1 JBIC ’ s Approach to Poverty Issue Ｍａｙ ２００３ Kunio Hatanaka Director General Environment Analysis Department Japan Bank for International Cooperation

2 1.Handbook on Social Dimensions (1999) Part I : Project Cycle and Social Dimensions Part II : Sector Specific Information for Incorporating Social Dimensions (1) 11 Sectors and 4 Sub-Sectors : Electric Power, Transportation, Irrigation, Flood Control, Agriculture, Forestry, Fisheries, Water Supply/Sewerage/Sanitation, Health, Education, Urban/Rural Community Infrastructure (Electrification, Roads, Micro-finance and Housing) (2) Involuntary Resettlement and Land Acquisition (3) Integration of Poverty Alleviation Components for Each Sector

3 2.Poverty Profile (Since 2001) Available for 20 Countries, of which 15 Countries are on JBIC web-site (Azerbaijan, Bangladesh, Cambodia, Indonesia, Lao PDR, Macedonia, Malaysia, Mongolia, Nepal, Peru, Philippines, Sri Lanka, Thailand, Tunisia and Vietnam) Compilation of Existing Data Typical Items in Profile (1) Statistical Data : Poverty Line, Trends of Poverty Incidence and Inequality, Regional Disparities in Poverty, Depth and Severity of Poverty, Profiles of the Poor (2) Government Policy and Actions for Poverty Reduction : Policy, Plans and Programs for the Poor,Government Departments Involved, Social Safety Net Programs, Budget and Expenditures for Social Services etc. (3) Partnerships for Poverty Reduction : Donor Coordination, NGOs, CSOs

4 3.Basic Strategy of Japan ’ s ODA Loan Medium-Term Strategy for Overseas Economic Cooperation Operations (April 2002) “ Strengthening Support for Poverty Reduction “ is targeted as one of seven priority areas. “ Supporting Environmental Improvement and Anti- Pollution Measures “ as well as “ Addressing Global Issues “ are also among the seven.

5 4. Example of Latest Study in Vietnam (1) Commanded to International Food Policy Research Institute (IFPRI, Washington) in 2002 Objective is to study the patterns of income diversifi- cation and its contribution to poverty reduction in the North Mountain region where the poverty issue is most critical in Vietnam. The study is to be finalized soon. Some preliminary results are as follows. (1) GDP per capita at constant prices has increased 7 % per year over Share of crop and livestock production in total GDP has fallen from 54 % to 47 %, whereas that of industry and services has increased from 33 % to 44 %.

6 4. Example of Latest Study in Vietnam (2) (2) The average area cultivated with crops per household has declined slightly over in the North Mountain region. So, area expansion has not contributed to per capita income growth which was 157 % in nominal terms and 68 % in real terms. (3) Yield increases have been the largest factor in the growth of the value of crop production (example : rice yields from 2.7 tons/ha in 1995 to 3.7 tons/ha in 2000). To a lesser extent, price increases have also contributed. (4) Diversification from low-value crops to high-value crops has made a significant contribution to income growth, but its effect has been less than yield increases. (5) Diversification in economic activities, namely the shift toward non- farm activities, has been also observed.

7 4. Example of Latest Study in Vietnam (3) Final Report is expected to clarify the following points, based on (i) Vietnam Household Living Standards Survey (ii) a qualitative assessment using rapid rural appraisal in the region and (iii) analysis by a social accounting matrix (SAM). (1) Describe the patterns of crop diversification and non-farm activities at the household level, (2) Estimate the relative importance of various sources of rural income growth in the region : Yield increases, crop price increases, growth in livestock and aquaculture, diversification into high-value crops and the shift toward non-farm activities, (3) Estimate the relative importance of income diversification and other sources of income growth in reducing rural poverty,

8 4. Example of Latest Study in Vietnam (4) (4) Compare different types of income diversification in terms of their multiplier effects, inter-sectoral linkages and contribution to poverty reduction, (5) Examine the constraints including environmental issues that farmers in the Northern Mountain region face in diversifying into high- value commodities and non-farm activities, and (6) Identify policy options for facilitating the process of diversification into high-value commodities and non-farm activities. Finally the study has been carried out in close collaboration with the World Bank and Vietnamese Government, the latter is expecting to take its result into consideration in their future project formulation. [ End ]