Poverty Reduction Strategies

Poverty affects a great number of the world's people: over a billion people exist on less than one U.S. dollar a day, and many more have little or no access to quality drinking water and food, medical assistance, education, and employment. Poverty is a crippling condition that both destroys lives and keeps people from bettering their lives. Because poverty is such a universal concern and is particularly high in many developing countries, numerous organizations and governments around the world are activity seeking to eradicate it. Many large organizations such as the United Nations and the World Bank are providing financial assistance and action plan formation services to impoverished countries, and countless other smaller organizations and individuals are also working to reduce poverty levels. In working with non-government and government organizations, many countries have established poverty reduction strategies to pinpoint the causes of poverty in areas and formulate solid goals in order that poverty may be reduced, or even eradicated.

Keywords Developed Country; Developing Country; Extreme Poverty; International Monetary Fund; Millennium Developmental Goals; Non-Government Organizations (NGO); Poverty; Poverty Reduction Strategy Papers; Structural Adjustment Programs; World Bank

Overview

Despite the numerous technological and societal advancements made in recent decades, a good percentage of the world's people live in poverty, unable to obtain their basic needs. Poverty, though, is a deceptively complex concept. A poor person in a developed country such as the U.S. might still have access to electricity, basic sanitation, medical care, and food, necessities that millions of others across the globe do without. While an impoverished person in an industrialized country may be quite different than an impoverished person in Haiti or Kenya, both people share many characteristics.

Some of these characteristics are malnutrition, illiteracy, death, disease, and hopelessness; however, the World Bank (2007) poignantly expressed other not-so-obvious consequences of poverty by stating, "Poverty is powerlessness, lack of representation and freedom." Poverty is the helplessness of a mother watching her child die because she cannot afford a doctor. Poverty is the frustration of a man that cannot afford a lawyer to seek justice for him. Poverty is the oppression of parents who cannot afford to move to a better area where their children can be safe and have the chance of an education. Additionally, Kozolchyk (2007) stated that, "despair and distrust for social institutions (are) predominate feelings among the poor" (p. 729). This distrust is particularly troublesome because it isolates the poor from the very people and institutions that can best help them.

Extreme Poverty

Extreme poverty is particularly dire. It is defined by the World Bank (2007) as the state of living on less than one U.S. dollar a day, which accounts for about 1.1 billion or 1/5th of the world's population. People living in extreme poverty cannot afford to provide for their basic, daily needs such as food, shelter, clean drinking water, and sanitation. An additional 2.7 billion people survive on less than 2 U.S. dollars a day. Although these people technically are not at the extreme poverty level, this significantly low income hinders them from seeking medical care and education and traps them into a usually shortened life with a very low standard of living.

Reducing Extreme Poverty

International indicators show that extreme poverty is improving in many areas. According to the World Bank (2007), from 1990-2001, there was a 7% reduction in the rate of people living in extreme poverty. These more promising numbers indicate that the dedicated efforts of numerous non-government organizations (NGOs), government initiatives, international charities, and concerned individuals are helping. In particular, poverty reduction strategies are being formed and implemented around the world, and these action plans and efforts are helping lift many people out of the oppressive lifestyle of poverty.

However, reducing the levels of poverty in the world is an extremely complex goal because poverty stems from many causes. Unemployment is often the main factor of poverty, and there are many reasons for unemployment such as a lack of education or vocational training skills, a poor economy where jobs are scarce, gender discrimination, and physical or mental disability. Poverty is often directly linked to environmental issues: drought, famine, or disease can destroy the livelihood of farmers and agricultural workers and place a huge premium on food and water. War and violence tears people from their homes and disrupts lives, leaving many impoverished.

Therefore, in order for poverty to be eradicated around the world, these issues of drought, terrorism, lack of water, illiteracy, and discrimination must be eradicated so that people have the resources and the power to better their lives. Poverty reduction strategies are focused on these very issues. Many of these strategies recognize that simply providing financial assistance is not enough; often, doing so can aggravate conditions. Instead, poverty reduction strategies focus on equipping people so that they can take charge of their own futures and have the resources to improve their lives, not merely live better on charity. Education, vocational training, job creation, small loans, and entrepreneurship assistance are just a few of the many opportunities that are offered to people through the efforts of poverty reduction strategies.

Further Insights

Organizations' Efforts

The United Nations and its well-known organization UNESCO (the United Nations Education, Scientific, and Cultural Organization) is one of the champion fighters in the battle to overcome poverty. In particular, the UN (2005) has established eight Millennium Development Goals to be accomplished by 2015. These goals are:

• Eliminate extreme hunger and poverty,

• Ensure that everyone has access to a primary education,

• Eliminate gender disparity and promote women's rights,

• Reduce the rate of child mortality,

• Reduce the rate of maternal mortality and poor health,

• Fight to eliminate serious diseases such as aids and malaria,

• Work to sustain the environment, and

• Create global partnerships.

All these goals work together to eliminate poverty and the difficulties that both create and accompany poverty.

UNESCO and the UN are not the only major worldwide organizations who are directly focused on targeting poverty. The World Bank and International Monetary Fund (IMF) have joined forces to develop poverty reduction strategies in low-income countries. These countries are those who are seeking to be covered under the Enhanced Heavily Indebted Poor Countries Initiative, and both the World Bank and IMF decided that as a prior requirement of the initiative, these countries needed to establish poverty reduction strategies based on five determined principles (Canagarajah & Van Diesen 2006). In particular, a country that wants to be considered for HIPC (Heavily Indebted Poor Country) relief must create Poverty Reduction Strategy Papers (PRSP). These papers essentially function as action plans to overcoming poverty and ascertaining that resources will be used effectively. These papers are mandatory before World Bank and IMF will grant financial assistance to a country. The use of these papers was introduced in 1999 (Imboela, 2005).

Types of Financial Assistance

Obviously, financial assistance to an entire nation, particularly HIPCs, is often crucial to helping a country create jobs, fund public assistance programs, and develop education structures, all important in overcoming poverty. However, financial assistance on a smaller or individual level is also a crucial need. One of the difficulties of poverty is that it traps people into a day-by-day survival mode and does not allow them to devote resources towards more long-term goals such as receiving an education or starting a business, and small or micro-level loans are often the only way poor people can start their own businesses or obtain secure housing.

Financial institutes that loan money to the very poor face a high possibility that these loans will not be repaid: this has the overall effect of driving up interest rates (Kozolchyk, 2007). This risk can be reduced if secured lending systems are adopted; not only does this protect the financial institute but it also results in a decline of interest rates. These secured lending systems also have a direct effect on the housing market by allowing for more low-income mortgages. Thus, Kozolchyk (2007) argued that poverty could be greatly reduced if financial institutions allowed both private and public parties to obtain small or large loans at a reasonable interest rate, which many financial institutes are beginning to do.

Many of these loans are "micro loans" given to individuals for the purpose of starting a business. Rather than demanding collateral, the financial institute bases eligibility on the borrower's willingness to accept the responsibility of the loan and pay it off. Another form of lending for commercial customers, commercial lending has the lender taking possession of the borrower's assets and only releasing them upon payment of the debt. Both of these practices, Kozolchyk (2007) stated, can have the very positive effect of helping people climb out of poverty, and many countries have been implementing these practices.

Programs in the Caribbean

Bowen (2007) said that the Caribbean is an area that is especially needful of poverty reduction strategies; as the percentage of poor people in Haiti alone is an astounding 65%. Thankfully, there have been many efforts in the Caribbean to improve this situation. One issue Bowen (2007) mentioned was fertility control; lowering the number of children being born has a positive effect on poverty. Bowen (2007) specifically mentioned the Caribbean Basin Initiative (CBI) which encouraged the spread of businesses, particular American businesses, in order to create jobs and spur the economy forward. The UK and Canada also are involved with reducing poverty in the Caribbean; the Canadian International Development Agency (CIDA) has helped support development projects in approximately 17 Caribbean countries. Micro-credit for individuals wanting to establish their own businesses is also growing throughout the Caribbean. The Trickle Up program which helps people receive job training, money for starting businesses, and support so that they may either start a micro-business or maintain an existing one (Bowen, 2007).

Assistance for Women

Some poverty reduction strategies focus on the particular plight of women in poverty. For example, van Der Molen (2006) said that in Sri Lanka, the particular issues of gender perception, and women's roles have often been overlooked and marginalized in poverty reduction strategies. Women in Sri Lanka suffer from such barriers as not having transportation to work, being viewed of as unable to operate mechanical equipment, and being prevented from performing "men's work," all of which severely limits their employment opportunities. As a result, van Der Molen (2006) said that the government of Sri Lanka "intends to encourage smallholders to cultivate high-value horticulture crops, livestock, fisheries and fruit processing" (p. 441) because most of these occupations can be performed by women in their homes and communities. This, hopefully, will have the result of giving women good employment and working themselves out of poverty.

Walingo (2006) echoed van Der Molen's (2006) discussion of gender in poverty reduction strategies with Kenya as an example. Agricultural development is often a feature of poverty reduction strategies, but Walingo (2006) said that these efforts often do not have desired results because education is a missing factor. Women in particular are important in agriculture because in many countries they are the primary ones responsible for cultivating and producing household food, because men are increasingly seeking work in cities and more children are able to attend school. This means more of the agriculture workload is being left to the women. One such poverty reduction strategy focused on women and agriculture is the Livestock Development Project, a program which educates and trains women farmers in such skills as disease control, breeding programs, grazing land development, and workload sharing.

These are only a small fraction of the enormous number of different poverty reduction strategies being created and implemented around the world. Because of these strategies, more people can receive an education, the financial assistance to start their own business, the knowledge in developing new agricultural practices, and the empowerment that can break through the hopelessness and helplessness of poverty.

Issues

Measuring Poverty Numbers

Chakravarty, Kanbur, & Mukherjee (2002) pointed out that evaluating poverty statistics is a difficult problem. The gross number of poor people in the world has increased, but the percentage of poor people has decreased because of expanding populations. The question remains for researchers is what number should be focused on - the absolute number of people in poverty or the percentage of the world's population that lives in poverty? (p. 2).

A further problem with gauging the number of poor in the world is the troubling reality that poverty is not decreasing universally. Some areas such as Sub Sahara Africa and Central Asia have experienced an increase in the number of people living in extreme poverty (World Bank, 2007). Sadly, the very poverty reduction strategies implemented to combat this problem sometimes have had the negative effect of increasing poverty.

PRSP's: Uganda

Canagarajah & Van Diesen (2006) stated that Uganda's Poverty Eradication Action Plan (PEAP) is held by some as one of the best poverty reduction strategy efforts and has had some very positive impacts, such as bringing the government's focus heavily on poverty and making all areas of the government value the eradication of poverty as a primary issue. However, despite these gains, Canagarajah & Van Diesen (2006) argued that PEAP has not done as good a job at upholding the five principles for Poverty Reduction Strategy Papers (PRSPs) as outlined by the World Bank and the IMF. An example of one of these would be that the first principle is the idea of country ownership: all sectors of the government and many stakeholders should be part of the poverty reduction strategy. However, in Uganda, the PEAP was seen as only belonging to the ministry and a limited number of stakeholders, "Linkages between the PEAP, sector plans and local government plans were not as strong as they could have been" (p. 649).

Cheru (2006) said that poverty reduction strategies, particularly PRSPs, have two common tendencies. On one hand, they do positively unite governing bodies together under the goal of poverty reduction and solidify a country's approach to reducing poverty along with allowing for more social action forces and stakeholders to be part of the war against poverty. On the other hand, many governments, particularly in Africa, are having difficulty in creating and implementing these strategies. Additionally, it is often a challenge synchronizing donor support with the poverty reduction strategies of a country, especially because donors often insist on upholding their own agendas and time frames.

Imboela (2005) clarified that PRSPs came about not at the initiative of countries but as a mandated World Bank and IMF prerequisite for financial assistance. This created cases such as the one in Zambia. "Zambia's poverty-reduction programs depend almost entirely on how well it upholds the conditions set by (international financial institutes) and donor countries" (p. 437). Not, it may be added, on how effectively the programs reduce poverty in the country.

Overlooking Resources

One of the failures of poverty reduction strategies is sometimes the fact that a country's own resources may be overlooked. For example, mineral resources are one asset that Africa holds, but this asset has not been used to its full poverty-fighting ability. Some scholars argue that mining is a very negative force in developing countries because mines are usually foreign-run and subject to corruption and worker exploitation (Pedro, 2006). The rising demand for "green" or "fair trade" diamonds and the increasing numbers of people refusing to purchase diamonds for ethical reasons certainly point to a social concern over this issue. However, Pedro (2006) argued that mining, properly regulated, can help lift Africa out of poverty, particularly since Africa gains the highest amount of its import money from its minerals and oil. In particular Pedro (2006) stated that there are areas of Africa where mining is regulated by a large number of stakeholders and the business of mining is carefully monitored. This has benefited the area quite highly. Unfortunately, many poverty reduction programs in Africa largely ignore mining, an attitude that Pedro (2006) insisted overlooks a very valuable resource in helping reduce poverty there.

It is certain that many nations and organizations are serious about eradicating poverty. However, doing so is an intensely complex task. Sadly, the best of intentions and the most dedicated of efforts in reducing poverty around the world have had both positive and negative effects. It is crucial that nations and organizations continue to approach the topic of poverty with a comprehensive view and that poverty reduction strategies continue to be evaluated, modified, and upheld in ways that ensure their success and reduce their failures.

Terms & Concepts

Developed Country: Often called "industrialized country" this is a term for a nation that has a relatively high level of income per capita, standard of living, and GDP (gross domestic product).

Developing Country: Formerly known as "third world" or "non industrialized" these countries have a relatively low level of income per capita, standard of living, and GDP.

Extreme Poverty: Defined by the World Bank as the state of living on less than one U.S. dollar per day.

International Monetary Fund (IMF): An international organization composed of 185 countries for the purpose of establishing financial solidarity and cooperation between nations. One of its functions is providing financial assistance to nations in need, especially HIPCs (Heavily Indebted Poor Countries).

Millennium Developmental Goals: Eight worldwide goals established by the UN for decreasing human suffering and increasing human development: some of these goals are making primary education universally available and reducing poverty. 2015 is the date set for accomplishing these goals.

Non-Government Organization (NGO): An organization of citizens with the purpose of accomplishing a social/human rights goal such as reducing gender discrimination.

Poverty: A broad term for the condition of not being able to provide for one's basic needs.

Poverty Reduction Strategy Papers: In order to qualify as a HIPC (Heavily Indebted Poor Country) and receive financial assistance from the World Bank and the International Monetary Fund, a country must create Poverty Reduction Strategy Papers which establish an action plan for fighting poverty and ensure that financial assistance will be handled properly.

Structural Adjustment Programs: Prior to the introduction of Poverty Reduction Strategy Papers, Structural Adjustment Programs were required of a country wanting to qualify as a HIPC and be eligible for financial assistance.

World Bank: An organization composed of the International Bank for Reconstruction and Development and the International Development Association, which are owned by 185 countries. The World Bank is a financial and technical assistance organization for developing countries.

Bibliography

Bowen, G.A. (2007). The challenges of poverty and social welfare in the Caribbean. International Journal of Social Welfare, 16 , 150-158. Retrieved November 17, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=24488264&site=ehost-live

Braidotti, G. (2013). New strategy for planet health. Chronicle of Higher Education, 4-7. Retrieved December 15, 2013, from EBSCO Online Database Education Research Complete. http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=91617453&site=ehost-live

Canagarajah, S., & van Diesen, A. (2006). The poverty reduction strategy approach six years on: An examination of principles and practice in Uganda. Development Policy Review, 26 , 647-667. Retrieved November 16, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=22740649&site=ehost-live

Chakravart, S.R.; Kanbur, R.; & Mukherjee, D. (2002). Population growth and poverty measurement. Retrieved November 16, 2007, from United Nations Statistics Division http://unstats.un.org/unsd/methods/poverty/Population%20growth%20and%20poverty%20measurement%20by%20Kanbur%20june%202002.pdf

Cheru, F. (2006, March). Building and supporting PRSPS in Africa: What has worked well so far? What needs changing? Third World Quarterly, 27 , 355-376. Retrieved November 19, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=19703420&site=ehost-live

Imboela, B.L. (2005). Poverty reduction in Zambia: A conceptual analysis of the Zainbian poverty reduction strategy paper. Bulletin of Science, Technology & Society, 25, 435-445. Retrieved November 19, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=18543779&site=ehost-live

Kozolchyk, B. (2007). Secured lending and its poverty reduction effect. Texas International Law Journal, 42 , 727-749.

Pedro, A. (2006). Mainstreaming mineral wealth in growth and poverty reduction strategies. Minerals & Energy, 21 , 2-16. Retrieved November 19, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=20858237&site=ehost-live

Tagoe, M. (2011). Accelerating the achievement of the Millennium Development Goals in Ghana: Literacy, the missing link. International Journal of Lifelong Education, 30, 651-666. Retrieved December 15, 2013, from EBSCO Online Database Education Research Complete. http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=66139954&site=ehost-live

Tarabini, A., & Jacovkis, J. (2012). The Poverty Reduction Strategy Papers: An analysis of a hegemonic link between education and poverty. International Journal of Educational Development, 32, 507-516. Retrieved December 15, 2013, from EBSCO Online Database Education Research Complete. http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=74662363&site=ehost-live

United Nations. (2005). UN development goals. Retrieved November 16, 2007, from http://www.un.org/millenniumgoals/#

Van der Molen, I. (2006). Gender, land and water in the poverty reduction strategy and country assistance strategy for Sri Lanka. European Journal of Development Research, 18 , 435-452. Retrieved November 17, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=22483098&site=ehost-live

Walingo, M. (2006). The role of education in agricultural projects for food security and poverty reduction in Kenya. International Review of Education, 52 (3/4), 287-304. Retrieved November 19, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=20910158&site=ehost-live

World Bank (2007). Poverty analysis: Overview. Retrieved November 16, 2007, from World Bank http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,,contentMDK:20153855~menuPK:435040~pagePK:148956~piPK:216618~theSitePK:430367,00.html

Suggested Reading

Dijkstra, G. (2005). The PRSP approach and the illusion of improved aid effectiveness: Lessons from Bolivia, Honduras and Nicaragua. Development Policy Review 23 , 443-464. Retrieved November 20, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=17380630&site=ehost-live

Driscoll, R., & Evans, A. (2005). Second-generation poverty reduction strategies: New opportunities and emerging issues. Development Policy Review, 23 , 5-25. Retrieved November 20, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=15477185&site=ehost-live

van der Venn, R., & Preece, J. (2005). Poverty reduction and adult education: Beyond

basic education. International Journal of Lifelong Education, 24 , 381-391. Retrieved November 20, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=17742433&site=ehost-live

Wordofa, D. (2004). Poverty-reduction policy responses to gender and social diversity in Uganda. Gender & Development, 12 , 68-74. Retrieved November 20, 2007 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=13310180&site=ehost-live