President Ramos, Secretary Quintos Deles, former ADB Governor Roberto Ocampo, Professor Neri, Mr. Locsin, distinguished members and guests of the Ramos Peace and Development Foundation, good afternoon. I am very happy to meet with you this afternoon, and I am delighted to have been invited as panelist and respondent. I look forward to a lively discussion and an open exchange of views on how we can reduce poverty.
- Why Fight Poverty?
Because poverty is an unacceptable human condition. Poverty is a deprivation of essential assets and opportunities to which every human being is entitled. And closer to home, Asia has two-thirds of the world's poor. At the beginning of this new millennium, the Asia and Pacific region faces many critical challenges. Despite significant progress, the region continues to be afflicted by unacceptable levels of deprivation, illiteracy, child malnutrition, gender disparity and environmental degradation. Even today, nearly 30 percent of Asians have no access to safe drinking water. Nearly 70 percent of Asians have no access to sanitation. Almost 50 percent of the adults in South Asia are illiterate. About 900 million people in the region still live in poverty. The overarching goal for Asia and the Pacific and for ADB should therefore be to reduce poverty. The fight against global poverty must be won here in this region.
- The Challenges of Poverty Reduction
Indeed, reducing poverty is a multi-dimensional challenge. The first challenge is that of attaining pro-poor, sustainable economic growth. Pro-poor, sustainable growth creates opportunities and lifts people out of poverty. Growth must be inclusive because it is important not only to reduce poverty levels, but also to maintain social stability and cohesion.
The second challenge is social development. Growth is necessary but not sufficient for poverty reduction. For example, if poor people have no access to basic education, how can they take advantage of job and income opportunities created by economic growth? If there are gender discrimination and other forms of social exclusion, how can discriminated and excluded people take advantage of expanded economic activities and share the benefits of economic growth? Social development, therefore, should accompany economic growth in order to reduce poverty effectively. Social development is also indispensable to prevent people - especially the most vulnerable including women, children and the elderly from falling back into poverty. This is as -important as pulling them out of poverty. The Asian crisis has shown how quickly poverty can recapture those who had only recently escaped it.
The third challenge is governance. Good governance benefits all, particularly the poor who are the least capable of coping with the consequences of poor governance. Sound, well-managed, well-governed economies foster growth and equity. Accountability, participation, predictability and transparency are essential to encourage private investments as well as to reduce corruption. The weight of corruption falls most heavily on the poor, not only directly, but the diversion of resources to the pockets of corrupt officials, politicians, and businessmen leave scant resources to invest in pro-poor programs and public services.
The fourth challenge is globalization. Globalization presents developing economies with enormous opportunities, but it also poses risks that have to be managed. Globalization helps developing economies by providing access to foreign markets. It also facilitates inflows of capital as well as the transfer of technological and managerial know-how. This creates employment and raises productivity. At the same time, however, globalization can generate social and economic stresses as well as financial volatility. These may exact a heavy toll on developing economies, particularly when there exist vulnerabilities in policies and institutional capacities.
The fifth challenge is how to ensure that technology, including information technology, will not widen the gap between the haves and the have-nots, both globally and within each country. Instead, we must use them in our fight against poverty. Medical science, for example, can be used to produce lifestyle drugs, but more importantly, it can also be used to -develop drugs that have wide benefits to all, particularly the poor, in the fight against communicable diseases, such as malaria, tuberculosis, and HIV/AIDS.
The sixth challenge is how to ensure productivity increase in the real sectors, which are the basis of growth and poverty reduction in many DMCs. For example, the majority of the region's poor still lives in the rural areas, and depends on agriculture for their food security and income. However, investments in rural areas are generally inadequate, whether for agriculture, energy, telecommunications, transport, education or health. Many rural poor have no access to electricity and only limited access to primary and secondary education. Before people can make use of information technology, they must have access to electricity, and should be able to read and write. The challenge of improving productivity requires a wide range of efforts by both public and private sectors. Many sound projects that would benefit the poor have fallen victim to the vagaries of "pork barrel" politics. Improvements to productivity to promote pro-poor growth require dedicated budgets and efforts to increase pro-poor spending.
Last, but not least, there is the challenge of environmental degradation. Poverty is both a contributor to, and a major consequence of, environmental degradation. The challenge is to understand the nexus between poverty reduction and environmental protection. The problem of water pollution and shortages, highlighted in ADB's latest Annual Report, is part of the broader challenge of environmental degradation, which hurts the poor the most.
- How is ADB responding to these challenges?
In November of 1999, we adopted a Poverty Reduction Strategy. How do we go about it? For each country, we are now conducting a country- specific Poverty Analysis in full consultation with the government, stakeholders and other aid agencies. The Poverty Analysis provides a basis for our Country Operational Strategy, and as Secretary Quintos Deles knows, a Partnership Agreement for poverty reduction with each DMC. We are now in the final stages of our Poverty Partnership Agreement with the Philippine Government. Poverty reduction requires a careful understanding of the nature and dimensions of poverty and the design of appropriate interventions. It will need effort, persistence, and will on all sides. The Partnership Agreement represents an important additional step toward that goal. It is our highest hope that it will help us achieve our shared aspirations.
Also, we have recently established the Japan Fund for Poverty Reduction, or JFPR, financed by the Government of Japan. The JFPR provides grant assistance for projects that have a direct impact on reducing poverty. We are currently working closely with NGOs, local governments, and civil society to develop new projects here in the Philippines to help the urban and rural poor. In July this year, for example, ADB provided US$1 in grant aid for the Payatas Project under This project is an innovative project that we hope will chart a new course in fighting urban poverty. Unlike past projects, it does not attempt to resettle poor urban families far from their sources of livelihood, but rather enables these communities to obtain secure titles to the land they live on, and to build permanent homes on it. More than 80 percent of the residents of the Payatas Estate are informal settlers. More than half live below the poverty line and more than a third of the children are malnourished. As an integrated urban upgrading project, it brings health services, housing, and microfinance to these communities.
Exactly a month ago, 13 August 2001, ADB provided another US$1 million in grant aid from JFPR, for the Off-Site and Off-City Relocation Project for Vulnerable Slum Communities of Muntinlupa City. Our effort here is built on forging a new, more cooperative relationship between Government, NGOs, and the urban poor. This project has its roots in an intensive consultation leading to a strong partnership. Our objective is to assist 567 households residing along this right-of-way by offering a humane and sustainable approach to relocation and resettlement - without depriving them of their livelihood. The Project will include selection of a suitable property for relocation, site development, core housing construction, provision of basic social services, provision of livelihood and enterprise development opportunities, and capacity building for the community association, including environmental management. The Project also builds on the sometimes hard lessons of experience to to strengthen government approaches to relocation efforts for informal settlers. At ADB we hope to use this pilot to inform and guide us in other activities, including our proposed $50 million project to upgrade and improve communities and services for the urban poor throughout the city. And the potential impact of this pilot Project does not end there. Revolving funds will be maintained after Project closure to help other urban poor families in Muntinlupa with land acquisition and site development, housing construction and improvements, and livelihood and enterprise development.
ADB recognizes the importance of private sector development in reducing poverty. The Asian experience has demonstrated that if we are to achieve the sustainable and inclusive economic growth needed to reduce poverty, a dynamic private sector is critical. Our Private Sector Development Strategy is intended to refocus and energize our work for private sector development. The strategy requires us to promote private sector development by helping to put in place an enabling policy and institutional environment. We also aim to catalyze private sector investments and use our public sector operations for increasing opportunities for private sector investments. In our public sector operations, we will think private sector development. Simultaneously, in our private sector operations, we will think development impact. Recently, ADB supported the privatization of Manila's water supply system, where one of the bidding requirements is to provide for water connections to 68,000 low income families in slum communities that previously relied on expensive, unreliable, and unsafe trucked-in water from informal vendors. Thanks to this creative design and public-private partnership, close to 410,000
people-now have cheap, safe, accessible water. This concession is currently troubled by exchange rate related revenue shortfall, but we hope the parties will reach agreement soon.
A couple of months back, we have completed our Country Programming exercise and drawn up a detailed list of projects and programs to assist the Government. It includes numerous projects specifically designed to reduce poverty and is in line with our partnership commitment to direct at least 40 percent of our loan resources to this effort. In terms of ADB's program for the 2001 to 2004 period, projects designed to reduce poverty represent a potential commitment of close to US$1 billion. To reiterate, pro-poor economic development requires pro-poor spending.
We will focus on social development through investments in education, health, and basic services. The benefits of such investments extend far beyond humanitarian considerations. They empower people to take control of their own destinies. They provide social safety nets to those who are vulnerable, and promote social inclusion. They create the human capital that can take advantage of the opportunities arising from globalization. We are refocusing our interventions in this area to target the poor more directly, to promote skills formation and to establish social safety nets.
We will continue to promote good governance. ADB has been a -forerunner in this area. As early as 1995, ADB adopted a Board-approved Governance Policy, the first among the multilateral development banks. We are supporting governance reform programs in many countries, including public administration reform, anti-corruption, and law and development. Building on lessons learned, we are preparing an action plan for the future.
Regarding globalization, we recognize that liberalized capital movements have contributed to robust economic development in many developing countries. But, we also recognize the valid concerns over volatility of capital flows in emerging economies. We have already learned many lessons from the recent Asian crisis. These include the need to develop adequate regulations and supervision, to undertake structural and institutional reforms in the financial and corporate sectors, to make careful and well-sequenced policy decisions, and so on. ADB has been providing and will continue to provide the Philippines with various assistance for, among others, strengthening the financial sector, developing capital markets, improving banking supervision, and regional economic monitoring.
The need to prepare for the technological revolution, especially in information and communications, is another area that has become increasingly important. Information technology will have a big impact on the Asian economies and ADB's operations. ADB has, for example, supported the introduction of modern telecommunications technologies to benefit poor people in remote villages in many countries. We will further explore the possibilities of utilizing emerging technologies in our fight against poverty in the Philippines.
Next is improving productivity in the real sectors. With a majority of the poor Filipinos living in the rural areas, especially in Mindanao, and depending on agriculture for their livelihoods, agricultural development is critical to poverty reduction and growth. The development of small and medium enterprises will be given particular emphasis. We will continue to support human resource development, institutional capacity building, and the development of necessary infrastructure, leveraging private sector investments as much as possible.
Finally, we focus on environmental protection. Philippines is one of the Asian countries suffering most from serious environmental degradation both air and water. Population increase and rapid urbanization continue to impose a heavy toll on the environment. ADB is preparing a new environment policy that will focus on the environmental constraints inhibiting poverty reduction.
- Conclusion
We, at ADB, are confident that we have set ourselves the right goal. ADB is dedicated to achieve our vision: a region free of poverty. It is our earnest wish to be your partner in reducing poverty in the Philippines.
Thank you.
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