Posted 11 December 1998
prepared by Nwanze Okidegbe
World Bank
The mandate of the World Bank is to help its clients reduce poverty and improve living standards through sustainable, broad-based growth and investment in people. This mandate cannot be met unless rural development in general and thriving agricultural economies in particular are nurtured and improved. Sustainable rural development is also essential to meet the formidable challenges of reducing poverty and hunger, raising economic growth, increasing global food production and halting natural resource degradation. A main objective of the Bank's rural sector strategy, Rural Development: From Vision to Action, is to raise awareness of these challenges and bring them back onto the national and international agendas for development (World Bank. 1997. Rural Development: From Vision to Action. Environmentally and Socially Sustainable Development Studies and Monographs Series 12. Washington, D.C.). It also proposes a new way of doing business to meet the critical challenges of providing food for all, raising rural incomes and reducing poverty and sustainably managing natural resources.
The President of the World Bank recognizes the need to translate the rural sector strategy into concrete actions. At his request, the Rural Sector Staff of the World Bank have formulated focus programs, intended to accelerate agricultural and rural development significantly through concentrated efforts of the Bank, other donors and collaborators. Through a combination of political will and rigorous application of best-practices, experience from the focus programs is intended to show what is possible in achieving the goals of improving regional and global food security and reducing poverty. The Bank is supporting the focus programs with fresh resources provided through its Strategic Compact.
Countries and regions vary greatly in regard to their economies and development needs. Recognizing that no single approach to rural development will work for all countries and regions, the rural sector strategy paper calls for key actions based on the country's or region's endowments, distribution of assets, functioning of markets and incentive systems. (Detailed descriptions of the focus programs are in Appendix 1 of the Rural Development: From Vision to Action). The key actions focus on: (a) strengthening countries rural and sub-regional strategies, (b) improving the quality of the Bank rural portfolio, (c) developing and implementing new products and approaches both in lending and non-lending services, and (d) building new alliances and strengthening old ones. Summaries of the focus programs, which are being, initiated in 18 countries and their implementation results appear below.
Increasing agricultural productivity is an urgent priority in Africa. Populations are growing rapidly, and food requirements are expected to double over the next 30 years. More than 70 percent of the poor live in rural areas. Agriculture is the main source of income and employment and contributes over 30 percent of GDP in many African countries. The challenge is great, because most increases in output will have to come from higher yields rather than area expansion, as most arable lands are already being cultivated.
In the Africa Focus Programs, the emphasis is on accelerating widely shared agricultural growth (Guinea, Madagascar, Malawi, Mali, and Uganda). The goals are to achieve rapid agricultural growth of at least 4 percent per annum, developing a common strategy for improving the rural economy, and promoting program lending to bring about systemic changes.
The Region is making satisfactory progress in its rural activities. Rural development programs focus on participatory development, completion of necessary policy and institutional reforms, agricultural intensification and land reform, and the reorientation of existing projects towards a few national programs. The outstanding portfolio consists primarily of agricultural services and non-agricultural rural investments.
Considerable progress has been made towards the establishment of two hubs (one in Harare for Southern African and the other in Abidjan for Western Africa.) of technical excellence, in close collaboration with Food and Agriculture Organization (FAO), the International Fund for Agriculture Development (IFAD), the African Development Bank (AfDB), the European Union (EU) and the United Nations Development Programme (UNDP). The hubs, like RUTA in Latin America, would be cost-effective and client-oriented service units, which would assist countries with project preparation and implementation, institutional strengthening, development of rural strategy and policy formulation, and training. They will serve as focal points for partnership for cooperating multilateral and bilateral institutions, and borrowing member countries, including vehicles for improving the quality of development assistance, increasing the development impact of donor-assisted operations and strengthening donor coordination.
The formulation of rural strategies in Guinea, Madagascar, Mali and Uganda, as well as sector studies in Malawi is progressing according to schedule. One of the exciting initiatives funded under the program is the participatory rural development initiative in Uganda, which was started only in August 1997 and now covers 250 communities. This program uses extension services to help these communities identify their needs in areas of agriculture, health, education and infrastructure and make local governments responsible for responding to these needs.
The current economic crisis has shifted priorities to fast disbursing operations, and to adapting economic and sector work to present country needs. The effects of El Niņo have also influenced programs, for example in an emergency loan to Papua New Guinea. An independent review of the overall portfolio has led to restructuring of non-performing projects and is helping to improve the performance of development assistance.
In East Asia and the Pacific, the focus is rural strategy formulation for Vietnam and analysis of options for long-term food security in China and the Philippines. The emphasis is to develop with the IFC (International Finance Corporation) new ways of financing agribusinesses, pragmatically reform parastatals, and address regional and donor competition.
Given the reassessment of regional priorities, work was suspended on the two regional studies originally agreed under the Strategic Compact, one on upland agricultural production systems, and the other concerning agricultural marketing and processing. This released approximately US$300,000. These funds are now being used for work on strategy formulation in Vietnam and the Philippines.
In China, a comprehensive study of strategic policy and institutional issues of the rural sector is underway. This is a much broader piece of work than originally envisaged, and is the result of China's desire to rapidly increase rural development and reduce rural poverty. China's rural portfolio, including the large China Grain Distribution and Marketing Project, is also being restructured.
In Vietnam, an analysis of agriculture and natural resource policy is near completion. The study will be used as a framework for participatory investment projects focused on reducing poverty. The economic and sector work has been very participatory. Progress and dissemination workshops were conducted regularly in the country. Vietnamese consultants prepared some sections and reviewed others. The focus country effort allowed a much more rapid and participatory approach to the work than would have been possible otherwise.
In the Philippines, the rural development strategy has been completed and discussed with government officials at the central and local levels, members of civil society and the donor community. Further coalition building is required to consolidate the gains and implement some of the recommendations. A major emphasis is on the peace process in Mindanao and creating opportunities for former "rebels" to move into mainstream economic activities through investments in rural and social infrastructure and community-based projects. Considerable effort has been made to build consensus with the donor community on a strategic direction for rural development in Mindanao.
A comprehensive rural development strategy is being prepared to address the region's variable performance in rural development. Some countries in the region are undertaking macroeconomic and institutional reforms much faster than others: the countries that have progressed the furthest are also demonstrating markedly faster agricultural and rural growth. In a number of countries the sector is characterized by slow policy reform (especially land reform), the inadequate liberalization of input distribution and marketing systems, and a deteriorating natural resource base. The rural sector strategy for the region will recommend a minimum level of economic reform as the prerequisite for significant investment lending for rural development in the future.
In Europe and Central Asia, the focus is on assisting Albania, Armenia, Georgia and Ukraine in developing their national strategies and analyzing the cross-country agricultural policy issues faced by countries that seek admission to the European Union. Focus programs in the region aim to base rural lending on a graduated response to thresholds of policy reform, search for ways to hasten farm and agribusiness restructuring, and convince European Union aspirants not to introduce policies similar to CAP (Common Agricultural Policies).
Ukraine's stalled land reform and privatization program has caused significant delays in the focus work proposed under the Strategic Compact. The most recent discussion with the Government indicates that future prospects for reform are better. Nevertheless, with the agreement of the Rural Sector Board, Strategic Compact resources for Ukraine were reduced by 50 percent, and the funds were reallocated to programs in Georgia, Armenia and Albania and to a regional agricultural knowledge initiative. The study on the implications of European Union accession for a number of countries in the region is progressing well.
Despite the rapid "urbanization of poverty," there are still at least 19 countries in Latin America and the Caribbean, where the majority of the poor are rural; rural poverty is closely intertwined with ethnicity and sustainable management of natural resources. Significant progress has been achieved in defining good practices in decentralization, improving the efficiency and intensity of natural resources use and implementing programs targeting the poor. The region is well equipped to implement a pragmatic approach to alleviate rural poverty. It is supporting market-assisted land reform programs, approaches to provide community-level rural infrastructure, and greater community involvement in decision-making.
In Latin America and the Caribbean, the focus is on reducing rural poverty in southern Mexico, northern Brazil, and Guatemala, and on supporting the Regional Unit for Technical Assistance (RUTA) in agriculture, based in Guatemala. The emphasis is on improving resource allocation and reducing poverty through land reform, removal of policy biases against small farmers and provision of targeted programs. It is also on sustainable natural resources management; the use of community-based approaches and sustainable production practices.
Strategic Compact funds are being used to prepare four new projects to address rural poverty in Brazil and Guatemala. The World Bank Executive Directors have already approved two. In Brazil, piloting of a micro-finance project in the northeast has begun. In Guatemala, a survey of rural entrepreneurs has been carried out and is now being analyzed, in preparation for a sector report on rural finance. In Mexico, agreement on decentralization has been reached with government on a Strategic Compact-financed program of institutional support. RUTA began its new three-year phase, adding Belize to its list of clients, and augmenting its program with the employment of an indigenous issue specialist.
The scarcest resource in Middle East and North Africa is water, and the overwhelming challenge is to increase the efficiency of water use in agriculture. Water charges are symbolic, and operations and maintenance are inadequate because of weak user participation. Urgent action is required and is being sought by the Region through series of investment operations in the water sector.
In the Middle East and North Africa the focus is rural strategy formulation and implementation in Morocco and analysis of water management and allocation issues across the entire region. The emphasis is on increasing water use efficiency in agriculture, improving water resources management, improving competitiveness of agriculture by designing effective targeted food consumption programs, and increasing investments in watershed management for soil and water conservation.
The activities in Morocco are making good progress. Dissemination of the Morocco Rural Development Strategy Report and the building of consensus on key issues in the country are well advanced. The government has, with Bank assistance, prepared a draft rural law in line with the strategy. Under the Strategic Compact-sponsored rural water initiative, a regional seminar was carried out in Egypt in June and another in Jordan in September 1998. Good progress is also being made on disseminating a water strategy in Yemen and in developing a water strategy for Tunisia. Overall, the Strategic Compact-sponsored water thematic activities in the region are on schedule.
Poverty, malnutrition and natural resource degradation are widespread in South Asia. These problems are being tackled. Many of the countries have elements of rural development strategies but these need to be better integrated with efforts to open up the regional economy and with the need for a comprehensive approach to the rural sector's low productivity, weak human resource base, and inadequate physical and institutional infrastructure. On the whole, progress is being made in participatory planning and community involvement in development, definition of appropriate government functions, and the integration of poverty alleviation and natural resource management measures with activities designed to raise productivity.
In South Asia, the focus is on integrating several existing activities into a multisectoral rural sector strategy for Bangladesh, and developing a comprehensive rural development strategy for India. The emphasis is on reducing poverty through reforms of anti-labor policies, rural development and watershed management; speeding up completion of trade policy reforms, including input and output markets; and improving water resources management and dispute resolution.
In Bangladesh, work on developing a comprehensive rural development strategy is well underway. Progress is being made on efforts to address planning and institutional issues in the water sector. Greater attention is being given to natural resources management and rural poverty alleviation.
In India, Strategic Compact resources are being used to open up a broad dialogue on development options in the rural sector and disseminate a variety of sector work results. Concentration of new lending in states that support public sector and fiscal reform is leading to a greater policy content of rural lending, while still allowing significant new work on poverty alleviation and land management for countries not included among the focus programs.
Implementation progress of the focus programs varies by regions. Some of the variation is due to adjustments made to account for changed country circumstances (particularly Ukraine and countries of East Asia and the Pacific), and some resulted from a rethinking of country needs and priorities (South Asia). The lessons of experience show that in order to achieve the key goals of the focus programs, all the development agencies would have to collaborate more with one another and with the client countries in the design and implementation of development assistance. There are however some challenges towards attaining these goals. These include: improving strategy and consensus-building; improving the performance of development assistance in the rural sector; and developing impact indicators for monitoring the performance of rural sector activities.
The ACC Network on Rural Development and Food Security can help to meet these challenges. The Network's Thematic Groups are encouraged to discuss with the World Bank country teams opportunities and mechanisms for linking the work of the Bank's Focus Programs with other initiatives of the Thematic Groups, in order to enhance synergies and develop new collaborative activities.