Announcement of the World Bank~^!!^s Tackling of Absolute Poverty in Southwest China on June 15, 1995 : Announcement of the World Bank's Tackling of Absolute Poverty in Southwest China on June 15, 1995

FOR IEIT RELAS The World Bank East Asia & Pacific Region 1818 H Street, NW Washington, DC 20433. USA Press Release no. 95/46 EAP Contact: Rachel McColgan-Mohamed (202) 458-0358 fax (202) 522-3405 Tackling Absolute Poverty in Southwest China Washington, June 15, 1995- The economy is booming for many people in China, but tens of millions still need help to escape malnourishment, high infant mortality, and low educational attainment. An International Development Association credit for $200 million and $47.5 million in IBRD funds, approved today by the World Bank's Executive Board, will improve the quality of life for more than 2.5 million people scattered across one of the poorest regions of East Asia. It is the most ambitious Bank-funded poverty project to date. The Southwest Poverty Reduction Project will not only improve health and education, but also equip farmers and village workers with the tools they need to boost their incomes. Hundreds of thousands of unemployed workers will also be assisted to find off-farm jobs. . Since 1986, the World Bank has helped the Govenment of China direct Sattention to the absolute poor by funding numerous single-sector projects, totalling more than $1.5 billion. The Southwest project is the first multisectoral project of its kind in China, and has been designed so that those at the bottom of the economic ladder- the absolute poor- are the sole beneficiaries. Although China has registered impressive economic growth over the past six years (averaging 10 percent annually), and has successfully lifted about 170 million people out of absolute poverty, nearly 85 million lead a life in some of the bleakest conditions in Asia. It is worth noting, however, that in 1978 the proportion of absolute poverty was over one in four; today, it is one in fourteen. The woman in the scarf had 14 children: 11 of them died from simple illnesses and conditions such as diarrhea which would have been easily treatable with basic medicines and vitamins. Her twelfth child was swept away by flash floods; the remaining two remain close by her side, in Puding County. The story is not unusual for the older generation of women in the project area. As Preparation Team Member Mike Goldberg says, "There is no need for such a huge loss of life. This level ofmortality can now easily and cheaply be avoided through oral rehydration therapy and other simple treatments." Archives/Records Center, H B1-001 ( 1) Although much has been achieved to date, 10 percent of population remain in absolute poverty 1143 1185 1200 - 1059 963 1000 - 790 808 8 Millions 800 - - people 400 - 60 200 96 97 85 1978 1985 1990 1993 E Total population 0 Incidence of rural absolute poverty O Rural population This absolute poverty is now concentrated in resource-constrained, remote upland areas. The key obstacle to reducing poverty since 1985 has been the absence of meaningful levels of agricultural growth and rural enterprise development in these upland areas. The project is located in 35 mountainous and remote poor counties, stretching over 700 kilometers. The landscape is desolate, comprising sinkholes that trap the extremes of climate and a rugged high elevation region. Subsistence farming is the predominant livelihood with very limited off-farm employment opportunities. As World Bank Task Manager Alan Piazza says, " These are some of China's least productive and most ecologically fragile lands. Farming in any commercial sense is extremely limited: there is very little flat land and what the natural tree and grass cover existed has been degraded, leaving steep rocky slopes." The geographical desolation of the very poorest villages is matched by worrying social statistics: * Only 10 percent of children will graduate from primary school; most girls will be illiterate; * In rare cases when off-farm employment is available, average monthly wages can be as low as 40 yuan (less than US$5), which is the cost of sending one child to school for a year; * Soils are so poor that stunted com is often the only food available, leading to stunted growth in children; * As many as 90 percent of poor children suffer chronic worm infections; * Although temperatures can soar to 400C in summer, they can dip to bone-chilling levels in winter, making cold and acute respiratory infections the major morbidity factors in children. Many of the homes- built on the slopes of limestone sinkholes - consist of little more than a thatched roof over a few planks and branches. 2 Project Description Alan Piazza describes the project as "the most comprehensive poverty project the Bank has implemented in China to date. The Leading Group for Poverty Reduction (LGPR), the Chinese Government agency responsible for implementing the project, has taken the ball and run with it from the start, ensuring that the project was a collaborative effort not just between Ministries, but also designed in large part by the villagers themselves. Supported by a Japanese Government Project Preparation Grant, we were able to bring a team often specialists into the field on several missions. They fanned out into villages on a household-to-household basis, asking the beneficiaries what they felt would improve their way oflfe. That participatory approach formed the backbone ofthe project design." The project has 6 main components, which cut across a number of sectors: * Social Services (12 percent of project costs): (i) basic education, ensuring every child in the project area will complete primary school, and (ii) basic preventative health care, enhancing the availability and delivery of primary and curative health care, including disease control and maternal and child health. Both these sub-components will entail construction or rehabilitation of facilities, training, equipment, and short-term coverage of tuition and some medical fees; * Land and Farmer Development (30 percent of project costs): upgrading agricultural output and reversing environmental degradation will be achieved through (i) improving agricultural and livestock management techniques and inputs; (ii) establishing tree nurseries; (iii) increasing crop production on the limited flat land; (iv) terracing for improved water and soil conservation; and (v) supporting provincial and regional research; * Rural Infrastructure (10 percent of project costs): labor-intensive construction of rural roads, safe drinking water supply systems, small-scale irrigation, agricultural drainage works, and rural electrification will all contribute to ensuring the beneficiaries have better access to the outside world and live in a safer environment. * Town and Village Enterprise (TVE) Development (14 percent of project costs) : investment credit for labor- intensive, commercially-viable agroprocessing, mineral, service, and handicraft industries that will purchase agricultural products and employ laborers from poor households, create a local economic base and meet environmental safeguards; * Institution Building and Poverty Monitoring (4 percent of project costs): This component will improve LGPR's and the Provincial Poor Area Development Office's capabilities in project design and implementation, procurement, accounting, and monitoring and evaluation. It will also establish an objective poverty monitoring system to assess the impact of the project's individual components. * Labor Mobility and Guangxi Municipal Employment Development (12 and 18 percent of project costs respectively): This component is the most innovative aspect of the project and will assist the absolute poor of working age to seek employment opportunities beyond the project area. Mike Goldberg described the process: "Agricultural interventions alone will not bring most people in the project area above the subsistence level. This component offers the rural unemployed a safe method of seeking employment outside their home villages. Now, without this project, a rural householder must go into debt or sell off scarce assets to look for work. For the lucky ones, one month's wages surpass what the entire family could earn back home in a year. People are often conned, misinformed, and find themselves stranded in distant, unfamiliar cities with no means of returning and no shelter. The project's system gives people the chance to base their employment decisions on fact, arming themselves with the proper protection they need to gain access to markets further afield. The participating enterprises are screened for a safe workplace environment and a fair wage. Most important, the migrant laborer has the means to return home at any time. It is no longer a gamble to seek off-farm employment." The SDR 128.6 million ($200 million equivalent) credit is extended on IDA standard terms with 35 years' maturity. The IBRD loan is extended for 20 years, including 5 years of grace, at the Bank's standard variable interest rate. 3