The Private Sector and Poverty Reduction : Lessons from the Field

The mission of the International Finance Corporation (IFC) is to create opportunities for people to escape poverty and improve their lives. There is a subjective dimension to poverty which relates to peoples’ perceptions and translates into such basic human concerns as self-confidence, motivation, and hope. Successful development projects tap into this dimension and enhance the meaning people give to their endeavors so that people become the architects of their own development. Independent evaluation group (IEG) selected four case studies in as many countries. The countries for these case studies were drawn from the two areas of the world with the highest incidence of absolute and proportional poverty - Asia and Africa. The projects represented four different sectors of economic activity, each important to poverty reduction: a micro-credit and savings financial service in a large Central African country; a telecom project in a small East African country; a farm forestry project in a large South Asian country; and a water and sanitation project in a middle sized East Asian country. This report will discuss a number of issues relating to the poverty reduction effectiveness of these four projects: the rationale behind their support; understanding the perspective of the poor (demand assessment); adjusting supply to market realities (how companies engage with beneficiaries); access to services; affordability; and effects (results), followed by a summary and conclusion