Finding all the poor? Poverty-targeting is described as pro-poor, whilst excluding many of the poorest. Image: Kyrgyzstan. How can social protection schemes that exclude the majority of the poorest in Kyrgyzstan and globally be described as ‘pro-poor’? Stephen Kidd investigates in a new blog for the New Year.
Stephen Kidd
A short while ago, I wrote a blog explaining how poverty-targeted social protection schemes are ‘pro-rich’ while universal schemes are ‘pro-poor’. It’s a pretty obvious point: poverty-targeted schemes have low budgets and, as a result, the demands on the rich to finance them from taxes are much less than when universal schemes are implemented. And, the rich – or, at least, most of them – love lower taxes (ask Donald Trump and his cronies).
So, why does the World Bank continue to refer to poverty-targeted schemes as ‘pro-poor’? How can schemes that exclude the majority of people living in poverty – while offering low-value transfers – be more pro-poor than universal schemes that are much more effective in reaching the poorest members of society while also providing higher-value transfers?
The answer is found in the World Bank’s idiosyncratic understanding of the term ‘pro-poor.’ A good illustration of this can be found in the World Bank interpretation of the graph in Figure 1. I found this in a World Bank Project Appraisal Document for a programme in the Kyrgyz Republic. It compares the targeting effectiveness of a poverty-targeted income transfer – the Monthly Benefit for Poor Families (MBPF) – and a universal scheme – the State Guaranteed Benefits Package (SGBP) – which offers exemptions to specific categories of the population when making co-payments for health treatment.
Figure 1: Coverage across consumption quintiles of two programmes in Kyrgyzstan
According to the World Bank, the “MBPF program is considerably more pro-poor compared to co-payment exemptions”. To most observers this must seem like a strange conclusion given that the universal SGBP scheme clearly reaches twice as many households in the poorest quintile of the population than the poverty-targeted MBPF (50 per cent compared to 25 per cent). The only explanation for the World Bank’s interpretation must be the gradual increase in the proportion of households benefiting from the MBPF scheme as the population becomes poorer while the SGBP has a much flatter distribution. So, as long as there are more poor people than non-poor receiving a benefit, then the World Bank interprets this as ‘pro-poor.’
This understanding of pro-poor permeates the World Bank’s analysis of targeting. Its ‘experts’ frequently measure targeting effectiveness by assessing the proportion of the beneficiaries of a programme who can be found in poorest 40 per cent of the population. This obviously disadvantages a universal programme which, despite reaching everyone living in poverty, may well – and, indeed, should by definition – only have 40 per cent of its recipients in the poorest 40 per cent. In contrast, if a small poverty-targeted programme has 70 per cent of its beneficiaries in the poorest 40 per cent – yet, for example, only reaches 20 per cent of the poorest households – the World Bank will argue that it is much more ‘pro-poor’ than the clearly much more effective universal scheme.
An example of this thinking can be found in the World Bank’s assessment of the targeting effectiveness of Pakistan’s Benazir Income Support Programme. It states that ‘the current BISP targeting performance compares well with international experience, with about 75 percent of beneficiaries belonging to the bottom 40 percent of the population’. It may compare well with international experience but, as Figure 2 indicates, it’s also pretty poor quality, with the vast majority of people living in poverty excluded from the scheme (all those to the left of the red line are the target population). The exclusion error is a massive 78 per cent.
Figure 2: Targeting effectiveness of Pakistan’s Benazir Income Support Programme
The World Bank’s interpretation of ‘pro-poor’ could lead them to make some very strange conclusions. Take, for example, the comparison in Figure 3 between Georgia’s universal old age pension and India’s poverty-targeted old age grant. According to the World Bank, India’s pension would be more ‘pro-poor’ than Georgia’s, despite the fact that 71 per cent of the target population are excluded from the scheme. In contrast, Georgia’s universal pension is accessed by almost all older people living in poverty (and 98 per cent of older persons in total). Furthermore, because Georgia’s pension is much more popular than India’s, the value of the transfer is much higher (in relative terms): Georgia’s is set at 28 per cent of GDP per capita while India’s is a mere 2 per cent. So, which pension would older people living in poverty prefer to have? I’m sure they would choose Georgia’s while the World Bank would seem to prefer India’s scheme.
Figure 3: The targeting effectiveness of Georgia’s universal pension and India’s poverty-targeted pension
In conclusion, therefore, it would seem that in the weird universe of World Bank speak, ‘pro-poor’ actually means ‘anti-poor.’ So, let’s not fool ourselves about whose interests the World Bank supports when it promotes poverty-targeted schemes: it’s those of the rich, not the poor (even if many of their so-called ‘experts’ don’t realise it). Only once the World Bank honours its ostensible commitment to inclusive social policy and universal social protection – and moves away from its obsession with low taxes and minimal redistribution – will it truly become an institution dedicated to eradicating poverty.
Stephen Kidd has over three decades supported robust strategies and effective delivery in social development and social protection in Africa, Asia, the Pacific and Latin America. Our CEO led DFID’s social protection work, policy at HelpAge International, and a development programme in Paraguay. He welcomes comments on his blog – scroll down to make comments – and you can read his publications by clicking here.