Poverty Reduction Strategy Paper

A path out of abject poverty is currently being beaten by many low income countries which are developing poverty reduction strategy papers (PRSPs) as a condition for debt relief. This new acronym in the alphabet soup of international aid is the latest lifeline being offered by the World Bank and the International Monetary Fund after what many regard as the failure of its predecessor, the structural adjustment programme (SAP). By May, 33 interim and four full poverty reduction strategy papers had been developed: do they offer genuine hope to low income countries or are they the same old approaches under a new name?

Structural adjustment was characterised by economic policies such as devaluation and public expenditure reduction coupled with longer term structural reforms such as privatisation and trade liberalisation. It has been blamed for rising food prices, closed schools, and massive lay offs and for delivering the final blow to creaking health systems. Poverty reduction strategies instead offer good intentions such as “national ownership,” “less dictation from Washington,” “civil society participation,” and “a focus on poverty.” But the money, or the stick of withholding it, is still in the hands of the World Bank and the International Monetary Fund, since poverty reduction strategy papers are a condition for further cheap loans. They are therefore crucial to the future of 78 developing countries where poverty is by far the most important cause of ill health. According to Oxfam, 3.4 million children under 5 die in the highly indebted poor countries each year from easily preventable diseases.1

An investigation by the London based Overseas Development Institute was cautiously optimistic about the process of developing poverty reduction strategy papers in eight African countries.2 The siting of poverty reduction in finance ministries (traditionally the most powerful parts of government) was seen as a sign of the importance many governments are giving to poverty. There are signs too of the benefits of increased civil participation. In Tanzania a poverty reduction strategy regional workshop was seen as contributing to the abolition of primary school fees. Yet the enormous difficulties encountered during the preparation of poverty reduction strategy papers cannot be ignored. Systems to collect data to monitor poverty reduction are crude, government policies fragmented, and public servants demoralised. Countries such as Rwanda do not have their own technical capacity to collect and analyse data, while the scant national budgets of Benin or Mali offer little real prospect of reform. Civil society may give its voice on the poverty strategies, but it remains excluded from discussions on the macroeconomic framework of the poverty reduction strategies.

Doubts have also been cast on the “revolution in thinking” that the World Bank and International Monetary Fund claimed had happened when they launched poverty reduction strategies two years ago. A glance at the World Bank website will show that a greater emphasis on poverty issues has barely challenged the old agenda of monetarist macroeconomic policies. There is one section on poverty and another on economics and “ne’er the twain shall meet.” Most poverty reduction strategy papers ignore the complex relations between poverty and policies on trade liberalisation, tax reform, privatisation of public utilities, and cost recovery.3 Despite earlier promises, the World Bank and the International Monetary Fund have yet to begin assessing the social impacts of their loan programmes.4

In particular the health effects of economic policy changes are barely touched on, although the effects can be disastrous.5,6 One study, for example, has shown how currency devaluation—one of the commonest components of structural adjustment programmes—and the changes in food prices it provokes can have severe effects on the nutrition of mothers and young children.7 In Tanzania, where spending on health and education fell by 40% in five years, user fees prevented the poor people in rural areas and pregnant women from accessing health care, even though they were supposedly exempt. Women, normally busy in the fields farming, must then treat sick family members at home. Meanwhile women are now being charged for cost effective preventive services such as cervical and breast cancer screening.8 Despite the threat of AIDS, attendance at sexually transmitted disease clinics in Kenya fell by up to 60% after user fees were introduced on the advice of the World Bank.9 Zambia saw public sector wages collapse to a quarter of their 1975 values by the beginning of the 1990s.10

The World Bank and International Monetary Fund promised that, although their policies might bring short term pain, in the long term they would certainly bring gain, but the evidence suggests that this hasn’t happened. A recent World Bank study shows that economic growth under International Monetary Fund programmes has been close to zero and that the poor are benefiting least from any economic growth that is occurring.11 Wall graffiti in Nicaragua seems to sum it up: “SAPs=hunger” and “PRSP=SAP.”

At a seminar in the Netherlands this spring, hosted by Wemos, a non-governmental organisation promoting health in developing countries, speakers from Africa, Asia, the Middle East, and Central America concluded that for poverty reduction strategies to work health must be protected as a basic human right. They want the World Health Organization to return to its global leadership role in health, including ensuring that policies outside the health sector do not undermine health and equity.