1s 0s POVERTY REDUCTION IN SOUTH ASIA Promoting Participation by the Poor Summary of an Informal Workshop Co-sponsored by the World Bank and the South Asian Association for Regional Cooperation (SAARC), October 12 - 15, 1993 V4 THE WORLD BANK SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION  0 b- a l 1ý21 o n m6>ml f CT - b- c u) @ 1994 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433 All rights reserved Manufactured in the United States of America First printing April 1994 The findings, interpretations, and conclusions expressed in this study are entirely those of the authors and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Cover photo: World Bank photo by Curt Carnemark This workshop was undertaken under the auspices of the Office of the Vice President, South Asia Region, World Bank. Valerie Kozel and Barbara Parker organized the workshop, with the assistance of Toni Thomas. The principal author of the report was Barbara Parker. Valuable contributions were made by D. J. Wood, Daniel Ritchie, Robert Drysdale, Sadiq Ahmed, and Ann Duncan. Salahuddin Ahmad provided research assistance. The workshop and the preparation of the report were under the general direc- tion of Gobind Nankani. Library of Congress Cataloging-in-Publication Data Poverty reduction in South Asia: promoting participation by the poor. p. cm. "Report on an informal workshop cosponsored by the World Bank and the South Asian Association for Regional Cooperation, Oct. 12-15, 1993." ISBN 0-8213-2810-7 1. Economic assistance, Domestic-Asia, South-Congresses. 2. Nongovernmental organizations-Asia, South-Congresses. I. International Bank for Reconstruction and Development. II. South Asian Association for Regional Cooperation. HC430.6.Z9P636 1994 338.9'1'0954-dc2O 94-14150 CIP Contents Foreword v Preface vii Acknowledgments ix Summary of Proceedings 1 Theme 1. The Need for Broadly Based Growth 4 Theme 2. Investing in People 9 Theme 3. The Role of Participation 14 Theme 4. The Need for Collaboration 19 Theme 5. The Need for Institutional Reform 22 Where Do We Go from Here? Recommended Next Steps 25 Appendix A. Findings and Conclusions, Plenary Session 27 Appendix B. List of Participants 32 Ill  Foreword I have great pleasure in contributing this foreword to the summary report of the informal workshop on poverty reduction in South Asia, held under the joint sponsorship of the South Asian Association for Regional Cooperation (SAARC) and the World Bank. By bringing together participants from a wide spectrum of fields rel- evant to development and poverty reduction, the workshop helped clarify diverse experiences, approaches, and perceptions in this area through a thorough exchange of views and information. As a result of this fruitful interaction, the workshop identified sev- eral areas of consensus, clarified issues for further research, analysis, and discussion, and suggested possible future steps. The broad con- sensus which emerged from the workshop-that the approaches adopted in successful community-based participatory programs in South Asia hold great promise-provides a firm basis for pursuing such approaches through further research, evaluation, and operational experimentation. The report of the Independent South Asian Commission on Poverty Alleviation (IsACPA), prepared in pursuance of the Colombo SAARC Summit decision in November 1991, and the Seventh Summit Consen- sus on Poverty Eradication of April 1993 have evoked a keen interest both regionally and in the wider international development commu- nity. The obvious common themes in the ISACPA recommendations, the Seventh Summit Consensus on Poverty Eradication, and the World Bank's work prompted SAARC and the Bank to jointly sponsor the informal workshop to pursue regional dialogue on the pressing issue of reducing poverty. The success of this first joint initiative sets the stage for further collaboration in this and other areas of common concern. The wider dissemination of the summary report of the workshop is intended to contribute to our efforts in formulating more effective pov- erty reduction and eradication strategies that would merit support by both South Asia governments and the development community Ibrahim Hussain Zaki Secretary-General SAARC V  Preface The workshop on Poverty Reduction in South Asia: Promoting Partici- pation of the Poor, jointly sponsored by the World Bank and the South Asian Association for Regional Cooperation (SAARC), provided an opportunity for participants to compare and discuss their ideas and experiences related to poverty reduction initiatives in the region. Although much has been achieved, the pace of poverty reduction in South Asia-particularly for the extremely poor-has been distress- ingly slow. Interest in promoting participation by the poor as a key component of comprehensive poverty reduction strategies has been growing in recent years. There are many examples of successful com- munity-based and participatory programs in South Asia, and all coun- tries within the region are beginning to incorporate insights from successful community-based programs conducted by nongovern- mental organizations (NGOs) into national poverty reduction strategies. For example, Pakistan's National Rural Support Program (NRSP) will apply many of the approaches developed by the well-known Aga Khan Rural Support Program to the design and implementation of government programs. In Bangladesh the government has undertaken a commitment to adopt a specifically pro-poor focus in its national planning. Participatory components are already being included in a number of World Bank-financed projects. Bank support has also been pledged for innovative approaches to poverty reduction programs such as the international Grameen Trust and Pakistan's NRSP. The Bank's South Asia Region intends to follow up the workshop with additional work on several of the issues identified by participants as requiring further analysis. For example, the circumstances under which participation can be effective, the roles of donors, nongovernmental organizations, and governments, and the feasibility of scaling up small programs are all topics on which useful insights can be gained through systematic study of existing programs. These studies will be carried out with a view to identifying the operating principles and external conditions that are necessary for successful expansion and replication of ongoing programs. We will draw on what is learned from these studies in designing future projects. Vii viii PREFACE I am pleased to have had the opportunity to join with SAARC in the planning and implementation of the workshop. This collaboration has been a valuable learning experience, and we hope that it will be fol- lowed by other cooperative endeavors. D. Joseph Wood Vice President, South Asia Region The World Bank Acknowledgments The World Bank and SAARC would like to thank the former commis- sioners of the Independent South Asian Commission on Poverty Alle- viation for their assistance. In particular, Ponna Wignaraja, vice- chairman and coordinator of the Commission, made significant contri- butions to the conceptualization, planning and organization of the workshop. For their participation in the workshop, gratitude is also extended to the following international and nongovernmental organi- zations: the United Nations Children's Fund (UNICEF); the United Nations Development Programme (UNDP); the International Food and Agriculture Organization (IFAD); the Asian Development Bank (ADB); the International Monetary Fund (IMF); the Grameen Bank; and the Aga Khan Foundation. ix T Summary of Proceedings On October 12-15, 1993, the World Bank and the South Asian Associa- tion for Regional Cooperation (SAARC) held in Annapolis, Maryland, an informal workshop on the topic Poverty Reduction in South Asia: Promoting Participation of the Poor. The concept of the workshop grew out of a mutual interest in the potential value of community- based programs and local participation as components of broader pov- erty reduction strategies. South Asia can boast of having led the world in the development of community-based organizations; it has a rich tradition of grassroots participation dating back at least to the Independence movement. Since then, a number of well-known nongovernmental organizations (NGOs) and government-sponsored organizations in the region have applied the local participation model to the problem of persistent rural poverty. Bangladesh has been the home of three of the best-known pro- grams of this type: the Comilla model of linked farmers' cooperatives, the Grameen Bank's targeted credit program, and the integrated devel- opment approach of the Bangladesh Rural Advancement Committee (BRAC). Pakistan's Aga Khan Rural Support Program and India's Self- Employed Women's Association (SEWA) are known throughout the world as programs that have withstood the test of time and might serve as possible models for programs in other settings. South Asia is the home of a host of less-known but equally successful smaller programs. This rich history of creative experimentation with participatory approaches to poverty reduction has set the stage for what could be a new dialogue between the donor community and development spe- cialists in the South Asia region. The World Bank has been in the pro- cess of broadening its poverty reduction focus to include innovative approaches to the problem of widespread poverty, both in South Asia and in other regions. The Bank has been assisting member govern- ments to design structural reforms and policies for adjustment and growth, and, with the assistance of the Bank and other donors, South Asian governments have begun to implement broad reform programs in both the public and private arenas. Persistent and endemic poverty on the scale found in South Asia may demand complementary mea- sures that, in addition to easing the transition to more efficient and out- 1 2 POVERTY REDUCTION IN SOUTH ASIA ward-looking market-based economies, also establish sustainable links between the very poor and the larger economic system with its main- stream public and private institutions. The concepts of broad local participation, social mobilization, and community organization have seized the interest of the Bank as a pos- sible means of broadening the focus and improving the effectiveness of poverty programs at the field level. Many World Bank-supported projects currently include participatory components, and lessons are beginning to emerge from the Bank's experience with them. The time was right, therefore, to take stock and compare notes with a group of South Asia development practitioners who have been active in plan- ning, analyzing, and implementing such programs in their region. This interest gained momentum in the region and in the World Bank after the publication of a report by the Independent South Asian Commis- sion on Poverty Alleviation (ISACPA) entitled Meeting the Challenge. The report was commissioned by the seven members of SAARC (Bang- ladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) at the 1991 Colombo Summit, with the goal of identifying the shortcomings of the poverty alleviation strategies of the past, documenting success- ful social mobilization initiatives, and making recommendations for a coherent future strategy for the countries of the region (see box 1). The emergence of Meeting the Challenge, the first report of its kind from the region, stimulated World Bank interest in reviewing poverty reduction work in South Asia being carried out by governments, NGOS, multilateral organizations, and donors. On behalf of SAARC, Secretary- General Ibrahim Hussain Zaki responded with interest to the idea of holding a workshop on this topic. Both organizations accordingly col- laborated in the planning and design of a three-day informal work- shop on poverty reduction strategies with special emphasis on participatory approaches. The goal of the workshop was to initiate a dialogue between the region and the donors that could lead to more effective collaboration in the fight against poverty Workshop participants included Secretary-General Zaki; former members of ISACPA from each of the SAARC member countries; repre- sentatives from the United Nations Development Programme (UNDP), the United Nations Children's Fund (UNICEF), the Asian Development Bank (ADB), the International Fund for Agricultural Development (IFAD), and the International Monetary Fund (IMF); representatives of two NGOs, the Grameen Bank and the Aga Khan Rural Support Pro- gram (AKRSP); and World Bank staff members. Resource persons from the region and from other countries attended, and a number of partici- pants were invited to give presentations. The structure of the work- shop permitted extensive discussion at the end of each of the seven sessions so that the views and experiences of participants could be SUMMARY OF PROCEEDINGS 3 Box 1. Excerpts from the SAARC Declaration on Poverty Reduction in South Asia At the Seventh Summit Meeting of the SAARC countries in Dhaka, Bang- ladesh, in 1993, the heads of state of the seven member nations issued the Dhaka Declaration, which welcomed the report of the Independent South Asian Commission on Poverty Alleviation (ISACPA) and reiterated members' commitment to "empowering the poor for enhanced growth, consistent with human development and equity." Member governments adopted the goal of alleviating poverty by the year 2002 through an action agenda emphasizing the following components: * Social mobilization that builds and empowers organizations of the poor * Decentralized agricultural development focused on household food security and basic nutritional needs * Decentralized, small-scale, labor-intensive industrialization using appropriate technology * Human development, including universal primary education, pri- mary health care, enhancement of women's social roles, protection of children, and shelter for the poor * Financial resources to support the above efforts. The national leaders stressed the "critical link between the success of national efforts aimed at poverty alleviation and external factors affect- ing growth and development." They called on "all major actors in the world economic scene, particularly the industrialized countries and mul- tilateral and regional financial institutions and nongovernmental organi- zations, to create an enabling international atmosphere that is supportive of poverty alleviation programmes in South Asia." To follow up, each government agreed to develop a pro-poor development plan and to share at the next SAARC summit information on the progress achieved. heard. The working groups and the concluding plenary session were devoted to identifying the findings and conclusions emerging from the workshop (see appendix A; see appendix B for a list of participants). The objectives of the workshop were to establish areas of common agreement on what is currently understood about the causes of pov- erty and the most effective approaches to poverty reduction; to identify unresolved issues requiring further research and analysis; and to sug- gest the next steps toward developing effective strategies for govern- ments, NGOs, and donors in the region. Five prominent themes recurred throughout the workshop's presentations and the discussions: * The need for broadly based growth * Investing in people 4 POVERTY REDUCTION IN SOUTH ASIA * The role of participation * The need for collaboration * The need for institutional reform The following is an overview of workshop proceedings, with partic- ular focus on these emerging themes. Theme 1. The Need for Broadly Based Growth Broadly based economic growth is necessary but not sufficient as a poverty reduction strategy for South Asia. There was clear recognition among the workshop's participants that although levels of poverty are declining, the absolute numbers of the poor are growing in nearly all the countries of the region. In this respect, South Asia compares poorly with many other regions (figure 1). Poverty levels continue to be unacceptably high, and performance on social indicators such as literacy levels, infant, child and maternal mortality rates, and access to family planning services has been disap- pointing in most SAARC countries (table 1). The participants voiced a strong sense of the urgency of the poverty problem. Many of those from South Asia expressed concern about the future political stability of their countries if the poverty issue is not dealt with in the decade to come. What are the requirements of a poverty reduction strategy that can solve a problem of this magnitude? No country has managed to reduce poverty without strong economic growth. Participants from all coun- tries and organizations saw growth as desirable and necessary. There was overall agreement that growth must be high quality-broadly based, labor-intensive, and sustainable-if it is to have an impact on poverty. There was extensive discussion and some debate concerning the best means of reducing poverty through sustained growth. It was clear to all that macroeconomic and sectoral policies which foster high-quality growth are essential. Until recently, the macroeconomic, sectoral, and trade policies followed by most countries in the region tended to hinder the growth of employment opportunities for the poor. Returns to nonlabor assets were suppressed by policies that worked against agriculture and the informal sector-key sources of employment and income for the poor. Public sector enterprises have been inefficient and have absorbed a significant share of public resources without generat- ing sufficient employment or providing adequate services. To correct past policy shortcomings, most countries of the region have begun to pursue a broad program of reforms that should, if sustained over time, accelerate growth in a sustainable fashion and expand earning oppor- tunities for the poor. SUMMARY OF PROCEEDINGS 5 Figure 1. Poverty in the Developing World, 1985 and 1990 Millions of people 600 - 1985 532 500 - 1990 400 - 300 - 216 200 - 182 169 4 108 100 - 87 607 55 0 -M East Asia Eastern Latin Middle South Sub-Saharan and Pacific Europe America East and Asia Africa and the North Africa Caribbean Percentage of poor 60 1985 51.8 50 1990 49.0 47.6 47.8 40 33.1 30.6- 30 25.2 22.0 20 13.2 11.3 10 7.1 7.1 0 iEjAH__ East Asia Eastern Latin Middle South Sub-Saharan and Pacific Europe America East and Asia Africa and the North Africa Caribbean Source: Chen, Datt, and Ravallion 1993. 6 POVERTY REDUCTION IN SOUTH ASIA Table 1. Social Indicators, South Asia, Selected Years Indicator Bangladesh India Nepal Pakistan Sri Lanka Health Infant mortality rate (per thousand live births) 1975 138 130 149 134 44 1980 132 116 142 124 34 1985 117 101 122 110 25 1990 105 91 103 99 19 Life expectancy at birth (years) 1975 46 52 45 50 66 1980 48 54 47 53 68 1985 50 57 50 56 70 1990 52 59 52 58 71 Total fertility rate (births per woman) 1975 7 5 7 7 4 1980 6 5 6 7 3 1985 5 4 6 7 3 1990 5 4 6 6 3 Education Gross primary enrollment rate (percentage of school-age population) Male 1985 70 111 110 61 104 1990 78 109 - 59 108 Female 1985 50 80 51 34 101 1990 68 83 - 31 105 Female literacy rate (percentage of females age 15 and older) 1985 19 29 11 18 81 1990 22 34 13 21 84 - Not available. Source: World Bank data. The Example of East Asia The "East Asian miracle" in countries such as Indonesia, the Republic of Korea, Malaysia, and Thailand is an example of how policies that promoted shared growth-growth in combination with investments in human resources-led to dramatic decreases in poverty levels. In East Asia overall, approximately one-third of the population fell below the poverty line in 1970, but by 1990 only one-tenth of the population was SUMMARY OF PROCEEDINGS 7 below the line. East Asian economies grew very rapidly during that period. It was suggested that the governments of South Asia look closely at this example for lessons that might be applied in their own countries. Not all South Asian participants agreed that East Asia was an appro- priate model for their countries. Some felt that circumstances in South Asia were too unlike those in East Asia for any useful insights to be gained from the comparison. Initial conditions were very different. For example, most East Asian countries began with relatively equal land distribution, either longstanding or as a result of land reforms. Some participants pointed out that many East Asian countries have systems of governance that are not shared by the more democratically oriented South Asian countries. In the view of those participants, South Asian countries must find a development path of their own that is consistent with their democratic political institutions. It was noted, however, that human resource development is central to poverty reduction strategies in both East and South Asia, and there was broad agreement on the importance of investments in education, primary health care, and fam- ily planning. Although consensus was not reached on this issue, many were at- tracted to the hypothesis that active participation by the poor in com- munity-based organizations may be a way to compensate for many of South Asia's disadvantages-such as low literacy rates and inequitable distribution of land and local political power-in relation to East Asia. Group membership, particularly when the group is linked with a broader network through NGOs or other partner organizations, can be a channel for information on markets and services that is often unavail- able to illiterate or semiliterate people. The effects of local power in- equalities can also be mitigated by group membership, since the poor can together better resist attempts by local elites to monopolize access to services and resources. In addition, local users' groups can force pub- lic services to be more efficient and more responsive to clients' needs. The Role of Economic Reform There was general agreement that market distortions caused by gov- ernment regulations, poorly planned public spending, and other errors of the past must be corrected. But whereas some participants were con- vinced that a strong program of market-oriented reforms was suffi- cient to bring about poverty reduction, others were concerned that adjustment and structural reforms, if undertaken too swiftly and with- out compensating measures, could damage the precarious economic position of the lowest economic strata. One feasible solution would be for governments to endeavor to design and sequence reform programs so as to minimize adverse impacts on the poor. 8 POVERTY REDUCTION IN SOUTH ASIA Most participants agreed that safety nets should be in place to fore- stall the consequences of natural disasters, loss of a breadwinner, and other causes of serious economic deprivation. It was pointed out, how- ever, that the safety net concept was designed to assist exceptional cases, such as the orphaned, the handicapped, and the transitional poor. Safety nets were never envisioned as being adequate to situations in which 40 to 50 percent of the population is below the poverty line, as in some countries of South Asia. Poverty reduction cannot be achieved painlessly or overnight. Yet, with the right priorities and better govern- ment expenditure programs, much could be achieved in one genera- tion, as East Asia has demonstrated. Reflecting the conclusions of the ISACPA report, some participants proposed that in addition to adjustment and reforms, the growth strat- egy include a complementary "prong" for the poor, aimed at lifting these large numbers out of poverty. Many felt that this strategy should emphasize participatory and community-based approaches to anti- poverty programs. It was suggested that the poor have an unrealized potential for accumulation and that if this potential could be tapped, the poor could add measurably to the country's growth. By implica- tion, aggregate growth will be slower if the growth potential of the poor is not tapped. The key to making the labor of the poor more pro- ductive, according to this view, is to create organizations of the poor that can undertake development initiatives at the local level. Commu- nity-based participation of this type is a critical component of a "pro- poor" development strategy. It was proposed that, at least for South Asia, social mobilization of the poor may be the missing element that could complete what is sometimes referred to as the World Bank's "two-and-one-half-prong strategy" of growth, human resource devel- opment, and safety nets. Summary Although there was agreement on the importance of broadly based growth in sustained poverty reduction, there was debate on how best to design a comprehensive pro-poor growth strategy. All participants agreed that adjustment and reform are necessary components of such a strategy. Broad consensus was reached on the importance of human resource development and on the need for targeted programs and safety nets (see Theme 2, below). There was debate, however, over whether the "open economy-structural adjustment" approach would automatically lead to a process of growth and accumulation for the poor. In addition to reforms, a complementary effort for the poor was proposed in which community mobilization and grass-roots develop- ment would feature prominently. SUMMARY OF PROCEEDINGS 9 Theme 2. Investing in People Investments in people are crucial for poverty-reducing, sustainable, broadly based growth. Poverty is not merely a problem of low incomes; rather, it is a multi- dimensional problem that includes low access to opportunities for developing human capital and to education, health, family planning, and nutrition. The effects of poverty can be seen in social indicators: high infant mortality and high premature female mortality, high mor- bidity, high fertility, low literacy rates, low primary school enrollments, and malnutrition (figures 2 and 3). Education, basic health care, and family planning services are crucial for generating and sustaining economic growth. Deprivation in these areas reinforces the vicious cir- cle created by low incomes, landlessness, and under- or unemploy- ment. A strong consensus was reached on the subject of human resource development. Although it is clear that growth provides revenues and resources that can be invested in human capital development, it is also likely that such investments are a prerequisite for high-quality growth that pro- vides opportunities to the poor. Participants were virtually unanimous in the conviction that the poor are not likely to be able to participate fully and sustainably in growth without significant investments in their human resource base. However, there is typically a long gestation period before the returns to investments in human resources are real- ized, and the up-front investment costs (measured in time and money) are considerable. Children who are well fed and educated today are far more likely to become productive, healthy individuals ten to twenty years hence, but meanwhile households must struggle to support themselves and their children, often under difficult economic circum- stances. In a crisis, families may sacrifice long-term gains such as child- ren's education for the sake of immediate needs. Interventions aimed at improving literacy levels may therefore need to include incentives to families that will motivate them to keep children, particularly girls, in school. Providing resources to educate and provide services for South Asia's growing population will be a significant challenge for governments in the years to come. It was observed that even if poverty eradication were not an important goal in the region, economic growth and increased public spending would be required just to maintain current levels of services and infrastructure because the population is expand- ing rapidly. Rapid population growth is linked, as both cause and effect, to low levels of human resource development, particularly for girls and women. (Figure 4 shows current fertility rates in the region.) One possible outcome is that the supply of unskilled labor may grow 10 POVERTY REDUCTION IN SOUTH ASIA Figure 2. Health Indicators, South Asia, Selected Years Life expectancy at birth (years) 80 Sri Lanka - - -- ----------------- 60- India - Pakistan Bangladesh 40 - Nepal 20 - 0 1975 1980 1985 1990 Infant mortality rate (deaths per thousand live births) 160 Nepal-- 140 - Bangladesh Pakistan. India .- 120 -. 100 - 80 60 - Sri Lanka - 40- 20 0 1975 1980 1985 1990 Source: World Bank data. SUMMARY OF PROCEEDINGS 11 Figure 3. Primary Gross Enrollement Ratios, South Asia, 1985 and 1990 Males Percentage of school-age population 120 100 _ 1985 LI 1990 80 - 60 - 40 - 20 0 Bangladesh India Nepal Pakistan Sri Lanka Females Percentage of school-age population 120 100 _ 1985 LI 1990 80 - 60- 40 - 20 - 0 Bangladesh India Nepal Pakistan Sri Lanka Source: World Bank data. 12 POVERTY REDUCTION IN SOUTH ASIA Figure 4. Total Fertility Rate, South Asia, 1975 and 1990 Births per woman 8 7 - 1975 6 - -ii 1990 5- 4- 3- 2- 1- 0 Bangladesh India Nepal Pakistan Sri Lanka Source: World Bank data. beyond the capacity of the agricultural sector to provide employment. Without strong support for educational, health, and family planning services, it may be difficult to curtail the increase in unemployment that could result. Gender Concerns Although none of the workshop's presentations focused exclusively on gender equality, the issue was raised repeatedly in discussions under the rubric of human resource development. The appropriateness of tar- geted programs for women was questioned at one point during the workshop. Since South Asian women nearly always reside in family groups, it was suggested that credit and other targeted programs should be aimed at the family rather than its individual members. Other participants countered that, since studies suggest the exist- ence of inequalities of access to food, medical care, family planning methods, and other essentials within the family in some countries, assistance to the family does not ensure that all members will benefit equally. Enhancing women's economic contribution to the family, through credit, assistance to microenterprises and horticulture and other interventions targeted to them, can improve their status within SUMMARY OF PROCEEDINGS 13 the home, help to cushion the shock of unexpected events such as wid- owhood or desertion, and add to the net accumulation of household assets. In addition, it is widely acknowledged that raising women's lit- eracy levels through universal primary education is an effective means of slowing population growth. Participants agreed that investments in education, with special attention to education for girls, are among the most critical requirements for sustainable development in the region. Summary Investments in human resource development are a critical prerequisite to poverty reduction and to the full participation of the poor in the growth process (see the discussion in box 2). Education is particularly important to a productive life, but because educational payoffs are long-term and daily needs are pressing, incentives to families may be Box 2. Use of Participatory Approaches in Poverty Assessments Participatory poverty assessments have been carried out with World Bank support in Ghana, Guatemala, and several other countries. In the South Asia region, Bank staff members involved in the Pakistan and India Poverty Assessments have begun to explore ways of including the views and opinions of the poor in assessing the conditions that cause persistent poverty and low levels of human resource development. In Pakistan economic growth has significantly outdistanced improve- ments in child survival, literacy, and fertility reduction. The condition of girls and women has not improved as much as expected, especially among the poor. The reasons for the gap between growth and quality of life indicators are not fully understood. The Pakistan Poverty Assess- ment will examine this problem through a number of methods, includ- ing focus group discussions and semistructured interviews carried out in disadvantaged areas. In this component, members of poor households will be asked to comment on the availability and suitability of existing educational, health, and family planning services in their neighborhoods and to describe their own health and educational needs and preferences. Reasons for failing to enroll children, especially girls, in school will be discussed, and constraints on greater educational attainment will be identified from the point of view of the informants. The goal of this exer- cise is to recommend interventions, whether in the form of adjustments to existing facilities and services, public awareness promotion cam- paigns, or support for new sources and modes of service delivery, that appear feasible, desirable, and cost-effective in view of the information provided by members of poor families. 14 POVERTY REDUCTION IN SOUTH ASIA required if school attendance levels, particularly of girls, are to be sig- nificantly improved. Population growth must slow if countries are to keep up with the demand for public services. Investments in health, family planning, and female education and other measures that enhance the status of women are known to be instrumental in slowing population growth. Enhancing women's economic contribution through education and programs targeted to them will benefit family units as well as improve the well-being of women as individuals. Theme 3. The Role of Participation Participation may be an important missing element in poverty reduction pro- grams for South Asia. In the past decade, the international development community has begun to explore the potential of community-level participation and social mobilization as approaches to ensuring that the poor are included in the benefits of economic growth. Although participatory approaches to reducing poverty are not equally successful in all set- tings, they have shown promising results in nearly all the countries of South Asia. Among the participants who gave presentations were rep- resentatives of two NGos-the Grameen Bank and the Aga Khan Rural Support Project-which have demonstrated that participation can be instrumental in improving the lives of the poor. These and other well- known success stories were discussed extensively as examples of pro- grams that may yield insights into the requirements for effective use of the participatory approach (see also box 3). When Does Participation Work? Participatory and social mobilization projects, particularly those that require the organization of the poor into groups for specific develop- ment-related tasks, are more successful under some circumstances than others. In the Bank's experience, participatory projects that are focused on infrastructure (particularly irrigation and water systems) or local resources (particularly forests) have had the greatest success, sug- gesting that participation works when there is a shared asset or other material incentive for spending time in group activities. Organization of the poor into resource users' groups is more likely to be sustainable when these groups have decisionmaking authority, economic responsi- bility, and financial autonomy The willingness of participants to con- tribute cash or labor to a joint enterprise is both an indication of their commitment to the project and a force for group cohesion. Community organization is more sustainable when the organized groups are small, although coordination of these groups at higher levels does not appear SUMMARY OF PROCEEDINGS 15 Box 3. Participation in Poverty Reduction Projects Supported by the World Bank Beneficiaries of World Bank-supported projects in South Asia and com- munities affected by them are increasingly being included in design and implementation. Users' groups have improved and managed water sys- tems in the Nepal Bhariawa-Lumbini Groundwater II Project, the Sri Lanka Water Supply and Sanitation Project, and the Pakistan Command Water Management Project. Other groups have been organized to main- tain and protect forests in Bangladesh (Bangladesh Forestry Project), India (West Bengal Forestry Project), and Nepal (Hill Community For- estry Project). In addition, the World Bank provides support to savings, credit, and income-generating interventions, primarily as a component of larger projects. Participatory approaches have been incorporated into human resource development projects, such as the Punjab Middle Schooling Project in Pakistan and the India Family Welfare (Urban Slums) Project. Not all of these projects have been fully successful in involving project beneficiaries in planning and implementation, and a number of con- straints have been encountered as projects unfolded. Local officials have not always been cooperative, the commitment of community members has not always proved sustainable, and the time and cost requirements have sometimes been greater than expected. Nevertheless, interest in using this approach continues to grow within the World Bank, and par- ticipation has been effective in some cases. to harm sustainability and may even promote it. The groups are more likely to take hold when they are homogeneous in composition, when they are organized according to culturally familiar and appropriate models, and when they are based on the use of common property or facilities. Some participants argued that there has been a tendency in many countries of South Asia to rely excessively on governments and public sector programs to solve problems and that there is now an analogous tendency to look to community mobilization to handle any problem that government cannot. In their view, some problems can be solved more efficiently by relying on markets, given a suitable enabling envi- ronment. As an example of an appropriate division of labor between community organizations and markets, one presentation noted the experience of Bank-supported projects with tubewells in the region. Users' groups are appropriate for managing and operating deep tube- wells, which irrigate large areas and serve many farmers. By contrast, 16 POVERTY REDUCTION IN SOUTH ASIA individual farmers have a motivation to sink and maintain shallow tubewells, which are inexpensive and irrigate much smaller areas; pri- vate markets function effectively and coordination with neighbors is unnecessary. As the next stage in assessing the merits of the participatory approach, governments, NGOs, and donors should examine the feasi- bility of replicating and scaling up successful participatory programs. Unless the programs can be expanded to the national or at least the state level, they will remain experiments, and their impact on aggre- gate poverty levels will be insignificant. A caveat mentioned in both presentations and discussions was that even if local participatory programs are thoughtfully designed and well implemented, they can- not be expected to have a measurable impact on poverty unless they are complemented by appropriate macroeconomic policies. Growth- promoting macroeconomic strategies, combined with investments in people, make up the context that can provide the conditions for suc- cess in reducing poverty through social mobilization of the poor. Institutions for the Poor? Some participants questioned whether separate organizations or insti- tutions should be created for the poor. An alternative approach that establishes connections between individual poor people and main- stream institutions (such as commercial banks) might be more sustain- able and cost-effective. Some participatory programs have attempted to capture the best of both approaches by organizing cooperative sav- ings, borrowers', or production groups in the initial stages of project implementation but establishing links between beneficiaries and main- stream commercial or government institutions after a certain momen- tum has been achieved. For example, some programs encourage beneficiaries to establish bank accounts in commercial banks once their savings through village-based savings or income-generating associa- tions have reached a significant level. The possibility that wealthy local elites may seize control of poor people's organizations and divert donor or government inputs for their own use was mentioned as an obstacle to be overcome. Participa- tion and local control do not guarantee that the poorest members of participating communities will be the ones to benefit. Controlling leak- age of benefits to the nonpoor is a problem with most poverty-reduc- tion programs, whether they are participatory or not. One objective of participation as a component of program design, however, is to permit community members themselves to police and deter attempts at mis- appropriation. SUMMARY OF PROCEEDINGS 17 Participants from NGOs community suggested that these and other potential implementation problems could be controlled if a sensitive support network were developed to mobilize, train, and monitor project beneficiaries at the local level. These functions are being per- formed by NGOs that act as intermediaries between small local commu- nities and larger entities-governments and international agencies- that find it difficult to make direct contact with the poor. Intermediary organizations can serve governments and donors as conduits of infor- mation about the poor and the conditions under which they live. They can serve the poor by ensuring that poor people's interests are consid- ered in the design of projects, by providing training in skills and orga- nization, and by voicing the concerns of the poor to development and funding agencies. Because these organizations often work at the com- munity level, they are in a position to notice and call attention to local misuse or misallocation of funds that were supposed to be allocated to the poor. Scaling Up and Replicating Programs Questions surrounding the scaling up and replicability of participatory programs, most of which are still small in scale, were frequently raised during the discussion. The organizations currently carrying out the programs often lack enough resources and trained staff to undertake the massive efforts that would be required to reduce poverty at the national level, even if the techniques required for meaningful expan- sion were better understood. Governments, which have greater resources and organizational capability, are often too hierarchically and bureaucratically organized to adapt easily to a more decentralized and flexible participatory model. It is far from clear what is the best way to marry the resources and scope of government with the inten- sive, flexible, and locally based approach of NGOs in order to develop a national network of participatory development programs. One prom- ising approach is to utilize NGos as intermediaries between programs and the poor. Relevant experiments are either in existence or being planned in Pakistan and Sri Lanka. A related question is whether a community-based program that has proved successful in one country or district can be deployed in other environments with equal success. A program that has successfully organized farmers to construct and maintain irrigation systems may or may not be adaptable to an urban slum setting. Because of differences among countries (or even within countries such as Nepal or India) in social conditions, literacy levels, and settlement patterns, a program design that is effective and acceptable in its original location may be 18 POVERTY REDUCTION IN SOUTH ASIA ineffective in or rejected by the members of a distant community. Cur- rently, efforts to replicate established community-based programs such as the Grameen Bank are being planned or are underway in various regions throughout the world. The results of those trials may help to answer questions regarding replicability. Group-Based Lending Among the many unresolved questions on this issue is whether group- based lending can be a model for improving the access of the poor to sources of credit. A number of NGO programs in the region have used the joint liability and group lending principles successfully in extend- ing credit to the poor. Not all such programs have proved successful or sustainable, however, and the internal and external conditions required for success are still unclear. The failure of some group-based and targeted credit programs to recover loans is partly a result of the lack of incentives to repay. In addition, a misguided use of subsidies in many unsuccessful programs has encouraged borrowers to view their loans as grants. Social inter- mediation or technical assistance could improve the performance of these programs. In one rural development program, however, lack of access to credit was not found to be a major factor limiting rural accu- mulation. Many rural households can generate their own capital through savings but have no clear avenues for productive investment. Participation: A Means or an End? The discussion revealed a basic difference of opinion on the ultimate role of participatory approaches in poverty reduction. One view is that social mobilization and local participation are a means to an end; they are useful only insofar as they increase incomes, create infrastructure, or serve some other clear development function. Implied in this posi- tion is the supposition that if some other approach were demonstrably more productive of income and other measurable benefits, social mobi- lization would be seen as the less desirable investment option. The other view is that social mobilization and participation of the poor in development programs are not only means to an end but are also ends in themselves. Beyond their actual utility in improving program effec- tiveness, in this view, participation and organization of poor com- munities serve an additional empowerment function, enhancing the dignity and self-determination of the poor and enabling them to present a united front against attempts at exploitation by the wealthy and powerful. SUMMARY OF PROCEEDINGS 19 Summary Community mobilization and participatory approaches have shown some promising results in South Asia, but they are not a panacea and are more successful under some circumstances than others. Experience demonstrates that organizations of the poor are most effective when there is a material incentive to continue participating, when groups are smaller rather than larger, when groups are homogenous, and when the approach is complemented by appropriate macroeconomic policies at the national level. There is debate on issues such as the value of sep- arate institutions for the poor, group-based lending, and whether social mobilization is worthwhile as an end in itself apart from its income-generating or productive functions. There are also questions about how successful programs can be scaled up or replicated; relevant experiments are being carried out in the region. Theme 4. The Need for Collaboration Effective use of participation requires collaboration by governments, NGOs, donors and organizations of the poor. What is the proper role of the many actors on the development scene in working with the poor to reduce poverty? Many participants (some of whom were working in the public sectors of their respective coun- tries) felt strongly that governments should take the lead in developing poverty reduction strategies and that they should be discouraged from abdicating their responsibilities toward the poor in favor of other actors such as NGos and donors. In addition, governments should take the opportunity to learn from successful NGO strategies and be willing to incorporate some of these strategies into their own programs. But fostering excessive dependency on paternalistic governmental pro- grams and initiatives is seen as an error of the past that must be cor- rected if rapid growth is to be achieved. To counter this dependency orientation, new approaches to developing local capacity and estab- lishing self-reliance should be designed. A portion of the workshop was devoted to defining the roles of the various actors-central gov- ernments, local governments, donors, NGos, and organizations of the poor-in this process. Roles and Functions of NGOs "Nongovernmental organizations" is a broad category that includes numerous organizations of varying sizes and capacities that may serve many different functions. Many NGos are service delivery mecha- 20 POVERTY REDUCTION IN SOUTH ASIA nisms, providing medical treatment, food, nutritional supplements, agricultural inputs credit, and the like directly to those whose needs are not being met by government or commercial sources. Some NGOS work with local government to ensure accountability and high-quality services. A number are beginning to act as advocates for the poor in situations of unequal political and economic power, giving the poor a voice and helping them to claim their share of services from the public sector. Of particular interest to this workshop was the function many NGOs perform in organizing communities and community groups to articulate and accomplish their own goals. Obviously, these roles and functions are not mutually exclusive, and an organization can play two or more roles simultaneously. Government-NGO Collaboration NGOs have been particularly important in the implementation of devel- opment strategies that involve a participatory component. Working on a smaller scale than do governments, they can tailor programs to spe- cific local conditions and have often proved well equipped to handle sensitive gender and environmental concerns. NGOs can also act as lab- oratories for testing innovative approaches in pilot projects to establish whether or not they are worthy of large-scale investment. The NGO community must realize, however, that it may not possess the resources and staff to have a national-level impact unless it works in cooperation with other actors, particularly governments. Many NGOs are already beginning to collaborate with governments and donors on finding ways to use successful elements of NGO programs in govern- ment programs. An example is Pakistan's effort to incorporate the approach used by the Aga Khan Rural Support Program into a National Rural Support Program (NRSP). Governments have an important role to play in creating a suitable enabling environment for the effective functioning of NGos. Policies to establish this environment might include components that promote donations to NGos by permitting tax-free contributions from both nationals and foreign donors or that forge cooperative links between NGos and units within line ministries. A democratic political environment is one of the critical factors that support the formation and functioning of NGos. Many SAARC countries with small or inactive NGO communities did not have democratically elected governments until recently. Under nondemocratic regimes, NGOs are often seen as potential threats to centralized control, and their leaders may be shut out of the development process. Now that every country of the region has a democratic leadership, the climate is right for the emergence of a strong complementary working relationship SUMMARY OF PROCEEDINGS 21 between governments and NGOs. In some South Asian countries, a pro- ductive government-NGO relationship has prevailed for a number of years, and reports from these countries were included among the workshop presentations. Donor-NGO Collaboration Views differ concerning the appropriate relationship between interna- tional donors and NGOs. Some argue that donors should establish mechanisms for working directly with NGOs and providing funding to them without involving governments in every transaction. To operate in this way could free donor-supported programs from crippling bureaucratic requirements and control by uncooperative local officials. An opposing view is that direct funding to NGOs could exacerbate the frequently tense relations between governments and NGOs. Unlike democratically elected governments, neither donors nor NGOs are the legal representatives of the people, and both should respect the prerog- atives and priorities of those governments. Questions can be raised concerning the broader political role of NGOs in their countries of oper- ation. Some would applaud the current policy orientation of NGos that seek to function as advocates of the poor. Others feel that NGOs may be seeking wider political influence for themselves and that it may be dif- ficult to distinguish between those that are altruistically motivated and those that are motivated by self-interest. Government-Donor Collaboration Donors can assist governments in carrying out their overall poverty reduction strategy, and they can facilitate the government-NGO rela- tionship, perhaps by working to establish special funding mechanisms for joint initiatives. There is some controversy about whether it is appropriate for donors to use funding mechanisms to encourage gov- ernments to adopt more participatory strategies. It was also noted that donors must begin to coordinate their efforts to avoid duplication and to complement one another's programs. The World Bank, although the largest of the donor organizations, is not the key player in every development arena. Donors are heterogeneous and have different strengths and weaknesses. It is important that the donor coordination process include a careful analysis of each agency's areas of comparative advantage so that redundancies can be avoided and complementarities can be strengthened. The broad representation from the multilateral donor community at the workshop was seen as an example of the type of information sharing and discussion that could lead to productive collaboration in the future. 22 POVERTY REDUCTION IN SOUTH ASIA Who Should Work Directly with the Poor? The role of organizations of the poor was explored with great interest. Among the participants who saw such organizations as an essential component of poverty reduction strategies for the region, there was some discussion of which actors were best suited to the task of plan- ning and organizing local groups. Some thought that NGOs were best equipped to undertake the organization of community groups in pur- suit of development objectives, but the potential of community organi- zations based on indigenous models to act independently of NGOS was also recognized. Some participants questioned the sustainability of local organiza- tions established with donor support through NGOs without the involve- ment of local government structures or indigenous organizations. Experience has shown that after external funds cease to flow, many NGO-organized community groups vanish for lack of support, despite a practical need for their continued existence. World Bank experience suggests that sustained participation could be fostered if the projects in question included built-in incentives (such as an irrigation system or natural resource, the benefits of which could be shared) or if locally familiar or indigenous organizational structures were utilized. Summary If they coordinate their efforts, governments, NGos, donors, and local organizations can achieve a larger poverty reduction impact than if they acted alone. To do so, they must define their respective roles clearly Governments should establish an enabling environment for NGO activities, and NGOs must be willing to share their insights and techniques with one another and with government agencies and orga- nizations. Governments, NGos, and donors should recognize the potential contribution of indigenous community organizations. Donors should work among themselves to identify their own areas of compar- ative advantage. They should encourage governments to experiment with innovative approaches to poverty reduction and to create an enabling environment that will allow effective NGOs to make their own contributions. Donors should deal sensitively with the question of gov- ernmental prerogatives when working directly with NGOS. Theme 5. The Need for Institutional Reform Institutional reforms are needed to implement participatory poverty programs. Participants agreed that governments should be the lead players in poverty reduction strategies, but they also saw a need for institutional changes if governments are to become more effective in promoting SUMMARY OF PROCEEDINGS 23 development at the local level. Although training and capacity build- ing should be improved generally, skills-building is particularly critical at the level of local government organizations, where services are actu- ally delivered. In addition to building technical and management skills, local officials and government workers should be trained to interact with service users and communities in a sensitive and sup- portive way. Entrenched hierarchical attitudes have meant that local government bureaucrats have been stumbling blocks for beneficiary participation in some participatory projects. It may be necessary to provide in-service training to local bureaucrats to sensitize them to participatory approaches. Locating Responsibility at the Local Level Many participants supported a movement of fiscal and administrative responsibility to local levels of government, including a significant transfer of resources and decisionmaking authority for the fight against poverty. Locating funds and decisionmaking responsibility at the local level would permit quick and appropriate responses to changes in local conditions, simplify the process of seeking and utilizing feed- back from service recipients in the design or modification of govern- ment services, and encourage the siting of government services where they are most likely to be utilized. User satisfaction could be increased if local government were able to respond directly to needs, characteris- tics, and requests specific to the particular district or municipality. Decentralization of fiscal responsibility to the local level would require either that districts and municipalities have their own revenue sources or that they receive revenue-sharing or matching grants from the state or federal government. To maximize the poverty-reducing impact of decentralization, revenue-sharing mechanisms could be weighted to favor poor and disadvantaged areas, and special alloca- tions could be set aside for small poverty- alleviation projects to be car- ried out by communities using community labor, materials, or both. Not all participants agreed that local government was the most appropriate locus of control over development funds and activities. Concern was expressed that local government agencies may lack the skills and capacity to carry out essential functions and that it is difficult to monitor their activities and establish accountability Some partici- pants observed that in many areas the local government structure is not "pro-poor" because it is under the control of large landowners or other powerful elites. A local government that is in the hands of large landholding families may be less a force for change than an obstacle, since it is disposed to resist any threat to the economic status quo in its area. Whether local elites have any positive role to play in local devel- opment was an issue that was raised briefly in this connection. One 24 POVERTY REDUCTION IN SOUTH ASIA participant pointed out that in some important domains, such as con- trol of communicable diseases, the interests of the poor are not sepa- rate from or opposed to those of the wealthy In such a context of shared interests, local elites could provide valuable leadership to the community as a whole. The threat of expropriation of control by wealthy local elites has been cited as a factor contributing to the reluctance of central govern- ments to devolve power and funds to local governments. Sometimes, too, central and state governments themselves have comfortable work- ing relations with local elites and may not be receptive to the sugges- tion that influential and relatively well educated families be bypassed by government programs aimed at the poor in their districts. Summary Local governments are well positioned to play an active role in com- munity-based and participatory development efforts. Their potential will not be realized, however, unless the division of governmental responsibilities is clear, unless local governments are motivated to be accountable to local constituents, and unless central and state govern- ments are willing to share decisionmaking power and funding with local government structures (see box 4). Central governments have fre- Box 4. Elements in Successful Decentralization According to a recent World Bank report, evidence from many countries suggests that for decentralization to succeed: * The division of functional responsibilities between levels of govern- ment must be clear. * Sources of revenue that correspond to these responsibilities must be authorized. * There must be a system of accountability that includes both central government regulation and incentives for responsiveness to local constituents. Regulation by the central government is important when local govern- ments are carrying out central government functions and when local activities can affect national policies. In functions with purely local effects, local government structures should be accountable to local municipalities and communities. Accountability of this kind may not be achieved, however, unless incentives have been built into the system. Even local elections can be an instrument of accountability if election rules are designed appropriately. SUMMARY OF PROCEEDINGS 25 quently resisted such a move, in part because of fears that local gov- ernments may lack capacity, that their activities will be difficult to monitor, and that they may be controlled by wealthy elites who do not share in the quest for a more equitable distribution of services and ben- efits. In a few domains, however, local elites may have overlapping interests with the poor, and in these arenas they may be able to provide leadership. Where Do We Go from Here? Recommended Next Steps * In support of SAARC's Dhaka Declaration in 1993, the next step suggested for member governments is to develop comprehensive poverty reduction strategies, with specific proposals for policies and programs, for their respective countries. * The importance of broadly based growth and increased invest- ment in people should be recognized, and the policy steps needed to promote these goals should be taken. * Effective participatory and social mobilization approaches should complement these strategies wherever they can be effective. * Depending on the country in question, sharing of decisionmaking authority over poverty initiatives with local governmental struc- tures may need to be a component of these strategies. It is impera- tive, however, that the division of functional responsibilities be made clear, that revenue sources corresponding to these responsi- bilities be authorized, and that local governments be accountable to both the central government and local constituents. * Governments should carry out an appraisal of the effectiveness of NGO programs in their own countries. They should identify cases in which NGos have been successful in using participatory approaches to enhance program impact and should develop plans for utilizing these approaches to improve the effectiveness of their own programs (with facilitation by NGOS in some cases). * Development agencies should, if so requested, work with govern- ments in developing and carrying out feasible strategies. They should coordinate their efforts, each providing support and tech- nical assistance in accordance with its own area of comparative advantage. * Development agencies should be prepared to initiate and support innovative experimental approaches linked to participation and social mobilization, including some that place the planning, implementation, and maintenance of interventions in the hands of those who will be affected by the project. The results of the projects should be closely monitored and evaluated so that the conditions necessary for success can be identified. 26 POVERTY REDUCTION IN SOUTH ASIA Box 5. An Indication of Future Directions: The Grameen Trust Initiatives to incorporate participation of the poor in poverty reduction efforts are being included in many World Bank-supported projects. An example particularly relevant to the themes of the workshop is the World Bank's $2 million grant to the Grameen Trust. The grant was announced by World Bank president Lewis T. Preston in November 1993 at the inter- national conference on Overcoming Global Hunger, hosted by the World Bank. The Grameen Trust is a nonprofit company established in Bangladesh for the replication of projects using the Grameen Bank approach throughout the developing world. It is seeking $100 million from inter- national donors for a five-year program that will expand current work in initiating Grameen-type pilot projects, scaling up successful projects, training replicators and field staff from a number of countries, publish- ing training materials, and monitoring and evaluating the results of these initiatives. If donors respond as requested, the trust will be able to test the hypothesis that the Grameen Bank approach, when adapted to local conditions and implemented by appropriately trained staff, can be replicated successfully in developing countries with a wide range of eco- nomic, demographic, environmental, and cultural characteristics. * Where innovative projects have already been found to be success- ful, agencies should support efforts to test the feasibility of upscal- ing or replicating them in similar and dissimilar environments. A continuing effort to identify the circumstances and factors neces- sary for successful scaling up and replication could be undertaken by governments, NGOs, and donors. (See the discussion in box 5.) Appendix A. Findings and Conclusions, Plenary Session Areas of Agreement 1. Poverty in South Asia is very high by any measure and affects women and children with particular severity. Unless credible and sus- tainable country-based programs for reducing poverty within a rea- sonably short time are adopted, the stability of the socio-political- economic system will be exposed to a great deal of risk. 2. Poverty is multidimensional: the poor not only lack enough income to meet their basic needs but are also deprived in other ways- social, economic, and political. 3. The indirect effects of macroeconomic, sectoral, and trade policies in limiting the growth of employment opportunities, as well as returns to the nonlabor assets of the poor, have been substantial in South Asia. 4. The primary thrust of any effective poverty reduction strategy is to enable the poor to climb out of poverty and stay out of poverty. In the longer term, public assistance should be necessary only for the transitory poor (those affected by natural disasters or unexpected shocks to income) and the chronic poor (such as the elderly, the handi- capped, and orphans). Chronic poverty is only weakly related to eco- nomic processes. 5. Growth is necessary for sustainable poverty reduction. However, the quality of growth is a crucial ingredient: it must be broadly based and labor-intensive, and incentives must be in place that encourage efficiency and reward competitive activities. 6. Investments in people-in health, education, and family plan- ning-must accompany growth if it is to lead to sustained poverty reduction. 7. Along with high-quality growth and investment in people, tar- geted programs for the poor are needed. These programs must be effi- cient (delivered at reasonable cost and well targeted) and use effective and innovative delivery mechanisms, creatively combining market mechanisms, government programs, and NGO activities and strength- ening community participation and relevant community institutions in pursuit of the programs' objectives. 27 28 POVERTY REDUCTION IN SOUTH ASIA 8. Participation of the poor in the design and delivery of basic ser- vices, as well as in specific, targeted programs, is crucial. There is abundant evidence of successful and effective participation of the poor in South Asia. Even so, much work needs to be done to analyze empir- ically the circumstances under which participation is most effective and when it is not and how successful schemes can be scaled up or replicated. Areas Requiring Further Analysis 1. On the quantitative analysis of poverty strategies: * What are the relative contributions of broadly based, labor-inten- sive growth (the right kind of growth) and investments in human resources in reducing poverty in South Asia? * Does growth bring about higher investment in human resources, or are greater investments in human resources a necessary precon- dition for growth? * What is the scope for increasing savings and domestic investment through improved social mobilization? * How does placing different weights on growth, human resource development, targeted programs, and participation affect the time horizons required for meeting poverty reduction targets? 2. On institutions and poverty reduction in South Asia: * What have been the roles of various institutions in South Asia in the region's relatively low growth and low investments in human resources? * Are social mobilization and greater participation of the poor the missing ingredients in poverty reduction? 3. When does participation work? * Under what economic, social, and political circumstances has par- ticipation been effective? * In light of resource constraints and the need to set priorities in poverty reduction strategies for South Asia, should participation be viewed more as a means or as an end in itself in poverty reduc- tion efforts? (For example, should participation be encouraged because it is effective in helping to reduce poverty or also because it gives people a sense of dignity and self-worth-that is, because it is empowering?) * Is there something unique to South Asia that permits the large- scale use of participatory approaches? 4. On the roles of governments, NGOs, and groups of the poor: APPENDIX A 29 * What does an analysis of both successful and less successful par- ticipatory programs tell us about when and how governments, NOs, and locally based groups of the poor can be combined effectively? * What are the community-related institution-building prerequisites for successful participation? NGOs comprise a wide spectrum of organizations that vary in their objectives, size, scope (local, national, or international), and effective- ness. What typology of NGOs would allow us to identify their potential roles in poverty reduction? 5. On the role of donors: * In what ways can the donor community participate in the design and implementation of poverty reduction strategies at the country level? (Note that, like NGOs, donors are highly heterogeneous.) * How can donor efforts be designed to best complement the pov- erty reduction efforts of governments, NGOs, and groups of the poor? 6. On participation and decentralization: * What are the links between local participation and local elites? Do local elites have any role to play? How can conflicts be resolved? * What is the role of financial decentralization in ensuring that par- ticipation is effective? 7. On institutions and poverty reduction in East Asia: * What was the role of institutions in fostering a political economy framework in East Asia within which quality growth, investments in human resources, and redistribution of assets combined to pro- duce shared growth? * Did social mobilization (in the sense in which it is being discussed for South Asia) play a role? * What other differences in the two regions could explain different rates of success in reducing poverty? 8. On effective delivery of rural credit: * Under what conditions should separate channels of credit (that is, separate financial institutions) be established for the poor? Under what conditions does social intermediation help the poor over- come barriers to access to existing sources of credit (government programs and commercial banks)? * Is group-based lending the only appropriate method for develop- ing a sustainable rural credit program in South Asia? Would 30 POVERTY REDUCTION IN SOUTH ASIA directed, incentive-based programs (similar to those currently used in rural areas of Indonesia) work as well? Under what conditions? Possible Next Steps 1. Each SAARC country needs to develop a specific poverty reduction strategy, specifying proposed policies and programs and identifying a role for coordinated donor assistance in implementing the strategy. The strategies should be developed through a consultative process involving relevant actors and should recognize the importance of pro- poor (labor-intensive, broadly based, and sustainable) growth and the steps required to promote such a growth path. The strategies should clarify what actions will be taken to expand investments in human resources in an equitable and efficient way and how efficient, sustain- able targeted programs could be developed or restructured. Effective participatory and social mobilization approaches should be developed. 2. Although governments will continue to play a strategic role in for- mulating and implementing strategies for reducing poverty, the effec- tiveness of this role needs to be improved through greater devolution of authority and responsibility, transparency of policymaking, and accountability. In particular, this will require reform of the public administration and reorientation of the bureaucracy. 3. South Asian governments should look for ways to improve the enabling environment for growth and development of NGos and of social mobilization and participatory schemes. This will also call for devolving more responsibilities to local government institutions and strengthening their capacities. Coordinated external assistance may be needed. 4. More innovation and risk-taking should be considered in experi- menting with new programs and projects that make use of social mobi- lization, which involves governments at all levels, NGos, and other partners, and of participatory, community-based approaches. Results should be monitored carefully. 5. Additional mechanisms for funding programs or projects that improve collaboration between government and NGOs in implementing social mobilization schemes should be explored (for example, through aid group meetings). Again, results should be carefully monitored. 6. There is a need for more experimentation with project components that support (a) training (particularly on-the-job training) of commu- nity members by successful NGOs; (b) development of institutional capacity to increase participation and mobilization of the poor; and (c) reorientation of NGOs, local bureaucracies, and other development agencies. 7. Countries should develop responsive information and monitoring systems that are participatory, that use both qualitative and quantita- APPENDIX A 31 tive methods, and that monitor not only inputs and processes but also outcomes (for example, the effectiveness of particular interventions in reducing poverty). 8. Funding and technical support should be provided for research and further analytic work on important unanswered questions and new questions. The most pressing short-term questions need to be identified. Appendix B. List of Participants Gautam Adhikari Consultant, South Asia Region, The World Bank Sadiq Ahmed Lead Economist, Country Department 3, South Asia Region, The World Bank S. Maqsood Ali Sadharanbima Corporation, Dhaka John Clark International Relations Officer (NGOS), Operations Policy Department, The World Bank Nancy Benjamin Economist, Central Asia Department, International Monetary Fund Lynn Bennet Senior Anthropologist, Asia Technical Department, The World Bank Carter Brandon Consultant (Economist), Asia Technical Depart- ment, The World Bank Abdul Sattar Moosa Didi State Dignitary, Republic of Maldives Lionel Demery Senior Economist Education and Social Policy De- partment, The World Bank Robert S. Drysdale Senior Operations Adviser, South Asia Region, The World Bank Ann Duncan Senior Economist, Country Department 3, South Asia Region, The World Bank Salem Gafsi Senior Operations Officer, Country Department 3, South Asia Region, The World Bank Godfrey Gunatilleke Executive Vice Chairman, Marga Institute, Colombo Ann Hamilton Director, Country Department 1, South Asia Re- gion, The World Bank S.R. Hashim Office of the Principal Adviser, Planning Commis- sion, New Delhi Jeffrey Hammer Principal Economist, East Asia Region, The World Bank Paul Isenman Director, Country Department 3, South Asia Re- gion, The World Bank Bimal Jalan Executive Director (Bangladesh, Bhutan, India, and Sri Lanka), The World Bank 32 APPENDIX B 33 Henning Karcher Chief, West and South Asia Divisions, Regional Bu- reau for Asia and the Pacific, United Nations De- velopment Programme (UNDP) Martin Karcher Division Chief, Country Department 1, South Asia Region, The World Bank Shoaib Sultan Khan Senior Adviser, Rural Development, Aga Khan Foundation, Islamabad Shahid Khandker Economist, Education and Social Policy Depart- ment, The World Bank Karl Eric Knutsson Regional Director for South Asia, United Nations Children's Fund (UNICEF), Kathmandu Valerie Kozel Economist, Office of the Vice President, South Asia Region, The World Bank Thomas Matthai Assistant to Regional Director for South Asia, Unit- ed Nations Children's Fund (UNICEF), Kathmandu John Mitchell Senior Public Information Officer, External Affairs, The World Bank Gobind T. Nankani Chief Economist, South Asia Region, The World Bank Deepa Narayan Social Scientist, Environment Department, The World Bank Sangay Ngedup Director General, Health, Royal Government of Bhutan, Office of the Superintendent, General Hos- pital Thimphu-Bhutan Barbara Parker Consultant (Anthropologist), South Asia Region, The World Bank M. S. Rao Manager, Social Dimensions Unit, Asian Develop- ment Bank, Manila Daniel Ritchie Director, Asia Technical Department, The World Bank Shiv N. Saigal Director, Asia Division, International Fund for Ag- ricultural Development (IFAD), Rome Sven Sandstrom Managing Director, The World Bank Binayak Sen Consultant, Operations Evaluation Department, The World Bank M. Khalid Shams Grameen Bank, Bangladesh Kamal Uddin Siddiqui Prime Minister's Office, Dhaka T. N. Srinivasan Department of Economics, Yale University, New Haven, Connecticut Paul Streeten Independent consultant, United States Lyn Squire Director, Policy Research Department, Middle East 34 POVERTY REDUCTION IN SOUTH ASIA and North Africa Region, The World Bank R. Sudarshan United Nations Development Programme (UNDP), New Delhi S. K. Upadhay Member, National Planning Commission, Kath- mandu K. R. Venugopal Special Secretary, Prime Minister's Office, New Delhi Heinz Vergin Director, Country Department 2, South Asia Re- gion, The World Bank Ponna Wignaraja Adviser, United Nations University Colombo D. Joseph Wood Vice President, South Asia Region, The World Bank Ibrahim Husain Zaki Secretary General, SAARC, Kathmandu  The World Bank Headquarters 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. 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