D. The Context of Poverty: Rural Policy Report for European Commission: Development Policy: (Extracts) September 2000
3.1.1.1
The State of Poverty
One in every four people alive today live in absolute poverty. Within
this group of absolute poor, some 800 million go hungry on a regular basis
(UNDP 1998). These bare data underline the fact that, although very considerable
progress has been made in recent decades, the challenge of eradicating
poverty remains enormous. …….Some three quarters of the 1.3
billion poor live in South Asia and East Asia/Pacific, with a further
17% living in sub-Saharan Africa. Within each region, however, the trends
with respect to poverty are diverging. Although the economic crisis in
East Asia has reversed recent gains, the share of the East Asian and Pacific
population falling below the $1/day poverty line has been in long-term
decline. South Asia has experienced a similarly positive trend. Yet in
sub-Saharan Africa and Latin America, the trends are in the opposite direction.
Latin America/Caribbean and sub-Saharan Africa are the two regions where
both the total number of people living in absolute poverty, and the share
of the population living in poverty, have increased.
The nature and depth of poverty varies across countries, although differences are often apparent even when aggregated at the regional level. Understanding these differences requires an assessment of some of the broader dimensions of poverty, going beyond levels of income and consumption. One additional dimension of what is sometimes called 'human poverty' (UNDP) concerns the proportion of population not expected to survive until the age of 40. The share ranges from 8 percent for East Asia/Pacific and Latin America, to 15% for South Asia, spiralling to 23% for sub-Saharan Africa. Huge differences in human capital, including education, exist across regions. While the school enrolment ratio of 6 to 23 year olds in South Asia rose from 37% in 1980 to 53% in 1994, for sub-Saharan Africa (and for this region alone) the ratio stagnated, at 39%. The comparable 1994 figure for Latin America is 70%, while for East Asia it stands at 79%.
Such data have their place, but without disaggregating the poor, by their activity, gender, age or other characteristics such as disability, it is difficult to formulate policy prescriptions for reducing the incidence and severity of poverty. There is no single basket of policies that can serve as a panacea for 'the poor'. The poor, like everyone else, engage in differentiated economic activities and have particular sets of assets and skills. Policy prescriptions, and natural resources, research for that matter, must clearly take these activities, assets and skills into account if they are to contribute to effective poverty reduction.
The 1992 IFAD study makes a useful contribution by identifying the range of activities undertaken by the poor, providing some pointer towards their likely skills and assets. The study sets out what it terms 'functionally vulnerable groups', defined as those groups which are 'economically insecure and thus particularly sensitive to the slightest change in external factors'. Such vulnerable groups may or may not be included in the core of the rural population which is below the poverty line but, the report argues, 'functionally vulnerable populations subsist on the borderline and can easily fall below it, temporarily or persistently, as a result of any deterioration in their conditions' (Jazairy et al, 1992: 468)
The report reveals a substantial variation across countries and between regions in the actual incidence of these functionally vulnerable groups. The most striking differences are between Asia and sub-Saharan Africa (SSA). In the case of SSA the largest functionally vulnerable group by far are smallholder farmers, who account for 73% of the total, with landless accounting for only 11%. In Asia, however, smallholders represent some 49% of the functionally poor, and landless 26% (rising to 31% in Latin America and the Caribbean).
Although the IFAD data are valuable, they are necessarily very broad brush, and offer only a partial insight into who the rural poor are, since they do not distinguish within the broad category of smallholder, for example, the poor from the less poor. Thus, for India the data indicate that functionally vulnerable smallholder farmers amounted to 280m people in 1988, the landless accounting for a further 180m making a total functionally vulnerable rural population, with other groups, of some 470m. However, India's total rural poor is identified as 250m, indicating that the 'functionally vulnerable' includes some 220m people who fall above India's poverty line.
3.1.1.2
Poor people's access to productive assets
Land is the most important such asset in rural areas, and the poorest
households are those of the landless - agricultural labourers and some
tenant farmers, especially sharecroppers. These people are often locked
into patron-client relationships, where they have to rely on the same
powerful person as landlord, creditor and employer. Female-headed households
are generally the poorest of the poor and have least access to land, because
in the great majority of cases men have ultimate control over this resource.
Mostly daughters do not inherit land, a divorced women almost always loses
access to her ex-husband's land, and widows normally lose all or most
of their land to the deceased husband's kin (Koopman 1997). Even in matrilineal
inheritance systems (which are still found in parts of west and central
Africa and in 'tribal' areas of Asia), where both men and women inherit
land from their mothers, married women are often pressured into ceding
land to their husbands - although in the event of widowhood or divorce
they are in a rather better position to retain access to land than in
patrilineal systems (ibid.).
Trends in access to land are negative in most places. Population pressures have led to repeated sub-division of land-holdings, so that many farms are too small to support the family, and there are insufficient capital resources to invest in land improvements. This is complicated by inheritance systems which cause land fragmentation, so that the time of cultivators and draught animals is wasted travelling between small scattered plots. Fragmentation also militates against investment in irrigation, particularly groundwater irrigation, because the area of contiguous plots under a single owner is too small to make this economic in a situation where water markets are often seriously underdeveloped. Landlessness is increasing, fuelling rural-urban migration and a host of related problems (Maxwell 1998).
There are also important negative trends in land quality. In Africa particularly, but also in some areas - particularly hill and mountainous areas - of Asia, the Pacific, the Caribbean and Latin America, population pressure on the land resource is causing its degradation. In cultivated areas there is reduced fallowing, and therefore declining soil fertility (GTZ 1998). This is worsened in most areas by fuel shortages (often caused by deforestation - itself another manifestation of pressure on the land), which cause crop residues and cattle dung to be used as fuel, so that nutrients are not being returned to the land. Soils depleted of their nutrient and organic matter content and are subject to acidification which is a growing problems in many areas (Hazell, 1998). Unbalanced use of chemical fertilisers is mining the soil of key crop nutrients. In dry areas such as Africa's Sahelian zone, the decline in land quality is such that a significant degree of desertification is taking place (ibid.). In pastoral areas over-stocking and therefore overgrazing are increasing problems, particularly in the vicinity of waterholes and oases. This is a growing problem in much of West Asia and North Africa (Nordblom and Shomo 1995). In all cases the net result is that even when quantitative access to land remains the same, its qualitative deterioration contributes to growing poverty.
In many countries, particularly in Latin America, land distribution can be extremely unequal, with Gini coefficients uniformly higher than 0.8, often with 2 per cent of landowners can hold 33 per cent of the land (Binswanger and Deininger 1997). Such inequality is not just an issue of social justice, it is also an economic issue, as is indicated by a recent cross-sectional study covering all the major regions of the developing world. This showed that there is a strong negative relationship between initial inequity in land distribution and long term growth, and that inequality reduces income growth for the poor, but not for the rich. These findings led the authors to conclude that policies that increase aggregate investment and facilitate acquisition of assets by the poor might be doubly beneficial for growth and poverty reduction (Deininger and Squire 1998).
The reasons why there should be a negative relationship between initial inequity in land distribution and economic growth probably lie the fact that, as many studies have shown, there are few economies of scale in agriculture for farms larger than the family farm, because there are high supervisory costs where farms are larger than the family can handle (Binswanger and Deininger 1997). Often lack of administrative capacity means that large holdings are deliberately placed under low productivity land use regimes, such as livestock rearing (common in Latin America) or plantation forestry (increasing in South Asia), because these require relatively little supervision.
Alternatively such lands may be leased out to sharecroppers, but this is usually an economically inefficient system, because most sharecropping arrangements give the tenant little incentive to apply productivity-raising inputs. Where there is no security of tenure or guarantee of compensation for improvements, the tenant has little incentive to invest in longer term land improvement measures, such as soil conservation, the sinking of tubewells and construction of irrigation ditches, and the use of phosphatic fertilisers with their important residual effects.
Even when distorted land ownership patterns do not cause land to be used in an economically inefficient way, the cost of labour recruitment and supervision on large holdings is high, and this encourages large landowners to displace labour through mechanisation. A study in the 'green revolution' states of India revealed that mechanisation of rice and wheat harvesting through the spread of combine harvesters on large farms had led to a 95 per cent cut in harvest labour requirements, and that this practically eliminated the practice of migratory labour coming from very poor labour surplus areas of Bihar and West Bengal (Laxminarayan 1981). This is equivalent to denying the very poor access to land resources, because it robs them of any fruits of such access.
In many circumstances the most economically efficient agriculture is found on small family-owned and operated farms, where there is ample self-supervising family labour and strong incentive to invest. Binswanger and Deininger (1997) cite the example of China, which in 1978 abandoned collective agriculture and handed land over to families, while at the same time sharply increasing the prices paid for agricultural produce. Largely because of this, China subsequently experienced 15 years of more than 6 per cent annual growth in farm output and growing prosperity for much of its rural population.
Remunerative prices are crucial here. Ownership of the land provides security for investment in land improvement, but unless produce can profitably be sold, the returns on such investment will remain unprofitably low. A well-known example is the Machakos district of Kenya, where market access and high prices motivated owner-cultivators to invest in soil conservation measures that the authorities had previously laboured in vain to introduce through exhortation and even compulsion. Market access provided both the means and the incentive to conserve the land, so that despite rising population, soil erosion was reduced (Tiffen et al 1994).
It is important to see land as more than a factor of production. It is also a means of saving, a hedge against inflation, a means of securing loans on relatively favourable terms, an insurance policy against times of stress, and in many societies a status symbol. This is why in developing countries land prices so often exceed the capitalised value of farm profits (Binswanger and Deininger 1997). Correspondingly, lack of access to land for the rural poor means lack of access to these other forms of economic security, which increases their vulnerability to shocks, negative trends and setbacks.
Access to water is almost equally problematic for the poor and it is often tied to access to the land resource. Lacking security of tenure, there is no incentive for tenant farmers to invest in irrigation facilities, so in effect they have no access to irrigation water, even where it is abundantly available. People who live in valley bottoms are often less poor than those in the surrounding hilly areas, and for reasons of hydrological flow they also have better access to irrigation water. Within irrigation schemes the "top ender" versus "tail ender" wrangles are a perennial problem, and the tail enders are the most likely to be poor, because the poor have the least influence over where irrigation structures are sited. In areas of South Asia where groundwater tables are falling because of overexploitation, richer farmers have been able to purchase relatively expensive deep tubewells and tap the water deep down in the aquifer, thus undermining their poorer neighbours who have access only to shallow tubewells (Gill 1995).
The collection of domestic water is almost always the responsibility of women and girls, who, as was shown earlier, suffer from intra-household discrimination. All over the northern plains of the South Asian subcontinent - an area that is home to hundreds of millions of poor people - hand wells for drinking water are going out of commission as the water table is lowered by irrigation. Pollution of both ground and surface water by agricultural chemicals is also reducing women's access to clean drinking water and forcing them to spend increasing amounts of time fetching supplies (ibid.).
Although there are areas in which more could be done to harvest increasing quantities of rainwater, in most areas the overall supply of fresh water can be regarded as fixed. For many decades to come increasing quantities of fresh water will be diverted from meeting food production and domestic needs in the rural areas to serve the needs of growing urban centres, including the demands of manufacturing industry and power generation. This is especially true of some of the world's most populous countries - including China, Egypt and India - all of which are rapidly approaching the physical and economic limits of water development (Seckler 1994). As water resources are diverted from rural to urban areas, it is of course the poor who will suffer disproportionately from dwindling access.
The rural credit market in most developing countries is highly dualistic. Structural adjustment may have reduced the levels of subsidy that were previously lavished on the formal sector, but access to this is still almost unknown for the poorest households, which must therefore resort to usurers to obtain credit, often for non-investment (and therefore non revenue generating) purposes such as hungry season food supply.
Access to modern technology has been similarly biased. Agricultural research in the CGIAR system has traditionally concentrated on varieties that are responsive to high input crop management regimes, heavily dependent on fertilisers, pesticides and controlled water supply. This favours the better off farmers in the more advantaged areas. The CG institutions have now accepted that there is a problem here, and that more must be done to develop crops that are suitable for marginal and risk prone rainfed areas, where poverty is endemic. But this is an expensive undertaking, it will take more time than the development of green revolution crops did, and the risks of failure will be higher.
3.1.1.3
Future trends in poverty
Predicting future rates of poverty reduction and thus numbers of those
remaining in poverty is clearly difficult and uncertain. Indeed, very
few studies have sought to make hard, quantitative analyses. Several recent
studies, however, have tried to estimate the likelihood of countries or
regions achieving the International Development Targets set out in the
DAC's Shaping the 21st Century report. Clearly, whether or not absolute
poverty is halved or other poverty targets are met depends on the international
economic environment, socio-economic trends within each country, and the
extent to which those countries implement pro-poor reforms. The broad
conclusions from a recent study by the World Bank include:
Halving poverty
by 2015 depends on the initial poverty level within the country, the initial
distribution of income, and whether this distribution becomes more or
less equal over time. The more initially unequal the country (and the
higher the initial poverty incidence) the higher the rate of growth required
to halve poverty;
If countries grow at similar rates to those of the early 1990s, or if
performance is projected on the basis of past policy and structural conditions,
many countries will not achieve the poverty reduction target. If there
are increases in inequality, their performance will be even worse;
If, however, countries with policies and institutions currently unfavourable
to economic growth were to reform and achieve the policy and institutional
performance of fast-growing countries, the majority of poor-performing
countries would grow sufficiently fast to halve poverty;
The reduction of other (social) dimensions of poverty is closely linked
with the reduction of income/consumption poverty - there is evidence of
two-way causation between income and social outcomes and vice versa. However,
even with high growth the majority would not meet targets for a reduction
of child mortality rates of two-thirds unless specific additional interventions
are carried out;
In short, future trends in poverty at the country level will vary widely
depending on both the initial levels of poverty and inequality and whether
a sound, pro-poor policy framework is established.
A recent study by Hanmer et al (1998), also considers likely future trends
in poverty in terms of the International Development Targets, but assesses
performance on a region-by-region basis. It concludes that the level of
human development indicators will improve considerably in all regions,
but that achieving a reduction of 50% in poverty incidence will be difficult
in several regions. The Hanmer et al study considers four different growth
scenarios, reflecting different assumptions about growth rates with developing
and industrialised countries. Under all four growth scenarios East Asia
and the Pacific regions are likely to achieve a halving in the proportion
of poor. Prospects are also good for South Asia, but for the other regions
the outlook is far less promising.
This table also shows that the prospects for achieving the International Development Targets of universal primary education, a reduction by two-thirds in the infant mortality rate, and the elimination of gender disparities in primary and secondary education, are good for all regions apart from sub-Saharan Africa.
Although the prospects for reducing the incidence of poverty are good, the absolute number of poor will nonetheless increase in many regions, even under scenarios which assume high growth rates. The predicted absolute number of poor people will remain particularly high in both sub-Saharan Africa and South Asia.
Comparative
economic analysis of past trends in sub-Saharan Africa and East Asia indicates
that gender inequality in education and employment has had the effect
of reducing the former's per capita growth rate by an estimated 0.8 percentage
points a year between 1960 and 1992, and was thus an important element
in Africa's poor economic performance over the period (World Bank 1998.).
This aggregates to an astonishing 30% difference in sub-Saharan Africa's
per capita income levels, comparing what is with what could have been.