MANILA — Economic growth is a must but not the end-all in eliminating poverty and the Asian Development Bank is now determined to get to the very heart of the problem, ADB President Tadao Chino says.
“There is no doubt that economic growth can reduce poverty. . . . But economic growth alone is not sufficient,” Chino said during a recent interview here.
Despite the remarkable economic development in Asia during the past few decades, the number of poor people has not been decreasing fast enough, he said, noting that the region still has nearly 900 million people living below the poverty line compared to more than 1 billion 30 years ago.
Asia’s poor population accounts for roughly 70 percent of the world’s poor and nearly one in three Asians survives on less than $1 a day.
It is against such a backdrop that the Manila-based multinational development bank took a major policy shift last November, setting poverty reduction as an “overarching goal” of its programs.
To be sure, poverty reduction has always been the ADB’s target since its inception in 1966.
But up until few months ago, this mission was just one of the ADB’s five strategic objectives, being on an equal footing with promoting economic growth, improving the status of women, protecting the environment and developing human resources. And traditionally, strong focus has been placed on infrastructure development to help bring about economic growth.
Redirecting the four other strategies toward poverty reduction was the first thing Chino, Japan’s former vice finance minister for international affairs, promised upon assuming the helm of the ADB in January 1999.
But he would not call the bank’s past policy totally wrong.
“Economic growth would generate job opportunities, which would then lead to greater income opportunities and reduce poverty. . . . That’s the logic we’ve worked on in the past,” he said.
But, he said, the reality is that the benefits of economic growth have not reached the poor fast enough, or have bypassed them altogether, calling for a deeper focus on poverty reduction.
Mounting overall population growth, the newly emerging poor in Central Asian republics in transition to market economy, and the recent financial crisis in Southeast Asia have all been adding to the absolute number of poor people, slowing down the pace of poverty reduction.
Under the new policy, the ADB — which finances roughly $6 billion worth of projects and programs per year — has pledged to direct 40 percent of its public-sector loans to antipoverty projects.
“It is not that we have stopped doing infrastructure, which is still very much needed in Asia,” Chino said. “But when we construct a road, we will make sure it will benefit the poor, for instance, providing them with a market access road so that they can sell their farm products.”
Specifically, the ADB will conduct country-by-country poverty analysis, draw up an operational strategy for each one, and strike a partnership agreement with the government of each loan recipient country.
In the process, the bank will seek opinions not only from the government but also from the beneficiaries themselves, nongovernmental organizations and international bodies such as the World Bank and concerned U.N. entities. According to Chino, the ADB has failed to follow such an approach sufficiently in the past. To ensure the maximum effect, he said, the bank will reinforce monitoring.
Chino acknowledges that the new policy will likely meet with resistance in loan recipient countries from those with vested interest.
In many cases, high-ranking government officials and some members of the privileged classes are among those with vested interest in the implementation of aid programs.
“We will say what we must say and we will sign an agreement only when we fully agree with the concerned government. And we will disburse loans in several stages, while ensuring that all the promises are carried out,” he said.
“In bilateral relations, you cannot take this uncompromising stance, which is tantamount to intervening in domestic affairs,” he said. “But being a politically neutral multinational entity, we can do this as a honest broker (for the good of each recipient country).”
Asia, he said, makes an ideal main theater in which concerted global efforts can be pursued in the war against poverty.
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