NZAID Tools Analytical Tools 

Poverty Analysis Guideline

Annex 1 | Some Approaches to Poverty Analysis

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Country poverty profile3

What is it

An analytical synthesis of poverty-related information4 aimed at answering the questions: Who are the poor? Where do they live? What are their main characteristics? Why are they poor? It essentially is a snapshot of poverty within a country at a specific point in time and an indication of poverty trends.

Why use it

It provides information on:

  • the extent, depth, severity and location of poverty
  • relevant subgroups of the poor, as distinguished by their characteristics and circumstances
  • the priority issues and concerns of the poor (and subgroups of the poor).

It helps identify information gaps regarding poverty that further poverty assessment and/or capability building work may address.

When to use it

  • As a first step in a country poverty assessment.
  • As part of NZAID country programme strategy development.

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Participatory poverty assessment (PPA)5

What is it

An instrument for including poor people’s views in the analysis of poverty and the formulation of strategies to reduce it through public policy.

The rationale for including poor people’s view include enhancing:

  • conceptualisation and understanding of poverty
  • participation and accountability, particularly in relation to poor people’s influence over and benefit from policies and programmes intended for their ostensible benefit
  • policy effectiveness, through addressing issues that the poor themselves consider important and through institutional channels that they value.

Why use it

PPAs can strengthen poverty analysis through:

  • broadening stakeholder involvement and thereby increasing general support and legitimacy for anti-poverty strategies
  • enriching the analysis and understanding of poverty by including the perspectives of the poor
  • providing a diverse range of valuable information on a cost-effective, rapid and timely basis
  • creating new relationships between policy-makers, service providers and people in poor communities.

A PPA can help inform the formulation of, and complement, a country poverty assessment.

When to use it

Conditions under which a PPA might be considered include when:

  • a national development or poverty reduction strategy is being developed, and key actors in government or donor community are aware of the need to broaden the institutional and informational base for developing and implementing the strategy
  • there is demand on the part of key individuals and institutions to better understand the nature of poverty and the outcomes of policies and programmes aimed at reducing it – and a willingness to recognise the value of directly engaging with the experience and knowledge of poor people to do this
  • key agencies in civil society that might engage in a PPA are seeking to engage in policy dialogue and advocacy with government and/or donor institutions.

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Country poverty assessment

What is it

A comprehensive assessment of poverty, often starting with a country poverty profile (see above) and including analysis of the:

  • overarching national development/poverty reduction strategy
  • government policies (macroeconomic, structural and sectoral)
  • public expenditure programme and service delivery systems
  • opportunities for empowering the poor
  • external causes of poverty.

Why use it

A country poverty assessment can help determine:

  • how, and to what extent, the poor benefit from growth and the overall development strategy
  • how to increase access of the poor to public services, especially basic social services
  • how to increase access of the poor to assets, especially productive assets
  • how to empower the poor.

When to use it

As part of the development or review of a country’s national development strategy or poverty reduction strategy (or equivalent).

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Poverty and social impact assessment (PSIA)

What is it

Poverty and social impact analysis constitutes both a process and a sizeable toolkit for the analysis of the distributional impact of specific policy and sector reforms on the well-being or welfare of different stakeholder groups, with particular focus on the poor and vulnerable.

Why use it

PSIA can be used to:

  • assess, ex ante, the distributional and poverty impacts of a range of different types of specific policy and sector reforms6
  • inform the sequencing and re-design of planned reforms so as to maximise the beneficial impact/minimise the negative impacts on the poor and vulnerable
  • identify and inform the design of specific mitigation and/or compensation measures for the poor and vulnerable
  • assess, ex-post, the impact of actual reforms, to help inform future reforms.

When to use it

The appropriateness of undertaking a PSIA of a particular reform will depend upon, among other things, the:

  • expected size and direction of the poverty and social impacts
  • prominence of the issue in the government’s policy agenda
  • timing and urgency of the underlying policy or reform
  • level of national debate surrounding the reform.

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Development programmes and projects

What is it

A range of different types of analyses and approaches that can be used to assess the local level poverty impacts of a specific development programme or project.

These include:

  • social analysis
  • gender analysis
  • livelihoods analysis
  • participatory rural appraisal
  • ‘local level’ participatory poverty assessment.

Why use it

Such analyses and approaches can be adapted to, among other things:

  • identify who the local poor and vulnerable are (and different categories of the poor and vulnerable)
  • determine why they are poor and vulnerable
  • assess the direct and indirect impacts of a development programme or project on them
  • identify the risks of a development programme or project for them and ways to mitigate these.

When to use it

Development programme and project identification and design processes, and integrated into monitoring and evaluation processes as well.

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3 | See Annex 2 and Annex 3 for more information. ←

4 | Existing sources of poverty-related information may include: regional and country MDG reports; UNDP human development reports; census data; household income and expenditure surveys; macroecomic policy analyses; sector studies and information systems; and existing poverty analyses; including participatory poverty assessements. ←

5 | Sometimes called Particpatory Hardships Assessment (PHA). ←

6 | PSIA has been applied to, among other things, the reform of: macro policies (trade, monetary, exchange rate, taxation); public sector restructuring; health and education; utility provision (energy, water and sanitation, telecommunications); the labour market; and the financial sector. ←