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Poverty reduction: Promoting inclusive pro-poor growth
Remarkable economic and social gains in Asia and the Pacific over the last few decades lifted millions from poverty but too many have been left behind. The region remains home to two-thirds of the world's poor, their ranks further deepened by loss of employment and reduced incomes from the 2008 global financial crisis.
ADB’s poverty reduction assistance to its developing member countries (DMCs) aims to reach the estimated 1.7 billion people still struggling on less than $2 a day in urban slums or rural poverty, marginalized and excluded from the benefits of the region’s growth. To achieve the vision of an Asia and Pacific free of poverty, as laid out in ADB’s guiding Strategy 2020, the bank supports pro-poor growth in its DMCs that is inclusive, environmentally sustainable, and draws on the region's increasing levels of cooperation and integration.
ADB’s enhanced poverty reduction strategy
ADB is seeking ways to help solve Asia's poverty puzzle, where over 900 million people live in extreme poverty.
In 2004, ADB reviewed and enhanced its 1999 Poverty Reduction Strategy to take into account the Millennium Development Goals (MDGs) and develop a broader approach to poverty reduction, clarifying that all ADB operational and knowledge work either directly or indirectly contributes to poverty reduction. The Enhanced Poverty Reduction Strategy also emphasizes increased harmonization and alignment of poverty reduction programs among donors and member countries, as well as the fostering of partnerships for poverty reduction. The new approach also puts increased emphasis on managing for development results, as well as capacity development. The Strategy is made up of three pillars: pro-poor sustainable economic growth, inclusive social development, and good governance, which also includes the cross-cutting priorities of environmental sustainability, gender equity, private sector development, and regional cooperation.
Depending on the partner countries' strategic priorities and ADB's comparative advantages, all sectors contribute to reducing income, social, and environment poverty. For example, road facilities and transport services impact greatly on the ability of poor women and children to access health services in cities. In many countries, suitable transport and ICT infrastructure are key factors in reducing mother and child mortality, and achieving social MDGs.
Promoting pro-poor growth and enhancing human and social development of the poor requires affordable and reliable access to economic infrastructure facilities and services. The need for increased investments in infrastructure and for making infrastructure management and maintenance more efficient and more effective for the poor is widely recognized.
Approximately 700 million people in Asia and the Pacific live on less than US$1 a day, 400 million of them in urban areas.
Many Asian cities face deteriorating sanitation and environmental conditions, inadequate housing and infrastructure, and other problems. ADB’s integrated approaches specifically target the urban poor, promote economic development, treat cities as a living ecosystem, and foster the involvement of private sector and civil society.
ADB has set up specific initiatives in water and sanitation to improve the social and environmental living standards of the poor and vulnerable. ADB urban poverty reduction efforts are upgrading slum housing, helping DMCs plan and build efficient urban mass transport, and develop energy efficiency.
About half of Asia's poor people live in rural areas. These also include the poorest of the poor, often indigenous people or vulnerable groups with little economic opportunities. The majority of rural environmental poor live in marginal dryland and wetland areas and their numbers are likely to increase with global warming. For these people, ADB support includes:
- rural infrastructure and connectivity (particularly through an effective transport network)
- natural resources conservation (soil and water)
- land reforms, water rights and empowerment of women
- off-farm employment opportunities
- security from natural disasters and new forms of social protection
- special plans for remote areas
- targeting of indigenous people fisherfolks and forest communities, and
- managed migration to urban areas
An example of ADB’s rural poverty reduction support is a $20 million grant from ADB's concessional Asian Development Fund for the High Mountain Agribusiness and Livelihood Improvement Project which is helping small farmers and rural enterprises increase the value and salability of their goods. The project will generate 7,500 new jobs, directly benefiting about 5,000 households in 10 districts across four development regions.
For Asia's poor, everyday is a financial crisis.
Pro-poor economic growth can effectively reduce poverty, provided it is accompanied by a comprehensive program for social development. Human capital is the primary asset of the poor, however, their lack of access to education, health services, and social protection blocks social development opportunities. The MDGs emphasize social outcomes for poverty reduction including gender equality and poor children, mothers, and the elderly.
ADB's Medium Term Strategy II (MTS 2006–2009) emphasizes educational and gender contributions to poverty reduction as a comparative advantage for assisting partner countries, and along with the Long-Term Strategic Framework (LTSF 2001–2015) is well aligned with the MDGs as a development objective.
Climate change and poverty reduction
Environmental threats disproportionately affect the poor in Asia and the Pacific, and climate change is making the situation worse. Air and water pollution, desertification, land degradation, loss of biodiversity, and exposure to hazardous materials affect the poor more than others, leaving them vulnerable to natural and man-made disasters.
ADB’s Poverty and Environment Program is a rapidly growing knowledge base that captures valuable knowledge on poverty-environment relationships from ADB and other development partner projects to promote effective responses toward environmental improvement and poverty reduction through a small grants program.
An Asia-wide conference on "The Environments of the Poor in the Context of Climate Change and the Green Economy: Making Sustainable Development Inclusive" organized by ADB along with 14 development partners, discussed the triple wins for the poor, the environment, and the climate.
Banking on the poor
A dynamic private sector, often driven by small and low income households, is the prime promoter of pro-poor growth, but about 90% of the 180 million poor households in the region still lack access to institutional finance. Financial services for the poor help improve productivity and living standards of the poor, and contribute to the achievement of several MDGs.
Microfinance is an effective development tool for promoting pro-poor growth and poverty reduction. Financial services enable poor and low income households to take advantage of economic opportunities, build assets, and reduce their vulnerability to external shocks that adversely affect their living standards.
ADB supports partner governments, commercial and rural banks, cooperatives and semi-formal institutions, including non-government organizations, to ensure permanent access to institutional financial services for the region's poor people and their micro and small businesses.