IMPLEMENTING POLICY GUIDANCE ON PRO-POOR GROWTH Solveig Buhl, OECD Taking Action for the World’s Poor and Hungry People Beijing, 17-19 October This master presentation is intended as a support to anyone making a presentation of POVNET’s recommendations on pro-poor growth. A presenter may add, remove or change specific slides. Each slide is provided with notes which are intended to give presenters an easy reference to relevant texts in POVNET publications. Master presentations are also available for the “sectoral” publications (PSD, agriculture and infrastructure).

ECONOMIC Consumption Income Assets DAC POVERTY REDUCTION NETWORK (POVNET) 2003-2006 ECONOMIC Consumption Income Assets Focus on the economic dimension of poverty The 2001 DAC Guidelines on Poverty Reduction showed that poverty has multiple and interlinked causes and dimensions: economic, human, political, socio-cultural, protective/security. Since 2003 the Development Assistance Committee (DAC) through its Network on Poverty Reduction (POVNET) has focused its work on one dimension of that bigger picture – reducing economic poverty through pro-poor growth. The work of POVNET since then has given priority to addressing strategies and policies in areas that contribute to pro-poor economic growth such as infrastructure, private sector development and agriculture. Task teams were set up and met over a period of two and a half years to improve understanding of the constraints and opportunities in these areas with a view to developing policy guidance for donors.

POVNET: Developing policy guidance on pro-poor growth Based on the experience of DAC POVNET member countries: Policy guidelines that enhances the ability of poor people to participate in, contribute to and benefit from growth This slide present the core message on POVNET’s view on pro-poor growth. What is pro-poor growth? Pro–poor growth focuses attention on the extent to which poor women and men are able to participate in, contribute to and benefit from growth, as measured by changes in the incomes of the households in which they live and the assets they and their children acquire to earn higher incomes in the future. When may growth be termed pro-poor? There are different views on this issue. For some, what matters is whether the incomes of the poor are rising relative to the incomes of the non-poor and hence inequality is falling. The merit of this perspective is that it focuses attention on whether the poor are benefiting more or less proportionately from growth and whether inequality, a key determinant of the extent to which growth reduces poverty, is increasing or falling. For others, what matters most is the absolute rate at which the incomes of the poor are rising. For example, are the incomes of the poor rising fast enough to reduce the number of people living below the international poverty line in accordance with MDG 1:1? The relative and absolute concepts of pro-poor growth are both relevant, and complement each other in the analysis of growth processes from a pro-poor perspective. In fact, the tools needed to analyse how the poor are participating in and benefiting from growth may be used with either definition. See further chapter 1.2 in the “Key Policy messages”. Analytic tools are further described in Box 1.

FOR DONORS, NOT BUSINESS AS USUAL Donors need to be more flexible and responsive to country situations and processes The engagement between policy makers, private sector and civil society needs to be strengthened The poor need to be informed and empowered to participate in the policy making process Policy trade-offs exist but can be better managed Rethink approaches: private sector development, infrastructure and agriculture This slide spells out POVNET’s general messages in Chapter 5 on the role of donors in promoting pro-poor growth, while the following slides deals with each of the three thematic areas which POVNET has studied in more detail. Main POVNET message: The pro-poor growth agenda has important implications for the way donors support partner countries. It is not a ‘business as usual’ agenda, and ‘more of the same’ will not be sufficient. Further POVNET messages: Donors should focus on supporting in-country processes that are inclusive of the poor. Donors should support the emergence and development of policy-making processes that are formal, transparent and accountable to the interests of the poor, and conduct their policy dialogue through them Donor support needs to be long term, flexible and responsive to country situations Donors need to stay engaged in states where respect for the rule of law and governance are weak A pro-poor growth lens reveals the need to rethink agendas and approaches in areas important to pro-poor growth, such as private sector development (PSD), infrastructure, agriculture and risk and vulnerability Donors need to enhance their organisational capacities to effectively support country-led, pro-poor growth

INFRASTRUCTURE: FACTS The infrastructure gaps are huge: 1 billion people lack road access, 1.2 billion do not have safe water Bilateral donor support to infrastructure decreased from 35% of total ODA in 1997 to 15% in 2003 This slide is intended to serve as an introduction to the presentation of POVNET’s key messages to donors on infrastructure. Photo: Sida

INFRASTRUCTURE: KEY POLICY MESSAGES TO DONORS Support partner-led frameworks Enhance infrastructure’s impact on poor people (target the poor) Improve management of infrastructure investment to achieve sustainable outcomes Increase infrastructure financing and use all financial resources efficiently The POVNET agenda on infrastructure:

AGRICULTURE: FACTS 75% of the world’s poor live in rural areas 10% increase in farm yields may reduce number of people living below 1 USD/day by 6-10% ODA support to agriculture decreased from 11% in 1984 to 3% in 2004 This slide is intended to serve as an introduction to the presentation of POVNET’s key messages to donors on agriculture. © International Labour Organization/Maillard

AGRICULTURE: KEY POLICY MESSAGES TO DONORS Recognize diversity of rural households Build household assets, reduce barriers and expand access to markets Support diversified livelihoods Tackle risk and vulnerability through insurance and productive safety nets The POVNET agenda on agriculture:

PRIVATE SECTOR DEVELOPMENT: FACTS 75% of non-agricultural work force in Africa earns its livelihood informally DAC members spend roughly 15-20 % of bilateral ODA on support to private sector development This slide is intended to serve as an introduction to the presentation of POVNET’s key messages to donors on private sector development.

PRIVATE SECTOR DEVELOPMENT: KEY POLICY MESSAGES TO DONORS Strengthen enabling environment Recognize contribution by informal firms and workers and reduce disincentives to formalisation Facilitate risk taking Promote dialogue between state, private sector and civil society Link / merge with PRS The POVNET agenda on Private Sector Development:

POVERTY IMPACT ASSESSMENT: New approach to guide implementation of policy guidance PIA is a harmonised approach that helps donors and their partners take evidence-based decisions to maximise the pro-poor impacts of their programmes and policies to assess the distributional impacts of interventions

PIA FRAMEWORKS AND MODULES Assess Improvements to MDGs plus Risks 5 Assess enhancement to capabilities (economic, protective, political, cultural, human) – gender/environment 4 R E S U L T C H A I N Determine transmission channels (prices, employment, transfers, access, authority, assets) 3 Information quality and gaps 2 assess the reliability of data/information and knowledge gaps assess key assumptions and potential risks provide a framework for improving baseline data and monitoring the impact hypothesis during implementation Analyse Institutions & Stakeholders 1 Determine & Design Interventions National Strategies / Plans Country Assistance Strategies

WAY FORWARD POVNET country workshops to operationalize the policy recommendations on country level Promoting Poverty Impact Assessments (scaling up and capacity development in partner countries) This slide spells out POVNET’s general messages in Chapter 5 on the role of donors in promoting pro-poor growth, while the following slides deals with each of the three thematic areas which POVNET has studied in more detail. Main POVNET message: The pro-poor growth agenda has important implications for the way donors support partner countries. It is not a ‘business as usual’ agenda, and ‘more of the same’ will not be sufficient. Further POVNET messages: Donors should focus on supporting in-country processes that are inclusive of the poor. Donors should support the emergence and development of policy-making processes that are formal, transparent and accountable to the interests of the poor, and conduct their policy dialogue through them Donor support needs to be long term, flexible and responsive to country situations Donors need to stay engaged in states where respect for the rule of law and governance are weak A pro-poor growth lens reveals the need to rethink agendas and approaches in areas important to pro-poor growth, such as private sector development (PSD), infrastructure, agriculture and risk and vulnerability Donors need to enhance their organisational capacities to effectively support country-led, pro-poor growth

www.oecd.org/dac/poverty FOR FURTHER READING ... Thank you! POVNET’s policy guidance to donors on private sector development, infrastructure and agriculture is being published in two ways: as a part of an integrated compendium on pro-poor growth and as separate off-prints. In addition, the same documents can be retrieved digitally from the DAC website and are also available on a CR-ROM. Thank you!