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June 6, 2011 / passiveprogressive

Redefining Progress: The Application of Pro-Poor Growth in Southern Sudan

Introduction: A Frontier on the Global Stage

Not so long ago it took two to four weeks for supply trucks to travel from the border town of Kaya to Rumbek – the war-torn temporary administrative center for the Government of South Sudan (GoSS) (Fisher 2005). During the rainy season from March to October trucks could be stuck for months in meter-deep mud (Mann 2011). It is tempting to picture these aid missions as sojourns into a lonesome frontier or modern repetitions of The Heart of Darkness. This characterization would be misguided. Southern Sudan may lack infrastructure, but it is also an international stage; satellites scan the landscape for military movement while farmers use Sat-phones to keep up on maize prices (Ngigi 2008). Behind the scenes, Multi-National Corporations from China, India, and Saudi Arabia jockey for resources (The Economist 2011). With the help of foreign aid, the truck route from Kaya to Rumbek now takes twelve hours to complete (Fisher 2005). If one thing is certain, it is that the international community will play an important role in Southern Sudan’s future.

This paper aims to examine a foreign aid strategy that is intuitive yet controversial and revolutionary: Pro-Poor Growth (PPG). Though there are competing strategies that have attempted to co-opt PPG, I argue that the consideration of wealth inequality should be the primary priority of international benefactors in Southern Sudan. To approach this topic we will first examine the challenges Southern Sudan faces from the perspectives of foreign aid organizations. In the second section of this paper will concentrate on how different actors within the international community understand PPG and what makes it a radical departure from previous strategies. Finally, we will look at how PPG could manifest itself on a practical level in Southern Sudan.

The limitations to foreign aid theory are undeniable. Even a brief survey of Carolyn Nordstrom’s Global Outlaws demonstrates the lack of control NGOs and other development organizations have over their resources in the instance of Angola. Why bother discussing theory when its implementation is so far from perfect? There are two answers: first because PPG represents a redefinition of the roles played by developed and under-developed countries, and second because this redefinition has given a voice to those receiving aid and opened up opportunities to place aid where it is wanted. Success of these ideas in Southern Sudan will likely determine future aid strategies, and by extension, the global community.

Background: The Struggle for Peace, then Prosperity

Conflict runs deep in the Sudan. A truck driver arriving in Rumbek would see the shells of houses still vacant from the years of civil war with the North that killed over 1.9 Million Sudanese (Fisher 2005). Since independence in 1956 Sudan has experienced only sixteen years without major conflict (USAID Sudan 2005).

While many factors contributed to the years of war, certainly the most prominent is the centralization of the Northern government in Khartoum. Douglas Johnson, a historian of the Sudan describes how the government worked to, “[create] groups of peoples with a lastingly ambiguous status in relation to the state.” (Johnson 2003). Johnson goes further to show us that this is not a new phenomenon; Khartoum has exploited the South since at least the 18th century. After two civil wars a Comprehensive Peace Agreement (CPA) was reached in 2005 between the North and South. The agreement stipulated that Southern Sudan could hold a referendum to secede from the north after six years. This past July, 99% of South Sudanese voters chose secession. The GoSS is set to be fully independent from the North by July 9th, 2011 (Kron, 2011). Inequality has proven to be a major factor in Southern Sudan’s known history.

The GoSS faces many challenges, though arguably the most important is the creation of equality and growth – even in rural areas. Already a faction of the Sudan People’s Liberation Army (SPLA) has broken off and attacked cattle farmers (Richmond 2011). There is a very real possibility that the new government in Juba will be just as isolated and oppressive with its citizens as that of Khartoum.  Several hurdles will continue to challenge the ability of the GoSS to integrate in the short term. Firstly, the GoSS receives 98% of its national revenue from oil. Though extremely valuable and a potential for growth in the region, oil prices are also fairly volatile. The result is that long term planning becomes extremely difficult. But even if one were able to fund projects that benefit rural areas, as we saw above, transportation of goods continues to be a lengthy endeavor. Thus the ability for poverty relief efforts to coordinate based upon information in rural areas is severely hampered  (USAID Sudan 2005).

An additional concern is the lack of healthcare facilities within the South. While essential to well being, these institutions also serve as key data collection points. Doctors are able to assess nutrition and more general causes of suffering that are often helpful to aid efforts. Without these facilities the government is often simply unaware of areas where it could benefit its people. Finally, the GoSS must tackle the problem of food production and distribution if it is to prevent its people from rioting and its own troops from raiding. Certainly, the citizens of South Sudan face challenges of violence, famine and disease more directly – however, the scope of this paper merely concerns itself with challenges from the developmental perspective.

But the GoSS is not alone in confronting its development challenges. Organizations such as the Joint Action Mission (JAM), World Bank, IMF, and USAID have been involved extensively in various development projects. However, the philosophies with which these groups have approached Southern Sudan differ greatly, and have evolved significantly over recent years (see Table 2). During the 1990s Structural Adjustment Programs (SAPs) were inflicted upon developing nations through many development institutions, namely the WTO, IMF and World Bank. The development goal was to make nations more attractive to foreign investment. This often meant privatizing public resources for the sake of efficiency, keeping labor costs low, and warding off inflation with tight monetary policy (Williamson, 1990).

Recently however, European development strategists have been contributing a new perspective: development should be about increasing equality. This is perhaps reflected in practice by the fact that per capita, Europeans contribute $167 to foreign aid per year, while neo-liberal countries such as the U.S., Japan, Australia, and Canada contributed a mere $64 per capita (Lopez 2009). With Norway as the chair of the JAM, these values of increased social programs have clashed with the neo-liberal consensus on economic growth policy (more on this later). For now, however, it seems as though institutions with neo-liberal backgrounds have been following the lead of the JAM. For example, rather than formulating top-down structural adjustment strategies, the JAM helps to facilitate meetings between aid organizations an Community Social Organizations (CSOs) in order to determine the priorities of the base. Currently, the JAM is in the process of collating a Poverty Reduction Strategy Papers (PRSPs) although interim versions have already been published as guiding documents (Arenas-García 2010).

But despite an attempt to solicit new opinions, García notes that, “the priorities proposed in the iPRSP bear a high resemblance with the World Bank’s own strategy for Sudan.” Further explaining that many of the proposals collected for the interim PRSP were solicited in the form of a loan application. A methodology that shifts input for the PRSP towards traditional neo-liberal policy would necessarily undermine the participatory nature of the current aid strategies. Ideally, aid recipients would be able to clearly communicate their needs to development administrators such as the World Bank.

As we will see in the following section, one of the biggest critiques and potential failures of PPG is its cooption into the pro-growth (as opposed to pro-equality) development camp. Given the centuries of oppression from a centralized government that has been felt in Southern Sudan, development strategies ought to actively target inequality. A failure to do so at the juncture of independence would almost certainly add decades to Southern Sudan’s history of political alienation and conflict.

Pro-Poor Growth: A New Take on Foreign Aid Priorities

In 2003 a Google search for the string “pro-poor growth” yielded just over 3,000 results. Eight years later a similar search yields closer to 10.5 million (Lopez, 2009). But despite the increase in attention PPG has received, there is still debate about its purpose. There are two camps in this battle of ideologies: the first is more conservative and harkens back to the rhetoric of structural adjustment and neo-liberalism. Supported by the World Bank and IMF, this interpretation considers economic growth that benefits the poor in any way to be PPG. In order to distinguish between the two, we will refer to this set of values as simply “Pro-Growth.” It is important to note that this definition does not consider income equality. For example, a country may experience an overall 5% increase in income per capita, though with the poorest 10% experiencing only a 0.5% increase income. Under the “Pro-Growth” interpretation, pattern would still be considered pro-poor, despite the fact that all data demonstrates an increasing wealth gap. However, proponents of this definition often argue that overall economic growth should not be sacrificed for the sake of equality (Lopez 2009).

Within this definition is the tacit belief behind most foreign development efforts in the post-World War II era: improvements to the upper levels of the economy will trickle down to benefit the poor. This belief is not inaccurate. In a study conducted by Martin Ravallion that correlated annualized Gini coefficients and levels of income across forty-seven countries, no indication of increasing income equality was found. In general the poor experienced improving conditions, but they also remained stationary with relation to the rest of society (Ravallion 2006). In a more specific study, it was found that the priorities of neo-liberal development, such as openness to global markets, membership in the WTO, and limited government have had merely neutral or slightly negative results, prompting the international development community to re-evaluate its priorities (Lopez 2006b).

The alternative, second interpretation of the strategy argues that aid is only “pro-poor” if the percent of the population living below the poverty line experiences an increase of income that is greater than the median increase of income. In other words, if the poorest members of the population are actively being brought up to speed with the wealthy in terms of income growth, then a strategy could be termed PPG. Proponents of this strategy point to the fact that countries with high initial rates of inequality often take much longer to develop, despite the fact that the poor benefit from a certain amount of the trickle-down effect (Lopez, 2006b). This camp of development theorists sees the poverty traps created by, “rich and poor clubs” in impoverished countries as a barrier to the distribution of resources (Lopez, 2009). The effect of inequality on rate of growth is still a subject of intense debate, though there are certainly a few theorists who suggest it is essential to development.

Ravallion, for example, posits that the reduction of poverty is dependent upon the rate of growth in the economy and the elasticity of inequality. Using this hypothesis he was able to construct the following equation:

Rate of poverty reduction =

[Constant x (1-inequality index)θ ] x Ordinary growth rate

In this equation the inequality index would be replaced with the country’s Gini Coefficient – a measure of income equality ranging from zero to one, with one being the most unequal. Using a sampling of sixty-seven different countries’ poverty reduction rates, annualized Gini coefficients and ordinary growth rates, a constant of -9.33 was calculated. Θ is a value greater than one that represents the notion that higher levels of initial inequality will have a decreased influence over the elasticity of poverty reduction if inequality increases.

The most important aspect of this equation is the recognition that a high Gini Coefficient – where the wealth is concentrated in the upper percentiles of the population – will lead to a slow rate of poverty reduction. Using this equation in conjunction with the average world growth rate of two percent, we are able to compare a series of Gini Coefficients and see their respective poverty reduction rates:

Using the mean poverty rate of the developing world, which currently stands at forty percent, Ravallion shows that the time it would take to half the poverty rate in an a country with a Gini Coefficient of 0.3 (e.g. Ukraine) would take 10.5 years, while the same task would take 57 years in country with a Gini Coefficient of 0.6 (e.g. Central African Republic) (Ravallion, 2006). As Ravallion notes, the model is imperfect due to its generalizations across multiple economies. Nonetheless, it draws a long ignored connection between inequality and the rate of growth a country experiences, providing an economic justification for closing the wealth gap.

Despite its potential, there are two major critiques of PPG that should be taken note of: first that it disables the tangible growth that comes from top-down economic policies, and second, that as it improves the lives of the poor, it also integrates them into a volatile world economy. The first critique seems to be empirically untrue as long as aid is provided with reasonable consideration for the economy as a whole. In fact, increases of income tend to circulate between more people in rural, impoverished areas before dissipating into the global economy (Lopez, 2006b).

However, the second critique is particularly concerning for Southern Sudan as it has in fact weathered recent food crises particularly well. In a similar example, during the Indonesian economic crisis of the late nineties, the poor saw a relatively unchanged level of income while the rich and middle experienced a rapid decline of income (Ravallion, 2006). According to food distribution scholar Jayati Ghosh, “countries, such as Sudan, have apparently been able to withstand the overall volatility and keep prices relatively stable throughout the period.” (Ghosh, 2010). But with poverty rates estimated at between fifty and ninety percent in most regions, it seems as though food independence has provided stable prices but an incredibly inadequate source of nourishment (USAID Sudan, 2005). But Ghosh is correct in pointing out that Southern Sudan could be worse off; since the trade-liberalization development projects in Mexico, the Mexican government has been repeatedly forced to import corn and wheat to prevent starvation (Ghosh, 2010). The recognition of the potential to destroy organic mechanisms that benefit the poor is an essential to foreign aid missions. However, as we will see in the coming section, reconciling protection and liberalization is a difficult process.

Moving Beyond Theory: Pro-Poor Growth in Practice

To implement development on the ground, benefactors wishing to help Southern Sudan combine resources in Multi-Donor Trust Funds (MDTFs) that are administered by the World Bank. The funds are then distributed to UN Organizations, the GoSS, and NGOs. At first these organizations experienced difficulties in working together – particularly because the World Bank had set standards of accountability that were very difficult for aid organizations to attain. However, the Bank “has admitted not being satisfied with its own management…” and has since made an effort to re-evaluate the tradeoffs of lower accountability standards and faster response times (Arenas-García, 2010).

On the implementation front, organizations such as USAID and the UN have been working to organize the types of aid based on “multi-sectoral” approaches rather than by geographic region. Aid agencies are responsible for tackling certain types of problems and tracking indicators across regions (USAID Sudan, 2005; Klasen, 2003). In this section I will examine three key development sectors – agriculture, gender equality, and healthcare – and discuss how pro-poor growth might be achieved.

Agriculture 

Agriculture represents a crucial yet highly condensed economy in which much of the trading and profit is done by the largest wholesalers in the industry. In 2008 Margaret Ngigi conducted a series of interviews to determine the inequality present in the grain, sorghum, and maize markets.  She then used this data to form Lorenz curves that demonstrate overall inequality within these markets:

The horizontal axis of the Lorenz curve represents the relative percentile of traders while the vertical axis represent the total volume of trade. Thus, a steeper curve indicates a higher level of inequality while a shallower curve indicates greater distribution of resources. In the example of the sorghum market, the largest 12% of traders account for approximately 70.7% of the trade volume (with a Gini Coefficient of about 0.91). In contrast, the Maize market demonstrates a higher level of equality with the upper 10% of traders accounting for about 27% of the total trade volume (Ngigi, 2008).

As we saw from Ravallion’s equation, the greater the inequality in an economic system, the slower the poverty rate declines with growth. In this situation, PPG gives us the insight to recognize that foreign aid programs targeted at maize programs could have a significantly faster impact than in the sorghum market. Ultimately, this development is needed to ward off food riots and violence.

Gender Equality

Pro-poor growth has also been instrumental in advocating for women’s rights on an economic basis. PPG theorist Stephan Klasen emphasizes that, “had Sub-Saharan Africa … closed the gap [in gender-equal education], real per capita annual growth between 1960 and 1992 would have been 0.4-0.6 percent faster.” (Klasen, 2003). But here too there is dissent on how PPG should be implemented; in his 2006 paper, Klasen points out that examining average income glosses over gender inequalities that are prevalent in developing countries.

Instead, Klasen suggests that we should measure general well being not through economic measures, but through measures of capability. This measure of development, attributed to Amartya Sen, is more concerned with a community’s ability to provide education and healthcare to its members regardless of race, class, or gender. For practical reasons, it is difficult to separate an individual’s economic consumption from the rest of their household. In contrast, surveys that test for specific capabilities and limitations of an individual with a community are far easier to implement (Klasen, 2006). Regardless of the measurements used, the principles of PPG remain the same: increased equality helps to reduce poverty as a whole.

Health

The problems facing Southern Sudan’s health care system are enormous. Before the referendum to secede, “Sudan had a GDP per capita of $1,000, which is 25% higher than the average in Sub-Saharan Africa. However, its health outcomes are nearer to countries [with a per capita GDP of] $400.” (Arenas-García 2010). Even as the GoSS attempts to distribute its oil revenue towards healthcare, the results of traditional government directed health care are often prejudiced towards the wealthy. As the Economic Commission for Africa reports,

Evidence has shown…that allocations through [tax revenues] are often biased against the poor, resulting in poor quality facilities offered to the poor, that are not exactly free as costs of transport need to be covered privately. (ECA 2003)

In addition, concerns of corruption and bureaucracy hampering the overall outcome of health expenditures make central distropution a sub-standard way of achieving PPG. Instead, the ECA recommends a community based healthcare system, which could be managed locally yet funded by the government. Such management would allow communities to negotiate the tradeoff of resources that often occurs between fighting disease and providing Primary Health Care that prevents infant and maternal deaths (ECA 2003). This type of recommendation emphasizes the concept that PPG is not simply about enacting a government-formed economic recovery plan; it seeks to actively engage those who have been most alienated from the political process.

Conclusion: Expanding the Global Community

Communities have been developing towards better standards of living for the majority of recorded history. Indeed, all of the nations that are now involved in coordinating the Joint Action Mission in Sudan were at one time “developing” regions. But Southern Sudan and majority of Sub-Saharan Africa are developing in a manner that is distinctly global. Development is no longer achieved through an individualistic process, but rather as cooperation between an “under-developed” nation and the global community.

For nations such as Southern Sudan, years of poverty under oppression have finally resulted in the possibility of self-governance and recourse to a political process. However, the threat of development policy that increases inequality and alienation should not be underestimated. For the moment, Southern Sudan possesses the power of being a development priority with international attention – this could prove to be extremely beneficial. Under the guiding principles of Pro-Poor Growth that emphasize maximum equality and participation in the aid process the Government of South Sudan has the potential to realize its goal of providing a better quality of life for its people.

Works Cited

Arenas-García, Nahuel. Pro-Poor Growth & Development in South Sudan: Post-CPA Aid Mechanisms, Poverty Reduction Strategies and the Role of the World Bank. Paper, Institute of Studies on Conflicts and Humanitarian Action, 2010.

Dollar, David and Kraay, Aart. Growth Is Good for the Poor. Research Report, Washignton, D.C.: World Bank, 2002.

Economic Commission for Africa. Financing for pro-poor Health Policies: An Inquiry into making financing health policies work for the poor. Strategy Report, Economic Policy Research Center, 2003.

Fisher, Jonah. “Southern Sudan’s Unlikely Capital.” BBC World News. Jan 21, 2005. http://news.bbc.co.uk/2/hi/africa/4192133.stm (accessed April 12, 2011).

Ghosh, Jayati. “The Unnatural Coupling: Food and Global Finance.” Journal of Agrarian Change 10 (2010): 72-86.

Johnson, Douglas. The Root Causes of Sudan’s Civil Wars. Bloomington, Indiana: Indiana University Press, 2003.

Joint Assessment Mission Sudan. “Framework for Stustained Peace, Development, and Poverty Eradication.” Synthesis, 2005.

Klasen, Stephan:

“In Search of the Holy Grail: How to Achieve Pro-Poor Growth?” In Toward pro-poor policies: aid, institutions, and globalization, by Nicholas Herbert Stern, Ivar Kolstad Bertil Tungodden. Washington, D.C.: World Bank Publications, 2004.

Pro-Poor Growth and Gender Inequality. Discussion Paper, Ibero-America Institute for Economic Research, Göttingen: Georg-August-Universität, 2006.

Kron, Josh. “Sudan Leader to Accept Secession of the South.” The New York Times. February 7, 2011. http://www.nytimes.com/2011/02/08/world/africa/08sudan.html (accessed March 23, 2011).

Lopez, J. Humberto:

A Normal Relationship? Poverty, Growth, and Inequality. Policy Paper, Washington, D.C.: Wold Bank, 2006b.

“Pro-poor Growth in an Era of Globalization: a Review of What We Know (and of What We Don’t).” In Globalization, Development and Integration: A European Perspective, by Milica Uvalic & Amy Verdun Pompeo Della Posta, 51-64. New York: Palgrave Macmillan, 2009.

Mann, Steven. “Ten Reasons to Repair Roads in Southern Sudan.” World Food Programme – Logistics. Feb 10, 2011. http://www.wfp.org/logistics/blog/10-reasons-repair-roads-south-sudan (accessed March 15, 2011).

Ngigi, Margaret. Structure, Conduct, and Performance of Commodity Markets in Sudan: Linkages to Food Security. New York: Food and Agriculture Organization of the United Nations, 2008.

Ravallion, Martin. Pro-Poor Growth: A Primer. Research Report, Washington D.C.: World Bank, 2006.

Richmond, Matt. “Southern Sudan Clashes Kill 72 People.” Bloomburg. May 10, 2011. http://www.bloomberg.com/news/2011-05-10/southern-sudan-clashes-in-warrap-state-kill-72-people-army-spokesman-says.html (accessed May 12, 2011).

The Economist. “The Surge in Land Deals: When others are grabbing their land.” The Economist Online. May 5, 2011. http://www.economist.com/node/18648855?story_id=18648855 (accessed May 5, 2011).

USAID Sudan. Strategy Statement. Washington, D.C.: USAID, 2005.

Williamson, John. “What Washington Means by Policy Reform.” In Latin American Adjustment: How Much has Happened?, by John Williamson. Institute for International Economics, 1990.

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