# CHAPTER HI. SPECIAL THEME: INSTlTUTIONAL<sup>DEVELOPMENT IN</sup> SUPPORT OF A POVERTY FOCUS<sup>FOR PHN SECTORS</sup>

### _A_ Introducwn

3.1 7Wo special topics were selected for this yeares sector review: (1) poverty, chosen by PRSVP<sup>for</sup> inclusion in al FY91 sector reviews and<sup>(2) manage-</sup> mentAnstitutlonal dwelopment, chosen<sup>by PHRHN</sup> in close consultation with PHN colleagues<sup>in opera-</sup> dons. A brief overview of each topic and<sup>its rele-</sup> vance to the PHN sector is presented<sup>here, followed</sup> by an introduction of this report's<sup>chosen theme,</sup> which blends the two special topics.

tions departments) and In the counuries (planning and finance ministres and heads<sup>of state). All</sup> sectoral interventions need to be prioritzed within<sup>a</sup> well-arIculated set of macroeconomic and multisectoral polcies that are oriented toward<sup>growth with</sup> poverty reductlon Without this kind of<sup>framework,</sup> the potential of the PHN sector (and<sup>others) to</sup> contribute effectively to poverty alleviation<sup>will not</sup> be fully realized.

## 2. _Manawment and Instiutdonal Development_

### 1. &env

3.2 The World Development Report (WDR) 1990 reflects the Bank's strong commitment to<sup>the allevia-</sup> tion of poverty as a central development<sup>objective</sup> and top priority. _RDR 1990,_ and<sup>the subsequent</sup> policy paper, *Assistance Strategies<sup>to Reduce</sup> Poverty," articulate a two-pronged<sup>strategy for</sup> sustainable poverty reduction: (1) the<sup>generation of</sup> income-earning opportunities for the<sup>poor, and (2)</sup> the provision of basic social services<sup>to the poor to</sup> enable them to seize those opportunities The strategy also calls for providing a social<sup>safety net for</sup> vulnerable groups who are unable to take<sup>advantage</sup> of income earning opportunides. Tbis<sup>strategy</sup> intensifies the emphasis on PHR sector activities<sup>as</sup> key investments in the development<sup>of any country</sup> and presents further challenges to the<sup>PHN sector.</sup> 3.3 Addressing poverty through PHN interventions certainly means expanding<sup>access to basic</sup> services and targeting programs<sup>for the poor and</sup> vulnerable groups, in particular. It also means addressing broader sectoral issues--improving<sup>the</sup> quality and efficency of services, reallocating<sup>public</sup> expenditure,decentralzingdecision-makingresponsibility, encouraging greater NOO and<sup>community</sup> involvement, and exploiting the role<sup>of the private</sup> sector to liberate public resources for basic<sup>and</sup> preventive serices and carefully designed cost-<sup>recov-</sup> ery programs.

3.4 The objective of poverty alleviation must<sup>be</sup> understood and internalized at the country<sup>(macro-</sup> economic) level-both in the Bank (country<sup>opera-</sup> 3.5 There is a strong, well-documented, positive correlation between project sustainability<sup>and institu-</sup> tional development. The FY90 PHN sector<sup>review</sup> noted an increasing appreciation in Bank<sup>investments</sup> in PHN of the importance of developing<sup>institutional</sup> capacity and management skills and<sup>practices, but</sup> some variance in the effectiveness with<sup>which differ-</sup> ent operations have addressd this issue.<sup>The need</sup> for strengthening Institutions and<sup>management</sup> capacity Is espedally acute when poverty<sup>and equity</sup> issues and objectives are addressed<sup>through PHN</sup> sector actvtities. To meet the PHN needs<sup>of poor and</sup> vulnerable groups, developing country<sup>institutions</sup> must be capable of: cross-sectoral and<sup>inter-agency</sup> communication and collaboration; more<sup>effective</sup> targeting, monitoring, and evaluation, which<sup>require</sup> a strong Management Information System<sup>(MIS) and</sup> research capadty, understanding and<sup>responding to</sup> the demands of the poor, and greater<sup>community</sup> involvement, to name only a few priorities.

## 3. _Choice f and ADporah to Special_<sup>_Topic_</sup>

3.6 Thespedaitheme,"Institutional Development in Support of a Poverty Focus for the PHN<sup>Sectors,"</sup> touches on issues of concern to all of<sup>the Bank's</sup> regions. In its treatment of this theme,<sup>this review</sup> emphasizes popular partidpation in the<sup>desig and</sup> Implementation of PHN activities, as a<sup>key to suc-</sup> vessfully providing basic servces to the poor.

3.7 One overwhelming message received from Operations during the consultative process<sup>of this</sup> exercise was the need to take better stock<sup>of lessons</sup> learned to enlighten the design of future<sup>operations.</sup>