Sri Lanka produces a mixed scorecard on managing poverty

By Poornima
Weerasekara
Sri Lanka has failed to manage its poverty alleviation challenge during the past 10 years compared to other low and middle income economies according to a recent World Bank survey titled “Moving out of Poverty: Success from the Bottom Up.”
According to the four year study, 24.5% of households moved out of poverty in Sri Lanka, which was ranked seventh, behind Afghanistan, Bangladesh and Uganda
However, 30% of non-poor fell below the poverty line making Sri Lanka the seventh worst off in this aspect.
Furthermore, of those who moved above the poverty line 54% only saw a marginal improvement in income levels, moving only one-step above the poverty line. Conversely, 10% of those fell one step below the poverty line.
With regard to Sri Lanka, the study focussed on the tea plantation sector and the conflict affected North and East. Sri Lanka was stratified as a country with high economic growth but low in terms of governance.
It defined a Community Poverty Line (CPL) to suit the local context, once the focus groups in each country were identified. The study was carried out in 15 countries of Africa, East Asia, South Asia and Latin America, which included interviews with over 60,000 people.
Mexico was ranked the best in terms of poverty alleviation with 51% of households who were initially considered below the poverty line climbing up the social ladder. In Afghanistan 46 percent moved up from poverty.
Entrepreneurship, female participation in the workforce, remittances and higher education were the key factors that pulled families out of poverty.
Malawi was worst off, where 45 percent non-poor households slipped below the poverty line.
“The poverty situation in Sri Lanka is complex. Sectors that are more exposed to the global economy like the apparel sector or export agriculture will feel the immediate impact of the current financial crisis. However, the agricultural sector where most of the poor are employed is insulated because it is catering to the domestic market,” Centre for Poverty studies senior professional on the Poverty Impact Monitoring program Nilakshi de Silva said.
UNDP senior programme analyst on poverty Dr. Fredric Abeyratne said that the lack of any comprehensive studies made it difficult to judge the effectiveness of the current social welfare systems in the face of the financial meltdown.
“The drying up of remittances is directly affecting the rural economy that has become more dependant on it over the years. Plus the escalating prices of fertiliser and other agricultural inputs are eroding farmer incomes. The situation is only expected to worsen as domestic demand also shrinks,” he added.
“In the midst of the worst financial crisis since the Great Depression, we need to understand the dynamics of poverty better by listening to what the poor themselves have to say,” said Danny Leipziger, World Bank Vice-President for Poverty Reduction and Economic Management in a statement accompanying the study.
“Their stories show us how it is possible to move out of poverty, especially when there are local opportunities available. But they also show us how easy and quick it is to become poor.”
The research also debunks some myths and prejudices about the poor, whom many see as passive and without ambition or aspirations. In fact, when asked by researchers how one could move out of poverty, nearly all groups, including disabled people, emphasised individual effort, self-reliance and initiative
“We find little evidence that poor people are poor because of laziness or disinterest in work and savings,” said the lead author of the study, Deepa Narayan. “Even in very poor and conflict-prone areas, poor people seldom seem apathetic. Instead they take initiatives often pursuing many small ventures simultaneously to survive and get ahead.”
The study says that the focus of poverty reduction strategies must therefore shift to increasing economic, social and political opportunities in the local communities where the poor live.  These local opportunities include the provision of business know-how, basic access to health and education and the improvement of local governance.  Local governments that are responsive and accountable have a critical role in creating the local conditions for households to escape poverty.
“Individual hard work and belief in self can take people far, but it cannot make up for lack of economic opportunity and blocked access to opportunity in the communities where poor people live,” said Narayan.
In addition, efforts must also be directed to preventing people from becoming poor in the first place when they sell off assets or become indebted because of illness, unemployment, natural disasters or more recently, the impact of the world financial crisis. New strategies are needed to increase their resilience through social and health insurance programmes, as well as better access to credits, local markets and infrastructure projects.
Given the fact that countries can experience mass poverty – from one third of the population in India to more than 60 percent in Zambia—the study finds that although efforts to support self-help organisations of the poor may ease the pain of a few in the short run, “they are totally inadequate to lift entire nations or communities out of poverty.”

Other highlights and recommendations of Moving out of Poverty include:
Most poor people believe that markets work and want to do business on an equal and fair footing.
Most poor people value democracy, which they equate with the freedom to vote, to think, to speak, to move, to protest and to work.
Family is the most frequently mentioned institution that helps people accumulate assets.
Microcredit can help the poor subsist from day to day, but in order to lift them out of poverty, larger loans are needed so that the poor can expand their productive activities and thereby increase their assets.
Poverty reduction efforts need a “liberalisation from below” that includes:
removing restrictive government regulations;
expanding access to markets, especially by providing connectivity through roads, bridges and telephones; and
integrating poor people’s businesses on fairer terms in new business models.