Pro-Poor Growth in the bilateral partner countries in Sub-Saharan Africa: an analysis of poverty reduction strategies

October 10, 2005 - nr.29
Summary

Background
Pro-poor growth is a strategic concept that is applied to interventions in development processes. It has evolved in response to the experience gained during several decades of international development, during which time poverty has not appreciably diminished. The key tenet of pro-poor growth is that policy to strengthen the economy should be harmonised or even integrated with measures to promote direct poverty reduction. This calls for clear choices to be made. The AIV welcomes this approach, but points out that the definition of pro-poor growth applied (i.e. growth that on average more than proportionally benefits the poor) relates only to income, and that the PRSP processes launched so far have not yet fully realised the pro-poor growth concept.

The AIV has the opinion that poverty reduction should not concentrate solely on income and macroeconomic growth, but also on measures to improve other poverty- related dimensions.

The PRSP processes arose from a desire to create conditions that would reduce the debt burden of developing countries, and to promote a pro-poor policy when issuing international credit facilities, including outside the HIPC context.1 In some partner countries, the search for a direct link with poverty reduction provided opportunities to link up with existing anti-poverty strategies. Although PRSPs are technically based on the views of the recipient countries, in practice their form and content are dominated by the political and economic vision of the IFIs and the donors. This forces the AIV to conclude that these processes must primarily be regarded as conceived, established and overseen by donors, and hence that they are at variance with the aims of the PRSP process.

PRSPs are often substantial and weighty documents, providing donors with a detailed account of the policies of the partner countries. Moreover, since they require an integrated, multifaceted formulation of policy, they place a considerable burden on the limited administrative capacity of recipient governments.

The AIV holds the view that the PRSPs should be as succinct and strategically formulated as possible.

Process
Pro-poor growth requires that policy decisions concerning development should at the very least not be anti-poor (that is, they should not have a negative impact on the poor). The AIV therefore regards an ex ante examination of the likely effects of policy measures on the poor as crucial.

The AIV therefore holds the opinion that PSIAs should be an integral part of the PRSP process. However, certain conditions must be met to ensure that yet more externally imposed procedures do not place a further strain on local capacity. To begin with, the existing capacity of NGOs and civil society must be strengthened to provide a counterweight to the local and international consultancies hired in by the IFIs and donors. Second, existing monitoring instruments must be used to the full, to prevent a ‘cascade’ of monitoring and guidance mechanisms.

PRS processes are designed to enhance the participation and ownership of the partner countries. Beyond this, it is usually also necessary to increase the involvement of parliaments, local and regional governments and associated political structures. Moreover, too many donors still assume the existence of a strong, highly organised and vocal civil society. It is doubtful that this western consultative model based on equality between partners can simply be transferred to Africa wholesale. Yet despite this, the participative process often consists of compulsory consultation rounds with people who have not been adequately briefed by their governments and the nature of whose ‘representation’ is not always clear. Civil society in Africa is still quite weak, especially in rural areas. As a result, participation will primarily mean having to involve the local leadership in formulating and implementing specific goals. More time will probably need to be spent on this phase in the process. Participation processes must be developed gradually, as must efforts to build trust at local level.

The AIV recommends ensuring the effective participation of civil society (the ‘emancipation framework’ referred to in this advisory report), both structurally and in the context of specific PRSPs. The elected parliament must also become more involved. The AIV recommends that donors adopt the approach used by Denmark to measure the effectiveness of participation, namely attaching an annexe to the PRSPs asking the government to list the civil society organisations it has consulted and to state how these consultations have affected the outcome of the PRSP.

Despite these criticisms, the AIV feels that the PRSP process is important in incorporating local insights into the decision-making process, adding questions to the agenda and measuring progress. However, even if the process were to run like clockwork, it would still not be enough to bring about poverty reduction. Nor would the deployment of instruments that have not yet been fully developed, such as PSIAs, expenditure tracking and the strengthening of local institutions, provide sufficient guarantee.

The AIV has the opinion that if the PRSPs are to be more effective in promoting pro-poor growth, they must also take account of the international context and of the rights-based approach to development cooperation.

Content
The PRSPs often contain so many priorities that – in view of the limited funding available – they effectively set no priorities at all.

The AIV holds the view that the Netherlands should argue for a restriction in the number of priorities and for the adoption of explicit posteriorities. It is also important to set a specific timeframe when formulating targets.

An analysis of the obstacles encountered by the poor when they are trying to improve their circumstances should be central to all PRSPs, since these ‘income-generating efforts’ are the natural springboard for pro-poor growth.

The AIV therefore believes that the PRPS should place more emphasis on local enterprise, including the informal sector. The poor must be afforded better access to micro credit and the labour market, and rural income-generating activities must be encouraged.

It is impossible to gain a proper overview of regional pro-poor development opportunities and priorities at national level. Measures targeted at local situations must there-fore be developed on a decentralised basis with local civil society and local enterprise.

It is the confiction of the AIV that the PRSP should include instructions on how to organise a follow-on process to draft more detailed plans at local level.

Although most PRSPs are based on a multidimensional analysis of poverty, they nevertheless fall back on a macro-variant of the economic dimension when compiling their strategies, concentrating chiefly on measures to create favourable conditions for economic growth (the ‘growth framework’). The social dimension is addressed later in the form of increased national expenditure on education and health care. The politicallegal dimension (the ‘emancipation framework’) receives little or no attention. Measures to improve access to means of production and to redistribute wealth and income (such as increasing the availability of land for the poor) impinge on existing power relations. They are therefore highly sensitive and are rarely addressed in PRSPs, if at all.

The macroeconomic dimension is seen as a way of fostering a positive investment climate, usually through Foreign Direct Investment (FDI). This can put local businesses at a competitive disadvantage.

The AIV holds the opinion that more attention should be given to the role of the private sector in boosting pro-poor growth, and therefore recommends that a follow-on advisory report should focus on the importance of developing the private sector, the relationship between international and local enterprise and how they can be used to benefit development cooperation. The report could also examine corporate social responsibility in the context of North-South relationships.

The PRSPs tacitly assume that development aid is permanent and ongoing.

The AIV considers reduced dependence on aid as a key long-term goal, obviously as part of a combined effort by donors and partner countries to strengthen the position of developing countries in the global economy.

Follow-up
The implementation of PRSPs assumes the presence of an effective monitoring system. The AIV welcomes specific measures to strengthen good governance, such as developing a policy of ‘zero tolerance’ on corruption, establishing Public Expenditure Management, Expenditure Tracking and a Financial Accountability Review, harmonising procedures, reducing administrative and transaction costs and creating viable national systems for monitoring input, output and impact.

The AIV recommends a systematic analysis of the likely effects at local level of allocating extra funding to e.g. education and health care.

The integrated approach to policy guidance that the PRSPs impose on developing countries stands in stark contrast to the lack of coordination and coherence on the donor side. Donors often get little further than a geographical or sectoral allocation of tasks. This leads to a fragmentation of development policy and impedes cross-border harmonisation.

The AIV therefore recommends encouraging systematic coordination between donors based on the priorities set out in the PRS process of the partner country. Donors must therefore subordinate their own policy priorities to those in the PRSP, as long as key cross-cutting issues such as the environment and gender equality are adequately addressed. Donors should only withdraw from the PRS framework if the overall policy being conducted is at odds with the primary goal of poverty reduction.

Concluding remarks
Although the PRS processes have embedded poverty reduction more explicitly in development policy than ever before, they have not yet led to a restructuring of donor policy in favour of pro-poor growth. This requires changes, not just in the partner countries but also in the form of increased coherence among donors.

The AIV supports the relevant UN initiative to assess the policies of all donor countries with a ‘coherence yardstick’.

The AIV recommends looking at ways to improve reciprocal communication in order to improve internal coherence within the Ministry of Foreign Affairs. The following are areas where change is needed (although this is not to suggest that these areas are not already being addressed). If the Dutch government wishes to promote pro-poor growth, the departments concerned with macroeconomic and social policy should not take separate approaches. For instance, in the case of budget support, critical questions must be asked about mechanisms and processes of distribution and protection; with regard to social interventions, greater attention should be paid to questions of economic efficiency and effectiveness.

The policies of Dutch ministries must become more mutually compatible and supportive. The AIV regards the government memorandum on coherence between international development policy and agriculture policy as a positive step in this direction.

One key prerequisite for the overall PPG concept is for the anti-poor effects of the existing international economic order to be tackled without delay. For example, many poor farmers in developing countries are still experiencing a substantial loss of income, not just due to the low prices paid for their products on the international market but also due to the subsidies paid to farmers in the north. It is not enough for donors simply to coordinate their respective development policies; they must also remove barriers to farming and food security in developing countries.

The AIV believes that a credible pro-poor policy can only be achieved if donors dismantle the protectionist measures that favour their own farming sectors and remove the import barriers to agricultural and other produce from developing countries.


1 Heavily Indebted Poor Countries, a debt relief scheme for certain Low Income Countries. See also note 14 of this advisory report..
Advice request
Mr F. Korthals Altes Sustainable Economic
Chairman of the Advisory Council Development Department
on International Affairs Postbus 20061
Postbus 20061 2500 EB Den Haag
2500 EB Den Haag

 

Date July 2002
Our ref. DDE-0692/2002
Contact J.C.J. Vlaar
Tel. 070-3487027
Fax 070-3485956
Email jan.vlaar@minbuza.nl

 

Re: Request for advice on Pro-Poor Growth in Sub-Saharan Africa


Dear Mr Korthals Altes,


When we met on 15 April you presented me with the memorandum “Pro-poor growth: oppor-tunities for targeted development policy”. I share your view that an AIV advisory report on the further operationalisation of the pro-poor growth concept you outlined could contribute to the debate on future policy.

I therefore request the AIV to investigate the findings of the memorandum in the ten coun-tries in Sub-Saharan Africa with which the Netherlands maintains structural bilateral ties. With the exception of Eritrea, all these countries have produced interim or long-term PRSPs. PRSPs are intended as strategies for pro-poor growth and as such should contain an inte-grated package of policies at macro, meso and micro level, geared to involving as large a section of the poor as possible in productive employment and entrepreneurship. Questions that could be asked include:

  • What is your opinion of the financial and economic content and feasibility of the PRSPs to date? Have they led to different priorities at macro, meso and micro level? Has there been a change in the policies pursued by the countries concerned or their donors, per-haps including more stress on job creation? Have the PRSPs encouraged policymakers to focus more on pro-poor growth, taking account on the one hand of poverty in all its dimensions and local opportunities for sustainable economic development?
     
  • Has the drafting of the PRSPs initiated or strengthened a process coherently linking poli-cy decisions to boost pro-poor economic development at national, regional and local level? How could this process be improved or strengthened so as to achieve a clearer idea of pro-poor growth policy and its effective implementation? How could a process of this kind be organised and monitored (e.g. in relation to the IMF and World Bank), making use of instruments such as Poverty and Social Impact Analysis?

Yours sincerely,

Eveline Herfkens
Minister for Development Cooperation

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