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