Background Note: OP 1.00 Poverty Reduction

Objectives of Revision

2. The update of the policy on Poverty Reduction is intended to reflect the current framework of the Bank’s poverty reduction mandate, the revised context for poverty assessments, and the overall effort to streamline operational guidance to staff:

• In terms of aligning operational policy with the Bank’s current poverty reduction framework, the new OP 1.00 builds on the World Development Report 2000/2001 by proposing that the Bank’s support for poverty reduction is focused on three pillars: increasing opportunity, enhancing empowerment, and strengthening security. The new OP 1.00 also reflects the principles of the Comprehensive Development Framework by confirming that the Bank supports borrowing countries in articulating their own vision and strategy for reducing poverty and attaining development results, and by acknowledging that poverty analysis may be conducted by borrowing countries, other donors, and other partners.
  
  
• In terms of revising guidance on poverty assessments, the new OP takes a more flexible approach than the old OD 4.15. it does not establish detailed content requirements, but instead requires poverty assessments to contain: (a) an analytical synthesis of the existing body of knowledge on three topics: the poverty situation; the impact of growth and public actions on poverty, and an appraisal of poverty monitoring and evaluation systems; (b) an identification of key knowledge gaps with respect to these three topics; and (c) new analysis that addresses selected identified gaps or complements existing work.
  
  
• In terms of streamlining guidance on the poverty focus of Bank instruments, the coverage of the new OP focuses on requirements for poverty assessments and the quality enhancement and monitoring responsibilities of the Poverty Reduction Board, rather than on non-mandatory guidance and best practices on how to integrate poverty objectives into Country Assistance Strategies, lending operations, and economic and sector work (as was the case with the old OD 4.15). This is no longer needed as the Bank's poverty reduction mandate is now reflected throughout relevant OPs and BPs.

Feedback received from the Executive Directors and the external consultations

3. Feedback from the Executive Directors. During the CODE meeting, the committee endorsed the approach of recasting operational directives so that policy content would be clearly distinguished from business processes and good practice standards. While acknowledging the benefits of brevity and conciseness in OPs, they stressed that this particular OP addressed an overarching operational priority of the Bank and that it should be put in a broader context and provide adequate background information. They suggested that Management cross-reference it to related OPs and Bank instruments. This would greatly assist staff and external audiences to understand the rationale of the OP and facilitate access to relevant guidance. Subsequent feedback from the Executive Directors also requested that the OP 1.00 mention the Bank's emphasis on supporting countries in achieving development results.

4. Feedback from the external consultations. After discussions were held with CODE on July 30, 2002 (see CODE2002-0069), the World Bank sought input from a wide range of interested parties (including governments, civil society, and academia) through web-based consultations. Web-based consultations were held for a period of three months, from March 15 to June 15,2003. The consultations were advertised through various means, including the PovertyNet newsletter and email messages targeted to key partners, such as staff of bilateral and multilateral institutions.

5. Comments received were rather limited in number. Some commentators were supportive of the effort to issue a clear and concise Operational Policy on Poverty Reduction; others felt that new OP is too concise and represents a step back with respect to OD 4.15. The main comments received can be summarized as follows:

The OP should:

• be set in the context of the WDR 2000/01 and incorporate the integral dimensions of empowerment and security into the Bank's definition of its approach to poverty reduction;
• contain language on the need for participatory approaches to poverty assessments;
• cover the emerging consensus on PRSPs, MDGs, development effectiveness, harmonization of policies/programs/procedures (as well as capacity building efforts in favor of better results on the ground), Poverty and Social Impact Analysis (PSIA) rather than just make passing references to these new directions in development thinking;
• mention the need for country-owned impact analysis of major policies fostering public debate around genuine options;
• recognize the right to "a standard of living adequate for the health and well-being of himself and his family" as a basic human right; and,
• be renamed "poverty analysis" or ''poverty assessments" rather than "poverty reduction" because of its content.

The Guidance Note on Poverty Assessments should:

• convey early on the importance of poverty assessments being country-based and country-owned; and,
• stress the importance of focusing on issues relevant for policy.

In terms of process:

• the main issue raised was whether it is appropriate tofinalize OP 1.00 before other relevant OPs (on CASs, development policy lending, etc.) are finalized -- as only after the other OPs are finalized would it be clear whether or not gaps remained in the coverage of poverty issues in the Bank's operational policy.

Response to external consultations

6. The draft OP was revised following the CODE discussion and the extemal consultations. The following changes were made:

• an explicit reference to the WDR 2000/2001 framework has been introduced in a footnote in the first paragraph; and
• other key OPs related to country assistance strategies and lending instruments are explicitly mentioned in footnote 3
• the second paragraph now mentions that the Bank supports borrowing countries in articulating their vision and strategy for reducing poverty and attaining development results and a footnote was added with the web address for the results agenda; and,
• the OP mentions that poverty assessments should be conducted in close collaboration with in-country stakeholders.

7. Changes were also made to the Guidance Note on Poverty Assessments:

• collaboration with partners, including poor people's organizations, is highlighted at the start (para. 2), not just in para. 18-21;
• the desirability of integrating or closely coordinating poverty assessments with other relevant studies such as Country Gender Assessments and Risk and Vulnerability Assessments is now mentioned explicitly (para. 2);
• the importance of focusing on issues relevant to policy is highlighted (para. 7);
• the expectation that poverty assessments would normally be made public is stated explicitly (para. 21);
• a section on Bank processes (which was included in a broader Guidance Note on Poverty ESW discussed with the PRE3 but not in the draft for extemal consultations) has been added in response to questions from country teams (paras. 22-27); and,
• a little more flexibility is provided on whether poverty assessments need to contain new analysis (para. 24).

8. Some suggested changes were not made, for the reasons indicated below:

• The OP does not cover the emerging consensus on PRSPs, MDGs, and so on, in line with the ongoing effort to not include in Bank OPs non-mandatory guidance and best practices.
• The need for country-owned impact analysis of major policies is not mentioned specifically here (although it is covered in paras. 6-7 of the Guidance Note) because it is expected to be covered in OP 8.60 on Development Policy Lending.
• The OP has not been renamed "Poverty Assessments" because it mentions the Bank's approach to poverty reduction as well as other Bank instruments and the relevant policies (paras. 1-2 of the OP).

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