Poverty Condition of:... –hunger, –inadequate income, –lack of food security, –lack of or insecure access to assets,with –informal and formal access rules biased against the poor Lack of power and voice to: –influence rules that determine access to productive assets (productivity of and returns to assets) –influence the organizations that govern these rules

Institutions Organizations are instrumental for empowerment of the poor: –securing access to assets –influencing the rules Rules (informal and formal) are crucial for access to assets: –reduce uncertainty in exchange; –define choice set; –determine transaction costs, production costs, profitability and feasibility, –provide incentive structure Institutions = organizations and rules of the game Institutions matter, particularly for rural people and women Institutions are political and socio-economic

Investing in Organizations Based on PPMS

Policy Environment Liberalization Decentralization Globalization Empowerment, Freedoms

Implications Markets become predominant institutions: –private entrepreneurship and self-help are key drivers –market oriented and inclusive institutional design (rules and organizations) critical mission for policy makers Governments play their role differently –role (focus on policy, disengagement from direct economic activities, public goods), and –structure (decentralization) Organizations of the poor: –play different role: access to markets, assets –play the role differently: influence rules, enforcement of rules –nature of the organizations: demand, the poor as citizens –structure of the organizations: voice, participation Institutional transformation matters (dysfunctional institutions)

Access to Common Property Resources: Oxbow Lakes in Bangladesh Institutional transformation: –new fisheries management policy: from medium-term lease to long-term license –empowerment of genuine fishermen and women : lake area management group –wage labour to self-management of assets (stocking, harvesting, marketing) –technology services: markets, pluralistic approach, women

Access to Water: WUAs Institutional transformation: –water resource management (irrigation) policy –from governmental/parastatal organizations to water users associations (WUAs) –participation in decision-making, investment and management (operation and maintenance) –from consumers of services to asset managers –associations that ‘buy-in’ services, on competitive basis

Access to Technology: Extension Institutional transformation: –policies for agricultural technology development and dissemination –departments of agricultural extension (training and visit) to pluralism (including, farmer field schools, vouchers…) –informal groups, pluralism in supply –research responsive to demand –competition among suppliers

Access to Financial Services Institutional transformation: –financial sector reform: inclusive of rural and microfinance –from supply of credit by government-controlled organizations to rural finance systems development (organizations of the poor linked into financial organizations) –sustainable membership-based organizations –rules of membership and access to services

Conclusion Inclusive institutions enable poverty reduction, within growth Secure access to assets determined by rules Organizational diagnosis, design and transformation is critical to influence rules: –inclusiveness –pluralism: choice (competition), voice, exit –build on traditional organizations, change existing organizations, add windows to existing organizations, new organizations –learning curve –political economy of organizational transformation: interest groups, elites Organizations help improve the rules, internal and external Design of rules and organizations key policy concern

Issues Effective models of organizational transformation: best practices, lessons learned elsewhere From targeting the poor to inclusion How to deal with elites, interest groups? Building organizational transformation into poverty-reduction strategies Partnerships for institutional transformation