Mali - Assessment of living conditions

Report No. 11842-MLI Mali Assessment of Living Conditions June 30, 1993 Africa Region Sahel Department Country Operations FOR OFFICIAL USE ONLY M I CIo(I) PA F'H I Peport N-,f: 1 184'2 Ml,T T F) F C' Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official luties. Its conter..s may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Cutrency Unit: CFA Franc (CFAF) Official Rate: US$1.00 = CFAF 278.2 (February 1993) ACRONYMS AND ABBREVIATIONS AGETIPE Agencc d'Exdcutic i des Travaux d'Interet Public AIDS Acquired Immune Deficiency Syndrome APE Association des Parents d'Eleves ASACOBA Association de Santc Communautaire de Bankoni BNDA Banque Nationale du D6veloppement Agricole CCA-ONG Comitc de Coordination des ONGs CERPOD Centre d'Etudes et de Recherche sur la Population pour It D4veloppcment et de Sante CIDER Centre Intemational de Developpement et de Recherche CMDT Compagnie Malienne pour le D6veloppement des Textiles DHS Demographic and Health Survey DNAFLA Direction Nationale de l'Alphabetisation Fonctionnelle et de la Linguistique Appliqu6e DNSi Direction Nationale de la Statistique et de l'Informatique EEC European Economic Community ESC Education Sector Consolidation Project ESMAP Energy Sector Management Assistance Program FAEF Fonds d'Appui a l'Education Fondamentale FEWS Famine Early Warning System FP Family planning GDP Gross Domestic Product GNP Gross National Product GTL German Technical Cooperation ICB Intemational Competitive Bidding IDA Intemational Development Association IEC Information, education, communication IMF International NMonetary Fund INPS Institut National de la Prdvoyance Sociale JASPA Jobs and Skills Program for Africa NGO Non-Governmental Organization NRMP Natural Resource Management Project ON Officc du Niger OPAM Office de Produits Agricoles du Mali PEV Programme Elargi de Vaccination PFP Policy Framework Paper PNVR Programme National de vulgarisation Rurale PPM Pharmacie Populaire du Mali PRMC Programme de Rehabilitation du Marche Cerealier SCC Savings and credit cooperatives SCF Save the Children-USA SMAG Salaire Minimum Agricole Garanti SMIG Salaire Minimum Interprofessionel Garanti SPAAR Special Program for African Agricultural Research SPHWS Second Population, Health and Rural Water Supply Project SSA Sub-Saharan Africa TB Tuberculosis UMOA Union Monetaire Ouest Africaine UNDP United Nations Devclopment Program UNICEF United Nations Children Fund USAID United States Agency for International Development VITA Volunteers for International Technical Assistance WDR World Development Report WFP World Food Program WHO World Health Organiztion  FOR OFMCIAL USK ONLY MALI ASSESSMENT OF LIVING CONDMTONS IL; ~~~UN HOMN1E R4U vRE .-a.' This document has a retricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. II  MALI: Priority Poverty Indicators 1987 1989 1990 Poerty line Upper CFAF 89,170 USS 289 Lower CFAF 53780 USS 174 Memo item GDP per capita (US$) 270 270 (CFAF) 86,130 73,520 Short-tenn Income Indicators Hourly Wage (CFAF), unskilled (1985)2 agriculture 56.23 non-agriculture 67.22 CPI, food 103.1 105.9 108.5 Social Indicators' Share of public expenditures for basis social services in GDP (%) 8 Gross nrimary enrollment (%) 23 Girls 17 Under five mortality 249 Immunization (%) Tuberculosis 82 DPT, polio, measles 42 Child malnutrition (%) stunting (height/age) 25 wasting (weight/height) 11 Life expectancy 47 Female-to-Male life expectancy (%) 1.08 Total fertility rate (%) 6.7 Maternal mortality (per 100,000 850 live births) X Refers to preliminary 1988/89 houschold budget survey data. 2 Minimum wages frozen since March 1985. 3 Most recent dats based on the Demographic and Hcalth Survey of 1987.  - v . MALI ASSESSMIENT OF LIVDNG CONDMCNS Contents Prefae ................. .. vii Executive S u m m a ry ............................................. ix Backgrou.d. I Introduction 1 Part I Profile of Living Conditions ..3 The Meaning of Povertv in Mali. 4 Vulnerability and Survival Strategies .5 Defining Poverty. 7 Household Consumption .10 Household and Employment Characteristics of the Poor ................. I 1 Demographic and Social Characteristics . 14 Part II Review of Existing Policies for Poverty Reduction . 23 Raising Economic Growth and Employment. A Policy Challenge . . 24 Why is Higher Growth Needed? . 24 Is Economic Adjustment Leading to Improved Living Conditions? . 24 Experience in the Rural Areas: Agricu.ture Policies . 26 Completing the Adjustment Program in Agriculture . 26 Addressing Long-Term Constraints: Land Tenure . 26 Addressing Long-Term Enviromnental Concerns: Forestry Resources .27 Raising Long-Term Productivity: Extension Services Role .29 Experience in the Urban Areas: Key Role of Labor Market Policies .29 Urban Employment and Structural Adjustment .30 Labor Market Flexibility .31 Access to Credit .32 Women: the Overlooked Half .34 Policies Improving the Delivery and Financing of Social Services. 35 Public Spending in Social Sectors. 35 Priority on Primary Education .37 Lib.alization of Drugs and Medical Profession .38 Decentralization and Cost Recovery ....................... 38  - vi - Part m Social Safety Nets .................... 41 Traditional Safety Nets .............. 42 The Role of Non-Governmental Organizations (NGOs) .................. 43 Safety Nets for Transitory Shocks ............................... 44 Part IV Policy Recommendations for a Poverty Reduction Strategy ............... 46 The Design of Policies for Economic Growth ....... ..... II I ...I..... 47 The Role of Non-traditional Methodologies in Policy Design .............. 49 The Inplementation of Policies and Programs ....................... 49 The Positive Contribution of NGOs .............................. 50 The Importance of Communications .............................. 50 The Monitoring of Policies and Their Imnact ........................ 50 The Need for Donor Coordination ............................... 51 The Role of the World Bank .................................. 51 Text Tables Table 1 Average Per Capita Expenditures, 1988/89 ........................ 10 Table 2 Household and Employment Characteristics of Urban Poor, 1985 .... ...... 12 Table 3 Social Indicators, 1975 and 1987 .............................. 15 Table 4 Per Capita Income Growth, 1970-92 ............................ 25 Text Boxes Box 1 "They pay us by letting us keep the bran.". ......................... 5 Box 2 "' am too poor to ask ....................................... 7 Box 3 Reliability of Data . ....................................... 8 BoJ 4 Selecting a Poverty Line .....r.. .. .. .. .. . 9 Box 5 The cost of drugs . ........................................ 17 Box 6 Unsafe Water - the Guinea Worm Disease ......................... 18 Box 7 Traditional Beliefs and Childbirth ............................... 20 Box 8 The Costs and Benefits of Education ............................. 21 Box 9 "A golden opportunity' - Artisanal Mining .......... ............... 32 Box 10 "Thanks to the tontine ...................... 33 Box 11 Semi-Formal and Informal Financial Institutions in Rural Mali .... ...... 34 Box 12 ASACOBA - Center for Well-Being ............ ............... 39 Box 13 Elements of a Pilot Poverty Reduction Project ....... .. ............. 52 Selected Bibliography . ........................................... 53 Appendix . ................................................... 59 Table 1.1 Poor and Very Poor, 1988/89 ................................ 60 Table 1.2 Regional Distribution of Poor and Very Poor, 1988/89 .61 Table 2.1 Existing Policies Linked to Poverty Reduction .62 Table 2.2 Recommendations for a Poverty Reduction Strategy .63 Map Population Distribution  - vii - PREFACE The World Bank's 1990 World Development Report on Poverty highlighted the fact that economic growth alone does not necessarily reduce poverty in a given country. To be effective, economic and social policies have to address also the needs and concerns of those, who, because of structural, social and cultural factors, have little voice in the development arena. In a country, such as Mali, this group represents the bulk of the population. The Govermnment of Mali views its developmen efforts as synonymous with poverty alleviation. Consequently, it has not articulated a specific poverty reduction strategy in itself. Defining the objectives and content of a poverty alleviation strategy is one of the principal elements of the World Bank's dialogue with Mali, and this report represents an essential instrument to that end. This is not to say that the Government is not striving to improve the living conditions of all Malians. As the Assessment shows, the Government has, in recent years, adopted and tried to implement a series of macroeconomic and sectoral policies and programs that address some key constraints to growth and social welfare. Despite the positive developments of this program, Mali condinues to face enormous challenges in the macroeconomic sphere (competitivencess, inefficient management of budgetary resources, and limited employment opportunities for its young population), in human resources development (the lowest level of primary school enrollment in the world and high infant mortality rates) and in environmental terms (gradual soil degradation and deforestation). The Assessment urges that in elaborating a poverty reduction strategy, the Government, with the collaboration of donors and NGO's, continue in the implementation of its growth-oriented economic program and place special emphasis on improving the human potential of all Malians so that they can participate in that growth and share its benefits. This Assessment has been prepared by a team led by Adriana De Leva (Task Manager, AF5CO), and comprising Maurizia Tovo (AFTSP), Elizabetii Huybens (consultant), and Lynn Brown (summer intern). Anna Martella (consu!tant, anthropologist) conducted the beneficiary assessment in Bamako with a local research team and collaborated with Ms. Tovo on the rapid rural appraisal in Kayes, Sikasso, and Mopti. The peer reviewer was Helena Ribe (ESP). Jean-Louis Sarbib, Fran;ois Laporte and Katherine Marshall are the Managing Division Chief, the Lead Economist and the Department Director, respectively. The Assessment was presented to the Govermuent of Mali in June 1993. The Government's major comment concerned the need to refine the analysis which led to the definition of the poverty line. The Malian Statistical Office is presently defining two poverty line, using the final results of the 1988/89 household budget survey. It is possible that these poverty lines - one based on nutritional requirements and the other on average expenditures - - may differ from that presented in this report. Our dialogue on this issue with the Malian Government will continue during FY94. The Assessment will serve as a basis for a series of seminars to be held in Mali with the relevant stakeholders.  - ix - EXECUTIVE SUMMARY 1. Poverty alleviation is the primary objective of the Bank's program in Mali. It defines the nature and content of our partnership witl Government, and it figures prominently in our relations with other donors and NGOs. Mali was the 16th poorest country in the world in 1990. Yet our understanding of the nature and manifestations of this poverty remains partial. And the impact of recent developments, in economic policy as well as through the profound political changes which started in March 1991 and are still unfolding, often cannot yet be eacily monitored anJ, consequently, adequately assessed. This report takes stock of what we know about poverty in Mali, attempts a first assessment of the impact of existing policies on poverty, and outlines directions for future work. The lack and unreliability of statistical data has led to the utilization of qualitative techniques (beneficiary assessments and rapid rural appraisal). Besides providing useful information, they have also ensured that the voice of the poor themselves is heard throughout the report. 2. Poor social indicators attest to the magnitude of the poverty challenge. Mali has 8 million people, its populaLion grows at over 2.7% eac;h year, and nearly half of it is under 15 years of age. The average Malian lives to age 47, one Malian child out of four dies before the age of five, and one out of four infants under three years old is chronically malnourished. One out of fobir adults, at best, can read and write, one out of four primary-school age child is enrolled in primrn-y school, and one out of five Malians has access to safe water. 3. Agriculture still dominates economic life: it providec a livelihood to over 80% of the population, under the constant threat of drought, and of fluctustinr world prices for cotton, the main export. Rapid demographic growth and cultivation techniques which have not adapted to changing conditions are threatening the environment. The rural people of Mali have responded by migrating to the nearby cities, to Bamako, the capital city, or abroad (essentially to Cote d'Ivoire and France). Today, one Malian in five lives in an urban area and Bamako alone contains 40% of the urbanized population. But employment opportunities are scarce, especially in the formal sector, and the tradition of public sector jobs in a welfare state system has proved not sustainable from an economic and financial standpoint. The resulting social and political pressures are fierce. 4. The profound changes of last decade have put a severe strain on Malian society. The traditional strategies illustrated in this report have enabled the Malians to cope. Such traditional coping mechanisms may well be reaching a limit. This would give a new sense of urgency to removing the bottlenecks to faster growth (essentially by restoring the competitiveness of the economy), to the proper use of public resources (particularly in the social sectors, and vitally to increase primary school enrollment), and to the mobilization and encouragement of the many initiatives under way. This daunting challenge requires strong Government determination, close donor coordination, and the integration of NGOs in the fight against poverty. The present report, with its many data shortcomings, can serve as an instrument to these ends. A projile of living conditions 5. Defining poverty in a context where it is as pervasive as in Ma,i is difficult. Out of all the dimensions of poverty, food sufficiency is generally accepted as its minimum common denominator - simply put, poor people are those who are not able to acquire adequate food at all times to lead an active and healthy life. Yet, the harshness and unpredictability of the climate  - x - mean that food security, and therefore poverty, has a very strong temporal aspect, largely determined by rainfall patterns. In addition, there are marked seasonal variations. Thus, while at harvest time only the most destitute will have trouble in finding enough to eat, during thae pre- harvest season it is not uncommon for the majority of farmers to complement their diet with wild fruits and leaves or with food commonly reserved to animals, because they simply cannot afford to buy any other food. Dignity and prestige also play an important role in determining the manifestations of poverty. Cultural choices, such as to ?o hungry during the pre-harvest season instead of relinquishing a tangible asset (jewelry, bicycle) cannot be dismissed as irrational or selfish, for they reflect the need to diversify investments and to keep one's position in the community in case of a real crisis. 6. Because poverty is multi-dimensional, no single indicator is adequate in measuring it. Because of deficient household budget data, this Assessment presents orders of magnitude of the incidence of poverty (defined by expenditure levels), and complements the profile of living conditions with an examination of selected social indicators and an analysis of vulnerability - survival strategies that Malians adopt to cope with the changing economic and social scene. To distinguish the core poor from the rest of the poor, two poverty lines are defined: the first is set at the maximum yearly per capita expenditure of the poorest 40% of the population, namely CFAF 89,170 (equivalent to US$289); the second at the maximum yearly per capita expenditure of the poorest 15%, CFAF 53,780, equivalent to US$174.' 7. Poverty is predominantly a rural phenomenon, but urban poverty is also a cause for concern because the traditional solidarity network is beginning to break up and access to food is at times more difficult than in rural areas. Considerable regional differences in the incidence of poverty were found with Mopti appearing to be the poorest region. Food represents the largest chunk of the household budget for all Malians, with an average of 65% for the poor and 69% for the very poor. Cereals is the most important food item in the budget of all Malians, with rice being the preferred cereal in urban areas and millet or sorghum in the rural areas. On the other hand, health expenditures are very low for all, implying weak utilization and/or inadequate access to health services and expenditures on education are even lower, reflecting the low level of schooling. 8. At most, modern employment represents about 6% of the labor force, the rest engaged in the informal sector or un6mployed. Salaried work is generally preferred to working independently because of the uncertain business environment - low returns and weak market demand. In urban areas, public sector emplcyment has been especially important to non-poor households, suggesting that the cutbacks in public employment under the adjustment program most likely increased urban unemployment. Moreover, since a salaried employee serves as the "social safety net" for his immediate household and for the extended family, the public sector reform most probably reduced the income of the "farnily" and hampered new investments in the informal sector. The concept of unemployment among the poor is of limited use given the necessity to earn a livelihood. In the rural areas, the poor are engaged in different non- agricultural activities during the dry season either in their own village or outside, while for the 1 The choice of a poverty line is a matter of preference. This Assessment has chosen these poverty cut-of! points merely as relative points of reference since: (i) computing an absolute poverty line based on the cost of a minimum consumption basket is not possible with the available information from the 1988/89 household budget survey; and (ii) setting a higher poverty line, ay USS 1 per day per person, would not be very meaningful from an operational perspective.  - xi - urban poor diverse economic activities is a way of life throughout the year - undertaken by all members of the family either seasonally or when the opportunity arises 9. Mali's rapid population growth, estimated at 2.7% per annum, reflects a high fertility rate, low use of family planning methods, and strong economic and cultural biases for large families. The high mortality and morbidity patterns among women and children attest to poor health conditions, inadequate access to health and sanitation services, reliance on traditional medicine, and cultural perceptions of causes of illnesses. It seems fair to conclude that poor people are more susceptible to illness and death on the basis of financial costs (the relative high cost of medical care - roughly two .ays of work per medical visit plus medicine and travel costs - the poor are more likely to live far from health facilities) and opportunity costs (foregone work in the fields). The financial burden of health care and inadequate supply and poor quality of health facilities contribute to the poor's recourse to traditional medicin%.b, whose important role is couched and re-enforced in strong cultural beliefs and practices. 10. By far, the most preoccupying social trend in Mali is the low and declining primary school enrollment rates - 23% for all children and 17% for girls. The reasons given for such low enrollment rates, especially for girls, are: (i' high financial and opportunity costs for poorer parents; (ii) insufficient schools, classrooms, equipment, school supplies and teaching materials; (iii) inadequate number and poor quality of teachers; (iv) cultural perceptions (such as educated children may become disrespectful, dishonest, selfish, or simply unattached to their family/village life); and (v) lack of job opportunities for young gra-.uates. Despite these obstacles, there appears to be a substantial unmet demand for education in urban areas, slightly less so in rural areas. Existing Policies for Poverty Reduction 11. The impact of on-going policies on poverty alleviation is a highly debated subject in Mali. Debates revolve around two sets of issues. The first concerns the need for and impact of the on- going structural adjustment program. The second relates to how best to achieve sustained long- term growth. This Assessment does not address all the nuances of the underlying issues, but presents an overview of the key facts and themes. 12. Since 1985, the Malian Government has implemented a program of structural reforms, while pursuing an "internal-adjustment" strategy. This internal strategy aims at achieving a depreciation of the real exchange rate through austere monetary and fiscal policies to repress wage and price increases, and force a lowering of Mali's cost structure relative to international competitors. Structural reforms included measures to improve public resource management and restore private sector vitality and growth. Measures included price liberalization, a simplified trade regime, tax reform, new investment, mining, commercial and labor codes, civil service reform, public enterprise restructuring, and the strengthening o" he budgetary process and public investment programming. 13. As a result of the adjustment measures taken, favorable rainfall conditions, and sustained world cotton prices until 1992, per capita incomes have risen by 2.6% annually since 1985. Even so there is widespread discontent with the pace of improvement in living conditions. Two reasons explain this legitimate concern: (i) time - not all measures have been implemented as quickly or as thoroughly as would have been necessary and the impact of certain measures takes time to be felt; and (ii) the nature of the adjustment strategy - unlike more comprehensive adjustment strategies, the gains in competitiveness from internal measures accrue only very  - xii - gradually as domestic costs are forced down, or, at least contained, and thus the full supply response and growth impact is deferred. Overall, while the stabilization component of structural adjustment has been successful, its irnpact on growth has been constrained by the adverse effects of internal adjustment policies. Adjustment measures have, however, benefitted the rural areas more than urban areas. 14. 'The liberalization of the cereal market is probably the biggest reform to touch the poor directly. From available data, it appears that production increases have been relatively strong, though part of the potential income gains to producers was eroded by lower prices. Similarly, this lowering of prices was generally beneficial to consumers. However, not all farmers benefitted from these changes, especially those in remote villages. Although the new policies represented an opportunity for increasing income, these farmers preferred to minimize risks by keeping out of the monetized economy and relying as much as possible on self-sufficiency. This clearly demonstrates that the incentives of the adjustment program were more domestic than export-oriented, and that the critical accompanying measures, such as information on new market outlets and improved processing techniques of primary products, are not yet in place. TLe success of adjustment to improve smallholders' income in the long term, therefore, strongly depends on a sustained restoration of international competitiveness. 15. Other long-term constraints that have limited farmers' response to an improved incentive framework and their income are land tenure issues, forestry rights, and effectivencss of extension services. Land tenure for most families, particularly poor ones, is uncertain. This situation has left farmers with little incentive to invest in the land, eventually leading to declining yields. It also implies that the landless have access to the worst or most distant parcels, which will further lose productivity in the absence of long-term investment. Clarification of land rights between traditional land tenure arrangements and Government regulations and definition of a mechanism to settle disputes is, therefore, essential. In a similar vein, clarification of forestry rights, which were set out in the revised Forestry Code, is important, if the intention of the code -- preserving the environment - is to have any impact. The National Rural Extension Program started three years ago has been advancing well, and its intention to focus more directly on the extension needs of female farmers should be pursued vigorously. 16. With respect to employment generation, the Government is committed to build a policy environment conducive to private sector investment. In the short term, it planc to promote labor- intensive investments that would make use of unskilled labor. While it has not defined a specific medium-to-long-term employment policy , the authorities have revised and adopted new Labor, Commercial, Mining, and Investment codes, as well as other deregulation measures, all of which improve the incentive framework for the private sector and thus indirectly create income-earning opportunities for the population as a whole. Despite these measures, the big challenge to combat poverty is to devise ways to address the concerns of the large informal sector; the legalization of artisanal mining, with the necessary accompanying measures to organize this activity and to take environmental issues into account, is a step in the right direction. 17. The poor and small businesses in Mali have no access to credit. For small borrowers, the family is the primary source of credit, followed by village associations and wealthier comnmunity members. The most widespread form of savings is the "tontine", which lends mainly for consumption purposes, rather than for investment. In the rural areas, a number of savings and credit schemes have been organized by non-profit organizations. These schemes are successful because they have developed institutional arrangements that rely on traditional practices and have the characteristics most valued by the poor, namely, flexibility, timeliness, and reliance  - xiii - on group guarantees rather than collateral. This approach is particularly appropriate for access to credit by women, whose inferior legal status denies them access to formal financing, despite their reliable repayment record. 18. The delivery of social services in Mali has been dismal over tne past decade. Moreover, the level of budgetary allocations to finance social sectors has been inadequate relative to needs. A persistent budgetary deficit, a limited tax base, and the nature of the internal adjustment strategy adopted by the Government will, however, continue to put the burden of adjustment on fiscal austerity. Hence, the inefficient use of resources, both budgetary and human is the key issue in improving the delivery and financing of social services. 19. In official announcements, primary education is the priority of the Government in the education sector. Yet, intra-sectoral budgetary allocations indicate that the system still favors secondary and higher education to the detriment of primary education, as clearly evidenced by the scholarship policy, wheiein higher education students receive scholarships regardless of their proven academic ability and ability to pay - implying that the poor directly or indirectly subsidize the better off. Since the early 1980's, about one-third of the total education budget has been devoted to primary education; yet, this share has declined gradually reaching a level of 28% -n 1993. Student subsidies, however, consume over one-fourth of the education b'idget. Given the strong political pressure of student groups (they played an important role in the demise of the previous regime and in the resignation of the last Prime Minister), revising scholarship policies is a delicate issue which needs very careful handling. 20. As compared to other SSA countries, the Government has spent relatively low amounts per capita for the health sector (less than US$2 per capita). The share of lealth expenditures of total expenditures has averaged about 2.5% since i980, of which 70% have covered personnel costs. Consequently, only 45 % of the population has access to health services, whose quality is among the poorest in the world, especially in rural areas. This can be mainly explained by the low quality and productivity of health personnel, an excessively-centralized planning system, weak management of human and financial resources (large wage bill anL shortages of drugs and supplies), and limited recourse to private medicine. Total public expenditures in health for 1993 represent about 5% of total expenditures. 21. The Government is committed to guarantee the availability of essential drugs at low cost in public health centers. The importance of this measure cannot be overstated aw it is often the high cost of prescriptions that prevents poor people from obtaining or seeking modern medicine. In an attempt to attract medical personnel to set up their own private offices, particularly in remote areas, the medical profession was liberalized in 1985. Other than in Bamako, this measure has had little impact, mainly because the minimum consultation fees set to ensure quality care appears to be too expensive for the average person. Legislation was recently passed concerning medical fees, with a view to liberalize them and thus provide incentives for private provision of both medical care and pharmaceuticals. 22. The Government is moving towards a decentralization policy in both the health and education sectors. A decentralized health program has already begun in five regions of Mali, with special attention being given to strengthening the management of community health centers with the participation of local health committees, Similarly, the management of schools will be handled at the regional and local level. Plans are in place to improve the management and supervision of schools, to render the curriculum more relevant to the local context, and to upgrade the teaching skills of teachers.  - xiv - 23. Since public funds will remain insufficient to meet the enormous needs of the health sector, the Government is relying on local contributions to cover non-salary expenditures. Cost- recovery formulas have already been successfully implemented in some of the poorer regions (Kayes, Gao and Tombouctou). The intention is that local health centers will eventually become self-financing, except in the poorest areas, through :,3,tem of user fees determined by the local council of each center on an ability-to-pay basis. Given that not all beneficiaries of services are able to pay, the user fee system will imply a subsidization of the poor by the better-off members of the community. Similarly, the Government is promoting local financing of schools through the involvement of parents-teachers association (APE) in a pilot funding mechanism (the Basic Education Support Fund, where APE's contributions would initially be matched by IDA and USAID funds). A concern here is that very poor districts may not be able to put up their share of the costs, so that close monitoring of the impact of user fees is required. Social Safety Nets 24. As in any traditional society, the extended family is the most important safety net in Mali. This traditional network is paticularly used in time of need, when food, cash, taking care of children, finding employment are the responsibility of the more fortunate members. Hence, a large extended famiiy is considered a sign of wealth for it reduces vulnerability. Yet, while the benefits of such strong family ties are real, there is also a downside -- the pressure or obligation to give discourages behavior which in the long run would reduce poverty, such as productive investments or limiting family size. 25. Associations are the other main form of traditional safety nets. While village-based associations are set up to keep alive cultural traditions, to strengthen community ties, or to contribute to community development initiatives, urban associations are based on common characteristics, such as occupation, area of residence or area of origin, and tend to have a stronger savings component (the "tontine" being the most popular example). 26. While traditional safety nets are still very strong, they appear to be weakening or transforming as modernization and/or economic realities set in. This is particularly the case in urban areas, where the core poor tend to be those who cannot avail themselves of the assistance of their extended family, such as widows, and may not be accepted as members in associations because they could not contribute their share. The rule of reciprocity in traditional safety nets, both in urban and rural areas, is felt deeply and is limited to the bare minimum (usually food) if the person in need is perceived as unable to repay the favor in the future. 27, NGOs are often considered a kind of safety net by the communities they serve, not only for their emergency assistance, but more important for their development activities. Their long- term objective is to transfer technical know-how, by mainly relying on an integrated participatory approach -- combining development activities with social concerns (health care, hygiene, training). Their astonishing growth and l--,P -lumber in Mali attests not only to the positive view of the Government to their activities but also to their contribution in meeting basic needs. 28. Safety nets to cover transitory shocks include the national food security stock program, food-for-work (FFW) programs, and the Voluntary Departure Program for civil servants and the redeployment program for laid-off public enterprise employees. The national food security stock program is working quite well. A good early warning information system for targeting the food insecure for emergency food aid has been put in place. Problems still exist, however, at the "arrondissement" level, where it is not clear whether, local leaders distribute food on an equity  - xv - or need basis. The Government and a network of NGOs are presently considering ways of improving this system by providing food to deficit areas before drought hits through FFW Drograrns, cereal banks and school canteens. The FFW programs, managed by the World Food Program, contribute food for activities requested by local communities, mostly in the construction and rehabilitation of infrastructure. In general, food is a desired form of remuneration and provides basic services that the local governments could not otherwise provide. The Voluntary Departure Program encountered a number of problems from the design stage - a poor information campaign, a financial system unresponsive to the small borrower, and delays in start- up. Consequently, the program has had very poor results in terms of reinserting the departees in the economy. Although it started out well, the redeployment program for laid-off public enterprise employees has been facing financial difficulties since 1991 when all laid-off workers (instead of the 'assumed' 10-15%) requested and received deployment assistance. Moreover, the compensation costs to the laid-off workers seemed to have been underestimated. Directions for the future 29. The Government of Mali views its overall development effort as synonymous with poverty alleviation. Consequently, it has not articulated a specific poverty reduction strategy as such. As this Assessment of Living Conditions shows, the Government has, in recent years, adopted and tried to implement a series of macroeconomic and sectoral policies and Drograms that address some key constraints to growth and social welfare. 30. Despite positive developments, Mali continues to face enormous challen,,es in the macroeconomic sphere (its competitiveness, inefficient management of budgetary resources, and limited employment opportunities for its young population), in human resources development (the lowest level of primary school enrollment in the world and high infant mortality rates) and in envirornmental terms (gradual soil degradation and deforestation). It is clear that a poverty reduction strategy must include the pursuit and monitoring of ongoing macroeconomic and sectoral interventions. In addition, the Assessment points to a number of specific areas (grouped under three categories) that require special emphasis in defining a poverty reduction strategy, namely : (i) the design of policies aiming at growth, employment, and income generation; (ii) the implementation of these policies; and (iii) monitoring their impact. 1. Policy design 31. The design of policies for :;conomic growth will depend on three critical dimensions: (i) human resources by raising the quality of the labor force, slowing down population growth, and preventing the onslaught of AIDS; (ii) adjustment by easing long-term structural and organizational barriers to efficiency and restructuring public expenditures to meet the human resources objective; and (iii) competitiveness by holding down Mali's production costs to give an edge to its products vis-a-vis competing nations. II. Policy implementation 32. Strengthening key economic and social institutions is critical to improve the design and implementation of policies and programs. This includes improving the capacity to monitor the socio-economic situation, define appropriate policy measures, diffuse information on these measures, raising the competency levels of staff in social sectors, and assessing the administrative and financial capacity of decentralized public institutions. This is of particular importance for public expenditures programs in the education and health sectors, where a strong centralized  - xvi - management system has led to distributional inequity in the provision of services and inefficient use of limited public funds. 33. Beyond stronger public institutions in charge of policy making and monitoring, the success of a poverty alleviation program rests on the mobilization of "civil society" to support it. Three areas require attention: (a) 'Me legal system: The need for faster growth is paramount, and with it the imFortance of an enticing and credible incentive system for the private sector. While work has started on many fronts to put such a system in place, the legal system still needs considerable attention. An independent judicial system is, indeed, key to investment (for example land improvements by smallholders) and to ensure that the legal framework can be enforced as intended. (b) Increasing the participation of NGOs: Given the weak capacity of public institutions, the contribution of agents close to the local communities, such as NGOs and village associations, needs to be maximized. It would be helpful to find ways to associate NGOs (local and international) more closely to the design of programs and to see the role they could play in their implementation. The success of AGETIPE in creating public works jobs in urban areas is worth emulating. (c) A communications/education strate&v: in order to minimize misinformation, encourage initiative, and build a consensus for smooth implementation, communication strategies (messages targeted to the proper audience through the proper media to explain policies, request feedback, and build local networks for implementation and follow-up) ought to be an integral part of any policy and program. When the specific concerns of a targeted population are taken into account, there is clearly a greater interest on the part of the beneficiaries to participate and sustain the given policy or prograrn. III. Monitoring 34. The monitoring of policies and their impact is essential to ensure that the intended results are achieved. This is not currently an area of strength. A monitoring system of social conditions would rely on both quantitative and qualitative methods. At the core of the system would be a household budget survey program tailored to the needs and constraints of the Malian statistical system and complemented by qualitative forms of investigation that would capture the sociological aspects of poverty. To coordinate the different elements of the monitoring system, an inter- ministerial "Poverty Monitoring and Analysis Unit' situated in a key ministry is proposed. The principal task of the Unit would be the preparation of a "Review on Poverty and Social Trends" that would be discussed with all parties interested in poverty reduction, so as to translate the findings of the analysis into policies and concrete programs/projects. Next Steps 35. The above agenda for the elaboration of a poverty reduction strategy is daunting. The present report will serve to re-focus the attention of the Malian Government and its development partners on the poverty agenda. A seminar in Mali followed by a series of discussions around the present report are planned. Their goal is to deepen the analysis and refine it, to coordinate interventions, and to integrate all actors involved in poverty reduction in the design of a comprehensive poverty alleviation strategy.  BACKGROUND 1. Mali was the 16th poorest country in the world in 1990. The per capita income was US$270 - a significant improvement from 1985, when per capita income was estimated at US$150, the fourth lowest in the world. Economic growth (real GDP grew by an average of 4.3% between 1985 and 1990) and a significant change in the exchange rate between the CFA franc and the US dollar largely explain this improvement. Yet, rapid population growth of 2.7% per annum continues to erode the purchasing power of households and any gains in economic growth. The young population of Mali (nearly half is under 15 years of age) adds to the burden of poor households. 2. The social standards of the eight million Malians confirm the magnitude of poor living conditions. The average Malian lives to age 47, one Malian child out of four dies before the age of five, one out of four infants under three years old is chronically malnourished, at best one out of four adults can read and write, one out of four primary-school age child Is enrolled in primary school, and one out of five Malians has access to safe water. 3. Agriculture is the livelihood of more than 80% of the Malians. Agricultural production, contributing 50% to GDP, is largely responsible for wide fluctuations in GDP growth. Mali's economic performance is inherently linked to climate, more specifically rainfall, soil condition and population growth.' Drought is an ever-present threat and preparedness is essential. Cereals are the staple of the Malian diet, both in rural and urban areas, and represent the bulk of food crop production. Recent good cereal harvests, mainly due to regular rainfall, have reduced the food shortage problem, except in the northern regions of Mali, where insufficient production and the possibility of drought are constant constraints. Rural migration is gradually taking its toll - 20% of Mali is urbanized, with two-fifths of the urban population residing in Bamako, the capital city. External migration to neighboring countries and France, when possible, is perhaps one of the best assurances of survival for all Malians. INTRODUCTION 4. The World Bank's 1990 World Development Report (WDR) on poverty highlighted the fact that economic growth alone does not necessarily reduce poverty in a given country. To be effective, economic and social policies have to address also the needs and concerns of those who, because of structural, social, and cultural factors, have little voice in the development arena. In a country, such as Mali, this group represents the bulk of the population. The WDR, therefore, recommended that a poverty reduction strategy be elaborated along three objectives, namely, (i) economic growth with an accent on employment generation; (ii) access to basic social services so as to improve the standard of living of the poor and increase their response to income-earning opportunities arising from t Mali, a landlocked country located in the Sahelian zone of West Africa, with a geographical area of 1.2 million square kilometers, is divided into eight regions plus the district of Bamako (map). Although the largest geographicaly, the hree northern regions, Tombouctou, Gao and Kidal, have the lowest population, principally due to their desertic environment with rainfall of only 300-500mm per year and sparse, thorny vegetation, mainly suitable for herding. South of these regions, dry savannah gives way to wet savannah with double the rainfall and land suitable for agriculture (cerals, cotton, groundnuts) and livestock. Since the region of Gao was split only recently into two, Gao and Kidal, any regional information presented in this report reflects the characteristics and situation of the previous region of Gao.  - 2 - economic growth; and (iii) availability of social safety nets. It is in keeping with this approach that this Assessment of Living Conditons has been conceived.2 S. Poverty reduction is at the center of the Bank's strategy in Mali. The purpose of the Assessment, then, is to refine and improve this strategy, by attempting to define 'poverty" in a poor country and suggesting best ways to address it In the Bank's lending program and economic work. In addition, the Assessment would serve as a basis for dialogue with the Government on its own strategy for improving the well-being of its citizens. 6. The Assessment is divided into four sections: (i) the proffle of living conditions, which defines a "poverty line" and key socio-economic characteristics of the poor and includes an analysis of vulnerability and survival straties; (ii) policy review of existing macroeconomic and sectoral policies pertinent to the poor; (iii) socia safety nets; and (iv) policy recommendations to be used as a basis for a strategy on improving living conditions in Mali.' The "images' of poverty, scattered throughout the report, have been drawn by children in Bamako and rural areas of Kayes, Sikasso and Mopti regions. 2 In the Malian context, the notion of povety refer to those individuals who have no support whatoever, in either economic temns (no resources) or social terms (no family). his definition would basically encompass the destitute, those marginalized. Thi definition of poverty is too resrictive for our purposes, thus in order to take into account any cultural sensitivity, the Poverty Assment for Mali is entiled Assessment of Living Conditions. 3 Since no recent publie expenditures review has boen done for Mali, this Assessment does not contain a comprehensive evaluaton of public expendkures in relation to poverty reduction. It does, however, review the use of aggregate budgetary resources in the health and education sectors. A public expenditures review is planned for the second half of 1993.  -3 - Part I: A Profile of Living Conditions r\~~~~~~~/ \$d \, wOambep Oftm :W. Zbu-dh.<r ieAsSag-m IWZWh* d" nen WAhf wams for )ooti. Sh9a uv ssoma an fvvo coRd droad her hou. 77lu c gd bde Ae two hJ Arfor w g 1~ ' (A boy from a gEbe in Slasso)  - 4 - The Meaning of Poverty in Mali This year I may have enough to ea$ because I had a good harvest, but next year who knows? This year I am mm poor, but mw year, if the rainsfail, I will be poor along with most of the village. ' (Farmer in the Sikaso region, Februgy 1993) 7. Defining poverty in a context where it is so pervasive is difficult. By any standard, basic living conditions in Mali - being able to eat, getting minimal health care, learning to read and write, drinking safe water - are so clearly inadequate, ingrained cultural traditions play such an important part on behavior, and data problems compounded by institutional weaknesses are so restrictive, that defining poverty is an arduous task. Out of all the dimensions of poverty, food sufficiency is generally accepted as its minimum common denominator - simply put, poor people are those who are not able to acquire adequate food. Yet, in the Malian context, even this "core" definition of poverty needs to be examined in light of climatic and cultural factors. 8. The harshness and unpredictability of the climate mean that food security, and therefore poverty, has a very strong temporal aspect. Data clearly show that the numbers and the location of those likely to suffer from food deficiency vary greatly from year to year according to rainfall patterns, (para. 96). In addition, there are marked seasonal variations. Thus, while at harvest time only the most destitute will have trouble in finding enough to eat, during the pre-harvest season it is not uncommon for the majority of farmers to complement their diet with wild fruits and leaves or with food commonly reserved to animals, because they simply cannot afford to buy any other food. This implies that standard estimates of the incidence of poverty based on yearly consumption (a proxy for income) mask these seasonal variations and may even underestimate poverty because there are households whose yearly average consumption is above the poverty line, but their consumption during the pre-harvest season may fall below the poverty line. This seasonal variation in consumption is not necessarily the result of poor planning, but may be due to external shocks such as unexpected expenses or inadequate storage. 9. Cultural values also call for caution in interpreting estimates of the incidence of poverty at any one point in time. Because farmers consider it shameful not to have enough to feed their family, food deficiency is hidden to the extent possible from the eyes of the neighbors and even more so from outsiders (Box 1). There are stories of women who would put an empty pot on the stove just to give neighbors the impression that the family has something to eat and save their husband's honor. In practice, only the desperate request help from community members (para. 17). 10. Dignity and prestige play an important role in determining the manifestation of poverty. Assets which are a status symbol or have been obtained at great cost, such as jewelry or a bicycle, will not be easily relinquished. Thus, it is possible for a farnily to own such assets and yet go hungry during the pre-harvest season or, more commonly, not invest in health or education. These choices cannot be dismissed as irrational or selfish, for they reflect the need to diversify investments and to keep one's position in the community in case of a real crisis. Given this cultural context, it becomes very difficult to determine what constitutes poverty. Is a family who has inadequate caloric intake for three months a year poor, even if it could sell a bracelet and have enough to eat? What about a father who saves money to buy a cow for his son's wedding and does not buy medicines for his sick child? While there are sound explanations for this behavior, traditional poverty measurements, such as household consumption surveys, do not capture them.  -5- A= il "Thn pay g ibytettnEuuk k thee r,n. .:a my ors a a a hild care oxtonson gent with n NGO, I visit reguhlary al tho village. in diis s. ti AndJl oan toll you that even if the Sk Aso region X considered rich, thore am many people iwo are7e poo It isJuOt dlut to fid out, bWCau they oen want to ido iL ast year, for example, evey Wt wt to a oet vgO near Bhakals I found that pregant women wore not putting on weight, ad mayw ctayosg weght. K e ask ng what wu th problem, and they kept usuring me tht ore was p WprobIln. irnay, one day a woman took me aside and told me 7he others do not wna to tel you, bidt I wa Z hmw nt fwan in three days, and many are lte mw. We have nothing to fas, and the only way we ca feed ow y lefr8 somebody rc hI 4wodhr iUage. Thy pay" w by lkn8g