MEASURING AND MONITORING POVERTY IN ETHIOPIA

1. MEASURING AND MONITORING POVERTY IN ETHIOPIA Tassew Woldehanna Department of Economics Addis Ababa University Ethiopia

2. Content • Background • Measuring Poverty • Monitoring poverty: periodic and between surveys • Mixing Qualitative and quantitative approaches to poverty assessment • Concluding remarks

3. 1. Background • Formulation and evaluation of PRSP is constrained by inadequate capacity to carry out surveys, quick and timely analysis and monitoring of poverty • Ethiopian PRSP is named as Sustainable Development and Poverty Reduction Program - SDPRP • SDPRP was prepared in August 2002. • Will be guiding till 2004/05 • It is the main policy document refereed by NGOs, regional/state government, parliament, government ministries • This has to be updated continuously • Hence evaluation is required on the process of formulation and monitoring of PRSP

4. Background …… • SDPRP objective is to reduce poverty and ensure food security via economics growth to be achieved via free market. • SDPRP is built on four pillars • ADLI and food security (FS) • Justice systems and Civil service reform • Decentralization and empowerment • Capacity building • The main focus is on the ADLI strategy and food security as a means of reducing poverty, but the latter three are designed to enhance the effectiveness of ADLI and FSS • SDPRP assumes -labor is abundant, and capital and land constrains : labor intensive technology, land augmenting technologies, capital saving

5. Background …… • SDPRP identifies four pro-poor sectors • Water • Agriculture and food security • Education • Health • Road There is an explicit budget and monitoring plan for this four sectors

6. Background: consultation …… • Consultations were done at Woreda/district/, regional/state/, and federal levels • 117 Woreda and 6000 people participated • Consultations involved high government officials, sectoral bureaus, journalists, religious leaders, representative of donor communities, and professional associations and the business community • Other forums – pastoral development forum – by state Civil organization – EEA, FSS • The consultations was done freely without government moderators (Joint IDA-IMF staff assessment)

8. Background: consultation …… • But consultation was made to react on government existed policies instead of crafting new ones. • conflicting ideas during the consultations: e.g. b/n business community (pro-urban) and Woreda/regional level consultations (pro-rural) • Is RSP a good generalization of ideas raised during the consultations or simply a summary of sectoral programs? • SDPRP has influence the budget allocation in 2003/04: food security, pro-poor sectors

9. Background : institution…. • WMU of the MOFED is the main unit responsible for the day to day work related to PRSP monitoring and implementation • WMS established long time before the PRSP(1996) • Revitalized during SDPRP preparation • WEM COM – poverty oriented sector ministries chaired by minister for MOFED • Provide over all guiding • WEM TEC – Chaired by the Economic Policy and Planning Department of MOFED • supply information technical advise to WMU

10. Background : sources information…. • Survey data – by CSA • Administrative data – sector ministries • CSA is the main data collecting authority • It has its own mid term plan and data collection and dissemination regulations • Recently the CSA has opened a new department to handle surveys directly related to poverty measurement: HICES and WMS, PPA

11. Background : sources information…. • Capability of CSA • Split of population census office • Good (long-run) • Bad (short-term)

12. 2. Measurement of poverty • SDPRP adopts WDR(200/01) definition of poverty: • lack of opportunities (material deprivation) • lack of capabilities (low achievement in education and health, malnutrition) • Vulnerability (low level of security) • voicelessness (and powerlessness • While the first and the second are more or less well measured, the third dimension was not appropriately measured. • The fourth dimension was not measured at all

13. Measurement of poverty • Choice of definition of poverty is based on experts opinion, not guided by the PRSP process • Income dimension of poverty is measured based on non-welfare approach (based on the expenditure required to cover daily calorie requirement (2200 kcal/day/adult) and essential non-food items • The poverty line in Ethiopia is 1075 Birr/adult in 1995/96 price (??? USD)

14. Measurement of….

15. Measurement of…. • Foster, Greer and Thorbecke (1984) P-measures of additively decomposable poverty measures is used • Two main data are used for measuring poverty: • Household income and consumption expenditure Survey (HICES) • Welfare Monitoring Survey (WMS)

16. Measurement of…. • HICES provides information on • consumption of food and non-food item, household expenditure, • payments, receipts and income, and • household characteristics such as family composition, education and occupation. • used to measure the income dimension of poverty.

17. Measurement of…. • Welfare Monitoring Survey (WMS) • conducted to assess the non-income dimension of poverty such as education, health, malnutrition and vulnerability • It provides extensive information on • access to education and health facilities • achievements in education, anthropometric measures, and • underlying asset bases of the poor and • the opportunity available to households

18. Measurement of…. • Consumption (as opposed to income) is used to measure poverty indices • Income is underestimated in HICE survey data: less than consumption expenditure for about 70% of the sample households • Saving negative (not real): impossible to measure saving • Consumption expenditure is collected based on • Weekly recall for food, drinks and tobacco; and six months recall for non-food expenditure • Non-food expenditure include durable consumption goods

19. Measurement of…. • Given households are poor and have limited transaction, it is not difficult to remember • Durable goods are included as expenditure (overestimates consumption) • Fuel wood, water collected from common resources are imputed (hence consumption reflect welfare) using local prices • Seasonality of food availability is well considered • HH visited for 8 weeks (4 during January/February – better food availability) and 4 weeks during June/July - less food availability)

20. Measurement of…. • 252 food items and 600 non-food items • Food items: • pulses; oil seeds; cereals preparations; bread and other prepared foods; meat; fish; milk, cheese and egg; oils and fats; vegetables & fruits; spices; potatoes and other tubers; coffee, tea and buck thorn leaves; salt, sugar and others; food taken away from home and milling charges

21. Measurement of…. • Non-Food items: • beverages; cigarette and tobacco; clothing and footwear; house rent, construction materials, water, fuel and power; furniture, furnishing, household equipment; medical care and health; transport and communication; recreation, entertainment and education; personal care and effects; and miscellaneous non-food goods

22. Measurement of…. • Real consumption (as opposed to income) is used to measure poverty indices • Income is underestimated in HICE • temporal price index • Deflated by regional price index • Laspeyres price index: reason given- simple, transparent and easily explained to policy makers • Calculated in terms of adult equivalent (gender and age based equivalent scale developed by WHO)

23. Measurement of: ….price data • There are two sources of price data in Ethiopia: • Internal price data: CSA call it standard prices • Independent price survey • Internal price data: expenditure/quantity, but CSA calculation of consumption expenditure is ……. • Reflect the local condition and price faced by poor

24. Measurement of: ….price data • Independent price survey – by CSA • Conducted in selected markets (a mix of small and major towns) using price questionnaire. • The CSA reports the prices of food and non-food items for each zone and major towns in Ethiopia both quarterly and every year. The problem with this kind of price information is that it is difficult to match price from the survey (price report) with the expenditure pattern of households in the HICE survey

25. Measurement of: ….price data • The poverty analysis in the PRSP document used • internal prices for all food items and few non-food items (beverage, alcohol, .. • external price (independent price survey) when internal price data are missing (for few food items and for most non-food items) in the HICE data

26. Measurement of: ….price data • The poverty figures are highly consumed by government and non-governmental organizations for their projects • E.g. regional budget subsidy uses a formula for allocating regional budget subsidy: population (55%), poverty (10%), expenditure need (20%) and revenue raising effort (15%) • However, it is only the head count index

27. 3. Monitoring poverty • The experience of CSA - not more than 10 years. • The WM surveys has been conducted in 1995/96, 1997, 1998 and 1999/2000 and • two HICES data were collected in 1995/96 and 1999/2000. • Hence HICES is a sub-sample of WMS

28. Monitoring poverty • While WMS represents administrative zones, HICES represents rural and urban regions and major urban areas. • In 1999/2000, the WMS collected data from 25,917 households and HICES collected data from 17,332 households. • Both surveys match for about 16,672 households. • This year both the WMS and HICES will be conducted

29. Monitoring poverty • Apart from these surveys, there are other surveys that can be used for poverty monitoring. • These surveys include • labor force survey (1999), • agricultural Sample Census (2002), and • Household Demographic Survey, HDS, (1999/2000), • crop survey

30. Monitoring poverty • Non-of the data collected by CSA are panel • They have not yet considered to collect such data • Hence difficult to measure vulnerability relatively accurately and and dynamics of poverty

31. Selected Welfare Monitoring Data of Ethiopia: A. Nation-wide official data

32. Selected Welfare Monitoring Data of Ethiopia: A. Nation-wide official data

33. Selected Welfare Monitoring Data of Ethiopia: Independent quantitative source

34. Other More Frequent Monitoring Mechanisms Governmental • • Health Sector HMIS – compiles clinic and health records from facilities • • Education Sector EMIS – compiles educational statistics (enrollment, sections, repetitions, promotions, calculates drop-out rate, gender –school to WEO to REB to National/Federal) • • Agricultural Statistics – crop production and yields (sample), land cultivated, land irrigated, some on prices • • National Accounts – Ministry of Finance accounting • • Annual Progress Report on PRSP • • Regional Plans, Budgets, Programs – accounting at regional level • (capacity building still in progress)

35. Rapid Rural Monitoring participatory constituency-based monitoring (indicators indicate) • Expenditure Monitoring done by CSO/NGOs (both foreign and domestic), usually at lower level (Regional, Zonal or Woreda) • Non-governmental Organizations (NGOs) and Community-Based Organizations (CBOs) projects, studies, canvass membership on issues • Academic Institutions – on-going work, student thesis, “think tanks” • Minutes of Local Government Assembly Meetings • Peasant Association Interviewing (Kebele or Village Level) – implementation of goods and services provision, issues of agricultural support

36. Rapid Rural Monitoring (Con’t) • • Service Provider Records and Reports – clinics, schools, cooperatives • • Customer Service Satisfaction Surveys – quality of services • • Citizen Report Cards – similar to above, but on issues of governance and response • • Food Early Warning System (FEWS) – keeps track of rain, production, pests (produces report at least monthly) • • Focus Group Discussions – on selected topics

37. 4. Qualitative vs quantitative • Many of the official surveys in Ethiopia are quantitative • Some include qualitative questions: wms, ERHS • Only few surveys qualitative • Consultation with the poor • Listening to the poor • Destitution study • Young lives • PPA (preparation underway)

38. Selected Welfare Monitoring Data of Ethiopia: Qualitative data collection and analysis

39. Other qualitative surveys

40. How do they measure poverty?FSS

41. How do they measure poverty?Destitution study: associated with material deprivation

42. Change of poverty overtime • Qualitative studies indicate • Poverty is increasing • Quantitative studies (official): • Poverty do not change • Quantitative (independent ERHS) • Poverty declines (Dercon, 2001)

43. Concluding remark • SDPRP is an important document both by government and other agents • SDPRP has already influenced policy and budget allocation • More to be done in PRSP consultation process: include people’s idea instead of experts idea only • Ethiopia is relatively rich in data, but analysis of data and making it public takes substantial time: improvement required • Improving access of researchers to CSA data, otherwise research will continue to depend on data that not representative

44. Concluding remark • Monitoring of poverty is limited by the cross section nature of the data: CSA should think having panel data • Conduct CWIQ every year to get poverty trend: using poverty correlates derived from HICE and WMS. • The Decentralization requires local level poverty estimates: poverty mapping exercise should be stated • Provide attention to qualitative poverty assessment: help to measure the empowerment (voicelessness) dimension of poverty. • Use depreciation of durable expenditure into poverty estimation instead of using the whole expenditure on durables