Poverty Indicators and Monitoring in Kyrgyzstan Case Study

Transcription

1 Poverty Indicators and Monitoring in Kyrgyzstan Case Study Prepared by R. Mogilevskiy (Center on Economic and Social Research) Kyrgyzstan Both the government and society in Kyrgyzstan have admitted that poverty is among the major challenges confronted by the country at the present stage of its development. Drastic reduction in poverty is among priorities of the long-term development program for Kyrgyzstan, called the Comprehensive Development Framework (CDF). Hence, addressing this problem is the primary objective of the medium-term national development framework, National Poverty Reduction Strategy. In order to successfully fight poverty, it is crucial to have a clear understanding of what poverty is, which indicators can be used to describe it, how these can be measured, which conclusions can be made as to the roots of poverty and ways to overcome it based on the available data. All this can be integrated into a poverty monitoring system which has been largely developed in Kyrgyzstan and continues its evolution. 1. Measuring Poverty in Kyrgyzstan 1.1 Notion of Poverty Traditionally, poverty has been viewed as a set of standards of living when a person (family) has low income and hence cannot ensure a decent living. Over the past few years the concept has been substantially revised, since standards of living depend on many other factors in addition to incomes, namely: access to benefits of civilization (education, health services, clean water, power and utilities), development opportunities (ability to improve one s situation and break away from poverty), level of security or vulnerability to negative external impacts. In analyzing poverty, studies normally distinguish between absolute and relative poverty. Absolute poverty relates to the ability of an individual to meet only minimal physiological food, water, clothing and shelter needs, i.e. here we do not take into account one s sociocultural needs. It is reflected only in case individuals sink below such level. Relative poverty is determined on the basis of generally accepted standards of living in a particular society during a particular period of time, and not only with respect to physiological needs. When assessing poverty in Kyrgyzstan, all key aspects of this phenomenon have been taken into account. Although the key indicator used to describe the phenomenon poverty level is based on expenditure data, various publications 1 and discussions use other more comprehensive indicators, i.e. impoverishment index. Estimation of the poverty level is based on average per capita expenditures (consumption) of household members. There are two levels depicting poverty, - poverty line and extreme poverty line. To establish the poverty line, in compliance with the World Bank procedure nutrition pattern (food basket) is determined first for the third of the population with the lowest income. Monetary equivalent of the food basket providing 2100 Kcal/day is 1 In particular, annual National Human Development Report published by independent experts with the support from the UNDP and participation of the National Statistical Committee of the Kyrgyz Republic. 1

2 assumed as the extreme poverty line. Poverty line is established at the level exceeding the extreme poverty line by 66%, thus including non-food needs of the poor. The level of poverty/extreme poverty is determined as the share of population with consumer expenditures below the respective line. In addition to these indicators, income gap (deviation of average income of the poor from society-average income) and poverty gap (the degree to which average incomes of the poor are below the poverty line) are employed. From the above definition, poverty level in Kyrgyzstan is determined on the basis of the established consumption pattern of the poor. Since the bulk of the data are collected and processed by the National Statistical Committee (NSC) 2 of the Kyrgyz Republic, it is this institution which determines where the poverty line is going to be drawn. Population impoverishment index (PII-1) designed by the UN Development Programme (UNDP) and used to describe poverty in developing countries is based not on consumer expenditures but on key characteristics of human existence: lifespan, education, and decent living conditions. This is an aggregated indicator which is calculated based on the following components: 1) share of the population dying before reaching the age of 40; 2) share of illiterate adult population; 3) share of the population without access to clean drinking water; 4) share of the population without access to health services; 5) share of underweight children under 5 years old. Each of the suggested indicators (like any other)has some advantages as well as limitations. Both poverty level and PII-1 are quantitatively justified and are based on internationally adopted techniques which adds to their objectiveness. The poverty level indicator is determined by the value of consumption basket and thus does not account for some key aspects of human livelihood which cannot be valued. On the other hand, the PII-1 which is free from such deficiency is a convenient measure for cross-country comparisons, but it does not give a clear picture of poverty incidence in a particular country. It appears that in order to correctly reflect poverty situation, both indicators should be used together with other qualitative and quantitative indicators. It seems advisable that additional indicators to be used in describing poverty should emphasize opportunities for the poor (access to education, health, utility services with respect to average access opportunities in society) as well their security/vulnerability (e.g., share of social benefits and allowances received by the poor in the overall social expenditures). 1.2 Sources of Poverty Data Household survey administered by the NSC is the key poverty data source in Kyrgyzstan. Such surveys originated in In the NSC together with the World Bank performed Poverty Monitoring in the Kyrgyz Republic (PMKR) In household survey techniques and reporting formats were improved based on the PMKR experience. Currently, a representative sample of 3,000 households from all regions of the country is surveyed on a monthly basis. In addition to general information on household members (place of residence, gender, age, ethnicity, education), the survey traces all cash incomes of households (including selfemployment income), food and non-food consumption (including products from private household plots), all types of expenditures, etc. The household sample size is held constant throughout a number of years and is replenished following normal attrition. When interpreting data from household budget surveys it should be noted that households receive a major portion of their income (especially in rural areas) in-kind, thus monetary values of such incomes (based on market prices for relevant products) are somewhat artificial. 2 See the next section. 2

3 Overall, the data on standards of living in Kyrgyzstan collected in the course of the survey are rather detailed and help trace various aspects of poverty in their dynamics. Household survey is the most important but not exclusive source of data on standards of living and poverty. The NSC using panel or cross-section surveys collects and publishes key human development statistics (lifespan, birth rate, mortality, morbidity for various diseases, literacy rate, pre-school and school enrollment, access to water and various utility services, etc.). Apart from the NSC, poverty information is gathered by various international and local non-government organizations. They administer surveys, questionnaires, focus-groups to the poor and experts in order to obtain additional poverty information. The emphasis is not on quantitative features, but rather on such hard-to-measure indicators as social status and coping strategies of the poor, criteria of relative poverty, etc. 1.3 Overall Situation and Causes of Poverty It is generally agreed that poverty situation in the country is quite dire; both quantitative and qualitative and subjective estimations suggest that over one half of the entire population live in poverty. The scale and changes in poverty indicators are summarized in Table 1. Table 1. Aggregated Poverty Indicators in Kyrgyzstan Poverty level, % Total Urban Rural Extreme poverty level, % Total Urban Rural Income gap, % Poverty gap, % Population impoverishment index (PII-1) Sources: Interim National Poverty Reduction Strategy in the Kyrgyz Republic for ; National Report on Human Development in the Kyrgyz Republic for According to preliminary estimations, poverty level in 2000 reached 52.0%, while PII- 1 climbed to 9.3 Controlling for the inevitable measurement bias endemic to any poverty indicator, it could be inferred that no significant changes in the poverty level have occurred over the past three years. It should be noted that in addition to the aforementioned, there are other poverty estimates published by the NGOs or independent experts which use their own definitions and quantitative techniques. These estimates vary a lot, sometimes suggesting a poverty level of 80-85%. To a great extent these estimates reflect not absolute, but rather relative poverty levels; this suggests major imbalances in income distribution and is consistent with related NSC estimates 4. 4 According to the data posted on the NSC web-site ( the Gini coefficient which shows income distribution inequalities has been steadily increasing over the past few years, and in

4 Over the past few years the country has enjoyed economic growth, with average annual real GDP growth rate of 5.5%. Agriculture which employs the majority of the country s poor, proved to be among the growth leaders. Increased economic activity without marked accompanying reduction in poverty is a phenomenon which is to be comprehended, since it is the economic growth is regarded by everyone as the key means of poverty reduction; however, up to now it has yielded almost no results in this respect. Without pretending to provide an exhaustive answer 5, some possible (and partial) explanations of what seems as a paradox can be offered. First, in order to reduce poverty, not only economic growth is important, but also the way its products are distributed, i.e. how high/low is income inequality. As mentioned previously, today this inequality appears to be significant. High (up to 2000) inflation was a major factor contributing to this high inequality, with wealthy population much better shielded against its impacts than the poor. Second, economic growth in Kyrgyzstan is measured by the gross domestic product (GDP) indicating quantities of products/services produced in the country, instead of the gross national product (GNP) which reflects incomes of the population and thus is more closely linked to poverty indicators. In such country as Kyrgyzstan where people, goods and capital actively move across borders, the dynamics of the GDP and GNP measures may be different. Third, the problem may be caused by purely statistical reasons due to partial inconsistency of data on macro (used to estimate the GDP growth) and micro (used to determine poverty indicators) levels. Review of different poverty indicators (including, but not limited to, the aforementioned) helps establish basic causes of poverty in Kyrgyzstan: underdeveloped economy and low incomes of the population in general; high income distribution inequality in society; lack of public resources to implement social programs due to low revenue collection rate; poor targeting of current public social programs and generally low efficiency of government expenditures. Clearly, the presented list is far from being exhaustive. It is important that the nature of poverty in Kyrgyzstan is unique when compared to many countries which formally (based on the PII-1 or human development index) are on a similar stage of development. In many countries which also face the poverty challenge, this phenomenon is accompanied by illiteracy by the majority of the population, lack of education and health systems as well as social infrastructure. Contrary to this, in Kyrgyzstan, as poverty and human development indicators suggest, adult literacy rate is almost 100%, while education and health are at the levels which are characteristic of countries with much stronger economies. However, such situation is to a great extent inherited from the previous stage of development; currently these sectors suffer from underfunding. Also of note is the fact that the majority of those who can now be classed as poor some ten years ago had middle incomes or at least were high above the absolute poverty line. In other words, the new poor constitute the most numerous group among the poor. 2. The Araket National Poverty Alleviation Program in the Kyrgyz Republic 2.1 General Features of the Program it reached which, according to international experience, is a rather high value suggesting high income inequality. 5 It seems that a separate study would be needed for this. 4

5 The Araket National Poverty Alleviation Program was adopted in 1998 and is intended for Objectives of the program are to improve standards of living and to reduce poverty in Kyrgyzstan. The Araket program stipulates that the objectives should be reached in two stages: during the first stage ( ) poverty expansion should be contained and its most acute formats mitigated; during the second stage ( ) a material reduction in the magnitude of poverty should be achieved, - it should not exceed 40% of the entire population (30% under favorable conditions ). The Program outlines a set of measures aimed to eliminate the causes of poverty or the most acute manifestations thereof. The measures promote sustainable growth and active social policy with the objective to establish personal responsibility for one s own well-being and to provide targeted assistance to the vulnerable groups. Two major groups of the poor are identified under the Araket Program: a) individuals unable to work and other vulnerable groups (large families and single -parent families, the disabled, single pensioners, children); b) able-bodied individuals (low-pay employees, farmers with small land plots, the unemployed). It is also stated that poverty has pronounced regional patterns and is especially endemic to rural areas, one -company towns (with the enterprises shut down or experiencing major economic problems), mountainous and remote areas. Measures to implement the Program can be split into three key groups: Key measures to overcome poverty among the vulnerable groups. These include strengthening of the public social insurance and social protection system, targeting of social benefits, special protection and support to the disabled, families, mothers and children. Measures to overcome poverty among the able -bodied population. Strengthening of employment service, setting up of a training and upgrading fund, promotion of small and medium-size business, establishing of relevant regulatory framework which would promote entrepreneurship, easy access to financing, including micro-credit facility, development of a network of business incubators, overcoming rural poverty; revision of salaries in the public sector. Access to social services for all categories of population. Protection of low-income individuals needed due to utility charges increase, better access to education, social assistance to orphans and neglected children, availability of health services. 2.2 Program Monitoring Based on international experience, a proven program monitoring system is used. The monitoring system includes: program objectives; activities to reach the objectives; program outcomes; program outputs, and program impacts. The following example can be used to illustrate the program monitoring technique (see Table 2): Table 2. Monitoring log-frame 6 6 The numbers in the table are fictitious. 5

6 Objective Reduced poverty among the elderly. Activities The Social Fund introduces a system of personified accounts for all workers. Outcomes The Pension Fund revenues go up by 20%. Outputs Old-age pension arrears of the Social Fund are reduced by 50%. Impacts Poverty in the country is reduced by 2%. In order to employ this monitoring scheme, it is necessary to, first, identify which objectives are pursued by specific activities. Second, output, outcome and impact indicators should be carefully selected. It should be noted that such indicators ideally must meet the following criteria: 1) be direct and adequate, i.e. be relevant to the measured phenomenon/action and provide its full characteristics; 2) be objective; 3) be practical, i.e. resources/time spent for their measurement should be sensible; 4) be sound, i.e. based on reliable information; 5) if possible - be quantitative and disaggregated. Third, baselines for the selected indicators should be fixed as well as their target values at the completion of the program. This allows on the one hand to assure internal consistency of different components of the program and, on the other hand, by comparing actual performance with targets, permits to clearly see the implementation stage the program is on, and whether revisions or corrections are needed. Such monitoring approach makes it possible to see to what extent the program caused the desired changes, and to what extent the developments occurred as a result of natural course of events. It is important that the monitoring should be not an ad hoc activity, but is performed on a regular basis. Monitoring for the Araket program meets these requirements only partially. Performance reports formulate objectives and describe in detail the activities aimed to achieve these objectives, as well as both ex ante and current situation (sufficient information is available for these purposes, - see Section 1). However, indicators of outcomes 7, outputs and impacts are lacking. Outcomes are almost never compared to indicator targets which prevents from assessing program implementation effectiveness. A major monitoring problem for this program is the fact that it does not outline neither sources nor plan to finance its implementation. Such plan would have allowed, first, to see whether the program objectives are set realistically, and, second, by comparing actual program costs with planned costs, to get a clear understanding of the implementation progress. It should be emphasized that the experience gained during implementation and monitoring of the Araket program was incorporated in the preparation of national medium-term (NPRS) and long-term (CDF) programs. For instance, a well-developed monitoring and evaluation system was designed for the CDF; the system comprises organizational and methodological support, information system, financial support to such activities. Monitoring and evaluation process follows participatory approach and involves government institutions (national and sub-national), civil society organizations and the mass media, private sector, as well as donors. It is expected that all stakeholders (and not only government institutions) will contribute to the collection of information on the CDF implementation, and also (and this is important) will get access to the accumulated data and analytical reports based on such data. A special Web-based informa tion gateway (www. kyrgyzinvest.org) is to be employed for this purpose. In addition to providing information on the CDF implementation, the gateway s primary role is to assure timely feedback from all stakeholders and general public. 7 Some of such indicators appear sporadically in the Program Monitoring Reports. 6

7 2.3 Civil Society Participation in Monitoring Clearly, such a complex and comprehensive program as Araket requires a huge number of indicators for its monitoring. This, in turn, demands a well-designed data gathering system for monitoring purposes. A major role here is to be played by government institutions (ministries and agencies) which mainly possess the necessary information, and especially the NSC. However, the complexity and scope of the problem can hardly be reflected by government institutions alone. Valuable, and sometimes unique information on poverty manifestations, the Araket program impacts, local poverty alleviation initiatives can and should be furnished by civil society of Kyrgyzstan through NGOs, local communities and other organizations. NGOs and other organizations do participate in implementation and monitoring of the Araket program, but their involvement is not supported by an adequate institutional framework. Civil society participation is much more explicit and complete in the NPRS and CDF monitoring effort. Objectives and principles of partnership arrangements between government institutions and advocacy groups have been identified, as well as mechanisms for their interaction, which have been reflected in the Partnership Plan and Partnership Matrix serving as integral parts of the NPRS. 3. Conclusions It is obvious that poverty alleviation effort may only be effective only if: society and government institutions have a clear understanding of what poverty is and which indicators can be used to describe it; a proven system to collect objective and timely information on values of these indicators is in place; monitoring is performed on many levels and involves both government institutions and civil society organizations; monitoring is regarded as an integral part of poverty alleviation programs which provides information and necessary feedback with society to evaluate effectiveness of programs. It could be concluded from the above that Kyrgyzstan has made substantial progress toward establishing a poverty monitoring system. Experience with monitoring helps eliminate the deficiencies which existed in tracking government programs implementation; thus, the latest government programs - the CDF and NPRS - have as their integral components monitoring mechanisms based on modern techniques and participatory approach to implementation. 7