1 Legal Empowerment of the Poor: An Action Agenda for the World Bank Ana Palacio April 19, 2006

2 LEP: What does it mean? (1) A new approach to same old problems? “Legal empowerment of the poor”, an expression that gives visibility to the key challenge of development today: the fusion of two tectonic plates  Poverty agenda: renewed awareness driven by concerns about security and migratory flows  Governance agenda : consensus that reforms cannot focus on the economy alone The State (at all levels, particularly local) has to be brought out of the closet

3 LEP: What does it mean? (2) Diversity of approaches to LEP by development agencies :  Three main approaches: Tackling informality Promoting access to justice and judicial reforms  The poor and disenfranchised suffer disproportionately when the state fails to provide access to justice  Law and justice reform is a broad field Formalizing property rights, in particular through legal land titling  The popularity of this approach stems from its simplicity  Yet, it overestimates the direct economic benefits, while downplaying important social impacts, and underestimates the difficulties in formalizing property rights in developing countries:  Rural vs urban contexts  Contestability of property rights  Legal titling takes time and requires meeting a number of challenges (technical; legal, administrative and political; economic; social and environmental)  The direct economic benefits may not materialize in contexts where the poor are confronted with multiple distortions in financial, labor, land, housing markets  Legal titling can have other important outcomes, such as increased female labor participation and child schooling  Legal titling is not the only way to improve security of tenure  Limitations: Driven by empirical experimentation, largely devoid of theoretical underpinning These approaches address LEP by focusing on a specific area of intervention LEP has to go beyond these partial approaches

4 LEP: What can it deliver? LEP can strengthen the voice and ability of the poor to demand greater accountability and responsiveness from the state by involving them as full citizens (and not just as ‘beneficiaries') in policy making and implementation  Example: Voices of the Poor LEP can serve as a reality anchor that grounds abstract models of governance and achieves measurable outcomes  Example: Peru Urban Land Titling Program LEP can play an essential ‘stitching’ role connecting the supply and the demand sides of governance  Example: Mozambique Country Assistance Strategy LEP can help break the ‘poverty trap’ by providing security and mobility to the poor  Example: National Alliance of Street Vendors and SEWA in India

5 LEP: How to do it better? (1) The World Bank has a unique role to play in leading the LEP agenda. Areas of comparative advantage:  Quality of its technical and analytical work  Cross-country experience  Ability to mobilize substantial resources  Broad mandate focused on poverty reduction  Global vision, not weighed down by historical ties or national interests  Ability to convene diverse stakeholders to discuss and implement strategies and programs What is the World Bank currently doing to promote LEP?  Valuable work on LEP but partial and scattered across units, lacking a common thrust and vision  Parallel approaches that need better coordination: supply-side (institution- building) more recently, demand-side of governance (community driven development)  Timid engagement with local governments

6 The World Bank should articulate a shared internal vision on LEP The World Bank should develop a “LEP Action Agenda”. Core building blocks :  Develop a strategic integrated framework  Rethink Bank’s engagement with local governments, which entails exploring direct sub-sovereign lending and grant financing  Expand current engagement with civil society  Improve coordination and integration of Bank activities related to LEP  Use (and adjust when necessary) existing lending instruments and analytical tools to operationalize the LEP agenda (CAS, LEP-specific country reports; integration of LEP issues as relevant in existing analytical products)  More systematic use of political and historical analysis in Bank operations and programs  Develop benchmark indicators against which to set baselines and measure performance  Identify and manage potential risks and misperceptions LEP: How to do it better? (2)