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"Community-Driven Development and Inclusive Growth"

Opening Remarks by
Lawrence Greenwood
Vice President, Operations 2
Asian Development Bank

At the International Conference on Community-Driven Development and Rural Poverty Alleviation

18 October 2009
Beijing, People’s Republic of China

Introduction

The Honorable Fan Xiaogang, Your Excellency David Mulroney, Vice President Adams, Excellencies, colleagues in development, good morning.

On behalf of the Asian Development Bank, it is a great honor for me to extend our sincerest welcome to all of you to this important forum on community driven development and poverty alleviation. Allow me to thank in particular the participants who have traveled from as far as Africa and Latin America to share with us today their vast experience in community-driven development and how these approaches have been instrumental in their own poverty reduction efforts.

The People's Republic of China (PRC) has enjoyed rapid growth over the last three decades, with its economy growing an average of over 9% per year. Nearly 300 million people have been lifted out of poverty during this period. Despite this impressive record, the PRC is still home to over 200 million people living on less than $1.25 a day. Reducing that poverty remains a daunting challenge, especially in the context of the current global economic slowdown. Resuming and sustaining growth will be vital, of course, but just as important will be ensuring that the poor share in the benefits of that growth by directly involving them in addressing poverty, ensuring their inclusion in the development process. This is relevant to us in ADB. Our recently launched Strategy 2020 reiterates our commitment to strive for an Asia Pacific region free of poverty focusing on inclusive growth. This strategy is borne out of a realization that, despite tremendous growth, the region remains home to about 900 million poor persons living on less than $1.25 per day, an international measure for those living in extreme poverty.

The PRC's development-oriented poverty alleviation program and rural development policies have prioritized interventions in improving the capacity of the rural poor in poverty alleviation. These policies lay the foundations of our discussions in the next two days. Central to these policies will be the experience of the PRC and those present here today in empowering the poor in their development through an approach known as community-driven development or CDD. Discussions in the next two days on how to use lessons from the pilots CDD in the PRC and the experience in other countries, in empowering the poor, will without doubt be valuable to all of us in the development world.

CDD Lessons and Experience

Community-driven development empowers the beneficiaries of local development at a village or community level to decide themselves on how to best deploy development resources. Pilot CDD initiatives have been carried out in the PRC since 2005. LGOP and the World Bank have jointly undertaken this in Guangxi, Sichuan, Shanxi and Inner Mongolia. The ADB has provided technical assistance to support the design and demonstration of models for NGO participation in government-funded poverty alleviation efforts at the village level in Jianxi province.

These initiatives aim to devise and improve mechanisms for poverty alleviation that enhance the ability of poor and marginalized communities to improve their well being. The pilot projects have tested approaches and systems that give communities real opportunities to influence the use of public resources: transparent information on budgets, channels for appeal, and local-level management of funds.

The pilots have shown promising results through improved productivity and the living conditions of communities. They have introduced effective decision making and meaningful participation at the community level, marking a significant departure from more common top-down approaches. The pilots have also strengthened ownership of the development process by communities - especially in self-organization, self-management and self-development - core elements of PRC's "Development-oriented Poverty Alleviation Program". The greater the stake the local community feels it has in the success of a development effort, the harder it will work to achieve that success.

CDD approaches are not new and have been applied with great success in other developing countries. In the last decade, CDD approaches have become among the major tools to empower communities and alleviate poverty. Over 100 countries are implementing CDD projects. ADB has supported projects with strong CDD elements in several countries in the region. The Inter-American Development Bank, World Bank, and bilateral development agencies such as the Australian Agency for International Development (AusAID), Germany's Development Cooperation Agency (GTZ), the United States Agency for International Development (USAID), the Canadian International Development Agency (CIDA) and the United Kingdom's Department for International Development (DFID) have also invested considerably in CDD.

Most investments are aimed at improving local rural infrastructure and public facilities, addressing poverty and basic needs in locations where local government capacity is limited or absent, in post-conflict or natural disaster-affected areas and areas where local resource management schemes are appropriate. Several flagship CDD programs are ongoing, with longterm investments in a government decentralization process whereby resources and responsibilities for local development are devolved to local government units and communitybased organizations.

The benefits from the success stories include: (i) better targeting of people with few resources; (ii) faster disbursement of funds at lower costs than other government-run projects; (iii) wellconstructed infrastructure; (iv) higher economic returns; and (v) high participation of women and poor persons. CDD approaches can also be applied usefully during economic downturns, as they provide targeted, quick-disbursing mechanisms that stimulate economic activity.

Limitations of CDD

CDD approaches have considerable potential to reduce poverty relatively quickly on a large scale in a variety of sectors and country conditions. However, the approach also has built-in limitations, and is not suited to all contexts and cases. Several CDD operations have encountered challenges in scaling-up: ineffective targeting, exacerbated the exclusion of already marginalized upland communities in some parts of the Philippines because of tendencies to target population centers; added costs such as the increase in total project cost due to additional social preparation and facilitation and the costs of participation on the poor; limits to participation in practice, as when mere attendance in meetings is considered sufficient; occasional cases of “supply-driven demand-driven” development, especially when sectoral agencies impose the types of projects according to their own expertise rather than the need of communities; and a lack of institutional sustainability, especially for earlier CDD projects that promoted parallel delivery mechanisms over established ones, failing to institutionalize the process.

These are the areas that I would propose we give particularly attention to over the next two days, exploring how - in the context of the PRC, they can be overcome. How can lessons from small-scale CDD operations and the pilot in China be applied to substantially increase community coverage and the resources made available for use by local authorities and communities? How do we ensure that policy designs for CDD initiatives properly incorporate significant participation, a core trait of the CDD approach? What kind of enabling framework is necessary to support devolving and clarifying responsibilities and accountability for disbursing funds to communities?

In the next two days, examples of how these, and other issues that have been encountered and addressed by other countries will be presented. The Indonesia model, one of those from which the PRC CDD pilot benefited, and which is also being supported by the ADB and the World Bank, has scaled up from a pilot of 200 villages to national coverage after nine years, using the robust funds flow mechanism, established and adjusted according to the realities and capacities of rural financial institutions in the country. The Philippine model, another area visited by the implementation team of the PRC pilot, has used the bottom-up planning systems under their local governance legislation to support and institutionalize CDD.

Experience has shown that the challenges of using CDD can be met if governments and donors are committed to promote it as a long-term institution-building process to promote inclusive growth within a good governance framework, and to address poverty and solicit community support at a very local level. For example, funding agencies can collaborate to offset high startup costs and increase benefits by applying lessons from past experience, pooling resources behind a common country strategy and fiduciary framework to offer longer-term, predictable program-based financing. A multi-year, multi-donor effort also provide officials at higher levels of government a longer planning horizon to champion a scaled-up program.

Conclusion

CDD is a proven approach for involving local communities in local development, and has generated tangible economic and social benefits. Poor communities and women in particular, have benefited from the process. Lessons from successful pilots and several flagship projects can guide us in considering how to scale up CDD operations in tandem with a country's program for promoting inclusive growth or poverty reduction.

I am certain that in the next two days, we will see that, when designed and implemented properly, CDD approaches add tangible value to economic development efforts by creating the connections necessary to engage and benefit poor communities, and thereby enhance the poverty reduction impact and sustainability of the overall project or program.

Today we will hear firsthand accounts from our colleagues in government, development institutions, CDD practitioners from all over the world concerning their experience in designing, implementing, and monitoring CDD activities. They will tell us stories of great promise, impressive successes, and daunting challenges.

I believe the exchange of experiences and ideas that this forum provides will help us refine our decade-long effort, as partners to governments and of PRC, in engaging poor communities in the development process, and making efficient use of development resources intended for their benefit.

I wish you all a productive discussion and look forward to hearing you. Thank you.