Poverty reduction activities

Human development

Gender

Social development

Environmentally sustainable development

Finance, private sector & infrastructure

Poverty reduction continues to be the World Bank's first priority, and the significant changes undertaken by the Bank in fiscal 1997 have important implications for its future poverty reduction agenda. These include the far-reaching reforms in the organization of regional operations; introduction of a new approach to knowledge management; and especially the establishment of the Poverty Reduction and Economic Management (PREM) network.

The newly constituted Poverty Sector Board within PREM is responsible for guiding the implementation of the Bank's poverty reduction strategy. It is ensuring that poverty remains at the heart of the Bank's operational and research activities and that the maximum possible contribution is made to reducing poverty in the developing world.

In fiscal 1997 the Bank continued to make progress in implementing its poverty reduction strategy, based on encouraging broad-based growth, human capital development, and the provision of safety nets. Through its analytical work, policy dialogue, and advice and its project and adjustment lending, the Bank supports a wide range of efforts by client countries to reduce poverty. Recent analysis has improved country-specific knowledge about poverty and has provided the basis for a more informed dialogue and more effective policy interventions. Poverty assessments synthesize information on poverty, identify key policy issues, and recommend a strategy for reducing poverty. Since the Bank began preparing poverty assessments in fiscal 1989, ninety-three poverty assessments, covering approximately 90 percent of the world's poor, have been completed. The findings of these assessments constitute an important input into the design of country assistance strategies. CASs, which are developed in consultation with borrowing governments and are discussed by the Board of Executive Directors, reflect each country's unique circumstances and priorities and present the Bank's program of assistance in the context of the country's efforts to reduce poverty. With the first round of poverty assessments coming to completion, the Bank will be placing more emphasis on the CAS in monitoring the implementation of its poverty reduction strategy.

Bank operations support numerous activities that help enhance the economic opportunities of the poor, develop their human capital (through health, education, and basic social services), and provide safety nets. While all of these activities combine to reduce poverty, their impact is difficult to measure. The impact of poverty-targeted projects is easier to measure, however. The Bank tracks its lending for projects in the Program of Targeted Interventions (PTI) and poverty-focused adjustment operations based on established criteria in targeting the poor. During fiscal 1997, $4.09 billion, or about 29 percent of World Bank investment lending, was channeled directly for poverty-targeted projects, compared with 32 percent in fiscal 1996. For IDA, the PTI amounted to 53 percent, compared with 63 percent in fiscal 1996. Of twenty-nine adjustment operations approved in fiscal 1997, eighteen contained specific poverty-reduction measures (see table 2-1).

While useful in planning the implementation of Bank strategy, these data on PTI lending and poverty-targeted adjustment operations do not measure the impact that Bank activities have on poor people's lives. Since the Bank places considerable emphasis on the need for better information on poverty in client countries, efforts are under way to assess trends in poverty by encouraging nationally representative household surveys. As a conservative estimate, data on household incomes and expenditures now exist for seventy-three countries, more than double the number (thirty-one) available in 1992. And since the fiscal 1995 progress report (which drew on a total of 122 surveys in sixty-seven countries), new results from at least sixteen surveys have become available. But there is also a need to build a better database on how Bank lending (and especially its PTI lending) benefits the poor. As such data become increasingly available, the emphasis of the Bank's monitoring efforts will shift away from input and process indicators and toward outcomes on the ground. This marked improvement in information on poverty will form the basis of preparations for World Development Report in the year 2000, which is to be devoted to poverty reduction (previously also the topic for World Develoment Report 1990: Poverty).

The Bank, the United Nations Children's Fund (UNICEF), and the United Nations Development Programme (UNDP) have been working in partnership to improve poverty monitoring methods since May 1995. Activities include:

· an ongoing exchange of views and sharing of approaches for monitoring social outcomes of development aimed at developing a core monitoring instrument;

· a joint Bank- and UNDP-sponsored review of how quantitative and qualitative data can be used jointly to enhance understanding of poverty and its reduction; and

· plans to link the agencies' poverty-related Web sites.