Three-quarters of the world’s poor people live and work in rural areas and survive on less than one dollar a day, Yet the first round of Poverty Reduction Strategies, the World Bank mechanism to plan poverty reduction and allocate aid for each country, has failed to engage directly with rural economies.

Research from the Overseas Development Institute, UK, examines the treatment of rural productive sectors (agriculture, tourism, forestry and fisheries) in Poverty Reduction Strategies (PRSs) in Malawi, Nicaragua and Vietnam. It suggests that development agencies and policymakers need to improve understanding of linkages between rural growth and poverty reduction and stop treating poor rural people as a homogeneous group.

Part of the problem is that there is little or no consensus on priorities for agricultural and rural development. Also, PRSs tend to focus on public spending, rather than encouraging private sector development. They tend to emphasise the public provision of social services and pay less attention to the potential contribution of the productive sectors to poverty reduction.

Malawi’s PRS process was started by those who recognised an opportunity to release Malawi’s massive debt burden for government spending. It has not ended a long-standing neglect of the needs of the country’s small farmers, but has created an opportunity for civil society engagement in policy processes.

Nicaragua imports twice as much as it exports and is heavily dependent on remittances and aid. The PRS sees exports as critical in driving the economy. Pessimists doubt whether it can reduce poverty as long as government policies continue to serve the interests of Nicaragua’s elite groups.

Vietnam’s PRS was written primarily for external consumption, to attract donor funding. The early process was not linked to ministerial and provincial five and ten year planning cycles. It recognises that poor people largely live in agricultural areas, but lacks detailed plans to assist them or build capacity in poor provinces.

The research finds that:

• In all three countries, the PRS is second in political importance to a national plan or economic growth strategy.
• The PRS growth model tends to be one of ‘trickle down’, with a lack of specific measures to address the particular needs of poor rural people.
• Participation, a key underlying PRS principle, has been modest, with low engagement by rural stakeholders.
• PRSs have been undermined by changes in government, or by national development plans that have overtaken them.

PRSs have overlooked dynamic aspects of poverty, such as opportunities for poor people to participate in economic growth, as well as the risks of non-poor people descending into poverty. Designers of second-round PRSs must:

• recognise that the analysis of poverty is always context specific
• strengthen accountability mechanisms, civil service capacity and scope for civil society participation in rural development
• encourage donors to coordinate their assistance and take a more realistic attitude to recipient government politics
• ensure that the focus of PRSs moves beyond the instrument itself to consider broader policy debates and political interests which might determine the feasibility of pro-poor change.

Source(s):
‘Poverty Reduction Strategies and the Rural Productive Sectors: Insights from Malawi, Nicaragua and Vietnam’, Overseas Development Institute, Working Paper 258, by Elizabeth Cromwell, Cecilia Luttrell, Andrew Shepherd and Steve Wiggins, November 2005 Full document.
 ‘Poverty Reduction Strategies and the Rural Productive Sectors: What Have We Learnt, What Else do We Need to Ask?’, Overseas Development Institute, Natural Resources Perspectives 100, by Lídia Cabral, May 2006 Full document.

id21 Research Highlight: 24 November 2006

Further Information:
Lídia Cabral
Overseas Development Institute
111 Westminster Bridge Road
London, SE1 7DJ
UK

Tel: +44 (0)20 79220300
Fax: +44 (0)20 79220399
Contact the contributor: l.cabral@odi.org.uk

Overseas Development Institute, UK

Cecilia Luttrell
Overseas Development Institute
111 Westminster Bridge Road
London, SE1 7DJ
UK

Tel: +44 (0)20 79220300
Fax: +44 (0)20 79220399
Contact the contributor: c.luttrell@odi.org.uk

Other related links:
'Poverty Reduction Strategies: getting it right second time around'

'Evolving environmental management: from conservation to poverty reduction'

'Monitoring the role of environmental management in the MDGs'

'Poverty Reduction Strategy Papers: neglecting growth, employment and external shocks'

Rural Poverty Portal (IFAD)