German Aid for Poverty Reduction

Eva Weidnitzer

Citation: Weidnitzer, E. 1996. German aid for poverty reduction. Berlin: Deutsches Institut für Entwicklungspolitik.

Contents

• 2.1 Main concepts for poverty reduction
• 2.2 Nature of poverty and definition of the poor in the German concept

• 3.1 Organisation at the administrative level
• 3.2 Poverty reduction at the country programming level
• 3.3 Sectoral allocation
• 3.4 Methods and instruments
• 3.5 Country distribution of bilateral aid - the share of self-help oriented poverty reduction

• 4.1 Problems associated with conceptualisation
• 4.2 Problems associated with instruments
• 4.3 The 20:20-initiative

Abbreviations

Preface

To our regret, we are not in a position to publish figures on country allocations of German development assistance in the field of poverty reduction. The German Federal Ministry for Economic Co-operation and Development (BMZ) does not have the necessary comprehensive criteria that make it possible to subsume its programmes and projects under the aspect of poverty reduction; a study on this question is just under way. Also, BMZ is involved in the activities of a statistics group in the DAC that seeks to establish internationally standardized and binding criteria. If that group succeeds, we will hopefully receive DAC-accepted criteria for the sectoral and cross-sectoral classification of individual aid activities for poverty reduction projects which will allow us to compare country figures of the different donors involved in the study.

The author of this study would like to thank all interviewees and colleagues who supported the study for their valuable assistance.

Berlin, December 1996

Summary

Since the beginning of the eighties initial ideas on poverty reduction and its place within the framework of Germany's aid policy have been developed. In 1983, the Federal Ministry for Economic Co-operation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung / BMZ) created a special staff panel for poverty reduction to anchor the objectives within the framework of official development aid. From the beginning, the panel developed its ideas in close co-operation and coordination with German NGOs which already had a lot of experience in this field. In 1990 the work resulted in a first policy paper "Fighting poverty by promoting self-help", which placed special emphasis on the promotion of participation and self-help as basic principles. Thus, as early as the eighties, German development co-operation gave priority to participation, self-help and self-help organisations as key elements of aid for poverty reduction. This development also received some impetus from international discussions, especially from the World Bank's World Development Report published in 1990. In the early nineties, further important steps were taken to strengthen the orientation of aid towards poverty reduction, among them the creation of a special administrative division within BMZ and the development of a second policy paper on poverty reduction.

Poverty in developing countries and German aid for poverty reduction were also intensively discussed in Parliament-Deutscher Bundestag. Twice, in 1991 and 1995, BMZ and about 20 German organisations reported on the progress of self-help oriented poverty reduction in the Third World to the Parliamentary Committee for Economic Co-operation and Development.

Nevertheless, the orientation of development co-operation towards poverty reduction as a central task has met with controversy. Criticism comes especially from those advocating a development co-operation with more emphasis on private sector development (at the same time strengthening Germany's export interests). So far, the concept of poverty reduction has been defended against all efforts to change its priority position among the objectives of aid. The new "Conception of development policy of BMZ" (published in October 1996) has again confirmed poverty reduction as priority goal.

Today, German development policy for poverty reduction is based on five policy papers dealing with different aspects of a policy oriented towards poverty reduction and forming the framework for the poverty reduction measures. Two policy papers, "Fighting poverty by promoting self-help: Self-help movements as partners in development co-operation" and "The main elements of poverty reduction" (published in 1992), are explicitly directed towards the field of poverty reduction.

The first policy paper emphasises the central role of self-help to fight against poverty. It defines criteria for self-help oriented projects as follows: (1) target groups: people below the poverty line; particular focus should be on women; (2) initiatives must already exist; the project is to make use of them; (3) participation must be ensured; (4) the target group must make its own contribution; (5) freedom of action must be guaranteed and (6) projects must aim at broad impact.

The lessons learnt during the implementation of the concept nevertheless showed that the self-help approach could reach only limited results unless the policy environment is supporting them. For this reason, aid for poverty reduction had to put more emphasis on the role and influence of framework conditions in developing countries and in international relations. This modified approach is reflected in the policy paper on the main elements of poverty reduction, which distinguishes three forms of poverty reduction:

• structural reforms to remove the causes (not only the manifestations) of poverty are the main approach under poverty reduction. Structural reforms means the creation of an economic, political and social climate conducive to the reduction of poverty at both international and national levels (by the removal of protectionism, safeguarding of fair trade, solution of the debt crises, democratic reforms, creation of the necessary scope for independent private activities, agricultural reforms etc.);

• direct poverty reduction by promoting projects and programmes with mainly (more than 50%) poor people as target group; and

• indirect poverty reduction that contributes to macroeconomic or sector policies of the recipient country which enlarge the scope for activities of the poor and for redistribution in their favour.

"People are poor", according to the concept, "if they do not have the minimum monetary or non-monetary income necessary to meet their food requirements and satisfy their other basic needs. The social, economic, cultural, political and ecological causes of poverty are inextricably interlinked in this context." The concept of the nature of poverty demonstrates that income figures do not sufficiently characterise the nature of poverty. Poverty does not only mean malnutrition, low life expectancy etc., it also means exclusion of the poor from decision-making and limited opportunity to take care of one's own life. To reduce poverty requires therefore measures to increase the living standard and to improve the possibilities for the poor to participate in social and political life.

BMZ and the implementing agencies (GTZ for Technical Co-operation and KfW for Financial Co-operation) initiated special measures to anchor the poverty reduction goal in their administrative structures and to train their staff members.

Besides the Ministry and the official implementing agencies, a lot of non-governmental organisations are traditionally engaged in the field of assistance for poverty reduction. To coordinate the activities of the various governmental and non-governmental organisations in this field a "Working group on poverty reduction by promoting help for self-help" has been established. It represents a forum to exchange experience of the organisations and institutions involved and is active in sensitization of the public and of other organisations to fight against poverty.

In order to implement the poverty reduction goal, BMZ seeks to translate the political guidelines into country programming of aid. Poverty reduction should play a prominent role in the country strategy papers, which are only to be elaborated for important recipient countries of German aid. These country strategy papers are one of the most important instruments of German development co-operation. It is common practice today that all country strategy papers refer to the poverty reduction objective. Poverty reduction has been made a central point in the BMZ sector and cross-sector policy papers as well. Each sector paper is to refer to the relevance and the possibilities for poverty reduction in its context taking into account the nature of poverty reduction as cross-cutting task which is to be implemented in all sectors and fields of assistance.

Nevertheless, German experience shows that there are some sectors and types of projects especially conducive to poverty reduction: financial services, credit and saving, rural development, small enterprise development, food security, informal sector development, housing, erosion control, water supply and sanitation, irrigation and basic education. So far, the majority of poverty reducing projects have been implemented in the field of direct poverty reduction and self-help oriented poverty reduction, particularly in the sectors of agriculture (small-scale farming), forestry and fisheries, health, social infrastructure (water supply, housing), financial services and education.

Concerning methods and instruments, German aid for poverty reduction rests on three basic principles: (1) priority for structural reforms, (2) self-help and participation and (3) promotion of the productive and creative capabilities of the poor. During the last years BMZ has revised its instruments and procedures and developed new ones to meet the demand for poverty reduction. The most important instruments to facilitate poverty reduction effects are the following: country strategy papers, special country studies to assess the poverty situation, participation of the target group and self-help revolving funds. Participation is - according to the German approach - the key method with regard to poverty reduction. The Ministry is promoting the application of participatory methods such as Participatory Rural Appraisal and Exposure - and Dialogue - Programmes.

Determining the share of poverty-oriented projects is a difficult task in German development co-operation because clear statistical criteria to classify poverty-oriented projects do not yet exist. Consequently, BMZ does not have comprehensive statistics on poverty reduction measures. BMZ strongly supports all efforts to find common criteria for poverty reduction measures within the group of DAC members. So far, BMZ has used the quota of self-help oriented and basic needs projects to assess and demonstrate its efforts in the field, which, however, reflect only a part of the overall poverty reduction activities.

In 1996, self-help oriented projects for poverty reduction reached their highest level with a volume of 700 million DM and a respective share of 18.6% of the development funds. A quarter of official flows were allocated to least developed countries (LDC) while the share of poor countries in general amounted to 65%. Projects in Technical as well as Financial Co-operation were highly concentrated on Africa, followed by Asian and Latin American countries.

Since the early nineties, when the fundamental conceptual approach was laid down, special emphasis has been placed on implementing the concept guidelines. In this field, development co-operation faces several problems relating to the conceptualisation, to problems of acceptance and the fact that the multitude of policy papers creates some difficulties for operationalisation. Furthermore, there are some problems concerning the role of "participation". Development co-operation in the recipient countries is often confronted with political structures which do not facilitate or support participatory initiatives of the population. The key role of participatory approaches in the policy papers also met with some problems in relation to the project planning and instruments used by the donor country. Thus, the traditional project-oriented thinking partly ran counter to a broader participation of the population in the partner countries. Participation of the poor target group in the process of planning and implementation also presupposes the willingness of the German side to yield some of its "power" in accordance with the principle that donors should interfere as little as possible. The 20:20 initiative on universal access to basic social services is fully supported by BMZ. However, the Ministry feels that a lot remains to be done in order to operationalise it and realign it to its own poverty reduction participatory approaches.

Although German development co-operation has made some remarkable progress in the conceptualisation of poverty reduction as a primary task, there is still an obvious gap between the conceptual claim and the implementation of the concept in practice. Actual results achieved in the field of poverty reduction deviate from the priority attached to the poverty reduction objective in German development co-operation. Reflecting the problems of decreasing development budgets and the debate on development co-operation priorities, which has been growing in this context, the budgetary allocation for 1997 shows a decline in the funds for self-help oriented poverty reduction. The volume amounts to some 500 million DM, which represents 14.2% of the developments funds. Even taking into account that the overall budget for development co-operation is declining, there is the question of a growing contradiction between the stated priority and the actual allocation of funds. Some representatives of the German development community are therefore concerned that these developments are a first sign of a redefinition of the objectives.

However, development co-operation for poverty reduction has reached some positive results so far. What matters now is to concretise the overall concept, to develop clear criteria for classification, to define appropriate instruments and to give poverty reduction in practice the priority stated in the policy papers.

1. Historical background and development of the concept

First ideas in this direction were developed in the seventies. They were reflected in new strategic approaches: a distribution-oriented growth strategy which was to redirect investments to the poor must go together with a strategy to satisfy basic needs and to improve the living conditions of the poor. The eighties then were characterised by international discussion about the increasing indebtedness of the developing countries, their insolvency and the adjustment of their economic structures. These economic developments were accompanied by problems of growing poverty and increasing numbers of poor people, especially in Third World countries.

Already, in 1983, the Federal Ministry for Economic Co-operation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung/BMZ) created a special staff panel for poverty reduction (called Sondereinheit 31/ SE 31). The basic idea of creating this staff panel was to anchor poverty reduction within the framework of official development aid. Up to this date poverty reduction was considered an inherent task of non-governmental organisations (NGOs) while the official development agencies were to secure the framework conditions for their work. Consequently, a new scope of activity opened up to governmental aid institutions. From the beginning, the staff panel developed its ideas in close co-operation and coordination with German NGOs which already had a lot of experience in this field. This way, the concept of poverty reduction within the framework of official German development assistance was not the result of an administrative act. Rather, it developed in a process of discussion and exchange of experience with the relevant actors of the German development co-operation community.

The panel was commissioned to examine the possible contributions of German development co-operation to increase the economic capabilities of the poor by promoting self-help and to improve their living conditions. The question also included the revision of the existing instruments in development co-operation and their adjustment to poverty reduction and promotion of self-help.

The lesson learnt in the field of projects for poverty reduction showed that the assistance was hardly effective and disappointing in general. In this situation the members of the panel decided to look to the developing countries themselves and to learn from the poor. On this basis, the panel developed ideas for a broader participation of the poor as a key element to realise the basic concept of giving "help for self-help".

In 1990 the panel's work resulted in the policy paper 'Fighting poverty by promoting self-help: self-help movements as partners in development co-operation'. The paper included the experience gained in developing countries and placed special emphasis on the promotion of participation and self-help as basic principles of a poverty-oriented development strategy. Thus, since the eighties, German development co-operation has given priority to participation, self-help and self-help organisations as key elements of development policy oriented towards poverty reduction. In so doing it highlighted elements, which later became central terms in the international discussion of poverty reducing development assistance.

In this situation, the World Bank's World Development Report, published in 1990, gave a new impetus. The report highlighted the necessity to give more attention to the situation of the poor and human development and to fight against poverty. It emphasised 'that rapid and politically sustainable progress on poverty has been achieved by pursuing a strategy that has two equally important elements. The first element is to promote the productive use of the poor's most abundant asset - labour. It calls for policies that harness market incentives, social and political institutions, infrastructure, and technology to that end. The second is to provide basic social services to the poor. Primary health care, family planning, nutrition, and primary education are especially important' (World Bank, 1990: p. 3). The importance which the World Bank attached to the issues of poverty reduction and human development confirmed the German development officials in further strengthening poverty reduction as a central goal of development assistance.

In 1991 BMZ created a separate administrative division for the tasks of poverty reduction within its organisational structure which replaced the former staff panel. In 1992 a further important step was taken to strengthen the orientation of German co-operation policy towards poverty reduction. That year the concept paper 'Main elements of poverty reduction' was published, which emphasised poverty reduction as a cross-cutting task of Germany's development co-operation. Besides the development of conceptional ideas, the implementation of the overall political guidelines became the main task of the poverty division in BMZ: to give poverty reduction the priority which has been stated in the policy papers, to interlink all activities of BMZ with the goal of poverty reduction, to give the Ministry's country divisions recommendations on how to involve the poverty reduction goal in their strategic decisions and their daily co-operation, and to develop procedures, instruments and project designs according to the poverty reduction objective.

Poverty in developing countries and the orientation of German development policy towards poverty reduction as a main task was also intensively discussed in parliament (Deutscher Bundestag). In 1990 and 1993, the Bundestag took decisions concerning poverty reduction in developing countries. The Parliamentary Committee for Economic Co-operation and Development (Ausschuß für wirtschaftliche Zusammenarbeit und Entwicklung/AwZ) arranged several hearings with experts on poverty reduction through self-help. Twice, in 1991 and 1995, the Federal Ministry for Economic Co-operation and Development and respectively 19 (1991) and 22 (1995) German organisations reported on the progress of self-help oriented poverty reduction in the Third World to the Parliamentary Committee. Two reports on poverty reduction through self-help have been published. The last report, presented in 1995 reported mainly positive results in self-help oriented poverty reduction during the period from 1991 to 1994:

• all major aid organisations in Germany have continued and intensified their co-operation in the field of self-help-oriented poverty reduction;

• all reporting organisations have strengthened their activities in self-help oriented poverty reduction ;

• all organisations involved reported progress in international discussion und practice;

• all reporters stated a growing acceptance of the goal of poverty reduction on the part of the governments in developing countries (see BMZ, 1995b: p. 3).

Nevertheless, the orientation of German development co-operation towards poverty reduction as a central task has met with controversial discussion. In December 1994, the German Advisory Council for Development Co-operation (Wissenschaftlicher Beirat beim BMZ) published a statement on "New accents in German Development Co-operation during the next Legislative Period". It pointed out the necessity to pursue a dual development strategy during the next period. On the one hand, the document stated that new forms of co-operation were needed for newly industrialising countries (NICs) and for special sectors and regions in middle-income countries. On the other hand, development co-operation was faced with conceptual and instrumental problems in poor countries and in the poor segments of middle-income countries. The elevation of poverty reduction as a central cross-cutting task of German development co-operation is first of all seen as a political question, namely how to win broad public support for development co-operation in Germany. But it is clearly beyond the possibilities of development co-operation to remove effectively the poverty of billions of people. Therefore, one of the most urgent changes within German development co-operation is - according to the document - to relinquish unrealistic claims and to return to the promotion of "development" with more emphasis on private sector development. Thus, the public image of the BMZ as sole competent agency for the problems of poor countries needs to be changed.

So far, the concept of poverty reduction has been defended against the fundamental critiques from those advocating a more "realistic" approach (putting more emphasis on Germany's export interests). The new "Conception on development policy of BMZ" which was published in October 1996 has again confirmed that poverty reduction is a priority goal.

However, a debate is going on in Germany (and has been growing recently) about the fundamental goals and concepts of development co-operation. Criticism of the poverty reduction guidelines of development assistance comes from two sides: on the one hand, the debate on the goals and objectives of development policy is related to discussion of the quality of Germany as a location for investments (Wirtschaftsstandort Deutschland) and the budgetary constraints, which create an increasing pressure to economise and confront development policy with decreasing budgetary funds. Those who advocate a new orientation of development policy demand that more emphasis is placed on private sector development and that greater importance is attached to the economic interests of Germany in light of this situation. German NGOs are therefore concerned that the overall poverty reduction goal of BMZ could be replaced in the near future by a strategy more influenced by Germany's own economic interests.

On the other hand, there are also some controversial debates within the German NGO scene about the poverty reduction strategy. Although the NGOs support the principal orientation of development assistance towards poverty reduction, they also discuss the role that self-help oriented poverty reduction should play within the framework of official development co-operation. Some representatives of the community demand a clearer division of tasks between official development co-operation and NGOs, arguing that official assistance should concentrate on structural reforms and indirect poverty reduction measures while the NGOs focus their activities on direct poverty-reducing measures and self-help oriented poverty reduction.

Consequently, it is difficult to gauge today how realistic the concept of assistance for poverty reduction within official German development co-operation is and hence whether poverty reduction as priority goal can be defended in the long run against other interests. Although it is common knowledge that it is necessary to distinguish between concept and reality, the current economic situation and the limited results reached so far in poverty reduction render the implementation of the poverty reduction strategy more difficult for the German development community.

2. Conceptualisation

2.1 Main concepts for poverty reduction

Since the beginning of the nineties the German government has focused its contributions of development co-operation policy particularly on poverty reduction, which since that time has been given first priority among the existing three primary areas of poverty reduction, environmental protection and the promotion of education.

Today, German development policy for poverty reduction is based on the following five policy/concept papers:

• Fighting poverty by promoting self-help. Self-help movements as partners in development co-operation (December 1990);

• The main elements of poverty reduction (October 1992);

• Cross-sectoral concept on target groups. Development co-operation: the players (November 1994);

• Socio-cultural criteria for projects under development co-operation. Frame-concept (February 1992);

• Concept on the promotion of women in developing countries (May 1988).

The five concepts deal with different aspects of a policy oriented towards poverty reduction and form the framework for poverty reduction measures of German development policy. The first two policy papers are explicitly directed toward poverty reduction and thus reflect the main elements of the German philosophy of aid concerning poverty reduction.

The first step to conceptualise poverty reduction was taken with the concept paper, 'Fighting poverty by promoting self help. Self-help movements as partners in development co-operation'. This cross-sectoral policy paper aims to make a contribution to

• creating framework conditions in the countries of the South and in development co-operation that favour the disadvantaged population groups and their involvement in the development process;

• ensuring that German development co-operation makes better provision for the initiative of these population groups;

• achieving a sustainable improvement in the living conditions of the poorer sections of the population.

The central point of the concept is to promote self-help. Self-help means to endeavour to achieve objectives by one's own efforts. Self-help is - according to the concept - a response by individuals and groups to situations of real distress and hardship or situations that are subjectively perceived to be unsatisfactory, which people try to change by their own efforts, either individually or in solidarity groups, with the aim of achieving a sustainable improvement of their living conditions and of their own self-reliance. In order to achieve a sustainable reduction in poverty, the instruments of development co-operation must support self-help initiatives by the poor, strengthen the self-reliance of self-help organisations and seek to bring about changes in social structures responsible for poverty.

The implementation instructions of the concept define the following criteria for self-help oriented projects:

• Target groups: people living below the poverty line; particular focus should be on women.

• Initiatives must already exist; projects should build on these.

• Participation must be ensured. The population concerned must be given responsibility for the project and the project design must ensure participation of the beneficiaries at all stages.

• The target group must make its own contribution. The project should reinforce existing initiatives, encourage the target group to make efforts of its own and strengthen its willingness and ability to assume responsibility. The beneficiaries' contribution is a precondition for assistance.

• Freedom of action must be guaranteed. The governmental organisations must be willing to guarantee the necessary freedom of action for participation in the project of local self-help organisations.

• The projects should be designed to achieve broad impact and sustainability, and hence to increase the economic and social self-reliance of the beneficiaries. They must therefore take into consideration the social and cultural context.

The concept paper 'Fighting poverty by promoting self-help' was published in 1990. The lessons learned during the implementation of this showed nevertheless that the self-help approach could reach only limited results unless the framework conditions created the necessary climate for them. People can only help themselves if the social, judicial, political and economic conditions are conducive to such activities. For this reason, the German conceptual basis for poverty reduction had to put more emphasis on the role and influence of framework conditions in the developing countries and in international relations. Fighting poverty requires an effective change in the political and economic structures, in the framework conditions in favour of the poor, as well as concrete measures to improve their living conditions. This means that German development co-operation should be active at two levels:

• the policy level: structural reforms in the field of international economic relations and the improvement of the internal framework conditions in developing countries are necessary to reduce poverty;

• the project level: concrete development activities have to be directed to improve the living conditions of the poor.

This modified approach is reflected in the 1992 policy paper, 'The main elements of poverty reduction'. This concept gives the following definition of poverty: People are poor if they do not have the minimum monetary or non-monetary income necessary to meet their food requirements and satisfy their other basic needs. The social, economic, cultural, political and ecological causes of poverty are inextricably interlinked in this context. The aim of poverty reduction is to promote the productive capabilities of the poor and enable them better to satisfy their needs through their own economic activity. It is therefore not to be associated with a term such as 'charity'.

The concept distinguishes between three forms of poverty reduction:

• Structural reforms. This is the main approach under poverty reduction, since it means that the causes and not just the outward manifestations of poverty should be removed. To this end an economic, political and social climate conducive to the reduction of poverty is to be created at both international and national levels. At the international level the key elements are the removal of protectionism, safeguarding of fair trade and the resolution of the debt crisis. At the national level structural reforms which will benefit the poor are needed: democratic structures, scope for independent private activities, agricultural reforms, decentralisation. The means available under development policy to accomplish all this include policy dialogue, policy advice and support for the structural reform of government, economic and administrative systems.

• Direct poverty reduction. Direct poverty reduction means projects where the target groups are mainly poor people of which at least 60% are usually women.

• Indirect poverty reduction. This comprises all projects that contribute to macroeconomic or sector policies of the recipient country which enlarge the scope for activities of the poor and for redistribution in their favour.

Table 1 sets out a matrix of these approaches, with examples. Poverty reduction is defined as a cross-cutting task, which means that, in principle, poverty can be fought through development projects in all areas. The concept emphasises that all BMZ activities should be seen in the context of poverty reduction and that efforts should be geared toward this. Such an approach includes a revision of existing promotion measures, procedures and instruments.

Today, 'The main elements of poverty reduction' paper remains the comprehensive conceptual approach of German development assistance to poverty reduction, giving details on the aims, forms and areas of promotion, while the 1990 paper 'Fighting poverty by promoting self-help' deals with one specific method of direct poverty reduction. Thus, the understanding of poverty reduction has been widened in the process of conceptualisation.

The other policy papers mentioned above emphasise different aspects which are to support the central aim of poverty reduction. Thus, the paper on "Target groups" identifies the poor in the developing countries as the predominant target group of German development co-operation activities. Since poor women are often at a far greater disadvantage than men, the target group is also subdivided according to gender.

Special aspects of the promotion of women are also adopted in the policy paper "Concept on the promotion of women in developing countries" of 1988. The paper outlines that all projects should take the interests of women into account: women's interests must form part of the planning and execution of all projects; adverse effects of projects upon women must be avoided and discrimination against women must be eliminated by special promotion measures. The paper defines categories for the classification of projects according to their effects on women which are obligatory for all development projects.

              

Table 1 Matrix: BMZ policy paper: The main elements of poverty reduction
Categories / Approach	Aims	Approach / Instruments	Examples	Areas of promotion
1. Structural poverty reduction (primary approach, to remove the causes and not just the outward manifestations of poverty)	Creating an economic, political and social climate conducive to poverty reduction of the international and national levels International level: - dismantling protectionism - securing conditions for fair trade - solving the debt crisis National level: - democratic structures - scope for independent private activities - agricultural reforms - decentralisation	- policy dialogue - policy advice - support for the structural reform of government, economic and administrative systems	- advisors on public spending reforms, social policy, the social dimension in structural adjustment - social funds within the framework of structural adjustment - securing ownership titles in rural poor regions	Poverty may be reduced through development policy projects in all areas. Examples: - environmental and resource protection soil and water conservation site-appropriate land use reforestation - education (particularly basic education, vocational training) employment-oriented basic and further training for target groups in the informal sector informal vocational training in trade and commerce to help with
2. Direct poverty reduction	Support of clearly defined poor population groups	Designing development policy projects which have a clearly recognisable circle of beneficiaries which consist mainly of the poor Promoting self-help groups	- Water supplies and waste water treatment - micro dams - public works - construction of low-cost housing by self-help groups - establishment of a rural savings and credit system for poor population groups - support for women's self-help groups	the establishment of livelihoods in the small business sector - infrastructure (power stations, roads, dams and irrigation systems provided that they benefit the poor or that they are part of the poverty-oriented policy of the partner country) rural feeder roads drinking water supplies and sanitation
3. Indirect poverty reduction	Extending the scope for action and distribution in favour of the poor	Embedding projects in a poverty-oriented overall or sectoral policy of the partner-country where the beneficiaries of the project cannot be clearly identified or may not be predominantly poor	Advisory services on improving the tax system and tax administration so that the government uses revenue from taxes for poverty-oriented policies and to reach a fairer system of taxation	- private sector development (by strengthening the developing countries' own economic power, it can help to reduce the structural causes of poverty) small credit systems for the informal sector advisory services for small entrepreneurs
Source: Ashoff, G.: Grundzüge einer mittelfristigen Planung der deutschen Entwicklungszusammenarbeit mit Ägypten, Berlin 1994, p. 5

Furthermore, the policy paper on "Socio-cultural criteria" highlights the relevance of non-economic factors for development co-operation projects and programmes. The paper identifies three key factors which should be applied in a way that the complex problem of socio-cultural aspects and their influence on the individual projects can be recorded. These factors are classified as legitimacy (willingness/acceptance), state of development reached (ability) and socio-cultural heterogeneity.

In addition to these five policy papers BMZ is preparing a new cross-sectoral concept paper dealing with "Social Security", which will complete the statement of policy on poverty reduction.

Beside the central strategy papers already mentioned, there are some further policy papers related to poverty reduction. An important paper in this context is the sector policy paper on "Financial sector development - promotion of credit and saving" published in 1994. The paper deals, inter alia, with the development of financial services for non-bankable, poor and handicapped people: credit facilities give them the opportunity to use their productive skills and to improve their living conditions in a self-reliant way.

2.2 Nature of poverty and definition of the poor in the German concept

Poor people in developing countries are the primary target group of Germany's development co-operation. Development co-operation distinguishes between the absolutely and the relatively poor. People who live below the subsistence minimum / poverty line are absolutely poor. The relatively poor are, in contrast, those who have an income inferior to the average wealth of the society. Official development aid is oriented toward the absolutely poor as the primary target group. To fight poverty means to give those a chance to live in human dignity who:

• do not have sufficient income and wealth to satisfy their physical and other socio-culturally determined basic needs;
• do not have the necessary prerequisites to reach this income, and
• are not able to change this situation on their own.

So far, BMZ has no more detailed criteria to classify the poverty target group, e.g. with regard to gender, family situation, social or employment categories.

3. Management of aid delivery

Organisation at the administrative level

The two German implementing agencies specialised in Technical (Deutsche Gesellschaft für Technische Zusammenarbeit / GTZ) and Financial (Kreditanstalt für Wiederaufbau / KfW) co-operation also made efforts to strengthen the poverty reduction component of their activities and adjusted their organisational structures accordingly.

GTZ created separate administrative units charged with the implementation of poverty-oriented policy. A special Staff Office (Stabsstelle) for poverty reduction was initiated. Moreover, to support the Operational Departments (Bereiche) of the GTZ, an interdisciplinary working group has been established within the Planning and Development Department. The working group has competence in all sector-oriented questions for the development and coordination of poverty reduction. In addition a "Staff panel on poverty reduction" (Thementeam Armutsbekämpfung) was set up. The team is to contribute to a better orientation of technical co-operation toward poverty reduction by collecting and coordinating all existing initiatives of GTZ (overseas, in the Country Departments of the Head Office, in the Planning and Development Department etc.). The staff panel is primarily engaged in the following activities:

• to clarify basic problems of operationalizing poverty reduction in overseas activities,
• to promote poverty reduction as primary objective of all GTZ activities,
• to improve communication and coordination among field staff and Headquarters (Departments and the Staff Office),
• to develop instruments and procedures, and
• to initiate a learning process for the staff of GTZ.

Beside these activities, initiatives in the partner countries were promoted to create interdisciplinary centres which study the more general and comprehensive questions of poverty reduction not directly related to special projects. Consultants for gender and poverty reduction issues were installed in the Regional Departments of the GTZ Head Office, who, among other things, are engaged in introducing new methods to promote participation.

The KfW has also made efforts to include the issue of poverty reduction in its work, without creating specialised administrative units. The agency aims to familiarise all staff members with the application of self-help concepts to financial co-operation. To this end, staff members attend exposure and dialogue programmes, learn about successful self-help projects and participate in pilot schemes.

In addition to the Ministry and the official implementing agencies, a lot of non-governmental organisations are traditionally engaged in the field of assistance for poverty reduction. To coordinate the activities of the various governmental and non-governmental organisations in this field the "Working group on poverty reduction by promoting help for self-help" (Arbeitskreis Armutsbekämpfung durch Hilfe zur Selbsthilfe / AKA) was initiated in 1989. The working group represents an association of official institutions (BMZ, GTZ, KfW), development agencies of the churches and other non-governmental organisations. The working group is also a good forum to exchange experiences between the organisations and institutions, and is active in the sensitization of the public and organisations of development co-operation to the problem of poverty and the fight against it. The working group meets regularly twice a year and has created three subgroups which are specialised in (1) the organization of an example for good co-ordination of the poverty reduction activities of various German development actors in one developing country (example of Uganda); (2) the assessment of the World Bank activities to reduce poverty in Honduras and (3) in the joint elaboration - for the first time - of a BMZ sector policy paper (on social security).

3.2 Poverty reduction at the country programming level

Poverty reduction plays a prominent role in the country strategy papers of the BMZ, and the management of poverty reduction at the country programming level has become a priority task of the country divisions. In this context the papers are required to focus on:

• the improvement of economic and social conditions, and identification of the poor strata of the population in the specific country context;
• specific problems and causes of poverty;
• the recipient government's commitment to poverty reduction;
• effects of the framework conditions on poor people and
• the compliance of German co-operation priorities with poverty reduction.

These aspects have to be considered especially in the chapters: "Core problems of the partner country", "Framework conditions", "Priorities for future development co-operation" and "Issues for policy dialogue". The main results of the socio-economic and socio-cultural analysis are summed up in the country strategy papers. The analysis of the socio-economic situation includes a special section dealing with the poverty situation in the partner country. In addition, it is recommended that specific country studies should be prepared to examine the existing conditions and possible approaches of a self-help oriented aid for poverty reduction.

Staff members of the Poverty Reduction Division in the BMZ participate in all country discussions to comment on the country papers and to present proposals for further co-operation, focusing on poverty reduction.

3.3 Sectoral allocation and effectiveness

Nevertheless, there are some sectors and types of projects especially conducive to poverty reduction. German development assistance for poverty reduction yielded positive and sustainable effects, above all, in projects of the following types:

• financial services,
• credit and saving,
• rural development,
• small enterprise development,
• food security,
• informal sector development,
• housing,
• erosion control and protection,
• water supply,
• irrigation and
• basic education.

Early experience indicates that projects in the field of food security programmes, the reintegration of economically and socially uprooted groups and the reconstruction of destroyed or poor areas, rural development, agriculture, forestry and fishery, and environmental and resource protection are to a high degree projects of direct poverty reduction because of their clear orientation towards poor people as a target group. Indirect poverty reduction measures in German development co-operation have so far especially concentrated on financial services and small enterprise development.

Until now, the majority of development projects for poverty reduction have been implemented in the fieldS of direct poverty reduction and self-help oriented poverty reduction.

Technical co-operation projects aiming at poverty reduction concentrated on agriculture, forestry and fisheries. From 1991 to 1994, 48% of the GTZ-projects of aid for poverty reduction through self-help were placed in these areas; 61% of them in Africa. Other important sectors of self-help oriented projects for poverty reduction in Technical co-operation were placed in the sectors of health, social infrastructure, education and science (see Chart 1).

In the area of financial co-operation, supply of drinking water (one third of all projects) and small-scale farming (31.7%) were the most important sectors for self-help oriented poverty reduction projects from 1991 to 1994. The third sector represented housing with a share of 11.2%. In general, financial co-operation is more diverse than technical co-operation in sectoral allocation of projects and funds. Apart from diversification, there seems to be another trend: the share of small-scale farming is declining and sectors like environmental and resource protection, credit and education are growing; water supply and housing remain significant (see Chart 2).

An analysis of project evaluation reports of 1993 and 1994 with regard to their statements on poverty reduction, showed that the projects in the field of financial services (see Box 1), small enterprise development, trades and crafts, and rural development have mainly brought positive results. Projects in these sectors cover a wide variety. The projects succeeded in the creation of jobs, the sustainable integration of enterprises into the economic circles and the accumulation of savings in case of unexpected need or necessary investments. In the sector of rural development, which shows a highly diverse picture in general, projects with an open and integrated approach nevertheless reached positive results in the improvement of the living conditions of poverty groups (Box 3).

Compared to these positive results in the financial and agricultural sectors, environmental and resource protection projects found it difficult to reconcile the objective of poverty reduction with environmental goals. Positive results were achieved especially by promoting single measures (see Box 2); this also applied to projects in such other sectors as food security and rural development.

Projects in the field of health and population policy were - according to this first assessment - disappointing. Structural reforms also brought only limited results, which is contrary to the key function of this field in the poverty reduction policy. Educational projects cannot be assessed at this time because evaluation reports do not provide the necessary information (but see Box 4).

3.4 Procedures and instruments

• priority of structural changes;
• self-help and participation; and
• promotion of the productive and creative capabilities of the poor.

During the past years BMZ has revised its instruments and procedures of co-operation and developed new ones to meet the demand for poverty reduction. Today, the most important procedures and instruments in German policy to reduce poverty, already mentioned above, are the following:

• country strategy papers describing the goals and major areas of co-operation with individual developing countries; these are supplemented by a socio-economic analysis of the country, which gives a special assessment of the poverty situation;

• special country studies on the poverty situation, a new instrument, concentrated on self-help oriented poverty reduction. These studies analyse (in a more detailed way than the socio-economic analysis) the basic poverty situation data of the recipient country and the conditions for aid measures in this field (especially concerning domestic policies in the partner countries); the country studies should identify approaches for future co-operation in the field of self-help oriented poverty reduction with respect to the sectoral allocation of aid, as well as the identification of potential partners for co-operation (NGOs);

• stronger participation of the target group and a better feedback of their ideas and needs. Special emphasis is placed on the promotion NGOs and the development of community-based organisations in the partner countries;

• self-help revolving funds. The underlying idea is to establish a fund for administration by local/national executing agencies used for the distribution of credits, as a loan guarantee fund or as capital stock to generate earnings for development goals.

Participation is the key method with regard to poverty reduction. The Ministry is promoting the application of professional participatory methods in the practice of development co-operation. Therefore, the Ministry's and the implementing agencies' staff need special training and qualification. In this context special emphasis is on Participatory Rural Appraisal and Exposure and Dialogue Programmes. The exposure programmes, for example, were introduced to give policy decision makers in German development co-operation the experience of poverty realities. The basic idea of the programmes is to live for a few days or a week among and with the poor in developing countries. That way, the programmes give the chance to interact with them, the better to understand the difficulties to overcome poverty. Exposure and Dialogue programmes were carried out in Bangladesh, India, Indonesia, the Philippines and Zimbabwe and have been successful as an instrument to qualify the staff members of development co-operation institutions.

3.5 Country distribution of bilateral aid - the share of self-help oriented poverty reduction

Consequently, German development co-operation does not have comprehensive statistics on poverty reduction measures. In this situation, BMZ uses the quota of self-help oriented and basic needs development projects. Both types of projects are used to assess the poverty orientation of German development policy.

Self-help oriented projects in technical and financial co-operation are classified by the BMZ with the help of a guideline derived from the concept paper "Fighting poverty by promoting self-help", described earlier. A project is classified as self-help oriented if the criteria set out in this paper largely apply.

Table 2 shows the development in the share of self-help oriented projects classified on the basis of the above mentioned criteria.

Table 2: Development of self-help oriented projects (Technical and Financial co-operation)
Year	Actual commitments (DM mn.)	Percentage of total development assistance
1991	333	8.0
1992	378	9.4
1993	412	10.2
1994	491	12.6
1995	661a	18.5
1996	698a	18.6
a planned Source: BMZ (1996)

Although the share of self-help oriented projects for poverty reduction was initially quite low, it has increased and in 1996 reached its highest level. Preparation and implementation of projects in the field of self-help are rather complicated because they require considerable coordination between a large number of actors: the German government and the recipient country, non-governmental organisations in Germany and in developing countries, grass roots organisations and the poverty target groups themselves all have to be considered.

As regards the country distribution of aid for poverty reduction, BMZ has not yet published comprehensive statistics. According to data available in 1994, the most important commitments of aid for self-help oriented poverty reduction were allocated to countries like India, Zimbabwe, Tunisia and Nepal. In general, BMZ considers co-operation with least developed countries and other poor countries to be of special importance. The share of least developed countries envisaged for official flows amounted to 25% in 1996, the share of poor countries in general to 65%.

BMZ seeks to base the country distribution of aid on the recipient government's commitment to poverty reduction, which is an important criterion of German support. German development co-operation assesses the development commitment of governments with the help of five criteria which reflect the general political and economic conditions in the recipient countries (human rights, popular participation in the political decision-making process, rule of law, economic and social conditions, general economic policies favourable to a market economy, and good governance). The fifth criterion, good governance, requires that that 'Government policy gives priority to the improvement of the economic and social situation of the poor'. BMZ uses these criteria to determine the volume and mode of co-operation with each country. This practice, however, is sometimes problematical because of the interference of differing political interests.

Concerning the main fields of development co-operation, the geographical distribution of aid for (self-help oriented) poverty reduction shows the following characteristics:

1. Technical co-operation expenditure for poverty reductionwas primarily in Africa. Between 1991 and 1994, 141 GTZ-projects (58.5% of all projects) related to poverty reduction and self-help, with a total expenditure of 918m. DM (57.8%) carried out in African countries. Almost 20% of the relevant funds were allocated to Asian and 17% to Latin American countries.

2. Financial co-operation also concentrated primarily on Africa. During 1991 to 1994, 50.7% of the financial co-operation funds for projects related to self-help-based poverty reduction were allocated to Africa, followed by Asian countries with a share of 31% and the American continent with a share of 15.2% (see Chart 4).

4.1 Problems associated with poverty conceptualisation

Acceptance

Fighting poverty is a question of political resolve. Although official documents and statements of policy emphasise explicitly that poverty reduction is the primary objective, development co-operation, in practice, faces problems of acceptance. This concerns both recipient and donor countries and is related to:

• a misunderstanding of the existing concepts of "poverty" and "poverty reduction",
• its importance within the framework of development co-operation measures and
• the problem of finding appropriate instruments for poverty reduction.

First of all, the interpretation of poverty and its understanding by a broad public as something "indecent" and "shocking" is a basic problem, which is to say that Germany also has other and more important objectives for its co-operation policy, namely "modernisation' in the Western sense, and promotion of economic growth seen as a value as such. This misunderstanding is accompanied by uncertainties about the meaning of fight against poverty. This is often reduced to direct poverty reduction measures, which are only one element of poverty reduction in the German concept. The consequence is that poverty reduction is considered to be a small-scale donation of "charity".

Second, the elevation of poverty reduction as the primary objective gives the impression that development co-operation implements only measures for poverty reduction. This is not the case, but this simplistic view presents an obstacle to the realisation of the policy, especially since poverty reduction is often seen as synonymous with directly poverty reducing measures.

Last but not least, difficulties of acheiving public acceptance result from deficiencies at the instrumental level, i.e. problems of modifying the existing instruments and of finding new instruments appropriate to poverty reduction (taken up in the following chapter). The basic problem is that some of the main "traditional" procedures and instruments are not quite appropriate to poverty reduction. Although BMZ has modified some of these procedures and instruments and has developed new ones, some of these innovations have not been sufficiently tested yet. The search for appropriate instruments and procedures of aid delivery is still going on and focuses in particular on the achievement of "participation".

Problems of operationalisation

With the issuance of at least five policy papers dealing in a narrower sense with poverty reduction, German policy has a very broad conceptual basis in this field. This creates problems for implementation. Staff members in the BMZ and the executing agencies have to execute five policy papers simultaneously and they are often overburdened.

Furthermore, the overall philosophy is very broad and rather abstract. It is not easy to operationalise. In addition and although the conceptual approach is very broad, it needs in some aspects further differentiation and development. This is especially evident in the field of indirect poverty reduction, where BMZ staff face a lot of problems in operationalising the policy.

"Structural reforms" and "indirect poverty reduction" often (although not always) cover the same issues. "Structural reforms" to reduce poverty mean first of all reforms at macro- and sectoral levels. The categories "indirect " and "direct' poverty reduction are used in another sense. Direct effects can be obtained if a poverty target group can be identified and distinguished from others, indirect reduction means that a target group cannot be identified. Both approaches may come under the category "structural reforms", but need not necessarily do so.

When assessing and classifying projects, one of the most difficult questions is to decide whether a project with indirect effects is to be considered poverty-oriented or not. BMZ does not accept the theory of "trickle down", it rather seeks to define more precise criteria. A study on the criteria of poverty projects has been commissioned. In the meanwhile BMZ uses the following features to identify indirect poverty reduction projects:

• when the project is integrated in an overall or sector poverty-oriented policy frameworkin such a way that the poor will benefit from broader possibilities of action and better distribution;

• mechanisms to strengthen key functions of the state which have a bearing on poverty reduction (e.g. basic education, health);

• political and economic conditions contributing to more efficiency, better availability of factors of production or other improvements to the benefit of the poor;

• framework conditions existing in the sector or subsector of the project must not discriminate against the poor but should improve their involvement in development;

• the efficiency of the sector or subsector (private sector organisation forms, commercial modes of work, rate of cost recovery, cost-benefit-ratio, competitiveness).

BMZ does not have a clear-cut catalogue of "pro-poor economic reforms". Features of such pro-poor policies include - according to the BMZ position - a broader scope for the poor to articulate their economic and social interests; freedom of assembly, an administrative and legal system favourable to the poor (e.g. decentralisation); economic, financial, budget, welfare and agrarian policies geared to the needs of the poor.

In addition, even the classification of directly poverty-oriented measures is not very clear. Until now, the central and sole criterion for this classification has been the share of poor people within the group of beneficiaries. The BMZ concept describes the criterion for direct poverty reducing projects in the following way: "...more than 50% of the beneficiaries must be poor people." BMZ does not yet have the criteria and indicators to define the target group more clearly, for instance by a further differentiation of 'the poor". Thus, the classification of projects is rather difficult and sometimes subjective.

4.2 Problems associated with instruments

The central role of "participation"

The promotion of participation plays the central role in the philosophy of aid for poverty reduction through self-help. However, its implementation meets with some problems in practice.

First, development co-operation in the recipient countries is often confronted with political structures which do not facilitate or promote the participatory initiatives of the population. Of course, BMZ has only limited possibilities to influence the political framework conditions, concentrating on policy dialogue and so-called positive measures to improve the national political environment by promoting democracy.

Participatory approaches, also meet with problems relating to project planning procedures and instruments used by donor countries. The instruments and procedures used and the traditional project-oriented thinking partly run counter to a broader participation of the population in partner countries. One of the most important instruments of technical co-operation is the so-called ZOPP, an objective-oriented system of project planning which is the German version of a "logical framework". Most criticism points to the fact, "that the question of the target group is only raised when the project already is mostly designed and decided by the managers. Typical example: the decisive phases 1 to 3 of ZOPP are to be carried out without direct participation of the target group from the developing countries; it is only included (if it is at all), when the project is already planned and decided". Thus, guidance of German development co-operation contradicts in some of its elements the overall philosophy of aid for poverty reduction.

Several members of the German development community have expressed fundamental opposition to the handling of "participation" in practice. For instance, Prof. Pinger, the speaker of the ruling party on development issues, is extremely critical of the role of participation in German development assistance: "Poverty reduction as basic needs programs always stayed in the hands of the German implementing agency, while the affected population could only participate in a very limited manner... This insight should lead to a completely different approach for self-help projects since traditionally aid efforts are oriented towards the need of recipient governments."

According to the self-help approach the first step is to ensure participation and initiatives of the target group. Having established the necessary partnership, the second step is the design and the actual planning of the project. This approach is in contrast to the existing practice which begins with project planning and involves the target group only later. This "new type" of project requires first of all the identification of the self-help potential of the target group as well as the limits of self-help. It also requires more flexibility in the project cycle and in the very strict budget procedures of BMZ. The implementation of this approach is accompanied by a learning process of all participants and should include flexible responses. Therefore, a long preparatory phase (of orientation) within the project management cycle is definitely needed.

In view of the problems in this field, reflections are under way to modify the existing ZOPP-procedure according to the poverty reduction objective.

Altogether, participation of the poverty target group in the process of planning and implementation also presupposes the willingness of the German side to yield some of its "power" and to implement projects in accordance with the principle that donors should interfere as little as possible. Experience shows that official development projects do not sufficiently adhere to the principle of transferring decision-making as much as possible to the target group, while German non-governmental organisations have made much more progress in this area.

Problems of measurement and evaluation

Asmentioned above, BMZ does not yet have the necessary statistical criteria to classify its activities as "poverty reduction oriented". In consequence BMZ is not able to publish comprehensive statistics of poverty-oriented activities and has not evaluated its projects sufficiently with regard to their poverty-reducing effects. The BMZ suffers especially "from the fact that the Ministry does not include information on target groups in its purpose code." The new BMZ policy paper on target groups "helps in clarifying and standardizing the methods used in the German aid program. However, it does not give operational criteria for classifying individual projects according to poverty issues and participation of target groups."

German NGOs are critical of this situation because it facilitates the application of rather arbitrary criteria. German NGOs demand more transparency. The study on "criteria for the classification of poverty projects" recently commissioned by BMZ aims at the elaboration of specific criteria for indirect and structural poverty programs. In addition, progress could also be reached if the Development Assistance Committee of the OECD introduced a new category "poverty" in the ODA annual member states' progress reports and defined clear criteria for poverty measures. In December 1994, the BMZ launched an initiative in the DAC to establish poverty reduction as a third cross-sectoral area on which donors would be required to report.

Moreover, it is necessary to assess the benefits of projects and to identify the actual beneficiaries. Therefore, the monitoring and evaluation of project poverty reduction effects has to be improved.

The criteria used by BMZ refer only to self-help oriented and basic needs projects. This classification cannot give a representative survey of the policy's implementation and the effects in practice.

Technical and financial co-operation

Until now, most of the projects in the poverty reduction field have been projects of technical co-operation. The experience of German development practice shows that technical assistance projects seem, in general to be more conducive to poverty reduction than of financial co-operation projects.

In quantitative terms, about two thirds of German development co-operation consist of financial co-operation. Given the fact that the German poverty reduction policies have primarily been implemented through technical co-operation and since technical co-operation is of quantitatively minor importance in total aid, the question comes up of how Germany can implement its policy of giving priority to poverty reduction.

Despite the fact that all assistance for self-help-oriented poverty reduction is in the form of grants, loans have a relatively high share in other fields related to poverty reduction (for instance, some projects in basic education and in the water sector). The promotion of the water sector in developing countries is one of the focal areas of German financial co-operation. The possible increase of foreign debt as a consequence of the loan policy can undermine the positive effects of poverty reduction measures. Case studies carried out by UNICEF show that the public debt service in developing countries prevents the expansion of social services for the poor. German NGOs therefore demand that "in order to allow for a comprehensive poverty focus of the German aid program all transfers should be passed out as straightforward grants."

Germany has done a lot in the field of debt relief. In 1996, it became possible for the first time to swap debts for poverty reduction measures. In the same year, the German Parliament decided to convert debt service on outstanding development loans to an amount of 200 million DM. These funds can now be allocated to measures for poverty reduction. Moreover, since 1989 the funds of financial co-operation dedicated to self-help oriented poverty reduction projects can be provided (up to a certain amount) in the form of grants for recipient countries which normally get their financial assistance in the form of loans.

German NGOs welcomed these steps, but stated at the same time that these initiatives - compared to need - are not sufficient. Within the international donor community, Germany ranks among the donors with the highest share of loans in its aid programmes. According to the NGOs, a true orientation of development policy towards poverty reduction requires a change from loans to grants.

4.3 The 20:20-initiative

The German government supports the 20:20-initiative. However, follow-up has been slow. BMZ hesitated to go ahead without clearly defined areas of application. The Oslo conference in April 1996 helped to clarify the promotion areas of 20:20, but the discussion on benchmarks still continues within DAC. Although there remain some open questions of definition, the 20:20-initiative is already part of the German dialogue with interested countries. According to the internal classification of "human priorities" in BMZ statistics their share of total bilateral commitments reported to the DAC reached 21.2% in 1994. Thus, Germany has already put its commitment at the summit into practice.

However, a more detailed analysis of German performance shows that the statistical system of the BMZ differs from the definition of basic social services used by UN institutions until now. According to the UN definition, there is a benchmark on costs for measures in the fields of water and sanitation to make sure that the statistics involve only projects from which poor people benefit directly. Only equipment for drinking water supply with costs of less than US$30 per user and sanitary accommodation with less than US$20 per user are considered to be part of basic social services. Deutsches NRO-Forum Weltsozialgipfel outlined in its statement that German statistics do not differentiate with respect to the cost level. It is possible that an important share of German projects in the water sector are above the benchmark. Other official BMZ statistics show that the actual share of core areas of basic social services (comprising only basic education and health services as well as family planning) amounts to about 6% of the overall performance. Besides this controversal dispute, it is common knowledge - also in the Ministry - that a lot remains to be done to put the initiative into operation and to adjust it to the Ministry's participatory approaches to poverty reduction.

5. State of implementation

German NGOs' criticism is that the central demands of BMZ policy papers, such as the implementation of structural reforms and the application of political conditionality, are not achieved in practice. Without the implementation of reforms in political structures, poverty reduction activities in development co-operation have only achieved limited success. Therefore, more emphasis should be placed on the development of structural framework conditions and on the removal of the causes of poverty. This aspect is not given enough consideration at the moment to meet the complexity of the issue at the different stages of co-operation, i.e. planning, implementation and results. New elements of a strategy geared more to poverty reduction are still to be tested. Despite the proclamation of poverty reduction as a primary goal of German development assistance, the Ministry's Poverty Division has not yet succeeded enough in its efforts to translate the well prepared policy papers into concrete development measures of the BMZ Country Divisions.

Reflecting the problems of decreasing development aid budgets and the debate on development co-operation priorities, the budgetary allocation for 1997 shows a decline in the financial funds for self-help oriented poverty reduction. In 1996 some 700 million DM (financial and technical assistance) were allocated to poverty reduction through self-help which represented 18.6% of the funds. In 1997 the amount will decline to 500 million DM in absolute terms, 14.2% of the development funds. Even taking into account that the overall budgetary funds for development co-operation are declining, there is a growing contradiction between the stated priority of poverty reduction and the actual allocation of funds. The German development community has therefore demanded a change in the distribution of funds in line with stated goals. Representatives of German NGOs are concerned that these changes are a first sign of a redefinition of German development policy and of a new orientation characterised by reduced importance for self-help oriented poverty reduction.

However, development co-operation for poverty reduction has achieved some positive results. Experience shows that the objective of poverty reduction as a priority of German development co-operation is realistic. What matters is to concretise the approach, to develop clear criteria for the classification of poverty- reducing projects and programmes, and to find and use the appropriate instruments and methods. What is particularly needed is consistent applciation of hte participatory principle and concentration on aising the position of poverty target groups, so that poverty reduction achieves in reality the priority stated in policy papers.

References and bibliography

Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (1995) Armutsbekämpfung - warum, wozu und vor allem: wie?, Bonn, June.

Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (no date) Arme sind nicht hilflos! - Aus der Praxis der Armutsbekämpfung - Institutionen der Entwicklungszusammenarbeit berichten, Bonn.

Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (1991) Bericht über die Armutsbekämpfung in der Dritten Welt durch "Hilfe zur Selbsthilfe", Deutscher Bundestag, document no. 12/924, Bonn, July.

Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (1995b) Zweiter Bericht über die Armutsbekämpfung in der Dritten Welt durch Hilfe zur Selbsthilfe, Deutscher Bundestag, document no. 13/3395, Bonn, December.

Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (1996) Entwicklungspolitische Konzeption des BMZ, Bonn, October.

Deutsche Welthungerhilfe/terre des hommes (ed.) (1995) Die Wirklichkeit der Entwicklungshilfe. Dritter Bericht 1994/95. Eine kritische Bestandsaufnahme der deutschen Entwicklungspolitik, Bonn.

Deutscher Bundestag / Committee for Economic Cooperation and Development (1995) Comments on the Public Hearing of the Committe for Economic Cooperation and Development 'Selbsthilfeorientierte Armutsbekämpfung" on October 25, document no. 13/47, Bonn.

Deutsches NRO-Forum Weltsozialgipfel (ed.) (1996) Social priorities in Development Cooperation. Implementing the 20/20 initiative, (Author: T. Fues), Bonn, March.

Federal Ministry for Economic Co-operation and Development (1992) The main elements of poverty reduction, Bonn, October.

Federal Ministry for Economic Co-operation and Development (1995a) Poverty reduction, self-help promotion of participation and human rights. Recent trends in German development co-operation, Bonn.

Federal Ministry for Economic Co-operation and Development (1994) Cross-sectoral concept on target groups. Development co-operation: the players, Bonn, November.

Federal Ministry for Economic Co-operation and Development (1990) Cross-sectoral concept: Fighting poverty by promoting self-help. Self-help movements as partners in development co-operation, Bonn, December.

Federal Ministry for Economic Co-operation and Development (1992) Socio-cultural criteria for projects under development co-operation, Frame-concept, Bonn, February.

Federal Ministry for Economic Co-operation and Development (1988) Concept on the promotion of women in developing countries. Principles for the promotion of women in developing countries in connection with the planning, implementation and evaluation of development co-operation projects, Bonn, May.

Gsänger, H. (1994) Proposals for Poverty-Oriented Development Cooperation Based on an Anti-Poverty Strategy, Berlin, Deutsches Institut für Entwicklungspolitik, July 1991 (in German). Published in English in: Economics, Vol. 49/50, p. 111-125.

Gsänger, H. (1993) Soziale Sicherungssysteme für arme Bevölkerungsgruppen, Deutsches Institut für Entwicklungspolitik, Schriften des DIE Band 106, Berlin.

Gsänger, H. (1995) 'Nach dem Weltgipfel für soziale Entwicklung: Die Zukunft des 20:20-compact zur Sicherung der sozialen Grundversorgung für alle', in: Nord-Süd aktuell, Vol. 9, No. 1, p. 62-68.

Pinger, W. (1995) Discussion paper presented at the German QUADRILOG workshop, 1995, study group '"Verbesserung der Projektarbeit"', December.

Schneider-Barthold, W. (1987) Talking, Acting and Learning with the Poor. Grassroots Development in the Third World and its Promotion, German Development Institute, Occasional Papers of the GDI No.90, Berlin.

World Bank (1990) World Development Report 1990, Washington D.C.

Wissenschaftlicher Beirat beim Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (1995) Neue Akzente in der deutschen Entwicklungszusammenarbeit während der nächsten Legislaturperiode, a commentary, BMZ aktuell 054, Bonn, February.

Wissenschaftlicher Beirat beim Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (1996) Der informelle Sektor als Handlungsfeld armutsorientierter Entwicklungspolitik: Ansatzpunkte, Grenzen, Perspektiven, a commentary, BMZ aktuell 064, Bonn, March.

UNDP (1994) Bericht über die menschliche Entwicklung 1994, Bonn

Home / About the Project / Collaborators / Publications

Updated on February 25, 1997
Developer's Note: These pages were developed for use on the Netscape browser. Please address comments to Aidan Cox, ODI