PRSP as an Indicator of Change - Essay Example

7 December 2006 PRSP as an Indicator of Change For the International Financial s Poverty continues to be a growing problem throughout the world as the present global economy narrows the gap between the wealthy and the poor. Prior to 1999, the World Bank and the International Monetary Fund (IMF) depended on Structural Adjustment Programmes (SAPs) for decisions on loans to developing countries. However, the programmes were often criticised as implementing generic free market policy, with little involvement from the developing country. In an effort to encourage more individual involvement, the World Bank announced a programme called Poverty Reduction Strategies (PRSP) in 1999 as a planning instrument and called for papers over a three-year period ("World Bank"). The PRSP approach has five principles--country driven, results-oriented, comprehensive, partnership-oriented, and long-term perspectives. The intention of these papers was to give developing countries the opportunity to become involved in their own poverty reduction strategies. As of 2002, an overview of the papers indicated that more monitoring was needed for the studies. Instead of being nationally derived, content across countries showed little variation, with external advice from outside sources and, in this respect, was not very different from the previous SAPs. The report called for more engagement between government and civil society. In addition, it was noted that countries were concerned primarily with stabilisation and only secondary with growth ("Overview"). Critics note that the similarities between SAPs and PRSPs show that the banks, and the countries that fund them, are still overly involved in the policy making process. Defining Poverty It is difficult to determine the success or failure of PRSP as an instrument of significant change within the International Financial Institutions without exploring the various areas covered by PRSP as well as defining poverty as it affects the world. The Eldis Poverty Resource Guide supports analyses of poverty and related implications of social and economic policies within Africa, Asia, and Latin America, where large pockets of poverty exist. The focus of this essay will be on these three areas plus Eastern Europe to determine whether any significant change has been noted in the fight against poverty. Some areas explored by Eldis are urban poverty, rural poverty, human resources and education, as well as second generational poverty. Poverty, however, cannot be measured primarily in income or expenditure terms. It has multiple dimensions and different levels, as follows ("World Bank"): Monetary poverty - The World Bank regularly estimates poverty based on the $1 a day poverty line, converted to local currency at latest exchange rates. Income and consumption are examples of monetary indicators of poverty. Illiteracy - Lack of education as a precursor to poverty is one of the dimensions to be considered in a study of poverty. Skilled workers are more apt to be hired than unskilled workers, who have trouble finding secure employment. In a society more and more dependent on information technology, lack of education is very much a part of the poverty overview. Social exclusion - Those excluded from development and forced to live on the margins of society. When a country has been excluded for a long period of time, it is difficult to change attitudes which have led to that exclusion. Absolute poverty - This can be defined as the number of people living below a certain income level, based on a specific poverty line. Relative poverty - It measures the extent to which a household's financial resources fall below an average income threshold for the economy. Objective - Indicates people's access to different kinds of resources. Subjective - Indicates standard of living people actually enjoy. Each facet of poverty needs a different approach and, depending on type of poverty, each phase of financial assistance for individuals falls under different or multiple agencies. Different countries are faced with different levels of poverty. A global view of the subject covers so many different countries and social environments, it has been difficult to find a common resolution. By narrowing the scope of this paper to the geographical areas noted above, it is expected that the results will answer the question of whether any substantial change has occurred from the intervention of PRSPs. Poverty in Urban Areas In most nations, the incidence of poverty is measured by setting a poverty line and by assessing how many people's incomes or consumptions fall below this line. However, the use of a single set of figures for setting poverty lines may not reflect the actual differences in prices within a country, and, over time, will not reflect chronic poverty. In Egypt, estimates of poverty vary, depending on whether the poverty line is based only on food, or also on non-food needs. Studies have shown the poor are highly differentiated by factors such as age, gender, educational attainment and ethnicity. Many programmes do little to ensure they reach the poorest groups, and reaching these groups is essential (Mitlin). Mitlin further discusses what it means to be poor in urban areas in relation to hunger, unemployment and limited income in Capetown, Cairo, China and Addis Ababa. He notes: At a time when many National Poverty Reduction Papers place considerable emphasis on the informal sector as a source of job opportunities, those researching the sector recognise the many problems associated with such employment such as lack of income security and access to services (3). According to Mitlin, little development programming addresses the needs of the urban poor, and in both Asia and Africa, two-fifths of the population is urban with Latin America already predominantly urbanised (5). Rural Poverty It is the contention of Bundervoet in his paper on Burundi that measurement of poverty in this area was instituted according to estimation of the absolute poverty line, based on actually observed behaviour of rural and urban households and a comparison of percentages before and after the 5-year civil war. Previous poverty rates were in line with average rates for Sub-Saharan Africa. Ten years later, with very poor infrastructure, economic deterioration, civil instability and low levels of education, rural poverty is said to be 72 per cent and Burundi, in the 21st century, has become one of the poorest nations on earth ("Burundi'). In the Eastern European country of Roma, the population has long been the target of social exclusion, with women and children excluded from preventive measures and made vulnerable due to being the target of persistent prejudice and negative stereotyping. Former communist countries, including Albania and ex-Yugoslavia, made an attempt to improve the situation, but little was actually done to sustain Roma development. Their social exclusion was also the result of racially motivated violence. The region has been compared to Sub-Saharan conditions, with Roma communities struggling to afford even the basic necessities (Abdikeeva para. 1). Human Resources and Education Like the chicken and the egg, families that cannot afford to educate their children are unable to increase their earnings so they can educate their children. In Mexico, the deficiencies in the basic education system are apt to carry over into public higher education. Some deficiencies are low faculty salaries, limited research opportunities, and inadequate instructional facilities and curricula ("Education; Mexico"). Mexico is also a country that must deal with corruption, and a recent study noted that education offsets corruption. According to a 2000 census, 1.6 million children in Mexico do not attend school at all. Some public educational facilities were 'encouraging' a mandatory payment of fees ("Price" 46), which was illegal, and Mexican school children often are expected to purchase their own uniforms in order to be enrolled. Second Generational Poverty With the Millennium Development Goals for 2015 in place, 'second generation' PRSPs are presently being formulated and implemented. Research has shown that principled rhetoric is not enough; practical action in support of the PRS process at the country level needs to take place. The first phase of PRSPs was completed in 2002, three years after implementation. The second phase is underway, and an overview of the programme was undertaken within the PRSP Monitoring and Synthesis Project in 2004. Has there been a significant change in policy focus for IFI as the second generations of PRSPs are instituted And what areas need more focus as the programme continues According to authors Driscoll and Evans, the second generation differs from the first in several ways: 1. Poverty is more a priority concern for individual governments rather than just being handled through projects; in other words, more government interaction in actual poverty issues within a country. 2. The PRS approach has resulted in a more active role for non-governmental agencies, and new national networks of civil society organisations have been formed around poverty policy. 3. Donors are making an effort to co-ordinate and harmonise their assistance around nationally owned PRSs. Future Concerns for Second Generation PRSPs Even with the change in focus, significant as it is, the second generation is meeting new obstacles: 1. Competition exists between PRS and other strategies which might command stronger national ownership. For instance, "in the Balkans and parts of Central America, the PRS is much less of a recognised national priority than European accession and the Central American Free Trade respectively" (Driscoll and Evans 14). 2. PRSs are intended to provide an ambitious policy framework, but they are also expected to be operationally relevant. Donor pressure for a transition from framework to an operational plan offers risks and opportunities, for instance political momentum. 3. The operational focus in PRSs limits the vision of the policy and financing challenges for achieving 2015 goals. The Millennium Project suggests a two-stage planning process-a needs assessment of required public investment and a long term (10-12 year) policy plan. 4. Donors face a complex balancing act between the political and technical dimensions of the PRS approach, and they must be encouraged to move beyond principled rhetoric and toward tangible improvements in the delivery of aid at country level. Trocaire's Experience with PRSP Project in Africa and Central America The non-governmental agency Trocaire recently offered a paper on lessons learned from their PRS project ("Lessons Learned"). It was Trocaire's contention that working in a cross-organisational team offers great potential to build impact and learning within a country as well as on an international basis. Partnerships among civil agencies are needed to analyse the political environment within a country and link local civil society analyses with broader national level policies and political processes. In post-conflict countries such as Burundi and Rwanda in Africa, in order to build their basic organisational competence, it is crucial that their confidence in dealing with the government is developed. Conclusion In its joint 2005 report on PRSP progress, the World Bank and IMF recommended that the Bank should foster customisation, assist in exploring a wider range of policy options and help define clearer partnership frameworks around PRSPs with accountabilities for both countries and partners ("Concept Note"). According to Eurodad, a global commitment was made to reduce poverty by 50% by 2015, and this has become the overarching objective for both national and international stakeholders. The major challenge is to achieve cohesion between macroeconomic and structural policies and social sector strategies ("Poverty Reduction Policies", para. 1-2). Because of the complicated structures of countries throughout the world and differences in cultural and social beliefs, it is impossible to use any generic method of determining the true level of poverty within an individual country. Both the SAPs and the first generation of PRSPs attempted to follow a generic course, and this had little effect on poverty reduction. Various countries have individual challenges, such as countries devastated by civil war [Burundi]; countries with different systems of setting the poverty line [Egypt]; countries in which lack of income security and access to services offsets statistics regarding employment; countries becoming more urbanised without addressing needs of urban poor; countries in which social exclusion has not been properly addressed and little improvement has taken place [Roma]; countries noted for corruption which takes money away from education when it has been found that education offsets corruption [Mexico]. The main result of the first generation of PRSPs between 1999 and 2002 indicates the need to address individual countries based on their individual needs through partnerships and cooperation among governments, civil organisations and various agencies. However, knowing what should be initiated as part of the second generation and actually finding a way to accomplish it within individual countries becomes dependent on future studies. It took three years to find out what changes must take place, and it will take far more than three years to realise any significant change in policy focus for IFI. Works Cited Abdikeeva, A., and MRG partners. September 2005. "Roma Poverty and the Roma National Strategies: The Cases of Albania, Greece and Serbia". Minority Rights Group International. 3 December 2006. http://www.minorityrights.org/admin/Download/pdf/RomaMacro2005.pdf Bundervoet, T. 2006. "How Has Civil War Changed Burundi's Poverty Rate" Households in Conflict Network. 2 December 2006 from www.eldis.org/poverty http://www.hicn.org/papers/wp20.pdf "Concept Note: Joint World Bank and IMF Report on Poverty Reduction Strategy Papers; progress in implementation". 2005. IMF/World Bank, 3-25. 4 December 2006. http://www.imf.org/external/np/pp/eng/2005/020205.pdf Driscoll, R., and Evans, A. September 2004. "Second Generation Poverty Reduction Strategies". PRSP Monitoring & Synthesis Project. 4 December 2006. http://www.prspsynthesis.org/synthesis10.pdf "Education: Mexico". 1996. U. S. Library of Congress. 3 December 2006. http://countrystudies.us/mexico/62.htm "Lessons Learned from Trocaire". 18 September 2006. PRS Project. 4 December 2006. http://www.eurodad.org/articles/default.aspxid=730 Mitlin, D. (ed) 2005. "Chronic Poverty in Urban Areas". Environment and Urbanization. 2 December 2006 from www.eldis.org/poverty. http://www.iied.org/pubs/pdf/full/10539IIED.pdf "Poverty Reduction Policies". 2006. Eurodad. 4 December 2006. http://www.eurodad.org/workareas/default.aspxid=74 "Poverty Reduction Strategies: Questions and Answers". 2006. The World Bank Group. 2 December 2006. http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPRS/0,,menuPK:384209pagePK:162100piPK:159310theSitePK:384201,00.html#early_prsps "The Price of a Place in School". 2004. Transparencia Mexicana, 44-49. 3 December 2006. http://www.transparency.org/content/download/4724/27958/file/7_Mexico.pdf http://en.wikipedia.org/wiki/Structural_adjustment "Overview of UNDP's Support to Poverty Reduction Strategies". 2004. United Nations Development Programme. 2 December 2006. http://www.undp.org/poverty/docs-propoor/Overview%20of%20UNDP%20Support%20to%20PRSPs%201999-2003%20-%20May%202004.do "Structural Adjustment". 7 December 2006. Wilipedia. 10 December 2006. http://en.wikipedia.org/wiki/Structural_adjustment World Bank Operations Evaluation Department. "The Bank's Contributions to Poverty Reduction Strategies". 2005. OED Reach. 3 December 2006. http://lnweb18.worldbank.org/oed/oeddoclib.nsf/DocUNIDViewForJavaSearch/7E69648737F0A42385257006005275C7/$file/2004_arde_reach.pdf Read More