DEVELOPMENT: World Bank Promises More Money to Rural Poor

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Nov 20 2002 (IPS) - The World Bank has unveiled a new strategy to guide its lending for rural and agricultural projects in the developing world, promising to inject more money into agriculture than ever before.

The new plan, Reaching the Rural Poor, promises to increase the Bank’s loans for agriculture for fiscal years 2003 and 2004 by 20 percent yearly, a net hike of about 400 million dollars.

It says developed nations must also do their part by cutting agricultural subsidies but adds that poor countries must continue to follow controversial liberalisation policies.

”The main aim is to reinvigorate the World Bank (lending) programmes in rural areas and in agriculture,” Csaba Csaki, senior adviser for rural development at the Bank told IPS.

The extra money is the first of a series of funding increases for rural development in the world’s poorest countries. The first portion will mainly target sub-Saharan Africa and South Asia, with subsequent phases to include East Asia.

The money will target projects in rural credit, irrigation, roads, sanitation and irrigation and to support farmers’ organisations, said Csaki.

Agricultural and rural growth is seen as essential for development because 75 percent of the world’s poor live in rural areas. Agricultural output represents one-quarter of the gross domestic product (GDP) of most low-income countries.

The Bank, whose mandate is to fight poverty and help sustain development in those countries, says the strategy will focus on poor people because ”poverty is predominantly, though not exclusively, a rural phenomenon”.

It says that agriculture must grow by at least 3.5 percent annually – up from 2-2.5 percent in the 1990-2000 period – in order to make a solid contribution to achieving the world’s goal of halving poverty and hunger.

One of the eight Millennium Development Goals set by the United Nations in 2000 is to halve the incidence of poverty from its 1990 levels by 2015.

The Bank acknowledges that 400 million dollars is far from enough to help meet that highly ambitious goal.

”This is only a first step,” Csaki said. ”Our aim is that the increase will be much more. This is just the immediate result of the new strategy.”

In its plan, the Bank reiterates that boosting agriculture in poor countries will require work from rich nations too, in particular opening up access to their markets for agricultural products from poor nations.

According to the development agency ”a major reason for the inability of developing countries to capture a larger share of agricultural trade” is protectionist policies, especially in the large markets of northern countries..

Continuing to promote trade liberalisation as a panacea for poverty, the Bank argues in the strategy that the potential economic benefits to the developing world of global agricultural trade reform are estimated to be at least a whopping 142 billion dollars annually.

Rich countries now spend about 300 billion dollars each year on agricultural subsidies, six times more than what they spend on foreign aid.

”The strategy emphasises that developed countries need to make progress in agricultural trade liberalisation, reduce trade-distorting agricultural subsidies, make scientific progress in agriculture accessible to developing countries, and re-focus assistance to rural development,” says a Bank statement.

”This is especially pertinent in sub-Saharan Africa and South Asia, where the majority of rural poverty is found,” it adds.

But the strategy also requires more trade and agricultural liberalisation from developing nations – a demand now much dreaded by those countries, which believe that the long process of liberalisation has netted them only losses.

During the annual meetings of the World Bank and International Monetary Fund (IMF) in September, ministers from developing countries complained that they have liberalised as much as possible, at the Bank’s urging.

The officials, along with scores of civil society groups, say that the Bank and developed countries are engaged in high-level hypocrisy by suggesting that poor countries need to further open up their markets for highly-subsided products from industrialised nations.

But the new strategy clearly says that the Bank wants developing countries to end all sorts of taxation of agriculture and to complete reforms in agricultural marketing.

The strategy is not pushing only trade liberalisation but a friendlier environment for development, said Csaki.

”We do not mean only liberalisation of tariff systems, he said. ”In the developing countries this is to do with removing internal barriers like corruption, red tape, harassment of the people,” he added.

”There are places where you cannot transport anything beyond 25 kilometres without armed guards. This is what we want to change.”

The strategy also recommends decentralising the provision of rural services, supporting rural organisations and promoting land reform as a means to increase the assets of the rural poor.

DEVELOPMENT: World Bank Promises More Money to Rural Poor

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Nov 20 2002 (IPS) - The World Bank has unveiled a new strategy to guide its lending for rural and agricultural projects in the developing world, promising to inject more money into agriculture than ever before.
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