Rethinking ways to beat poverty

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July 28, 2006/businessinafrica

 

  

 

Two things happened around economist Jeffrey Sach’s latest publication.


The first was a significant change-of-direction initiative by United Nations Secretary General, Kofi Annan to find a new perspective in the interplay between terrorism, economic development and poverty reduction. The second was the coming together in response to Annan’s proposal of over 250 development experts, led by Sachs, to lay out practical strategies for promoting rapid development. Their findings are set out in The End of Poverty in a highly readable and plausible form that stitches together with sometimes colourful thread the new thinking that emerged from this unprecedented meeting of minds.


Earlier this year, Kofi Annan remarked: “We will not defeat terrorism unless we also tackle the causes of conflict and misgovernment in developing countries. And we will not defeat poverty so long as trade and investment in any major part of the world are inhibited by fear of violence or instability.”

Key to this ambition is the UN’s poverty reduction strategy bound in its Millennium Development Goals (MDGs), adopted by all member countries in 2000. Their principal aims are to eradicate extreme poverty, ensure universal primary education and access to basic health care by the year 2015.

Now well into the MDG programme, it is becoming increasingly evident that many emerging nations will miss the deadline, the poorest lagging furthest behind. The task of the panel of experts was to figure out how to reach these goals through the acceleration of economic development. In essence, the report calls for both an increase in aid from Western countries and a reallocation of funding priorities in the developing countries themselves. The report also calls for more aid to be given on a local level. It hopes that more immediate and effective development will result from bypassing governments.

For instance, records the book, in one test case conducted in Kenya, UN funding went straight to the village of Sauri where the schools were able to provide much-needed food for their students, and hence jumped in ranking from 68th to 7th in the district.

The End of Poverty is a blueprint for eliminating absolute poverty based on directly delivering the goods and services that the world’s one billion extremely poor people — with an income of less than a dollar a day — need to escape from destitution. The cost of such salvation, he argues, is well within the development assistance target of 0,7 percent of GDP to which all rich nations have given lip service, but which few have yet reached.

Even for a task force of 250 experts, the task was daunting, and the first questions they faced were: Why have five decades of development economics failed to eliminate poverty? Can we eradicate poverty in our lifetime?

Now, with the publication of the panel’s findings, donor nations are asking what makes the new plan any more workable.

“I think so far there’s been a lack of appropriate effort, which includes many things,” Sachs says in an interview with development magazine, Mother Jones. “For development to work, rich countries need to help poor countries make certain practical investments that are often really very basic. Once you get your head around development issues and realise how solvable many of them are, there are tremendous things that can be done. But for decades we just haven’t tried to do many of these basic things. For instance, one issue that has been tragically neglected for decades now is malaria. That’s a disease that kills up to 3 million people every year. It’s a disease that could be controlled quite dramatically and easily if we just put in the effort. It’s truly hard for me to understand why we aren’t.”

In addressing the issue that brings about most donor fatigue — the ineffective use of funding — Sachs believes fund application simply hasn’t been smart thus far.

“I’m quite convinced that, broadly speaking, economic development works. The main arguments of the Millennium Project Report, and the main argument of my book is that there are certain places on the planet that, because of various circumstances — geographical isolation, burden of disease, climate, or soil — these countries just can’t quite get started. So it’s a matter of helping them get started, whether to grow more food or to fight malaria or to handle recurring droughts. Then, once they’re on the first rung of the ladder of development, they’ll start climbing just like the rest of the world.”

“The End of Poverty has caused irritation, and even some anger, amongst many of his fellow-development specialists,” observes Dr Patrick Honohan, researcher at the World Bank. “Perhaps it is the solipsism of the writing style whereby the author appears centre-stage and almost as a monopolist of wisdom. Seeming to neglect extensive parallel achievements of other scholars and policy advisors, at least comparable in their effectiveness, the style of this account may be too much for some colleagues to stomach. So what arose from the deliberations and Sachs’ pondering that can be considered groundbreaking?

Standing out is the proposal that funding should bypass central governments and be applied directly at the local level. This is bold thinking and would be considered politically incorrect in most developing countries. The South African government, as an example, would not allow a donation of $250mn by an international Aids organisation to be made to the provincial government of KwaZulu-Natal, a region where the disease is most rampant, insisting that the money be channelled into the central bank for later redistribution. The result was that the funding was withdrawn by the donor agency.

“I’m not proposing a single global plan dictated by some UN central command,” Sachs insists. “Quite the opposite, I’m proposing that we help people help themselves. This can be done without legions of people rushing over to these countries to build houses and schools. This is what people in their own communities can do if we give them the resources to do it.”


Sachs says corruption is not exclusive to Africa, but is a global infectious disease that “you can control but not eradicate”. He also concedes that there are some countries where corruption is so massive that unless radically new approaches to the issue are made, development goals could be out of reach.

“It’s quite hard in a place like Zimbabwe, now, where the current government, in a quite despicable way, clings to power.”

In these circumstances it’s difficult to get anything done, he says. But as a general rule in the new proposals, aid flow will be more finely targeted to benefit directly those communities most in need.

“Nothing is done on trust. Everything should be done on a basis of measurement and monitoring. When you really focus, there are so many ways to be clever about how to do this to make it work better. Don’t just send money; send bed nets, send in auditors, make targets quantitative. There are a lot of tricks, a lot of ways, that if one is practical about this, one can get results.”

Sachs maintains that achievement of the grander reforms of development policy requires a basic level of health and nutrition as a starting point. This rings true, especially in Africa, where about a third of the extremely poor live and where, in sharp contrast to Asia, both the numbers and the proportion of the population in extreme poverty have continued to rise.

“Scientific and technological advances make it possible to overcome Africa’s uniquely unfavourable climatic and ecological conditions, but at a cost which is currently beyond the reach of these countries,” he says. “Increased development assistance is the only way in which the necessary investments can be achieved in a reasonable time interval. At current levels — an average of $30 a year per person in Africa — there is too little aid to make the difference.”

More than anything, The End of Poverty is a book of hope. To that end, it neglects the formidable implementation challenges of delivering even this basic package for getting the poorest to the bottom rung of the ladder. But it is not a book about implementation or delivery; rather it is a rethink about what poor countries need to be lifted from the poverty trap.

Once that is made clearer, it makes meeting the goals that much more realistic.

Book Information:
Author: Jeffrey Sachs
Publisher: Penguin
Price: R113
Review by: John Etkind

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