POVERTY ASSESSMENT REPORT - ST. LUCIA


Submitted to
THE CARIBBEAN DEVELOPMENT BANK


Prepared by
KAIRI CONSULTANTS LTD.


In association with
THE NATIONAL ASSESSMENT TEAM OF ST. LUCIA


Executive Summary
Introduction

This study, Poverty Assessment Report, St. Lucia, sought to understand the phenomenon of poverty in St. Lucia both from official data sources and from the people themselves. The findings are derived from three main sources: a national survey, community-level situational analyses, and an analysis of key institutions and organisations. The objective was to arrive at measures to address both the immediate conditions of poverty and the underlying factors that lead to such poverty. The Terms of Reference for the study can be summarised in the following five key questions:

Key Questions


1.What are the nature, extent, geographic concentration and severity of poverty in St. Lucia?
2.What are the dynamic links between unemployment, poverty and conditions in the informal sector?
3.What are the causes of poverty in St. Lucia, that is: What economic and social policies and/or socio-cultural issues generate, sustain, alleviate, or reduce poverty?
4.In the context of (3) how do Government Agencies, Non-Governmental Organisations (NGOs) Community-Based Organisations (CBOs) and Grass-Roots Organisations (GROs) currently impact on poverty?
5.What actions by these groups (Government Agencies, NGOs, CBOs, GROs and the people themselves) can address the immediate conditions of poverty and its underlying causes?


Additionally, the study tackled a core task of training St. Lucians in conducting poverty assessments and in project action such that, on the withdrawal of the consultants, the critical work of poverty reduction and socio-economic development can be sustained.

Definition of Poverty

The fundament of all definitions of poverty is the notion of a deficiency of resources. One absolute measure, the indigence line, establishes the level below which the members of a household or an individual are threatened with ill-health and even death: it is the minimum food requirement necessary for existence. Beyond the indigence line, there are other measures of poverty that include non-food elements deemed necessary for functioning in a society. These measures vary among researchers.

Approach

The present study utilised the approach to the measurement of poverty employed by the World Bank, which imputes for non-food elements by taking the average spent by the poorest 40 percent of the population on these items. The sum of the values of the minimum food requirements and the non-food elements constitute the poverty line. The study also relied on reported expenditure rather than on income in identifying the level of well-being in a household and among individuals.

The data for the assessment of poverty were derived from a National Survey conducted by the Central Statistical Office of St. Lucia, with the use of a survey design patterned after the St. Lucia Labour Force Survey.

In addition, community-level situational analyses yielded data on the perceptions and concerns of households in twelve poor communities chosen by a National Assessment Team (NAT) which collaborated with the consultants (Regional Technical Team) in the conduct of the Poverty Assessment Exercise. The selection of the communities was based on the knowledge of the NAT of the country.

Findings

Poverty Estimates

18.7 percent of households and 25.1 percent of individuals were poor on the basis of their reported expenditures on food and non-food items. Moreover, 5.3 percent of households, and 7.1 percent of individuals were indigent: based on their reported expenditures, they did not have the wherewithal to ensure that their basic food requirements for healthy existence could be achieved.

Poverty was more pronounced in the rural areas than in the urban. In the lowest expenditure quintile, 75.9 percent lived in rural areas, as compared to a population average of 64.3 percent. The self assessment of heads of households showed that the lowest rates of self assessed poverty were in respect of communities in, or in close proximity to, urban areas. The highest level of self-perceived poverty was in respect of one of the more remote communities, Balca. On the other hand, the most remote and inaccessible of rural communities, Bouton, had self assessed poverty much below more than half of the selected communities.

The poverty gap for the entire country was 8.6 percent, which is the average consumption needed to be transferred to the poor to bring them just above the poverty line. The poverty gap for the urban poor was 6.1 percent as compared to 9.9 percent for the rural poor. The FGTP2 Index for the country `was 4.4 which compares with 3.7 for Trinidad and Tobago and 8.2 for Guyana, suggesting that St. Lucia held an intermediate position in respect of the severity of poverty among the poor themselves.

Some Other Characteristics of the Poor

The average age of heads in the lower quintiles was somewhat higher than the national average, and children in the age groups 0-4 years and 5-9 years were respectively 14.5 percent and 17.2 percent of the persons in the lowest expenditure quintile compared to 6.3 percent and 8.2 percent in the highest quintile. The youthfulness of the poor was clearly established by the data, implying a high dependency ratio in the poorest quintile.

Almost fifty-two percent of heads of households in the lowest quintile were males compared to a national average of 56.7 percent. Female heads, while not the majority, were indeed significant in the lowest quintile. The selected communities generally displayed greater dominance of female headed households.

Among poor males, the largest percentage was engaged in Agriculture and Forestry followed by Construction. In the case of poor women, the Manufacturing Sector was the single most important sector of employment, followed by Wholesale and Retail activities or Distribution. Thirty percent of the labour force participants in the lowest quintile were engaged in informal sector activity, which was only slightly above the national average of 27.3 percent. The unemployment rate was 26.0 percent for the lowest quintile, 24.3 percent for males and 27.0 percent for females, as against 16.2 percent for the country as a whole, with 17.2 percent for males and 15.0 percent for females.

The vast majority of heads of households in the lowest quintile had attained primary level education (91.0%). Female heads of households in the lowest quintile were almost totally limited to the primary level (97.2%). Gender disparities in education tended to disappear, the higher the quintile.

The percentage of persons of secondary school age in the lowest quintile enrolled at secondary schools was lowest of all the quintiles (48.4% as compared to 84.0% for the highest quintile). Moreover, there was also higher probability that youth in the lowest quintile would not have been enrolled in vocational and technical education and training. A lower percentage of pre-school age children in the lowest quintile were enrolled in pre-schools, 34.0 percent as against a national average of 48.2 percent.

The highest quintile had a higher participation in the school feeding programme than the lowest quintile. While the poor did benefit more from the provision of free school books than those in the highest quintile, only 5.0 percent of the lowest quintile were beneficiaries.

There was some limited evidence of gastroenteritis and dysentery/diarrhoea which reflected problems of potable water supply. Life style diseases such as diabetes and hypertension were also significant. There was almost universal immunisation for measles and diphtheria, which implies that children in the lowest expenditure quintile had access to this aspect of primary health care.

The study found that there are problems in the coordination and reach of family planning services. However, in addition to these problems, it was also found that there are attitudinal factors that result in the indifferent use by poor households of available family planning services.

The main problem experienced in most communities was in the area of garbage collection and disposal, and effluent control. Eight of the communities surveyed had serious deficiencies in access to safe toilets and in Bouton, as elsewhere, "people defecated wherever they will". Indiscriminate cultivation of hillsides, and as a result, severe erosion, were also a major problem for sustainable environmental management.

The poor like the better-off, lived in their own dwellings but the poor were more likely to suffer inadequate potable water supply and toilet facilities.

Most of the poorer communities displayed an absence of community organisation and thus an inability to take collective action to address some of their own problems. However, where there was such organisation, the community was better mobilised in treating with external agencies and in accessing support.

Causes of Poverty

The main causes and sustaining factors of poverty in St. Lucia were identified as follows:


The decline in earnings from the Banana Industry. Falling banana earnings have hurt the farming sector and small farmers in particular. But given the relationship of the Industry to Transport, and to other sectors, the decline has had a ripple effect on other areas of the economy, inducing poverty beyond the agricultural sector.
The decline in wage competitiveness of St. Lucia in the area of export-oriented light manufacturing and assembly operations. Light manufacturing, that had made an important contribution to the economy and to the diversification process, suffered from developments elsewhere in the international economy.
The sluggish response in the creation of new viable activities or in increasing existing activities to take up the slack caused by the decline in the two sectors identified above. The response of the country to the decline in two areas of its tradable sector, was inadequate to compensate for reduced incomes and employment. Non-traditional agricultural activity could not produce output to maintain foreign exchange earnings from agriculture. Nor did the growth in the Informatics Sector, Tourism, and newer manufacturing activities fully compensate.
The general deficiency in the capacities necessary to support alternative activities. The educational and training systems of St. Lucia are not geared to upgrading the existing workforce to respond quickly to changes in trade and technological requirements. As such, the incremental supply of skilled and knowledge intensive human resources is inadequate to make St. Lucia attractive as a source of cheaper skilled labour.
The impossibility for the Government in taking counter-cyclical action by increasing public expenditure. The nature of monetary policy in St. Lucia, as in the other OECS countries, prevents the soft option of loans from the Central Bank (or the printing of money) to increase public expenditure, and to maintain economic activity.
The limitations of the existing safety-net because of the inadequacy of resources. The fiscal difficulties prevented the government from expanding expenditure on the social services generally, and on the social safety-net specifically. Thus as poverty inducing conditions increased, the Government has found itself with fewer resources to address the problem through alleviation.
Structural and institutional constraints and problems that predated the crisis of the mid-1990s. The structural poverty in the South and South-West of the country that had not benefitted directly from the expansion of the Banana Industry has continued.
Limitations in physical infrastructure. Poor access roads, lack of communications, absence of potable water, and inadequate electricity supplies limit possibilities for non-agricultural activities in certain communities.
Weaknesses in social infrastructure. The unwillingness among the young population to accept and use family planning services results in a high population growth rate which places a strain on social services e.g. health, education. Additionally, there is a lack of daycare and pre-school facilities, within the economic and geographic reach of poor women, preventing them from participation in the labour market and in training.
Absence of community organisation. The absence of Local Government organisation results in poor mobilisation of local effort to surmount problems within the community. There is also a lack of community spirit in some villages which prevents the poor from addressing problems collectively.


Effectiveness of Existing Responses to the Poverty Situation

The Government of St. Lucia has generally pursued sound macro-economic strategies in the recent past. Current expenditures have been maintained within the capacity of the Government to generate revenues through the fiscal system. Thus, it has avoided excessive public debt, which latter is geared to support infrastructural investment.

On the other hand, there has been much reliance on external sources for the financing of the capital programme, with loans from multilateral and bilateral agencies, and from grants. Much of the revenue generated derives from indirect taxes, mainly import duties, which face the implications of reduced rates consequent on the Common External Tariff within CARICOM.

The service capacity to the poor of critical state agencies showed many areas of weakness. Poor communities reported that visits by Environmental Health Officers, and assistance with the formation of Development Communities by the Ministry of Youth, Community Development, Social Affairs, Sports, Co-operatives and Local Governments were the main support services received from Government Agencies.

The study also found that existing organisation machinery of NGOs, CBOs, and GROs is only moderately effective in dealing with poverty alleviation and poverty reduction, and that few of the economic type organisations displayed a poverty focus, and fewer still had had experience in fashioning programmes to assist persons in the lowest socio-economic category, and to develop capabilities and capacities among them. In this regard, NRDF, and the Laborie Credit Union displayed a model worthy of emulation by others.

Recommendations

Poverty reduction in St. Lucia requires the expansion of the economy, and with it, the generation of incomes and employment for the poorer sections of the community. Given the small size of the country, economic growth is always contingent on the export competitiveness of the productive system.

Strategies for Poverty Reduction and Alleviation

The main elements of the poverty reduction strategy are:

Reorganisation of the Tax Regime

In the light of the CET, and other international commitments, by which it must abide, the Government of St. Lucia needs to reorganise its tax regime in such a way that it can continue to maintain balance, having regard to the requirements to expand the economic and social infrastructure and to provide a safety-net for the vulnerable. To this end, it is recommended that a system of Value Added Taxes (VAT) be introduced and that an adequate mechanism be developed to ensure that the revenues collected are used more positively for the benefit the poor.

Building Consensus and Social Partners

It is also recommended that the Government intensify its effort to arrive at a level of commitment among all the social partners for building social consensus. This is a necessary condition for resolving the difficulties over the sacrifices that must be made in the interest of national development, as the Government adjusts the structure of its revenues and expenditures.

Resuscitation and Expansion of Key Economic Sectors

The development of certain sectors holds the key to the reduction of poverty by the provision of income generating capacity in the short to medium term. Their promotion, therefore, is the sine qua non of any policy proposal for the improvement of the quality of life of the poor, outside of any redistributive measures that the Government or other agencies can employ. It is recommended that emphasis be placed on the Agricultural and Manufacturing Sectors, in which the majority of the poor are found. Additionally, the development of the following sectors should be encouraged:

Improvement of the Social-Safety Net

The social safety net must be so designed to ensure that the major areas of vulnerability are effectively addressed as the economy and society undergo structural change. It is recommended that a review of legislation regarding the social welfare system be conducted and that a "needs" assessment system be established. The introduction of Old Age Pension and National Health Insurance schemes is also recommended.

Improvement in the Social Infrastructure

There is need to improve the delivery of a range of social services. The following are recommended:


the provsion and support of maternal/child-care and family planning services in coordination with the St. Lucia Planned Parenthood Association, particularly in the more rural districts;
construction of more daycare/pre-school facilities in rural areas; and
the construction of toilets in rural areas in which they are absent.

Improvement in the Physical Infrastructure

The continued expansion of the physical infrastructure is a necessity. The country has made major strides in road building, telephones, rural electrification and the supply of potable water. It is recommended that on-going efforts to provide and/or improve the physical infrastructure be intensified, particularly in areas that lack one or more of these services. Other areas of infrastructure in urgent need of action are the preservation of hillside vegetation for erosion control, the development of disposal systems for waste produced by the Agricultural and Other Sectors and the protection of other brittle eco-systems.

Development and Implementation of Mechanisms for the Empowerment of Communities

There is need to develop a capacity in all communities for mobilisation, for discussion, and action in respect of problems and issues of relevance to the respective communities. The revitalisation of the system of Local Government is recommended. Training of a cadre of members of community organisations, where they exist, or groups of individuals, for collaborative initiatives within their communities is also recommended.

Institutional Framework for Poverty Assessment and Reduction

The National Assessment Team should be institutionalised retaining a structure that affords participation to NGOs and CBOs. The focus of such an entity should always be poverty reduction and alleviation. Poverty monitoring will ensure that the appropriate official and other policies are adjusted in the light of the changing realities. While poverty assessment exercises of the type conducted herein will not be undertaken with great frequency, the development of suitable indicators will allow the profile of the poor to be adequately and effectively monitored.




Box 1: Poverty Profile
The monthly Poverty Line and the Indigence Line were estimated at $156.37 and $83.55 respectively.
18.7 percent of households and 25.1 percent of the population were poor.
5.3 percent of households and 7.1 percent of the population were indigent in that their expenditures were inadequate to cover their dietary requirements.
17.4 percent of households headed by males and 20.4 percent of households headed by female were poor.
16.3 percent of the urban population and 29.6 percent of the rural population were poor.
The Poverty Gap for the country was 8.6 percent, but 6.6 percent for the urban population and 9.9 percent for the rural population.
If the Poverty Line of the NAT, or if the non-food expenditure of the 4th decile were used, estimated poverty would have been much higher at 37.7 and 31.4 percent respectively, which seem inflated relative to the conditions known to exist in St. Lucia as compared to countries with such higher levels of poverty.
The working poor were concentrated in Agriculture and in Manufacturing. The poor involved in the Agricultural Sector, particularly the Banana Industry, face the risk of loss of income resulting from a declining Banana Industry. A stagnated Manufacturing Sector also presents some concern among the urban poor employed in this sector.
High levels of teenage pregnancy exist in St. Lucia and this exacerbates poverty.
The lowest quintile had the highest average number of children 2.7, compared to 0.7 in the highest quintile.
The two lowest quintiles spent more than half of all expenditures on food.
The lowest quintile had a lower participation rate in the labour force and a higher unemployment rate than the highest quintile.
51.6 percent of those leaving home continued to make a contribution to the household.
Most heads of poor households had had access to primary school education but the heads of households in the higher quintiles had a higher level of education.
Poor households were less likely to have their children enrolled in pre-schools, thereby setting the stage for differential educational attainment very early in life.
The poor did not seem to be specifically favoured by the arrangements for educational subsidies.
The data on child health suggest that St. Lucia has achieved almost universal immunisation of children in respect of tetanus, polio, tuberculosis, measles, and diphtheria.
While family planning services were available in a number of communities, they were not fully utilised by the poor: there were negative attitudes to the use of such services.
Garbage and human waste disposal were major problems in a number of communities.
There is a general lack of proper toilet facilities and potable water supply in most poor communities.
While the poor lived in their own homes, the quality of housing was very inadequate in terms of the amenities available: 20.8 percent of households in the lowest quintile had no form of toilet facilities, and 29.2 percent of the lowest quintile were dependent on kerosene for lighting.
Twenty-one percent of the poor owned land. A higher percentage of the rural poor owned land as compared to the urban poor.