Can Local Institutions Reduce Poverty

September 2001 Can local institutions take a lead role in reducing poverty? In the past the answer would have been an emphatic no. Local institutions have traditionally been a blind spot for national governments and international development agencies. But high-performing local institutions in Burkina Faso have reduced poverty and inequality. Can this model of rural decentralization spark a reinvention of development models across Africa, using indigenous development institutions to reduce poverty and promote equitable growth? Donnelly-Roark, Ouedraogo, and Ye present evidence that in Burkina Faso certain high-performing local institutions contribute to equitable economic development. They link reduced levels of poverty and inequality to a high degree of internal village organization. The structure of these high-performing local organizations means they can exist in a number of African countries because they depend more on internal participation rather than on any one country's cultural assets. The authors find that: * Service-asset management groups (SAMs)--one of three local institutions identified in the study--have helped to significantly reduce inequality in participating households. SAMs are a fusion of long-standing development committees and indigenous management councils that collectively manage community assets such as water. SAMs have combined the productivity goals of growth with the values of equity and solidarity. * Current development approaches use growth as an initiator, assuming that surpluses will be used to benefit the poor. SAMs and other local institutions in Burkina Faso start with equity and solidarity and aim for a result of growth and development. * Internal participation is essential for SAMs to function. Only locally anchored participation can power the realignments and institutional revisions needed to scale up development action. SAMs and other local institutions have launched their communities on equitable growth paths and are reducing poverty with little or no outside assistance, despite severe resource constraints. Their impact could be enormous if external development resources augmented their potential. World Bank programs and policy interventions could build on local strength and make their activities more sustainable by mapping local institutions to guide new initiatives in pro-poor investment and using that mapping to formalize and increase internal local participation--expanding nationwide by using a network of local institutions. SAMs and other local institutions could be the vehicle for ensuring transparency and accountability. Working with the results of local activities, national policies could favor the development of indigenously based but externally oriented local economies. This paper--a product of the Environment and Social Development Unit, Africa Region--is part of a larger effort in the region to enhance accountable poverty reduction. The authors may be contacted at [email protected], [email protected], or [email protected].