World Bank Calls for Global Action to End Rural Poverty

Released in Washington, D.C.

Resolving the three inter-related global issues of reducing poverty, protecting the environment and ensuring a secure food supply can best be achieved by helping the rural poor, who still number some 1 billion people, or three out of four of the world’s impoverished, the World Bank says.

Despite the growth of urban slums since World War II, the majority of the world’s poor will still be living in rural areas for the next 20-30 years.

“Some 40,000 hunger-related deaths occur every day, mostly in rural regions– well out of view of the media eye,” says Ismail Serageldin, World Bank Vice President for Environmentally Sustainable Development.

According to the World Bank, more than 800 million people go hungry every day, most of them in rural areas. More than 500 million children, most of them rural, do not get enough food to fully develop mentally and physically.

In order to address the problems fully and seek solutions for the rural poor, the World Bank is holding a conference in Washington, D.C. September 25-27, entitled: “Rural Well-Being: From Vision to Action.” The conference aims at revitalizing rural development in the global development community. It will be a global village meeting that highlights success stories.

“A thriving rural economy will generate benefits far beyond the boundaries of any local area,” says Mr. Serageldin. “From the beginning of the industrial age, down to the amazing advances of the East Asian countries of the 1980s, a strong rural economy has been a necessary pre-condition for strong national economic growth.”

Mr. Serageldin adds: “It is not that the rural poor should be helped before the urban poor. The problems of both must be addressed, but the rural poor must not be forgotten in the global rush to modernization.”

Development in rural regions of developing countries has often been hampered by faulty policies, weak institutions and inadequate investment.

Access to basic human needs — education, potable water, health care and sanitation — is far less available in rural areas than in urban centers. In addition, the problems of malnutrition, short life-expectancy and high infant-mortality are more severe in rural areas.

As a example of the rural poor’s plight, India’s National Family Health Survey recently released national 1993 child mortality figures — in urban areas, 78 boys per 1,000 and 79 girls per 1,000 died before the age of five; in rural areas, the death rates are much higher, 127 boys and 135 girls.

Mr. Serageldin says that the poverty gripping the rural and urban poor must be viewed with the same moral outrage as people had for slavery when it was widely legal. “People looked at the condition of slavery and said it was monstrous and unconscionable. They were known as abolitionists,” says Mr. Serageldin. “Today the condition of hunger in a world of plenty is equally monstrous and unconscionable and must be abolished. We must become the ‘new abolitionists.'”

Why are people who are living close to the soil, in areas where food is grown, going hungry? Recent Bank studies in Latin America and the Caribbean have found that both farmers and landless rural inhabitants who work in agricultural activities are much poorer than the landless who work in rural non-agricultural activities.

In addition, some 370 million people, an estimated 47 percent of the less-developed world’s poorest people, live in areas of low agricultural production potential. They face double dangers: their inability to sustain themselves economically on the available land; and degrading the land so that it cannot produce at all.

The World Bank says that effective rural development — a combination of sound policies, accountable institutions, profitable investments, and technological innovations — by the international community and national programs, working together, provides the best means to both increase food production and to protect the environment.

“A thriving agricultural economy is the engine that must be ignited if the well-being of the rural inhabitant is to be improved,” say World Bank economists. “That’s why governments should concentrate in putting policies into place that will foster a robust agricultural economy.

Where are the Poor

The World Bank has completed poverty assessments of 59 developing countries divided into six regions for which it has reliable statistics on the rural/urban breakdown of poverty. Data is weak and definitions vary both of the poverty line and what is rural. Nonetheless, for these 59 countries, the overwhelming finding is that, out of a total of 950 million poor, some 72 percent, or 689 million, are rural poor.

Of the total number of poor in each of the six regions:

  • East Asia and the Pacific have the highest percentage of rural poor, 87 percent, or 173.6 million rural poor; the urban poor number 26.2 million, or 13 percent of all poor in this region;
  • Africa has the next highest percentage of rural poor, 80 percent, composed of 87.2 million people; African urban poor total 21.6 million, or 20 percent of the total;
  • South Asia is third in the percentage of rural poor, 79 percent, though it contains the largest absolute number of rural poor, 343.3 million people; urban poor in South Asia number 90 million, or 21 percent of the total;
  • The Middle East and North Africa is fourth, with 61 percent of all poor classified as rural, or 61 percent; urban poor in this region total 7.7 million, or 39 percent;
  • Latin America and the Caribbean have 41 percent of their poor in rural areas, or 60.6 million people; urban poor number 85.9 million, or 59 percent;
  • Europe and Central Asia, have 35 percent of their poor in rural regions, or 19 million people; urban poor number 35.2 million, or 65 percent.

Rural poor can also be calculated by solely considering the percentage of poor among the total rural population — not comparing it to the urban population. Using this measurement, Latin America and the Caribbean have 54 percent of all their rural inhabitants classified as poor, the highest percentage of any region. Africa is next, with 44 percent of all rural inhabitants classified as poor; South Asia, 41 percent, Europe and Central Asia, 35 percent; Middle East and North Africa, 29 percent; and East Asia and Pacific, 16 percent.

Agriculture must be Intensified, Sustainable

World food supplies will have to double by the year 2025 to meet demands caused by continued population growth and the increase in income among many millions of people in the developing regions, say World Bank staff

“The extra food will basically have to come on the same amount of land, or even less, than is now available for agriculture,” says the World Bank. “Biological yield increases — getting more food from the same plant and more meat from the same animal — provide the best way to produce enough food.”

Right now, some 80 percent of the planet’s people live in developing countries, where agriculture accounts for some 70 percent of all land used on the planet, and 70 percent of the water. In the poorest countries of the world, agriculture remains the most important sector for employment and income generation.

Agricultural research in the past 20 years has led to food increases sufficient to feed one billion more people. From the early 1970s to 1994, farmers and researchers, with the assistance of the World Bank and the Consultative Group on International Agricultural Research (CGIAR), and other national and international agencies, have increased yields for these food crops:

  • Rice, to 3.5 metric tons per hectare (2.47 acres), a 52 percent increase;
  • Wheat, to 2.4 metric tons per hectare, a 96.1 percent increase;
  • Maize (corn), to 2.6 metric tons per hectare, a 72.1 percent increase;
  • Potatoes, to 12.7 metric tons per hectare, a 24.6 percent increase;
  • Food legumes, to 0.7 metric ton per hectare, a 13.2 percent increase;
  • Cassava, to 9.7 metric tons per hectare, a 16.7 percent increase;
  • Yams, to 9.5 metric tons per hectare, a 21.1 percent increase;
  • Bananas, to 11.1 metric tons per hectare, a 14.2 percent increase;
  • Barley, to 1.3 metric tons per hectare, a 22.4 percent increase;
  • Millet, to 0.7 metric ton per hectare, a 12.4 percent increase;
  • Sorghum, to 1.1 metric tons per hectare, a 18.3 percent increase;
  • Sweet potato, to 13.5 metric tons per hectare, a 20.4 percent increase.

Production of 10 major developing country food crops increased by 74 percent since the early 1970s. Yield advances from research and technology contributed 70 percent to this growth in food output. But future yield increases will be hard to come by, and will have to be sought in agricultural systems that are more sustainable.

“If agriculture is not intensified, in an environmentally appropriate fashion, then the sheer expansion of the population and its requirement will lead to the destruction of the world’s forests from slash-and-burn farming of poor, small holders who barely feed their families,” Mr. Serageldin adds.

Mr. Serageldin stresses that the private sector will not undertake research whose costs cannot be recouped through patented products. That is why the Consultative Group on International Agricultural Research (CGIAR) — jointly sponsored by the World Bank, the United Nations Development Programme, the Food and Agriculture Organization, and the United Nations Environment Programme — and national institutes in the developing countries must receive even greater support.

Beyond the production side is the access side. Special efforts to reduce poverty among the poorest of the poor remain absolutely essential, and access to resources is fundamental to improving their status. The experience of micro-finance is important for this, as a means of promoting access, solidarity and reducing vulnerability among the very poor.

Success Stories

For most developing countries, agricultural growth is essential to economic growth. Very few low-income countries have achieved rapid non-agricultural growth without corresponding rapid agricultural growth.

Most of the developing countries that grew rapidly in the 1980s experienced rapid agricultural growth in the preceding years. For example, China’s tremendous annual growth rate of 9.5 percent during the 1980s and 1990s was preceded by rural and agricultural policy reforms in the late 1970s and early 1980s. Indonesia and Thailand also experienced strong agricultural growth prior to the period of high non-agricultural growth that continues up to the present.

Agricultural growth stimulates economic growth in non-agricultural sectors, which results in increased employment and reduced poverty.

The World Bank has already assisted several rural development programs that could serve as models for other developing countries. Some of these success stories are described here.

Mexico

The lessons learned in a successful pilot irrigation decentralization project in Mexico, partially funded by the Bank, are spreading worldwide. In the late 1980s, Mexico initiated a radical program to transfer management of many of the state-owned irrigation systems to water user organizations.

During a four-year period, the government transferred irrigation systems covering 6.2 million acres (2.5 million hectares) — 80 percent of the state-owned irrigation systems — to 320,000 farmers organized in 316 water user organizations.

To support the transfer of irrigation systems, the federal government enacted a new National Water Law; the national irrigation agency was restructured; a well-defined training and communications program was implemented; and formal agreements between the agency and user organizations were developed. In addition, water withdrawal fees were raised by 60 to 180 percent. As a result, more than 80 percent of the transferred projects became financially self-sufficient between 1992-94. Some 80 percent of farmers surveyed 2-3 years after the transfer, said they were satisfied with the improvement in services, although they were concerned about rising water charges.

Turkey is now following Mexico in transferring its irrigation systems to users. In 1993 and 1994, at the initiative of the World Bank, 60 Turkish irrigation officials visited Mexico to learn about its irrigation experiences. Turkey has now transferred some 2.4 million acres (960,000 hectares) to 176 user associations.

In 1994, the World Bank embarked on a new program to disseminate the lessons from Mexico and Turkey to major borrowing partner countries, first in South Asia, to Pakistan and Indian, then in the Middle East, to Egypt and Morocco.

Nepal

Nepal’s JAKPAS project, supported by the World Bank and UNDP, is a rural water supply and sanitation program that delivers sustainable services by involving communities in decision-making. It relies on participation of the private sector, non governmental organizations, and local governments.

The JAKPAS project works with communities on a demand basis — people choose the services for which they are willing to pay. The World Bank works with each community through the pre-development, development, implementation and post-implementation phases. By demonstrating how the project functioned better when community members tapped their own strengths and resources, new and improved water sources were developed.

Bolivia

Lack of water and sanitation constituted one of the main problems facing the disbursed rural population of Bolivia’s altiplano. The Yacupaj Project, supported by the World Bank, operated from 1991 to 1994.

The project tested new strategies for delivering water to widely separated groups of people. It demonstrated the key elements of its success — community management, women’s participation, appropriate technology, community contributions, training, and strengthening local capacity.

The lessons learned in the Yacupaj Project are being applied at the much larger nation-wide PROSABAR project.

Albania

The dismantling of Albania’s agricultural cooperatives in 1992 created 380,000 farms, averaging 3.5 acres (1.4 hectares) each. This transformation to private farms resulted in a rapid recovery of food production and averted a major agricultural crisis. But, because of the disarray in the financial sector, the new land owners were unable to obtain the credit they needed to invest in agriculture and animal husbandry.

To address this problem, the World Bank is providing funding for the Albanian government’s Rural Poverty Alleviation Pilot Project. The project assists villages in establishing village credit funds.

Democratically-elected village credit committees manage the funds. Credit officers, who are recruited and trained by the World Bank supported program, participate in village credit committee decisions, and are extending the network of village credit funds. The program is successful because if a borrower fails to repay a loan, the line of credit to the whole village is suspended. Since only a fraction of the village’s households receive loans for a given period, persons waiting for funds exert strong social pressure on debtors to repay their loans on time.

By December, 1995, 93 village credit funds had been created that have disbursed 4,300 loans with an average size of $350 each. Nearly 100 percent of the loans that have come due have been repaid. The loans have been used mainly to purchase livestock (65 percent), seeds, fertilizer and farm machinery (25 percent), trade and services (6 percent), and crafts (4 percent). Interest rates began at 6 percent and have since risen to 10 percent in local currency; Albanian inflation was 8 percent in 1995.

The World Bank says that two main lessons can be drawn from the Albanian example:

  • First, village-based credit funds can succeed in delivering financial services to small-scale farmers;
  • Second, funds are much more likely to succeed when villagers actively participate in their design and when the village credit committees maintain open communication with villagers and government officials;

Mali

The Office du Niger (ON) is one of the oldest and largest irrigation projects in Sub-Saharan Africa. The French Government began the project in 1932, planning to developing about 2.5 million acres (1 million hectares) over a 50-year period. But by 1982, the project was decades behind schedule. Much of the infrastructure was poorly maintained, with one-third of the developed area abandoned.

In 1977, the World Bank became involved in the effort to rehabilitate the ON, based on initial testing of modern High-Yielding Varieties (HYV) of rice in the ON region. Other donors then joined the project, including the European Union and the Governments of France, the Netherlands, Germany and the United States.

The overall result of the rehabilitation is an impressive turnaround between 1983 and 1994, which includes:

  • An average tripling in paddy rice yields, to 2 tons per acre (5 tons per hectare), which compares favorably with the Green Revolution achievements in Asia;
  • About 25,000 acres (10,000 hectares), or a fourth of the total area cultivated, were lands previously abandoned, since no new land development has been undertaken for rice since 1966;
  • The settler population grew by 222 percent, attracted by an opportunity for income-generation;

“The combination of settler population and productivity increases is making a significant contribution to poverty alleviation and food security for the country,” says the Bank.

The factors of success were both technical and institutional/economic. Adequate delivery and disposal of excess water is essential for rice intensification. Water control was achieved in the ON through the physical rehabilitation of the irrigation and drainage network. Since this has been completed on just 40 percent of the total cultivated area, a still significant margin exists for raising average yield and overall production in rehabilitated areas, the average rice yield of 2.8 tons per acre (7 t/h) is more than twice the average in the unrehabilitated areas.

Also crucial were the availability of a comprehensive package of improved technological messages to increase rice yield. A good example of a simple production technology that suddenly became attractive once water control and favorable macroeconomic conditions were achieved is transplanting seedlings instead of casting seeds by hand. In the past five years, the percentage of area transplanted increased from 10 percent to 70 percent.

China

The World Bank is engaged in a aquaculture project in Fujian Province that is providing food and income for farmers displaced by the construction of reservoirs.

The 1,400 megawatt Shuikou Hydroelectric Project on the Min River, 50 miles (84 kilometers) from the city of Fuzhou, will inundate about 5,000 acres (2,000 hectares) of agricultural and forest lands, and displace about 67,000 people living in 87 villages and 16 townships.

A major source of income and food for the resettled persons is expected to be the fisheries of the newly created reservoir. The World Bank is working with local governments to design and implement a resettlement plan that gives displaced farmers exclusive access to the fisheries resources of the new reservoir, and which provides them with financial resources, training and technical assistance.

The reservoir fisheries can employ 1,500 people and produce 6,000 tons of fresh fish per year. It constitutes one of the largest aquaculture projects supported by the Bank and can serve as a model for other large projects, especially as aquaculture grows in supplying the global demand for fish.

The World Bank says that aquaculture projects work best when the following conditions are met:

  • To ensure that reservoir fisheries are managed sustainably, it is essential to establish and enforce rules regarding who may use the resources;
  • Access to credit is necessary;
  • Water quality must be monitored regularly, because pollutants from sewage systems, industrial plants, and runoff from farms can destroy the productivity of fisheries.

Demand-driven Investment Funds

The demand-driven investment fund (DRIF) is a new instrument, developed in partnership with the World Bank for improving the design, implementation and sustainability of programs and projects for rural development.

The DRIF is a mechanism through which central governments transfer funds to local governments and communities in order to address their development priorities within a carefully defined set of guidelines.

Results from DRIFs in Mexico and Brazil have been extremely successful, even though the concept is so new. A World Bank-financed project in Mexico helped local governments and communities to initiate 30,000 mini-projects in three years with average costs 30-60 percent less than projects implemented in the traditional way. In Brazil, the share of funding that reached the beneficiaries has risen from 45 to more than 90 percent. Local people are much more satisfied because DRIF projects meet their needs much better than traditional projects.

DRIF beneficiaries are communities or groups of poor people, such as neighborhood associations, women’s groups, parent associations, or cooperatives. DRIFs are decentralized, delegating responsibility for project design, execution and financing decisions to local councils that are connected to local governments.

Community projects funded by DRIFs must meet specific eligibility criteria, typically may not exceed a budget and must be implemented within a limited time frame. For example, a DRIF project in Mexico may not cost more than $50,000 and must be implemented within one year. Beneficiary communities are required to contribute a portion of the project cost, in cash or in kind.

DRIFs have also demonstrated that local development councils and communities almost always have much more latent capacity to design and implement successful projects than is recognized by central governments. Nevertheless, communities sometimes require technical assistance for project design and implementation. A key feature of the community-driven approach is that the people themselves request the technical assistance they need.

In addition, the management and supervision of many small projects make traditional management procedures inoperable. Instead, DRIFs must have a strong and clear set of operating rules and eligibility criteria for projects, to assure high quality from the outset. Computerized monitoring systems are essential to identify trends and generic problems quickly.

Many central governments and international donors have resisted the establishment of DRIFs, concerned that local elites would appropriate or misspend allotted funds. The World Bank has found that such problems can be minimized by taking care to inform the broad public about the fund, including its size and allocation rules.

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