## CAPE VERDE — GROWTH AND POVERTY REDUCTION STRATEGY PAPER (DECRP): STATUS REPORT ON PREPARATION (JUNE 15, 2004)

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### I. Introduction and strategic intent
- The government is reaffirming its focus on poverty reduction and is preparing the DECRP (Documento de Estratégia para o Crescimento e a Redução da Pobreza) for the period 2004-2005/2007 as the guiding instrument for public sector, private sector, and civil society action.
- The DECRP is positioned as a forum for dialogue and consultation because of its links to public investment programs, privatization, fiscal policies, education, health, agriculture, environment, and infrastructure.
- The DECRP will be prepared and implemented within a broad participatory framework.

### II. Preparation status and institutional arrangements
- Drafting timeline and phases:
  - I-PRSP completed in January 2002; first PRSP drafting delayed until July 2003.
  - Preparation timed for 2004-2005/2007.
- General principles underpinning the DECRP:
  - Derives from the Major Plan Policies (GOP), the 2002-2005 National Development Plan (PND), and the I-PRSP.
  - Functions as the benchmark document for foreign aid.
  - Encompasses general and sectoral policies.
- First phase (July–November):
  - Technical Secretariat of Support for Development (STAD) given a coordinator; recruitment of 3 high-level experts initiated.
  - World Bank–sponsored workshop with Minister of Finance, Planning, and Regional Development on methodological framework and PRSC conceptual definition.
  - Two Video Conferences between DECRP management team and World Bank (Washington – Dakar – Praia).
  - Draft Council of Ministers resolution prepared to institutionalize Coordination Committee (central) and Local Committees (pending).
  - Internal regulations for Coordination Committee approved.
  - World Bank/IDA financing arrangement FT051749 execution advanced; two UNDP financing agreements signed (November 2003):
    - "Reduction Poverty in Equity" (exclusively in support of the PRSP).
    - "Programme de Réduction de la Pauvreté et Appui à l’Environnement" (serving the same purpose, albeit to a partial extent).
  - Hiring of local and international consultants initiated.
  - Work on setting up “Threshold 21” using Millennium Institute technical assistance.
- Second phase (from December 2003; consultants hired):
  - Establish Task Force for permanent follow-up.
  - Define and clarify sectoral proposals and Poverty Profile content.
  - Assess methodologies for thematic studies and organize thematic study coordination.
  - Formulate proposal to identify key areas for poverty reduction strategy.
  - Engage stakeholders; involve International IDEA for MTEF and monitoring/assessment indicators (technical assistance financed by government of the Netherlands).
  - Carry out thematic studies; present outputs and sectoral proposals by October 2004.
  - Analyze and incorporate outputs March 11-21; draft preliminary DECRP April 5-14; finalize preliminary version thereafter.
- Institutional implementation framework:
  - General Directorate of Planning (DGP) of the Ministry of Finance and Planning to coordinate and provide technical support at the central level.
  - Research and Planning Offices (GEPs) of ministries to be technical units for preparation and follow-up/assessment of prioritized programs and projects.
  - Merger of administrative and planning units to create single implementation units in priority sector ministries.
  - General Inspectorate of Finance (IGF) to strengthen audit actions at priority sectoral ministries.

### III. Third phase — Scheduled tasks and dates (2004)
- 1. Approval of the preliminary version of the DECRP by the National Coordination Committee — April 20
- 2. Approval of the preliminary version of the DECRP by the Council of Ministers — April 29
- 3. Submission of the preliminary version of the DECRP to Cape Verde stakeholders for further comments and suggestions — May 14
- 4. Distribution of preliminary version of the DECRP for feedback and collection of data — June 7
- 5. Planning of the final phase — June 11
- 6. Analysis and inclusion of data available — June 20
- 7. Macroeconomic framework — June 21
- 9. Changes to the preliminary version to reflect contributions received — June 18
- 10. Meetings with the relevant sectors (tasks within):
  - 3.1 Budget allocation set for each sector/area, based on sectors’ proposals, albeit reflecting financial constraints deriving from macroeconomic scenarios;
  - 3.2 Analysis of the system of indicators for each sector;
  - 3.3 Verification that there is a close fit between goals and policy measures. — June 25
- 11. Incorporation of data from meetings — June 27
- 12. DECRP - final comprehensive revision — July 2
- 13. Assessment of the final version by the DECRP National Coordination Committee — July 7
- 14. Validation of the final version by the Government — July 15
- 15. Dissemination of the final Portuguese version, to the sectors and Cape Verde stakeholders — July 16
- 16. Translation of the final version from Portuguese into English — (date not specified)
- 17. Distribution of the English version to key stakeholders — July 29

### IV. Summary of the preliminary DECRP: scope and priorities
- Scope:
  - DECRP (ECRP) is integral to Cape Verde strategic planning based on GOPs and PND 2002-2005.
  - Positions poverty alleviation at the center of policies to promote economic growth, with emphasis on governance/macro policy (general), social sectors (sectoral), and regional/local participation (decentralized).
- Growth, employment and poverty:
  - Strong economic growth in the last decade increased the domestic active population, lowered male unemployment, and increased female employment, especially in the informal sector.
  - Economic growth has not served to reduce poverty.
- Poverty profile (key statistics and characteristics):
  - Proportion of poor people rose from 30 percent to 37 percent.
  - Proportion of very poor people rose from 14 percent to 20 percent.
  - Incidence of poverty is greater for female heads of household.
  - Education is a key determinant of poverty.
  - Young heads of household face less severe incidence, depth, and seriousness of poverty.
  - Santo Antão and Fogo islands have high rates of poverty (predominantly agricultural islands).
  - Poverty increases with family size.
  - Unemployment affects the poor much more than the non-poor.
  - Propensity to poverty higher among unskilled workers, skilled farmers and fishermen.
  - Agriculture and fisheries sectors carry the highest poverty rates among the working population.
- Main causes of poverty:
  - Rural sector conditions and reduced number of employed population among the poor are main determinants.
- Survival strategies of the poor:
  - Emigration (abroad) and informal commerce are primary coping strategies.
  - Migration to urban areas (notably Praia) produced sanitation, housing, education and health infrastructure pressures.
  - FAIMO has been main rural employment network.
  - Livestock (stockbreeding) is important for subsistence during droughts.
  - Informal sector is main urban outlet, with women playing a major role; incidence of poverty among women improved through the 1990s.

### V. Policy measures, strategic areas and program focus
- Core policy program areas:
  - (i) Policies of growth and macroeconomic stability;
  - (ii) Decentralization policies;
  - (iii) Employment policies including gradual integration of the FAIMO;
  - (iv) Agriculture sector development policies;
  - (v) Policies to maximize spinoff effects of production sectors with greatest multiplier effect;
  - (vi) Redistribution and social protection policies.
- Five strategic action areas:
  - Area 1: Promote good governance, strengthen effectiveness and ensure equity.
  - Area 2: Strengthen competitiveness to promote economic growth and job creation.
  - Area 3: Develop and enhance human capital.
  - Area 4: Improve and develop basic infrastructures, promote orderly management of the territory and protect the environment.
  - Area 5: Enhance the efficiency of the social safety net and ensure its sustainability.

### VI. Monitoring, evaluation, and public financial management reforms
- Monitoring and participation:
  - Implementation to involve grass-roots organizations, decentralized structures, and private sector.
  - Government instituted a Medium-term Expenditure Framework (MTEF) and Tables of Medium-term Sectoral Expenditures in the 2005 budget tracking process, focusing on key ministries.
- Expected outcomes of control mechanisms:
  - (i) Prioritization of programmes and projects directly promoting ECRP sectoral goals;
  - (ii) Budgeting programs and projects based on readily mobilizable financial resources;
  - (iii) Allocation of financial resources for a medium-term period (3 years) reflecting set priorities.
- Public financial management reforms underway to enhance efficiency, reliability, and transparency:
  - Preparation of policies to implement recommendations from government expenditure review exercises and the CFAA (Country Financial Accountability Assessment).

### VII. Items to be strengthened in the final DECRP
- Clarify sectoral policies insufficiently detailed in the preliminary version, notably social security, pensions, and AIDS.
- Include sectoral budgets, area-by-area, to assess feasibility and financial sustainability.
- Provide tables of indicators and goals.
- Include a summary review of government expenditure (investment and current expenses) linked to the strategy to assess impacts of continuity or discontinuity.
- Present macroeconomic scenarios based on government expenditures associated with the strategy, simulating alternatives: with or without a financing gap, with or without external shocks.
- Clarify and strengthen coordination among implementation and evaluation mechanisms for the NDP, PPIP (Multiyear Public Investment Program), and ECRP.
- Clarify roles assigned to entities involved, including the role of the consulting firm.

*Source: Cape Verde — Growth and Poverty Reduction Strategy Paper (DECRP) Status Report, June 15, 2004.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04302.pdf_