Social Equity Enhancing (SEQ) and Poverty Targeted Investments (PTI)
The Bank has made a strong commitment to orient its portfolio towards the goals of poverty reduction and equity enhancement. The Eighth Replenishment of capital pledged that 40 percent of the total volume of lending and 50 percent of the total number of loans would be devoted to the promotion of social equity and poverty reduction (SEQ Loans). In addition to creating this explicit social equity target, the Eight Replenishment created a category of loans defined as Poverty Targeted Investments (PTI Loans). The Bank offers an additional 10 percent financing in loans classified as PTI. The document Reducción de la Pobreza y Promoción de la Equidad Social: Informe de Actividades en el Año 2002 y Plan de Acción en Areas de Enfasis Especial presents the activities undertaken by the Bank during 2002 to achieve the goals stated in the Eighth Replenishment document and a plan of action to enhance the efforts of the Bank towards attaining these goals.
The following are the SEQ and PTI criteria:
SEQ Criteria
- Social Equity and Poverty Reduction Classification is applicable to all loans except for emergency loans. All eligible projects should state whether or not they will contribute toward our goal of having 50 percent of the projects and 40 percent of the lending volume devoted to enhancing social equity and reducing poverty. All project teams should use the following criteria for the Social Equity/Poverty Reduction (SEQ) classification: operations in all social sectors (health, education, sanitation, nutrition and housing solutions), or operations in nonsocial sectors that are expected to have significant impact on poverty reduction and equity enhancement, regardless of PTI status, plus any other Bank operation that qualifies as PTI (see below).
PTI Criteria
Poverty Targeted Investment classification is applicable to investment loans excluding technical cooperation loans, but including innovation and sector facility loans.
- Sector Automatic Classification: Projects automatically classify as PTI when they support programs in the following sectors: Pre-School, Primary Education, Early Childhood Development, Social Programs for At Risk Children and Adolescents, Primary Health Care, Nutrition, Urban Development of Marginalized Areas, Small-holder Agricultural Production, Microenterprises, Social Investment Funds and Emergency Employment Operations.
- Geographic Classification: Projects can classify as PTI when project benefits are targeted to regions, cities, neighborhoods, or areas identified as poor within each country. Proxy income measures such as unsatisfied basic needs, below country-average social indicators, or other household characteristics that are strongly correlated with poverty may be used to classify such areas. There is no pre-defined cut-off point for the application of this criterion. Project teams must justify on a case by case basis how the targeting mechanism used, given the specific characteristics of the operation, serves to target resources to the poor. Generally if the indicators are below the country averages, the project will classify as PTI.
- Headcount Classification : Projects can classify as PTI when more than 50% of the potential beneficiaries of the operation are likely to be poor according to the selected PTI poverty line for each country. If headcount classification is used, then the calculation needs to be included as part of the project document.
Last updated: 01/16/07
