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Report of the International Conference on Poverty Reduction Strategy in Africa

3. Keynote speeches
 
Two keynote papers were presented at the conference.


3.1 First keynote paper delivered by Dr. Mark Ellyne

The first keynote paper entitled “The Poverty Reduction Strategy Paper Concept and its Connection with the HIPC Debt Relief” as delivered by the Resident Representative of International Monetary Fund (IMF), Dr. Mark Ellyne.

Introductory Overview

In his presentation, Dr Ellyne began by providing a background to the evolution of the Poverty Reduction & Growth Facility (PRGF). It was against this background that he informed the conference that in September 1999, the IMF replaced its Enhanced Structural Adjustment Facility with the PRGF. He went on to point out that 77 low income (under $900 per capita income) countries were identified as being potentially eligible in terms of benefiting from the PRGF mechanism.

Background to the Poverty Reduction & Growth Facility

The IMF representative drew the conference participants’ attention to the PRGF’ s policies, which focus on:
  • Integrating poverty reduction with macro-economic policies by budgets that are more pro-poor.


  • Emphasizing good governance by promoting transparency and accountability, and improving the management of public resources, and


  • ensuring domestic ownership of poverty reduction interventions


Dr Ellyne also summed up the three most essential components of the Poverty Reduction Strategy Paper concept by observing that:
  • PRSPs represent a medium-term strategy that underlies the PRGF supported programs and budget preparation.


  • PRSPS are formulated on the basis of comprehensive and nationally owned plans prepared by governments with the active participation of civil society, NGOS, donors and international institutions.


  • The papers (PRSPs) have to secure the endorsement of the Boards of the World Bank and the IMF as the basis for donor concessional lending and for debt relief under the enhanced HIPIC initiative.


Characteristics of Effective Poverty Reduction Strategies

Having outlined the most essential components of PRSPs, the IMF Representative went on to identify the characteristics of effective poverty reduction strategies. In specific terms he highlighted the:
  • Overriding importance of a broad based participatory process intended to generate a country driven poverty reduction strategy, based on the twin pillars of national ownership and partnership with Civil Society Organizations.


  • Necessity of carrying out accurate poverty diagnosis through data analysis.


  • Urgency of formulating coherent, realizable and achievable long term plans for poverty reduction.


  • Importance of ensuring that actions taken will have the highest ameliorative impact on the poor.


  • Need to develop reliable and scientifically accurate indicators to monitor progress and assess effectiveness of specific anti poverty interventions.


Key Strengths and Potential Weaknesses of Zambia’s Poverty Reduction Strategy Paper(PRSP)

With regard to Zambia’s Poverty Reduction Strategy Paper, the IMF Representative indicated that the Zambian paper manifested the following strengths:
  • Zambia’s PRSP had emerged from a strong participatory process that had involved civil society and donors.


  • There had been good use of both qualitative and quantitative data which had provided a good overall profile of poverty and its causes.


  • The focus in Zambia’s PRSP on growth, diversification, governance and social issues deserved commendation as progress in these spheres could help empower the majority of the core poor with sustainable livelihoods.


  • The existence of an appropriate and consistent macro-economic framework would facilitate the successful realization of the major goals of Zambia’s PRSP.


  • Zambia’s PRSP had evolved as a result of having prioritized of certain key sectors in terms of their impact on pro-poor growth.


  • An ambitious program to improve both political and economic governance as well as reducing corruption offered a favorable policy and institutional environment within which Zambia’s PRSP could be successfully implemented.


Some weaknesses in Zambia’s PRSP noted were:
  • The need for deeper analysis in the relationship between policies that promote growth and those that reduce poverty.


  • Some of the core goals and targets of the PRSP appeared too ambitious.


  • Targets and indicators needed to be further refined to ensure that they were realistic and could be monitored within the timeframe allotted of the PRSP.


  • More details were required on the financing of the PRSP.


The paper also disclosed that Zambia’s performance under the HIPIC initiative had been generally favorable as the country had reached its decision point in December 2000,based on a nominal debt stock of $6,459 million at the end of 1999 with a net present value of $3,999 million.

Critical Assumptions Determining Zambia’s Beneficial Participation in HIPIC

In order for Zambia to continue benefiting under HIPIC, the country would have to comply with the following benchmarks:
  • Macro-economic and Structural Reforms

    • Continuity in terms of meeting targets under the IMF and World Bank’s lending programs.


    • Implementation of the Integrated Financial Management Information System (IFMIS) on a pilot basis.


    • Implementation of a Medium Term Economic Framework.


    • Privatization of ZESCO and ZANACO.


  • Poverty Reduction

    • The adoption of the PRSP and an objective assessment of its performance in terms of making measurable impacts on poverty after one year of its implementation


  • Progress in Education sector

    • Increase the educational sector’s share of the budget from 18.5 % to 20.5 %.


    • Raise the compensation for teachers above the poverty line in the rural areas.


    • Increase student retention in provinces outside the ‘line of rail’.


  • Progress in combating HIV/AIDS

    • Creation of a National AIDS Council.


    • Implementation of HIV/AIDS education programs in government ministries.


  • Progress in the Health Sector

    • Action plan for malaria prevention.


    • Transparent mechanism for drug procurement .


    • Timely release of complete, detailed health data.


    • Release of at least 80 % of budget to District Health Management Boards.


Conclusion

The paper concluded on an optimistic note by observing that the seal of approval granted by the boards of the WB and the IMF to Zambia’s PRSP represented a major step towards meaningfully addressing the challenge of poverty reduction. It was accordingly observed that if the country could fulfill the critical benchmarks as agreed with the its Cooperating partners, Zambia could reach its PRSP completion point in 2003.

3.2 Second keynote paper delivered by Prof. Dr. Oliver Saasa

The second keynote paper entitled Poverty Reduction Strategy Paper and Development—An African Perspective was delivered by Prof. Dr. Oliver Saasa of the Institute for Economic and Social Research (INESOR)

Definitional Challenges

In commencing his presentation, Prof. Saasa observed that:
  • Consensus on a universally accepted definition of human poverty is yet to emerge;


  • poverty has for many years been perceived as largely an economic condition that can be solved by using primarily economic solutions;


  • improvement in national income levels, for example has tended to characterize the contemporary analysis of poverty;


  • a number of multilateral institutions that tried during preceding decades to address poverty by perceiving it exclusively through ‘economic spectacles’ have been disappointed by the emerging realization that while economic growth is very important for poverty reduction, it is never sufficient;


  • Zambia had been a victim of this rather belated discovery after many years of experimentation by those institutions that, only recently, had come to realize that their quick fix diagnosis and prescribed remedies had been part of the problem rather than the solution to the deepening poverty levels in the country;


  • economic growth can nonetheless can be a powerful means to eradicate poverty. Positive GDP growth rates can raise the poor people’s productivity and incomes and it expands their opportunities in a number of important ways;


  • whilst phenomenal economic growth has been cited in explaining the unprecedented leap from poverty on the part of the industrialized countries and the Newly industrializing countries of South East Asia, economic growth in Sub-Saharan Africa had not registered a significantly ameliorative impact on poverty;


  • economic growth may not have produced the desired results in SSA either because it was insufficient or too slow or, perhaps more importantly, it has not been sufficiently pro-poor in both its quality and structure;


  • recognition of the weaknesses of ‘economic variables’ in explaining poverty led to the development of broader conceptualization of poverty. In the new paradigm, poverty is defined by the Human Development Index (HDI) that is based on such aspects as life expectancy, infant mortality, nutrition, literacy, school enrollment, and access to safe drinking water. These human dimensions are expressed, for the purposes of measurement, by a number of variables that include the index of life expectancy at birth, the educational index, and standard of life, as measured by real per capita. In short the HDI is a composite of three basic components of human development, namely longevity, knowledge and standard of living.


The Nature and the Role of PRSP

Professor Saasa further observed that:
  • there was wide acceptance among all the major stakeholders that structural adjustment programs (SAPs) and the attendant monetary and fiscal measures promoted by the Breton Woods institutions over the past two decades have failed to generate the anticipated level of improvement in economic performance and social welfare;


  • ‘religious’ implementation of the SAPs left many developing countries with huge and unsustainable debt burdens;


  • granting of debt reduction for these countries, albeit in different form and magnitude has therefore become a major development issue on the agenda of both developed and developing countries;


  • developing countries broadly advance the view that outright debt cancellation should be embarked upon, because financial loans extended by the World Bank and the IMF were accompanied by policy prescriptions (under adjustment lending) that failed to bring forth the promised results;


  • the counter argument maintains that there was no inherent problem with SAP policies per se and apportions blame on the commitments made by borrowing countries and the faulty structures and institutions in these states;


  • out of this ‘deadlock’ emerged the PRSP approach, which outlined responsive measures to be undertaken both by borrowers and creditors. It was against this background that the World Bank and the IMF decided in September 1999 that developing countries should prepare ‘nationally owned’ participatory poverty reduction strategies and that these would henceforth provide the basis of all IMF/World Bank concessional lending as well as debt relief under the enhance Heavily Indebted Poor Countries Initiative (HIPIC);


  • this new approach had resulted in the ongoing development of PRSPs by African countries for submission to the boards of the World Bank and the IMF;


  • core principles as outlined by the Bank and Fund as being fundamental in the preparation of PRSPs/poverty reduction strategies are:

    • Country Driven: they should involve broad-based participation by civil society and the private sector in all operational stages.


    • Results oriented: they should be focused on outcomes that shall benefit the poor.


    • Comprehensive: they should recognize the multidimensional nature of poverty.

    • Prioritized: their implementation should be feasible in both fiscal and institutional terms.


    • Partnership oriented: they should involve co-coordinated participation of development partners, and


    • ong-term perspective: they should be based on poverty reduction that is long term in perspective.


  • in response, creditor nations committed themselves to cancel debt to countries that would demonstrate strong commitment to poverty reduction as evidenced by the formulation and implementation of PRSPs;


  • in effect, the approach towards poverty reduction embodied by the PRSP paradigm, could be considered as a triumph for civil society organizations, which have in the past vociferously campaigned against World Bank/IMF policies in the name of the poor;


  • as of mid 2002, a good number of Sub-Saharan African countries, including Zambia had already developed Poverty Reduction Strategy Papers (PRSP s) that, with the support of the World Bank and the IMF, aim to better plan poverty reduction interventions.


PRSP: A New Conditionality or a Ray of Hope?

In addressing the above question, Prof. Saasa noted that:
  • there is no straightforward answer to this question for the success of PRSPs in Africa is yet to be recorded;


  • many analysts optimistically believe that this new approach potentially provides African governments with the opportunity to occupy the driving seat as well as ensuring the participation of civil society organizations thereby promoting accountable and transparent concerted effort against poverty;


  • PRSP skeptics, on the other hand argue that the PRSP paradigm in fact reinforces conditionality and constitutes a new subtle mechanism to delay debt cancellation/ reduction.


PRSP Strengths

Professor Saasa illustrated the following strengths of the PRSP paradigm:
  • Poverty concerns are for the first time being placed at the center of the policy making process, thus constituting the strongest merit of the new approach.


  • Under the auspices of the PRSP paradigm, ownership by African governments, civil society organizations and ordinary citizens of their country’s poverty reduction strategies is made feasible.


  • The PRSP paradigm seeks to address poverty reduction in a comprehensive manner integrating macroeconomic, structural, sectoral and social elements in a consistent and integrated policy framework.


  • The PRSP approach is essentially oriented towards the production of outcome/results that tangibly and measurably reduce poverty in the most vulnerable and disadvantaged strata of the poor.


PRSP Weaknesses

Professor Saasa drew attention to the following weaknesses inherent in the PRSP Paradigm:
  • Extremely poor countries or ‘failed states’ may be inadvertently punished on account of their lack of capacity in preparing realistic and ‘salable’ PRSPs, whilst those states with higher capacity in respect of designing credible anti-poverty blue prints will be more strongly placed in terms of accessing debt relief under HIPIC.


  • It is highly questionable to what extent PRSPs can be expected to be truly government or nationally owned when in the final analysis their adoption depends on whether or not they secure endorsement by the World Bank and IMF boards.


  • The pressure exerted on PRSP to fulfill macroeconomic conditions on the one hand appears to be at variance with the urgent need to address microeconomic poverty challenges and may generate tensions which might ultimately breakdown the entire poverty reduction process.


  • The meaningful participation of civil society envisaged in the PRSP process may well be excessively ambitious given the willingness and capacity limitations that exist both on the government and civil society sides. Poor quality of available data, weak infrastructure and resources for collecting additional data, and low analytical capacity are for example some of the constraints that are characteristic in an average African country. Non-Governmental interest groups are more often than not plagued with similar limitations, which severely constrain their capacity for policy dialogue.


  • Donor views about PRSP processes may not be similar and therefore, may show different commitment in coming forward with intellectual or financial contributions. Donor hesitation could be prompted by legitimate doubts regarding the validity and sustainability of the process and/or the reservation that increased donor involvement would be at variance with the quest for increased national ownership.


  • Despite the high emphasis placed on local ownership by the Bank and the Fund, PRSPs are in essence a conditionality for accessing Bank and Fund resources. As such, though these papers may be important and appropriate in poverty reduction, the wider context of conditionality in which they are prepared ought not to be underemphasized.


  • It remains unclear whether or not the World Bank and IMF inspired Poverty Reduction Strategy Papers automatically become African countries poverty reduction Plans in view of the negative and dismissive manner with which central planning was abandoned during the SAP era when the power of market forces was over exalted.


Conclusions

In concluding his presentation, Prof. Saasa made the following observations:
  • Given the implication in the PRSP paradigm that the IMF and the World Bank have to endorse African poverty reduction interventions before they are disseminated, what does that entail for local ownership and the real value of the one year long consultative process that by and large characterize the preparatory process?


  • World Bank and IMF bureaucrats may not have accorded sufficient attention to the implications arising out of terminologies such as ‘participatory’, ‘country driven’ and ‘partnership oriented’ that dominate the six core principles of PRSPs. It is therefore important not only to use the right language, but also to understand the full meaning and implications arising from the phraseology vis-а-vis their evident challenge of how systems are operating.


  • If PRSPs are to ultimately assume the supreme role of being the prime national plans and strategies for addressing poverty in poor African countries, then the role of the national citizens (who include the poor people themselves) and their governments in the approval, adoption and endorsement of these anti-poverty blueprints should be paramount.


  • All things considered, on the basis of the available empirical evidence, it would be unrealistic to simplistically condemn the PRSP paradigm in Africa as an external imposition. It would be equally unrealistic to remain unmindful of the new challenges and built in contradictions with which Africa must come to grips as the continent endeavors to fine-tune its development agenda to effectively confront rising poverty levels.


Discussion

The discussion following the presentation of the two keynote papers took the form of comments and questions on issues raised as follows:
  • The importance of labor standards and living wages was recognized. In this regard, it was pointed out that in order to reduce poverty levels, there was need to minimize tax on income/wage.


  • The issue of subsidies on agricultural inputs was raised and it was accordingly recognized that in order to compete favorably with imports from outside Africa, there was need to address the issues of subsidies objectively, particularly in respect of vulnerability of African economies.


  • Concern was raised as to whether the PRSP is another example of putting ‘new wine into old bottles’. In other words, is PRSP not disguised version of SAP? In addition, some participants felt that the IMF tended to prescribe the same solution for all African regardless of their peculiar circumstances.


  • Attention was brought to the tendency of overemphasizing domestic/internal factors as a principal cause for poverty in Africa without taking into the full impact of exogenous such as the unequal terms of trade etc.


  • Some participants underlined the importance of evaluating previous programs like SAP to find out what worked and what did not in order to ensure that past mistakes are not repeated in the PRSP process.


  • It was also pointed out that the jargon used by the IMF/WB with regard to PRSP was too complex and technical not only for government officials but for ordinary citizens to comprehend. This aspect tended to work against popular participation in the PRSP process.


  • The link between economic growth and poverty reduction was brought out and it emerged that impressive economic growth statistics do not always translate into sustainable poverty reduction impacts for the core poor.


  • Participants were also interested to know how realistic it was for most, if not all the countries to reach the IMF /WB benchmarks within the stipulated timeframes. And since approval criteria was set by the IMF/WB, whether there was genuine national ownership


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