Asian Development Bank News Release No. 106/99
http://www.adb.org/news/1999/nr106-99.asp
November 9, 1999
ADB Poverty Reduction Strategy Aims To Rid Region Of Extreme Poverty
New focus signals radical shift in policy
The Asian Development Bank today approved a new poverty reduction strategy to help eradicate extreme poverty from Asia and the Pacific.
Announcing the Bank's new focus, ADB President Tadao Chino said, "Despite the development gains of the past few decades, Asia is still home to 900 million extremely poor people. This is unacceptable. Public policy and action can change this and we are refocusing our work with the single, over-arching goal of eliminating poverty from the region."
The all-out assault on poverty is largely the initiative of Mr. Chino, who took over the helm of the ADB in January, 1999. Previously, the ADB had four other strategic objectives besides alleviating poverty: promoting economic growth, improving the status of women, protecting the environment and developing human resources (including population planning). These will now be redirected towards poverty reduction.
The three pillars of the new strategy are:
- pro-poor, sustainable economic growth
- social development and
- good governance.
The ADB's policy shift will affect every aspect and level of its operations. The Bank is setting up a new poverty reduction unit by the end of this year to spearhead the drive. The Manila-based multilateral development bank, which finances roughly $6 billion worth of projects and programs yearly, will readjust its project focus. At least 40 percent of all public sector lending will be for poverty interventions.
"Future projects will have to show that they directly or indirectly benefit large numbers of very poor people," explains ADB Vice-President Peter Sullivan, chairman of the committee which prepared the strategy. "This means we'll be doing more farm-to-market roads and fewer expressways, more rural electrification projects and fewer big power plants."
The ADB's strategy builds on the region's earlier successes in tackling poverty. In the early 1970s, more than half the region was poor, average life expectancy was 48 and only 40 percent of the adult population was literate. Today, the percentage of poor people has fallen to one third, life expectancy has risen to 65 years and 70 percent of adults are literate. Although the total population has jumped from 1.8 billion to 3 billion, the number of poor people has fallen from over 1 billion to 900 million.
With emphasis on economic growth in earlier years, the ADB financed Asia's urgent need for physical infrastructure -- electricity, roads, irrigation systems, school buildings and health centers. In later years, the Bank expanded its focus to include human development, gender equity and environmental protection.
"However, the Asian crisis, which reversed decades of development in some countries, underscored the fact that Asia has a massive underclass which has been untouched by the general rise in prosperity," said Mr. Sullivan. "It is this 'hard-core poor' that we are now trying to reach. For this, economic growth is important, but not enough. We need more direct interventions which means new policies and new tools."
Nevertheless, the experience in East Asia before the crisis points to a clear lesson: growth can reduce poverty by generating employment and incomes, and labor-intensive growth can reduce it even faster. Consequently, the ADB will use policy-based lending and infrastructure projects to promote pro-poor economic growth.
Over the years, measuring poverty by income level has been expanded to include access to basic education, health care, nutrition, water and sanitation, as well as intangibles such as powerlessness and the ability to participate in society.
The ADB notes the primary responsibility for overcoming poverty lies with individual countries but success depends on the united efforts of government and civil society and on strong, sustained support from the international donor community.
The Bank will change the way it operates in a number of ways. It will undertake poverty analyses of individual countries - the causes and characteristics of poverty vary from country to country - to ascertain the most effective policies and institutions to fight poverty. These analyses will be discussed at high-level forums where governments, NGOs, community-based organizations, the private sector and the donor community will be represented. These forums will produce country operational strategies that will form the basis for programs. These will, in turn, be implemented through partnership agreements which will include mechanisms for reviewing performance and which will link performance to the allocation of funds.
Governance is crucial to the success of the strategy, especially in the rural areas where government institutions are frequently the weakest in capacity, commitment and accountability. In the past, institutional capacity building has been focused on government institutions. In future, the emphasis will be on the client, meaning community-based organizations, people's organizations and cooperatives.
The Bank will also invest more to provide the poor, especially women, access to essential services. These investments are often the most effective way to break the cycle of poverty. Access to basic education and primary health care will increase the poor's chance of earning income. Providing social safety nets also will reduce the indebtedness that entraps many poor in a vicious circle.
ADB's investments in other sectors will have a more direct impact on the poor. In infrastructure, priority will be given to rural roads and electrification, small and medium enterprises, water supply and sanitation programs. In transport, the aim will be to reduce transport costs between rural areas and growth centers. In communications, ADB will harness information technology to enhance the poor's market access. Finance projects will promote policy reforms and market infrastructure to develop medium, small and micro enterprises.
The ADB will also use new tools to bring its operations closer to the poor. These include lending directly to local governments, promoting social and investment funds and supporting NGOs with proven track records for helping the poor.
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Fax: (63-2) 636-2444
Telex: 63587 ADB PN/
29066 ADB PH
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