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Enhancing the Fight Against Poverty in Asia and the Pacific: The Poverty Reduction Strategy of the Asian Development Bank

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I. The Asian Development Bank’s Mission

A. Poverty Reduction: the Overarching Goal of the Asian Development Bank

1. The goal of an Asia-Pacific region free of poverty clearly defines the mission of the Asian Development Bank (ADB). All other strategic objectives will be pursued in ways that contribute most effectively to this goal. Poverty is an unacceptable human condition in the 21st century. It is not immutable; public policy and action can and must help eliminate it. Although considerable progress in reducing poverty in the region has been made, almost two thirds of the world’s poor live in Asia and the Pacific. This must change.

2. Poverty is characterized by a lack of access to essential goods, services, assets, and opportunities to which every human being is entitled. Everyone should be free from hunger, should be able to live in peace, and should have access to basic education and primary health care services. Poor households need to sustain themselves by their labor and be reasonably rewarded and should have a degree of protection from external shocks. In addition, individuals and societies are also poor—and tend to remain so—if they are not empowered to participate in making the decisions that shape their lives.

3. ADB has always been concerned with poverty reduction. Beginning with a focus on economic growth, ADB has progressively expanded its development approach to encompass a wide range of social and environmental concerns. The experience gained in the Asia-Pacific region has given rise to unprecedented confidence that absolute poverty can be substantially reduced.

4. Following the United Nations Millennium Declaration, ADB incorporated the Millennium Development Goals (MDGs) that clearly enunciate targets for reducing income and non-income dimensions of poverty into its poverty reduction strategy. Progress on achieving the MDGs will be used to monitor the strategy’s impact. On an operational level, ADB assists its developing member countries (DMCs) to integrate the MDGs into their national poverty reduction strategies and to monitor their progress.

B. Reducing Poverty by Building on Success

5. In the early 1970s, more than half the population of the region was poor. In 1990, about 32% or 900 million people in the region survived on less than US$1 a day. By 2000, this number had declined by around 180 million to 720 million. This was achieved in spite of a major financial crisis in 1997 that depressed regional growth and triggered a temporary setback in poverty reduction.

6. There is still a long way to go, however. Poverty remains at unacceptable levels and progress has been uneven across the region. During the 1970s and 1980s, poverty reduction was most pronounced in East and Southeast Asia. During the past decade, on the other hand, it has been most apparent in the People’s Republic of China and in India. According to official estimates, the incidence of poverty declined from 31% to 16% in the People’s Republic of China and from 41% to 33% in India. The rest of the Asia-Pacific region did not experience major improvement.

7. In addition, less progress has been made in the non-income dimensions of poverty. For instance, the mortality rate of children under 5 years in the region fell from 85 per 1,000 live births in 1990 to 70 in 2000, a rate too slow to meet the MDG target of reducing under-five mortality by two thirds by 2015. The biggest challenge lies in South Asia where child and infant mortality rates remain exceptionally high. Under-five mortality rates declined slowly there in the 1990s from 120 to 94 per 1,000 live births while infant mortality was reduced from 69 to 58 per 1,000 live births. Progress in reducing the proportion of undernourished children, in expanding immunization coverage, in increasing the number of births attended by skilled health staff, and in combating HIV/AIDS also remains slow. These indicators are strongly linked to the poor status of women.¹

8. Thus, while the Asia-Pacific region as a whole appears to be on track for meeting the MDGs for income poverty, several countries are likely to be left behind. Others that are likely to meet the overall target may still have sizable pockets of poverty. In addition, accelerating the pace of progress to meet the MDG targets relating to non-income poverty also continues to be a formidable challenge.

C. ADB’s Response to the Challenges

9. In January 2002, ADB reorganized its operations to align its structure and business processes with its overarching goal of poverty reduction. To achieve greater country focus and client orientation, operations are being progressively decentralized to resident missions that have been considerably strengthened . More specialists in poverty and social development were recruited to bolster ADB’s internal capacity to address poverty reduction. In ADB headquarters, the Regional and Sustainable Development Department (RSDD) was established to help align policies with the poverty reduction strategy (PRS), to review the quality of operations, and to foster knowledge management. Research analyzing the impact of poverty was undertaken to better inform country strategies and project design.

10. The review of the PRS indicates that the greater strategic focus on poverty reduction had a perceptible impact on ADB and its operations. Partnerships with civil society and other development agencies were strengthened. At the country level, poverty assessments helped to inform assistance programs while country strategies and programs (CSPs) generally became more sharply focused on poverty reduction. The review concluded that the strategic focus and orientation of the 1999 PRS continue to be relevant. It recommended that ADB’s country support be more closely aligned with national poverty reduction strategies; that more comprehensive approaches to monitoring be adopted; and that the focus of ADB performance monitoring be shifted to results in the DMCs related to the MDGs.

11. ADB draws on strengths that equip it uniquely to reduce poverty. These include the exclusive focus on Asia and the Pacific; regional location; and majority shareholding of regional members. At the same time, the participation of members outside the region ensures that global resources and perspectives are brought to bear on regional development issues. ADB undertakes grant-financed assistance, public sector lending, and private sector operations under a single roof and takes advantage of the synergies that result.

12. While the primary responsibility for poverty reduction rests with DMCs themselves, ADB’s intellectual and financial contributions can play a crucial, catalytic role in reinforcing national efforts. The enhanced PRS embodies ADB’s commitment to eradicate poverty in the region.

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