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Agricultural growth remains central to poverty reduction, says report

One billion people worldwide still live in extreme poverty

Agricultural growth remains central to poverty reduction, as one billion people worldwide continue living in extreme poverty, many of them in rural areas, a World Bank Group on agriculture, the Independent Evaluation Group (IEG), said in a report released on Tuesday.

Drawing on the World Bank Group's (WBG) experience in supporting agricultural growth in the past decade, the report — Growth and Productivity in Agriculture and Agribusiness: Evaluative Lessons from World Bank Group Experience — points to areas where increased funding can translate into higher impact.

In addition, the challenges posed by the global food crisis are likely to grow due to the expected doubling of worldwide food demand by 2050, the report says.

The Group's evaluation shows that agricultural projects have performed above the WBG average in Latin America and the Caribbean, Europe and Central Asia, and East Asia. Productivity growth has been particularly strong over a sustained period in China and India.

Results in Sub-Saharan Africa, however, have been weak. Lessons from the work done in important areas such as water use and irrigation, rural infrastructure, know-how on supply-value chains, and gender mainstreaming have proven to be vital to agricultural growth.

Better outcomes

Some of the country cases indicate how the expansion of rural infrastructure in China, India, and Mali yielded better outcomes in agriculture. However, in most cases, sustainability of these programmes beyond the life of the project remains an issue due to insufficient government funding and limited cost-recovery.

Tracing the history of agricultural growth and support for the sector, the report said that, in the 1990s, waning donor and government interest led to a decline in agriculture support by the WBG.

This was reversed in the mid-2000s with the food crisis and the increasing recognition of the importance of farm productivity to growth and poverty reduction.

From fiscal years 1998 to 2008, the WBG provided $23.7 billion in financing for agriculture and agribusiness activities in 108 countries, 28 of which were in Sub-Saharan Africa. An additional $5.4 billion was committed by the WBG in 2009, as support to the sector was scaled up.

World Bank and International Finance Corporation also provided non-lending services to their clients, and the Bank supported several global and regional programmes in the sector.

“The World Bank Group and partners have a unique opportunity to match the increases in the financing for agriculture with a sharper focus on improving agricultural growth and productivity,” said Vinod Thomas, Director-General, Evaluation, WBG. “The study highlights the complementary roles of the World Bank and the IFC, reflecting the importance of both the public and private sectors for agriculture.”

According to Nalini Kumar and Miguel Rebolledo Dellepiane, the co-authors of the report, “A key challenge for the WBG going forward is to increase the effectiveness of its support in agriculture-based economies, notably in Sub-Saharan Africa, where the needs are greatest. The report recognises that many of the issues that were identified as impediments to agricultural growth in the region are fundamental components of WBG's current Agriculture Action Plan FY 2010-2012.”

Evaluative lessons suggest that success in Sub-Saharan Africa will require enhanced staff skills and stronger coordination, both across sectors, including agriculture, financial sector, infrastructure, economic policy and governance, and between the World Bank and the IFC.

In one example of collaboration across WBG, support is being provided to develop Liberia's tree crop industry by which the IFC's advisory services and investments add to the Bank's support to the government's policy capacity.

The IEG report also indicates that rain-fed agriculture and the financial sustainability of projects will need more attention. Continued analytic work and policy dialogue are important to help build client capacity and understanding, and efforts are needed to ensure that WBG support is integrated with support at the country level.