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The report—World Development Report 2004: Making Services Work for Poor People—says that too often, key services fail poor people—in access, in quantity, in quality. This imperils a set of development targets known as the Millennium Development Goals (MDGs) which call for a halving of the global incidence of poverty, and broad improvements in human development by 2015, such as to cut child mortality by two thirds by 2015. Without major improvements in policy, most states in India, for example, will not be able to accomplish this MDG. Pakistan has not translated its respectable growth of income into better outcomes – enrollment in schools has been stagnant for almost a decade.

However, the report also provides powerful examples of where services do work, showing how governments and citizens can do better. The report says there have been spectacular successes and miserable failures in the efforts by developing countries to make services work. The main difference between success and failure is the degree to which poor people themselves are involved in determining the quality and the quantity of the services, which they receive.

"Too often, services fail poor people. These failures may be less spectacular than financial crises, but their effects are continuing and deep nonetheless," says World Bank President, James D. Wolfensohn. "Services work when they include all people, when girls are encouraged to go to school, when pupils and parents participate in the schooling process, when communities take charge of their own sanitation. They work when we take a comprehensive view of development—recognizing that a mother's education will help her baby's health, that building a road or a bridge will enable children to go to school."

The report comes at a time when rich countries have pledged to increase foreign aid, and poor countries have pledged to improve their policies and institutions, to try to reach the MDGs. "To accelerate progress in human development, economic growth is of course necessary, but it is not enough," says World Bank Chief Economist and Senior Vice-President for Development Economics, Nicholas Stern. "Mobilizing to reach the 2015 development goals will require both a substantial increase in external resources and more effective use of all resources, internal and external. The report offers a practical framework for using resources more effectively."

"The challenge is formidable," says Shekhar Shah, World Bank Sector Manager and a member of the WDR team. "Making services work for poor people involves changing public sector institutions—those that govern the budget, the relations between central and local governments, the civil service, and others. It also involves changing the way much foreign aid is transferred. But the Report suggests that there are strong examples of services working, and by learning from these examples, governments and citizens can do better."

How services are failing poor people

Personal accounts from poor people in the new report describe how they receive shoddy services.

In Andhra Pradesh, India, "they are supposed to give us Rs. 1,000 and 15 kg of rice for family planning operations; they give us Rs. 500 and 10 kg rice and make us run around for the rest." In Potrero Sula, El Salvador, villagers complain that "the health post here is useless because there is no doctor or nurse, and it is only open two days a week until noon." A common response in a client survey by women, who had given birth at rural health centers in the Mutasa district of Zimbabwe, is that they were hit by staff during delivery.

Anecdotes like these are supported by accounts from other countries as well. The average poor child in rural Mali has to walk 8 kilometers to primary school. Her counterpart in rural Chad has to walk 23 kilometers to get to a clinic. A billion people worldwide lack access to an improved water source; 2.5 billion lack access to improved sanitation.

Even when poor people have access, the quality of services is distressingly low. In random visits to 200 primary schools in India, investigators found no teaching activity in half of them at the time of visit. Up to 45 percent of teachers in Ethiopia were absent at least one day in the week before a visit—10 percent of them for three days or more. A survey of primary health care facilities in Bangladesh found the absenteeism rate among doctors to be 74 percent.

"Improving the delivery of key services such as healthcare and education to poor people is critical to accelerate progress in human development because more public spending by itself will not do it," says Jeffrey Hammer, a Lead Economist with the World Bank. "Much of public spending never reaches poor people. In Nepal 46 percent of education spending accrues to the richest fifth of the people, only 11 percent to the poorest. In India, the richest fifth receives three times the curative care subsidy of the poorest."

Services can work for poor people

On a positive note, the report points to several success stories. The state of Madhya Pradesh in India, in spite of its low income and high poverty, has seen substantial progress in primary education through greater community involvement in recruiting teachers, getting schools built, and encouraging neighbors to enroll their children, mainly via public schools. With a different approach, Bangladesh has seen a 10 percent annual growth of secondary school enrollments mostly through nongovernmental schools. Most of this increase comes from enrollments of girls, assisted by the Female Secondary School program, which provides stipends to girls that attend school. A program in Mexico that gives cash to poor households if they visited a clinic regularly and their children attended school reduced illness among children by 20 percent, and increased secondary enrollment by 5 percentage points for boys and 8 for girls.

"Services can work when poor people stand at the center of service provision—when they can avoid poor providers, while rewarding good providers with their clientele, and when their voices are heard by politicians—that is, when service providers have incentives to serve the poor," says Shanta Devarajan, Director of the World Development Report 2004 and Chief Economist of the World Bank's Human Development Network.

The report documents three ways in which services can be improved:

1. By increasing poor clients' choice and participation in service delivery, so they can monitor and discipline providers. School voucher schemes—such as a program for poor families in Colombia or a girls' scholarship program in Bangladesh—increase clients' power over providers and substantially increased enrollment rates. Community-managed schools in El Salvador, where parents visited schools regularly, lowered teacher absenteeism and raised student test scores.
2. By raising poor citizens' voices, through the ballot box and making information widely available. Service delivery surveys in Bangalore, India, that showed poor people the quality of the water, health, education, and transport services they were receiving compared to neighboring districts, increased demand for better public services and forced politicians to act.
3. By rewarding the effective and penalizing the ineffective delivery of services to poor people. In the aftermath of a civil war, Cambodia paid primary health providers in two districts based on the health of the households (as measured by independent surveys) in their district. Health indicators, as well as use by the poor, in those districts improved relative to other districts.

Public services versus private—a false argument ?

Providing communities with healthcare, education, and other services has been a contentious issue in many countries, with government services pitted against large-scale privatization.

The report says that while there are frequent problems with public services, it would be wrong to conclude that government should give up and leave everything to the private sector. If individuals are left to their own devices, they will not provide levels of education and health that they collectively want. Not only is this true in theory, but in practice no country has achieved significant improvement in child mortality and primary education without government involvement.

Furthermore, private sector participation in health, education, and infrastructure is not without problems—especially in reaching poor people. The extreme position that the private sector should do everything is clearly not desirable either.

"Instead of getting caught up in the public versus private services argument, the only issue that really matters is whether the mechanism that delivers key services strengthens poor people's ability to monitor and discipline providers, raises their voice in policymaking, and gets them the effective services they need for their families," says Ritva Reinikka, the Co-Director of WDR 2004 and Research Manager for Public Services at the World Bank.

The report says that some aid donors take a variant of the "leave-everything-to-the-private-sector" position. If government services are performing so badly, donors may ask, why give more aid to those governments?

"That would be equally wrong," says Reinikka. "There is now substantial research showing that aid is productive in countries with good policies and institutions, and those policies and institutions have recently been improving. The reforms detailed in this Report (aimed at recipient countries and aid agencies) can make aid even more productive."

When policies and institutions are improving, the report argues, aid should increase, not decrease, to realize the mutually shared objective of poverty alleviation, such as the Millennium Development Goals. At the same time, simply increasing public spending—without seeking improvements in the efficiency of that spending—is unlikely to reap substantial benefits.

The productivity of public spending varies enormously across countries. Ethiopia and Malawi spend roughly the same amount per person on primary education—with very different outcomes. Peru and Thailand spend vastly different amounts—with similar outcomes.

The Report concludes that no one size fits all. The type of service delivery mechanism needs to be tailored to characteristics of the service and circumstances of the country.

For instance, if the service is easy to monitor, such as immunization, and it is in a country where the politics are pro-poor, such as Norway, then it can be delivered by the central government directly, or contracted out. But if the politics of the country are such that these resources are likely to be diverted to the well-off by way of patronage, and the service is difficult to monitor, such as student learning, then arrangements that strengthen the client's power as much as possible are necessary. Means-tested voucher schemes, as in Colombia or Bangladesh, community-managed schools as in El Salvador, or transparent, rule-based programs, such as Mexico's ‘Progresa', are more likely to work for poor people.

Taking good examples nationwide

Innovating with service delivery arrangements will not be enough, according to the report. What is needed are ways of widening the reach of these innovations or ‘scaling up' so the entire country can benefit. To achieve this, the report emphasizes the role of information—as a stimulant for public action, as a catalyst for change, as an input to making other reforms work. In Uganda, publishing in the newspaper the fact that only 13 percent of the money due to primary schools was actually reaching the schools, galvanized the populace. The share now is 80 percent and the entire budget of the school is posted on the schoolroom door.

Systematic evaluations of these innovations, with a control group assessed alongside the "treatment group," gives policymakers confidence that what they are seeing is real. Such an evaluation of Mexico's Progresa led to the program being scaled up to cover 20 percent of the Mexican population.

For countries in the South Asia region, the report means that the aspirations of poor people are within reach but will require substantial reforms. Poor people as citizens need to have their voices heard by policy makers—scorecards rating services in Bangalore illustrate one way of achieving this. Policy makers need to find out what works through rigorous evaluation of programs. Providers need to be given the incentives to provide quality services—and the means to do so. And people as users of services need to take a more active role in monitoring and ensuring services get delivered.

The authors of the report warn that achieving these reforms will be difficult. "There is no silver bullet," says Devarajan, "just the hard slog of reforming institutions and power relations. But the needs of the world's poor people are urgent. And services have too often failed them. We must act now."