Poverty Reduction Updates
Policy Highlights
Following the emerging trend at the World Bank to redefine its main objective as poverty reduction as opposed to mere economic development, in November 1999 the Asian Development Bank (ADB) approved its Poverty Reduction Strategy (PRS) which it likewise declared as its over-arching goal.
The strategy aims to drastically reduce poverty in Asia through promoting three main objectives: i) pro-poor sustainable economic growth, ii) social development, and iii) good governance.
To the ADB, poverty reduction can best be achieved by promoting economic growth that the poor and disadvantaged share in. To achieve this inclusive growth, the Asian economies should promote an overall policy environment that emphasizes economic openness and market orientation, labor market flexibility and prudent macroeconomic management.
ADB, which finances roughly US$6 billion worth of projects and programs yearly, will allot at least 40 percent of all public sector lending to 'poverty interventions'.
According to former ADB Vice-President Peter Sullivan in November 1999, this meant ‘more farm-to-market roads and fewer expressways, more rural electrification projects and fewer big power plants.’
In each recipient country, the ADB will: 1) conduct poverty analysis; 2) organize a High Level Forum (HLF); 3) formulate the Country Operational Strategy (COS); 4) make a Partnership Agreement; 5) formulate the Country Assistant Plan (CAP); 6) follow project cycle (identification, design, implementation, and evaluation of projects). Poverty reduction processes have been initiated by the ADB in Indonesia, Philippines, Mongolia, Thailand, Cambodia, Laos, Vietnam, Burma, Bangladesh, Bhutan, India, China, Maldives, Pakistan and Sri Lanka.
ADB relates its Poverty Reduction Strategy closely with its Private Sector Development Strategy (approved March 2000) claiming that it “is widely accepted that the private sector is needed and better suited for sustaining rapid growth. And the Asian experience shows that growth is the most powerful weapon in the fight against poverty”. In the Bank’s view, promoting private sector development will result in poverty reduction.
The Bank’s Microfinance Development Strategy approved in June 2000, is also intended as a key tool in poverty reduction. It is aimed at ensuring permanent access to institutional financial services for most poor people and their small businesses in Asia and the Pacific. Microfinance includes a broad range of services such as deposits, loans, money transfers, and insurance to poor and low-income households and their microenterprises. See full version of policy
NGO Concerns
ADB’s Poverty Reduction Strategy was received with skepticism by several NGO critics. The main points of criticism are that the new strategy is a merely a new type of structural adjustment lending in disguise and that the emphasis on private sector development will in reality hurt the poor rather then benefiting them.
Several questions also need to be raised with this new overarching goal already in place: (a) Did a drastic paradigm shift occur at the Bank to come to terms with pervasive poverty despite large infusions of capital to DMCs in the past? (b) Did ADB at all seek out the views of its very vocal critics and acknowledge that the Bank cannot be infallible all of the time in its pursuit of development in the region? (c) Did ADB at all pause and take time to reflect, take stock and learn lessons from its 34 years of operations in the region? Or was it business as usual at the ADB?
ADB Contact
Director, Poverty Reduction and Social Development Department ADB
Director General, Regional Sustainable Development Department, ADB
Related NGO Documents
Asian NGO Perspectives: The ADB Poverty Reduction Strategy, Asian NGO Coalition, July 2001
Reaching Global Consensus on Poverty Reduction, Violeta Q. Perez-Corral, NGO Forum on ADB, April 2001
'Poverty Reduction' Initiatives at ADB, Violeta Q. Perez-Corral, NGO Forum on ADB, April 2001
Profiting from Poverty: The ADB, Private Sector and Development in Asia, Focus on the Global South,
April 2001
Have We Even Tried Asking the Poor?, Isagani Serrano, Philippine Rural Reconstruction Movement,
February 2001
Globalization and Poverty Eradication in Asia and Pacific, Isagani Serrano, Philippine Rural Reconstruction Movement, February 2001
Cambodia's Civil Society Comments on RGC's Poverty Reduction Strategy, NGO Forum on Cambodia, November 2000
Punishing the Poor: Debt, Corporate Subsidies and the ADB, Chris Adams, Focus on the Global South, October 2000
Board Approves 2001 Action Plan (July 2001)
UK Funds Poverty Reduction in India (June 2001)
ADB Launches New Long-Term Strategic Framework (March 2001)
ADB Hosts 1st Asia-Pacific Poverty Forum (February 2001)
New ADB Microfinance Strategy Key to Poverty Reduction (June 2000)
ADB Sets Up Japan Fund for Poverty Reduction (May 2000)
40% of 1999 ADB Public Sector Lending for 'Poverty Interventions' (April 2000)
Joint ADB-WB-UNDP Anti-Poverty Consultations in the Philippines (April 2000)
'Landmark' Agreement to Fight Poverty in Bangladesh (April 2000)
ADB, Mongolia Sign 'Poverty Partnership Agreement' (March 2000)
Poverty Reduction Key Topic at GMS Conference (January 2000)Board Approves 2001 Action Plan (July 2001)
A follow up to the the very first Action Plan that was implemented last year, the 2001 Action Plan presents how it would boost the Bank's new role as a poverty-specialist and finance poverty-reducing projects. This includes the expansion of Bank staff whose expertise tackle the world of poverty, continuous build-up of tools necessary for analyzing poverty, securing more funds to support poverty-oriented projects, development of a medium-term plan for 2001-2005 and the adaptation of policies to the Bank's new overarching goal.
[back to top]UK Funds Poverty Reduction in India (June 2001)
The Bank's Board approved the operation of a new technical assistance fund financed by the United Kingdom solely for studies that address India's poverty issues. The initial amount of 20 million pounds sterling will cover the years 2001-2003. [back to top]
ADB Launches New Long-Term Strategy Framework (March 2001)
The new 15-year timeframe earmarks the Bank's incorporation of poverty reduction in its goals and policies aimed to reduce poverty by half (?) by 2015. [back to top]
ADB Hosts 1st Asia-Pacific Poverty Forum (February 2001)
ADB hosted the first Asia and Pacific Forum on Poverty: Reforming Policies and Institutions for Poverty Reduction at ADB Headquarters in Manila on 5-9 February 2001. In his opening remarks, ADB President Tadao Chino said that since Asia is home to two-thirds of the world’s poor, so should Asia spearhead the drive towards the international development goal (IDG) of halving global poverty by 2015. The Forum aimed to build consensus on reform and investment priorities in the region's economies. It also sought to identify concrete mechanisms which foster pro-poor policy reforms. The keynote address was given by Nobel Laureate for Economics Robert Mundell on Poverty, Growth and the International Monetary System. Participants discussed a range of poverty issues at the macro, sectoral, and micro levels. The participants included various actors and stakeholders (e.g., policymakers, private sector groups, representatives of non-government and civil organizations, and international donors). Out of a total 300, some 20 NGOs were invited. More information on the Poverty Forum is available online at http://www.adb.org/poverty/forum/papers.htm.
[back to top]New ADB Microfinance Strategy Key to Poverty Reduction (June 2000)
ADB approved in June 2000 a Microfinance Development Strategy that will be a 'key tool in poverty reduction.' It is aimed at ensuring permanent access to institutional financial services for most poor people and their small businesses in Asia and the Pacific. Microfinance includes a broad range of services such as deposits, loans, money transfers, and insurance to poor and low-income households and their micro-enterprises. ADB will help to: provide and leverage its assistance to bring about policy reforms essential for developing microfinance; develop critical financial infrastructure; develop microfinance institutions, which can set in motion a process of commercialization of microfinance services; and help the poor become more aware of, and use, microfinance services. According to Jan van Heeswijk, Chairman of ADB's Task Force on Microfinance, ADB has financed microfinance projects in the past but provided this assistance without a well-defined strategy and, as a result, has not been able to harness the full potential of microfinance for poverty reduction. Microfinance used to be the domain of donors and experimental credit projects - but it has evolved into an industry. This strategy will help us to be more effective and consistent in meeting the diverse requirements of this sector." [back to top]
ADB Sets Up Japan Fund for Poverty Reduction (May 2000)
With an initial contribution of ¥10 billion (approximately US$90 million) from Japan, ADB approves the Japan Fund for Poverty Reduction (JFPR) to support its fight against poverty. JFPR will provide poor countries with grants to support innovative poverty reduction and related social development activities. The proposal for the fund was earlier announced by Japanese Finance Minister Kiichi Miyazawa at ADB's Thirty-Third Annual Meeting held in Chiang Mai, Thailand in May 2000. Typical activities to be supported by the Fund include: Provision of small-scale basic economic and social services to the poor; Supporting social development fund activities that channel funding to small-scale projects targeted to benefit the poor; Supporting non-government organization activities that support poverty reduction and social development; and Capacity-building for local government, and for community-based organizations for enhancing effectiveness and sustainability of DMCs' poverty reduction efforts. [back to top]
40%of 1999 ADB Public Sector Lending for 'Poverty Interventions' (April 2000)
According to ADB's 1999 Annual Report, ADB approved 66 loans in 1999 totaling nearly US$5 billion for 52 projects; about 40 percent was focused on poverty reduction. By sector, social infrastructure received the highest share of total lending (28 percent); the largest share of technical assistance (21 percent) went to agriculture and natural resources. [back to top]
Joint ADB-WB-UNDP Anti-Poverty Consultations in the Philippines (April 2000)
The ADB, UNDP, World Bank and the National Anti-Poverty Commission of the Philippines (NAPC) signed a Memorandum of Understanding to collaborate on a 7-month series of poverty consultations to craft a national anti-poverty strategy and action program for the Philippines. The program will identify: priority initiatives with the greatest impact for the poor, areas of cooperation and the role of stakeholders, resources needed for these programs, and monitoring mechanisms to assess progress in poverty reduction at national and local level. Two major outputs are expected – a series of workshops at regional and national level involving government agencies and basic sector groups to come up with National Anti-Poverty Action Agenda; and a consultation exercise and a Poverty Symposium to discuss the Action Agenda involving civil society, government agencies, the private sector and international organizations. [back to top]
'Landmark' Agreement to Fight Poverty in Bangladesh (April 2000)
The ADB and the Government of Bangladesh signed a Poverty Partnership Agreement to achieve specified targets in various areas of poverty reduction - including nutrition, health and education - within clearly-defined time frames. This is the first such agreement in South Asia. The ADB views Bangladesh as a 'frontline state' in the war against poverty and plans to lend up to US$500 million annually to the country. The Poverty Partnership Agreement was signed by Bangladesh Finance Minister Shah A. M. S. Kibria and ADB President Tadao Chino. ADB plans to lend up to US$500 million annually to Bangladesh to support these poverty reduction goals.
To promote 'pro-poor' economic growth, ADB will help develop key infrastructure such as electricity, gas and transportation, along with policy reforms to establish an enabling environment for the private sector. It will also support reforms in the financial sector. ADB will help liberalize markets for agriculture inputs and will target the poorest areas such as the North West. It will emphasize small and medium scale irrigation and flood control projects, combined with reforms in the irrigation sector; research, extension, storage and marketing for diversifying to higher value-added crops and non-crop agriculture; community development, rural infrastructure and micro-finance. [back to top]ADB, Mongolia Sign 'Poverty Partnership Agreement' (March 2000)
The ADB and Mongolia signed a Poverty Partnership Agreement (PPA) with the aim of reducing by at least half the proportion of the country's poor by 2005. Thirty six percent of Mongolia's 2.5 million people live below the poverty line. According to the Bank, poverty in Mongolia is the result of the 'shocks' following the break-up of the former Soviet Union in 1991. These include the loss of capital inflows and trading arrangements; transition to a market economy; economic contraction and hyperinflation (1990-1993); the loss of financing for social services and the weakening of the social safety net. The Partnership Agreement sets targets for poverty reduction and establishes mechanisms to monitor the progress made. Among others, the Agreement aims at achieving universal primary education and halving the mortality rates for infants and children under five years, all by 2005. Universal access to family planning services is targeted for achievement by 2015. Lending through ADB's concessionary lending window is expected at about $40 million per year. Continued monitoring and analysis of the poverty situation will be a key component of the ADB's assistance. In May 2000, the ADB adopted a new country operational strategy entitled 'A Poverty Reduction Strategy for ADB Operations in Mongolia (2000-2005)'. (see ADB report on 1st Annual Review of Mongolia's PPA, April 2001) [back to top]
Poverty Reduction Key Topic at GMS Conference (January 2000)
Further opening of borders and a new emphasis on poverty reduction topped the agenda at the 9th Ministerial Meeting of the Greater Mekong Subregion (GMS) Economic Cooperation Program in Manila in January 2000. This meeting followed the 'precedent-setting' GMS accord signed in November 1999 that eases the cross-border movement of goods and people on the so-called East-West Corridor linking Thailand, Lao PDR and Viet Nam. Also discussed were new initiatives to address poverty reduction and environmental management in remote GMS watersheds; health and education needs of ethnic minorities; and the protection and management of critical watersheds in the Lower Mekong Basin. [back to top]