report on poverty alleviation

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POVERTY ALLEVIATION PROGRAM IN OTHER COUNTRIES

Poverty alleviation is the main issue that needs to be addressed properly by the governments of respective countries .whether it is developed ,developing or under developed country everyoneis still clueless about the solution.Poverty as defined by the U.N. is the inability to attain a

minimal standard of living.It is intrinsically dynamic problem.Here I have discussed some of the programs run by the government or foreign-aided.

UNDP EXPENDITURE

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poverty reduction

democraticgovernance

energy&environment

crisis preventionrecovery

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ERSAP-EGYPT(ECONOMIC REFORM AND STRUCTURAL ADJUSTMENT PROGRAM)

In order to combat poverty, the Egyptian government pursued the long-adopted policy of foodsubsidies, which had its origins in the 1940s after the World War II. Poverty in Egypt, measured

by the number of households living at or below the poverty level, has increased remarkably.While less than eight percent of the population are abjectly poor (living on less than $1 per day),consumption surveys in the early- to mid-1990s show the overall poverty rate has risen, with 44

percent of the population unable to spend enough to have minimally adequate diet. Fallingaverage incomes have resulted in falling household expenditure on food . Food subsidies play a

pivotal role in combating poverty during periods of economic hardship, especially those broughton by reforms. Often, this policy chooses between either administrative targeting or self-targeting in order to reach out to the poor. Under the self-targeting method, which is adopted inEgypt, food subsidies are offered to all people. However, it is originally designed to benefit onlythe poor through directing resources to goods used only by them. The adoption of the economicreforms in Egypt since the early 1990s - known as Economic Reform and Structural AdjustmentProgram (ERSAP) - led to a dramatic reduction in public spending. In general, the main twoarms of ERSAP have not yielded the anticipated sustainable growth and poverty reduction. Thus,great efforts are needed to achieve a pro-poor development strategy (Yamada, 2008).Foodsubsidies, the main component of Egyptian public subsidies, decreased in both number of goodsand overall volume. They are originally directed to assist the Egyptian poor, who greatly suffered

because of the reform measures.The impact of ERSAP on the poor can be well measured through the cost of

living criterion. Cost of living increased because of the main ERSAP policies, such asthe elimination of subsides; devaluation; increase in prices of energy, transportation,

public enterprise commodities, etc; as well as raising indirect taxes and wideningtheir base. Subsidies were given for basic consumer commodities and services, like

basic food items and transportation. Reducing the subsidy bill has a greater impact onthe poor, since a large portion of a poor family's budget is spent on subsidized basicfood items. Similarly, the devaluation of the pound raised energy prices, which led toan increase in the price of imported commodities, including basic food items likewheat and flour, as well as the prices of imported capital and intermediate goods.These in turn raised production costs of domestically produced goods and the general

price level, and hence the cost of living (Korayem, 1997).ERSAP's impact on the poor could secondly be measured through observing thereduction in real income resulted from price increase. After adoption of ERSAP, theEgyptian economy has witnessed the decline of real wages (Said, 2002). This ismeasured as either the rising in prices or decreasing of nominal wages. The working

poor, who are mostly illiterate or have low education levels, earned low incomes andwere thus more vulnerable to increased prices. Moreover, ERSAP's tight fiscal andmonetary policies and calls for reduction in government spending depressed jobcreation. Since the poor are the least educated and do not have influential socialconnections, their chances of getting jobs is thus relatively slim when the labor markettightens up .The third criterion to measure the impact of ERSAP on the poor is through social

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services provided by the government at little or no cost. Despite the increase in realinvestment in education and health, their services remained below the level achievedin the late 1980s. With the increase in the number of students and population, theresult was a decline in real investment per student and per capita in education andhealth. Consequently, although students at all levels now pay a small fee, this does not

necessarily translate into improvement in the quality of education provided, nor mayadequate reasonable quality health services be expected at subsidized price .The implementation of ERSAP, therefore, had negative effects on the poor, amatter that was acknowledged by both the IMF and the World Bank. The SFD wascreated to alleviate hardship on the poor, but the limited resources of the SFD madethis unfeasible. This gives room for food subsidies to play a wider role in alleviatingthe suffering of the poor from the reform measures.IV- Effect of Food Subsidy Policies Adopted in Egypt on PovertyThe subsidy scheme was under great pressures from international organizations to

be eliminated. The whole debate on food subsidies in Egypt centers on economic andsocial considerations. Those who call for elimination of subsidies for economic

considerations ignore any resulting social unrests that may happen. The claims for economic considerations are either the necessity for applying market mechanism or production efficiency. The other problem in their point of view is the volume of leakage of these subsidies to the rich .

On the other hand, as a result of the application of ERSAP in Egypt, foodsubsidies as percent of total public spending decreased dramatically - from 16.9 per cent in 1975 and 18.4 per cent in 1984-85 to 7.4 per cent in 1990-91, then to 6.5 per cent in 1996-97 (Adams, 2000). Then, the social spending as a percentage of GDP inEgypt increased from an average of 7.5 per cent during the period 1996 2000 to 9.8

per cent during the period 2001 2005. The empirical experience also reveals the importance of food subsidies. Violencehas occurred in a great number of countries, such as Algeria, Morocco, Sudan, Jordonand Tunisia between 1977 and 1989 as a result of reform policies aimed primarily atapplying structural adjustment, stabilization, liberalization and privatization.Thisgives an important indicator of the role that food subsidies play in society stability,as the opposite will result in severe costs on the country.

C onclusion -There are genuine fears that economic stabilization may prove reversible if theadjustment does not deliver significant growth in the near future. It is clear that GOE had optedfor a very gradual implementation of the ERSAP, which led to a long-run cost in the form of lower incomes and continuing poverty. With continuous price increases, vast groups of

population witnessed a great deterioration in their social positions and became unable to fulfilltheir basic needs. The need, therefore, arises for reforming, not eliminating, the current foodsubsidy system in Egypt which appears to function more likely as a safety valve.

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CH INA

During the two decades since reform and opening up, China has conductedrural management systems reforms and organized systematic and large-scale povertyalleviation and development programs. The number of absolute poor population in

rural areas has decreased from 250 million in 1978 to 21.48 million in 2006. Theabsolute poverty incidence has dropped from 30% to 2.8%. According to statisticsfrom the World Bank, the number of poor people living on less than $1 per day hasdecreased by 274 million throughout the world during the period of 1991-2000, whileChina has accounted for 55% of them, about 150 million people. China has realizedthe objective stipulated in UN Millennium Development Goals ahead of time, i.e.reducing the number of poor people to half of 1990s level.Such remarkable progress in Chinas poverty alleviation work are guaranteed by thestable and harmonious political environment and supported by its sustained and rapideconomic growth. It is also the result of adhering to the poverty alleviation road withChinese characteristics, featuring government leadership, public participation,

self-dependence, development-oriented poverty alleviation as well as all-round andcoordinated development. With government-led special poverty alleviation as themain impetus, poverty alleviation and development work has always valuedinternational cooperation in poverty reduction and localization of the internationalexperience. Such cooperation has not only enhanced Chinas poverty alleviationstrength, but also played a positive role in learning advanced poverty alleviation ideasand management expertise to enhance the overall quality of Chinas povertyalleviation work.2. General Situation of Foreign Funded Poverty Alleviation in Ch inaSince reform and opening up, The Chinese government has conducted extensivecooperation with the international community in poverty alleviation. Various

international institutions cooperate with Chinas poverty alleviation agencies of alllevels, other government institutions and non-governmental organizations to carry outa series of activities related to poverty reduction. Such cooperation has played animportant role in poverty alleviation and development.2.1 C ourse of DevelopmentChinas poverty alleviation undertaking is pushed forward along with Chinas reformsand opening up as well as the development of organized, systematic and large-scale

poverty alleviation program. In the beginning of 1980s, relevant agencies in UNsystem were the first to participate in Chinas poverty alleviation and developmentwork. Later on, some bilateral institutions and financial organizations started to

provide assistance to Chinas poor regions. After mid-1990s, under the The Severn

Year Priority Poverty Alleviation Program, some international NGOs started to participate in poverty alleviation work. The international bilateral agency and NGOsmainly provided gratuitous assistance and international financial organizations mainly

provided loans for conducting projects. The direct cooperation between internationalinstitutions and Chinas poverty alleviation departments started from 1990, when theState Council Leading Group Office of Poverty Alleviation and development and theWorld Bank cooperated to conduct the reserch report China Overcoming Rural

Poverty . For many years, the World Bank has always been the top international

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partner of Chinas poverty alleviation agencies, with the most projects andlargest-scale of assistance.Early projects carried out by the international institutions in ChinaAccording to statistics, over 50 international institutions of variouskinds have taken part in Chinas poverty alleviation program from different

aspects. UN poverty alleviation institutions are the earliest to join in Chinas poverty alleviation efforts. In 1981, IFAD (International Fund for AgricultureDevelopment) started North Prairie and Husbandry Development Project(1981-1988), which was the earliest international assistance project.Afterwards, such institutions as UNDP, UNICEF and WFP started their

projects in Chinas poor regions successively. Projects supported by bilateralinstitutions basically started since 1986. For instance, it was since 1987 thatAUSAID began to support agriculture and husbandry development projects inChinese poor areas, and began to support several small-scale anti-poverty

projects every year since 1988. GTZ conducted large-scale food aid project inYimeng mountain areas, Shandong Province in 1988. Since 1995, the World

Bank started to work closely with Chinas poverty alleviation agencies andcarried out 4 large-scale poverty alleviation projects, with a total assistance of $686 million.2.2 Status and EffectThe White Paper on Development-Oriented Poverty Alleviation Program for RuralChina issued by the Chinese government in 2001 pointed out that China mainlyrelies on its own strength to carry out poverty alleviation program while the Chinesegovernment also pays great attention to exchange and cooperation with theinternational community in this area. The Chinese government is convinced thatactively promoting international exchange and cooperation will not only helpaccelerate to resolve the issue of providing food and clothing to its own poor

population, but also help raise the general level of Chinas poverty alleviation work bydrawing upon the poverty alleviation experience and successful practice accumulated

by the international community in many years. The Development-Oriented PovertyReduction Program for Rural China (2001-2010) issued in the same year also statesclearly that poverty alleviation and development program in the new stage willencourage seeking assistance from international organizations and developedcountries to poverty alleviation programs, drawing upon the successful experienceand effective ways in reducing poverty so as to improve Chinas poverty alleviationwork and overall efficiency. It will also promote different channels and forms toseek support and assistance from international NGOs to Chinas poverty alleviation

programs .Such remarks not only affirm the important role of foreign funded povertyalleviation in Chinas overall poverty alleviation and development program, but alsoserve as policy foundation and direction for the further development of foreign funded

poverty alleviation.2.3 Area and ScaleForeign funded poverty alleviation covers extensive areas, including integrated ruraldevelopment, supply and improvement of public service and products, infrastructure,industry development, environmental management, institutional capacity building and

poverty alleviation study. These assistance projects have well supplemented the

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anti-poor activity in Chinas rural areas. Most of the foreign fund used in Chinas poverty alleviation and development program comes from loans provided byinternational financial organizations and development assistance from bilateral andmultilateral development institutions and international NGOs. From 1981 to 2002, theforeign loans used in poverty alleviation and rural development totaled nearly $8

billion. Besides, the international multi-lateral and bilateral assistance agencies have provided nearly $5.6 billion of official development assistance. The grants for povertyalleviation provided by nearly 30 NGOs also reached over $200 million.

List of some international cooperation projects in the povertyalleviationagencies Partner project nameWorld Bank

China Southwest Poverty Reduction ProjectChina Qinba Mountains Poverty Reduction ProjectPoverty Reduction Project in Gansu and Inner Mongolia of ChinaChina Poor Rural Community Development ProjectChina Shanxi Poverty Alleviation ProjectCapacity Building to Strengthen the Poor Regions in PovertyAlleviation (TCC4)China Community-driven Development Project

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M IC ROFINAN C E ND M IC ROENTERPRISE-A STUDY ONUSA AND T H IRD WORLD

Microfinance embodies much that attracts policymakers and practitioners who work toexpand opportunities for low-income Americans. In particular, microfinance offers a way tohelp low-income clients find new livelihoods while moving away from cash-transfer programs

associated with the traditional welfare system.Advocates for microfinance in the United Statesargue that profitability should not be expected here, but the field has yet to convincinglydemonstrate that it can be efficient and can generate social impacts that would justify the costs of on-going subsidization.

Through small loans targeted to the poor, microfinance promises to create newlivelihoods and enhanced capacity for self-improvement. Most loans go to borrowers who plan tostart, maintain, or expand very small businesses (microenterprises). While microenterprises may

be small in terms of employment and sales, advocates argue that they can be meaningful in thelives of the participants and their communities.Early efforts in the United States have failed to approach the kinds of successes achieved by the

best microfinance institutions in Asia and Latin America. Arkansass Good Faith Fund, for example, has re-invented itself and cut back on microenterprise lending after two years duringwhich repayment rates by clients sank to 48% and demand stagnated .The success of U.S. microfinance rests on a chain of incentivesfor borrowers torepay as promised, for employees to make sure that borrowers repay as promised, and for

programs to reward innovationthat ultimately depend on the incentives faced by donors.Beyond altruism, the incentives for donors depend, at least in the long term, on whether votersand taxpayers believe that support for microfinance is worthwhile. In the short term, self-interested elected officials and bureaucrats want programs thatat least in appearance if not alsoin facthave big effects on the lives of people, that hide or diffuse costs, and/or that concentrate

benefits on small groups (perhaps poor entrepreneurs, perhaps the employees of microfinance programs). For private donors, the incentives are different but still complex and potentiallyambiguous. Although their mandate often explicitly includes the encouragement of innovation,the sanction for failure to fulfill that mandate is not always clear. There are still pressures for quick results, and often pressures to disburse quotas of funds per year.

a) S ize of the microenterprise sector . The microenterprise sectorand thus the potentialmarket for microfinanceis large in the Third World but small in the United States. This makesreaching a large scale much easier in developing relative to the United States .With scale, programs can both reduce costs per transaction and have wider impacts. In manyThird World countries, most workers are in the microenterprise sector inthe United States, however, only about 11 percent of all full-time employed men areselfemployed.It is estimated that selfemployment might be a viable livelihood strategy for up to8-20 percent of poor U.S. households, the working poor in the United States usually turn to wage

jobs because selfemployment typically means longer hours, more risk, and less pay, especiallyfor women. The poor person who is well-suited for self-employment is probably also well-suitedfor wage-employment .In fact, most of the self-employed in theIn 1995, households with less than $10,000 in income started about 136,000 new firmsb) Functional safety net . The United States, unlike most of the Third World, has a publicsafety net that serves as a functional alternative to self-employment. Thus, not only is the pull

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into self-employment weaker in the United States, but the push is also weaker. The safety net like the abundance of wage jobsplaces a floor on the reservation wage of potentialmicroentrepreneurs. It may even sap entrepreneurial spirits as people learn not to look toselfemployment for their livelihoods in bad times.c) Competition from large firms . Large retailers and service providers like Wal-Mart and

McDonalds do not have a strong presence in Bolivia, Bangladesh, and Indonesia; shopkeepersand street vendors there, unlike those in the United States, compete mostly against each other,not against large factories or chains of restaurants or retailers. Manufacturing microenterprises inthe United States are unlikely to compete on price or quality against imported goods made bylow-wage workers in large firms, and small retailers have difficulty diluting overhead enough tocompete against chains. Of course, a few small manufacturers and retailers in the United Statesdo carve out small niches, for example, in the production of trophies, picture frames, tee-shirts,may hurt the poor if incentives encourage them to rush to start a small firm with limited

prospects and to cut short their search for a wage job.The demand for customized products andstores, however, is limited; U.S. households do not spend large shares of their budgets on theoutput of microenterprises. Furthermore, entry into the most common microenterprise in the

worldagricultureis seldom easy at a profitable scale in the United States. The service sector offers more opportunities for U.S. microenterprises, although service firms may still not providea steady income. In promising news for microenterprises, as U.S. households become richer, theytend to demand more customized services. Many U.S. microenterprises make repairs (clothes,

plumbing, cars), clean (homes, offices, cars, lawns), cater, or care for children or elders. Manyservice jobs require little human capital and so may be within the reach of poor, unskilled people,

but this also means that they do not pay well.d) Competition from commercial lenders . Microfinance in the Third World competeswith moneylenders and other forms of informal finance. Microfinance in the United Statescompetes mainly with credit cards. Many of the poorif they have a job and a clean creditrecordcan get a credit card. Of course, credit cards are less accessible to the self-employedthan to the wage-employed, but they still provide many U.S. microentrepreneurs with access tosmall, quick, hassle-free loans. In the Third World, the task of microfinance is to judge the risk of self-employed borrowers new to formal credit; in the United States, the task is often to judgethe risk of self employed borrowers with bad credit records. For example, 18 percent of

borrowers in the U.S.had declared bankruptcy in the past. Likewise, 25 percent of borrowers arehaving bad credit records. course, many of these potential borrowers are no longer bad risks andare now willing and able to repay microfinance loans; the challenge for the lender is to learn todistinguish this group from those who are still bad risks.