‘A country-owned, participatory document’
TITU DATTA GUPTA with ENAYETULLAH KHAN
The Poverty Reduction Strategy Paper is going to be the handbook for the government of Bangladesh in planning and undertaking future development programmes initially for three years up to 2006-07. It marks a shift from the traditional long-term development plans.
Apart from envisaging higher economic growth, the PRSP document, which has been drafted recently, identifies the priorities and sets specific development agenda for the government. Involving the civil society in policy planning and engaging the private sector in development schemes in a bigger way are among the major thrusts of the PRSP.
‘The draft document of the PRSP, to be finalised after due post-release consultations, also bridges what is seen to be a vacuum in government’s policy making, following the expiry of the fifth five year plan in 2002, which any way was ‘ineffectual’ as its predecessors, says economist Hossain Zillur Rahman, one of the members of the nationaql steering committee on the PRSP and also one of the authors of the document..
‘It is not an expenditure plan. It is a strategy plan as to who can do what better,’ he said. Explaining how it is distinct from the Five-year Plan documents, Hossain Zillur said it focussed more on private sector and civil society participation in the formulation of the premises, the crafting of the document and the implementation of the concrete targets under a broad strategic vision.
Unlike long-term development planning so far practised, which mainly dealt with expenditure targets, the PRSP has sought to premise the development goals and poverty-reduction dynamic on three broad issues. They are: strategic visions, medium term macroeconomic issues; and policy agenda and priorities for the government to meet the Millennium Development Goals by 2015, Hossain Zillur told a three-hour January 25 New Age Interactive, that included three other members of the national committee — Quazi Mesbahuddin Ahmed, Ali Taslim and Abdus Sattar Mandal. The panel of experts were chaired by Kamaluddin Siddiqui, principal secretary to the prime minister and also a development practitioner. The other member of the panel was Kaniz Siddiqui.
The Interactive, both in its critiquing and dissection of the document as far as the New Age team’s understanding of the base-paper of the executive summary goes, was designed to initiate an informed debate on the document. Generally documents like this or the other kinds, indigenous or externally-driven, are accepted or rejected on ideological grounds, or simply dismissed out of hand by the old-left polemicists.
The final document, titled somewhat figuratively, if not wistfully, as Unlocking the Potential, is slated to be sent out to the relevant circles on January 30, 05, for feedbacks and immediate consultations.
How it came: or the genesis
The idea of PRSP first came in the late 90s from the World Bank and the International Monetary Fund, the twin Bretton Woods institutions, when the global lender and the fiscal disciplinarian — in that order — faced mounting criticism for their on-again off-again strategies which contributed precious little to poverty reduction, previously glamourised as poverty alleviation.
Thus and thence, an otherwise dour IMF created a benign Poverty Reduction and Growth Facility fund for low-income countries, which were told to prepare PRSPs of their own to have access to the fund.
Similarly, the World Bank made future International Development Association funds conditional for countries with a per capita income below $735. Countries of this group (the developing countries inclusive under the income ceiling) were told to get their respective strategy papers on hand to become eligible for future funding from the development agency, the bank’s soft-lending arm. Some countries, like India, which is not IDA-dependent, would rather swear by their Five-Year Plan document. Pakistan under the same category went for the PRSP. Nepal, among the lower-income countries of the region would rather not labour on a new PRSP and refer instead to its planning document.
Bangladesh stopped the five-year planning exercise after the fifth plan ended in 2002, about the time when PRSP came into vogue.
And Bangladesh opted for what is known as the three-year rolling programme contingent upon an Interim Poverty Reduction Strategy Paper, instead of what can be called an all-weather document that has to be drafted and finalised in 24 months on the dot. The interim strategy paper, as the name suggests, was an interim document enabling Bangladesh to qualify for both PRGF and IDA soft loan.
More than 40 low-income countries have so far prepared PRSPs. In South Asia, Pakistan and Sri Lanka have already got it done, while India insisted that their five-year plan be treated as PRSP. So did Nepal, as mentioned before.
‘India could say ‘no’ because it can borrow directly from World Bank, and we cannot,’ said Quazi Mesbahuddin Ahmed, a government planner, also a member of the core group that drafted the paper.
‘There is no denying the fact that the idea first came from the World Bank and the IMF, and that they had provided the respective countries with a voluminous manual as guidelines for putting pen to paper. But, in effect and by all measures, including that of financing and the commissioning of the experts for the purpose, it is fully country-owned, country-financed,’ he says, countering the general criticism or misunderstanding that the PRSP is a donor-driven document.
He also adds that it was left to the countries to use their own methodology, data and research materials.
Advised by the World Bank-IMF joint boards of governors’ meet, Bangladesh initiated the process in the middle of 2001. The Economic Relations Division, which was entrusted with the task at the initial stage, started working on I-PRSP in October 2001 and completed the job in March 2003. (Binayak Sen, among others, was one of the principal authors of the document.)
Later, the General Economic Division of the Planning Commission was assigned to prepare the regular document of the PRSP. A national steering committee was formed with representations from the line ministries. The committee organised seven consultation meetings — six in the divisional headquarters and one at the national level — to lend the entire process a broad-based participatory inputs and hence the attendant quality. The seven consultative processes involved grassroots people responding to questionnaires or interviews in order that the authors may identify the broad targets and the tasks under a strategic vision.
The meetings produced seven humongous volumes of paperwork that provided the final draft of PRSP a kind of base-polls for putting together a final and compressed draft document under the title ‘Unlocking the Potential.’
Before finalisation, the draft will be widely discussed in three forums — parliamentarians, local consultative group (LCG) of bilateral and multilateral development partners and civil society, said Quazi Mesbahuddin Ahmed, of the Planning Commission, who is also the member-secretary of the steering committee for PRSP documentation.
‘We have the urgency for finalising the document,’ he said.
‘We have to do something to reduce poverty. It is our job now to do the PRSP in as best a way as possible and base the document on the data and other inputs/information from a country-wide ground-study. Thereby, the country ownership is established and the imperative of engaging our own people in the task is met. There is no foreign fund involved, no foreign consultant (in the PRSP preparation process),’ said Quazi Mesbah.
‘There is no gainsaying that the process started due to the conditionality/initiative/ of and intervention by the World Bank and the IMF; but the country needed to transit to another manner of policy-making in order to make a real dent in poverty,’ Hossain Zillur added.
‘Why should other people have to tell us to balance our books? Do we really need it (PRSP)? But no matter who said it, the imperative does not go away,’ said MA Taslim, former chairman of Tariff Commission and now a professor of economics in Dhaka University. Taslim further added that in more than twenty five years of market-transition, it was time to engage the private sector in infrastructure development.
‘If the private sector is still not ready for roads, which involves high investment and slow return, it could certainly complement the public sector in the construction of bridges, for instance (the tolls can ensure quicker returns), power generation etc. He cited the not too enviable example of laying the submarine cable by the government when foreign direct investment and local private sector participation were available for the job.
Why it is so necessary
The PRSP document substitutes the traditional bookish and mainly bureaucratic way of making wish lists of projections and aspirations, such as double digit growth within a certain period of time, without the slightest idea of what is doable and what is not. Hossain Zillur identifies the tendency for making wish lists as the major weakness of the erstwhile economic-planning and growth-projection processes.
‘One of the implicit goals of PRSP is to set a style of strategy-making away from (making) wish lists which transcend the political and institutional realities of non- or under-implementation. We have come away from this.’
There has been a major transition in policy making, from state-centric five-year plans to participatory planning involving the other non-state actors. The post 5th five-year plan hiatus is not a vacuum, but an interesting transition period,’ Hossain Zillur described the gap as above between the end of fifth FYP in 2002 and the publication of PRSP draft. Actually, the hiatus, so to speak, has not caused any gap in the government’s development works; the annual development plans or the three-year rolling programmes have been continuing to get on with development. (The ADP implementation is mostly observed in the breach, and the ADP projects at their worst, oftener represent the parliamentarians’ fancies; some of which, in the reckoning of the finance minister, Saifur Rahman, may even take 55 to 75 years to get off the ground, — parenthesis ours.)
‘Having spent my whole career in the Planning Commission, I have no love lost for Five-Year Plans,’ said Quazi Mesbah. He referred to the shortcomings of such plans in that they (the plans) ignored the role of private sector and they mostly were aborted halfway with little or no implementation.
‘General criticisms of FYP are well-known; no plan has ever been implemented fully; no plan did ever touch the private sector, because it did not even have any mechanism to involve the private sector. It was entirely a function of the State — of the public sector, for the public sector and by the public sector. Making another five-year plan would not have brought much benefit, because making plans in the red-brick building without knowing the country would be of little use,’ the planning commission executive felt.
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That is why the transition was and is needed in the business of policy making,’ he reasoned, adding and claiming that the PRSP draft preparation has been made as participatory as possible, involving hundreds of people in the consultation process: ‘You cannot expect something (to be done) by the public sector alone.’
What it focuses on
Quazi Mesbahuddin Ahmed said the final draft of the full-fledged PRSP has taken care of some lacunae in the interim PRSP, which were inherent in the document because of the deadline and hence some haste. The final draft incorporates many issues which were left out, such as environment, the gender question and water resources management.
‘A mechanism has also been put in place to accommodate the poor people’s concerns and heed their voice on policy issues,’ he said.
The PRSP is a rolling process and can be updated year on year, he pointed out.
‘It is not for three years alone,’ said Hossain Zillur.
The document has highlighted seven strategic agenda with policy frameworks —employment, nutrition, maternal health, quality education, sanitation and safe water, criminal justice and local government. Ensuring affordable justice for the poor and effective local government are the musts for making governance work for the poor.
Can the local government be made effective without a political decision?
Zillur agreed, and hoped that there would be some sort of political consensus within or outside parliament on the imperative of devolution of power and the strengthening of local government, including the upazila. In fact, major political parties do not have much differences on economic and governance issues, he pointed out.
There is no other way but to mobilise local government down to the union council level if poverty is to be tackled, he stressed. In any event, despite obstructions from the parliamentarians and the bureaucracy, the local governments are being assigned certain grassroots tasks like sanitation et al.
‘We have a very holistic governance agenda. Tackling corruption has also been highlighted,’ he said.
There is no use of producing systems one after another unless they yield outcome for the poor. ‘The entire focus, hence, on the development dynamic that lifts the poor in more than one concrete way,’ Zillur said.
There are three major areas in the PRSP document — one for consultations with donors, one for government’s policy agenda and the other for operational purpose.
Like in the policy making process, involving the private sector in a bigger way in the development programmes is also a major focus of the PRSP document. Private sector can be engaged in social sectors such as sanitation as well as infrastructure development.
It is not that private sector will do everything. The government must also be in the driving seat for dev eloping road infrastructure, providing basic health services and enhancing the quality of education, the economist, however, clarified.
Responding to a question as to how far the private sector will be willing to be engaged in developing infrastructures such as roads, former Tariff Commission chief MA Taslim said private sector is very much interested in investing in infrastructures, such as bridges.
Four private companies expressed interest to get involved in the submarine cable project, but the government would rather do the job by itself, he said. ‘Here is the question of political decision.’
He cited the success of private sector in education, under a proper regulatory framework of course. Giving instances of the private schools, he inferred, ‘it is no longer a question of whether they (private sector) can do it. It is all about involving them in the sector more and more,’ said Taslim.
‘There are many other sectors where private sector can function well… We want that the private sector is facilitated by the government as much as it is to be brought under an effective regulatory framework, particularly in the case of quality higher education,’ he said.
Micro-credit, among other things, has been stressed in the PRSP document as the most significant of all the anti-poverty instruments, despite the criticism and scepticism on the input-output ratio and its real impact on the poor.
‘Micro-credit still remains valid as an important instrument in the fight against poverty,’ Hossain Zillur said, stressing that up-scaling micro-credit and enhancing its poverty impact will be important factors in realising the goals of accelerated poverty reduction.
Agriculture and rural economy have been given special thrust in the document that seeks broader support and some protections for the farm sector. ‘We want a level playing field. We need protection against unbridled liberalisation,’ said Mandal, professor of agricultural economics at Bangladesh Agricultural University, also involved in the PRSP process.
He admitted that subsidies distort the market, but added these were necessary in some cases. Poverty reduction needs higher growth in overall economy as well as in the agriculture and small and medium enterprise sectors. According to Mandal policy focuses on rural sectors for creating jobs are imperative.
Even much earlier before the idea of PRSP was mooted, Bangladesh had established a credible record of sustained growth within a stable macroeconomic framework and made important gains in the fight against poverty during the last three decades. By most estimates, Bangladesh has witnessed a modest poverty reduction rate of around one percentage point a year in the decade of 1990 — from 49.7 per cent in 1991/92 to 40.2 per cent in 2000.
The executive summary of the PRSP document, however, admits that aggregate poverty rates remain dauntingly high with pockets of extreme poverty still persisting and inequality widening, and also that governance weaknesses stand in the way of accelerating the growth process.
‘Since poverty is multi-dimensional, the battle against it has to be waged on many fronts and with unremitting vigour. The challenge is not only one of budgetary targets. It is a challenge of better understanding of the ground realities, of transforming institutional cultures, of building dynamic partnerships, and above all a challenge of political determination.’
Poverty stats: Quantitative and
qualitative aspects
ASJADUL KIBRIA
Asjadul Kibria
Updated data and statistics on economic trend(s) are not easy to access in Bangladesh. In fact, they are not suitably worked and reworked by the government-run Bangladesh Bureau of Statistics, an otherwise backwater department of the government. The poverty reduction strategy paper also acknowledges the relative data-poverty as reflected by an absence of reliable as also comprehensive database on poverty situation in Bangladesh. The document clearly said, ‘Poverty estimates are generally based on budget surveys such as Household Income and Expenditure Surveys. The latest HIES data available for Bangladesh is for 2000. In the absence of recent HIES data it is difficult to provide an account of the income-poverty situation beyond 2000.’
So, the preparation-processes of the national strategy on the basis of outdated data and its’ long-term effectiveness to reduce poverty are likely to be somewhat flawed on the particular count. How can it be possible to frame a national policy plan without an updated statistics?
‘It is true that we have no comprehensive statistics on the poverty situation except the one generated by the HIES that does not go beyond the year of 2000,’ said Quazi Mesbahuddin Ahmad, member of the planning commission. ‘But, as we have been working on the PRSP document, we have had to depend on two alternative sources to track the poverty situation of the country. These two are: Poverty Monitoring Survey and real agricultural wage data.’
Mesbahuddin, however, told the New Age Interactive that the sample size ‘is very small in the poverty monitoring survey than that of HIES; and therefore, the big picture drawn from the statistics is taken as indicative.’
The Poverty Monitoring Survey uses the ‘Direct Calorie Intake’ and ‘Food Energy Intake’ methods to measure poverty level. Although the outcomes of these two methods are not comparable, the results of both methods show reduction of head-count poverty between 1999 and 2004. According to the DCI method, head-count poverty declined from 46.2 percent in 1999 to 40.9 percent in 2004. The corresponding estimates under the FEI method have been 44.7 and 42.1 percent for 1999 and 2004 respectively. According to both these measurements, the rate of poverty reduction has been found to be higher for urban areas compared to rural areas, reversing the trend reported for the period 1996 to 2000. The above outcomes thus suggest improvements in poverty situation in Bangladesh beyond 2000.
Real agricultural wages have also been found to be increasing in recent years. The real agricultural wage rate for male labourers has increased from about Tk 20/day in 1983/84 to Tk 24/day in 1991 and further to Tk 28/day in 2003. Moreover, an improvement in real agricultural wages has taken place in most districts of Bangladesh between 1995 and 2003. The rising trend in real agricultural wages also indicates improvement in the welfare of the rural poor.
Mesbahuddin also said that HIES is a very extensive survey, and hence it is difficult to carry out the survey every year. ‘Nonetheless, a fresh survey is going to be carried out in 2005 by the Bangladesh Bureau of Statistics.’
He also said that PRSP has also emphasized updating the statistical data for both framing policy plans and monitoring the outcomes.
The PRSP document said, ‘At present, BBS is the main data generating organization. It conducts a number of sample national surveys relevant for poverty assessment. If BBS is expected to generate more information for poverty monitoring, its capacity must be expanded, as has been already mentioned.’
‘The poverty situation should be reviewed not only with quantitative tools, but also with qualitative aspects,’ said Hossain Zillur Rahman. ‘There are alternative methods to find out poverty situation and so it is important to read the poverty balance sheet correctly.’
In this connection, Zillur mentioned that two alternative estimates based on the HIES 2000 by
the Bangladesh Bureau of Statistics showed two figures of declining trend. One is of poverty declining from 58.8 per cent in 1991-92 to 49.8 per cent in 2000, and other from 49.7 per cent to 40.2 per cent in 2000.
Zillur said that of the two findings, the latter was supported by the panel data derived from the BIDS/PPRC 62 village poverty study.
‘The World bank in a report said that 33 per cent of the Bangladeshi people are extreme poor,’ he said. ‘But one should test the statistics with reality. How many people in a village have to survive without having three-meals a day?’
Zillur said that virtually there were no such people except in some areas affected by ‘what is known as monga or want in a particular season; a qualitative assessment is, therefore, necessary.’
The economist said that the PRSP has to take into account as well as in estimation both the quantitative as well as the qualitative aspects of poverty. ‘It is not only some parameters like per capita income used by the economists to find out the poverty situation, but also the general conception of people to define poverty situation by themselves with different reference points.’
He said khoraki, a local term of daily meal, is such a reference point by which one can state his/her poverty situation.
Zillur also mentioned that different parameters are now being incorporated to identify the improvement in different areas like health and education. ‘In education, our major indicator is the enrolment rate,’ he said. ‘Now, we are able to look at the completion rate.’
‘There should be some clear indicators for quantitative aspects of poverty and for this there should be strong database,’ said Mandal. ‘The PRSP have highlighted the issue.’
He also said that most important thing is to monitor the trend with the help of updated statistics.
‘The data of the statistical bureau is not highly reliable, but reasonably reliable,’ he said. ‘As we require regular and reliable data, the BBS should be strengthened rather than be downsized.’
Sattar Mandal said that the PRSP document ‘has clearly stressed on monitoring the processes and inputs of poverty reduction activities which must be accompanied by periodic assessment of actual progress in poverty reduction. Setting up an institutional mechanism for monitoring is very important,’ he added.
Underscoring the different data sources, the PRSP document said: ‘The most recent rounds of all the surveys are somewhat dated and cannot provide a benchmark for PRSP. A new round of these surveys cannot be conducted simultaneously with HIES, because it will overburden BBS with consequent decline of quality. However, a separate module for social MDG may be included in the HIES. In addition to the usual surveys, an effective monitoring system will require data from other appropriately designed special surveys. Some new surveys and specially designed evaluation studies may be conducted by research organizations like BIDS and other public and private research organizations. In addition to quantitative surveys, qualitative data are also important, especially for certain social indicators.’
So, the important issue from the PRSP draft is that it acknowledges the deficiencies of the data and statistics and underscores the improvement. At the same time, the approach to testing the poverty scene by both quantitative as well as qualitative tools is a significant notion for the long term policy planning in the country.
PRSP highlights
There are eight specific avenues — four strategic block and four supporting strategies — through which the PRSP document is to pursue accelerated poverty reduction.
The specific policy recommendations, however, are grouped under different heads that include macroeconomic stability, trade, agricultural growth, food security and governance.
Some of the policy recommendations are mentioned here.
Macroeconomic stability
The document recommends for increased monitoring and accountability of public expenditure. Poverty reducing expenditure has to be increased to 9 per cent of the GDP from 7.5 per cent in 2004.
For financial sector reforms, the paper does not deviate from IMF recommendations and confirms to pursue the ongoing banking sector reform strategy, close down loss making nationalised commercial banks. It stresses on securing management support for Sonali and Janata banks and bringing Rupali Bank to the point of sale, while continuing the current programmes.
As regards to state-owned enterprises, the paper points out that 28 mills including the Adamjee Jute Mills were closed down in 2003, 12 mills transferred to private hands in 2004 and another 6 will be handed over in 2005. The paper intends to reduce losses incurred by the state-owned enterprises and promote the private sector. The paper also advocates for downscaling subsidies in the state-run enterprises.
The paper promotes further import liberalisation brining down the average protective tariff to 20 per cent with three slabs — 7.5 per cent, 15 per cent and 25 per cent — from the current four — at 7.5 per cent, 15 per cent, 22.5 per cent and 30 per cent. The number of items restricted from imports should be brought down to 50 from the current 60. In general, import should be further liberalised through reduction of the maximum tariff and quantitative restrictions, it says.
On the other hand, export diversification remains limited to exploring possible markets in the Eastern Europe, Africa, China and India.
Small and medium enterprise development
The paper wishes to promote the small and medium enterprises by identifying comparative advantage, ensuring speedy and effective dispute resolution, simplifying regulatory procedures, having a wider duty-free access for export goods and easing supply side constraints.
Agricultural growth
The paper intends to intensify crop cultivation, especially rice through quality seeds, balanced fertiliser and integrated pest management. The agriculture sector would be strengthened further through production of high value crops for domestic and export markets.
Land use would be improved with mixed cropping and inter cropping. There will be increased research, especially in biotechnology while agricultural extension and marketing will be further strengthened.
Cultivation of cash crops including jute will be encouraged.
Microcredit
While the paper looks to upscale microcredit, the policy agenda involves reviewing the delivery systems of the major credit providers and new experimentation in reaching the ultra poor. The collaboration between the government and non-governmental organisations in this regard would also be increased.
Water resources development and management
The paper advocates for harnessing the water of all trans-boundary rivers and negotiations with the upper riparian countries on water usage. The national water management plan would be fully implemented along with integrated projects to increase water in Ganges and Brahmaputra.
Referring to exploiting ground water, the paper’s policy agenda includes monitoring the quality and quantity of the ground water and promotion of regulated private investment in the sector.
The document includes flood protection in this sector and proposes that government buildings and educational institutions should be designed and constructed as flood shelters. It also intends to devise a mechanism which would help people live with flood and derive benefits out of them.
Infrastructure
In the power sector, the paper intends to reduce system loss to 21 per cent and unbundle the power sector operations. It also intends to reduce the time of receivables to no longer than six months. The section also includes policy agenda for a number of sub-sectors within the power sector and makes several recommendations to increase power generation and reduce losses.
For roads and highways section, it recommends updating the Highways Act of 1925, modernising roads and highways, which includes privatisation of plants, equipment and workshop functions and involving private sector investment in roads and highways. The paper also intends to complete flyovers and construct more bypass roads, construct Barisal-Bhola-Lakshmipur and Bhanga-Bhatiapara-Narail roads.
ICT and biotechnology
The paper recommends updating the national science and technology policy and developing an implementation framework for national biotechnology policy, establishment of a biotechnology cell under the Ministry of Science and ICT and establishment of a nationwide internet backbone based on the fibre optic submarine cable.
Education
The paper recommends introduction of a common core curriculum for madrassah and general education and identify ways to discourage private tutoring. To ensure gender parity, it recommends introduction of stipends for poor women at the secondary level and setting up of toilets and drinking water facilities at all secondary schools. To improve the quality of education, it recommends introduction of registration and accreditation of all secondary school teachers and strengthening teachers’ training.
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