1. Poverty and Social Exclusion: What do we know, and what do we need to know?
Luca Barbone
Director, Poverty Reduction and Development Effectiveness Department
World Bank
The EU definition of social exclusion (European Commission 2004).
a process whereby certain individuals are pushed to the edge of society; prevented from participating due to poverty, discrimination, lack of basic competencies and learning opportunities
This distances them from job, income, education and training opportunities, and social and community networks and activities.
Lacking access to power and decision making bodies, they feel unable to control decisions that affect their daily lives

2. Outline Why measure poverty and social exclusion
Developments ın poverty measurement and methodologıcal challenges
Problems in collecting data with regularity
Practical aspects of organizing monitoring at the national and local levels
Practical aspects of organizing monitoring at the local level

3. 1. Why measure poverty and social exclusion?
The new aid architecture and country-based development model:
goes beyond the purely economic model of poverty
addresses the relationship between structural, institutional, human, & macroeconomic aspects of development
emphasizes the links between objectives and the actions needed to reach them – and the importance of clear, monitorable indicators of progress

4. The country-based development model
Poverty Reduction Strategy process
Understanding the nature of poverty
Monitoring outcomes and
evaluating impact
Choosing poverty reduction
objectives
Defining strategy for poverty
reduction and growth including:
- Macro and structural policies
- Governance
- Sectoral policies and programs
- Realistic costing and funding
Implementation of programs
and policies
Actors and participatory processes including:
- Central government
agencies and inter-
ministerial groups
- Parliaments and other
representative
structures
- The public, including
the poor
- Civil society
- External partners
BACKGROUND: The process of developing a PRS varies greatly because it takes place in different countries, under different kinds of governments and circumstances. In general, though, the process can be thought of in terms of several phases, although certain elements, particularly participatory processes, may run throughout.
It is important that the PRSP build on and provide consistency with other current government processes and resulting documents that set forth national or sectoral development plans and budgets. It is, therefore, also important to build on existing strategies and plans, as far as possible, at the sectoral and national level. Existing national strategies, or national development plans that would have been prepared in any case, provided that these are consistent with the guiding principles of the PSRP approach, may be considered to be the PRSP, as is the case in Uganda with the Poverty Reduction Eradication Plan and Mozambique’s Plano de Acção para a Redução da Pobreza Absoluta (PARPA) [English translation: Action Plan for the Reduction of Absolute Poverty], which also predated the PRSP initiative. It is important that PRSPs reinforce, rather than compete with and undermine, existing democratic institutions and processes. Therefore, PRSPs are expected to be fully based on the formally approved policies and budgets of governments, and their preparation should follow appropriate domestic channels, complemented as appropriate with a greater degree of openness and transparency than may have otherwise been the case.
There are important linkages between implementation of the strategy and the annual budget cycle, Medium-Term Expenditure Frameworks where they exist, and the iterative process by which results from the preceding year and ongoing dialogue are fed into policy and program redesign and annual progress reports. It is important that the PRSP become institutionalized in domestic budget preparation and policy and program formulation practices.
The PRSP will be the primary instrument by which a country articulates a strategy around which external development partners could align their own programs of support. Development partners should also be involved to ensure that the poverty strategy has a realistic chance of being funded.

5. Architecture to improve aid effectiveness
C O U N T R Y
Consultations
Link to the budget
Poverty Analysis
PRSP
Monitoring
Policies and programs
Sector Diagnostics
D O N O R S
Assistance Strategies
Donor programs:
Projects, including budget support
Advisory and Analytical Work
Support for analysis and consultations
Feedback mechanisms

6. So what should be monitored?
Shared growth and equality of opportunity require a broader concept of poverty that encompasses non-economic dimensions such as:
access to opportunities
empowerment
subjective well-being
health, education, shelter
gender equality
participation and “voice”
Recent experience amply demonstrates that rapid growth reduces poverty, but the benefits are not always shared equally.
So - the key to sustainable growth and poverty reduction is to enhance the capacity of poor men and women to participate in growth (economic inclusion), through investments in better access to education and training, health services, infrastructure, and productive assets. This positions them better to take advantage of the opportunities for productive, income-generating employment, by increasing their productivity or facilitating their mobility.
It should be noted that equality of opportunity does not necessarily lead to equality of outcomes, which are mediated by individual effort and intrinsic abilities.

7. 2. Developments in poverty measurement
Despite consensus that poverty is multi-dimensional, the expanded definition is still moving “from the periphery to the core”:
1980s – inclusion of nutrition, education and health
1990s – Human Development Indicators
Since 2000 – centrality of “well-being” and empowerment
CWIQ – annual measure of access, usage, & satisfaction with services to give advance warning of future impact
Poverty maps – address spatial correlates of poverty (isolation/accessibility, market access)
Evolution of poverty meaning and measurement:
1960s – GDP per capita growth
1970s – GDP + basic goods
1980s – GDP per capita
1990s -- UNDP HDI
2000s -- MDGs
Multidimensionality of poverty is accepted but income poverty measures are still “first among equals” in:
MDGs (main drivers of contemporary development policy)
Human Development and Gender Development Indices (widely used and debated)
PRSPs
Core Welfare Indicators questionnaire
Designed for Africa to monitor change in key social areas
Large samples, short questionnaire and quick data entry
1997 Ghana CWIQ of primary school services found adequate access & usage, but found that poor were poorly served and everyone lack books

8. But -- measuring non-economic dimensions involves methodological challenges
Indicators should be:
relevant to policy makers and decision makers
cheap and easy to collect
relevant to interventions
unambiguous measures of progress
Finding non-economic indicators is more complicated because they:
may change more slowly than economic indicators
can be more difficult to collect
may require special surveys
Are more context-specific and less “universal”
may be less tangible and quantifiable
…hence perceived as less objective and rigorous

9. Examples of new approaches: poverty maps and policies
Overlays used to identify correlates of poverty
Sri Lanka: Poverty and isolation/accessibility
South Africa: Containing a cholera epidemic
Tanzania: Changes in poverty and market access
Ecuador: Compare poverty maps at two points in time.
… coordinate programs, and improve targeting
Cambodia: WFP combined with maps of nutrition, infrastructure, and vulnerability to flooding & drought to identify potential areas for WFP programs.
Morocco: Maps suggested different mechanism for urban vs. rural areas.
Vietnam: Validated targeting approach of Program 135.
Mexico: PROGRESA & Oportunidades
South Africa: Municipal grant amounts based on estimated no. of poor
Poverty maps:
facilitate comparison of income with non-income measures of poverty (access to infrastructure or services, availability and condition of natural resources, distribution of transport and communications
GIS based poverty analysis makes it easier to integrate poverty data from various sources
Geo-referenced information allows data to be converted from administrative to ecological or other boundaries
Visual representation makes the results of analysis more understandable to non-specialists.
Examples of application:
Tanzania: poverty map challenged conventional wisdom that market reforms in agriculture had left poorer areas behind
Morocco: poverty maps demonstrated that urban neighborhoods showed much more economic heterogeneity than did rural, suggesting geographical targeting for rural areas only
Mexico: maps led to explicit targeting of the 50 municipalities that combined the highest poverty rates with the lowest Human Development Indicators

11. Tracking the impact of education of poverty and mobility
Poverty and access to education:
Importance of secondary education for poverty reduction grew in 1990s
Access for poorer households remains low
But education has potential to enlarge opportunities for mobility out of low paying agriculture sector.

12. Tracking impact of secondary education on productivity and mobility
Importance of secondary education for poverty reduction grew in 1990s, with rapid non-agricultural growth.
Yet, access for poorer households remains low.
Uganda:
The change in benefit incidence from secondary education for the poorest quintile decreased during the 1990s
…while it rose for the top quintile.
Education can help create greater opportunities for mobility out of low paying (traditional) agriculture sector

13. Tracking inclusion in financial markets
Systematic information on household financial assets in developing countries remains sparse
To date, tracking access relies on combining data from HHS and data on penetration of financial institutions
Findings: financial inclusion of the poor still a challenge

14. Financial inclusion of the poor…still a challenge
Shallow financial markets are excluding the poor and limiting their opportunities for investment.
This map shows estimates of the share of households with access to financial services for over 150 countries.
In most African countries, less than 40% of households are estimated to have access to financial services
In China and India, the estimate is only ~40-60% of households.
SOURCE:
Note that systematic information on household financial asset holdings in developing countries is very sparse.
Honohan (2006) combines data on the penetration of banks, savings banks, and “alternative financial institutions” (such as microfinance institutions, with existing household surveys to estimate these shares. The 3 data sources are:
Beck, Demirguc-Kunt and Martinez Peria (2007) use aggregate indicators on bank penetration to predict the proportion of households that uses financial services.
Peachey and Roe (2005): data on penetration of savings banks across countries.
CGAP (2005): data on penetration of “alternative financial institutions”, such as MFIs.

15. Selecting indicators to monitor empowerment
Definitions focus on choice, participation, control and influence, ownership, voice and means of overcoming oppression
Challenging to measure because:
Not a unitary concept: intrinsic/ instrumental, universal/ context specific, individual/ collective, subjective/objective?
multiple levels and dimensions
not directly observable, but must be measured through proxies

16. Monitoring the impact of reforms on empowerment and social inclusion
Measuring Empowerment and Social Inclusion in Nepal
tracked effects of decentralization policy and rural water supply and sanitation project on gender, caste and ethnic relations
found that greater focus on livelihood interventions was called for to reduce influence of caste and ethnicity
Impact Evaluation of Honduras Community-Based Education
monitored impact of reforms on community empowerment with respect to influencing school management
identified necessity of long-term government commitment to reducing power imbalances between elites and indigenous population within communities

17. 3. Problems in collecting data with regularity
Incomplete administrative data (electoral registers, identity cards)
Selecting indicators reflects a long social process
Under-representation of “invisible” populations
Difficulties in coordination, duplication, redundancies
Few incentives to participate or relinquish space
Weak demand (interest?) from decision-makers
Without common purpose, formal obligations don’t work
In addition to organizing data collection, national monitoring systems must build demand and establish links to entry points in decision-making processes:
Budget
MTEF
Planning
Review/update PRS
Parliamentary sessions
Public dialogue

18. 4. Practical aspects of organizing monitoring at the national level
Choice of institutional lead critical - more effective if a single agency close to center of government
Champion important – but dangerous to tie system to a personality
Coordination is the greatest challenge: process, advocacy, political leadership critical
Promote monitoring within line ministries; change incentives and capacity
National statistical agencies: ensure complementarity with existing systems and plans
Increase dissemination, training/statistical literacy
Institutional lead - range of locations:
Ministry of Finance (Mali, Niger, Uganda)  close to budget
Ministry of Planning (Malawi, Mauritania)  better analysis
Office of the (vice-)President (Tanzania)  greater authority

19. Practical aspects of monitoring at the local level
Involve local governments:
limit indicators to reduce burden and increase compliance
Central quality control mechanism
Support and capacity-building, provide feedback
Important that those responsible for collecting data understand how they will be used
Build on local civil society, encourage local accountability and dissemination

20. Thank you!