Although some of Côte d'Ivoire's poor showed a remarkable ability to escape poverty, its poorest were hit hardest by structural change. More can be done to help the poor help themselves
Does adjustment hurt the poor? For Africa, hard and fast figures needed to answer this question are in short supply, itself a barrier to designing better policies. Many basic needs indicators for Africa have improved over the past three decades, but there are also indications that living standards fell in the 1980s. Food consumption, for instance, has declined in many countries.
But these aggregate indicators give no information about the distribution of the change, and the poor may well have been affected more than the better-off. Only detailed information from households can pinpoint the losers. The problem is that few countries have undertaken such surveys. Côte d'Ivoire, however, has a detailed household survey on the living conditions of its people in 1985, 1986, 1987, and 1988.[1]
In 1981, Côte d'Ivoire became one of the first African countries to launch a structural adjustment program with support from the World Bank and the International Monetary Fund. The program, begun in response to an economic crisis that started in 1979, lasted six years, improving internal and external balances, and in 1985-86 there was a mild economic upturn.
In 1987, recession returned with a vengeance, triggered by a sudden and sharp appreciation of the real effective exchange rate. The terms of trade turned against Côte d'Ivoire, adjustment was abandoned, and destabilization followed.
The impact of these two macroeconomic regimes on the poor has been captured by the annual surveys conducted from 1985 to 1988. Surveys in the first two years captured the situation at the end of sustained adjustment when the economy was growing moderately; those in the last two years covered destabilization and severe recession. So what happened?
While Ivorian living standards fell throughout the 1980s, the decline was gradual at first. During the final years of adjustment (1985-86), the number of people living in poverty remained steady at around 30% of the population, while extreme poverty fell from 10% to 6.4%. The average expenditure of the poor and the very poor actually rose, mostly in rural areas, benefiting farmers. This suggests that one of the main policies of adjustment (the shift of the urban-rural terms of trade in favor of rural areas) achieved the desired effect. By contrast, the average expenditure of the middle-income and upper-income classes fell significantly, especially in urban areas, where poverty increased. Although poverty was low among public sector employees, it rose by 14% in 1985-86. Clearly, there were some "new poor" from adjustment. Poverty also rose in the urban private sector (formal and informal), although this was probably due more to the unfavorable macroeconomic situation than to adjustment.
By 1988, poverty had risen to 46%, with urban poverty almost doubling over the level of the previous year. That was an increase from 2 million people living in poverty in 1986 to 4.8 million in 1988. Extreme poverty also increased rapidly---to 14% of the population by 1988. In rural areas, the biggest rise in poverty was in West Forest among export crop farmers, due to rapidly falling yields and export sales, especially coffee.
Did poverty increase in Côte d'Ivoire in the 1980s because of a fall in per capita household consumption or because of a change in its distribution? It is possible to separate the two effects in 1985-88. The entire increase in poverty was due to negative economic growth. In fact, the distribution of welfare became more equal over the period.
If there had been zero economic growth rather than a decline, poverty would have fallen 20% rather than rising 50%. Similarly, extreme poverty would have fallen by more than 40%. What was needed in Côte d'Ivoire in the 1980s (and today) is not redistributive policies but policies that generate growth.
Did the 1980s add to the "hard core" poor? It's difficult to say because survey data are usually snapshots in time and give no indication of the duration of poverty. Côte d'Ivoire's survey data contain information from a panel of households which suggests that there is a great deal of mobility into, and out of, poverty. For each of these years, a minimum of 30% of households improved their standard of living. In 1987 and 1988, when overall poverty increased sharply, 27% of the households that were very poor in 1987 increased their living standards enough in 1988 to become mid-poor or even not poor, and 19% of households that were mid-poor in 1987 escaped poverty in 1988.
Much poverty in Côte d'Ivoire is thus transitory, and coping mechanisms help many households out of poverty. This is a remarkable set of arrangements in an economy that has been in recession for more than 10 years---and gives hope to those in the business of poverty reduction.
Although government spending (in real terms) fell during adjustment, Côte d'Ivoire protected spending in the social sectors (health and education). Indeed, their share in recurrent expenditure rose slightly. Most basic needs indicators in Côte d'Ivoire (literacy, school enrollment, use of health care facilities, access to safe water, and housing amenities) changed little in 1985-88. This is encouraging.
But these countrywide results mask big differences between the poor and the nonpoor---differences the household surveys reveal. Net primary school enrollment for girls in very poor households fell from 22.4% to 16.7%. The number of children one year or more behind their grade-for-age doubled to 64% for boys and 53% for girls. Medical consultations for ill women in very poor households fell from 30% to 16%. And access to electricity fell from 14% to 11%. In addition, the private expenditures of very poor households for education and health care fell by 50% and 12%. There was an exception to this pattern in health care: preventive consultations rose more for very poor households than the national average.
So, although some of Côte d'Ivoire's poor showed a remarkable ability to escape poverty, its poorest were hit hardest by structural change. And to avoid deteriorations in basic needs, targeted interventions---within the existing budget---are the keys.