World Bank Report Gives Weight to Agricultural-Led Dev't

from All Africa

Addis Fortune (Addis Ababa)

By Tamrat G. Giorgis

During most of their rule since the early 1990s, and to the dismay of their staunch critics, the Revolutionary Democrats in Ethiopia were fixated in their argument that the only way out of poverty for Ethiopia is their agricultural development-led industrialisation, a.k.a ADLI. It is an economic policy framework that puts much faith and emphasis by concentrating on the 84.2pc of the population that is agrarian.

If there would be any time they should be vindicated of their otherwise controversial policy, it ought to have been last week, following news from Washington DC that they have been right all along. The World Bank, an authoritative multilateral development agency, said last Friday that basing economic policies on agriculture is an "essential component of effective development strategies for most developing countries".

This, it said in a report released a day before the opening of the annual joint meeting of the World Bank and the International Monetary Fund (IMF) in Washington DC, is an important meeting for both. The first just came out from a scandalous past where its previous president, Paul Wolfawitz, had to leave after being accused of favouring his girlfriend when she was transferred from the Bank to the State Department. Morale within the Bank had been at an all-time low that the new president, Robert Zoellick, has been busy in calming "the water before charting across new water."

Nevertheless, Mr. Zoellick said in a press conference he held inside the headquarters of the IMF last Thursday that focusing on states that emerge from conflict and those on the verge of break-up will be his priorities, together with other issues such as knowledge sharing and climate change. He has pledged to funnel 3.5 billion dollars through the International Development Agency (IDA), an amount that is double last year, and will largely be spent on regional projects, according to Mr. Zoellick.

For its sister organisation, the IMF, it is a matter of proving its relevance and legitimacy, following the international financial crises due to the real estate crash in the United States (US), according to analysts.

"Global financial stability is as important today as it was 60 years ago," said Rodrigo de Rato, the departing managing director of the IMF, describing the new challenge to the IMF as legitimacy and the quality of its advises to member countries.

Ethiopia is one of them. Its delegation of 13 led by Finance and Economic Development Minister, Sufian Ahmed is comprised of Neway Gebreab, chief economic advisor to the Prime Minister; Teklewold Atnafu, governor of the central bank; Abi W. Meskel, head of the Federal Investement Agency; and heads of the three state owned banks.

A separate delegation of heads of private banks is also attending.

The World Bank's latest report is seen as the most radical shift for the Bank in 25 years, while Oxfam International called it a correction of "the many years of neglect of the millions of poor people who depend on agriculture."

Indeed, it was in 1982 that the Bank last mentioned agricultural development in its flagship reports issued annually for the past 30 years. Even as recently as 10 years ago, urging by Bank staffers to give attention to the agricultural sector used to be considered a politically incorrect position, according to Bank insiders.

Nevertheless, three of every four people in developing countries live in rural areas, 880 million of them on less than a dollar a day income. Neglect of a sector that feeds such a size of the global population is what Francois Bourguignon, World Bank's chief economist, described as "a major discrepancy."

However, the challenge lays not so much in expanding agriculture as it is in increasing productivity by increasing investments, both from the public and private sectors, according to Robert Zoellick, the newly appointed president of the Bank.

Investment to the sector has indeed diminished over the years, according to data complied by Oxfam International. In 1987, global aid to the agricultural sector was 11.5 billion Br, an amount drastically dropped to 3.5 billion Br in 2005. In Africa, only four per cent of the gross domestic product (GDP) has been invested in the agricultural sector.

"Until very recently, governments and donors, including the World Bank, neglected agricultural development in Africa," said a report released by Independent Evaluation Group of the Bank.

The Bank has invested 2.8 billion dollars in the 15 years beginning 1991, an amount representing eight per cent of its total investment lending to the continent.

Not even Ethiopia, one of the 10 largest borrowers of the Bank in Africa, and the staunch advocate of greater investment in the agricultural sector, has done enough, although the sector contributes close to 44pc to GDP. The amount the state spent to the support the sector in 2004 was 930 million dollars, far lower than what a desert country such as Egypt, in which 57.3pc of its population depends on agriculture, had spent the same year, 4.3 billion dollars.

Neither was the amount of official development aid (ODA) given to Ethiopia impressive; for two years beginning 2003, agriculture claims only 6.4pc of the total ODA the country had received, disclosed the 365-page World Development Report for 2008, titled "Agriculture for Development".

It was a report that struck Ellen Johnson Sirleaf, herself a staffer of the World Bank before she was elected to be the president of Liberia. She was the lone head of state to attend the launch of the report on Friday noon, inside the headquarters of the Bank.

"We like the report," she told senior staffers of the Bank and members of the media. "We like the return of the Bank to that basic sector of what we in the developing world are all about."

The World Bank called on its latest report for African countries to place agriculture at the centre of their development agenda, and increase investment to the sector.

"Given where they are and what they do best, promoting agriculture is imperative for meeting the Millennium Development Goal (MDG) of halving poverty and hunger by 2015 and reducing poverty and hunger for several decades thereafter," said the report.

Mr. Zoellick urged African countries to create the policy and regulatory environment that help private sector operators invest in the development of the agricultural sector.

Development experts, however, acknowledge that in spite of their focus on the agricultural sector, countries such as Ethiopia are faced with other challenges such as a growing population, shrinking land size and fragmentations of plots.

"You cannot solve rural poverty with agriculture," said Derek Byerlee, co-team leader of the report, who also worked in Ethiopia few years ago. "You need to develop the non-farm sector and ease exit to those who would like to move out of agriculture."

World Bank President Robert Zoellick at a press conference at the IMF Headquarters October 18, 2007 in Washington, DC. International Monetary Fund.