net, if one exists. Assesses irs the Poveny Redion Handbook. The major cost-effectiveness in reaching targeted poor and elements of the typical Poverty Assessment vunerable groups 'Assesses role of existng pub- Summary follow. lic or private organizadons, including nongover- mental organizations. 2. PovemyProfile. Summarizesthemost impor- tamn economic,' demographic,2 and social charaC 6. Poverty Stegy. Summarizes recommenda- tristics of the poor. dons for strengtenig government's povet reduction strateg and indicative targets for pov- 3. Incemnve and Regaory Framewrk. Sum- erty reducdon, as reflected in the social and maizes the major macroeconomic and/or regu- income indicators. latory issues that impede poverty reduction. Where applicable, indicates the impact of saui- 7. Siastical System. Summarizes the major tural adjustment weaknesses of county poverty data and the pro- posed steps-including recmmendations about 4. Public Ependkures. Summaries Ihe impact technical assistance or other external support-to of public expenditures on poverW reduction, improve it. including an examination of their effectiveness in 1. Induding food smcuridy. 2. Inluding ferilky. M7ls dincve ws prpared fr*e gMaace of isnff of die Wol BAt ad -B necaa4, a c=AnLerenoss of Ae subijects cvwn THE WoRLD BANK OPERATIONAL MANuAL 309 December 199l OD 4.1S-Annex B Operational Directive Noro Poerty iaditrs 1T- j.1960 ^); 1 . . .152 . MX iML.. .: I 'i 4 p~~~~~~~~~~~~~~~~~~~~~~~1s Pore* d ,,; .ine; , 4 rpper Poverty Lint. ;.: *LA n1it MeTbw y Line' ..GDP Per Capiwa> ; IW.QU.E! l : ::....>.-;... . .; .= r . Sliod-Thrin Incense Indkoloat. .: =. ,.7. ;-L Wage, (UJnskifledl CPT (LDwcr Incomb). . -* RrlemlTmns :: d : : ..o. = - :. . .... Cpiu . :.;... ...... . . I ......... .... ......... :..:...... .... .... . : ........ . 197 JJrjJQ 92 9 i S.cial 'IIdIcar . '. . . . Sla orf TPublic Expenditures . , . , - fiv lBasic Soc-ial Srrvicea in GDP.- Net ,Prinuiy UnrOiu :1 - * : Ulnder Fives Mnhnalih/ .... Puurnml Is: Male. U1th F.zpocwncy. - fHltill Fe:tility Rale Matnrnml Moit'C l iCy ...r. .flshi .......... scdnru........-... a. The uppier ;mvcdy line rull in Luud1I ft por, Ime lower povoay roo is .l . cii or.(a ry pwz I'. (Ouiry epiecilic indicalomn. Wheft avrniIahIc; quatmuIy dais lot thorns ~ihiaInai &ciiAaluM a1-itulitting alliuualg miIjuutuuhrS C. tlbs"r aul rMnral, jfuvilala... d. Whiem availblk, p idev indei Lbased on piwtg Ocguoigijg bast: Wbcre nut avaimlabl. ($H 9em jjxJ pjy., AuClmiln^ldecua. . .-.. II. r milinvc wmal ofMaln ti This dir prepared . i . s........... .......e.W...Ba.and..... . ..n.. _.. a_ ._ ..p........le.. . .... . ..... . ... . a. wa pmpal r lbedf lo r dIhe tildml ofitor ofr, Wh wer Bptfn lr Is nt s c,nM a¢ cr,pfe veamm Ofr W=rPe 311 INDEX Africa 29, 53, 66, 83, 111, 135, 143, 149, Cernea, Michael 160, 197 154, 170, 218, 219, 239, 245, Chad 25, 155, 251 251; see also Sub-Saran Cander, Ramesh 242, 252 Africa Chile 82 African Development Bank 136, 137, 204 China 184, 201, 202, 203 agricultural extension 65, 162, 173, 182, 183, Claver, Kevin 52 204 Cochyane, Susan 70 agriculture 18, 23, 27, 38, 41, 42, 46, 48, 52, cofinancing 126, 127, 129, 131, 133, 135, 57, 65, 66, 70, 77, 87, 91, 176, 201, 204, 208, 209, 210, 106, 112, 113, 114, 128, 131, 212, 213, 214, 216, 218, 221, 135, 150, 15, 153, 159, 162, 222, 224, 225, 226, 227, 229, 166, 168, 170, 179, 180, 181, 230, 231 182, 183, 201, 203, 205, 206, CoIl, Xavier 172 211, 238, 252, 256, 260, 261 collateral 46, 47, 181, 182, 185, 208, 209 Ameur, Charles 169 CoDliou, Alain 131 appropriate technology 88, 182 Colombia 36, 83, 195, 201, 212, 222 Asia 72, 213, 245; South, 29, 64, 135; East, community parlicipation 72, 73, 131, 175, 135 186, 187, 188, 214, 215, 219, Asian Development Bank 129, 137 231 Assistance &rategies to Reduce Poverty 21, 28, Condin, Sean 151 96, 123, 124, 125, 143, 156, consltadve group 126, 127, 128, 130, 135, 237, 259, 262 141 Azefor, Michael 219 core poverty program 257, 260, 262 Bingladesh 26, 45, 48, 60, 64, 102, 129, 139, cost recovery 62, 66, 67, 69, 74, 75, 79, 81, 170, 183, 201, 211, 224, 227 82, 88, 89, 90, 99, 160, 161, Barnum, Howard 74 162, 166, 176, 186, 187, 188, Barrett, Richard 81 189, 191, 195, 196, 217, 226, beneficiary assessment 164, 195, 240 228, 231 Benin 155, 183 Costa Rica 82,87,90 Berg, Alan 194 COt d'tvoire 27, 82, 134, 247, 251 Berk, David 140 Cox, Pamela 66 Binswanger, Hans 127 credit 39, 41, 42, 43, 46, 47, 48, 50, 51, 63, Birdsall, Nancy 44, 52, 71 66, 68, 69, 91, 9S, 97, 105, Bolivia 47, 82, 87, 88, 102, 105, 134, 154, 106, 109, 110, 112, 113, 123, 157 131, 134, 135, 137, 154, 156, Brazil 43, 59, 82, 87, 89, 102, 190 163, 168, 169, 181, 182, 184, Briscoe, John 81 185, 188, 189, 190, 201, 208, Bunyasi, Sakwa 151 209, 210, 217, 228, 246 Burundi 164 Czechoslovakia 152 Caflns, Richard 124 De Beyer, Jay 225 Cameroon 251 de Ferranti, David 81 Caribbean Development Bank 137 demand for labor 23, 33, 34, 35, 39, 42, 68, Carlson, Samuel 81 69, 185 Carvalho, Soniya 158, 175, 184, 260 D Melo, Mart SI Cental America 127 Deng, Lua 137 312 Denton, Hazel 75, 193 equWty 36, 38, 40, 59, 61, 65, 67, 68, 71, 72, de Tray, Demis 27 73, 75, 77, 78, 82, 88, 105, donor coordination 122, 161 107, 113, 122, 123, 165, 168, econmic rate of return 61, 154, 157, 158, 194, 226, 228 207 Erzan, Refit 36 Ecuador 73, 164 ESW 121, 122, 126, 157 education 18, 19, 20, 25, 29, 34, 38, 45, 50, Europe 245; Central and Eastern, 152 52, 57, 58, 59, 60, 61, 68, 70, exchange rate 35, 37, 39, 40, 41, 81, 148, 71, 76, 79, 83, 87, 88, 89, 92, 153, 162 99, 105, 106, 108, 111, 113, extenalities 44, 52, 97, 161, 194 114, 115, 116, 124, 125, 128, Falion, Peter 38 131, 132, 133, 134, 141, 147, family plannng 34, 38, 39, 46, 57, 60, 70, 149, 150, 153, 154, 156, 159, 71, 87, 90, 93, 99, 112, 124, 162, 164, 166, 167, 169, 170, 126, 129, 140, 142, 159, 165, 171, 172, 176, 179, 180, 181, 171, 172, 174, 175, 179, 190, 187, 192, 193, 196, 201, 204, 191, 192, 193, 204, 211, 219, 218, 221, 223, 224, 225, 230, 224, 225, 226, 246 240, 246, 247, 250, 252, 263; FAO 19, 26, 65, 81, 131, 165, 245 see arso primary educaton, feimale 20, 22, 26, 45, 52, 59, 61, 66, 70, 79, secondary education, and 80, 108, 114, 115, 124, 130, vocational education 143, 182, 185, 194, 206, 229, efficiency 24, 33, 34, 36, 38, 49, 58, 60, 61, 243,.246 62, 63, 65, 67, 68, 69, 71, 73, Ferroni, Marco 81 74, 76, 78, 79, 81, 82, 88, 89, fertility: female, 17, 22, 26, 44, 45, 50, 52, 90, 91, 92, 105, 108, 115, 70, 71, 79, 114, 116, 129, 122, 123, 130, 141, 149, 155, 170, 193, 204, 218, 244, 245, 156, 157, 161, 162, 172, 181, 246; agriculue, 151, 180, 183 191, 192, 194, 195, 204, 207, Fleisig, Heywood 47 215, 225, 226, 227, 231, 238, food security 19, 64, 66, 83, 91, 106, 111, 242 123, 124, 131, 135, 171, 191, Egypt 102, 106, 107 225,263 El Salvrdor 82, 127, 153 foretry 134, 166, 168, 169, 179, 181, 184, employment 18, 23, 27, 29, 34, 36, 38, 39, 197, 205, 206, 263 40, 41, 42, 43, 45, 46, 52, 64, Fox, Louise 43, 152 92, 98, 105, 106, 107, 108, Galagher, Mark 239, 252 109, 110, 111, 112, 114, 123, Gadloway, Rae 27 124, 131, 134, 137, 138, 141, Gambia, The 201, 204 148, 150, 152, 154, 155, 164, Ghana 18, 19, 27, 74, 125, 140, 151, 196, 169, 184, 195, 202, 203, 209, 201, 213, 247, 248 210, 212, 215, 216, 231, 244, Gillespie, Nancy 99, 102 246, 247,250 Glewwe, Paul 27, 82,245,252 English, linda 139, 167 governance 84, 239 entrepreneurship 150, 185 Grootaert, Chisfiaan 252 environment 17, 35, 48, 49, 50, 52, 64, 70, Grosh, Margaret 61, 82, 154, 243, 248, 252 84, 95, 96, 122, 132, 134, growth 15, 20, 27, 28, 29, 33, 34, 35, 36, 38, 138, 142, 143, 151, 156, 163, 39, 43,44, 45, 46, 49, 50, 51, 168, 170, 176, 183, 184, 189, 52, 57, 58, 60. 62, 63, 66, 68, 201, 212, 214, 216, 227, 263 69, 81, 95, 96, 97, 98, 99, 100, 105, 106, 108, 111, 113, 313 114 115, 121, 122, capit 28, 29, 33, 34, 44, 45, 47, 63 123, 124, 125, 127, 95, 97, 98, 99 107, 106,1 10, 128, 134, 137, 138, 112, 156, 158, 161, 190, 197, 142, 147, 148, 150, 258 151, 152, 170, 171, hkm r oeare 60, 105, 111, 122, IS0, 176, 175, 179, 184, 185, 191, 206, 210, 226, 231, 263 193, 194, 197, 205, -U 130, 134 206, 209, 223, 227, Huppl, MOIIdI 23 238, 239, 255, 257, WPAD 127, 126, 134, 135, 141 260 I1O 21, 131, 134, 141, 175 Guatemala 87, 91, 127, 189 IMF 121, 127, 137, 141, 246 Guinea 131, 132, 154, 155, 167, 201, 219, lumnunatloc 2S, 26, 72, 979 131, 133, 140, 251 149, 371, 172, 173 Our tatm, Daniel 202 InmpImaftdon 21, 57, 61, 73, 82, 83, 96, Gunmuekara, Charles 207 98, 99, 101, 107, 121, 122, Guyana 172, 247 123, 12S, 127, 128, 130, 131, Hait 154 132, 134, 135, 137, 140, 143, Haimaun, Carmen 193, 220 147, 148, 150, 154, 155, 158, Haq, Toneema 154, 262 160, 161, 163, 165, 166, 167, Haell, Peter 49 170, 171, 172, 173, 175, 181, hedth 14, 17, 18, 19, 20, 24, 26, 27, 28, 29, 184, 186, 187, 188, 189,195, 34, 42, 44, 45, 50, 52, 57, 53, 197, 202, 205, 206, 207, 209, 59, 60, 61, 63, 65, 67, 68, 70, 210, 211, 212, 214, 216, 219, 71, 73, 74, 75, 76, 77, 79, 37, 221, 229, 231, 237, 238, 239, 89, 90, 99, 105, 106, 107, 241, 244, 245, 247, 249, 2S8 106, 110, 113, 114, 116, 124, inome dutribudon 15, 19, 27, 36, 39, 78, 125, 126, 128, 129, 131, 133, 97, 113, 127, 141, IS8, 161, 134, 136, 139, 141, 143, 147, 162, 244, 245 149, 153, 154, 156, 159, 162, IndIa 49, 66, 102, 108, 109, 133, 171, 173, 164, 166, 167, 169, 170, 172, 187, 201, 205, 214, 223 173, 174, 179, 180, 187, 191, Indonsa 18, 28, 42, 48, 102, 110, 124, 129, 192, 193, 194, 201, 202, 214, 134, 160, 166, 185, 194, 201, 220, 221, 222, 224,226, 227, 209, 216 240, 241, 242,243, 244, 245, Induty 40,70, 110, 150, 179, 134, 185, 246, 247, 248, 253, 255, 259, 201, 216,226 263; see also primary health Inlaton 43,4B, 97 Heaver, Richard 133, 173, 174, 192, 223 ninaud sector 17, 39, 43, 69, 77,4, 124, Heat, Robert 226 141, 213 Herz, Barbara 80 indttiuo 13, 20, 25, 33, 46, 48, 52, 53, 58, Hot, Sbaron L. 46,52 65, 68, 69, 71, 72, 73, 76, 83, Honduras 87, 92, 127, 134, 154, 247 95, 96, 97, 93, 99, 113, 116, household survey 18, 19, 23, 28, 59, 82, 96, 123, 124, 128, 135, 138, 143, 110, 112, 113, 116, 240, 241, 150, 151, 154, 156, 159, 163, 243, 244, 245, 246, 247, 248, 166, 180, 181, 182, 134, 185, 252 187, 188, 190, 192, 193, 197, houig 17, 28, 48, 50, 69, 89, 91, 113, 114, 204, 215, 213, 228, 240, 248, 124, 132, 152, 153, 154, 172, 250 175, 188, 190,216,217, 246, later-American Dvelpment Bank 250,255 138, 212 314 interest rates 43, 46, 48, 63, 185, 209 Mexico 78, 81, 114, 125, 153, 193, 201, 215, irrigation 59, 60, 63, 65, 66, 108, 134, 154, 217, 220 160, 162, 166, 168, 175, 180, Middle East 135, 245 181, 183, 184, 203, 207, 212 minimum wage 34, 38, 112, 217 Jamaica 82, 201, 228, 231, 243, 247, 248 Mink, Stephen 19, 50, 52 Jimenez, Enmmanuel 81 Mitchell, Francis 183, 211 Jorgensen, Steen 88, 105 Molnar, Augusta 197 Joss, Sandra 212 monitoring 13, 21, 22, 25, 28, 62, 76, 80, 82, Kanbur, Ravi 19, 27, 81 83, 96, 100, 116, 137, 140, Kaufinann, Daniel 157 142, 147, 148, 152, 158, 165, Kenya 167, 249 171, 192, 193, 194, 197, 201, Klaras, Honi 113 207, 210, 211, 214, 215, 216, Kozel, Valerie 164 223, 231, 238, 240, 241, 242, Krumm, Katie 20, 112, 150 243, 244, 245, 247, 249, 251, labor-intensive 36, 39, 64, 68, 105, 110, 113, 252, 258, 259, 260, 262; see 131, 134, 137, 154, 175 also poverty monitoring LAC 43, 47, 77, 84, 127 Moock, Peter 196 land reclamadon 183 Morocco 102, 238, 247, 248 land tenure 46, 47, 48, 49, 91, 97, 114, 123, Mozambique 128 156, 166, 183, 188, 189, 190, Musgrove, Philip 77 203, 208 Nelson, Ridley 171, 205 Latin America 27, 29. 52, 61, 77, 82, 84, Nepal 26, 175 115, 125, 127, 151, 153, 176, NGO(s) 25, 61, 62, 67, 79, 83, 87, 88, 92, 218, 245 105, 111, 121, 123, 127, 131, Leno, Janet 196 136, 137, 138, 140, 143, 155, Levy, Brian 40 159, 163, 164, 166, 167, 170, L,evy, Santiago 114 171, 172, 175, 176, 187, 189, Lieberman, Samuel 109 192, 193, 195, 201, 204, 210, Lipton, Michael 28, 52 213, 214, 217, 218, 219, 221, LSMS 15, 16, 17, 18, 238, 240, 241, 243, 224, 240 245, 247, 248, 249, 250, 252 Niger 155 Maasland, Anne 23, 28, 97 Nigera 75, 182, 193, 201, 218 Madagascar 102, 131 Nijhawan, Om 210 Magnus, Chrles 185, 209 nutrition 14, 15, 16, 19, 25, 26, 28, 29, 44, Makonnen, Elene 28, 149 57, 63, 71, 73, 75, 76, 77, 78, Makonnen, Roza 153 84, 87, 89, 90, 92, 106, 107, Malawi 18, 20, 29, 102, 111, 112, 125, 150, 108, 111, 114, 115, 116, 124, 155, 201, 225 125, 131, 132, 136, 140, 142, Malaysia 113 147, 149, 153, 154, 156, 159, Mah 132, 155, 164, 195, 201, 206 166, 169, 172, 173, 174, 176, Maraviglia, Nydia 133 179, 180, 190, 191, 192, 193, Marc, Alexandre 153, 155 194, 201, 204, 210, 219, 220, Marchant, Tim 96, 239, 249, 252 222, 223, 224, 225, 226, 227, Martin, Kris 166 231, 243, 244, 245, 246, 259, Mabeus, Abel 215 263 Mcginnis, Linda 116, 231 Pakistan 99, 102, 124, 134, 201, 221, 229, McGreevey, Wilam 59, 73, 89, 92 246, 247, 248 LAcrd, Lemna 79, 151, 249 Pankaj, lbampil 213 Park, George 91 315 Pean, Leslie 155 private sector 28, 43, 58, 61, 62, 66, 69, 74, Peru 27, 247 79, 81, 91, 92, 99, 105, 111, Philippines 168, 201, 207 116, 122, 123, 130, 150, 155, Piazza, Alan 203 160, 162, 163, 179, 188, 192, POCs 258, 259, 262, 263 195, 201, 204, 210, 217, 224, Poland 152 226, 228, 263 policy framework 33, 34, 64, 95, 105, 110, productivity 19, 28, 46, 49, 50, 52, 64, 65, 124, 148, 157, 231 66, 67, 68, 69, 71, 74, 75, 76, popular participation 68, 136, 138, 143, 163, 77, 80, 81, 84, 106, 111, 112, 164, 165, 166, 167, 168, 175, 113, 124, 134, 137, 156, 157, 184, 201 158, 159, 169, 171, 180, 183, population 29, 44, 45, 49, 50, 52, 70, 73, 80, 194, 195, 203, 204, 205, 208, 92, 106, 108, 122, 124, 129, 214, 255, 259 132, 133, 140, 142, 143, 166, program of targeted interventions 259, 262 168, 170, 171, 174, 191, 192, Psacharopoulos, George 52, 78, 79, 82, 195 193, 197, 201, 203, 218, 219, public expenditures 22, 23, 34, 41, 52, 57, 221, 224, 225, 226, 227, 231, 58, 59, 60, 63, 65, 67, 78, 81, 245, 252, 257, 263; see also 96, 97, 99, 100, 105, 106, family planning 107, 108, 110, 111, 113, 114, poverty assessment 28, 33, 95, 96, 99, 100, 115, 122 123, 126, 127, 141, 122, 137, 150 147, 148, 150, 156, 176, 179, poverty gap 15, 17, 19, 20 181, 190 poverty income threshold 256, 261 Radel, David 218 poverty line 13, 14, 15, 16, 17, 18, 19, 20, Ravallion, Martin 15, 16, 18, 28, 42, 64, 110, 22, 28, 60, 96, 105, 109, 114, 241 130, 208, 209, 262 recurrent costs 62, 67, 73, 79, 122, 126, 130, poverty measurement 13, 102, 109, 110, 113, 159, 160, 161, 162, 187, 191, 237, 239, 241 192, 220, 221, 226 poverty monitoring 248, 255, 256, 257, 261 resettlement 135, 137, 159, 160, 181, 197, poverty profile 13, 14, 15, 16, 17 18, 19, 21, 203 25, 27, 33, 34, 36, 39, 40, 41, Ribe, Helena 46, 52, 99, 158, 175, 260 44, 57, 58, 67, 68, 78, 95, 96, Riboud, Michelie 90 97, 100, 105, 106, 108, 110, Rodriguez, Emilio 190 111, 113, 114, 115, 121, 126, Romania 152 147, 241, 247 Ruderfer, Emil 212 poverty projects 158, 159, 160, 163, 167, rural credit 46, 105, 123, 169 168, 172, 175, 260 rural roads 68, 131, 169, 180, 183, 187, 211, poverty reduction strategy 57, 110, 115, 116, 215 121, 126, 134, 138, 157, 194, rural water 67, 68, 81, 99, 111, 132, 162, 256, 258 166, 186, 187, 214 price controls 34, 35, 37, 110, 113, 150 Rwanda 49 primary education 24, 27, 44, 77, 78, 82, 90, Sackey, James 60 91, 107, 110, 112, 126, 130, safety net 44, 45, 57, 58, 63, 88, 89, 90, 91, 136, 142, 190, 194, 195, 215, 92, 96, 97, 98, 99, 100, 105, 227, 229, 231, 259 107, 108, 110, 11t, 113, 114, primary health 25, 43, 72, 82, 88, 91, 92, 115, 122, 123, 124, 134, 147, 111, 115, 130, 132, 140, 142, 150, 152, 153, 156 190, 219, 223, 225, 231 Saito, Katrine 182 Salem, Claude 135 316 Salmen, Lawrence 83, 164, 176, 230 subsidy(ies) 34, 37, 42, 43, 46, 48, 59, 60, Salmy, Jamil 107 65, 66, 67, 68, 69, 72, 75, 76, Samuel, Paul 82 77, 79, 80, 81, 82, 88, 92, 95, Sao Tome and Principe 154 107, 113, 114, 115, 127, 131, Schacter, Mark 83, 149 150, 151, 153, 161, 188, 191, Schaengold, Ellen 187, 214 203, 209, 2L7, 238, 243, 246, Schmidt, Thomas 227 247, 260 Schreiber, Eleanor 52, 170, 197, 222 supervision 63, 68, 72, 76, 91, 133, 152, 153, Schreiber, Gotz 52 159, 163, 165, 170, 172, 173, Schwartz, Antoine 83 174, 184, 185, 187, 189, 193, Schweitzer, Julian 229 196, 209, 224 SDA 19, 27, 81, 96, 112, 136, 240, 245, 247, sustainability 34, 60, 61, 65, 67, 69, 79, 81, 248, 249, 250, 251, 252 89, 90, 91, 92, 107, 142, 147, secondary education 80, 194, 195, 227, 228 153, 154, 157, 159, 160, 161, sectoral strategy 58, 123, 129, 228 162, 163, 165, 168, 171, 172, Selowsky, Marcelo 76, 83, 153, 176 176, 182, 183, 186, 197, 202, Senegal 1S5 203, 204, 205, 206, 207, 208, service delivery 67, 91, 92, 96, 98, 99, 105, 209, 210, 211, 212, 213, 214, 115, 123, 128, 129, 154, 164, 215, 216, 217, 218, 219, 220, 166, 171, 173, 191, 192, 193, 221, 222, 223, 224, 225, 226, 220, 231, 243, 260 227, 228, 229, 230, 231, 260 sewerage 61, 69, 72, 154, 164, 189, 190 Tan, Jee-Peng 72 Shalizi, Zmarak 81 Tanzania 40, 175, 195 Sirur, Neeta 128 targeted programs 42, 61, 73, 113, 114, 115, social action programs 153, 154, 155, 156 125, 153, 175, 231, 243 social costs of adjustment 129, 148, 149, 150, targeted projects 138, 158, 172 154, 155, 159, 260 targeting 45, 60, 63, 72, 76, 81, 82, 87, 89, social costs of investment 159 90, 91, 107, 108, 110, 111, social funds 151, 152, 153, 154, 155, 218, 116, 131, 138, 141, 150, 151, 260 153, 157, 171, 175, 222, 231, social indicators 13, 19, 21, 24, 27, 28, 29, 238, 239, 255, 262 34, 61, 82, 89, 96, 97, 98, tariffs 34, 35, 62, 69, 162, 187, 189 100, 102, 111, 112, 115, 124, taxes 34, 36, 37, 39, 60, 62, 73, 89, 98, 123, 125, 126, 127, 147, 148, 149, 148, 152, 162 238, 241, 242 tedhnical assistance 67, 106, 126, 128, 129, Squire, Lyn 52, 158 135, 140, 141, 147, 152, 167, Sri Lanka 21, 23, 40, 201, 210 168, 170, 172, 176, 185, 186, statistical capacity 237, 241, 242 187, 191, 201, 209, 210, 211, statisfical system 96, 100, 105, 107, 109, 110, 221, 224, 225, 227, 228, 230, 112, 113, 114, 116, 237, 239, 239, 243, 248, 249, 258 241 Thailand 48, 164, 181, 201, 208 Steeds, David 206 time preference 49, 51, 74 Stevenson, Gail 83 training 38, 48, 62, 67, 71, 72, 76, 79, 81, structural adjustment 27, 28, 107, 110, 136, 90, 91, 99, 105, 106, 131, 137, 148, 149, 150, 152, 153, 133, 134, 135, 136, 137, 140, 176, 247, 248, 251 154, 167, 168, 170, 173, 174, Sub-Saharan Africa 18, 20, 45, 49, 52, 64, 175, 180, 181, 182, 184, 186, 81, 82, 99, 136, 242, 248, 252 187, 188, 191, 192, 193, 195, 196, 197, 204, 206, 208, 209, 317 210, 211, 212, 219, Valad, Paula 45 220, 221, 222, 223, Valdivieso, Cecilia 228 224, 225, 226, 227, Van de Walle, Dominique 18, 28 230, 239, 244, 248, Van der Gaag, Jacques 27, 28, 52 249, 250, 251 Van der Vynckt, Susan 136 transfers 29, 45, 59, 60, 73, 76, 89, 95, 98, Venezuela 82, 115, 116, 131, 153, 247, 248 99, 107, 110, 111, 112, 152, Verspoor, Adriaan 78 154, 179, 246, 250 Viet Nam 247 trnsport 19, 20, 39, 68, 69, 81, 91, 107, vocational education 195 110, 112, 181, 182, 183, 188, Walker, Christopher 221 190, 211, 213, 226, 247, 250 Walters, Harry 64, 73 Tunisia 154, 169 Walton, Michael 53, 238 Uganda 129, 155, 251 WDR 35, 46, 124, 134, 143, 157, 158, 162 UNDP 21, 25, 126, 127, 128, 129, 130, 131, Whitehead, Stuart 189, 216 136, 140, 141, 142, 172, 204, WHO 25, 128, 129, 132, 143, 221, 210, 214, 225, 227, 230, 231, 225 243, 247 Williams, Aubrey 143 UNFPA 128, 129, 132, 140, 141, 142, 204, women in development 26, 122, 131, 138, 225, 226, 227, 243 201, 204, 263 UNICEF 19, 22, 25, 26, 127, 128, 129, 130, Wong, Yves 181, 208 131, 132, 133, 136, 140, 141, Yaron, Jacob 48 142, 214, 221, 222, 225, 227, Yemen 201, 230 231, 243, 245 Zearley, Thomas 217 urban poverty 16, 68, 84, 113, 211, 256, 261 Zimbabwe 38, 134, 137, 201, 226, 249 user charges 62, 63, 74, 89, 161 Distributors of World Bank Publcations ARGENTINA The Middle Eat duer KENYA SOUTH AFlJCA. OTSWAPIA CarhFiasHhU, SRL 41, Shdlt sreet Arica lHook Bol WALid. F rde HikiU Galerl Cuanm Cair Quaren HouasW. nppeStd Oilrd UniveityPr Florida 165, 4th FlumcOt 453/466 P.O. HOe 4l245 So elsrn Aria 1322 aum Air FINLAND NainIb P.O. Beo 1141 AlkeMminn nIClejkuppA Cape Town 800 AUSTRALIA. PAPUA NEW GUINEA. P.O. Dox 12B KOREA, REPUBLIC OF FIJI SOLOMONISLANDS, S9;WID Helsnki 10 Pan KoreBaokokCorpomldon A r : VANUATU. AND WESTERN SAMOA P.O. DM101. Kwmgwhnrun IRiend dma SuSbeiatinm envim D.A. Bonks & lournal FRANCE Seoul PO Box 41016 64 Whllehons Road World Bank Pub"lans Crighil MitchaM3132 6& avenuedllna MALAYSIA JoIannwburgi0l Vldorix 7SIl6PalSP Unlwersity of Malay Coopentive Deolamop, Limiled SPAIN AUSTRIA GERMANY P.O. DO I127 ialan. Panr Dare MundI-JnsaUbrme.SA. 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