Vietnam has been one of the best performing economies in the world over the last decade. It has become increasingly integrated with the world economy and within a single decade the percentage of people living in poverty has fallen from around 60 percent in 1993 to under 20 percent by 2004. However, poverty incidence among ethnic minorities and communities in mountainous areas remains much higher than the national average. In 2004, over 60 percent of ethnic minorities were still living in poverty.
These ethnic minority communities are the focus of a US$50 million IDA credit which aims to strengthen the results of a major poverty-targeted program of the Government of Vietnam. The operation supports policy and institutional improvements in the way the government program is designed and implemented. Known as "Program 135," this program supports socio-economic development in around 1,644 of the country's poorest communes and 2,500 poorest villages, through a combination of rural infrastructure, production and livelihood-enhancing services, and institutional capacity building.
Phase 2 of this Government program has been re-designed for the period 2006-2010 with the support of the World Bank, UNDP, IFAD, and five bilateral donors. The Bank and most of these development partners are also providing joint budget support to Program 135 Phase 2 based on demonstrated results in areas such as poverty targeting, decentralization and public participation, and financial transparency and acccountability.
The essential elements of this approach, which builds on lessons learned under previous and ongoing community-driven development operations in Vietnam, include:
devolution of investment ownership to commune level, and strong reliance on participatory planning processes;
better poverty targeting, particularly to reach the most remote ethnic minority communities;
a shift away from an exclusive reliance on packages of subsidies linked to agricultural extension services and towards more market-orientated livelihood-support services, focusing on commodity value chains deriving from ethnic minorities' own upland farming systems, whether rain-fed or irrigated;
community monitoring approaches, through public access to information and greater public oversight in matters of financial management and budget execution;
community participation in procurement for simple, small-scale civil works creates incentives to keep costs low while still maintaining quality. Local employment is also created, generating multiplier effects within the local economy by circulating more cash;
when all these elements are present, they can combine to produce stronger results, seen in better quality, more cost-effective investments, and which more closely match the needs of ethnic minority communities.
When control over decisions and investment resources is devolved to communes, which comprise 5 to 15 hamlets or villages, strong reliance on participatory planning processes helps to ensure that local priorities are addressed.
Better, more careful poverty targeting is needed, particularly to reach the most remote ethnic minority communities.
At over 10 million, ethnic minorities account for almost 40 percent of all poor people in Vietnam . Program 135 Phase 2 is being implemented in 1,644 of the poorest communes and 2,500 poorest villages.
Improvements in the productivity of upland farming systems are needed to help lift ethnic minority communities out of poverty.
Productivity improvements are needed both for irrigated and rain-fed upland cropping systems, reducing reliance on subsidies which do not lead to sustainable solutions for poor households.
Promoting market integration is a vital element in improved livelihood and support services, focusing on products derived from ethnic minorities' own cropping and livestock production systems.
Such approaches need to focus on improving food safety and quality at all stages of the commodity value-chain from the farm to the plate.
Community monitoring, through public access to information and greater public oversight in financial management and budget, are important in improving transparency and accountability.
Community participation in procurement for simple, small-scale civil works creates incentives to keep costs low while still maintaining quality. Local employment is also created, generating multiplier effects within the local economy by circulating more cash.
Throughout the program area in 45 out of Vietnam's 64 provinces, basic infrastructure is being upgraded, including replacing leaky, thatched-roofed village classrooms without electricity to more durable and well-lit buildings that increase the time children can spend in school.
Rural roads increased significantly in recent years due to investments under Program 135. Proportion of the population living within 2 km or 20 minutes walk of an all-weather road increased from 76 percent in 2002 to 83 percent by 2004.
Stronger decentralization and public participation, better poverty targeting, and improved public financial management and procurement that are more transparent and accountable to local citizens, combine to produce more cost-effective public investments that better match the needs of ethnic minorities.
Photos courtesy of Robin Mearns, Bui Dinh Toai, and Son Thanh Vo, World Bank Vietnam Office.
Rural development and agriculture in Vietnam