Chicago Tribune - January 25, 2001
William Neikirk, Washington Bureau

The major international financial institution for developing countries outlined this two-pronged lending approach Wednesday in a report declaring that the poor are increasingly vulnerable to periodic economic crises, natural disasters and disease, such as the HIV-AIDs epidemic in Africa.

The bank said less than a quarter of the world's population is protected by government safety nets, which include such programs as old-age pensions and unemployment insurance, while less than 5 percent can rely on their own savings, land or other assets in case of a crisis.

If poor countries that have weak safety nets or none at all decide to make them permanent features, poverty could be cut faster and the poor could gain benefits from globalization instead of being punished by its often-harsh edge, the bank said.

Eduardo Doryan, the bank's vice president for human development and a former Costa Rican education minister, said bolstering safety nets in developing countries is not enough. The World Bank, he said, is adopting a broader lending concept of improving social protection by reducing the risk of being poor.

As a result, the bank is concentrating more on programs that can remove people and communities from what Doryan called a "poverty trap," including worker training and other labor market improvements, education, jobs in public works, legal reforms helping women, or child care.

Many of these can be done at the community level, he added. But, taken together, said World Bank officials, they represent a preventive strategy against poverty that has been tried on a limited basis in various Latin American countries, including Argentina, Colombia and Uruguay.

Reducing poverty through easy loan terms is the bank's mission, but the World Bank does not have the resources alone to make a serious dent in world poverty. Its estimates show that some 1.2 billion of the world's 6 billion people live in extreme poverty, on less than $1 a day, while 60 percent of the world's population in 63 poor countries earns less than $2 a day.

At last summer's summit, the Group of Eight industrial nations set a goal of cutting the poverty rate in half by using their own funds and money from the World Bank, International Monetary Fund and other international lending institutions. This goal was given greater urgency by violent protests against globalization at the Seattle World Trade Organization meeting in 1999.

"This is not a time to be complacent," Doryan said. The bank said that since 1994 ithad increased six-fold its lending for "social protection" of the poor. In fiscal year 1999, such lending totaled $3.76 billion, 13 percent of all its loans.Robert Holzmann, director of social protection and chief author of the report, said the strategy is flexible and will be tailored according to the wishes of poor countries and communities.

"It may be that they need access to basic medical care, or clean drinking water, or ways to stop their farms from being flooded every year," he said.

Holzmann cited such examples as stipends to help orphan children remain in school or the use of social funds that can provide money for health, education and even public works helpful to the poor. Developing computer skills for workers is another, he said, while unemployment insurance and old-age pensions are among the safety nets that would be encouraged.

In Africa, said World Bank specialist Laura Frigenti, governments have scarce resources for large safety nets for the poor, particularly with the AIDs epidemic raging. One thing the bank is doing in Africa is simply assisting existing community efforts, such as helping the elderly who take care of AIDs-infected children at home, she said. Another is to encourage giving women more legal protection.

Rather than a program developed by higher-ups, she said, those that prove effective may be those that have been put in place by families and communities. Other lending institutions have supported such projects in an effort to get away from the bureaucracy and corruption of central governments and to target their money where it might do more good.

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