Why poverty persists

The major objectives of the Poverty Alleviation Projects are to increase income earning opportunities among the poor and to improve the nutrition status of children under three years of age and pregnant and lactating mothers. The project will assist the newly created Janasaviya Trust Fund (the Trust). The Trust will manage four funds: (a) a Credit Fund to lend to partner organizations (POs) which will on-lend to the poor in a manner prescribed by the trust at interest rates which will make the credit fund operations 

Rating agencies have continued to show that the indices of poverty in Africa are even worsening, with over seventy per cent of the population said to be living below poverty lines-living on less than a dollar a day. With many still having great difficulty affording three square meals a day, or unable to attend to health challenges, or even a decent accommodation, the Human Development Index (HDI) of Nigerians is bound to be low. Rather than improving, the poverty level of Nigerians is rather increasing. One thing that this shows is that all claims to poverty alleviation in the country are sheer sloganeering.

Plan to Cut Global Poverty by 50 % is Failing - Needs of Rural Majority Neglected

The 20 years between 1970 and 1990 saw the fastest and most widespread retreat of poverty, hunger, premature death, and illiteracy in history, but poverty reduction in the countryside has stalled over the past 10 years as resources and attention were diverted away from the rural poor and the activities upon which they depend for their livelihood, the IFAD report says.  

Today, 1.2 billion people remain mired in "extreme consumption poverty" or the equivalent of living on less than one dollar a day. Of these, 44% live in South Asia, 24% in sub-Saharan Africa, 24% in East Asia and 6.5% in Latin America and the Caribbean, the report finds.

At the UN Millennium Summit, in 2000, 147 heads of UN member states (delegates from 191 countries) pledged to halve extreme consumption poverty by 2015. This pledge built on the commitment of the UN Social Development Summit in 1995, where 117 heads of UN member states (delegates from 186 countries) pledged to devise programs to eradicate extreme consumption poverty by a targeted date determined by each country. In 1996, international aid donors agreed to restructure their programs to support these poverty reduction programs. However, aid resources have yet to be directed where the majority of the poor live and work.

Without accounting for population growth, 30 million people have to leave poverty each year to reach that goal. The report says, "The rate of poverty reduction in 1990-98 was less than one-third of what is needed to halve extreme poverty during 1995-2015." Whereas 75% of extreme poverty occurs in rural areas where the principle economy is agriculture, "The absolute value of aid to agriculture fell by two-thirds in 1987-98" while overall investments in agriculture and rural areas decreased.

The Trapped Rural Poor

The report describes how the rural poor confront an interlocking logjam of disadvantages. The rural poor live in remote areas that are often great distances from centers of commerce and social services provision. This contributes to difficulties in accessing market opportunities and health care as well as high levels of illiteracy. The rural poor also have bigger families, work in insecure and relatively unproductive jobs, and may experience discrimination as women and as members of ethnic minorities. For all of these reasons, the poor themselves say that they suffer from hunger, ill health, a lack of education, vulnerability and low self-esteem as well as disrespect from government officials who are often unresponsive to their concerns.

The report notes two critical reasons for past success in cutting poverty rates from 1970-1990:

• Irrigation of cropland. "East and South Asia’s fast poverty reduction and farm growth owe much to the 30-35% of irrigated cropland -- and the persistence of rural poverty and agricultural stagnation in most of sub-Saharan Africa to its mere 1-5%."
  

• Agricultural technology access. "In 1965-85, rice, wheat and maize, in much of Asia and Central America, experienced a big technology shift, the ‘Green Revolution’, that increased yields, enhanced employment and brought about a rapid fall in poverty."
  

"Current development efforts grossly and increasingly neglect agricultural and rural people," says Dr. Michael Lipton, Director of the Poverty Research Unit at Sussex University in England, who contributed to the IFAD report. "Halving poverty by 2015 must not be an empty pledge. It requires a commitment to agricultural and rural development. The tremendous decline in attention to rural poor that has taken place everywhere must be reversed. Not enough attention is being paid to how rural people make their livings."

"To succeed, poverty reduction programs must be refocused on rural people and on agriculture," adds Dr. Lipton.

The report highlights that between 1987-98 "The amount of aid going to low-income or least-developed countries, which contain over 85 percent of the poor, stayed around 63 percent, and agricultural aid contracted by two thirds."

More than one-half of the world’s extreme poor depend mainly on farming or farm labor for their livelihoods. "Effective poverty reduction requires that assets and productive resources be allocated to the rural poor, which can spur overall economic growth," says Mr. Al-Sultan.

Ending Rural Poverty: Findings of the Report

Cutting world poverty in half requires a focus on reviving agricultural development and responding to the needs of rural populations. Improving the welfare of the rural poor depends on their empowerment through access to productive resources – such as land, water, knowledge, technology and capital – in order to seize opportunities in the market. Influence within and over decision-making institutions that have often served them badly in the past is also critical.

Allocating resources to the rural and the poor will not compromise economic growth. Since the economies of developing countries and their labor supplies are overwhelmingly dependent on the agricultural sector, such investments can only accelerate growth.

"Underlying all of these themes is the fact that labor-intensive approaches are especially appropriate to rural poverty reduction," says Mr. Al-Sultan. "Capital is always scarce in low-income countries. Developing countries have high ratios of labor to capital. Therefore, they can gain more from market liberalization if they encourage labor-intensive production."

Since poverty has many dimensions, efforts to reduce it must be multi-targeted. The report details four dimensions of poverty that it says are of critical importance for understanding the "challenges" facing rural poverty reduction.

• First, food staples retain a critical role in the livelihoods of the rural poor. Those in extreme poverty spend most of their time growing staples and usually get 70-80 per cent of calories from them. Although an increasing proportion of the rural poor generate income mainly on livestock, other food crops, cash-crops or non-farm activity, food staples farming and employment provides most of their income, especially in the early stages of development.
  

• Second, reducing rural poverty requires better allocation and distribution of water to the rural poor. Nearly 630 million rural poor live in dryland areas already suffering from severe water stress, 375 million of which in Asia. In these areas, groundwater tables are falling, and surface water may become scarcer due its diversion into cities and industrial bases, and climate change. Water is a precious global asset that is underexploited in many developing countries, particularly in Africa. Ensuring access by the rural poor to water will go a long way in establishing their position in the global economy.
  

• Third, achieving the poverty reduction target requires a conscious effort to increase the share of the rural poor in resources. Economic growth alone, even in the rural sector, will in many countries not be sufficient to cut extreme poverty 50 percent by 2015. Recent projections of economic growth illustrate that most developing countries will not grow fast enough to cut poverty in half by 2015. In some very poor countries, too many people are too deeply poor. In some middle-income countries, initial inequality is too great. In such cases, the poor must acquire higher shares, access and control of appropriate assets, institutions, technologies and markets in order to promote economic growth with equity.
  

Land reform must be put on the development agenda -- Most of the rural poor depend on farm income, yet usually control little farmland. ‘New-wave’ land reform – or the redistribution of land through decentralized, market-based means – is a cost-effective strategy to reduce poverty through creating small family farms. It also helps hired farmworkers, as small farms employ more people per hectare than large farms.

• Fourth, particular groups – especially women – merit special attention. Redressing the disadvantages of women, ethnic minorities, hill people, and semi-arid residents helps the efficient use of anti-poverty resources.
  

Bias against women remains a persistent problem that harms all the poor. Poor rural women and girls need to be targeted by policies, as they constitute the majority of the rural poor whose poverty is often reinforced through cultural and/or legal obstacles. The gaps between male and female access to assets, education, and influence within decision-making institutions are inefficient obstacles to economic growth and human development. These gaps are greater in rural areas, and greatest for the rural poor. When women are empowered to make decisions concerning household resources, especially within the context of higher incomes, there are many subsequent benefits in child nutrition, health and education.

Increased access to assets and technology by the rural poor is effective, efficient, and equitable. The rural poor often lack access to physical assets, especially land, and human assets such as health, education and nutrition. People without assets tend to be poor because they rely mainly on selling their labor in poorly paid markets; they have nothing to sell or mortgage in hard times, and are economically dependent and politically weak. Lack of human assets stops children from learning, compels parents to send them to work, and perpetuates poverty. Furthermore, a lack of access to technology creates obstacles for the poor to utilize their assets efficiently such that they can compete within the marketplace.

Access to assets and technology is effective in bringing quick relief from poverty. Assets empower the rural poor by increasing their incomes, their reserves against shocks, and the choices they have to escape from harsh conditions – their ‘exit options.’ Assets most help rural poverty reduction when they are divisible into small low-cost units. Technology access can alleviate poverty through increasing agricultural output and other income sources. Key to this process is the development of "pro-poor" technologies. Pro-poor technologies can be adopted easily at relatively low cost and risk. They also increase production and efficiency, use labor-intensive means, and contribute to the economic stability of poor households.

Improving the assets and technologies of the rural poor promotes efficiency by stimulating higher productivity and economic growth. Access to different types of assets is beneficial as they strongly reinforce one another. The poor gain more from some improvement in health, nutrition and education than from a lot of one and none of the others.

The development of markets for the poor alleviates poverty in the long term. At a time when globalization promises great benefits, the well-being of the poor is threatened because their ability to seize opportunities in the market faces severe obstacles. These obstacles can be overcome through:

• Investments in the countryside that facilitate access by the rural poor to assets, skills, infrastructure and institutions. In the absence of seed money from the private sector to spawn agricultural and rural development, investments to create wealth and alleviate poverty in developing countries have increasingly relied on foreign aid. As these investments in agriculture have decreased overall by two-thirds between 1987-1998, markets for most of the goods produced by the rural poor are largely underdeveloped.
  

• Trade liberalization for the goods produced by the poor. Global markets can help the rural poor. Yet, most of the goods they produce face international trade barriers that must be lifted if the poor are to be able to market their goods globally as businesspeople: smallholder farmers, fisherman, herdsman, traders, and artisans alike. With the development of rural markets and trade liberalization, the non-staple sector – which produces cash crops, other food crops, and non-farm commodities – will become an increasingly important source of income for the rural poor.
  

Influence by the rural poor within and over institutions making decision affecting their lives. Typically, the poor have little control over their lives and the institutions that shape them. Institutions mediate the access of the poor to assets, technology, markets, and the rules that determine whether the poor benefit from such access. Participation in institutions allows the poor a voice, and gives them the power to discover and determine means to improve their own lives, in public affairs and the market. Decentralized institutional systems often favor the poor in terms of their control over natural resources, access to financial services, and ability to develop linkages with NGOs and the private sector. This promotes the empowerment of the poor, and improves the cost-effectiveness of a range of actions, from developing new seed varieties, to micro-finance, to rural schools and public works programs.

IFAD’s Commitment to Rural Poverty Alleviation

IFAD is a Rome-based specialized agency of the United Nations. Established in 1977, IFAD was created with the unique mandate to combat rural hunger and poverty in the low-income food-deficit regions of the world. IFAD finances innovative, cost-effective, and replicable projects that are designed to increase household food security through increasing productivity of on and off farm income generating activities. Each year, IFAD launches agricultural and rural development projects that will reach approximately 10 million rural people upon completion, usually 5-6 years. Some of the most innovative IFAD programs include:

• The Ugandan Women’s Effort to Save Orphans (UWESO) Development Program (1995-1999), in Uganda, has enabled UWESO – a grassroots Ugandan NGO – to become the only microfinance institution specifically targeting AIDS-affected families. Since 1996, over 6,500 households have received microcredit (small loans ranging from $20-$500) to establish small businesses in order to provide for nearly 30,000 adoptive AIDS orphans. Over 90% of these loans have gone to women, as they bear the principle responsibility for orphan care. The repayment rate on these loans is 90%. This project has entered a second phase (2000-2004) and aims to reach additional 14,000 households.
  

• The Smallholders’ Agricultural Development Project in the Paracentral Region (1996-1999), in El Salvador, helped pioneer the use of a gender perspective in the design and implementation of poverty alleviation projects so that they may be more responsive to the divergent needs of poor rural men and women. Through the provision of training in farming techniques and business, the transfer of technology and the ability to pay for it through microcredit, the project improved the lives of 80,000 people, 60% of whom were women. As a result of the project, El Salvador’s Ministry of Education introduced gender into the curricula of local schools. This project has entered a second phase (2000-2006) to assist 13,500 families in the aftermath of Hurricane Mitch.
  

• The Maharashtra Rural Credit Project (1994-2001), in India, is helping pioneer the linkage of rural poor with financial services and capital provided by commercial banks. Long considered to be "unbankable" in conventional banking systems, the project has linked 91,000 poor rural households with access to financial services and capital from 677 branch offices of 9 commercial banks. Another innovative IFAD program in Asia – The Electronic Networking for Rural Asia/Pacific (1998-2001) – is helping 250,000 poor rural households reached by 16 IFAD projects in 8 countries – Bangladesh, China, India, Indonesia, Nepal, Pakistan, the Philippines and Sri Lanka – build institutions responsive to their needs. Online at www.enrap.org, the network brings rural communities into the information age in enabling them to share and identify new strategies to improve their quality of life based on lessons learned. This is achieved largely through issue-specific chat-room discussions, and the circulation of a monthly e-newsletter that is distributed on paper to remote communities.

World leaders will not meet their commitment to cut global poverty in half by 2015, with only 10 million people instead of the expected 30 million escaping poverty yearly, according to a new report by the International Fund for Agricultural Development (IFAD).

Entitled, Rural Poverty Report 2001 – The Challenge of Ending Rural Poverty, the report states that the ramifications of this failure are especially acute in sub-Sahara Africa where the rate of poverty reduction is six times too slow to meet the 2015 deadline.

"The failure stems in large part from a misconception that the main poverty problem has moved from the countryside to the burgeoning megacities of the developing world," says Fawzi H. Al-Sultan, President of IFAD, a Rome-based UN specialized agency charged with combating rural hunger and poverty in the developing world. "75% of the world’s poor live in rural areas, most of which make their living in farming or farm labor. As this figure will drop only to 60% by 2020, a focus on rural poverty and agricultural development is crucial to the reduction of poverty overall."

Rural Poverty and Global Poverty Reduction

Cutting poverty promotes global stability, public health and prosperity, the report says. "By acting proactively to reduce the 1.2 billion people living in extreme poverty, we can reduce the power and number of crises that mold our global landscape and profoundly alter the lives of the poor," says Mr. Al-Sultan. "We can also reduce the onslaught of poverty-related diseases like cholera, tuberculosis and HIV-AIDS that claim the lives of millions of men, women and children each year. Through these means, we can help the poor prosper and build better lives for themselves, their families and their communities."