A beacon of light on poverty eradication

A shopping bag project: An NGO microcredit programme providing self-employment to the sub-urban poor

In line with the MDGs, Bangladesh set itself the target to reduce the proportion of people living in extreme poverty by half, from 28 per cent to 14 per cent, by 2015. The latest available data, released by the United Nations in February 2005, show that the proportion of people in extreme poverty has been reduced from 28 per cent to 20 per cent -- more than half the target in less than half the timeframe.

A recent Country Programme Evaluation of IFAD's work in Bangladesh found that much of the success of the rural poverty projects it has financed over the past ten years is linked to government macroeconomic policies that have created an environment favouring stability and growth. Other policies have contributed to positive developments in rural areas, where extreme poverty is most prevalent.

For example, abolishing restrictions on the sites of shallow tube wells has made it easier for poor rural people to access water. Reducing tariffs on imported diesel engines and liberalising the retail markets for fertilisers have made it possible for smallholders to purchase these critical inputs. These public-sector policy changes are directly related to private-sector supply of goods and services to the rural areas. As such, they have also helped to increase the returns to the private sector and their investments in rural areas.

What is interesting is that higher returns in agriculture due to increased use of fertiliser, increased availability of water and lower cost fuel are accruing not only to large landowners or agri-business operators, as one might assume. They are also accruing to many poor rural households increasing the returns to their main resource -- household labour, especially where livestock and horticulture activities are concerned.

For example, we can look at the estimated 170,000 landless and small farmers in the districts of Tangail, Gazipur, Narsingdi, and Kishorganj, who are participating in the IFAD-financed Agricultural Diversification and Intensification Project. Some 79 per cent now grow vegetables, whereas only 42 per cent did so previously. Homestead vegetable production has increased by 55 per cent. These increases are linked to market-related changes in the availability of water and fertiliser, as well as the training, technology and microfinance that the project supports.

Results from the IFAD supported projects in Bangladesh that we evaluated showed that rural poor people have not only benefited from good macroeconomic policies and growth of the private sector in rural economies. They themselves are also contributing to such growth.

One example is the farmers and poor households who participated in the Small Scale Water Resources Project (1996-2002) co-financed by IFAD, the Asian Development Bank, and the Netherlands. About 100,000 farmers with small plots and poor households owning small ditches (doba or pagar) were producing an additional 375,000 metric tons of various crops per year by project closing.

Today there are increasing calls nationally and internationally for greater involvement of the private sector in sustaining the progress of Bangladesh to meet the MDGs. New national strategies like the current work-in-progress referred to as Unlocking the Potential: National Strategy for Accelerated Poverty Reduction put the private sector front and center, while retaining a role for the government as facilitator, especially in infrastructure and capacity building.

Experience from rural poverty reduction projects financed by IFAD over the last ten years confirms the wisdom of this strategic choice. Moreover, there is evidence that larger, more skilled private-sector operators, including seed producers, marketing agents and various service providers, have much to offer that can be shared with poor people through strong partnerships between the public and private sectors. The evaluation of IFAD projects and the situation in rural Bangladesh led us to recommend that such collaboration be pursued. This week, IFAD will be discussing with our partners what some of the best ways to do this might be.

One thing is certain: a balanced approach is required. It would be unwise to fall into the trap of over-simplification or to suggest that the private sector and the market hold all solutions. While poor rural people have proven fully capable of entering the market and succeeding as private-sector operators, this has happened only when certain conditions were fulfilled. We found that poor people often need help to enter on an equal footing -- and they sometimes need protection.

By help, we do not mean, for example, subsidising the cost of livestock vaccines or credit -- a sure way to undermine the development of sustainable private sector supplies of these essentials. We mean, for example, better access to information and technologies that meet their needs and possibilities. By protection, we mean, for example, norms, and standards that help guarantee the safety and quality of their yields and the equipment and material they use. In sum, we need measures that enable the rural poor to claim their rights, expand their influence over public policy and institutions, and enhance their bargaining power in the marketplace.

Luciano Lavizzari is Director of the Office of Evaluation for the International Fund for Agricultural Development (IFAD).