Targeting And Poverty Alleviation

To what extent is targeting the most effective way of alleviating poverty in the context of limited state resources?

Weiss (2004) defines poverty targeting as the “use of policy instruments to channel resources to a target group identified below an agreed national poverty line”. (p. 2) The issue of poverty is a matter of definition and as such poverty targeting is invariably encapsulated in what is conceived of, or defined as poverty. According to the United Nations Commission on Human Rights (UNCHR) (n.d.), normally quantitative benchmarks like living on one or two dollars a day and certain economic and social factors like infant mortality and literacy rates are used in the definition of poverty. Such statistics based definitions of poverty may however not capture the diversity of issues and conditions that typify the condition of poverty. Employing a more holistic approach, the UNCHR (n.d.) defines poverty as “a human condition characterized by the sustained or chronic deprivation of the resources, capabilities, choices, security and power necessary for the enjoyment of an adequate standard of living and other civil, cultural, economic, political and social rights”. (para. 2)

Evidently, addressing poverty from a holistic perspective as defined by the UNCHR has the advantage of dealing with the issue of poverty from all its conceivable facets. It would be a universalist way of tackling the issue of poverty. Poverty targeting however allows policy formulators to use specific and convenient definitions or benchmarks in their bid to target specific issues and people who may fall within the general or universalist definition of poverty. The use of benchmarks, a ‘poverty line’, or some form of positive segregation is thus essential in the formulation of policies based on justifications of poverty targeting. HelpAge International and Save the Children Europe Group (2004) for instance argue that: “Poverty reduction mechanisms are needed that disaggregate data by age as well as by gender, and that clearly target children and older people. This is because children and older people bear the heaviest burdens of poverty and are often powerless to change their situation.” (p. 5) Targeting is thus a needed tool where specific needs of poor people have to be tackled or segregated from a general or universal need.

Different forms of poverty targeting can be identified. Weiss (2004) identifies four categories of targeting are discussed beneath.

Firstly, poverty targeting can be categorised under activities – targeting by activities. Programmes like primary healthcare and primary education fall under this category. Normally, primary healthcare and primary education are used to target a broad spectrum of poor people and can thus be termed as ‘broad targeting’. (Weiss, 2004, p.6) Broad targeting can be contrasted from forms of targeting that aim at identifying certain specific conditions associated with an identifiable or precise group of poor people.

Secondly, targeting can be done through indicators. Indicators like land ownership (e.g. the lack or size of land owned), housing conditions, size of family, composition of family, and gender of the breadwinner of the family are important factors for consideration when employing targeting by indicators. Such indicators are pointers to the prevalence of poverty in certain communities. Consequently, the use of such indicators helps to target those whose living conditions fall within such indicators.

Thirdly, targeting can be done by location. Certain residential or geographic areas may be identified with poverty. The springing up of slums in urban communities for example is a notable offshoot of rural-urban migratory patterns in a lot of developing counties where such slums are always synonymous with abject poverty. Certain regions or geographical areas may also suffer from serious underdevelopment as compared to other parts of a country. Such residential, geographical, or regional peculiarities that are synonymous with poverty can be targeted with poverty alleviation programmes customised to the peculiar developmental and socio-economic needs of that location. In the Peoples Republic of China a lot of poverty targeting initiatives by the central government has targeted notable poor counties where under development and deprivation is rife (Wang 2004)

The fourth category of targeting is targeting by self selection. Certain activities are designed to appeal to people within certain income brackets or from a certain socio-economic background. Charities that run soup kitchens for example target the homeless who are noted to patronise such activities. Activities like workfares where people work for food or wages or the sale of subsidised foodstuffs that are notable staple diets of people from a particular socio-economic background, also fall under the category of targeting by self selection.

It must be noted though that the categories presented above are not exhaustive. The World Bank (2000) has stated that many forms of targeting have been used over the past decades in poverty alleviation programmes.

According to Weiss (2004) poverty targeting can either result in resources being used for purposes of protection or for purposes of promotion. Targeting for purposes of protection takes place when welfare packages are designed to alleviate certain adverse conditions whereas promotional targeting is designed to raise welfare over a long duration. In the aftermath of the Asian financial crisis for instance, Indonesia put in place a poverty targeted programmed aimed at creating jobs, providing education, health and subsidies for food. (Perdana and Maxwell, 2004)

Targeting could also be useful in addressing some endemic historical roots of poverty. In Latin America for instance, colonization of the territory by the Spanish and the Portuguese witnessed the establishment of ‘institutions of plunder’ – African Slavery and indigenous servitude. (Soares, et al, 2007) These institutionalized inequalities still persist in the postcolonial era. The use of conditional cash transfer (CCT) programmes targeted at addressing these inequalities has recorded notable successes across the board in different Latin American states. On the other hand, some supposed general paradigms like open market policies and trade liberalization have achieved varying degrees of successes and in some cases have recorded failures when it comes to poverty alleviation.

For instance, though Chile has achieved remarkable successes in economic growth since it introduced open market reforms in 1974, these successes have not translated into closing the gaps of inequalities between the rich and the poor. The inequalities have actually grown wider. (Soares, et al, 2007) In effect, the rich have grown richer and the poor have grown poorer. A universalist approach like trade liberalization and open market has not solved the problem of poverty. However, though Brazil and Mexico have also introduced open market reforms and trade liberalization, they have not recorded the high levels of growth recorded by Chile, but have on the contrary succeeded at bridging the gaps of inequalities in their countries. Thus, the evidence in support of a universalist approach like trade liberalization and open markets has been quite heterogeneous. (Soares, et al, 2007)

Such heterogeneity of results are crucial issues for consideration in policy formulation choices that are aimed at alleviating poverty. Brazil’s poverty targeting programmes have achieved some measures of successes and are considered in some detail beneath.

Prior to adopting a uniform and synchronized system in its CCT under the Bolsa Familia programme in 2003, Brazil had four different CCTs in operation, which were managed by different agencies who did not share information with each other. Each CCT had its own specific focus: Programa de Erradicacao do Trabalho Infantil targeted child labour; Bolsa Escola targeted children between the ages of 6 to 15 from poor families; Bolsa Alimentacao dealt with infant mortality by providing medical care for poor pregnant women and their children (up to the age of six); and Cartao Alimentacao targeted poor families whose per capita income fell below half the minimum wage. Notable among the four CCTs was the (PETI) established in 1996.

The main cause of child labour globally is poverty (Edmonds and Pavcnik, 2005) as such, the PETI programme was a targeted poverty alleviation programme. PETI focused on eradicating child labour by targeting children between the ages of 7 to 15 who were either working or were prone to work. Cash transfers of $37 PPP (i.e. Constant Purchasing Power Parity Dollars calculated in 2000) were provided to children living in rural areas on the condition that children beneath the age of 16 years would not work nor fall beneath a 75 per cent rate of school attendance. In urban areas, $59 PPP was provided for children within the above stated age range and under the same conditions as those in the rural areas. (Soares, et al, 2007) Edmonds and Pavcnik (2005) attest to the effectiveness of such CCT programmes and argue that:

“… historical growth rates suggest that reducing child labor through improvements in living standards alone will take time. If a more rapid reduction in the general incidence of child labor is a policy goal, improving educational systems and providing financial incentives to poor families to send children to school may be more useful solutions.” (p. 200)

Targeting, as a policy tool in poverty alleviation thus has a good following of endorsements. It however appears that the Brazilian example of targeting under the four CCTs were too segmented. Soares et al (2005) report that the lack of uniformity in the Brazilian experience resulted in a situation where some families who were living in extreme poverty were missed out in the four different CCT programmes. Thus adopting a more uniform approach to poverty targeting helped to widen the net of the CCT programmes to those who were hitherto unreached. Targeting should not result in an over segmentation of the demographics of poor people, otherwise a substantial amount of poor people would be missed out and the root causes of poverty would remain

In Brazil, the current synchronized CCT under the Bolsa Familia targets families living in extreme poverty by providing each family with $42 PPP. – i.e. families whose per capita incomes are below $42 PPP. The programme further provides an additional $13 PPP per month for each child or pregnant woman in a family living in extreme poverty. A ceiling of three children or women per family is however in place. Families considered to be living in moderate poverty (with monthly per capita income of between $42 PPP to $85 PPP) are also provided with $13 PPP per child or pregnant woman, up to three children or women.

The issue of poverty targeting has been a debated one with some arguments made against targeting in favour of a more universalist approach to poverty alleviation instead of a targeted approach. Though the issue of poverty is a global phenomenon, the specific conditions that poor people face vary in severity. The heterogeneous nature of the conditions of poor people makes targeting a very effective tool in formulating policies that address poverty. This is the more so when scarcity of resources is taken into consideration. In the Brazilian example considered above, it is evident that scarcity of resources may have contributed to the targets that the Bolsa Familia set – i.e. families living on a monthly per capita income of less than half of the minimum wage. Evidently, families living on a per capita income equal to the minimum wage or a quarter beneath the minimum wage may be poor. To be able to address all the needs of poor people in Brazil, the government should have enough resources to do so. In the face of scarcity of resources, which appears to be as global a phenomenon as poverty is, targeting appears to be the most reasonable and effective way of dealing with poverty. This is also backed by the empirical evidence of the Brazilian experience related above.

Though it has been argued in this paper that targeting presents an effective means of tackling poverty within the context of limited resources, it must be conceded that poverty targeting in itself is not failure proof. Since targeting relies on accuracy of information like the definition, indicators and the demographics of poverty, any errors in such definitions, indicators, or demographics would invariably result in the failure of any programmes upon which such information is based.

Good governance and implementation of targeted poverty alleviation programmes are very crucial to the success of such programmes. In the Brazilian case related above, it was obvious that a lack of uniformity and communication between the different agencies undertaking different targeted programmes resulted in the duplication of efforts and activities in some instances. Also, a sizeable chunk of families living in extreme poverty were missed prior to the reorganization of the poverty targeting programmes in 2003. Evidently, a lack of good governance and proper implementation of poverty targeting programmes will not solve the problem of poverty. Good governance in poverty targeting also extends to issues of corruptions and malpractices that poverty alleviation programmes are sometimes fraught with. (Weiss, 2004)

Apart from the above discussed bottlenecks, poverty targeting can be quite expensive to run as it requires an administrative set up with requisite skilled personnel to man such set ups and programmes. The argument made in favour of targeting justifies targeting as being effective within the context of limited state resources. The administrative cost of targeting programmes could however result in money being channeled to finance the administrative workings of bureaucracies instead of for addressing issues of poverty alleviation.

According to Taylor and Seaman (2004) putting in place a monitoring system helps to identify failures that may be embedded in the implementation of poverty targeting programmes: “Monitoring the targeting system is an integral part of the system itself, not an optional extra. Monitoring provides the mechanism through which errors can be reduced and the system redesigned.” (p. 25)

In conclusion, it can be argued that in spite of some of the problems embedded in targeting programmes, effective planning, objective setting, good governance and implementation and effective monitoring systems, can immensely contribute to the success of poverty targeting programmes.

References:

Copestake, J, (2006), ‘Multiple Dimensions of Social Assistance: The Case of Peru’s Glass of Milk Programme’ WeD Working Paper 21, Economic and Social Research Council Research Group on Wellbeing in Developing Countries, ESRC, UK

Edmonds, E. V. & Pavcnik, N. (2005). Child Labor in the Global Economy. Journal of Economic Perspectives, 19(1), pp. 199–220

HelpAge International and Save the Children Europe Group (2004), Inclusive and Effective Poverty Reduction: The Case for Targeting all Age Groups in European Union Development. London: HelpAge International and Save the Children Europe Group

Soares, S., Osorio, G. R., Soares, F. V., Medeiros, M., Zepeda, E. (2007) ‘Conditional Cash Transfers in Brazil, Chile and Mexico: Impacts Upon Inequality’. International Poverty Centre, Working Paper No. 35

Srivastava P. (2004) ‘Poverty Targeting in Asia: Country Experience of India’. ADB Institute Discussion Paper No. 5

Taylor, A. and Seaman, J (2004) ‘Targeting Food Aid in Emergencies’. Emergency Nutrition Network Special Supplement Series, No. 1, July 2004

United Nations Commission on Human Rights (n.d.) ‘What is Poverty’ http://www.unhchr.ch/development/poverty-02.html

Wang, S. (2004) “Poverty Targeting in China”, mimeo ADB Institute, Tokyo.

Weiss, J. (2004) ‘Experiences with Poverty Targeting in Asia’. ADB Institute Research Paper No 53

World Bank (2000) World Development Report 2000/01. World Bank, Washington, DC.