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Poverty Reduction in a New Era: Government-NGO Partnerships in the PRC

Poverty Reduction in a New Era: Government-NGO Partnerships in the PRC. IPRCC-IFPRI International Conference on Poverty Reduction Strategy in the New Millennium: Emerging Issues, Experiences and Lessons Beijing, 23-24 May 2006 Chris A. Spohr // 宋思年 ; cspohr@adb.org Social Sector Economist

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Poverty Reduction in a New Era: Government-NGO Partnerships in the PRC

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  1. Poverty Reduction in a New Era: Government-NGO Partnerships in the PRC IPRCC-IFPRI International Conference on Poverty Reduction Strategy in the New Millennium: Emerging Issues, Experiences and Lessons Beijing, 23-24 May 2006 Chris A. Spohr // 宋思年 ; cspohr@adb.org Social Sector Economist Asian Development Bank

  2. Outline • Basic background and terminology • International experience in NGO-government cooperation • Pioneering new partnerships in the PRC • Broader implications

  3. I. Basic Background and Terminology—Poverty • Absolute and relative poverty of income & assets • Multi-faceted manifestations and causes • Vicious cycles and “poverty traps” • Existence of intra-household poverty • Is economic growth enough?

  4. Poverty Reduction Policy and Tools • Macro-level policies—e.g., accelerating aggregate growth, redistributive taxation, support to rural sectors and labor-intensive industry, basic social services (2002 IFPRI study on the PRC finds that “Government expenditure on education had the largest impact on reducing both rural poverty and regional inequality”) • Social safety nets (e.g., from food stamps to full-fledged minimum living standard schemes) • Decreasing burdens on the poor (e.g., education & health fees, agriculture tax)

  5. Policy and Tools (cont.) • Local development (e.g., PRC’s “dragonhead” industries, lifting infrastructure barriers, etc.) and/or community-based approaches; • Addressing broader underpinnings of poverty, directly or via empowerment—e.g., Mexico's evidenced-based expansion of Progresa (later Opportunidad) program, wherein eligible households receive cash transfers conditional on enrolment of all school-age children, availing of regular prenatal health services for women and preventive care for all family members, nutrition counseling and supplementation for pregnant women and young children

  6. State and Civil Society Actors • Governments (central to local), especially for policy and macro approaches; often top-down • NGOs (from GONGOs, to independent apexes, to grassroots), as well as non-profit “institutions” • Volunteers

  7. Poverty Efforts Often Linked to Broader Shifts in Government Role • Decentralization—to enhance “government working for society”, but some efficiency-equity tradeoffs • Engaging civil society—in some cases, “society working for government”

  8. II. International Experience in NGO-Govt. Cooperation Government Role Transformation (revisited):“Key factors in the success of these reforms are based on balancing public and private participation in providing social services… there appears to be a consensus that： • governments should have the responsibility for financing basic social services and for ensuring that poor have access to these services, even if the services are provided by the private sector, NGOs, or other groups that give guarantees that the services are delivered in an efficient and accountable way

  9. Govt. Role Change (Intl. Experience cont.) • consultation and discussions need to ensure that participants have influence in the definition of the proposed strategies, policies, and programs • To make empowerment meaningful, local actors and stakeholders must have control over resources and decision-making • Social auditing by key stakeholders has proven to be an effective instrument to improve control over resource use” Paraphrased from World Bank. 2005. “Scaling Up Poverty Reduction”

  10. Shifting Balance of Roles Across Actors • Increasing funds, responsibilities, and capacity building to local governments (e.g., Philippines’ “LGUs” and panchayats in India’s 1992 constitutional reform) • Rising NGO resources: • est. 15% of all intl. devt. funds channeled through donor agency NGOs: in late 1990s, 2,500 “INGOs” provided 50,000 “Southern NGOs” $5.5B in private donations and $2.2B government funds annually (J. Garrison, 2000) ; • human resources—avg. of 4.8% share of non-agricultural employment in Salamon et al (2000) sample (12.6% in Netherlands) • some progress in institutional foundations for coop.with govt. (e.g., ADB support to Pakistan & GMS countries) • Volunteers comprise 2.5% non-agricultural employ- ment (8% in Netherlands)

  11. Shifting Roles: the Case of India • The Indian devt. miracle of Kerala combined bold decentralization and NGO partnership—in 1996, state govt. started to transfer 40% of planning funds as untied grants to elected local govt. institutions, which guided participatory local devt. planning, often tapping NGOs in design and implementation (e.g., microcredit/entrepreneurship). • At the national-level, India’s Council for Advancement of People’s Action and Rural Technology channels government funds to NGOs (World Bank SUPR, 2005)

  12. Microfinance to Address Poverty of Income and Assets • Bangladesh—11.5 million poor households access microfinance from BRAC, ASA, Proshika, and Grameen Bank (supported under 1983 law, constantly reinventing itself), under Government support and “hands-off regulation” • PRC—innovations in microcredit (e.g., CFPA) • Mongolia—public-private partnership in Khan Bank (WB/USAID-supported 2003 privatization from defunct Bank of Mongolia to profitable rural bank serving 62% of households)

  13. Vicious to Virtuous Cycles: Basic Education • PRC—state-led efforts to achieve EFA and “the two basics”, including via facilities (in some cases school mergers) and lowering financial barriers: e.g., “two frees, one support”  phase out of rural compulsory education fees • Bangladesh—only 1/2 of officially recognized primary schools are government-run, while 24% are run by non-religious NGOs but under the national curriculum and government funded/highly subsidized. Reflects state emphasis on expanding access and a strategic division of labor with “NGO school provision to focus more on socially and geographically marginal groups that the state system does not reach” (World Bank SUPR, 2005)

  14. Basic Education (cont.) • CSOs in Ghana, Zimbabwe, and Kenya provide 40% of education and healthcare (Pollard and Court, 2005) • Philippines—as in Bangladesh, NGOs act as service providers for nonformal education (e.g., literacy) to the poorest • US—mobilizing volunteers in Teach for America

  15. Striking at Poverty’s Underlying Causes: Health • Mexico—new Minister’s vision of “social inclusion and financial justice” in reforms to increase health investment from 5.7% to 6.8% by 2007, raise insurance coverage of the poor, and reverse pro-rich central budgeting (5:1 from richest/poorest states) • Like Opportunidad, BRAC income generation [IGVGD] program also bundles in essential preventive and curative health services)—see also IFPRI research in Guatemala

  16. Health (cont.) • PRC—market reforms undercut rural health system, low government expenditure (17% share, or below 1% of GDP in 2004), and over-prescription of drugs (Mok, 2000 cites 40%); MOH 3rd National Health Survey found 48.9% of public don’t seek treatment when ill and 29.6% don’t accept inpatient care)… • … but efforts include pilot testing a new rural cooperative medical scheme (RCMS) since 2003, while CASS 2nd generation RCMS pilot in Shaanxi introduces community mgt. • Cambodia—experiment contracting NGOs enhances access and efficiency: ADB (2002)

  17. Comprehensive, Bottom-up Poverty Reduction—the Case of Yemen • Govt. established the Social Fund for Development (SFD) in 1997 to address high poverty (42% of a population w/ avg. income of $450) and mis-targeting of social assistance • Aims incl. mobilizing local self-help and building capacities of communities, NGOs, and local govt. to advance local devt. • Includes community-prioritized, community-supported public works, as well as micro-enterprise and income generation • Institutional innovations—esp. demand-driven (incl. from women), multi-channel service delivery—supported by capacity building to NGOs, communities, and private sector to identify, implement, and operate SFD projects • Success  scale-up from $80M to $175M to $340M, esp. in community-demanded areas of education, health, and water Source: World Bank SUPR (2005)

  18. III. Pioneering New Partnerships in the PRC PRC’s global success story in poverty alleviation • Rural poverty fell from 250M in 1978 to 23.7M in 2005 (at official poverty line of RMB 683) • Reflects sustained economic growth (near 10%), but also state poverty programs • Targeted 258 national poverty counties in 1986  592 counties starting with “8-7 Plan” (1994-2000), adjusted in 2001

  19. Global Poverty Success Story (cont.) • Coordinated by State Council Leading Group Office of Poverty Alleviation and Development (LGOP), 3 main tools: • Budgetary funds for poverty alleviation—LGOP and Ministry of Finance (MOF) • Subsidized lending (largest component)—Agricultural Bank of China (ABC) w/ MOF • Food (later cash)-for-work program—National Development and Reform Commission (NDRC) • Others, such as education development funds, and “sponsor agencies”, as well as federations/NGOs/ associations like ACWF, CFPA, and Brilliant Cause

  20. State-led, Development-based Rural Poverty Alleviation Efforts China Rural Poverty Alleviation and Development Outline (2001-2010): • revised targeting to 592 key working counties for poverty alleviation and development, • instituted multi-dimensional assessment to identify 148,000 poverty villages spanning more than 1800 counties (70% of total) • adopted participatory village poverty alleviation and development planning (VPADP) • calls for NGO involvement

  21. 8-8 Structure of Poor Village Identification and VPADP

  22. Opportunities for Continued Progress • Strong commitment—13B RMB (4.4%) central govt. allocation to rural poverty in 2005; • New conceptualization of poverty as multi-dimensional—e.g., LGOP’s village identification includes school dropouts and women’s health; exploring HIV/AIDS-poverty link; • “Socialist New Rurality” as top directive under 11th Five-year Plan (2006-2010) • Redoubled commitment to poverty alleviation and social development • High-level calls for broader govt. role transformation • Increasing openness and the catalytic intl. dialogue

  23. But Also Challenges—Macro-level • Growing gaps (e.g., regional, rural-urban, rich-poor): • GINI = 0. 34 in 1995  0.447 in 2001  0.48 in 2005 (World Bank; China Daily), Asia’s highest; also rising within rural and urban areas; • Woo et al (2004) est. 63% of absolute poverty in the Western Region (11.8% incidence in Northwest vs. 3.2% nation-wide, compounded by 27.8% illiteracy rate) • Roughly 150M rural surplus laborers, shifts in rural and urban populations (pros and cons of migration), and new manifestations of urban poverty (ADB est. 4.7 - 11.9% in 1998; 1.5 times higher among migrants) • Decelerating declines in poverty despite increasing investment, in part reflecting a “natural” decline in the contribution from economic growth

  24. Seeking Innovation to Address Challenges w/in Poverty Programs • Rural poverty increasingly concentrated in “hard-to-reach” poor (e.g., remote areas; degraded land; elderly, chronically ill, and disabled; language gaps) • Some evidence of rising extreme poverty (below $0.5/day; Woo et al, 2004) • Coordination issues: e.g., non/partial arrival or poor linkage of non-LGOP funds, and ABC “unwilling” to provide subsidized lending to the poor and withdrawing from villages

  25. Challenges in Poverty Programs (cont.) • Time required for fund transfer through administrative tiers, and national audits suggest sizeable misallocation of poverty-related funds • Incomplete grassroots actualization of LGOP guidelines and principles for VPADP, incl. (i) integration of multiple resources; (ii) priority to pro-poor projects; (iii) participation by women and other diverse groups—S. Wang (2005) est. poor (< about $0.65/day) and low-income (< about $0.90/day) groups comprise only 10.3% and 20.7% shares in poor villages

  26. NGO-Government Partnerships in Village-level Poverty Alleviation Project (TA 4580) • LGOP proactively sought ADB technical assistance to operationalize call for engaging NGOs, with strong support from MOF • Strong support and foresight also from Jiangxi Poverty Alleviation and Development Office (PADO) and local government • Ownership evident in government contribution—est. $1.78M total, incl. RMB 9M of budgetary poverty alleviation funds administered by NGOs • Partnership w/ China Foundation for Poverty Allev. (CFPA), implementing agency for TA’s focal pilot test component • ADB providing $1M in TA, funded by the UK (DFID) under the PRF

  27. Basic Project Design • 4 components: (i) analysis, design, and policy dialogue; (ii) capacity building for NGOs and local “governments”; (iii) pilot test; and (iv) external monitoring and evaluation (M&E) • Pilot test incl. 2 models for NGO-government partnership in 22 villages in Le’An, Ningdu, and Xinguo counties of Jiangxi (plus 4 control villages) • ADB funds NGO staff costs/overheads of up to 10%: e.g. RMB 50,000 to RMB 500,000 govt. funding per Phase 1 village

  28. Significance • Public announcement of competitive selection of 6 Phase 1 NGOs (based on multi-stakeholder panel review) a major landmark in the PRC • The first time NGOs have been selected to manage government funds and implement government programs on any significant scale • Also distinct in that NGOs are implementing/ facilitating cross-cutting programs based on villager demand and in cooperation with local officials • Operationalizing the ten-year poverty outline and broader calls for govt. role transformation: a precedent with implications for broader govt. programs

  29. Challenges/Tasks • “Making it work”—overcoming inertia/skepticism to achieve real partnerships and a “win-win-win” • Transparency: positive media attention to date and traffic to CFPA website http://www.fupin.org.cn/new/default.asp • Pioneering mechanisms (e.g., NGO selection, capacity building, M&E, etc.), ensuring post-project sustainability/replicability, and advancing supportive institutional reforms

  30. Strong Govt. but Nascent “Third Sector” Ten-year rural poverty outline calls for NGO participation in poverty programs, but: • 143,000 MOCA-registered NGOs in 2003, but revenues only 0.05% of PRC’s GDP—vs. est. 8% (?) in the US: United Way alone raised $3.86 billion in 2004/5 (more than 0.03% of US GDP and 3.4 times all PRC NGOs combined) • NGO human resources—vs. avg. of 4.8% share of non-agricultural employment in Salamon et. al (2000) sample, incl. 12.6% in Netherlands • Especially thin in poverty/social development, which account for > 55% staff of EU NGOs • “Volunteerism” only emerging (CANGO est. 1.4M volunteers in PRC NGOs in 2002)—vs. 2.5% non-agricultural employment in Salamon sample (8% in Netherlands)

  31. IV. Broader Implications & Shared Questions In addition to implications for poverty work and the development of NGOs in the PRC: • Whether defined as the 23.7M absolute poor, 40.7M “low-income population”, or 173M $1/day poor (ADB est. for 2003), improving wellbeing of poorer segments of the world’s largest population will continue to have global implications • The PRC, incl. via the IPRCC, is increasingly a partner in global poverty • Experiences may feed into global dialogue on innovating poverty efforts and evolving the role of govt. in developing and transition economies

  32. Key Questions Surrounding NGOs as Partners • Institutional barriers may obstruct the transition from government monopoly toward a strategic role focused on policy guidance, support, regulation, and quality control • … and are NGOs ready? World Bank (2005) assessment of Indonesia loan on HIV/AIDS and STDs found that “effectively, the Project relied on creating large numbers of NGOs”, while “mechanisms for the flow of government funds to NGOs… were only put partly into practice”.

  33. NGOs into Businesses? • How to shape competition to promote efficacy & efficiency: • registration regulations (PRC) or other impediments—e.g., in 40% of municipalities in Bosnia Hercegovina, NGOs had no competition from govt. or NGOs in providing public services • intra-NGO competition for resources needs to balance “professionalism” vs. local roots and mission, and encourage experience sharing • Dilemma of sustainability and efficiency versus mission and mandate?—e.g. • In Kenya, K-Rep emerged from a World Bank support as an NGO in the late 1980s  transitioned again in late 1990s to a commercial microfinance bank • but difficulties in mobilizing Cambodian NGOs as condom vendors to fight HIV/AIDS (World Bank SUPR, 2005)

  34. Institutional Environments Another key dimension: prerequisites for the institutional environment needed to • effectively tap NGOs’ strengths (recognizing that comparative advantage vis-à-vis public and private sectors may evolve) • avert potential corruption in NGOs and/or agencies working with NGOs (e.g., recent Philippines scandals) • balance state support with NGO autonomy, while maintaining accountability

  35. Consensus that Accountability is Key Accountability not to shareholders, but to society and government—e.g., NGOs in Israel have rec’d. 3/4 of funds from govt. (nearly $7B, under regular budget), but • based on eligibility certification linked to “1998 Benchmark of Proper Management” regulation, and generally via competition • with clear annual reporting requirements on finances and program delivery • transparently reported by MOF in print- and web-based annual report

  36. Pillars of an Enabling Policy Environment • "Good Governance" - policies that encourage a healthy civil society and public accountability of state institutions; • Regulations – limited to those that help, not hinder, NGO growth, but also to root out corruption and to foster sound management discipline; • Taxation policies to provide incentives for activities meeting State development priorities; • Project/Policy implementation - State collaboration with proven NGOs, incl. articulating beneficiaries’ needs, informing communities, organizing community participation, and delivering services to less accessible populations;

  37. Enabling Policy Environment (cont.) • Policy formulation – giving NGOs a role in public consultations and/or on official commissions; • Coordination supported (not dominated by) government – e.g., NGOs focus on geographic/sectoral gaps to complement state efforts; • Official support - the government provides funds, contracts, and training opportunities (esp. on management, strategic planning, and experience sharing) to promote NGO activities in priority areas without undermining NGOs’ autonomy (modified from J. Clark, 1993)

  38. Closing Thoughts • The PRC has embarked on an historic exploration (摸着石头过河), and can learn from and share with other countries • Globally, more analysis on partnerships is needed; at the country-level, obstacles (esp. where NGOs viewed as an unknown or a threat) may require an iterative approach • This process should keep an eye to reforms and mechanisms to: • Transition the role of the state and ensure an effective and partnering role for NGOs • Elevate status and expectations of NGOs in the public eye, and promote volunteerism • Encourage NGO “coopetition”, including partnering across NGOs and beyond

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