World Bank turns to farm aid to fight poverty

The new Bank president, Robert Zoellick, has pledged to boost the institution’s lending to the farm sector after allowing it to decline in 1980s and 1990s.

Zoellick vows the Bank will use an inclusive approach to fight poverty, hunger and disease, and this week unveiled a controversial proposal to allow private-sector business to help finance aid to poor countries.

‘There is much more we can do to connect the ‘bottom billion’ to the rest of the world,’ Zoellick said Saturday, after attending a meeting of the International Monetary Fund steering committee. The twin institutions are holding their annual meetings in Washington through Monday.

‘Inclusive development means greater voice for those most affected by our decisions,’ said the former US trade chief and Goldman Sachs executive, who took office in July after his predecessor was forced to resign in a favoritism scandal.

Globalization has created opportunities but ‘has not embraced all,’ he said. ‘Too many countries, especially in Africa, are expected to fall short of meeting many of the Millennium Development Goals’ of halving the percentage of people living on less than a dollar a day by 2015.

The institution’s annual World Development Report, released this week, acknowledged that Bank lending to agriculture had declined from 1980 to 2000 but said its support for rural development had begun to pick up four years ago and would increase further. Commitments this year are expected to come to 3.1 billion dollars.

Nevertheless, while 75 percent of the world’s poor live in rural areas ‘a mere 4.0 percent of official development assistance goes to agriculture in developing countries,’ the report found.

In sub-Saharan Africa furthermore, public spending on farming amounts to only 4.0 percent of total government expenditure.

An improvement in a country’s gross domestic product that is agriculture-driven is four times more effective in reducing poverty than is GDP growth originating in other sectors, the report said.

‘We need to give agriculture more prominence across the board,’ Zoellick said in presenting the report Thursday.

‘At the global level, countries must deliver on vital reforms such as cutting distorting subsidies and opening markets, while civil society groups, especially farmer organizations, need more say in setting the agricultural agenda.’

ActionAid, which is spearheading a campaign to stamp out hunger, denounced the Bank report for perpetuating the ‘same market-led approach, which for the last 25 years has been a massive failure even by its (the Bank’s) own standards.’

The ambitious agenda under Zoellick comes as the 185-nation Bank campaigns for contributions among members to rebuild the coffers of the International Development Association (IDA), the Bank’s main lender to countries whose populations live on less that two dollars per day, most of them in sub-Saharan Africa.

The Bank itself recently pledged to more than double its contribution to the 15^th IDA campaign, to 3.5 billion dollars.

Zoellick noted Saturday that about 70 percent of the poor live in India, China and the middle-income countries (MICs) served by the International Bank for Reconstruction and Development, the Bank’s public financing arm.

‘In order to meet the great needs of emerging-market countries, I have asked our board to simplify and cut our prices so we can expand our lending to support development and growth,’ he said.

Bank policymakers are also expected to discuss an innovative strategy to involve private-sector business in Bank financing.

Zoellick said he did not see any ‘particular problem’ with getting board approval for the project, but for some the plan raises conflict of interest concerns.

‘The private sector getting involved in the replenishment of IDA raises serious questions,’ said Sebastien Fourmy, a spokesman of Oxfam International, a nongovernmental organization.

The World Bank is ‘a public institution accountable to citizens,’ not to shareholders, said Fourmy.