The poverty of poverty reduction strategies
THE predominant and prevalent discourse for poverty reduction is that the rich countries can help to lift poor people onto the bottom rung of the ladder through debt relief and/or a massive injection of aid. Those poor (countries) will then be able to climb the ladder of growth themselves, and thereby ascend out of poverty. Such a vision of economic growth is based on the notion that it is possible for all states to follow a broadly similar pattern of "development."
Consequently, there had been an abundance of policy strategies for poverty reduction for many years, for example, Heavily Indebted Poor Countries (HIPC) initiatives, Country Assistance Strategies (CAS), Structural Adjustment Programs (SAP), and Comprehensive Development Frameworks (CDF).
But the lives of poor people were unchanged. This leads to the question: why so many "well-intentioned" development initiatives have failed in the past? One reason is that those initiatives were imposed from outside, with insufficient sensitivity to local contexts.
Critics argue that these esoteric and erudite prescriptions helped to disguise the hegemonic nature of anti-poverty policies in poor countries. Experience suggests that such policies quite often fall on infertile ground. Instead of assisting people's pursuits, these policies send them off in other directions, replacing and displacing the local effort.
Poverty elimination of basic deprivation is not primarily a matter of mere economic growth, but of political and economic empowerment of the poor through firm commitment and uncompromising, resolved, and dedicated action on the part of political leadership. It needs to focus more on minimising inequalities than on maximising profits and inducing growth based neo-liberal economic policies.
Political leaders, seemingly, have difficulty in coming to terms with the fact that the conditions of poverty in the developing countries are a consequence of the maldistribution of power, and, therefore, require major institutional change or change in the existing political and social power structure.
However, although one size cannot be suitable for everyone, a universal framework for poverty reduction, Poverty Reduction Strategy Paper (PRSP), is now in place for poor countries.
As of May 2008, fifty-nine countries have a full PRSP, and in addition to this, Interim PRSPs (IPRSP) of nine other countries can be found in the World Bank website. There are several reasons why the national governments have "accepted" such an approach. It is primarily because of the hegemonic relationship of the governments with two leading global monetary agencies, the World Bank and IMF.
When a policy is being prepared cognate to an external framework to fulfil a condition of a lending and borrowing relationship, then the borrower tries to produce the strategy exactly in a way that will ensure the deal. This leads to the production of a policy that is distant from local and cultural contexts and closer to the lenders' prescriptions.
Nevertheless, it is probably safe to say that "poverty reduction" is an issue that will remain at the top among the research topics. Governments, the international community, IFIs, civil society, academics, consultants, researchers and NGOs are perpetually coming up with different ideas and frameworks for poverty reduction. Various targets are set and re-set, aid and other assistance are pledged for poor countries, but poverty still persists in the poor countries and even in pockets of many so called developed countries.
It seems as though poverty reduction is an insurmountable task regardless of all national and international efforts. But is this really the case? Is poverty actually mightier than human-kind and its aspirations and dreams of a better world? Or is it that nationally and internationally "poverty reduction" is little more than a slogan and not backed up by firm commitment?
The current financial crisis has made a dramatic economic downturn in rich countries. What could be the likely impact of this crisis for developing countries? There are several dimensions. First of all, budgets for official development assistance (ODA) might be cut, as tax revenues in rich countries decline. Furthermore, there is less demand for the commodities in the West that poor countries export. The exports of emerging and developing economies are collapsing. Labour markets are also shrinking which is a terrible news for countries like Bangladesh where migrant workers were contributing to a significant level for its forex reserve.
Initially, it appeared that developing countries would not be hit very hard by the current financial crisis because they had not invested in the highly speculative and inadequately collateralised asset-backed securities. That assumption, however, proved false.
This leads us to the question what could poor-country governments do to mitigate the crisis? The reality is there is not much they can do vis-a-vis the rich nations. They have much less fiscal scope, because they only get loans on tougher terms. Their options in monetary policy are also very limited, because relaxing interest rates has a much greater impact on their currencies' exchange rates. Their ability to act at the macro-economic level is thus limited.
At the same time, we must not forget that these countries are falling victim to a global crisis which they did not cause. Therefore, the governments of rich nations must swiftly take action to set up new procedures to resolve such problems fast and in fair terms. When we talk about "fair terms," we must not forget that, historically, poor countries are following and conforming to some global ideas. As the poor countries are often obliged to agree on global ideas to perpetrate loans and aid, this hegemonic process may then lead the ideas and frameworks to become dogmatic (which must be followed by poor countries to obtain aid) rather than to become effective.
Poverty reduction is not feasible by borrowing concepts from external sources or by foreign experts. How far an eloquently drafted policy (foisted by the IFIs and/or other international organisations) will influence national and local development is highly dependent on the extent to which political leaderships have belief, confidence, and commitment. Otherwise, policies will be merely a superficial paper document.
The reduction of global poverty requires not only political will, but also capable states and effective actions. Adequate funding is also necessary. There was an agreement in the second UN conference on development finance in Doha to asses the financial crisis and its impact on poor countries at a UN summit at the highest political level in 2009.
This April in London, G20 leaders will face a number of major domestic and international challenges in the forthcoming summit on tackling global financial crisis, such as fiscal stimulus to boost economic demands, toxic assets of banking systems, rising unemployment and falling house prices.
Governments in Europe and the US put together packages worth several hundred billion dollars or euros to save banks and other financial institutions threatened by insolvency. Is it possible for these leaders to ponder any bailout package for the poor countries to come out of debt and reduce poverty while poor people's sufferings have intensified due to a crisis where they did not play any role.
Is it possible to think about a "new beginning" for global poverty reduction -- a synergy between contemporary knowledge of West; and hopes, desires and aspirations of poor countries in contrast to hegemonic aid/debt relationships that fetter the poor even firmer with the chain of poverty?
Dr. Palash Kamruzzaman is Research Assistant, School of Sociology and Social Policy, University of Liverpool. E-mail: [email protected].
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