Propelling Poverty Reduction Strategies Requires Clarity

By Connor J. Wangler

Source: World Bank

Source: World Bank

There are countless strategies for extreme poverty eradication being peddled by a myriad of actors, everywhere from private non-profits to international organizations. Each focuses on what areas its creators have deemed the most important for focusing aid and effort. Renowned aid-economist Jeffrey Sachs is no different in making a public plea for more aid directed at specific investment models; however, in his The End of PovertySachs does differ from others in offering specific suggestions as to how to develop these strategies and recognizes there must be a unique plan developed for each country. Sachs’ suggestions include identifying policies and investments needed to achieve the Millennium Development Goals (MDGs), laying out the timing and costs of those investments, creating a plan to finance the investment plan, listing the different commitments of donors, and outlining “mechanisms of governance and public administration” needed to implement the plan. He then argues that these plans are often hindered by lack of donor funding and the effects of global policies, such as global trade policy.

One of the Sub-Saharan countries that Sachs looks to as an example is Kenya. In order to achieve MDG compliance, Kenya’s government developed the “Vision 2030” poverty reduction strategy plan. The plan focuses on three main pillars: Economic, Social, and Political. Within each pillar the plan lays out investment and policy strategies for specific targets, such as GDP growth, female primary education, and a Post-election Violence Commission. It then details assessment plans for monitoring progress on these projects. In a 2011 progress report, the government reported that it could potentially meet five of the eight Millennium Development Goals (Education, Gender Equality, Disease, Environment, & Development Partnerships) and only three goals (Extreme Poverty, Child Mortality, & Maternal Health) were unlikely to be met. Even an ingenious plan runs into problems, however; Kenya has faced post-election violence in the past that has disrupted progress, as well as a myriad of other problems. The following video was produced as a commercial to air in Kenya to educate citizens on the Vision 2030 program:

Here is an interactive map of the Vision 2030 flagship projects: Click Here

Another country Sachs looks at is Uganda, who developed its Poverty Eradication Action Plan in 2010. Its focus is to “accelerate socio-economic transformation to achieve the National Vision of a transformed Ugandan society from a peasant to a modern and prosperous country within 30 years.” There have been several sectors of Ugandan society that are unpleased with the way the plan is being implemented, claiming only a few are benefitting. One example of this is the disparity between the agricultural and service industries; many point to the larger investments into the telecommunication sector, due to its comparative lower risk, than the agricultural industry, which employs more of Uganda’s poor.

Source: tilt.ft.com

Source: tilt.ft.com

Many have pointed to these strategies’ failures as stemming from lack of funding. Jeffrey Sachs calls for increased aid flow from donor governments to countries who have successfully developed and begun to implement these plans. Dambisa Moyo, however, demands that this “culture of aid” be broken through the issuance of bonds by the governments in her Dead Aid book. Several countries in Sub-Saharan Africa have taken advantage of these programs, such as Uganda. While many credit rating agencies, such as S&P and Moody’s, have labeled Uganda as ‘highly speculative,’ the country has had some success with the bonds. Many, on the contrary, would rather these countries be caught in a “cycle of aid” then be caught in a “cycle of dependency” with the credit rating agencies. Even more, in some instances, it can be extremely difficult for a country to get a rating, and, therefore, it can be difficult to access bonds; each rating agency approaches its ratings differently.

What is clear, however, is that in order for any country to make progress in poverty reduction, it must develop a clear strategy that explains goals, how to meet those goals, and how to measure progress. Even more importantly, countries need to establish a clear focus on where the funds to support these plans will come from. If they do not provide unambiguous financial strategies, poverty reduction efforts can fall victim to either the “culture of aid” or the “cycle of dependency” so many fear. Most important of all, however, a country must develop its plan within a local context; local problems and local solutions should be the focus if a country is going to develop a society and economy that can support itself.

 

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