IDENTIFYING POOR AND POVERTY REDUCTION

1. IDENTIFYING POOR AND POVERTY REDUCTION

2. poverty • command over commodities in general • people are better off if they have a greater command over resources • Or ability to obtain a specific type of consumption good • Including food and non-food components. • People who lack the “capability” to function in society might have lower well-being .

3. poverty • Poverty is also associated with insufficient outcomes with respect to health, nutrition and literacy, to deficient social relations, to insecurity, and to low self-confidence and powerlessness.

4. Poverty line • why PL needed • To separate poor and non-poor • the poverty line: minimum expenditure required by an individual to fulfill his or her basic food and non-food needs.

5. Construction of Poverty Line • Food Energy Intake poverty lines • Basic Needs poverty lines- calorie income function • World bank defined poverty line • Subjective poverty lines • Poverty line– pay and receive zakat • Absolute and relative poverty lines • variation in poverty lines across countries • Application: a poverty line using real survey data • how do countries adjust their poverty lines over time? • Generally adjusted by CPI

6. Counting the poor • After defining poverty line • Head count Index • Poverty gap index • FGT poverty Index measuring Income distribution among the poor.

7. Why measure poverty? • to assess the effects of projects or government policies on poverty, • compare poverty over time, • make comparisons with other countries, and • target the poor with a view to improving their position • Growth strategy • Social spending • Targeted interventions.

8. MaqasidPrinciples and Human Wellbeing/Poverty • The term „maqsid‟ (plural: maqasid) literally means a purpose, intent, objective, principle, goal or end. • •Maqasid al-Shariahcould be defined as the objectives, purposes, intents, ends or principles behind the Islamic law or Islamic rulings .

9. MaqasidPrinciples and Human Wellbeing/Poverty • Al-Ghazali: “The objective of the Shariahis to promote the wellbeing of all mankind • safeguarding their faith (din), their human self (nafs), their intellect (`aql), their posterity (nasl) and their wealth (mal)” (in Chapra, 2000). • Similar perspective is shared by al-Shatibi • Ibn Taymiyyah: “Islamic law came to realize and enhance human well-being ..” (in Al-Raysuni, 2005). • Ibn Qayyim: “Islamic law is all about wisdom and achieving people’s welfare… “(in Auda, 2008:20-21)

10. Methods to Achieve the Maqasid • Methods to achieve the objectives: promotion (opening access ) and protection of human wellbeing. • –Al-Ghazali: “Whatever ensures the safeguard of these five [objectives], serves public interest and is desirable” (In M. Chapra, 2000:118). • –Al-Izz ibn Abd al-Salam: Islamic law consists of two interests, namely either interests that prevent what would cause harms or achieve what would bring benefits (in Al-Raysuni, 2005:30-32).

11. General Framework for Developing a Maqasid al-ShariahBased Multidimensional Poverty Index (MSMPI)

12. Defining Poverty (Wellbeing Indicators ) • In choosing the dimension, it is suggested to utilize the maqasidprinciples --particularly those advocated by al-Ghazali and al-Shatibi-- due to: • –its relevance to current situation in the Muslim world, where poverty persistently exist • –This approach limits the poverty or wellbeing dimensions to enable easier and more focused measurement • Interpretation of the five poverty/wellbeing dimensions: religious (din), health (nafs), education (aql), family/social (nasl) and economic (mal) dimensions. • These could be more…

13. Cont… • The operational indicators can be determined based on the current conditions and norms (urf) of Muslims. • The maqasidprinciples generally suggest that human wellbeing could be achieved through opening access (promotion) and protection of the essentials from potential harms, such that people have abilities to exist in society and ultimately achieve falah. • This implies that access and ability should be the focus of the indicators.

14. Examples of Operational Indicators for a Maqasid-based Multidimensional Poverty Measure

15. Constructing A Single-Aggregate Multidimensional Poverty Measure • A simple model with equal weight amongst the dimensions and indicators is preferable due to its simplicity and easy methods of calculation. • General model • MSMPI • Where MSMPI is Maqasid al-Shariah based Multidimensional Poverty Index • n is the equal weight for each dimension (n=1/5); • H, Ed, R, Ec and S are the weighted average of poverty/wellbeing score in health, education, religious/spiritual, economic and social dimensions

16. Constructing a Set of Multiple Multidimensional Poverty Measure • With a similar method, a set of multiple indices could be constructed for each of the poverty/wellbeing dimension. • H is maqasid-based poverty index in Health dimension, which is derived from an equally weighted score of the indicators (Xi, i = 1…n) constructing the index. • – This general formula could be used to generate a multiple set of index in the other dimensions (i.e. Ed, R, Ec and S).

17. The Estimated Maqasid al-Shariahbased Multidimensional Poverty Index (MSMPI) • Dimension of Poverty/Wellbeing Obs. MSMPI St. Dev. Min Max • Health 677 4.20 0.73 2 6 • Education 581 4.55 0.79 2 6 • Religion 297 4. 06 0.74 2 6 • Economic 466 3.65 0.76 1.4 6 • Social 90 4.16 0.67 2.75 6 • Average/Aggregate MSMPI 4.12

18. Approaches to Poverty Reduction

19. Some poverty reduction approaches • Poverty Reduction Strategy Paper Approach -PRSP – (WDB and IMF) • Islamic Approach to Poverty reduction

20. Introduction • Approaches to poverty reduction results from concept of poverty. • poverty was defined in terms of income/consumption levels and the availability of social services (WDR 1990 ) • The basic approach to poverty reduction focused on the supply and demand for labor, the main income source among the poor. • Dealing with two issues simultaneously: • Achieving labor-intensive growth patterns that would increase the demand for labor, especially unskilled labor, and • creating human capital that could respond to the income earning opportunities generated in the course of the growth process, by providing education, health care, and other social services (WDR 1990).

21. Cont… Definition: Poverty is a lack of political, socio-cultural, economic, human or protective capabilities (Development Assistant Committee-DAC, OECD). Condition in which people are deprived of opportunities to develop capabilities required to lead a basic human life, and are excluded from society and development process (The Japan International cooperation Agency-JICA) • Broadening the definition of poverty-multidimensional poverty- has made an important contribution toward developing new, multidimensional approaches to poverty reduction.

22. Three tasks have been identified as the keys to poverty reduction. • 1- Promoting opportunity among the poor, who lack assets, access to markets, and work opportunities, in order to increase their income and allow them to escape from poverty in terms of consumption and income levels. (This approach roughly corresponds to that of the WDR 1990. ) • 2. Enhancing security, which is reducing their vulnerability and enabling the poor to cope with unfavorable situations. • 3. Facilitating empowerment, which makes formal political administrative and informal social institutions work in favor of the poor. (WDR 2000/2001 )

23. Poverty Reduction Strategy Paper Approach (PRSP) • BACKGROUND: In January 1999, the World Bank formulated the Comprehensive Development Framework (CDF). At a joint annual meeting of the World Bank and the IMF in September 1999, they decided that drawing up and presenting a Poverty Reduction Strategy Paper (PRSP) would be a precondition to implementing concessional lending to the Heavily Indebted Poor Countries (HIPCs) . • These initiatives have determined the basic tenets of approaches to poverty reduction to be collectively pursued by the international community as a whole.

24. PRSP • The PRSP is a three-year action plan for poverty reduction • Country driven • Broad collaboration with the Aid agencies and NGOs for decision making process • The international community also sees the Poverty Reduction Strategy Paper (PRSP) as the country-level operational framework for progressing toward the Millennium Development Goals (MDGs) • The PRSP prepared by the country then must be approved by the boards of the Bank and IMF.

25. The PRSP document consists of following parts. • 1. it reviews current poverty situations and diagnoses the causes of poverty. • 2. it indicates goals and policy measures. • Goals: The goals include both long-term (10-15 years) poverty reduction targets and short-term (2-3 years) targets; the latter are readily monitorable for timely evaluation of policy measures. • Policy Measures: The policy measures constituting the strategy comprise macro and sector-level economic policies, social policies, and administrative and political reforms. • 3. It establishes a system to monitor and evaluate policy effects - result oriented and focused on outcomes that benefit the poor • 4. It determines the effectiveness of and the need for external assistance.

26. The structure of the results-based Monitoring & Evaluation process • Inputs Outputs Outcomes Resources (Pro-poor polices and pro poor expenditures) Improvement in Status, Access, Utilization, and Quality Physical and non Physical Targets

27. PRSP expenditures

28. Few Findings From the Case Study of Ten Countries Progress • PRSP made significant progress so far • Increased attention to poverty diagnosis • More stakeholders involved • Better government dialogue • The inititive remain relevant but potential not yet realized; benefits vary widely by country Participation • Governments consulted widely, with the Bank’s support, during formulation but faded during implementation • Dialogue space widened, but little evidence of impact on strategy design; Parliaments had limited involvement

29. Partnership • Donors provided well-coordinated assistance to governments to formulate PRSPs… • ….which have provided a constructive framework for their policy dialogue with the government • But neither donors nor the Bank have defined how the content of their programs should change to reflect PRSPs

30. Design • PRSP is a condition for access to IDA • more focus on producing documents than on improving domestic processes • little guidance on adaptation to country conditions

31. THANKS