WHITHER
PRSP (Poverty Reduction Strategy Paper)?
M. M. Akash
Background:
1.28
billion citizens of our planet are now living below the poverty line income.
This is what World Bank says in its latest World Development Report (WDR,
2000). Almost 72 percent of them live in Asia and about half of the one
billion Asian poor live in South Asia alone! Bangladesh is a low-income
poverty ridden country of this South Asian region. Every one man in two
here is considered to be poor, if we accept the international definition
of absolute poverty as offered by WB . What actually are the characteristics
of these "Poor People"? Basically they are that part of the
society who are relatively most deprived from income, wealth, education,
social security and political power. They are the defeated victims of
an unequal competition in an intrinsically unequal society. In Bangladesh
there is going on a continuous process of unequal and unjust competition
through which a greater section of the middle class is slowly becoming
the member of a lower middle class and after a brief period of life and
death struggle to hold on they also ultimately in most cases slide down
to swell the ranks of the poor. Now a day in the literature you will find
another category: "Poor becoming Extreme Poor!"
Therefore
there must be present an absolutely clear recognition of the following
truths in any document promising to change the lots of the lower-depth.
Firstly it has to be recognized that if there is unequal distribution
of initial endowments like wealth, education, security and political power
in the society then there cannot be any fair and equal competition. And
the relatively deprived is generally bound to be defeated in that unfair
economic and political game. Secondly one has to recognize frankly that
the main challenge before a strategic planner planning to reduce poverty
is to design such policies that will enable the poor and the weak to win
in spite of the unequal nature of the game. So far we find mainly two
types of strategic answers to this question.
The
radical answer to the above question is to start with a revolutionary
redistribution of wealth and power from which will follow an egalitarian
growth or pro-poor growth within the society. The problem of that answer
lies in its abstract nature. If one means business one should not stop
here and proceed further in order to concretize and chart out a political
road map for achieving that so called "Revolutionary Redistribution"
which is of course not so easy!.
On the other hand the traditional mainstream thinkers are prone to believe
that the natural law of "Struggle for Existence and Survival of the
Fittest" holds good in the society as well and therefore what one
can mostly do is to device a few "Safety Net" measures for at
least protecting the rights of the poor to live. The true meaning of these
"Safety Net Measures", however, is to maintain the cheap labour
reserve for the more powerful employers of labour in the society. That
is why they have set the minimum subsistence income or the so-called poverty
line income as the norm for the millions of poor people of the globe.
Professor Anisur Rahman, one of the founder members of the first planning
commission of Independent Bangladesh had rightly ridiculed this concept
of poverty as the "Livestock Concept of Poverty"!
We
have traversed a long way in the last century where we had observed the
rise and fall of cold war between supposedly two diametrically opposite
schools of thoughts in the field of development discourse. The practical
experiences of the last century taught us two very definite lessons:
"
Those who were in favour of radical "Affirmative Action" for
the deprived classes actually forgot that it does not mean either "Charity"
or "Benevolence". It is actually a question of right of the
deprived people justified not only by an external moral ethical ground
but also by an active fulfillment of all necessary responsibilities by
the enjoyer of those rights. The logic of affirmative action for the weak
actually remains valid as long as it can be shown that this help is temporary
and time bounded and the helped object will become an autonomous subject
in due course of time. In fact in the early part of the last century we
really saw the great socialist experiment being started with a radical
redistribution of power and a move towards making the people the subject
of their own development. But after a period of spectacular rise and success
on the basis of a generous support from the above the people there slowly
lost all their initiatives and had become a play-toy in the hands of the
centralized state power. This is the real reason why people did not make
any protest when the state elites in many of these socialist countries
shed their masks to recapture openly the state owned wealth and thereby
were able to turn themselves into "Mafia Capital" or "Corporate
Capital". This was perhaps the biggest tragedy of the twentieth century
but the lessons should be well taken.
"
On the other hand the so-called victorious capitalism had tried to introduce
various reforms e.g. progressive taxation, social security schemes, etc.
in order to address the issue of unequal distribution. But the experiences
of twentieth century has also made it quite clear that such standard reforms
or safety net measures could
not stop the absolute growth of the total number of poor people living
especially in the historically resource poor regions. This traditional
safety net approach is merely a tool for intervention only when somebody
is sliding down into the pit of poverty. In that sense it is a curative
treatment and not a preventive treatment of the disease of poverty. Thus
if the spreading rate of the disease is equal or higher than the recovery
rate then the number of poor patients will obviously not decline if not
increase! Bangladesh is a very vivid example of this chronic poverty syndrome.
During the whole decade of eighties the head count ratio of income poverty
in Bangladesh remained almost static fluctuating in between 52.3 p.c.
(1983-84) and 49.7 p.c. (1991-92). Presently some people are claiming
that there was an impressive decline in the rate of poverty in Bangladesh
during the decade of nineties. More precisely they say that in year 2000
it has come down to only 39.8 p.c. Leaving aside the statistical and methodological
controversies even if we accept the last figure as it is then what does
it actually mean? It actually implies that in 1983-84 there were 38.7
million poor people in the country but now the total number of poor has
actually become almost 50 million! The happy people are actually presenting
the picture of poverty of our country in relative terms, which again helps
them to hide the increasingly alarming size of the poor population in
our country. And it does not require a great knowledge in economics to
understand that in a country where 50 to 60 million people i.e. almost
half the population lives in an abject condition of poverty, everything
is going to turn fragile and vulnerable.
On Poverty Reduction Strategy Paper
At
present it seems that the Donors especially WB is very anxious about the
poverty of Bangladesh. Now a days Donors no longer give grants or untied
aids. Most of the loans coming from WB is either for a particular project
or based on one or another certain strategic policy framework such as
SAP (Structural Adjustment Programme). SAP has miserably failed not only
in Bangladesh but also in many countries of Asia and Africa. The main
three policy thrusts of SAP are:
1. Indiscriminate Privatization of not only industries but also major
utilities e.g. water, electricity, gas, railway, port, etc.
2. The so-called policy of free market policy, which actually means almost
unilateral withdrawal of all tariff and non-tariff restrictions by the
aid-recipient country.
3. Withdrawal of all kinds of subsidies in the name of "Efficiency".
4. Tightening the belt of the Government in order to ensure so-called
macro stability of the economy.
SAP
was introduced in Bangladesh from the middle of eighties when the country
was under a Martial Law Regime led by General Ershad and is being continued
till now. At present it is at its last phase and is trying to privatize
all the remaining industries in the state sector whether it is profitable
or not. There is also a high pressure on the Government to dismantle BPC
(Bangladesh Petroleum Corporation) in order to establish the complete
control of MNCs on the gas and oil sector of Bangladesh. Similarly there
is a high pressure from US embassy in Bangladesh to hand over the Chittagong
Port to a foreign US based company. SAP was evaluated through a national
participatory process of all the stakeholders including WB in Bangladesh
and the conclusion was negative. The participants even raised the demand
that WB should pay compensation for imposing harmful policies that have
created a slump in the economy, increased poverty and unemployment as
well as caused mass discontent in the Agricultural Sector by withdrawing
subsidies. And finally it was recognized that nobody actually owned the
SAP. The Minister also confessed that they were forced to accept the SAP
under pressure otherwise loans or grants whatever little was coming would
have been stopped.
[D ebapriya Bhattacharya and Rashed Titumir (ed), Stakeholders' Perceptions
Reforms and Consequences: Report on the First National Forum of SAPRI,
Bangladesh, CPD and Proshika, Dhaka, 2001]
Given
this unfavourable background not only in Bangladesh but also in all over
the world the WB had to recognize the failures of SAP at least partly
and they tried to put the blame on the local host country government who
according to them were not sufficiently committed and have numerous governance
problems. And side by side they also recognized the need for the safety
measures to offset the so-called pains of the reform process. Last of
all came the announcement of a "Poverty Reduction Strategy Paper".
WB was now insisting that Bangladesh and many such highly indebted countries
will have to prepare a PRSP within a prescribed limit of time (In the
case of Bangladesh it is September 2002) and submit it to them for preliminary
scrutiny and then they will forward it to the September meeting of the
member states of the board of directors of WB for the final approval.
Till then all so-called soft loan options will be remaining withheld.
At
this juncture our organization "Peoples Empowerment Trust" in
co-operation with Action Aid Bangladesh launched a nationwide campaign
against this process of donor driven PRSP [Please See our dialogue paper,
"PRSP: What, Why and For Whom" in our web site: ............].
The central theme of our campaign was "OWNERSHIP". We pointed
out that like SAP, the Government is now again preparing a PRSP under
the influence of the "Carrot and Stick" policy of WB and IMF.
and this will produce a paper without any national ownership. We demanded
to start the process of PRSP from the ground by first arranging dialogues
with the people in the field to understand their understanding of poverty.
We also proposed that the PRSP must be integrated with the existing long
term and medium term national plans of the country. In that case PRSP
will become a part of the whole and not the whole itself. Otherwise, we
predicted that the sad story of SAP will be repeated again and we will
have to repent afterwards saying, "PRSP failed because of lack of
ownership and commitment"! We also apprehended that within PRSP there
will be incorporated some of the unfinished macro agendas of the failed
strategy of SAP and this is perhaps the real hidden agenda of WB behind
PRSP.
In
response to our campaign Government of Bangladesh tried to meet both ends
in a novel manner. They at first tried to prepare a PRSP in a hurried
manner before the Paris Consortium meeting and to give it a semblance
of bottom up participation they hired BRAC to arrange twenty-one dialogues.
On that thin basis the consultants were asked to prepare a draft PRSP.
It was finished just before the Paris meeting and our finance Minister
took it with him to Paris calling it interim PRSP . But whatever negotiations
took place in Paris it seems that the finance Minister was not at all
happy with the donors' standpoint. Later after coming back to home he
proclaimed in an open statement published in the top national dailies
that although the donors ask us to sit at the driver's seat, but after
sitting there we find that the steering wheel is really in the hands of
the donors and my task is just to repair the tires and tubes after the
accident. Subsequently we found that the name "PRSP" was dropped
and the Government circulated a draft paper named "Bangladesh: A
National Strategy For Economic Growth and Poverty Reduction" for
discussion.. We hailed these moves towards a correct direction and asked
the Government to proceed further and incorporate the real demands of
our people within it instead of those SAP agendas superimposed by the
donors. At the same time we also started to think and plan about a critical
engagement with the content of the draft "National Strategy for Economic
Growth and Poverty Reduction" [published by ERD, Ministry of Finance,
GOB, in April 2002]. But to our utter surprise, we find that in the last
budget session the finance minister retreated from his post Paris position
saying that the WB and IMF actually have a stronger approval of his regime
compared to the previous one. He also added that hopefully after finalizing
what he this time called PRSP on the basis of dialogues held between the
donors (meaning WB and IMF) and his Government, soft funds would be obtained
to implement that so-called "mutually approved PRSP". Thus the
truth has ultimately been revealed. So this time we are again going to
have a donor driven strategy of poverty reduction and it is going to be
approved neither through an extended participatory process in the bottom
nor through a minimum national debate in the parliament in the presence
of all concerned political parties. Thus we think it is high time to start
our second phase of the campaign on the contents of draft strategy, which
is after all the real substantial issue!
The Draft
Strategy Paper
At
page one of the NSEGPR (National Strategy for Economic growth and Poverty
Reduction) it is written:
"
For operational purposes, the strategy paper will form the core of the
sixth Five Year Plan (2002-2007) beginning from 1st. July, 2002."
(P:1)
But
in his last budget speech the finance minister spelt out his own understanding
of this strategy paper in terms of the following words:
"
This strategy will be subsequently converted to PRSP which will provide
the basis for holding dialogues with the development partners....... Necessary
administrative and economic reforms will be implemented in phases to implement
this strategy. A three year macro-economic framework will be developed
for achieving the purpose of the strategy The budget deficit will be contained
within sustainable limit, domestic resource mobilisation will be augmented
to gradually achieve self-reliance and domestic borrowing by the Government
will be scaled down. Besides wastage and misuse of resources will be curbed
in all spheres of the economy. Private sector will be promoted and made
more robust." [section 26 and 27 of the Annual Budget Speech, 2002-2003]
From
the above statement it seems that a standard SAP policy package based
on a three year rolling investment plan for macro economic stability is
the chief concern of the Finance Minister whereas poverty reduction strategy
can wait until more resources are available from the donors. This statement
creates apprehension about the status of our ongoing sixth five-year plan
process. Will it be continued or will it be stopped? What will be its
status vis-à-vis the NSEGPR and what shape the NSEGPR itself will
take?
We
know that at least twenty-one dialogues were held with different sections
of the people at three successive levels of Upazila, Division and National
level before finalizing NSEGPR. It will be extremely useful from the peoples'
point of view to look at these dialogue reports spelling out people's
own priorities. The paper has presented the summary findings of these
dialogues in chapter three titled " Participatory Consultation on
Poverty Reduction Strategy: Emerging Lessons". As reported there,
the participants roughly identified seven past commendable achievements
and at the same time pointed out to sixteen urgent failures in the field
of general development, especially the development of the deprived and
poor. These are worth mentioning:
ACHIEVEMENTS (7)
1.
Bangladesh has been able to reduce acute deprivations measured in terms
of food and income entitlements.
2. Some increase has taken place in educational and health facilities
for the poor.
3. The wage of the rural labourers has increased.
4. The traditional money lending business has been curtailed.
5. The volume of remittance transfer from the foreign countries has increased.
6. Employment opportunity in the non-farm sector e.g. fishery, poultry,
small business, services etc. have been widened.
7. The role of the Women Entrepreneurs in the rural areas has increased.
But side-by-side the number of areas of key concern was quite large:
FAILURES (16)
1.
The law and order situation has deteriorated extremely!
2. Especially the vulnerability of the poor and the weak has increased
enormously.
3. "Mastanocracy" has increased very much.
4. The administration in general and especially the law enforcing agencies
do not have any accountability.
5. The political parties have recruited the dropouts from the S.S.C. and
H.S.C. examinations in order to turn them into terrorists under political
protection.
6. The poor people are generally disorganized and are not aware of their
rights.
7. The power of the local level Government (UP and UZ level elected body)
is inadequate and there is also lack of accountability.
8. The quality and standard of health services at local level is quite
low.
9. In the field of education there is no uniformity and inequality is
being enhanced by this dual education system.
10. Not only health and education, other governmental services e.g. electricity,
water and road services all are in equally deplorable condition.
11. The standard of agricultural extension services is also quite low.
12. There is an extreme lack of coordination among the N.G.O., C.B.O.
and the G.O.B.
13. Regional inequality especially rural-urban gap is increasing.
14. Politics has become polarized and conflicting.
15. The micro level borrower and saving groups have not been able to form
a united federal body of their own.
16. Poor have neither voice nor any participation in the policy formulation
process at local, regional and national levels.
Although
the above list can't be considered as comprehensive and complete yet one
would wonder what actually has been suggested in the strategy paper to
address these important issues, which were self- identified by the people
from the bottom?
Fundamental Weakness of the Draft
The
draft document concentrates mainly on a technical growth projection exercise
and gives very little attention to the really thorny problems, which did
surface up in the preparatory dialogues. It is rightly recognized that
in the nineties the national inequality index (GINI INDEX) has been increasing
at a very accelerated rate (i.e. 2.1 p.c. per annum, see P7)! But in the
very beginning of the technical exercise it was fatalistically assumed
that nothing could be done to reduce the present level of inequality.
Moreover it was further assumed that in future the inequality in the society
would continue to increase. Only on that basis the projection suggests
that if and only if Bangladesh could achieve a sustained average growth
rate of seven percent over the next twenty years we will be able to reduce
absolute income poverty from the current level of 50 percent to 25 percent.
(See the Annex Table 6). This actually reflects the "Millennium Development
Goal" for the developing countries (Reducing poverty rate by half
within next twenty years). But like "Inequality" if we also
assume that our growth performance would continue to remain same (i.e.
two percent per-capita income growth) then number of poor people will
rather increase from 63 million to 64 million!!
What
a tragedy, our plan even if 100 percent successful would be able to reduce
the number of poor people living in the society to a level of only 43
million (the current level is about 63 million). So only 20 million poor
people at the margin will be able to cross over the poverty line within
next twenty years and almost 68 percent of the currently poor will continue
to remain poor. Actually any plan that does not have the courage to attack
inequality cannot but have such a pessimistic result. Look at China, Vietnam,
South Korea, Cuba, and all other poverty reduction success stories even
well recognized by WB, you would find that the success could only be achieved
on the basis of an egalitarian growth based on fundamental redistributive
measures.
This
strategy paper describes the role of the private sector as "The Engine
of Growth". But let us look at the facts more critically. Our past
experiences have clearly proved that there are two distinct types private
sectors in our country. The largest private sector is the agricultural
sector and non-formal rural urban sector. During the last decades in spite
of the lack of or little state help they played the leading role in augmenting
our economic growth. On the other hand the big corporate sector and the
co-operators of MNCs actually had failed to produce any significant growth
in the modern sector (of course the Garment sector is the only exception
but that also is based on special international opportunity and the cheap
women labour of our country). So the plan should have specified which
private sector they want to target: the big defaulters or the productive
entrepreneur?
The
plan surprisingly remains silent or ambivalent about a few burning issues
of our country. Let me mention a few here. What is going to happen to
our garment industry after the withdrawal of MFA agreement in 2005? How
will you face the pressure to privatize Gas, Electricity, Water, Railway,
etc. and what would be the net impact of such a reform on the poor? How
can the government mobilize more resources from the rich? How education
and health sector can attain uniformity at least in the basic level? These
are really thorny and difficult issues and also popular issues because
they touch the pockets of the rich and if successfully implemented can
change the lives of the poor. Actually the plan takes it for granted that
hard anti-poor reforms within the framework of SAP will be occurring and
wishfully hopes,
"
The pro-poor programmes will be made strong to complement the liberalization
agenda. Macro economic stability and robust growth would ensure that employment
losses as a part of needed economic restructuring can be offset by rapid
growth in other sectors" (P 27-28)
But all previous studies here and in most of the countries of the world
shows that donor driven SAP measures cause slump, poverty and inequality
instead of growth, affluence and justice. So what is the basis of this
wishful thinking?
Conclusion
The
strategy document abounds with numerous rhetorics on "Pro Poor Growth".
But never goes beyond the traditional safety net measures. It starts with
a self-defeating assumption that inequality cannot be reduced. It is funny
to find a chapter titled " Policies and Institutions for reducing
inequality" where at the very beginning it is stated that what can
be done at best is " to prevent any serious worsening of income distribution
to ensure poverty reduction as average income increases". It also
remains silent or rather supportive of the measures of SAP dictated by
the foreign donors. It totally ignores or pay scant attention to the real
issues of life that had actually surfaced up during their own dialogues
with the people. Finally it is not clear whether the document will be
under national ownership or it will be hijacked by the donors, especially
the WB who has both carrots and sticks at his disposal.
But it will be very unfair if I do not point out at least one very strong
and the most pro poor statement of this strategy paper. At page 39 it
is rightly mentioned,
"
A faster pace of poverty reduction would require greater voices of the
poor. Greater voices would be ensured through moving beyond the narrow
domain of micro-empowerment measures such as access to credit. For greater
agency role of the poor, measures would be taken for building institutions
for the poor at sectoral, sub-national and national levels with emphasis
on developing new institutional ways and means for collective empowerment.
This would be needed not just for catalyzing the active pressure group
function of the poor but also for increasing their aggregate claims in
the distribution of overall benefits for economic growth and distribution"
Whoever
has written this deserves to be congratulated for speaking the truth.
This should have been the starting point of this strategy document and
focus should have been concentrated on further concretizing effective
means for effective empowerment of the so-called poor. Instead, the ruling
class has relegated this statement to a corner of the text, and has kept
it hanging in the air. Perhaps they do not want "faster pace of poverty
reduction"! I would like to end my discussion on the draft strategy
paper with a statement by Naom Chomsky. He said that a text can be understood
by not only looking at what it contains but what it omits and ignores.
(M.M.
Akash , Professor, Department of Economics, Dhaka University.Please feel
free to post your comments to [email protected] )
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