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Leaders Meet on Progress for Poorest Countries

Global Banking And Finance 1 News
  • Fourth U.N. Conference on Least Developed Countries convenes next week in Istanbul, Turkey.
  • Two-thirds of developing countries are on track to meet Millennium Development Goals (MDGs); for others, challenges remain.
  • Despite setbacks due to conflict, Nepal, Solomon Islands and Rwanda have made progress on issues such as primary education, reducing maternal mortality.

Bahadur Magar once had to borrow to put food on the table. Then, with seed money and training from a World Bank-backed program, he started a vegetable business, earning enough money to feed his family year-round and send his eight children to school.

“Instead of collecting money, the man I used to borrow from comes over to buy vegetables,” says the farmer from a remote district in eastern Nepal.

Stories of new-found prosperity like Magar’s have become more commonplace in the last 10 years, as millions of people have emerged from poverty.

But as heads of state and representatives from United Nations member countries meet next week in Istanbul for the 4th U.N. Conference on Least Developed Countries (LDCs), millions more don’t have enough nutritious food to eat, adequate access to health care, clean water or a toilet.

The conference, attended by governments, international organizations, civil society organizations, academia and the private sector, will assess development results over the last decade, and identify challenges and opportunities for helping low-income countries overcome remaining hurdles in the next 10 years.

Despite Crises, Countries Closer to Goals

Several low-income countries are closer to meeting development goals despite strains on budgets from consecutive food, fuel and financial crises. Scaling up agriculture, along with other successful programs and strategies, could accelerate progress on human development goals and help more countries become economically self-sustaining, says World Bank Managing Director Ngozi Okonjo-Iweala.

“It’s vital to build on the achievements of LDCs to date and to recognize that poor countries have been playing their part to contribute to the global economy,” she said. “Clearly today, these countries still face significant risks from high and volatile food prices, climate change and conflict. While these uncertainties loom large, out of crises comes opportunity to realize a new decade of growth.”

Already, two-thirds of developing countries are on track;or close to meeting Millennium Development Goals (MDGs) such as sending equal numbers of boys and girls to school, or reducing child mortality.

“Many lagging countries can still reach several of the MDGs by 2015—or soon after—if their policies improve and their growth accelerates,” blogged Delfin Go, lead economist in the World Bank’s Development Prospects Group and the main author of the 2011 Global Monitoring Report, released April 15.

Donors pledged nearly $50 billion last December to the World Bank’s International Development Association (IDA) – a fund for the poorest countries that pools assistance from multiple donors. IDA is a major form of support for government budgets, medicine, food security, and other needs, in low-income countries like Nepal, the Solomon Islands, and Rwanda.

Those three countries – in South Asia, East Asia and Africa – were all set back by conflict or civil war; none currently look like they will attain the Millennium Development Goal of halving poverty by 2015. And in each the challenges are similar, yet different.

Nepal: Community-driven development
Nepal, a landlocked country of 28 million, has one of the lowest per capita incomes in the world. Political turmoil from 1996 to 2006 greatly hampered growth. Low economic development, landlessness and poverty are widespread, especially in rural areas where many marginalized social groups live. The country is vulnerable to food insecurity, climate change and disasters such as earthquakes.

Low-income countries continue to face risks from high and volatile food prices, climate change and conflict.

Yet, life expectancy, maternal health, under-5 and infant mortality and poverty levels have all improved dramatically since 1970. In 2010, Nepal won the MDG Millennium Award for reducing maternal mortality. Nepal has achieved the goal on access to safe water, and is on track to meet the goals on gender parity in primary and secondary education and on reducing under-5 mortality.

One explanation for the country’s progress is that the public sector apparatus continued to function amid turmoil, says World Bank Nepal country director Susan Goldmark.

Community-driven development (CDD) programs incorporating citizen voice and decision-making, and often aided by the work of non-governmental organizations, successfully delivered services in remote communities.

About 60% of Bank funding goes to CDD programs such as the Poverty Alleviation Fund (PAF), which assume that “the poor themselves are best positioned to manage their own needs and resources,” says Goldmark.

PAF so far has supported more than 400,000 households across Nepal, helping communities to improve infrastructure and individuals to boost incomes by purchasing livestock, growing vegetables and other activities. Incomes increased 15%, and more than 15,000 households gained access to roads for the first time; 32,000 households now have access to water supply, bridges and sanitation through the program.

Solomon Islands: MDG challenge

In the Solomon Islands, “communication, transportation, and governance challenges are formidable,” says World Bank Country Manager Edith Bowles. “In addition, the distances to market and a narrow economic base means the country is highly vulnerable to economic shocks.”

The country is still recovering from a period of civil conflict between 1998 and 2003, as well as the effects of the financial crisis.

The group of about 1,000 islands also has one of the lowest population densities in the world, making services difficult and expensive to deliver. Only 16% of households have access to electricity, for instance.

While the country is on track to achieve gender parity in primary education by 2015, greater economic growth is crucial to achieving other goals, says Bowles. Growth dropped to 1% in 2009, after the financial crisis. While growth has recovered in 2010 and 2011, the economic future is uncertain, with the imminent decline in logging—the largest economic activity of the last 20 years, she says.

The Bank is working with other donors to support rural development, energy, and telecommunications. It’s also supporting a rapid-response employment project to give young people and women jobs. As of March, the project had employed about 2,800 people for an average of 14 days each.

Rwanda: Recovery and growth

Rwanda’s recovery from the 1994 genocide and civil war is nothing short of remarkable, says World Bank Rwanda Country Manager Omowunmi Ladipo. It’s now one of the most stable countries in Africa, with plans to transform itself from a subsistence agricultural economy to a knowledge-based economy by 2020.

Reforms aimed at changing outside perceptions of the country as a risky place to do business earned Rwanda the Doing Business top reformer of the year title in 2010. The country has achieved gender parity in access to primary education and is on track to achieve universal education, access to sanitation, gender equality, and the HIV/AIDS MDG.

In the post-civil war period, large budget allocations to social sectors, including increased financing for primary schools and rehabilitation of health facilities, together with new legal reforms to promote gender equality, helped Rwanda recover, says Bank Senior Economist Birgit Hansl.

The will to move ahead with innovative solutions, as was done in health and education, contributed to dramatic changes in key social indicators,” she says.

But challenges remain. The most recent survey (2006) found that about 57% of the population still lives below the poverty line. Some 37% of Rwandans cannot afford minimum food requirements, an estimated 52% of households are food insecure or vulnerable, and maternal and child mortality rates are still among the highest in Africa.

The government is fully aware that strong growth, led by private sector investment, is key to improving living conditions,” says Ladipo.

To that end, the World Bank Group is supporting 11 projects with net commitments of $237 million, targeting agriculture, energy, the private sector and public financial management. Other goals include reforming basic services to help ensure the most vulnerable Rwandans also benefit from growth, and child and maternal mortality is reduced.

Global Banking & Finance Review


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