Ending Poverty: the Unfinished Business of the MDGs


biswa-1By Bishow Parajuli (KATHMANDU, July 5) –Later in September this year, the United Nations General Assembly will midwife the transition from the Millennium Development Goals (MDGs) to a new development paradigm: the Sustainable Development Goals (SDGs).

The world has seen some remarkable progress towards poverty reduction over the past two and a half decades. In 1990, almost half of the population in the developing world were living on less than US$1.25 a day. After two decades, the number of people living below the poverty line has dropped to 22 per cent, lifting more than 700 million people out of extreme poverty. While this paints a very rosy picture in the global context, the success of Sub-Saharan Africa in reducing poverty is moderate as it only managed to reduce poverty from 56% to 48% during the same period.

As such, one of the unfinished businesses of the MDGs is the eradication of poverty. It is therefore, of paramount importance to reflect on one of the most critical development issues for Zimbabwe, that of arresting poverty in its form and manifestation. The prospect of ending poverty depends critically on two factors: first, the rate of economic growth – provided it is pro-poor and the benefits are shared by all and in sustainable manner – and second, the level of national resources devoted to poverty eradication programmes.

A number of complex challenges have kept Zimbabwe from making a significant dent on poverty reduction. The objective of this piece is to contribute to a dialogue and explore a pathway towards enabling Zimbabwe make progress in significantly reducing poverty.

The Poverty Income Consumption and Expenditure Survey (PICES) published by the Zimbabwe Statistics Agency in 2012 shows that 62.6% of households in the country were living in poverty. It also showed higher poverty levels in the rural areas (76%) than in the urban areas (38.2%). This indicates a slight deterioration from the levels of 2001 and moving back closer to the mid-1990s levels. One encouraging development is that the share of the poorest, measured by extreme poverty (or people below food poverty line) has declined from 32.2% in 2001 to 16.2% in 2011/2012.

While poverty reduction matters for overall well-being, it has other multiple benefits as well. The data from the PICES clearly indicate a close correlation between poverty and educational outcomes. We have seen school dropout rates rise when poverty levels increase. Higher poverty rates keep children out of school permanently. Recent episodes also point to the fact that school attendance at both primary and secondary levels drop as poverty increases. Interestingly, boys seem to suffer the most in terms of low school attendance at the primary level while girls suffer at the secondary level in the face of poverty.

Stunting and malnutrition also go hand in hand with poverty. It is also common to see poor people deprived of productive services such as electricity and social services such as access to proper medical care, safe drinking water, and sanitation. These deprivations perpetuate poverty as they restrict production capacities and the ability to engage in economic activities.

Today, Zimbabwe finds itself in unfavorable economic and social positions with little room for maneuvering and only difficult choices left. Given the complexities involved, any comprehensive poverty eradication initiative requires collective efforts. Government cannot go it alone. The whole society should be mobilized in a form of social contract. Development partners, including the United Nations, are here to support Zimbabwe in those efforts. Combined, the dividends can be very high.

What is described below does not pretend to be a full-fledged policy prescription, rather, it sets out critical, practical and feasible issue areas for action.

First, a right policy environment is the most critically important pre-requisite to get things going. In getting this right, we need to look at why things are not happening as we expect. If it is due to lack of clarity or inconsistency in policies we need to address them. If certain policies keep domestic or foreign investors away from Zimbabwe we need to understand what they are, from the point of view of such investors and address them accordingly. A conducive policy environment is also important in attracting money from diaspora as done in many developing countries including Ethiopia, Indonesia, Philippines, Nepal and Sri Lanka. An incentive mechanism including duty free concessions for Zimbabwean expats working abroad, could be considered for harnessing over $ 3.5 billion worth of remittances a year.

Second, access to assets and credit makes a big difference in poverty reduction. Given the high number of Zimbabweans engaged in Agriculture, capital in a form of credit is key to develop the land. Unfortunately, the poor have limited access to financial services (e.g., micro-loans), due to the high cost of borrowing and banks’ stringent collateral requirements. This constrains their ability to exploit productive opportunities.

The recently concluded FinScope Consumer Survey Zimbabwe 2014 indicated 23% of Zimbabweans are excluded from the financial sector. While Zimbabwe has made improvements in financial inclusion over the years and fared better than most in the Southern Africa Development Community (SADC) region, access to formal credit is not only limited but expensive. For example, total micro credit in 2014 stood at $170 million with the average loan amounting to less than $1,000.

In addition, improvements in access to inputs such as seeds, fertilizer and pesticides at reasonable costs are equally important to make a dent in poverty. Equally important is access to markets, be it local, regional or international. Developing local markets and facilitating access to local and international markets will open opportunities for entrepreneurial Zimbabweans at all levels. In turn this will spur innovations in production and marketing by both farmers and entrepreneurs.

Moreover, irrigation and water harvesting to counter and mitigate high incidences of drought in Zimbabwe is key in efforts to fight poverty.  More than one-half of Zimbabwe’s 39 million hectares are classified as Natural Regions four and five which have low, erratic rainfall and poor soils, making agriculture a challenging endeavor. However, given that the majority of the rural poor are engaged in agriculture, it is the gateway for most of them to get out of poverty as well.

There are two approaches that could be considered to counter the effects of climate change such as recurrent droughts. One is to develop irrigation and harvest rain water. Water management techniques could also help to maximize the use of water productively. The other option is to encourage alternative livelihood opportunities that do not depend only on agriculture or could still be productive even under drought conditions. These could include drought-tolerant small grains, sisal production, and livestock production, among others.

Third, scaling up of access to skills and technology. Zimbabwe has a large pool of skills and a high level of technological adaptation including in the diaspora. Zimbabwe need to make effective use of this pool of skills to transfer technology to targeted community groups. It is necessary to facilitate learning and application of skills on the job, a critical process in the fight against poverty.

Fourth, infrastructure, particularly access to steady supply of energy is a pre-requisite for investments and development. High energy costs make local production uncompetitive, discouraging investments. In a country like Zimbabwe, alternative energy sources such as mini-hydro, renewable energy, including solar energy and improved systems for traditional energy use (including for cooking) could make a big difference.

Equally important are transport (road and air) services that greatly facilitate movement of people, goods and services. Even when one considers the local economy in isolation, bottlenecks to easy transportation could become a constraint to development. This is why connecting rural farms to local markets through a good road network is essential.

Fifth, creation of employment is the sure way to reduce poverty. This would require for a robust economic growth where the private sector plays a dynamic role. Skills development programmes will play a critical role in facilitating the exploitation of opportunities generated by high economic growth.

In addition, regardless of how hard people work and how much they earn, shocks can affect their livelihoods and wellbeing. As such the possibility of people needing some sort of social protection is a reality.

The growing social and economic vulnerabilities among the majority of the Zimbabweans as evidenced by the high incidence of poverty, predominance of the informal sector, job losses, high unemployment and the high levels of multidimensional poverty would require a well-articulated social protection mechanism. Social protection, in this context, is considered important in ensuring effective risk management, covering all vulnerable Zimbabweans. It is heartening to note that steps are already underway in putting in place a social protection policy in Zimbabwe. Increased international support to such initiatives should be encouraged.

Significant reduction in poverty is possible even under difficult conditions if we focus on building resilience and invest in rural communities. Directly strengthening the capacities of communities (and local authorities) to produce, add value and market could help increase the resource flow back to the communities.

*Bishow Parajuli is UN Resident Coordinator and UNDP Resident Representative in Zimbabwe.

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