Colombia - Poverty assessment report (Vol. 1 of 2) : Main report

Report No. 12673-CO Colombia Poverty Assessment Report (In Two Volumes) Volume l: The Main Report August 8, 1994 Country Department III Country Operations Division I Latin America and the Caribbean Region MICROGRAPHICS Document of the World Dank Report No: 12673 CO Type: SEC  Table of Contents Currency Equivalents and Glossary of Abbreviations ................ x Prk1ifce ................................... xiv Straegic Overview .................................... ns W-si6n Estratgica ..................................... . xxvu Chapter - Cbombia Povcny Profile I. Introduction ......................................... 1 II. Trends in Poverty ...................................... 2 Poverty in Colombia: 1992 ......... .................. 2 Prgress inPoverty Reduction: 1978-1992 ........... 6 The Index of Unsasfied Lsic Needs (NBI) ................. 8 m. A Profile of the Poor ................................... 11 PrNcipal Characristics of Households in Povety ............. 11 Mm Probabiliy of Being Poor .......................... 14 Poverty and the Urban Labor Market ..................... 18 IV. A Profile of Social Indicators ........................... 21 Chapter 2 - Promodng Income-Eaning Opporunit for the Poor: The Macroeconomic Framework I. Bawgrcd ........................................ 28 Poverty Reduction: Major Macroeconomic Challenges ..... ...... 31 II. Structal Reforms, Shocks, Responses and te Poor: 1990-92 ..... ..... 32 Macroeonomic Performance and the Poor: 1990-92 ............ 32 Income Determination: The Role of Policy Reforms and lonomic Shocks, 1990-92 ................................ .. 36  - iv - m. Macroeconomic Policy Challenges in the Medium Term: Adjusting to Cusiana's Oil Bonanza .............. 44 Colombia's Medium Term Macroeconoraic Perspectives: Adjusting to the Oil Boom .45 Proposed Medium-Term Macroeconomic Policy Framework .48 ChaWter 3 - Human Resource Development I. Introduction .52 II. Education ............................................ 53 Sector Overview ........... ........................ 53 Incidence Analysis: Who Benefits from Public Expenditures in Education? ....................................... 58 Main Consraints and Challenges ......................... 63 Conclusions and Recommendations ........................ 66 m. Health .............................................. 69 Sector Overview ............................. 69 Incidence Analysis: Who Benefits from Public Expenditures in Health? . 73 Main Constraints and Challenges .77 Conclusions and ReCOmmendations .79 Chapter 4 - Providing Energy, Water, Sewerage and Shelter to the Poor 1. Introduction .82 ... Energy 83 Sector Overview .83 Incidence Analysis: Who Benefits from Public Subsidies? .88 Conclusions and Recommendations .93 m. Water and Sewerage .97 Sector Overview .97 Incidence Analysis: Who Benefits from Public Subsidies? .100 Conclusions and Recommendations .104 IV. Housing Policy Framework: A Program to Benefit the Poor .... ......... 106 SectorOverview ................................... 106 InidenceAnalysis ................................. 112 Conclusions and Recommendations ........................ 112  - V . Chapter 5 - Rural Programs atd the foor I. Overview of Main Rural Programs .......................... 117 U. Fondo de Desarrollo Rural Integrado (DR) ....fl9.... ......... 119 DRI Spending . .. I 1.2. Distributive Impact .......................... ., 121 Main Constraints and Challenges .In Conclusions and Recommendations ...! II. Plan Nacional de Rehabilitaci6n (PNR) .124 PNR Spending .125 Distributive Impact ..126 Conclusions and Recommendaticns .12 IV. Instituto Nacional Colombiano de la Reforma Agraria (INCORA). ... 127 INCORA Spending.. 128 Distributive Impact ...129 Main Constrnts and Challenges ..130 Conclusions and Recommendations ...131 V. Agricultural Credit Bank (Caja de Cr6dito Agmrio) .132 Lending to Small Farmers. 132 Distributive Impact .133 Main Constraints and Challenges .134 Conclusions and Recommendations .135 VI. Overall Conclusions and Recommendations.. 135 Chapter 6 - Poverty Reduction in a Decentralized Setting: Equity, Efficiency and Accountability L Inroduction .138 I. Recent Evolution of Institutional Arrangements for Poverty Reduction .139 m. A Framework for Institutional Development: Efficiency, Equity and Accountability for Poverty Reduction in a Decentalized System .148 IV. A Strategy for Institutional Development: Strengthening Local Capacity. 156  - vi - Chapter 7 - The Social Safety Net 1. Introduction .................................... 160 II. Colombian nstitute of Family Welfare (ICBF) ..................... 160 lmtitutionl Armngements and Coverge .................... 162 Effectiveness of the Program ........... ................ 63 Policy Recommendations .............................. 168 m. Programs of the Office of the President .169 Evaluation of the Programs .169 Conclusions and Recommendations .170 IV. Social Security .171 Recent Reform of the Social Security System: Law 100 of 1993 .173 Assessment and Recommendations .175 v. Proposa for New Anti-Poverty Programs ........... ............. 176 VI. Overall Recommendations ................................... 178 Bibliography ........................... 181 Map (IBRD No. 18370RI) ........... ................ 191  - vi - - List of Tables, Figures, and Boxes Tables 1.1 Poverty in Colombia - 1992 ................................. 3 1.2 International Poverty Comparisons Incidence of Poverty. 5 1.3 NBIs and the Urban Poor, 1991... 9 1.4 NBIs and the Rural Poor, 1991. 9 1.5 Characteristics of the Poor According to Alternative Definitions, 1991 .11 1.6 Characteristics of the Average Poor Household, 1992 .12 1.7 Incidence of Poverty by Household Group, 1992 .13 1.8 The Probability of Being Poor, Marginal Effects, 1992 .14 1.9 Education and the Probability of Being Poor, 1992 .16 1.10 Household Poverty Over the Life-Cycle, 1992 .17 1.11 Education - Income Differentials, 1990 .20 1.12 Evolution of Education Indicators ............................. 21 1.13 Global andChronic Malnutridon, 1989 .27 2.1 AnnualGrowthRates, 1970-90. 29 2.2 Economic Growtiandits Sources, 1990-92 .34 2.3 The Labor Market, 1990-92 .................. ; ....... 33 2.4 Estimated Income Effects of Policy Reforms and Economic Shocks, 1990 92 ... 37 3.1 Public Expenditure in Education, Selected Years, 1970-92 .4 3.2 Distrbution of Public Educational Expenditure, Selected Years, 1975-90 S 3 3.3 Spending per Student by Level, Selected Countries .56 3.4 Enrollmentby Level, 1992. 58 3.5 School Attendance by Income Level andAge. 59 3.6 Subsidies in Education, 1992 .60 3.7 Distribution of Subsidies to Public Primary Education, 1992. 66 3.8 Distribution of Subsidies to Public Secondary Education, 1992 .61 3.9 Distribution of Subsidies to Public Higher Education, 1992 .62 3.10 Distribution of Subsidies by SENA, 1992 ..62 3.11 Total Educadon Subsidies, 1992 .62 3.12 Growth in Public Speding in Health ........................... 70 3.13 Non-Access to Health Services ........... ............. 73 3.14 Distribution of PHS Services .......... .............. 74 3.15 Distribution of ISS Services .......................7.....4.. 74 3.16 PHS and SSS Subsidy Distribution ....................... 75 3.17 PHS Subsidies by Income Level, 1992 .......................... 76 3.18 Distribution of ISS Subsidies, 1992 ......... ................... 77 4.1 Subsidies in Electricity Tariffs as a Percentage of Cost ................ 85 4.2 Residential Natural Gas Tariffs as a Percentage of Cost, December 1991 ..... 85 4.3 Monthly Energy Used for Cooldng per Lower-Income Household .... ..... 87 4.4 Coverage of Electricity by Income Group, 1970, 1974, and 1992 .... ...... 89 4.5 Distribution of Electricity Subsidies ............................ 90  - vili - Tables 4.6 Housel.,ld Stratification and Income Distribution, 1992 ................ 92 4.7 Water and Sewerage Tariff by Socioeconomic Strata .................. 98 4.8 Coverage of Water by Income Gror.p, 1970,1974, and 1992 ............. 101 4.9 Coverage of Sewerage by Income Group, 1970, 1974, and 1992 ... ....... 102 4.10 Distribution of Water and Sewerage Subsidies ............... 103 4.11 Ihe Housing Problem in Colombia, 1991 ........................ 107 4.12 Program Targets and Observed Performance (Number of Housiag Solutions) ... 109 4.13 Subsidy for a 2 SM Household and the Estimated Required Paymenu for a Housing Solution ....................... 114 Investment Spending by Selected Rural Programs .118 S.'. Distribution of Subsidies by Selected Rural Programs, 1991 .118 5.3 Contribution of Selected Rural Programs to Total Subsidies . .119 5.4 DRI - Program Spending, 1988-92 ..120 5.5 DRI - Distribution of Progra Subsidies, 1991.. 122 5.6 PNR Program Speing, 1988-92 ............................. 125 5.7 DPNR Distribution of Prgram Subsidies, 1991 ..126 5.8 INCORA, Program Spending, 1987-91 ..129 5.9 INCORA - Distribution of Program Subsidies, 1991 . . .129 5.10 Caja Agraria - Lending to Small Farmers, 1988-91 . . .133 5.11 Caja Agraria - Distribution of Program Subsidies, 1991 .133 6.1 Local Govemnmen and Population .. . 142 6.2 Local Govemnien Spending, Seleced Years, 1990-94 ......... ....... 145 6.3 Oranizing Principles Decentralization and Poverty Reduction .... ........ 150 6.4 Rural Program Population and Expenditure, 1992 .................... 153 6.6 Administradve Load for Targeting Poverty . . ..................... 153 7.1 ICBF Expenditure, 1989 and 1993 . . .162 7.2 HCB and CAIP Costs Under Different Assumptions of Program Coverage .... 163 7.3 Daycare Use, 1992 ..165 7.4 HCB Programs among Household with Child Age 2-6 . .166 7.5 Presidential Programs, Budgets and Expenditures, 1990-94 .170 F1gUres 1.1 Poverty Incidence, 1992..................................... 3 1.2 Regional Distnbution of the Poor, 1992 ......................... 4 1.3 Evolution of the Inidence of Extreme Poverty ..................... 6 1.4 Distribution of the Poor According to NBIs, 1991 ................... 10 1.5 Probability of Being Poor and Number of Children in Household, 1992 ...... 15 1.6 Gender and Poverty, 1992 ................................. 15  - ix - Figures 1.7 Regional Difference in Poverty (Head Count Index), 1992 ............... 17 1.8 Labor Force Participation, 1990 .............................. 18 1.9 Labor Force Participation Rate, 1990 ....... ................ ... 19 1.10 Life Expectancy at Birth for Men and Women .............2........ n 1.11 Colombia - Infant Mortality Rates .......................... 22 1.12 Evolution of Fertility Rates by Zone ........... ................ 22 1.13 Under-Five Mortality Rates ................................. 24 1.14 Life Expectancy, by Region ................................. 25 1.15 Infant Mortality Rates ................................... 25 1.16 Fertility Rates by Level of Education and Zone, 1987-90 .26 2.1 GDP Growth Rates at Constance Prices, 1970-90 .29 2.2 Nominal Interest Rates, 1990-93 .33 4.1 Monthly Electricity Charges, Costs and Subsidies per Legal Urban Household, by Strata, 1992 .91 4.2 Monthly Gas Charges, Costs and Subsidies per Legal Urban Household, by Strata, 1992 .92 4.3 Monthly Water and Sewerage Charges, Costs, and Subsidies per Legal Urban Household, by Strata, 1992 .98 4.4 Supply of Housing Solutions, Collective and Individual .111 6.1 Municipal Property Tax Income .141 6.2 Local Government Revenues, 1992-2000 .141 6.3 Situado Fiscal per capita, by Region .145 Boxes 3.1 Escuela Nueva - A Successful Program .,erving the Rural Poor .57 4.1 Switching from Cocinol to LPG .87 5.1 Rural Development Investment Project, A Decentalized, Demand Driven Program of Rural Investments .121 6.1 Study of Regional Practices in Grant Design. 146 6.2 Demand Verification and Pricing Signals in Mexico's PRONASOL .149 6.3 Recommendations for Improved Efficiency .151 6.4 Recommendations for Improved Equity ....... .................. 152 6.5 Recommendations for Improved Accountability .154 7.1 Characteristics of Principal ICBF Programs ........................ 161 7.2 Factors Affecting Use of HCB Services .............. .......... 166 7.3 Estimated ISS Deficits and Obligations, 1992 .173 7.4 Estimating the Costs of a Social Safety Net .179  Currency Equivalents (As of April 14, 1994) Currency Unit = Peso (Col$) Col$1 = US$0.00121 US$1 = Col$827.96 Fiscal Year January 1 to December 31 Glossary of Abbreviations AGETIP Senegal's Public Employment Program (L'Agence d'execution de travaux d'interest public contre le sous-emploi) Apertura Opening of the economy BATUTA Music Education Program, Office of the President Bienestina Fortified flour made and distributed by ICBF CAIP Day Care Centers (Centro de Atenci6n Inegrl al Preescolar) Caja de CrEdito Agraria Agricultural Credit Bank CAJANAL Social Security for Governent enployees (Caja de Compensaci6n Nacional) Caprecom Social Security for Employees in Communications (Caja de Previsi6n Social de Comunicaciones) Caprecundi Social security for employees of Cundinamarca Dqment (Caja de Previsi6n del Departmento de Cundiamma) CASEN Household Survey CCI Community Child Centers (Centros Comunitarios pam la Infancia) CCRP Regional Population Research Ceter [NGOJ(Corporaci6n Centro Regional de Poblaci6n) CDRs Municipal Councils for Rural Developmem (Consejos de Desarrollo Rural Municipal) CELGAC Cundinamarca's Electricity Utility Company CEPAL Economic Commission for Latin America (Comisi6n Econ6mica para Latinoam6rica) CERT Tax credit certificate (Certificado de Reembolso Tributario) Cesantis Redundancy rights Cocinol Gasoline for cooking purposes COLGAS LPG Distribution Program CONPES National Council for Economic and Social Policies (Consejo Nacional de Politica Econ6mica y Social)  - xi - CORPES Regional Council for Economic and Social Policies (Consejo Regional de Politica Econ6mica y Social) Corporan6nimas Social security for corporate employees (Caja de Previsi6n de las Corporaciones y Sociedades An6nimas) DANE National Statistics Department (Departamento Administrativo Nacional de Estadistica) DAPRE Administrative Department, Office of the President (Departamento Administrativo de la Oficina de la Presidencia) DBRS Division of Basic Rural Sanitation, INPES DFIET Division of Institutional Strengthening, DNP DNP Department of National Planning (Departamento Nacional de Planeaci6n) DRI Integned Rural Development Program (Desarrollo Rural IntegraL..)) DTF Coloznoian .ierest Rate Index (Dep6sitos a T6mino Fijo) ECOPETROL Colombian Oil Enterpri'e (Empresa Colombiana de P6troleos) EDP Essential Drugs Pi gram EMP Economic Modernization Program EMPOS Water and Sanitation Companies (Empresas de Obras Sanitarias) Escuela Nueva New School Program ESMAP Energy Strategy Management Program (World Bank) FAG Agriculture Guarantee Fund (Fondo Agricola de Garantia) FAMI Program for the Family, Women and Infants (Familia, Mujer e Infancia) FAO Food Agricultural Organization FECODE National Teachers' Union FEDESARROLLO Foundation for Higher Education and Development (Fundacion Para la Educaci6n Superior y Desarrollo) FES Foundation for Higher Education (NGO) FFAP Fondo Financiero Agropecuario FINAGRO Fund for the Financing of the Agricultural Sector (Fondo para el Financiamiento del Sector Agropecuario) FINDETER Municipal Development Bank (Financiera de Desarrollo Territorial) FIS Social Investment Fund (Fondo de Inversion Social) FNC National Coffee Fund (Fondo Nacional del Caf6) FNCV National Fund for Local Roads (Fondo Nacional de Caminos Vecinales) Fondo DRI Integrated Rural Development Fund (Fondo para el Desarrollo Rural Integrado) FSES See PPFSES GIS jeographical Information Sy. cm HBF Family Welfare Prograan (Hagares de Bienestar Familiar) HCB Community [cnild care] welfare center (Hogar Comunitaio de  - xii - Bienestar) HIMAT Colombian Institute for Hydrology, Meterology and Land Preparation (Instituto Colombiano de Hidrologfa, Meteorologia y Aderuaci6n de Tierras) ICA Colombian Agricultural Institute (Instituto Colombiano de Agricultura) ICBF Family Welfare Ihstitute (Instituto Colombiano de Bienestar Familiar) ICFES National College Entrance Examination ICT National Construction anid Mortgage Company (Instituto de Cr6dito Territorial) IDB Irnter-American Development Bank IDEMA Agricultural Marketing Institute (Instituto de Mercadeo Agropecuario) IFS International Financial Statistics, IMF IMF International Monetary Fund INCORA Colombian Institute for Agrarian Reform (Instituto Colombiano de Reforma Agrria) INDERENA National Institute of Renewable Resources and the Environment (Instituto Nacional de Recursos Renovables y del Medio Ambiente) INEA National Institute for Alternative Energy (nstituto Nacional de Energias Alternas) INPES Natonal Institute for Specia Health Programs (nsttuto Nacional Para Programas Especiales de Salud) INSFOPAL Institute for Municipal Development (Instituto de Fomento Municipal) INURBE National Institute of Urban Reform and Low-income Housing (Instituto Nacional para la Reforma Urbana y La Vivienda de Interds Social) IPC Community Development Program anstituto de Programas Comunitarios) ISS Institute of Social Security (Instituto de Seguridad Social) 1MP See PPJMF JNT National Tarriff Board (Junta Nacional de Tarifas) kBtu Thousand British Thermal Units kWh Kilowatts per hour LPG Uquified petroleum gas MAM See PPMAM Misi6n Social Special commission in arport of dalization and targetui of social services (Misi6n de Apoyo a la Descentralizacifn y la Focalizaci6n de los Servicios Sociales) MOA Ministry of Agriculture MOH Ministry of Health  - xiii -. MOPT Ministry of Public Works NBI Index of Unsatisfied Basic Needs ODEPLAN Chile's National Planning Office PDI Program for Municipal Institutional Development (Programa de Desarrollo Institucional Municipal) PDIC Integrated Campesino Development Plan (Plan de Desarrollo Integral Campesino) PHS Public Health System Plan DIA Targeted Nutrition Assistance Program (Plan de Desarrollo Integ.al Alimenticio) PNR National Rehabilitation Plan (Plan Nacional de Rehabilitaci6n) PNUD Umted Nations Development Program (Programa de las Naciones Unidas Para el Desamrollo) PPFSES Fund for solidarity and social emergencies (Fondo de Solidaridad y Emergencia Social) PPJMF Presidential Program for the Youth, Women and Family (Programa Juventud, Mujer y Familia) PPMAM Medellin Metropolitan Area Presidential Program (Progma Presidencial para Medellin y su Area Metropolitana) PPP Purchasing Power Parity ProFamilia Family Planning Institution PRONASOL Mexico's National Solidarity Program (Programa Nacional Para la Solidaridad en Mexico) Revolucift Pacfifca 1990-94 Economic Development Plan SENA National Vocational Training Service SIF Social Investment Fund SINTAP National System for Transfer of Agricultre Technology (Sistema Nacional de Transfeencia de Tecnologia Agropecuaria) SlTC Standard Intemational Trade Classification SSPD Regulatory Agency for Public Services (Superintendencia de Servicios PNblicos Domiciliarios) Tcal Tera-Calories (Tera-calorias) UAP Unit of Land for the Rural Household (Unidad Agricola Familar) UAP DNP unit in charge of water and sanitation (Unidad de Agua Potable y Saneamiento) UDA DNP unit in charge of agarian development (DNP, Unidad de Desarrollo Agrario) UDT DNP unit in charge of inter-governental relations (DNP, Unidad de Desarrollo Territorial) UNDP United Nations Development Program  Preface Sustainable poverty reduction is the World Bank's main objecdve. The Bank's approach to poverty reduction has evolved, reflectng both the progression of development thinking and the lessons of experience. Two recent Bank publications promoted the policies and practices found to work best. Based on cross-country analysis, World Developnen Report 1990 concluded that the countries most successful in reducing poverty have followed a two- part approach. They have promoted policies tat emphasize efficient growth and make use of labor, the poor's most abundant asset. And they have promoted expenditures and institutions that provide equitable access to social services, including education and health care. World Developmert Report 1990 also emphaized the importance of a social safety net to protect society's most vulnerable groups. The 1991 policy paper, Assistance Strategies to Reduce Poveny, established guidelines on how the Bank should promote the two-part approach in its policy dialogue, analytical work, and lending. Asstance Strateges recommended that poverty assessments be prepared for all active borrower countries to provide policy advice and help design Bank-pported programs. In its simplest form, the porty assessment addresses ree questons: Who is poor? Why are they poor? And what should policymaker do about it? This report presents the poverty asessment for Colombia. The report has three parts: stategic overview, main text, and anexes. hne strategic overiw identifies areas where the government and the Bank need to focus to ensure future progress in poverty reduction. It offers a context for the assessment's different elements and a sense of priorty among policy options. The main report has swven chapters detaiing the analysis and recommendatons of both Bank and government teams regarding: the nature and extent of poverty in Colombia, the effectiveness of economic management, the adequacy of govement efforts to provide basic social and infrastructural services to the poor, the effectiveness of the instutional framework, and the availablity of a scia safety net. The annexes provide methodological and informat support for the report. The World Bank and Government of Colombia took the oppornity to work together in desgning this study. While the Bank was seeig to produce a poverty assessment, the Misn Socal in DNP warted to conduct a study on the incidence of government expenditure. Juan Luis Londof o (then Deputy Director of DNP) and Emnesto May (task manager for the poverty assessment report) agreed to set up joint Bank/DNP teams to work on both studies. An agreement to produce two paralle publications was formaized In April 1993. The Government of Colombia hired a group of consultants to provide background reports on educa, health, pubic housing, childcae, public utility services, rural programs, and the programs of the Office of the Presdent. The Bank assigned sector specists to work closely with the consultants. DNP also appointed counterrs to collaborate with the Bane's spedalist Carlos Eduardo Velez Edcavarfa was hired to head the Miln Social's effort, and a special module an socl was included in the national household survey of September 1992.  - Xv - The Bank mission visited Colombia on May 9-21, 1993. The mission was led by Emeto May and integrated by Ariel Fisibein (deputy mision leader), Jacques van der OWag, Wilam McGreevey, Tim Campbell, Eleanor Shreiber, Isabele Girardot-Berg, Anne- Marie del Castillo, Jayme PortCarreiro, nakoor Persaud, and Guilherme Sedlacek. Mbisson members worked closely with DNPIMisI6n Social counterparts as well as with tIhe consultants. See tie list of joint World Bank/DNP worldng teams. The poverty report was prepared by tie Bank team on the basis of worldng papers drafted by the Colombian consultants and the outcome of the mission. In February 1994, the first draft of the report was discused wift all those involved. Ten eams prePared background repot for the studies. Frai. sco lasso and Hnando Moreno Guerrero produced the statscal informadon in the povrty profile. Teams from FEDSARROLLO prepared the reports on educafion (Carlos Geardo Molina, Doris Polanfa, and Mariclo Alviar), health (Carlos Gerardo Molina, Ursula Giedidn, Maria Clara Rueda, id Maurico Alviar) and macr cnmic policy (duardo Lora and Ana Maria Herrera). ECONOMETRIA (Alvaro Reyes Posada and Marfa Gloria Cano) prepaed the reports on eltity and gas and on water and sanitation. CENAC (Fabio Giraldo IsaLa and Jorge Enrique Torres) ptepared the report on housing. Juan Jos6 Perfetti and Marfa del Rosano Guerfa de Mesa wrote about nrral progams. Carmen Elisa Florez and Regina M6ndez prepaed tie report about ICBF, and INVAL (Alvaro Toledo Romero, Lucero Zamudo Cirdenas, and lbardo Sarmdento Anzola) prepared te report on the progams of the Ofaice of the Presdent The following people also contributed significntly: Demnis de Tray, Darnie Morrow, Scott Quehl, Helena Rbe (pee reviewer), Jeffrey Hammer (pe reviewer), Mada Elena Maldonado, Francisca Castro, Ana Mara Llorente, Juan Manuel Rojas, and Carlos AIberto Media At various stages, the teams benefitted gray firom the comments and advice of many people: Juan Luis Londoflo, Hernando Jos6 Gomez, Cecilia Marfa Velez, Tarsico Castalleda, Hugo L4pez Castalo, Nelson Ortiz, Aida Soler, Mguel Urrutia, and Kristine lbegt. Bruce Ross-Larson provided the final editng, working with Heather Cochran and Paul Holtz. Rafael E. Flores and Elena B. Rodriguez provided excelent seruarial asusitne.  - xvi. Joint Word BankIDNP Woridng Teams Taut WeddsBan Cr,euadftat DNP/MIsId SeWd mow Ernesto May (Mission Leader) Carlos Eduardo V6elz (General Coordinator) Povaty Proftie AnsI FRszbeln IDeputy Mission Ledr) Fracsco Lasso Carbs Albato Medina (Technical Assisnt) Gaurav Datt H4emndo Moreno Gurrro Macroeconomico Framework Emesto May FEDESARROLLO, Eduawdo Lois Cas Esteban Posada Ana Made lererH Hemando Zuteta' Labao Marlts Guhrm Sedlacek H"el Jacques van der Gasg FEDESARROLLO: Cados Garafdo Mot Clara Guzmrn - Eleanor Schebe Mats aaCr Rueda Hectr Fablo Medina Education Jacqs van der Geag FEDESARRDLLO: Carlos Gerad Molha Camn Helena Vergara- Mcbal Poetshnik P.rgait Peii* Eetity end Gas Jayrne Porto-Carelro ECONOMETRIA: Alvaro Ree Posada Eva Mari Udibe* Mrt Gltoda Cano Sonib Rojas- Water and Santtion Thakoot Persud ECONOMETRtIA: Alato Reya Posada Eva Mar Urbe^ Maria Glori Cano Ruben Datto Avendallo* Houing Thakoor Peraud CENAC: Pablo Gircido Isaz Dego Fernfndezo Jorp Enrique Tonfes Ramnrez Luz Stella Gonzhlet Andres Escobar Urb Rul Progam abolbs Girardot-Beri Juan Jos4 Pentett del Conal Cara Gonzilez Anne Mari del Cstillo Consult Made del Roscuo Guenra de Mesa tecenhtIon Thn Campbel Sol Safet Not Willam MeGrevy ICIIF Carmen Esa F16tez beetr Pbza- Regia Mnt" Mirim Gutlne Progas of th Presidncy INVAL: Atvao Toedo Romero Nancy Tirado* Lcero Zamudio Ckdenm Libardo Sermkent Anzoa *Pe Reviewers ased by OW  Strategic Overview Povery Reduction Strategy: Steering for measures that will enhance rural Colombia toward Growth with Equity incomes. This need is accentuated by the recent deterioration of rural incomnes and The recent Cusiana and Cupiagua oil dis- the economy's anticipated adjustment to edpoverty coveries give Colombia an excellent the oil boom. A proactive policy frame- redon strategy opportunity to move onto a higher work must ensure that the rural sector needs tofocus in growth path. Colombia has the resources and the poor share the oil windfall gains. three priority to pursue a coordinated poverty reduction Work on a coherent rural develop- areas: 1) rural strategy. It now needs effective and effi- ment strategy, notably absent in the gov- development cient human resource policies and target- emient's 1990-94 Development Plan, 2) social and ed poverty programs-in short, a strate- has just been initiated. Previously, the sttural gy. In devising and implementing that authorities focused on agricultural poli- servcsran strategy, policymakers must give priority cies and rural expenditure programs. The serwcest and 3) to three areas: (1) rural development, (2) Ministry of Agriculture attended to agri- decentralizatio social and infrastructural services, and cultural policy. And the implementing capacity buil8ing. (3) decentralization, capacity building, agencies of the rural expenditure pro- and institutional and institutional strengthening. It will grams (Integrated Rural Development strngthening also be important to improve the moni- Program, National Rehabilitation Plan, toring and evaluation systems for all Colombian Institute for Agrarian Reform, poverty reduction programs. and Agricultural Credit Bank) worked The pace of institutional reform in directly with local governments-but Colombia's development strategy is a without adequate coordination to develop major challenge. The policies are gener- an institutional framework conducive to ally well conceived but need further defi- broader rural development. nition to become fully operational. So far The first steps have recently been the government has seriously underesti- taken. The functions of the implementing mated the difficulties of implementation agencies for rural expenditure programs and institutional change. The government have been streamlined and specialized, must now specify the implementation making them more complementary. details of its social sector development Placing one institudon, the Integrated program. Rural Development Fund, in charge of financing infrastructure and services for Rural Development the productive rural sector assures greater consistency in formulating programs and Extreme poverty in Colombia is mainly a implementing actions in the field. By rural problem. Seventy percent of the. bringing together municipalities. rural people with incomes below subsistence communities, and public officials to coor- live in ural areas, underscoring the need dinate local rural development projects in  ' xviii - the Municipal Councils for Rural Rural) to support rural capital expendi- Develop-ment, the government has framed tures by the private sector. a more integrated vision of rural develop- The trade protection and domestic ment. Appropriate consideration can now support mechanisms in agriculture, in be given to the links among national, addition to hindering competitiveness, regional, and local rural projects and are inefficient instruments for protecting between social and productive sectors. the rural poor. To reduce poverty, the Consistent with a more comprehen- government should reverse the recent The basisfor rural sive and coordinated rural development backsliding in trade policies, eliminate development is strategy, the government needs to pro- agriculture price and investment subsi- vide adequate incentives for the agricul- dies, and redirect resources to targeted afficgemagrwdth ture sector, invest in economically attrac- rurl programs. growth tive rural infrastructure projects and ser- To aid the poor during the current vices to support production, and elimi- period of stress and to begin a transition- nate the urban bias in the delivery of al scheme for reallocating agricultural social services. But improving the living resources, the proposed Emergency Rural conditions of the rural poor is not all that Employment Program should be put in can be done. Because migration from the place, evaluated, and expanded as appro- rural to urban areas is another mecha- priate. As proposed, the pilot employ- nism for increasing living standards, the ment scheme is to be coordinated by the government should ensure the mobility Ministry of Agriculture and managed by of labor. It should eliminate distortions in the Integrated Rural Development the labor market and provide high-quality Program. Particular care should be taken basic rural education and health care. to ensure efficient labor-intensive tech- niques are used in the proposed rural Incentive Frameworkfor Agriculture infrastructure projects and to set wages in the program below market rates. This The basis for rural development is effi- will ensure targeting through self-selec- cient agricultural growth, possible only tion and give an incentive to leave the by removing today's price distortions. program as soon as alternative work The governmen, made significant opportunities develop. To maximize the progress in liberalizing the sector, dis- impact of the employment program, it mantling the Agricultural Marketing should be executed by community Institute (IDEMA) and relaxing agricul- groups (such as Juntas de Acci6n ture supports. But these advances were Communal, Empresas Solidarias, reversed in 1993. In response to the women's groups) with funds from 1991-92 crisis in agriculture, the govern- municipalities, the Integrated Rural ment increased its trade protection, reini- Development Fund, the National tiated market interventions to support the Rehabilitation Plan, or the Fund for purchase of important crops-IDEMA's Solidarity and Social Emergencies. purchase of agriculture products doubled between 1992 and 1993-and extended Rural Infrasructre and Services the date for bringing interest rates to small farmers closer to market levels. Is Increasing rural productivity through also created an investment subsidy economically attractive rural infrastruc- scheme (Incentivo a la Capitalizacidn ture projects is one of the most effective  - xix means to reduce poverty in Colombia. have been impressive in improving the Programs to improve rural infrastructure, school environment to increase learning services, and land consolidation are and community involvement. If the important instruments of poverty reduc- Escuela Nueva is to continue to function tion. The challenge is to identify, design, on a national scale, it will require and implement projects with high eco- renewed commitment from senior policy- nomic and social rates of retum, while makers. In health, the clinic-based care encouraging private sector participation. system appears poorly suited to the rural In the short to medium term, the most poor. A model based more on out-reach Resources should important constraint in rural project services should be considered. In addi- be channeedfrom delivery is low implementation capacity, tion, a reasonably attractve career pack- exising subsides a constraint that should c- -cled imnme- age for a permanent, rural-oriented pub- eg husing diately. As local and depa aiental opera- lic service needs to be developed. for energy. houstng tional capacity is enhanced, additional and agricultural resources could be effectively channeled Socal and Infastructural Services price support through direct transfers to rural munici- systems toward palities or through the cofinancing sys- Although Colombia has made impressive basic education, tem. With the added resources, special gains during the last two decades in health cae, na safeguards and incentives will be expanding services, much remains to be and required to ensure that national poverty done to improve the access and quality of reduction goals are reflected in planning services for the poor in both urban and most to and budgeting. In this context, the rural areas. Many poverty programs have Integrated Rural Development Fund pro- mainly benefited the better-off, and elim- grams can play a special role to channel inating these subsidies would free up additional funds, develop capacity at the considerable resources to fmance more local level, influence the allocation of poverty reduction. In particular, local resources, and promote specific resources should be channeled from projects in support of the poor. existing subsidies for energy, housing, and agricultural price support systems Delivery of Socil Services in RuralAreas toward basic education, health care, rural infrastructure, and social assistance to the The design and delivery of social ser- most vulnerable. vices are biased toward urban centers. Correcting this bias requires tilting the Education balance of social spending toward rural areas and-more important-modifying The education system is at a crossads. the delivery modes for such services as The decentralization effort will pose education and health so that they more opportunities and challenges and requires closely respond to the special circum- a genuine commitment to improve edu- stances of the rural population. cation, reflected in govemment priorities Education is the only sector that has and expressed in a Minister of Education made a concerted effort to develop a who embodies these principles. With an rumral model for the delivery of services. overall coverage rate of roughly 86 per- The results of the program, Escuela cent at the primary level and nearly 50 Nuev, are very positive. Achievemenu peren at the secondary level, Colombia  -xU- is still far from the constitutional man- expenditures. A centerpiece of the gov- date of universal basic education to age emment's new strategy in the sector, as 15. Low coverage in basic education presented in the recent Social Security remains a problem among the poor and in Law, is the universal provision of a stan- certain areas (most notably, the Atlantic dard package of health services, begin- Building local region). Furthermore, the overall quality ning with primary services. The goal is to of basic public education is extremely deliver a basic health package to all politic al comftlnent low. Colombians, regardless of their income, to education is as The projected growth in central gov- by subsidizing the poor. But the imple- critical as building einment transfers to departments and mentation details of the law are incom- capacity municipalities should substantially plete or evolving, and they promise to be increase the resources available to difficult to institutionalize. regional and local govemments for edu- A commitment to continuity and flex- cation. Although these expanded ibility in pursuing universal basic health resources should theoretically lead to coverage over the medium to long term increased access to education, achieving will be required from the next adminis- this objective will depend upon local tration and from future governments. The government commitment. Building local Minstry of Health needs to be strength- political commitment to education is as ened to aggressively guide the system critical as building capacity. National, and set quality and efficiency control departmental, and municipal authorities standards, particularly important as the must enhance the quality of public edu- system moves to integrate public and pri- cation by raising the educational require- vate health providers under the new ments of new teachers. They must move framework. toward a system that rewards perfor- Notably absent from the govern- mance rather than tenure. They must ment's plans for basic services are verti- improve the availability of instructional cal programs for immunization and materials in schools and provide ade- endemic disease control, which are espe- quate facilities to limit overcrowding, cially important for the poor. Vector- and ultimately eliminate the three-shift borne diseases are still prevalent in system in public secondary schools. urban slums and coastal and river valley areas. Malaria and dengue fever control Health programs have declined in both efficien- cy and effectiveness in recent years. Most of Colombia's poor rely on the pub- Mass immunization campaigns have lic health system. Present service use and proved effective but not yet achieved expenditure outcomes indicate sufficient universal coverage. The Ministry of quality services are not reaching this Health needs to retain service responsi- group. Effective care through the public bilities for these programs and actively system reaches only 35 percent of the pursue their implementation. To enhance population, compared with the target of their effectiveness, the rural out-reach 60 percent. Overall expenditure is insuf- strategy should prove critical. In the ficiently targeted toward the poor. The decentralized provision of health ser- richest 40 percent of the households ben- vices, local governments need to be dis- efit from almost one-third of the couraged from overinvesting in health  I xxi I facilities whose recurrent costs may not liquid petroleum gas and kerosene appli- be sustainable. Critical elements in the ances available through Community search for better quality will be holding Councils with subsidization. Network local officials accountable for the effec- extensions of natural gas could be subsi- tiveness of services and strengthening dized in poor neighborhoods through low user demand. hook-up charges and efficient two-burner stoves. For rural households, extending Energy the electricity network may be too expen- sive, and isolated generating units could Cridcal elements in For many years, the strategy for setting provide basic lighting and communica- the search for beter electricity tariffs was anchored in the tion services. Small communities can be quality will be belief that by maintaining low prices, served by installing generating equip- qa will be poor households would have access to the ment such as diesel motors. hogkalls services. Evidence indicates, however, accountabe for the that the distribution of the massive subsi- Water and Sewerage effectiveness of dies (representing 1.4 percent of GDP) services and has been slightly regressive and thus not Lack of access to water and sewerage is strengthening user primarily beneficial to the poor. Although mostly a problem of the poor in demad the government recently increased elec- Colombia. For both services, coverage of tricity tariffs a%d reduced stfatification (a the poorest fifth of the population in poorly designed pricing scheme that 1992 was well below the countly aver- allegedly charges residential users on the age: for water, it was 65 percent (com- basis of income), the process needs to be pared with the average of 83 percent) and accelerated. The government should fur- for sewerage it was 37 percent (com- ther simplify or eliminate stratification, pared with 67 percent). This lack of cov- establish a more general residentil tariff erage of the poor is not explained by an based on marginal cost pricing, and com- unwillingness to pay. In the main cities, plement it with targeted social tariffs for households in the lowest income decile low income users. The resources attained spend up to 9 percent of their income on through changes in public pricing could water and sewerage, while the population reduce regressive taxes or finance more at large spends 1 to 2 percent. targeted interventions. Increasing coverage in water and Complementary measures will be sewerage goes beyond the need to follow required to accompany the tariff adjust- the pricing policies for cost recovery and ments. With up to 11 percent of poor targeted subsidies recommended in the urban household income spent on energy, report It requires meeting the needs of economical alternatives for household scatered rural populaons or of residents energy are critical. Natural gas, liquid in inaccessible, unserviced, periurban petroleum gas, and kerosene are alterna- areas. In the urban centers, this must be tive fuels to be promoted along with the done without crating incentives for oth- electricity tariff reforms. Market forces ers to settle in even more dificult tin. can accomplish the switch from electrici- Apart fiom technological constraints, the ty, and the govemment should make wre cost per household of traditional services these brces are at play. For low-incom in these areas is prohibitive. hcoseholds, the. govenment could make This ,drings two issues into focus.  -xlii - Intermediate technologies should be used for very poor and vulnerable groups, and for residents in inaccessible or very poor developing such a mechanism must be a areas, whether in peripheral settlements priority. near urban centers or in dispersed rural Resources should be made available zones. And housing policies should pro- by eliminating subsidies (such as those vide more access to basic services and for public utilities) or other programs that avoid further proliferation of unautho- mainly benefit the wealthy, or by assign- rized urban setdements. Tie government ing a small fraction of the expected oil Lack of coverage should promote such altematives as com- revenues. Experience elsewhere suggests of e poorfor munity standpipes, cisterns, tanker that, if efficient programs can be trucks, and water purification tablets as designed, an appropriate level of spend- energs wategI solutions for today's unserviced areas. It ing for social protection (leaving aside and sewerage is should explore ways of upgrading the traditional responsibilities for education not exPlained by quality of service provided under such and health services) would range from 1 an unwlngness alternatives by encouraging private sec- to 2 percent of GDP. In assigning to pay tor participation through a bidding resources to the very poor and vulnera- process that would assign both lucrative ble, the government must ensure tAat and nonlucrative neighborhoods to be resources are not wasted on ineffective serviced by the bidders. A subsidy of the projects. Bureaucratic red tape must be same magrnitude as that provided to low- kept to a minimum, and the bulk of social income households for conventional ser- spending must reach those in greatest vices could be awarded to ensure service need. in the poorest neighborhoods. Within the Restructured and refocused, the pro- existing housing policy of direct subsi- grams run by the Family Welfare dies to the poor-to purchase a new Institute (ICBF), the Office of the house, improve an existing one, title President, and the Social Security System land, or access sanitation services-the could form a social safety net providing government should direct more resources more efficient and equitable assistance to to finance urbanized and urbanizable lots those in greatest need, substantially alle- and water and sanitation works. viating poverty. New options for poverty programs worth considering are Plan Social Assistance to the Most Vulnerable DIA (a food stamp program) and the Groups Emergency Rural Employment Program In designing these programs, the govern- The poverty reduction strategy should ment observed five rules: direct most of ensure that the poor gain from-and con- the subsidy to beneficiaries, minimize the tribute to-gowth. But some poor peo- need for additional staff or management, ple, especially the old and the infirm, will induce self-targeting and establish auto- not be able to respond to new oppomtni- matic exit points for recipients, promote ties. And others, although benefiting, will complementarities between services, and still have incomes inadequate for basic test the program as a pilot project and necessities, or be vulnerable to income- evaluate results before implementation. reducing shocks such as drought or loss As the government develops its social of the family breadwinner. Colombia safety net, it must follow these guiding does not yet have an effective safety net principles. Only after careful evaluation  - xxiii - of the benefits and costs of such pilot governments, organized interest groups, projects should any program be institu- and private sector-can reach a profi- tionalized. ciency in decisionmaking and manage- ment commnensurate with the sweeping Decentralization, Capacity Building, expansion of subnational government and Institutional Strengthening responsibilities under the new constitu- tion and legislation. The proposed strate- The effectiveness of Colombia's social gy incorporates required changes at all expenditures and poverty reduction levels of government: central, depart- Wuhdece6 a&4dM efforts depends on a precarious balance mental, and municipal. One critical com- poverty reduction of power between central and local gov- ponent is to transform departments into and insttutional ernments. With the decentralization of its the intermediate links between the central deont hav public sector, Colombia is shifting to government and municipalities. A second deelopmenthave local governments the responsibility for is to open public administration to the become inseparabk delivering social programs and many private sector, NGOs, and organized infrastructural services to the poor. Local communities in planning, financing, pro- governments have eagerly embraced the gram implementation, training, manage- new powers and autonomy in spending ment, and evaluation. A third is to conveyed in recent legislation, particular- enhance human resources at all levels of ly 1993's Ley de Competencias y government. Recursos (on local government functions Given the magnitude of the task, the and financing). But the effectiveness and implementation of the strategy should efficiency of social spending and man- start with pilot projects in each area-to agement are seriously in question in all make more effective use of limited insti- but a handful of cities and departments. tutional capacity. The projects should To induce effective spending, the central continuously test intergovernmental government is developing an incentive coordination-and include evaluations at framework for local authorities. Properly each stage as well as strategies to expand defining this framework is critical for the application to more recipients. success of decentralized services in reaching the poor. Define an Incentive Frameworkfor Local With decentralization, poverty reduc- Governments tion and institutional development have become inseparable. The "War on Essential programs in health, education, Poverty" clearly requires a strategy for water, sanitation, and social assistance institutional development an overarching will be delivered by municipal govern- vision, explicit long-term objectives, a ments pursuant to centrally mandated central body responsible for husbanding dictates, but strongly influenced by local subnatiornal institudons, greater capacity priorities. Making these arrangements among local governments to formulate work depends on effectively deploying programs of local public spending and to the instruments of decentralization. The evaluate their poverty impact, and atten- incentive framework now being designed tion to professionalism. This vision calls combines both fnancial incentives and for an entirely new level of technical administraive controls: intergovermmen- capacity so that local communities- tal revenue transfers, matching grants,  - xxiV - and regulatory provisions. By them- Open Public Administration to Private selves, however, the fiscal instruments Providers used to decentralize public services do not ensure the poor wili benefit from Given their limited capacity, local gov- social spending-that resources will be ernments should start using the private well spent in response to shifting local sector, NGOs, and organized communi- needs. ties to support their activities in plan- The government should ensure that ning, finance, pronam implementation, Spedal attention is services are efficient, roughly equivalent training, management, and evaluation. needed n, hunwnfor everyone entitled to services, and pro- This option is more realistic now. Some vided in a way that responds to the needs departments and municipalities have ministries, of the poor. The government's success in already taken the lead and can provide man tries, inducing effective spending on social pri- positive examples. The central govern- deartment, and orities will depend on its ability to moni- ment has created a positive climate for muncpalities tor outcomes and make adjustments to public-private sector interaction during the incentive framework. One priority the past few years. The new agencies for area for change relates to the terms of the regulation and control provide a fresh transfer formulas. The government opportunity for private sector participa- should consider including social expendi- tion in monitoring and evaluating decen- ture performance indicators in the formu- tralized programs. And the country has las-such as infant mortality or academic NGOs capable of assuming a leadership performance scores-to compensate role. achievements. Enhace Hum Resources atAUl Levels Trasorn Departments Special attention is needed in human The passivity of departments in the resources in sectoral ministries, depart- decentralization process must be over- ments, and municipalities, and the come, and their role as intermediaries required skill mix must be adjusted between the central government and through training or staff composition municipalities facilitated. The depart- changes. The areas of technical expertise ments need to create or strengthen their in need of emphasis are: sectoral techni- own technical assice units for munici- cal knowledge; targeting techniques; palities and participate in the central gov- impact evaluation; contemporary man- ernent's pilot projects. They also need agement training; information systems; to be part of the new intergovernmental identification, design, and implementa- information syster, bringing local and ton of projects; and public administra- regional resource allocation priorities to tion, planning, and budgeting. Training the attention of central government agen- and evaluation progams should include cies. And they need to train departmental operational plans and start with the most staff to sufport municipalities whenever advanced deparm ts and cities, gradu- the municipalities cannot fully comply ally expanding to the rest of departments with the new responsibilities. and cities.  - xxv-^ It is iso inportant to create a pool of with little connection to lower levels of professional managers and public offi- government. A much more robust man- cials at the subnational levels of govern- agement information system similar to ment. Colombia needs to establish pro- Chile's or Argentina's could serve as a fessional qualifications for local civil ser- single source of reliable information for vice with salary schedules and education- local and central goverments to assess al institutions equipped to produce quali- progress, gauge needs, and manage pro- fied upper and middle-rank personnel. grams. To be effective, the system must be linked to the budget and planning A limiation in Monitoring and Evaluation Systems process at all levels of government. assessing the To implement the poverty reduction strat- Social Assistance Programs eectveness of egy, the government must continuously and monitor advances and modify action The absence of any credible estimates of prOgrams has been plans. For this, the government needs to the benefits and identification of recipi- the lack ofpre. enhance its monitoring and evaluation ents of social assistance programs seri- established systems. A clear limitation in assessing ously undermines efforts to recommend monitoring and the effectiveness of expenditures and expansion, contraction,or elimination. At evaluaon sysems programs has been the lack of pre-estab- best, programs provide information about to uwasure the lished monitoring and evaluation systems program costs and unit costs per recipi- to measure the impact and cost-effective- ent, but cost information cannot be a u c ness of poverty reduction programs. So. guide to assessment without knowledge gffec'i'ess lf developing adequate information systems of benefits. For example, within ICBF poverty rduction should be among the top priorities. there have been no comparatve longitu- programs dinal evaluations of the community child Decentralization Effort care centers (HCB) and day care pro- grams (CAIP). The decision to increase To support closer links among govern- ICBF financing to the HCB program, and ment levels, two types of information to increase parents' payments to the systems will be required. Colombia CAIP program while seeking alternative should develop performance criteria to modes to finance it, was based on the montor progress in institutional develop- govemnment's decision to target limited ment. The Department of National resources to the poor. But the effective- Planning Unit for Intergovernmental ness of ICBF's current expenditure mix Relations (DNP-UDT) has the responsi- is impossible to determine. bility to monitor and evaluate-at arm's A sound analytical base to assess the length-the implementation and impact benefits and cost-effectiveness of each of the institutional development strategy. program is urgently needed to determine Even so, given its limited experience future resource allocations. Evaluation with implementation issues, it will need modules should be incorporated in all support. social assistance programs. Resource An intergovernmental information allocation decisions should be made only system is also required. The information with this information in hand. The Office systems for resource allocation for social of the Presidency, which should become spending have so far been mainly centraL more active as an incubator of poverty  - xxvi - programs, can be effective exploring development, expanded social and infra- innovative approaches only if it concen- structural services, decentralization and trates on timely evaluation of the results. institution-building, and monitoring and To function as pilot projects, the evaluation systems-must be pursued Programs of the Presidency need to together. Adequate coordination will be incorporate evaluation modules from the required across ministries and among dif- start. On the basis of the information ferent levels of government, between the generated, assessment can be made on public and private sectors, and among With the expected whether a pilot program should be users and providers of social services. oil revenuesfrom expanded and transferred to a line min- The change of administration in August Cusiana and istry-or discarded. 1994 provides an excellent opportunity to incorporate poverty reduction as a core Cupiagua. the time Poverty Progress Reports element in the new four-year develop- is ripe for ment plan. The recent reversal in the Colombia to To ensure adequate attention to the trend toward poverty reduction- embark on a implementation of the poverty reduction observed in declining rural incomes- renewed effort of strategy, and improve the approaches and the level of violence in the country- poverty reduction being followed, there should be a period- which contributes to social disintegra- ic progress report on poverty. A National tion-make the task critical. With the Commission for Poverty Reduction expected oil revenues from Cusiana and should be established to produce this Cupiagua, the time is ripe for Colombia annual or biannual report. This commis- to embark on a renewed effort of poverty sion should be a pluralistic body with reduction. representatives of central, departmental, The challenge is for the government and municipal governments, NOOs and to start implementing the proposed local communities. As an input to this poverty reduction strategy. By systemati- report, national and regional councils for cally pursuing each element in the strate- economic and social policies and NGOs gy, it will be possible to continuously should prepare background reports on monitor advances, make required modifi- governmental and nongovernmental cations, and further elaborate the specific efforts. All levels of government should details of the corresponding action plans. be required to include poverty reducdon The Bank stands ready to support this strategies in their annual planning and strategy through economic and sector budgeting exercises. work, lending operadons, and technical assistance. Patience and perseverance are Conclusion required, however, for the fight against poverty is a long-term endeavor. The The proposed poverty reduction strategy rewards will come-the most vulnerable is an integrated framework to tackle in society will attain a higher standard of poverty systematically in Colombia. All living. four elements of the strategy-rural  Vision Estrategica Estrategia para la Redu-ci6n de la Por ello, la tarea actual involucra la Pobreza: c6mo encaminar a Colombia especificaci6n detallada del mecanismo hacia un crecimiento con equidad de ejecuci6n para el programa de desa- rrollo social. Los recientes descubri mientos de petr6leo en Cusiana y Cupiagua brindan Desarrollo rural La estrtgia de a Colombia una excelente oportunidad rdccOn de la de acelerar su ritmo de crecimiento. La pobreza extrema de Colombia es, Pobreza debe cen- Colombia cuenta con los recursos nece- fundamentalmente, un problema rural. trarse en tres aeas sarios para emprender una estrategia El setenta por ciento de la poblaci6n p)ioas: IJ coordinada de reducci6n de la pobreza. con ingresos por debajo del nivel de desarrovio is Lo que precisa ahora son polfticas efi- subsistencia vive en zonas rurales, lo 2) servcos caces y eficientes en el Area de recursos que demuestra la necesidad de adoptar sociakes y de humanos, y programas focalizados de medidas para aumentar los ingresos en iYs'y reducci6n de la pobreza: en pocas pa- ese sector. Esta necesidad se ve acentua- 3) descent ra- labras, una estrategia. En el disefto y da por el reciente deterioro de los ingre-e capacidafomepeo aplicaci6n de la misma, las autoridades sos rurales y el ajuste previsto de la raCiva ope- deben conceder prioridad a tres areas: 1) economfa a la bonanza petrolera Para rakvatyfonta- desarrollo rural, 2) servicios sociales y que el sector rural y los pobres puedanl km U- de infraestructura y 3) descentra- compartir los beneficios de dicha cional lizaci6n, fomento de capacidad operati- bonanza es menester contar con un va y fortalecimiento institucional. Seri marco de polfticas adecuadas. tambien necesario mejorar los sistemas La formulaci6n de una estrategia de seguimiento y evaluaci6n en todos coherente de desarrollo rural, sorpren- los programas de reducci6n de la dentemente olvidada en el Plan de pobreza. Desarrollo de 1990-94, solo se ha El ritmo de las reformas institu- empezado a elaborar recientemente. cionales constituye uno de los grandes Hasta ahora, los organismos compe- desaffos de la estrategia de desarrollo de tentes se ocupaban dnicamente de las Colombia. Por lo general, las polfticss polfticas agrarias y de los programas de aplicadas estan bien concebidas pero, gastos en zonas rurales. El Ministerio de para que s . plenamente operativas, Agricultura se encargaba de la polftica necesitan mayor concreci6n. El gobier- agraria mientras que los organismos de no, sin embargo, ha subestimado las ejecuci6n de los programas de gasto dificultades asociadas con la puesta en mrales (Programa de Desarrollo Rural marcha de las reformas institucionales. Integrado, Plan Naciondl de  - xxviii - Rehabilitaci6n, Instituto Colombiano de condiciones de vida de los pobres que Reforma Agraria y Banco de Crddito viven en zonas rurales. Otro mecanismo Agrario) se relacionaban directamente para mejorar los niveles de vida de la con los gobiernos locales, pero sin la poblaci6n es la migraci6n del campo a coordinaci6n necesaria para establecer la ciudad, por lo que el gobiemo debe un marco institucional conducente a un garantizar la movilidad de la mano de desarrollo rural mas amplio. obra, eliminar las distorsiones del mer- Recientemente se han dado los cado de trabajo y proporcionar servicios La base del primeros pasos en este sentido. Se han de educaci6n y de salud basicos de alta desarrollo rural es agilizado y especializado las funciones calidad en las zonas rurales. un crecimiento de los organismos responsables de los agricola eficiente programas de gastos en el sector rural, Marco de incentivos para el sector mejorando asf su grado de complemen- agricola tariedad. Al asignar a una sola institu- ci6n, el Fondo de Desarrollo Rural La base del desarrollo rural es un creci- Integrado, a cargo del financiamiento de miento agrfcola eficiente, y 6ste s6lo es infraestructura y servicios para el sector posible si se eliminan las actuales dis- rural productivo se consigue una mayor torsiones de precios. El gobierno logr6 coh.erencia en la formulaci6n de progra- avances notables en la liberalizaci6n del mas y en la realizaci6n de actividades sector, desmantelando al Instituto de en el lugar mismo de implementaci6n. Mercadeo Agropecuario (IDEMA) y Agrupando a las autoridades munici- reduciendo los subsidios a la agricul- pales, representantes de las comu- tura. Pero estos avances se revirtieron nidades rurales y funcionarios de las en el afto 1993. En respuesta a la crisis entidades pdblicas en los Consejos agricola de 1991-92, el gobierno inten- Municipales para el Desarrollo Rural sific6 el proteccionismo comercial, rein- con el fin de coordinar los proyectos trodujo el apoyo a la adquisici6n de locales, el gobierno ha concebido una importantes cultivos-la adquisici6n de visi6n mas integrada del desarrollo productos agrfcolas por el IDEMA se rural. Ahora serb posible tener en cuen- duplic6 entre 1992 y 1993-y aplaz6 la ta, como es debido, las relaciones entre fecha prevista para establecer las tasas los proyectos rurales de alcance de inter6s de los pequeftos agricultores -;cional, regional y local y entre los en niveles mas pr6ximos a los del mer- sectores sociales y productivos. cado. Asimismo formul6 un programa De acuerdo con una estrategia mas de subsidios a la inversi6n (Incentivo a integral y coordinada del desarrollo la Capitalizaci6n Rural) con el fin de rural, el gobierno debe ofrecer incen- estimular las inversiones privadas en el tivos adecuados al sectot agrfcola, sector agrfcola. invertir en proyectos de infraestructura Los mecanismos de proteccionismo rural de altos rendimientos econ6micos comercial y de apoyo a la agricultura y sociales, y eliminar la tendencia a nacional, ademias de frenar la competi- favorecer a las zonas urbanas en la tividad del sector, son poco eficaces prestaci6n de los servicios pdblicos. como instrumentos de protecci6n para Pero no basta con mejorar las. Ia poblaci6n rural pobre. Para reducir la  - xxix . pobreza, el gobierno deber