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The Social Dimensionsof Adjustment in Africa

A Policy Agenda

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African Development United NationsBank Development Frogramme The World Bank

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The Social Dimensions of Adjustmentin Africa

A Policy Agenda

African Development Bank United Nations The World BankAbidjan, C6te d'lvoire Development Programme Washington, D.C.,

New York, N.Y., U.S.A. U.S.A.

Copyright X 1990The International Bank for Reconstruction and Developmen,t/The World Bank1818 H Street, N.W.Washington, D.C. 20433, U.S.A.

All rights reservedManufactured in the United States of AmericaFirst printing March 1990

This is a study by the staff of the SDA Unit at the World Bank, and thejudgments in it do not necessarily reflect the views of the Board of Executive Direc-tors or the governments they represent. The material in this publication is copy-righted. Requests for permission to reproduce portions of it should be sent to Di-rector, Publications Department, at the address shown in the copyright noticeabove. The World Bank encourages dissemination of its work and will normallygive permission promptly and, when the reproduction is for noncommercial pur-poses, without asking a fee. Permission to photocopy portions for classroom use isnot required, though notification of such use having been made will be appreci-ated.

The complete backlist of publications from the World Bank is shown in theannual Index of Publications, which contains an alphabetical title list and indexes ofsubjects, authors, and countries and regions. The latest edition is available free ofcharge from the Publications Sales Unit, Department F, The World Bank, 1818 HStreet, N.W., Washington, D.C. 20433, U.S.A., or from Publications, The WorldBank, 66, avenue d'Iena, 75116 Paris, France.

Library of Congress Cataloging-in-Publication DataThe Social dimensions of adjustment in Africa.

1. Economic stabilization - Social aspects - Africa, Sub-Saharan.I. World Bank. II. United Nations Development Programme. III. African De-velopment Bank.HC800.S62 1990 339.5'0967 90-12087ISBN 0-8213-1462-9

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Foreword

This paper provides a broad policy overview brought about by the reforms.of the Social Dimensions of Adjustment initia- Apart from the specific projects that are beingtive, jointly sponsored by the African Develop- designed and implemented within the SDAment Bank, the United Nations Development framework, the SDA initiative is proving to be aProgramme Regional Bureau for Africa, and the focal point for the governments, in collaborationWorld Bank, and supported by several multilat- with the international community, to exploreeral and bilateral donors. Currently, 29 African more systematically various ways in which thecountries have sought assistance within the frame- design and implementation of macro and sec-work of the SDA initiative. All countries that are toral policy can be made more sensitive to con-presently eligible for the Special Program of As- cerns with social dimensions - without sacrific-sistance for Low-Income, Debt-Distressed Coun- ing the objectives of economic growth. This kindtries in Sub-Saharan Africa are participating in of policy analysis is still in its early stages andthe SDA. will no doubt continue well beyond the life of

Most African countries are now embarked on specific SDA activities. Yet one of the lessons ofcomprehensive programs of economic adjust- Africa's past development efforts is that economicment. At the same time, the SDA initiative repre- growth cannot be sustained over the long termsents a significant effort by the international unless and until the poor and marginalized arecommunity to help African countries address one solidly integrated into their countries' economicof the fundamental public policy problems con- mainstream.fronting not only African nations, but all devel- This SDA policy agenda outlines a conceptualoping countries. This problem relates to the ways approach and specific program of action for as-in which poor and vulnerable groups within a sisting African governments to meet the needs ofcountry can be, to the extent possible, protected poor and vulnerable groups. It is based on thefrom bearing undue hardships resulting from the conviction that the mutually reinforcing goals ofabrupt economic adjustments that are often nec- sustainable economic growth and poverty reduc-essary to restore economic growth. Equally im- tion can be achieved without causing distortionsportant are the ways in which the poor and vul- in relevant economic mechanisms or loss of thenerable can be helped to participate actively in necessary political resolve.the newly emerging economic opportunities

G. Avika Pierre-Claver Damiba Edward V. K. JaycoxVice President Assistant Administrator and Vice PresidentAfrican Development Bank Regional Director Africa Regional Office

Regional Bureau for Africa The World BankUnited Nations Development Programme

..

This report was prepared by the World Bank's Social Dimensions of Adjust-ment Unit under the direction of Ismail Serageldin and Michel Noel. It is theproduct of extensive international collaboration with the donor communityand African governments. Thomas Stephens was the principal author.Valuable contributions were received from Tony Addison, Lionel Demery,Marco Ferroni, Christian Grootaert, Ravi Kanbur, Timothy Marchant, andMahfouz E. Tadros. Within the World Bank, the report also benefited fromthe reviews and comments of the Africa Regional Management Team, theOperations Committee, and the President's Council. Numerous others gen-erously provided important comments and suggestions. A special word ofthanks goes to Stephanie Gerard for her assistance in preparing the reportfor publication.

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Contents

1 Introduction 1

2 The social dimensions of adjustment- Background and key concepts 2The antecedents to adjustment 2The evolution of adjustment programs 3SDA target groups: the poor and vulnerable 4A taxonomy of social dimensions policy interventions 6

3 The SDA policy agenda for country activities 9Policy objectives of SDA country activities 9Improved management of macro and sectoral policy 10Social action programs 13Strengthened national information systems 17Institution building and training 19

4 Summary and conclusions 23

Notes 24

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1Introduction

Structural adjustment and economic reform tions Development Programme, and the Worldhave been at the center of the policy agenda in Bank and is supported by several bilateral andmany African countries since the early 1980s.1 In multilateral donors. The creation and ongoingan era of scarce resources, African policymakers activities of the SDA initiative are a clear mani-have the formidable task of trying to reconcile festation of the commitment by the internationalwhat their citizens need (or have come to expect) community to the concerns of social dimensions.with what their countries can afford. Although This paper is meant to provide policymakersthis dilemma must be confronted in any econ- and managers in African governments and theomy, the gravity of Africa's situation has made international donor community withanoverviewthis process of political and economic accommo- of the background, policy rationale, and programdation particularly difficult and painful. objectives of the SDA initiative. The following

As part of the process, thinking about the de- chapter discusses the background and meaningsign and implementation of structural adjustment of structural adjustment and traces the changinghas been continually evolving. African govern- content of adjustment programs since the earlyments and their development partners are still 1980s. It also sets out a simplified framework forrefining and adapting their adjustment strategies policy analysis and explores some of the princi-to ensure that the twin goals of sustained eco- pal approaches for incorporating the social di-nomic growth and poverty reduction can be at- mensions of adjustment into policy formulationtained and that these goals can be achieved amid and implementation. Chapter 3 describes thethe very different economic and social conditions policy approach of the SDA initiative for partici-of the Sub-Saharan countries. pating countries, which has the goal of integrat-

The Social Dimensions of Adjustment (SDA) ing social dimensions into policy design, intoinitiative was begun in 1988 to address the prob- program and project activities, and into the na-lems of, first, protecting poor and vulnerable tional information system. In addition, thesegroups from bearing undue hardships resulting components are supported by assistance tofrom structural adjustment and economic reform strengthen national institutional capacity for sus-and, second, integrating these groups into the taining social dimensions objectives over the longeconomic mainstream. It is jointly sponsored by term.the African Development Bank, the United Na-

1

2The social dimensions of adjustment:Background and key concepts

The extent and gravity of Africa's develop- from the general account of the Internationalment crisis has been debated by the international Monetary Fund (IMF). At the same time, totalcommunity in a wide range of reports and fo- net financial flows in 1987 remained some 15rums for many years. Despite differences of in- percent below the 1980-83 average in real terms.2terpretation and emphasis, all would agree that Behind these aggregate economic statistics liesthe 1980s have been a decade of severe, if not un- the day-to-day reality of the development crisissurpassed, economic hardship, affecting millions confronting African countries: crumbling roadsof people in virtually every African country. and deteriorating infrastructure, clinics without

medicines, idle factories, growing unemploymentThe antecedents to adjustment and underemployment, schools without teach-

ing materials, and deteriorating maternal andAlthough significant differences exist among child health. For some countries, these condi-

countries and regional figures must be treated tions have been aggravated by drought, civil strife,with caution, real per capita gross domestic prod- and war, leaving as many as 10 million refugeesuct (GDP) for the region declined nearly 20 per- and displaced persons.cent between 1980 and 1987; in 1987 alone, it Despite the magnitude of Africa's economicdropped 4.7 percent. Export earnings fell about and social crisis, policymakers both within Afri-40 percent from 1980 to 1983, recovered slightly, can governments and among the internationaland then declined still further in 1986 and 1987. community have reached a significant measureImport purchases fell about 40 percent during of agreement about its causes. This consensus,1981-85 and have regained only 3 percent since first noted at the 1986 U.N. Special General As-then. The terms of trade for the 34 poorest Sub- sembly Session on Africa and subsequently re-Saharan countries - those eligible for IDA (Inter- confirmed at other international and regionalnational Development Association) financing - meetings, identified several internal and externaldeclined persistently from 1970 to 1981, and, al- factors that had contributed to the situation. Thesethough they have remained fairly level since 1981, included the turbulence of the international eco-the terms of trade still represent only 60 percent nomic environment; the slowdown in net privateof their 1970-73 levels. The region's debt, which and official financial flows to Africa; misman-stood at US$6 billion in 1970, reached US$129 agement of domestic economic policies, includ-billion in 1987, representing 100 percent of its ing distortionary pricing policies; drought andgross national product (GNP) and more than 350 population pressures, which have severelypercent of its total exports. About 70 percent of strained the region's resource base and ecosys-this debt is at market interest rates, including tem; and past gaps and inconsistencies in devel-short-term commercial trade credits and resources opment assistance from the donor community.3

2

The World Bank's position on the overall prob- lization and World Bank-supported adjustmentlem confronting Sub-Saharan Africa and the need programs - have generally had three principalfor reform was first enunciated in 1984 in Toward objectives:Sustained Development in Sub-Saharan Afnica. More *Attaining macroeconomic balance by bring-recently, the Bank has prepared a major study, ing national expenditures into line with nationalwhich builds on the earlier consensus in looking incomeat approaches to address Africa's problems dur- *Allocating resources more efficiently, whiching the 1990s. Sub-Saharan Africa: From Crisis to involves switching resources across economicSustainable Growth stresses the need for African sectorscountries to radically improve the productivity *Mobilizing more resources over the longerof their labor, capital, and natural resources. This term to raise rates of economic growth and livingimprovement must be built on an "enabling en- standards, particularly for the poor.vironment" of sound policies and efficient in- The policy instruments used in adjustmentfrastructure and services, as well as on a greater programs have depended on the weight andcapacity - from the village to the highest eche- immediacy given at the time to each of theselons of government - to cope with the changes objectives. It is axiomatic that a government'snecessary to solve Africa's underlying problems. success in reducing an unsustainable gap between

All the examinations of Africa's development aggregate supply and demand will depend onchallenge have persuaded policymakers that a the policies chosen and the ability to coexist with,broad range of simultaneous actions and pro- or to modify, the country's institutional and pol-grams is required to overcome the region's prob- icy setting. The particular policy path chosen haslems and to avoid the piecemeal and disjointed generally involved placing constraints on nationalapproaches of the past. In this regard, the U.N. expenditures through monetary and fiscal instru-Programme of Action for African Economic Re- ments, as well as expanding supply by changingcovery and Development 1986-1990 (UN- themarketandinstitutionalenviromnenttoelimi-PAAERD) specifically committed African gov- nate bottlenecks. Under these circumstances, poli-emments to undertake the "necessary economic cymakers face the challenge of selecting the bestreform and structural adjustment ... as the basis combination of policies, not simply choosing be-for broad-based, sustained economic develop- tween alternatives to restrain demand or enhancement..." Such actions were to be contingent on supply.the international community's ability to provide As in Latin America, the initial round of ad-adequate levels of assistance and to resolve the justment programs in Africa, which occurred fromserious constraints on international trade and 1981 to 1984, concentrated mainly on restoringfinance beyond Africa's control. For its part, the macroeconomic balances. The imbalances weredonor community has responded by creating the precipitated by earlier overexpansionary mone-Special Program of Assistance for Low-Income tary and public finance policies, underwritten byDebt-Distressed Countries in Sub-Saharan Africa. levels of foreign borrowing well beyond the debt-Bilateral and multilateral donors have pledged servicing capacity of the countries. This situationUS$6.4 billion for 1988-90, to be used as conces- was compounded by a history of distortionarysional, quick-disbursing funds to assist Sub- trade and price policies that discriminated againstSaharan countries in the process of adjustment. the production of tradables in general and the

The following discussion examines efforts to rural sector in particular.assist African governments in their process of Given the urgency of the situation, early ad-structural reform. It does not cover the charac- justment programs emphasized restraining ag-teristics of the world economy and the trade con- gregate demand through tight monetary and fis-straints facing Africa, although the international cal policies. The groundwork for policies to en-economic environment is a major determinant of hance supply over the medium-to-longer termsAfrica's long-term economic growth. was laid at the same time. Although significant

efforts were made to bring the size of publicThe evolution of adjustment programs investment programs in line with available re-

sources, insufficient progress was made in im-Although circumstances in individual coun- proving the quality of the remaining project pipe-

tries have varied, adjustment programs - gen- line to support future growth. Even though iterically defined to include IMF-supported stabi- was recognized that various poor and vulnerable

3

groups could be hurt in the short run by adjust- proved efficiency and economic growth (see boxment, it was felt that their situation would have on Madagascar, opposite). This represents a ma-been worse if past policies had been maintained jor challenge for policy design, since it explicitlyand that their longer-term interests would be touches the core of the adjustment program andserved by the new economic incentive structure requires an understanding of the effects of alter-being put into place. These first-generation pro- native adjustment packages on poverty. This ingrams included the first structural adjustment turn demands a much more comprehensive dataloans (SALs) in C6te d'Ivoire and Senegal and base than is generally now available.Kenya's stabilization program. Based on this record of adjustment programs,

The second phase of adjustment programs in the current phase will likely evolve toward anAfrica (1984-86) retained most of the same policy even stronger focus on poverty-oriented adjust-instruments but recognized that it would take ment, in which increasing the participation of thelonger to achieve the intended objectives. More poor in the growth process would be one of theemphasis was therefore placed on improving key components. To achieve this, it will be neces-resource allocation and growth. Governments sary to broaden the design of the adjustmentincreasingly sought to change the structure of program itself. Four main aspects of the adjust-economic incentives through a comprehensive ment program are particularly open to review.revision of trade and exchange rate policies as * Phasing price and institutional reforms towell as through institutional reforms, especially identify the optimal sequencing of macro policyin marketing. In addition, they paid more atten- necessary to incorporate poverty considerations.tion to improving the efficiency of the public * Reforming public finance - both its expen-sector and the planning and implementation of diture and revenue dimensions; a critical compo-public investments. This growth orientation was nent of this is protecting core funding for publicfacilitated by increased flows of external financ- expenditures that benefit mainly the pooring in support of adjustment programs. * Strengthening the institutional capacity-build-

It was during the second generation of pro- ing component of adjustment, including partici-grams that more attention was focused on the patory programs for community organizationssocial dimensions of adjustment. Once it was and local nongovernmental organizationsseen that the transition could well take longer (NGOs).than initially anticipated, public policy began to * Exploring new forms of external financing toexplore ways to assist poor and vulnerable groups support both the widened objectives of a pov-affected by the adjustment process. African gov- erty-sensitive adjustment process and the directemments and donors recognized that vulnerable costs of project and program interventions.4

groups could not wait for the benefits of adjust- In short, future adjustment programs will re-ment to accrue to them and that they would need quire further refinement of policy instruments invarious kinds of assistance during the process. light of accumulated experience, particularly withHowever, social dimensions programs were seen respect to making macroeconomic policy formu-as parallel activities to be undertaken alongside of lation itself more conscious of its effect on pov-ongoing adjustment programs. Moreover, these erty. Experience has shown that when first-gen-early social dimensions projects and programs eration adjustment programs simply emphasizedemphasized protecting poor and vulnerable restraining demand, there was little room forgroups during adjustment through welfare and encouraging the participation by the poor in re-consumption interventions, that is, through miti- newed growth. When adjustment programsgation, rather than by promoting their integra- emphasize resource reallocation and economiction into the newly emerging economic environ- growth, however, there is greater room for poli-ment. Second-generation programs, for example, cies to aid poor groups.were implemented in Ghana, Guinea-Bissau, andSenegal (SAL III). SDA target groups: the poor and vulnerable

The current third phase of adjustment pro-grams, such as those now under way in Cameroon Concern for social dimensions requires a clearand Madagascar, has carried the second phase picture of the vulnerability of particular socio-one critical step further. The programs explicitly economic groups to adjustment programs and ofincorporate poverty reduction as a fundamental the impact of adjustment on the patterns of pov-objective of adjustment policy, along with im- erty in a given country. Policymakers are faced

4

Madagascar. Economic Management and Social Action ProjectThis US$41 milion project, cofinanced by numerous multilateral and bilateral donors, was formulated to help the govern-ment implement its structural adjustment program by addressing the most pressing social problems and strengtheningpublic administrative capacity. Project components for key ministries are given below.

Project Component Government Ministry or Agency Project Component

* Study fund for socioeconomic studies Directorate General of Panning* Assistance for social policy planning > l

* Establishment of permanent National Sttistical Institutehousehold survey capability \

* Assistance for strengthening publicenterprise reform Ministry of Finance

* Assistance in budget reform

Strengthening data* Civil servant redeployment assistance Ministry of Civil Service and Lbrcollection and• Labor-intensive pubhc works projects _ statistical services

* Targeted food aid subcomponent Ministry of Agricultural Productionand Agrarian Reform

* Assistance for strengthening Ministry of Healthmalaria control

• Family planning assistance Population, SocialeCondition, Youth, and Sports

with the task of deciding which of a wide range rooted and existed before the recent deteriora-of competing social needs for various poor and tion in national economies and the implementa-vulnerable groups should be funded with avail- tion of adjustment programs. Some of them areable resources. Setting priorities is therefore ines- susceptible to shocks from recession and adjust-capable, but determining the criteria for such ment, which may have increased their povertychoices is made more difficult by the limitations further. Others in this group, however, may beimposed by the adjustment process. In making relatively unaffected, while yet others may inchoices, policymakers need to identify three broad fact benefit from adjustment measures. Gener-categories of socioeconomic groups, who will no ally, both are susceptible to such noneconomicdoubt require some kind of assistance during the shocks as drought and natural disaster.adjustment period. * The new poor, who were in higher socioeco-

* The chronic poor, whose situation is caused by nomic categories before the economic crisis andmultiple deprivations, such as low productivity subsequent adjustment, but who have fallen intofrom poor health and nutrition and limited ac- poverty as a result.cess to productive assets. Within this category * Other vulnerable socioeconomic groups, whoexists a subcategory, the "ultra poor" or the poor- have not fallen into poverty, but who have none-est of the poor, who comprise the lowest socio- theless been hurt by the recession or specific ad-economic level of the population. The poverty of justment measures and therefore merit policy con-both the chronic poor and the ultra poor is deeply sideration.

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The term "vulnerable" is applied to groups micro levels (or the "meso" level of socioeco-whose welfare is particularly open to the influ- nomic activity) and consist of three mainence of economic shocks and adjustment policies. elements:As used here, the term involves a distinction be- * Markets, for both products and factors of pro-tween vulnerability and poverty: a group can be duction (such as capital and labor), which can bevulnerable and yet not poor. Or they can be poor official, parallel, or informaland not vulnerable to adjustment policies. In * Economic infrastructure, including physicalthese circumstances, it is essential to emphasize infrastructure (such as roads and communica-that the SDA attention is not just with those nega- tions), and economic services (such as marketingtively affected by specific adjustment measures, institutions)but embraces the much larger number of the poor * Social infrastructure, covering health, educa-who have suffered because of the economic crisis tion, and other social services.and the previous policies. Seen in this light, economic and social infra-

Indeed, some of the chronic poor may have structure and investment are as important forbeen largely by-passed by government policy most African countries as price reforms in deter-before adjustment, and thus far they may be rela- mining both the success of adjustment and itstively unaffected by recent policy changes. Yet social effects. Changes in the mesoeconomy alterthis certainly does not preclude them from being the opportunities and constraints faced by house-an important focus of adjustment policy design. holds and thus the choices open to them regard-In fact, policy reforms provide an opportunity to ing employmen,t, consumption, health, and edu-address their problems anew and to involve them cation. Poor households may face such severein the process of adjustment-led growth. Such a constraints that their ability to maneuver is veryreorientation to assist previously neglected sec- limited, as happens when the mesoeconomy failstors and segments of the population is possible to provide enough infrastructure or credit to al-since the adjustment process explicitly calls for low them to diversify their production.reevaluating institutional and economic effective- Thus, understanding the effects of adjustmentness and long-term sustainability. on the poor requires a thorough investigation of

how all three elements of the mesoeconomy areA taxonomy of social dimensions policy changed by macro policy decisions and how theseinterventions elements in turn affect household welfare. This

produces information, not only aboutThe proper integration of the social dimen- adjustment's social dimensions, but also about

sions into the design of adjustment policy is con- how adjustment is actually meeting its overalltingent upon a thorough understanding of how policy goals, since the attainment of macroecon-policies are transmitted down through the econ- omic objectives requires large shifts in resourceomy to affect households.5 However, the proc- allocations, most of which are manifested at theesses through which these effects are transmitted meso and household levels.to households are complex. For instance, the At the same time, the tasks of formulating andways in which policies change prices and market implementing adjustment policy are also compli-conditions are not always easy to predict. More- cated by the fact that various policy instruments,over, the actual impact on household behavior of whether adverse or beneficial, may affect thethe resulting market changes depends on a vari- household level at different times. Some groups,ety of factors, including the characteristics of the for example, may suffer immediately from in-particular households in question and many creased consunmer prices but may take longer tononeconomic considerations. benefit from greater employment opportunities.

Others may reap benefits from the start, whileFramework for social dimensions policy still others may suffer lasting harm. How people

are affected depends on their socioeconomic char-To facilitate policy analysis, the SDA Unit has acteristics, on the changes that have occurred in

proposed a framework that explicitly recognizes the mesoeconomy, and therefore on the design ofthe links and processes that transmit changes in the adjustment program.macro strategy to the actual behavior and deci- These ongoing changes in household livingsions made at the micro or household level. These standards have significance for the design ofconduit processes occur between the macro and poverty reduction policies under adjustment. If

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most people suffer only temporary losses but are offs must be quantified to allow informed policyexpected to reap subsequent benefits, then only making.short-run interventions are required. By con- The dilemma of the short run and long runtrast, if losses continue through, for example, the applies not only to the environment but also toloss of both human and physical capital, then standard investment decisions. When faced withpolicy interventions must have a very different a negative income shock, a key question is whatprofile. In the former case, an argument can be balance between consumption and investmentmade for a government to mobilize secondary should be maintained in the face of this shock.income support through transfers and to provide The basic issue is one of consumption today ver-some primary income through emergency em- sus consumption tomorrow. Many countries haveployment programs. In the latter case, poverty responded to negative shocks through an invest-reduction necessitates policies and programs ment pause to protect consumption. But too longaimed at increasing the productive participation an investment pause will reduce future incomeby the poor in the new economic environment. and consumption and will thus reduce the abilityThe strategies chosen and costs of assistance will to alleviate poverty tomorrow. Again, the essen-therefore vary depending on whether or not the tial task is to quantify this tradeoff so that policy-adverse effects are judged to be temporary or makers can make informed decisions.more long term.

The formulation of adjustment policy and Strategy for social dimensions interventionsimplementation must also take into account thelong-run consequences of short-term adjustment. Based on this social dimensions policy frame-Although adjustment measures have a longer time work, a strategy of social dimensions policy inter-horizon than stabilization measures, even this ventions is therefore primarily focused on de-time horizon may be too short, and there may be signing better combinations of short-term andsignificant and detrimental long-run conse- long-term measures for securing livelihoods for thequences of some of the stabilization and adjust- poor. This strategy consists of five essentialment measures. elements:6

An example of this is economies in which for- * Investing in the household's human capitalestry is a major source of export earnings. A through nutrition, health, and education pro-central objective of adjustment is to increase the grams as a basis for greater participation in growthoutput of export sectors by using such general- * Increasing the household's productive assets toized price instruments as exchange rate changes which the poor have access in order to placeor combinations of tariffs and subsidies. Since them on upward "income escalators"felling trees for export is one of the quickest ways * Raising the return on these assets throughto increase export earnings, governments, when changes in relative pricesfaced with short-run macroeconomic imbalances, * Promoting wage employment, especially for ur-may be tempted to overuse the available stock of ban and nonfarm rural workers in the tradablesnatural forests, with detrimental consequences sectors and helping those in the nontradablesfor the environment. Thus, when evaluating sector to shift sectors, as well as reducing laboradjustment programs, these longer-run conse- market impediments to employment for youth,quences must be taken into account. If a particu- women, and minoritieslar adjustment program achieves the macroecon- - Empowering the poor to expand their economicomic objectives and does not have detrimental and social participation through community-long-run consequences, it is clearly to be pre- based projects and other schemes that give themferred. greater control over their own destinies.

What, then, of the poor? The foregoing envi- These five elements do not in themselves nec-ronmental tradeoffs carry poverty tradeoffs as essarily represent any new approaches to pov-well. The long-run deterioration of the environ- erty reduction. They should be seen as part of thement hurts the poor, but so can short-run envi- overall developmental challenge facing the coun-ronmental protection if, for example, it implies tries of Sub-Saharan Africa. At the same time,more draconian measures to reduce demand. however, the process of adjustment has forcedSince the choice is about tradeoffs between re- African governments and the donor communityducing poverty today and reducing poverty to reassess how such a five-pronged strategy totomorrow, there is no easy answer. But the trade- reduce poverty can be undertaken while main-

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taining macroeconomic discipline and restoring are "first-best" measures. Improved efficiency inthe conditions for gTowth. The key policy prob- the transport sector, which lowers the costs oflem therefore is how to assist poor and vulner- marketing inputs and consumer goods, is an ex-able groups without distorting economic mecha- ample of a first-best policy objective, which helpsnisms, since such distortions would hurt both both the overall economy and the poor. Povertyeconomic recovery and the poor. At the same interventions that reduce the attainment of macrotime, economic recovery will never be secured if and meso objectives by small amounts are "sec-poor and vulnerable groups are effectively ex- ond-best." This would be true, for example, forcluded. certain kinds of subsidies, such as subsidies on

Overall, a broad range of policy interventions inputs used by subsistence farmers.can achieve the twin objectives of growth and Measures that substantially disrupt the attain-poverty reduction. With the vast majority of the ment of macro and meso objectives should not bepoor in Sub-Saharan Africa engaged in tradable considered in the category of "second-best" in-activities, policies that shift relative prices in fa- terventions for poverty reduction. A case in pointvor of tradables production can help to reduce would be setting food prices below market ratespoverty. These policies alone, however, are not to protect poor urban consumers. Not only wouldsufficient to reduce poverty, because constraints food production be undermined, but such a pol-in markets and in economic and social infrastruc- icy would benefit one poverty group (poor urbanture limit the capacity of the poor to participate consumers) at the expense of another (food pro-in the growth that adjustment can generate. This ducers). Whatever the political economy in favorin turn may reduce the potential for future growth of the measures, by creating macro imbalancesand affect the sustainability of the growth proc- and reducing efficiency and growth, such meas-ess itself. ures undermine the sustainable attainment of the

To achieve desired resource reallocations in intended poverty reduction objectives as well.the framework of adjustment programs, new The five objectives cited above are no doubtsystems of incentives must be constructed, which shared and incorporated in the development ac-implies significant changes in prices and expen- tivities of most African governments, donors, andditure patterns. That some people gain and oth- NGOs, irrespective of adjustment. The SDA pol-ers lose in this process is an inescapable part of icy strategy to improve the livelihoods of theadjustment. Public policy must therefore seek to poor and vulnerable under adjustment mustminimize losses to the poor and maximize their therefore be seen as one contribution to reducinggains. Yet invariably, policymakers must decide poverty in Africa. The aim of SDA policy assis-how far to go in modifying policies to improve tance is to explore opportunities in the design ofthe situation of the poor. If the modifications adjustment to do more for the poor by enhancingreduce poverty and make the attainment of the benefits accrued to them from policy reformadjustment's macro and meso objectives easier, and by raising the returns from other povertythen the decision is straightforward. initiatives. Theory and experience now suggest

The difficulty usually arises when policies meet that specific macro targets can be attained throughadjustment's macro and meso objectives, but do different mixes of macro policies. This would beso by hurting the poor. If modifying the policies the case, for instance, in the choice between manyprotects the poor, at only a small cost in lost policies to restrain demand or enhance supplyefficiency or other objectives, then such modifi- or, more specifically, in the choice between im-cations may be warranted. It may be possible to port restriction versus trade liberalization poli-find some other means to protect the poor with- cies. African governments and the donor com-out affecting adjustment's objectives or - best of munity must now explore and then implementall - to enable the poor to gain rather than lose policy mixes that promote poverty reduction, asfrom the policy. These measures, because they well as economic growth and efficiency.involve no tradeoffs with other policy objectives,

8

The SDA policy agenda for country activities

Policy objectives of SDA country activities on the availability of existing information on liv-ing conditions of households, the institutional

The preceding chapter highlighted some of capacity to conduct policy analyses, the capabil-the key concepts involved in directing policy ity to transform analysis into effective actions,toward the social dimensions of adjustment. This and the resources - both domestic and externalchapter now describes the SDA country policy - to finance them. Third, to be effective, theagenda. In its efforts to assist African govern- various components of SDA country activitiesments, the SDA initiative is concentrating on fourareas (see box, this page):

a Improved management of macro and sectoralpolicy Social Dimensions of Adjustment:

i Social action programs and projects to help vul- the scope of country activitiesnerable socioeconomic groups

i Strengthened national information systems toenhance policy and program formulation Improved

* Institution building and training to integrate of macro and

social dimensions as part of the ongoing policy- sectoral

making and implementation process. policy

These four areas were chosen on the basis ofthe experiences of the World Bank and otherdevelopment agencies in working closely withAfrican countries. However, it is important to Institution

recognize that the circumstances in individual building

countries play a crucial role in determining the and

pace and sequence in which these four compo- training

nents can be implemented.In turn, these concerns are premised on three

fundamental points. First, successful implemen- trengtation of this policy agenda is contingent upon a action nationalstrong political commitment by the government programs information

to make poverty reduction a core objective of its and projects systems

structural adjustment programs and developmentplans. Second, the pace of implementing thevarious components of the agenda will depend

9

should not overburden or detract from existing As a result, policymakers need to be able to con-governmental capacities, which could compro- duct policy analyses on the links between themise the effectiveness of existing projects and poor and vulnerable groups and the meso andprograms as well as the long-term success of the macroeconomy (see box on Cote d'Ivoire, oppo-SDA country initiative itself. site).

The four components of the SDA program One of the lessons of recent adjustment experi-should thus be seen as consisting of several com- ences is that the data and policy tools available soplementary activities, some of which can be im- far have been insufficient to incorporate effec-plemented over the short to medium term, while tively the social dimensions into macro policyothers are more long-term in nature. And as formulation. In addition, consideration of theconditions in the country change, the content and social dimensions has been a residual activity,approach of activities in each component can be undertaken only after the traditional macroecon-expected to change over time as well. omic policies had been decided.

This implies that the SDA policy agenda must Nearly all African governments have usedbe implemented through a modular approach. The various policy tools and analytical techniques forvarious modules of the SDA program may be policy planning and evaluation, but the existingimplemented through a range of operations sup- techniques have generally not been suited to de-ported by a variety of instruments, including riving the effects of policy on poverty. This ap-lending for structural adjustment loans (SALs), plies with equal force to the current techniquessectoral adjustment loans (SECALs), investment used by donor agencies. Policy analysis mustprojects, technical assistance projects, or self- fulfill two requirements if it is to produce anystanding projects combining a social action pro- systematic understanding of the social effects ofgram with key institutional development sup- macro policy. First, the analysis must have anport. The key is to achieve the best fit between economy wide perspective if it is to properly trackthe country's strategy to reduce poverty and the the application of macro instruments or even toportfolio of operational instruments through fully understand the effects of sectoral policies.which the strategy can take hold. Second, the techniques must be able to trace

changes in household living standards over time,Improved management of macro and sectoral particularly changes in income, expenditure, andpolicy employment. At the same time, policy formula-

tion and analysis for SDA purposes should ide-SDA assistance to improve policy management ally embrace the three levels of economic activity

is concentrating on three areas of macro and sec- previously described (macro, meso, and micro)toral policy formulation and analysis aimed at to give further insight into how macro policy isincorporating social dimensions in macro policy transmitted to the household level through theanalysis, in sectoral and meso-level analysis, and intermediate meso level.in public finance strategies. The SDA perspective is that governments need

to consider carefully how they can systematicallyIncorporating social indicators in macro policy build up their policy analytic capability by assur-analysis ing that - whatever the analytical techniques

selected - they are actually used in the poli-The capability to interpret the social dimen- cymaking process. As country policy analysis

sions of macro policies is important not just for becomes more refined and able to incorporatereducing poverty, but also for monitoring the social dimensions concerns, it can offer a frame-attainment of macroeconomic goals. To the ex- work in which the collection, management, andtent that mnacro policy does not promote greater analysis of macroeconomic, sectoral, and house-participation of the poor in economic growth, an hold survey data can be integrated into a consis-important source of economic activity will re- tent whole. In turn, with better policy articula-main untapped. The poor themselves constitute tion by the government, the policy dialogue be-a large part of Africa's human capital stock, and tween the government and the donor commu-their activities are a major component of national nity will be facilitated by:output. If the poor are bypassed in the pursuit of * Permitting timely and ex ante assessment ofshort- or medium-term economic objectives, pros- the macro-, sectoral-, and household-level rami-pects for longer-term growth may be endangered. fications of macro policies being considered

10

Cote d' Ivoire: Social statistics and economic policy formulation

The importance of social indicators for macro policy losses. The number of poor, as well as the depth of theirformulation can be seen in Cote d'lvoire, a country in poverty, decreased, especially in the rural areas. Whilewhich policy analysis and data collection are relatively farmers benefited, urban wage earners and householdswell advanced. Analysis of available data showed that the relying on transfers for the bulk of their income becameeconomic recession of the early 1980s and the following more prevalent among the poor. As a consequence, theadjustment measures improved income distribution, both ratio between urban and rural consumption further de-between the urban and rural sectors and within the urban cined to about 1.7:1 in 1987.sector, even though per capita income declined by about 25 The improvements in income distribution regrettablypercent in real terms. The ratio of urban to average per could not be sustained in the face of the deteriorating termscapita rural income declined from 3.5:1 in 1980 to 2:1 in of trade, and some of these improvements in income distri-1985, in part because of changes in agricultural price policy bution are currently being reversed. Consequently, effortsunder the government's structural adjustment program. to design suitably targeted responses are at the heart of theBetween 1980 and 1985, the distribution of income among Bank and government's concerns in the early 1990s. SDAurban groups improved when measured in terms of dis- data and analytic work are proving essential to properlyposable income by socioeconomic groups. In 1980, the target these interventions and to avoid misdirecting thehighest income groups had 35 times more disposable in- benefits toward the middle- and upper-income groups, ascome than the lowest groups. By 1984, that ratio had happened with Cote d'lvoire's public housing subsidies.dropped to an estimated 18:1, reflecting the strength and In that case, the government had decided to privatize itsresilience of the urban informal sector, compared with the national public housing authority - whose original pur-hard-hit secondary and tertiary activities of the formal pose was to provide housing for low- and medium-incomeurban sector. families - when it was discovered that only 14 percent of

During the growth years of 1986-87, those gains were the tenants were below the country's "high" poverty lineconsolidated. Recent household survey data show that and that there were no tenants below the hard-core povertyhousehold expenditures per capita improved modestly and line. The availability of detailed socioeconomic data wasthat their distribution became more egalitarian - poorer thus a key factor in helping decisionmakers to make impor-groups made absolute gains, and richer groups incurred tant policy changes.

- Allowing explicit social objectives to be built social indicators. In countries where simpleinto the design of macroeconomic policy pack- macroeconomic frameworks are used, this mayages that allow for the poor and vulnerable to entail integrating a basic module to trace the ef-more effectively participate in the renewed eco- fects of alternative macroeconomic adjustmentnomic environment strategies on income distribution and employ-

- Indicating when and where the adverse ef- ment. During the life of the SDA country project,fects of these policies are inescapable, so that assistance will be provided to systematically buildappropriate mitigating actions can be taken dur- up the country's policy analytic capability in lineing both the short and medium term. with evolving data and institutional conditions.

The goal of making ex ante predictions of the The emphasis will be on developing operationalsocial effects of adjustment policy represents - tools that can feed directly into the policymakingfor most African countries - a medium- to long- process in order to make the design of macro-term objective, normally involving the construc- economic policy more conscious of its effects ontion and use of appropriate macroeconomic poverty.modeling techniques. Thus, the circumstances ineach individual country will determnine the ac- Sectoral and meso-level analysistual pace and kinds of analysis supported by theSDA initiative. The fundamental concern is that Adjustment programs generally involve ma-governments begin to include social dimensions jor reforms of important economic and socialconcerns in the policymaking process at the earli- sectors, many of which can have profound effectsest possible stage. At the outset, this may involve on poor and vulnerable socioeconomic groups.evaluating existing data to provide policymakers Therefore, attention to macro issues alone willwith some initial indicators of how various socio- not ensure that social dimensions concerns areeconomic groups are faring under adjustment, fully understood or incorporated into the overallsuch as the preparation of a "tableau de bord" of policymaking framework. A clearly delineated

11

focus on sectoral and meso issues is likewise nec- Public finance strategiesessary to complement macro-level analysis andto assist governments and donors in preparing Public finance is one of the most visible policysector-specific programs. In order to add a social elements of the adjustment process. The extremedimensions perspective to sectoral policy ques- macroeconomic imbalances in which countriestions, more narrowly focused analysis is required found themselves at the beginning of adjustmenton how sectoral or meso policy instruments trans- necessitated demand restraint, the core of whichlate mnacro objectives in ways that can affect house- involved reforms in public finance on both thehold behavior. Such analysis cannot rely entirely expenditure and revenue sides. This in turn raisedon economywide analysis given the degree of concern over the need to maintain social sectordetail often required. expenditures to protect vulnerable groups who

Factor and product markets - identified ear- depend on basic services, such as in health, edu-lier as important meso conduits ofr macro policy cation, and nutrition. For example, the- are examples of sectoral issues in which more Cameroonian govemrnent decided to set targetsdetailed information is normally required for for nonsalary recurrent expenditures in basicpolicymaking. In the long term, markets may health and education as part of its first structuralallocate resources rationally to and from the pro- adjustment program (see box, opposite).ductive sectors. However, short-terrn distorting As an organizing framework to deal with thefactors - such as urban-biased marketing chan- social expenditures issue, the SDA Unit is explor-nels, differences between formal and informal ing with participating countries the possibility ofmarkets, few reliable private sector operators, using core public expenditure budgeting proceduresand weak institutions and infrastructure - must to protect the poor and vulnerable. The ideabe sufficiently understood, so that specific cor- behind core public expenditures is that once arective mechanisms and interventions can be put government has defined the kinds of socially ori-in place where needed to offset poor market ar- ented services it wants to protect (such as pre-ticulation. ventative health services, primary education, and

The SDA Unit has prepared several Analysis targeted subsidies for poor farmers), specificPlans to provide government policymakers and budgeting procedures are introduced to clarifyplanners with guidelines and methodologies for and systematize the translation of these prioritiesdetermining how adjustment policies affect key into public expenditure decisions.sectors. These Analysis Plans currently cover One such budgeting system is program budg-education, employment and earnings, food secu- eting, which is designed to ensure a proper fitrity and nutrition, health, poverty profiles, the between expenditure categories and specific sec-role of women, and smallholder farmers.! Some toral goals. In a standard format, program budg-of these plans go beyond the sectoral level to en- ets articulate the expenditures to be committedcompass target groups of major policy concern. by type of service or type of program, and thenAlthough certainly not exhaustive, these Analy- indicate the corresponding region, institution, andsis Plans represent the kinds of generic sectoral expenditure category. Once information is avail-problems requiring particular policy attention able about what kinds of delivery mechanismsduring the adjustment process. for services are provided and about who the ac-

In addition, the SDA initiative is funding coun- tual users of these services are, it will be easier totry studies geared to specific operational objec- protect these services for vulnerable groups.tives. Such studies are designed to fill data gaps Depending on the level of development of budg-or examine particular subjects before or while etary processes in the various countries, highlySDA country projects or programs are being simplified forms of budgetary allocation andimplemented. Representative topics include control systems will need to be implemented toanalyses of urban or rural labor markets, the na- rapidly secure minimum levels of expendituresture of the informal sector, the prospects for cost for core services aimed primarily at the poor.recovery in specific government programs, and Throughout the lifetime of the SDA initiative,the use of subsidies and other income transfers assistance will be provided to build the country'sfor selected socioeconomic groups. Under most capacity in this critical area, starting with simplecircumstances, these studies would be carried systems and progressing to systems such as pro-out under the auspices of the ministry of plan- gram budgeting, for adequate prioritization andning or the relevant line ministry. control of expenditures in favor of the poor.

12

The SDA Unit recognizes that a great deal of the earned component of total income have bothadditional research and analysis is needed in the been reduced. Various vulnerable groups couldcomplex area of public finance management. fall anywhere between these two ends of the spec-Already, governments and donors regularly set trum, depending on their particular socioeco-guidelines for allocating government revenues nomic circumstances.among sectors and activities to maintain fiscaland financial responsibility within agreed adjust- Social action programsment objectives. Reconciling the expendituretargets with the need to protect social expendi- Many of the policy instruments discussed intures for target groups is now the key challenge. the previous sections are designed to provide aYet the task is more involved than simply tryingto maintain a certain aggregate level of govern-ment spending for each social service. It is nowclear that the size of cuts in social services, itself, Cameroon: The SDA Social Actionneed not imply a reduction in services available Programto the poor. For example, budgets for capitalprograms rather than current outlays may be cut, The Social Dimensions of Adjustment Project forthereby postponing the impact on target groups. Cameroon, with expected financing of approximatelyW'hathereby th postoing of the cuts, thecentralissueis US$80 million, has been formulated as an integral part ofWhatever the size of the cuts, the central Issue IS Cameroon's Structural Adjustment Program.whether they fall disproportionately on poor The Social Action Program component of this projectfamilies. Or, even if the cuts do not fall dispro- will consist of several separate subcomponents coveringportionately on the poor, whether the poor may initiatives in population, health, education, employment,be less able to support their effects. women in development, and community development.

It may be possible to reduce social spending * Population. The project will support strengtheningwithout any negative impact on poor households. provincial family planning services and extending theGreater attention to efficient administration and high-risk pregnancy service currently being implemented

in five provincial centers.delivery, the introduction of user charges based * Health care. The project will support theon the ability to pay, better targeting of services government's program to revitalize primary health careto the poor, and a corresponding reduction in the services and to reverse the decline in the quality of careleakage of services to the nonpoor - all can actu- and the shortage of medicines and other supplies thatally improve the quality of services to the poor resulted from past budgetary cuts.even after expenditure reductions. In addition, the project will support short-term meas-

ures to improve the quality and coverage of basic healthAt the same time, protecting social expendi- care for the poor.

tures must also be considered in the light of ob- * Education. Although the government is undertak-

served trends in the incomes of the poor. Many ing medium- to long-term reform of the education sys-goods and services are provided by the public tem, the project will finance an immediate injection ofsector at below marginal cost, either through so- badly needed supplies and teaching materials for pri-cial services or through subsidies on consumer mary and secondary schools. In addition, the project

goods or production inputs. Increased prices for will support short-term measures to improve the qualitygoods s . .. and coverage of education for the poor.

particular goods and services may improve re- * Employment. The project will establish a nationalsource allocation and reduce domestic demand employment program to channel contributions into coun-by reflecting the true scarcity value of the goods seling, apprenticeship, andvocational training programs,and services. as well as to provide technical and financial support to

However, such potential improvements in eco- microenterprises.nomic efficiency must be weighed against changes * Women in development. The project will supportin relative household income. Based on the newly an information and sensitization program within the

Education Service of the Ministry of Women and Socialevolving price and incentive structures, some Affairs and will include relevant ministries in the designfamilies may be better off relatively, even after and management of the social action subcomponents inincreased costs for public goods and services, if health, education, population, employment, and com-their total income more than offsets any reduc- munity development.tions in access or increased prices for social serv- * Community development. The project will estab-ices or other subsidized public goods. By con- lish a fund to finance small-scale community initiativestrast, families most negatively affected would be to create employment and provide basic services forthose whose social benefits and subsidies plus vulnerable groups.

13

positive policy foundation for meeting social Ghana The SDA Projectdimensions concerns. These policy reforms maynot necessarily be geared to narrowly delineated The Sodal Dimensions of Adjustment Project in Ghana,target groups, nor can they always be expected to with a total cost estimated at US$5.7 million, comple-elicit the intended household response in the short ments Ghana's Programme of Actions to Mitigate theterm. Existing socioeconomic and institutional Social Costs of Adjustment (PAMSCAD). The project isimpediments may diminish the speed and ability cofinanced by the governments of the Federal Republic of

Germany, Switzerland, the United Kingdom, and thewith which various vulnerable groups can profit United States.from the newly emerging policy environment. The central objective of the project will be to help pro-However, complementary interventions can be vide the government with the information base needed todesigned to address the more imrnmediate needs formulate a medium- and long-term poverty reductionof target groups. These interventions are grouped strategy as a part of Ghana's Economic Recovery Pro-under the general heading of social action gram. The project will support policy studies on theprograms. social dimensions of adjustment and the production of

statistical data on the structure and evolution of house-Broadly speaking, social action programs can hold living conditions and will strengthen the monitoring

have two different purposes: of poverty reduction programs.* To protect or mitigate the effects of adjust- More specifically, the project will provide support to

ment on specific target groups the government in three key tasks:* To foster greater participation of vulnerable . Develop the capability to carry out policy studies on

groups in the process of socioeconomic the social dimensions of adjustment with the support ofdevelopment. an SDA studies fund

* Extend household and community surveys for fourThe first is concerned with protection or com- yea

pensation - protecting or restoring the welfare . Strengthen the capability to design and follow upand consumption levels of the target group. The poverty reduction programs and projects through an SDAsecond is directed toward enhancing the produc- project evaluation and monitoring fund as well astive capacity - strengthening the economic inte- strengthen the PAMSCAD secretariat.gration of a particular socioeconomic group. The government established the SDA Unit in late 1989

There already exists valuable experience gained to oversee and coordinate implementation of the project.

in designing projects that meet the two objectivesof protecting certain groups during the transitionor facilitating the participation of the poor in the Senegal has taken steps to ensure access for thegrowth process. In the first category, several landless to the ownership of lands becomingcountries, such as The Gambia, Guinea, and Se- available under irrigation projects. Guinea is es-negal have developed compensatory actions for tablishing an informal sector, micro-credit mecha-laid-off public sector employees. Mauritania has nism through NGOs, as well as a project for localintroduced food-for work programs, with better- administrations to renovate and construct educa-targeted food distribution to the neediest groups. tion facilities.Kenya is providing health services, including One way to distinguish between the two typesfamily planning, in the rural areas through a sys- of interventions is to recognize that the first typetem of satellite facilities. Madagascar is sponsor- consists of measures targeted to the groups di-ing special work programs to provide short-term rectly affected by the policy and budgetary reme-employment for dislocated workers and offering dies that are part of the transition during adjust-special services to rural families during the diffi- ment. The second! type is aimed at problem areascult preharvest period. that, while not necessarily resulting specifically

In the second category, The Gambia has cre- from the economic crisis or adjustment program,ated an operation to promote small and me- will have a definite impact on long-term successdium-size enterprises, with a special component of adjustment by helping to bring the poor andthat focuses on creating enterprises by women. vulnerable groups into the economic mainstream.In Mauritania, a similar project provides a line of For both types of social action programs, thecredit to local artisans. Sao Tome and Principe is target groups remain essentially the same as fordeveloping a credit initiative for small farmers as policy interventions: the chronic poor, the newwell as a land distribution scheme, both as part of poor, and other vulnerable groups. Due to theiran improved incentive system for cocoa workers. heterogeneity, the three groups will require sev-

14

eral different kinds of social action interventions adjustment efforts. A second and expandedbecause of the different ways that adjustment phase of the Emergency Social Fund providespolicies influence them. grants to a range of small-scale subprojects spon-

In the past few years, concern for protecting sored by municipalities, community organiza-vulnerable groups has formed an integral part of tions, and NGOs in four broad categories: socialpolicy discussions about structural adjustment assistance, social infrastructure, economic infra-lending and the kinds of complementary meas- structure, and support to production. Althoughures to be pursued during the transition period somewhat different, a parallel effort in Africaof economic reform. One of the first institution- was the establishment of the Participatory De-alized efforts to address this issue in Africa oc- velopment Program in Togo (see box, below).curred during an interagency workshop that met Based on these earlier prototypes, Social Ac-with the government of Ghana in July 1987. The tion Funds have been, or are being, establishedresult of this workshop was a 'Programme of as part of SDA country projects in Chad, Guinea,Actions to Mitigate the Social Costs of Adjust- Malawi, Mozambique, and Somalia, which willment" (PAMSCAD), which consisted of several provide resources for projects proposed by localproposals for project interventions (see box, op- NGOs. In addition, social action interventionsposite). have been formulated, or are now under consid-

Another project that has contributed to cur- eration, for primary health support in Mozam-rent thinking about ways to protect vulnerable bique and Zaire, for family planning assistancegroups during adjustment came from Latin in Madagascar and Zaire, for support for reha-America - the Bolivian Emergency Social Fund. bilitating primary education in Mozambique andThis fund, begun in 1987 with assistance from the Uganda, and for targeted food subsidies for low-Bank and other donors, aimed to provide emer- income groups in Malawi and Mozambique.gency relief and to generate employment oppor- Others include housing and urban and commu-tunities during one phase of Bolivia's structural nity infrastructure in Chad and Zaire; training

Togo: The Grassroots Development Initiatives Project

The Togolese government's initiative to strengthen local * Respectfor the role and contributions of each partner requiresNGOs is a remarkable partnership aimed at establishing an that the collaborative framework sustain an often precari-innovative institutional framework for collaboration be- ous balance between the independence and autonomy oftween the government and the NGO community, while NGOs and the legitimate concerns and priorities ofproviding direct financial support for NG(}sponsored de- government.velopment projects. It is part of a local Participatory Devel- * Supportive political leadership is critical to reinforce mu-opment Program for microprojects initiated and imple- tual respect and confidence, foster awareness of the com-mented at the community level to foster effective commu- plementarity of the relationship, and direct governmentnity participation in building local capacity and institu- agencies to facilitate NGO's work.tions and to mobilize additional concessional resources for * Partnership and participation are as important to the rela-small-scale projects. tionship between NGOs and their beneficiary communities

At the core of this framework is a steering committee, on as they are to that between NGOs and government.which both government and NGOs are equally represented, The pilot program has considerably benefited both par-with a limited but autonomous mandate to select NGO ties, and, as a result, the institutional framework for col-projects to be financed, provide policy guidance and direc- laboration between the government and NGOs is stronger.tion, and serve as a forum for dialogue in carrying out the The government has reaffirmed its commitment to dele-program. The government created a specal division in the gate decisionmaking authority to the steering committeeMinistry of Planning and Mines (PDLP/NGO) to coordi- and has reorganized the PDLP/NGO Division. Agreementnate and administer the program and to serve as a liaison on NGO eligibility and project selection criteria has beenwith the NGO community and the NGO association, reached, and guidelines for submission and administrationFONGTO. of NGO operations have been drawn up. A new IDA-

During a pilot program, the government and the NGO financed Grassroots Development Initiatives Project, whichcommunity grappled with the practical problems of work- supports NGO development actions at the communityleveling together and persevered in their efforts to reach a and builds the capacity of local NGOs to design and man-consensus. Their experience affords valuable insight into age their projects, will help government and NGOs to con-the dynamics of forging an effective partnership between solidate and deepen their prornising partnership.government and NGOs:

15

or redeployment for redundant civil servants in Chad: The Social Development ActionBurundi, Guinea-Bissau, Madagascar, and Zaire; Projectsmall enterprise development in Burundi, Guinea-Bissau, and Uganda; and vocational training in The Social Development Action Project for Chad, withChad. This range of social action interventions a cost of US$27 million, indudes four components, ofhas evolved from the experiences of the Bank, which three are directly action-oriented and a fourthother donors, and African governments. aims to strengthen the government's ability to design

Most attention to protecting vulnerable groups social policy and programs.was originally focused on the social sectors The first component consists of three initiatives to

improve employment:narrowly interpreted to mean the health and * A counseling program and a placement serviceeducation sectors - along with nutrition inter- for laid-off public sector workers in the country's twoventions. Yet, as suggested above, a broader defi- major urban areasnition has begun to emerge about the kinds of * A component to promote micro-enterprises bysocial interventions and projects that are seen as providing technical support to entrepreneurs, including

capable of mitigating the negative effects of ad- practical courses, demonstrations, and workshopsjustment on various groups. * A loan scheme for micro businesses, which will

Mortentonvaritfocus groupsf attentionhasbeguntbe managed by NGOs and is expected to reach 120 smallMoreover, the focus of attention has begun to enterprises and 370 microenterprises

shift from an orientation that is primarily directed The second component is a program to strengthenat compensatory measures to one that places primary health care and social services in the cities ofgreater emphasis on expanding the participation N'Djamena and Tandjile by rehabilitating existing fadli-and productive capacity of identified target tie, building new units, providing training programs forgroups during the adjustment process. A second social workers and nurses, and improving the distribu-avenue of social action programs is necessary tion of drugs and medicines. In all, approximatelyavenuse it would be clearly inappropriate to ex- 250,000- 300,000people will benefitfrom these expandedbecause It would be clearly inappropriate to ex- and rehabilitated health faclities.pect that the negative effects of adjustment could The third component focuses on the crucial problembe rectified solely through compensatory meas- of urban sanitation. Using labor-intensive schemes em-ures aimed at improving consumption. Sub- ploying about 15,000 persons, it will rehabilitate theSaharan Africa does not have enough resources drainage infrastructure in specific easily flooded zonesto sustain large social welfare programs over the in N'Djamena, rehabilitate marketplaces, and promotelong term, and, for the immediate future, the garbage collection through community participation.

of most of the poor will be closely Some 85,000 people are expected to benefit from thiswell-being of most of the poor will be closely component.linked to improvements in their production and The fourth component will strengthen the Ministry ofeconomic activity. Planning to improve specificsocial policy design through

The problems associated with low economic training and the provision of consultant services. Theactivity and poverty clearly predate the advent of Centre for Applied Research will be reinforced to man-

structural adjustment lending. These problems age the studies necessary to identify and implementare not the result of adjustment, but they do exist these policies, and surveys will be implemented on the

living conditions of the households. During the firstalongside the adjustment process and have con- two years of the project, priority surveys will be carriedsequences that require attention. The conceptual out in the major urban centers and one prefecture in thepoint of departure, therefore, is that social action south of the country. An integrated survey will then useprograms designed to foster productive capacity the sample frame established for the 1991 populationseek to overcome the remaining policy and insti- census. Five subjects will be examined in depth: livingtutional distortions that thwart economic partici- conditions of urban households and essential needs;pation by the poor - distortions that may have food security and vulnerable groups; household budget

arisen welefreadusme i . Istructure and financing of essential services; living con-arisen well before adjustment was initiated. In ditions in the cotton-producing region of Chad, the re-these circumstances, this category of social action gion that is most influenced by the adjustment program;programs is meant primarily to reorient and re- and obstades to promoting microenterprises and gener-habilitate neglected infrastructure and debilitated ating employment.support services and to promote the involvementof village and community institutions in moreproductive economic activity. tries in Sub-Saharan Africa. The SDA Unit is

Social action programs are being designed and providing support to participating governmentsimplemented in conjunction with structural ad- for the design and follow-up of these programs,justment programs in a growing number of coun- in conjunction with other World Bank divisions

16

and in collaboration with U.N. agencies and reformn, African governments had come to recog-donors. Examples can be found in Madagascar's nize the institutional weaknesses and creepingEconomic Management and Social Action Project stagnation in their national statistical services.(see box, page 5), the Social Development Action The situation was compounded as financial aus-Program in Chad (see box, opposite), and in the terity in recent years forced further cutbacks inSocial Sector Adjustment Program in Zaire. The already weakened statistical offices, which causedSDA Social Action Program in Cameroon com- several statistical and survey programs launchedbines specific actions in response to the economic in the 1970s to be cancelled. This condition hascrisis and longer-term support for participation created a vicious circle in which data users com-at the community level (see box, page 13). SDA plain that the sorts of data they need for policycountry projects will provide further assistance design are not available at the same time thatto establish benchmarks for measuring the im- statistical offices bemoan the suspension of sev-pact of these programs on target groups, espe- eral data collection activities because of lack ofcially through the use of monitoring surveys, as funds and interest.described in the following section. Expanding a statistical system entails more

than simply providing additional resources orStrengthened national infozmation systems staff. It must begin with explicit government

policy objectives and a concomitant understand-Including social dimensions in the policymak- ing of the kinds of information required to meas-

ing process establishes an unequivocal require- ure the progress in attaining those objectives.ment for African national information services: Creating such a "demand-driven" system doespolicymakers will need a clear picture of what not imply, however, that policymakers unilater-changes are occurring to various segments of the ally decide what should be the format and con-population during and after the process of ad- tent of data presented. A great deal of interactionjustment. To meet this requirement, an ongoing is required between users and collectors to pin-process of planning and analysis is essential, point the relative strengths and weaknesses of apredicated on a national information system that national information system and to ascertain theis able to provide quantifiable measures of gaps and reliability of the data while the nationalchanges over time in key social and economic information service is being reinvigorated. Us-indicators for specific socioeconomic groups. ers' Committees have been established to ensure

The term, "national information system," is close collaboration between statisticians in chargenot meant to imply a specific model of data col- of information systems and the users of surveylection and management that would be applied data in Guinea, Madagascar, and Senegal. Theregardless of the conditions of the country con- establishment of the Users' Committees is often acerned. Rather, it is intended to highlight that condition of effectiveness for SDA projects.social indicators - however important - must Seen in this light, the extent and reliability of abe seen as part of a government's entire statistical country's national information system obviouslycapacity and of the objectives for which it is de- have a major impact on the choice of analyticalsigned. tools used by planners and policymakers to ana-

Although some have thought that SDA was lyze the link between macro and sectoral policiesconcerned primarily with surveys and statistical on the one hand and outcomes at the householdanalyses, the SDA focus on national statistical level on the other. The pivotal role played bysystems remains the smallest of the four SDA household data for policy analysis at all levelsproject modules. By the same token, given the explains why the SDA initiative has placed par-already long record of statistical efforts in Africa, ticular emphasis on strengthening countries'the SDA's attention to national information sys- household survey capabilities. Apart from thetems is not meant to replace or duplicate existing importance of having information on social indi-programs. On the contrary, the goals of the SDA cators, an improved household data base is alsoinitiative are to make maximum use of existing needed for macro and sectoral policy analysis.programs to meet social dimensions concerns Such data will also serve a useful, if not essential,during economic reform and to help identify in- role in guiding social action programs and insti-formation gaps that need to be filled by the gov- tutional development.ernment and its donor partners. The SDA initiative is seeking to assist partici-

Even before the current attention to economic pating countries in two major areas. First, it is

17

offering help in a range of data collection and Second, assistance is being provided throughsurvey methodologies, primarily but not exclu- SDA project activities to national statistical of-sively with household survey techniques, de- fices for enhanced data collection and analysis tosigned to expand the quantity and to improve the ensure that social dimensions concerns are in-quality and reliability of social indicators data. cluded at the macro and meso as well as microIn this regard, it has helped generate a consensus levels (see box on Mozambique, below). Thiswithin the international statistical community on second area primarily revolves around the insti-a survey strategy to assess how households react tution-building and training activities discussedto changes in policy and to monitor the evolution in the following section.of living conditions of households through ad- However, the sequence and the choice of sur-justment. This survey strategy is based on three veys depend on each country's needs and im-different but complementary methodologies: plementation capabilities. In Guinea, an inte-

* A prototype Integrated Survey to provide grated survey is planned with a community sur-information needed to investigate in detail the vey. In The Gambia, a priority survey is plannedimpact of adjustment on different household the first year, followed by an integrated survey.groups and to establish the relationships between Ghana provides a good illustration of how anmacro policies and their effects on the household SDA survey program can be developed and inte-level; this is achieved using a detailed multisub- grated into ongoing national survey activities.ject questionnaire on a relatively restricted sample The Ghana Statistical Service has elaborated a

* A prototype Priority Survey, based on a four-year survey program with the active sup-shorter questionnaire, to be administered to a port and advice of the U.N. National Householdlarger sample and used to identify vulnerable Survey Capability Programme, the Economicgroups and to monitor changes in the socioeco- Conmmission for Africa, and the SDA Unit. Thenomic conditions of these groups program includes all three elements of the SDA

o Prototype Community Surveys to provide survey methodology (integrated, priority, andbaseline and monitoring information on the ac- community surveys). But it displays a specifictivities of markets and institutions in the meso national identity by also addressing, over the foureconomy. years, national concerns for the recomputation of

Consideration is being given to collecting, weights for consumer price indexes, for an ex-through these surveys or through specific micro panded review of labor and employment issues,studies, qualitative information on household and for a detailed review of informal sector ac-opinions about opportunities for, and constraints tivities.to, participation in socioeconomnic activity.

Moza=bique: The Social Dimensions of Adjustment Initiative

The Social Dimensions of Adjustment Initiative in accessible rural areas who lack essential infrastructure, ag-Mozambique consists of a Priority Social Action Program ricultural inputs, and basic services; women and childrenand a Policy Analysis and Data Program and will funnel its whose institutional needs are not being met; and personsassistance through the National Planning Commission. It who have lost their jobs.will cost US$83 million and run from 1990 to 1994. It is co- The Policy Analysis and Data Program will assist thefinanced by the Federal Republc of Germany, the Nether- National Directorate of Statistics and other institutions tolands, Switzerland, and the United Kingdom. build up a capacity to run surveys to provide policy-rele-

The Priority Social Action Program will help the govern- vant information on poverty issues quickly. Studies will bement to prepare and develop interventions focused on alle- financed on poverty profiles, targeting and cost recoveryviating poverty. Initial interventions are expected in four for service delivery, and policy options and project inter-areas: training rural basic health workers, expanding ventions to raise urban employment and income.community standpipenetworks in peri-urban Maputo, tar- A training plan has been developed to reinforce thegeting food subsidies, and developing a demonstration capacity of the government to implement surveys, to ana-project for a low-cost vehicle. lyze their main results, to carry out studies, to evaluate

The interventions will concentrate on five target groups: projects and design interventions, and to implement spe-households with incomes too low to provide for basic cific interventions.needs; households that lack access to basic needs; people in

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Institution building and training IMPRovED CAPABILITIES FOR POLiCY ANALYSiS. Theinstitution-building component of SDA country

This last issue in the country policy agenda projects addresses the general objective ofconcerns the considerations and major compo- strengthening the capacity of participating gov-nents involved in institutionalizing a social di- ernments (i) to design and introduce into theirmensions framework into the day-to-day plan- structural adjustment processes specific policiesning and decisionmaking activities at the coun- and programs to reach identified vulnerabletry level. Such activities correspond to the tech- groups and (ii) to carry out policy studies on thenical assistance component of the SDA initiative, social dimensions of adjustment in order to as-which complements the policy and project assis- sess the evolution of socioeconomic conditionstance discussed above. Institutional development over time for different population groups. Bothcan have, on the one hand, the objective of ensur- of these objectives require a strengthened capac-ing the continuation of institutional capacity ity for policy analysis.building during the process of development or, Improved policy analysis from the standpointon the other hand, the narrower objective of in- of institutional development is, however, morestitutionalizing social dimensions concerns into than simply ensuring that the skills exist to un-the planning and policymaking process. Given dertake various macro, sectoral, and micro analy-its mandate, the SDA initiative has this second, ses. It is one thing to have individuals trained inmore limited approach. the various disciplines related to policy analysis.

The broader objective of institutional develop- It is quite another to have public institutions in-ment during adjustment still warrants greater corporate policy analytic approaches in their day-attention by donors and African governments. to-day decisionmaking and management.In the past, the institutional ramifications of ad- Individual country circumstances will dictatejustment objectives were often either underesti- the way in which this policy analytic componentmated or neglected. The Bank is now actively of SDA institution building is approached. Atpromoting a coordinated effort at institution the same time, promoting an institutional basebuilding in Africa, which is generating a positive for policy analysis transcends social dimensionsresponse from the donor community. It is now concerns, and therefore must be understood fromevident that institutional interventions must be the wider perspective of a country's existing po-more than mainly by-products of macroeconomic litical economy. Still, three key elements havepolicy changes. Without a comprehensive analy- relevance for all Sub-Saharan countries.sis of the implications of reform on institutional First, the tools and training for policy analysisarrangements, bottlenecks have emerged in sec- should notbe confused with the institutional proc-tors such as transport and product markets. More- ess of using policy analysis for decisionmakingover, new laws, regulations, and structures alone and planning. These tools and methods are nocannot ensure success in institutional reform. substitute for sound judgment and a careful

weighing of the options by the policymakers in-SDA focus for strengthening institutional capacity volved. This implies that policymakers should

be aware of the acceptable uses and limitations ofThe long-term success of the SDA initiative policy analytic techniques and should recognize

will be ultimately measured by its ability to help them as a necessary but not sufficient conditionparticipating countries develop their own capac- - a facilitator - for informed decisionmaking.ity to identify existing or potential vulnerable Second, policy analysis is most fruitfully con-groups during a period of adjustment and to ducted when there is a generally free flow ofrespond with appropriate policies and program data, opinions, and information among line min-interventions. Toward this end, three key areas istries and the ministries of planning and finance.in support of institutional development have been Likewise, it requires inputs from the field toidentified: remain current and realistic. Improved policy

analysis can probably not take place in an institu-* Improved capabilities for policy analysis tional environment that compartmentalizes and* Reinforcement of government policymaking restrains policy analysts from sharing their ap-

procedures proaches and findings with their counterparts in* Expanded participation by local groups. other ministries and agencies or that remains out

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of touch with the realities at the grassroots. Simi- reordered, which involves overcoming en-larly, freedom of access to data should ideally trenched interests and established procedures.benefit other national and international research- Improved dialogue based on better data collec-ers as well as the govemment's own policymakers tion and policy analysis can facilitate this diffi-and analysts. cult but necessary process.

Third, senior policymnakers need to know at anearly stage when existing policies are not meet- EXPANDED PARIMCIPATION BY LocAL GROUPS. Par-ing their intended objectives, notwithstanding any ticipation is crucial for economic development,downstream political ramifications. In this sense, but it is even more important with social dimen-policy analysts, or the government units theyrepresent, should not be penalized for presenting Uganda: The Alleviation of Poverty anddata and findings that report less-than-satisfac- the Social Costs of Adjustmnent Projecttory performance of government policies or pro-grams. Negative feedback (as well as positive As part of its Economic Recovery Programme, thefeedback) is a fundamental component in the government of Uganda has prepared a Programmne forconstant process of refining and adapting public the Alleviation of Poverty and the Social Costs of Ad-policy to ever-changing conditions. justment (PAPSCA). At a total cost of US$106 million,

the PAPSCA consists of 19 targeted initiatives, of which

RFiNTORCEMŽENT OF GovERNMENT POLICYMAKINaG IDA will provide US$28 mnillion to finance two compo-P.)RocEDuREs. Improved data collection and policy nents of the program and to strengthen the government's

capacity to improve sodal policy planning.analysis is to no avail if the resulting information The project will address some of the most pressingis not effectively used in the decisionmaking social concerns of the country's most vulnerable groups.process. Qualitatively and quantitatively more In the short term, it will use NGOs as implementingthorough data collection and policy analysis are agencies to supplement the government's limited im-helpful operationally only if they are employed plementation capacity. The project will help local com-in an appropriate institutional setting in which munities to improve primary education facilities by re-potential users of the results are involved in pol- habiitating more than 4,000 cassrooms in 12 of the

most disadvantaged districts. The project will developicy formulation and program design. Although assistance prograrms for widows and orphans - victimsit is crucial to sensitize key policymakers to social of war and AIDS - including basic health care, basicdimensions, there are limits to which this can be education (through scholarships, job skills training, andplanned. rehabilitation of rural training centers), and nutrition. In

To start the process of sensitization and to the Masindi District, assistance will be provided topromote interaction among data collectors and strengthen district health personnel and community-analysts on the one hand and users and poli- based health organisations. The access of urban resi-analysts on the one hand and users and poli- dents living in hazardous environmental conditions tocyTnakers on the other hand, the SDA initiative adequate water su,pply and sanitation facilities wil alsoseeks to establish high-level "groupes de reflex- be improved through one of the project's components.ion" in participating countries, chaired when The project will complement ongoing community ini-possible at the ministerial level, such as by the tiatives by creating a mechanism to fund the materials,minister of planning. These interagency commit- tools, and skilled labor required to maintain and con-tees will both deliberate about strategies to alle- struct wells, rehabilitate schools and health centers, andviate poverty (a process that will identify data the rehabilitate and maintain community access roads.

These two subcomponents are expected to benefit ap-and analysis needs) and evaluate major econonmc proximately 400,000 people.

policy and public resource allocation decisions Through the component for social policy planning,with respect to their inclusion of social dimen- the project will strengthen the government's ability tosions concerns. Such committees will also im- design programs and policies to protect economicallyprove the process of policy negotiation between vulnerable groups from the transitory impact of adjust-the government and donors as well as between ment and to facilitate their participation in the country'sthe planning and finance rministries and the tech- economic recovery. The component will provide short-term technical support to strengthen and develop sodalnical or line ministries. policy planning, a statistical data base (through a Prior-

Institutionalizing such channels of dialogue ity Household Survey on the level and evolution ofand negotiation is particularly important, since household socioeconomic conditions), and experiencethe SDA objective of enhancing the poverty focus in designing and implementing actions that would ad-of macro and sectoral policies and of public ex- dress the basic needs of Uganda's most disadvantagedpenditures often requires past priorities to be groups.

20

sions objectives, because government efforts alone that encourage the development of national skillsare unlikely to reach the most vulnerable groups. and competencies at the outset, the SDA initia-The term "participation," as used here, refers to tive seeks to ensure the availability of qualifiedthe active involvemnent of a given population in people to plan and implement social dimensionsidentifying, designing, and implementing poli- activities over the long term - beyond the life ofcies and programs that are intended for its bene- the SDA country project itself. Thus, the SDAfit. Such participation is essential not only to training program is being developed with theunderstand the needs of the population but also view that training is a parallel but no less signifi-to ensure that the programs and projects will be cant objective of SDA initiatives, both at the coun-accepted by them and thus will be more likely to try and regional levels.be sustained over the long term (see box on This approach has four major implications forUganda, opposite). the design of the overall training program. First,

At the level of identification and formulation learning and skills should improve at each stageof policies and programs, the SDA initiative is of the project, and significant knowledge trans-exploring ways to associate the representatives fers and know-how can be realized by hands-onof NGOs, private associations, the academic applications. Second, social dimensions consid-community, and portions of the private sector erations can be internalized through identifyingmore closely into the planning process. In three and supporting national and regional trainingcountries, "poverty task forces" have been estab- centers to develop relevant curricula and courselished, bringing together members of the govern- offerings, which in turn can be made available toments, research institutes, NGOs, and the private appropriate staff. Third, the training componentssector. In Senegal, journalists have also been should correspond to the SDA's three policy ob-invited to participate. Efforts are also being made jectives: integrating socioeconomic analysis intoto organize national seminars to discuss specific macro and sectoral policy management, design-aspects of project activities, such as developing ing and implementing social action projects andmicroenterprises, increasing food security, tar- programs, and strengthening national statisticalgeting vulnerable groups, and lowering school services. Fourth, the various training elementsfees and related educational costs. should be integrated in a consistent and compre-

Grassroots participation presents even more hensive progression from data collection to macro-problems for formulating and implementing economic analysis and social policy design. Anprojects because the intended beneficiaries are example is the SDA initiative currently being for-dispersed and their capabilities for political ar- mulated in Malawi, which places considerableticulation are often lacking. New institutional emphasis on the training component. Training isarrangements may be required to avoid the tradi- envisaged in the areas of data collection and analy-tional top-down approach in favor of decentral- sis and social policy formulation. This trainingizing program and budgetary authority to com- will contribute to an expanded national capacitymunity or municipal organizations, NGOs, and for policy studies as part of improved macro andother simnilar groups. An interesting example of sectoral policy formulation and monitoring.this approach is the grassroots development ini- These activities will be coordinated by the De-tiatives project in Togo (see box, page 15). The partment of Personnel Management and Train-concept of a Community Development Fund ing.holds promise as a way to let local groups iden- SDA training programs are targeted towardtify their own social needs and then have access civil servants in the central and line ministries, asto core or seed funding. Most country projects well as researchers and employees in researchdesigned thus far with the help of the SDA initia- institutes working with the project. The pro-tive have included components for community grams will focus mainly on upgrading the skillsinitiatives. of professional, technical, and support staff, with

emphasis on training at the workplace, combinedSDA training objectives with on-site or short off-site training courses.

Despite inherent difficulties, it is hoped that aTraining occupies a central role in the overall core group of individuals associated with the

objectives of the SDA initiative and transcends project can be identified for various training ac-all of the institution-building activities discussed tivities over a substantial length of time in orderabove.8 By including components or subprojects to maximize the benefits of the training and to

21

ensure continuity between training and the work out relevant and effective African training capa-environment. bilities supporting the project, there is little guar-

Emphasis is also being placed on involving antee that relevant skills will, in the long run, beAfrican training institutions - in collaboration maintained at an appropriate level.with other donor agencies such as the Munich In short, two results are expected from theCentre for Advanced Training in Applied Statis- overall training activities: enhanced and suitabletics for Developing Countries, the International national skills at all levels of the project and aLabour Office, and the European Communities stronger national and regional training capacity- in actually carrying out the bulk of training to provide the skills required by public policyactivities. Capacity building is therefore an im- objectives that incorporate social dimensionsportant goal for the training program, since with- concerns.

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_ ~ 4

Summary and conclusions

The preceding chapters have provided an over- problem is therefore how to assist these poor andview of the policy rationale and scope of country vulnerable groups without causing distortions inactivities for the Social Dimensions of Adjustment economic mechanisms that would threaten theinitiative. The focus of adjustment programs has maintenance of macroeconomic discipline.changed during the past few years, notably in- The policy framework of SDA country-levelvolving a growing concern for integrating meas- assistance is based on four areas: improved macroures to reduce poverty into the adjustment proc- and sectoral policy management, social actioness itself. This widened perspective reflects the programs to help vulnerable socioeconomicview that adjustment programs in Sub-Saharan groups, strengthened national information sys-Africa cannot be sustainable over the long term tems for enhanced policy and program formula-unless and until poor and vulnerable socioeco- tion, and institutional development to sustainnomic groups can fully participate in the newly social dimensions concerns in future policymak-emerging economic opportunities brought about ing and implementation.by adjustment. Such a perspective goes beyond a Given the great diversity of economic and so-more limited policy approach that seeks solely to cial conditions in Africa, the SDA initiative isprotect or mitigate the transitional costs of adjust- providing its assistance in collaboration with par-ment on various population groups. Seen in this ticipating countries based on each country's par-light, adjustment affords the possibility to mar- ticular capacities and circumstances. These fourshal renewed attention on meeting the problems areas are nonetheless complementary measures,of the poor, who had been previously bypassed which offer a range of possible kinds of assis-by the former macroeconomic environment. tance and which can help promote the common

The policy focus of the SDA initiative consists objective of fully integrating social dimensionsof helping three categories of socioeconomic concerns into day-to-day decisionmaking at allgroups: the chronic poor, who may or may not levels of government. In this manner and in closehave been affected by adjustment; the new poor, consultation with the entire donor community,who have fallen into poverty as a result of eco- participating countries will be able to move to-nomic shocks and adjustment; and other vulner- ward meeting the critical and mutually reinforc-able groups, who - while not poor - have none- ing goals of sustainable economic growth andtheless been negatively affected. The key policy poverty reduction.

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Notes

1. In this report "Africa" refers to the 29 Sub- 4. This latter point has been the subject of re-Saharan countries now participating in the SDA cent discussion within the donor community re-initiative, unless the context suggests a reference garding a second phase of the Special Program ofto the whole continent. Assistance, coordinated by the World Bank.-2. For more detailed data on Sub-Saharan 5. For a more detailed discussion of the social

Africa's macroeconomnic situation, see Geographi- dimensions policy framework, see Parts I and IIIcal Distribution of Financial Flows to Developing in "Structural Adjustment and Poverty: A Con-Countries: 1984-1987 (Paris: OECD, 1989), Poverty, ceptual, Empirical, and Policy Frarnework," (SDAAdjustment, and Growth in Africa (Washington, Unit, World Bank, Washington, D.C., 1990; proc-D.C.: World Bank, 1989), Sub-Sahara Africa: From essed).Crisis to Sustainable Growth (Washington, D.C.: 6. Ibid., Part III.World Bank, 1989), World Debt Tables 1988-89 Edi- 7. The Analysis Plan on the smallholder sectortion (Washington, D.C.: World Bank, 1988), and- was prepared by the International Fund for Agri-World Economic Outlook (Washington, D.C.: IMF, cultural Development.1988). 8. For a more detailed discussion of training for3. See U.N. General Assembly Resolution social dimensions objectives, see "SDA Regional

"United Nations Programme of Action for Afri- Training Program" (SDA Unit, World Bank, Wash-can Economic Recovery 1986-1990," Part I, paras. ington, D.C., October 1989; processed).1-7, (New York, 1986).

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