REACHINGTHE RURAL POOR A RENEWED STRATEGY FOR RURAL DEVELOPMENT A SUMMARY Absolute poverty is a condition of life so degraded by disease, illiteracy, malnutrition, and squalor as to deny its victims basic human necessities . . . a condition of life so limited as to prevent realization of the potential of the genes with which one is born. . . . the problem is most severe in the countryside . . . ROBERT S. McNAMARA President,The World Bank Group Joint Annual Meetings, Nairobi, September 4, 1973 Eighty percent of our global population have 20 percent of the world's income . . . Some 800 million people . . . go to bed hungry every night, the majority of them in rural areas. Indeed, 70 percent of the poor of our globe are in rural areas . . . why is it that this year in the demand for World Bank loans, we're almost at an all-time low in terms of the proportion of our lending for rural and agricultural purposes . . .? JAMES D.WOLFENSOHN President,The World Bank Group Rural Development Strategy Regional Consultations, 2001 This booklet is based on World Bank, Reaching the Rural Poor:A Renewed Strategy for Rural Development, Washington, D.C., 2002, which also provides any references to outside sources cited here. The entire REACHING THE RURAL POOR document can be viewed at: http://www.worldbank.org/rural. REACHINGTHE RURAL POOR A RENEWED STRATEGY FOR RURAL DEVELOPMENT A SUMMARY M ore than a half century of persistent efforts by the World Bank and others have not altered the stubborn reality of rural poverty, and the gap between rich and poor is widening. Most of the world's poorest people still live in rural areas and this will continue for the foreseeable future. The day when the goals for international development will be met is still far off in many parts of the world. 3 What is more, with globalization, the "poverty challenge is getting bigger and harder," according to World Bank President James D. Wolfensohn. "Many of the benefits of an increasingly interconnected and interdependent global economy have bypassed the least developed countries, while some of the risks--of financial instability, communicable disease, and environmental degradation--have extracted a great price." A RENEWED STRATEGY FOR RURAL DEVELOPMENT FromVision to Practice: The Case for a Revitalized Strategy From Vision to Action, the Bank's previous rural development strategy launched in 1997, had a decisive influence on global thinking--but disappointing results on the ground. In 2001 lending for agricultural projects was the lowest in the World Bank's history (box 1). The new strategy is results oriented. Reaching the Rural Poor stresses practice, implementation, monitoring, and empow- erment of the people it is designed to help.The strategy responds to changes in: 1 Recent Bank Operations in Rural Areas The global environment ­ changes brought about by the forces of global- Rural investment is under-represented in the World ization and persistent trade distortions Bank's lending. The Bank's lending to rural areas in Fiscal Years 1999­2001 amounted to a total of US$15 billion (about $5 billion annually). This represents Client countries ­ challenges of unfin- around 25 percent of the Bank's total lending and ished policy reforms, decentralization, therefore is not congruent with the greater incidence institutional development, poor gover- of poverty in rural areas. Figures from Fiscal Year nance, the expanding roles of the pri- 2002 (FY02) show that this situation has not changed. vate sector and civil society, and prolif- The situation is particularly acute for agricultural erating national and regional conflicts 4 lending, which has declined markedly over the past 20 years, both absolutely and as a proportion of total Bank lending. Of the US$5 billion lending to rural The World Bank ­ to apply the areas in FY02, total investment in the agriculture sec- lessons learned in the past four to tor (including agro-industry and markets) was US$1.5 five years while implementing From billion. This equates to just 7.9 percent of total Bank Vision to Action lending, whereas in the early 1980s it accounted for more than 30 percent. Work on Reaching the Rural Poor began in a. The term "rural areas" as used throughout this publication mid 2000. Starting with the development includes small and medium sized towns, according to the of regional action plans and extensive national definitions. Investment in rural areas covers invest- consultations at the regional level, the new ments in all sectors (agriculture, natural resource manage- ment, rural transport, water and sanitation, telecommunica- strategy was designed to respond to the tions, education, health, and other social services). local circumstances and needs of the peo- REACHING THE RURAL POOR ple who have the greatest stake in its 2 Reaching the Rural Poor: implementation (box 2). Regionally draft- The Consultative Process ed strategies became the framework for the new corporate strategy. This process More than 2,000 people (government officials, civil was followed by intensive dialogs with society, nongovernmental organizations, academics, individuals and with international, national, private sector, and donor agencies) were involved in and local organizations. the consultations for the rural strategy. Consultations involved four major stages: Consultations on the regional strategies and the Reaching the Rural Poor also reflects and initial framework of the corporate strategy. Eleven reinforces the Bank's commitment to the regional consultations were held in early 2001 UN Millennium Development Goals (Nepal, Philippines, China, Lebanon, France, Kenya, (www.developmentgoals.org), which will Senegal, Russia, Panama, Belgium, and Japan). be met only through increases in rural Consultations and seminars focused on the corpo- incomes and broadened opportunities for rate strategy and its implementation. In 2002 a rural inhabitants. The strategy assigns series of consultations and seminars on imple- mentation were held in countries including great weight to developing, establishing, Vietnam, Nigeria, and Ethiopia and at regional and supporting appropriate implementa- development banks. tion and monitoring mechanisms and Presentations, seminars and panel discussions at processes at the national, regional and major international gatherings with broad-based international levels. stakeholder participation. These venues included the International Food Policy Research Institute 2020 Conference in 2001, and in 2002, the Food The Key Features of and Agriculture Organization Council Meeting, the United Nations Conference on Financing for Reaching the Rural Poor Development, the United Nations PrepComm for the World Summit on Sustainable Development, Reaching the Rural Poor will revitalize the European Sustainable Development World Bank activities in rural areas by Conference, the 35th World Farmer Congress, the adjusting the strategic framework and for- World Food Summit--Five Years Later, and the mulating a program of concrete and European Rural Development Forum. 5 attainable actions. The strategy calls for Rural strategy website and internet consultations raising the profile of rural development on the final draft of the strategy. A website was created early in the strategy-development process efforts and extending Bank endeavors to with drafts and all relevant material posted for reach the rural poor. The strategy: comment. Numerous comments were received from academics, civil society groups, donors, govern- Focuses on the rural poor ments, nongovernmental organizations, and private Fosters broad-based economic growth individuals. Addresses rural areas comprehensively Forges alliances of all stakeholders Addresses the impact of global developments on client countries A RENEWED STRATEGY FOR RURAL DEVELOPMENT Focusing on the Rural Poor Who are the rural poor? Where do they live? What challenges does poverty pose in their respective localities? Answers to these questions are the basis for an effective rural development strategy. The rural poor include the landless, individuals and households with few assets, smallholders, pastoralists, rural women (especially women-headed households); ethnic minorities, and indigenous populations. The rural poor are not a homogeneous group. Understanding the needs of such different groups is central to the success of the Bank's new strategy. Fostering Broad-Based Economic Growth Reaching the Rural Poor makes broad-based economic growth its primary objective. Rural poverty is as diverse as are the rural poor in their livelihood strategies, but in most of the poorest developing countries agriculture is the main source of rural economic growth. That is why improved agricultural productivity and growth are central to the Bank's strategy for reducing poverty. At the same time, the Bank recog- nizes the importance of nonfarm economic activities in rural development, so their promotion is another key feature. Addressing Rural Areas inTheir Entirety To reduce rural poverty, the Bank must work with clients to address rural areas in their entirety--all of rural society and every economic, social, and environmental aspect of rural development. Past approaches identified most pieces of the puzzle but failed to put them together in a way that attained objectives. Sustainable rural development requires multidisciplinary and pluralistic approaches to poverty reduction, social and gender equity, local economic development, natural resource management, and good gover- nance. The Bank is moving away from short-term, sector-by-sector approaches and 6 toward coherent cross-sectoral approaches for the sustained reduction of rural poverty. While the poor have much in common with each other wherever they live, rural areas are distinctly different from urban ones. For this reason, the approaches in addressing the needs of the rural and the urban poor must be tailored specifically to each group. However, the Bank's rural strategy recognizes that urban and rural areas are inextricably linked in the process of development and that the strategy must take into account the diverse range of interactions between urban and rural economies when crafting future development efforts. As development progresses, all countries undergo a transition from a predominantly rural to a more heavily urban economy. Urban and rural areas are a continuum, but they are also internally heterogeneous. REACHING THE RURAL POOR Forging Alliances of All Stakeholders To broaden stakeholder participation in project and program design and implementation, the Bank is working with clients to overcome the short- comings of earlier top-down, non-inclu- sive approaches. The Bank will work with others (governments, develop- ment agencies, civil society private sec- tor, academia) in a broad-based global coalition to make the reduction of rural poverty a major thrust for the coming decade. Through enhanced partner- ships and other linkages, the develop- ment community will increase advocacy for rural development and share expe- riences in best practices and innovation. Addressing the Impact of Global Developments on Client Countries The process of globalization has brought about a "shrinkage" of spatial distance and a lowering of transaction costs that has resulted in growing inter- dependence of the world's economies, markets, and people. Globalization 7 encompasses more open international trade in goods and financial services, growth of multinational companies, more uniform labor and environmental standards, and growing global sourcing in supply chains. This expanded market in goods, servic- es, and information provides new opportunities for rural development and poverty reduction. But globalization and economic liberalization carry risks as well as oppor- tunities and create losers as well as winners. Finding ways to harness the growth opportunities while managing risks and compensating losers is a challenge for policy- makers everywhere. Reaching the Rural Poor reflects the World Bank's increased emphasis on helping countries meet these challenges, addressing global issues such as international trade policy, subsidization of agriculture, and global climate change. A RENEWED STRATEGY FOR RURAL DEVELOPMENT The Strategic Objectives of Reaching the Rural Poor The Bank's objectives in rural poverty reduction,and for rural development in gen- eral, are geared to helping clients accelerate economic growth so that it is shared by the poor. The strategy therefore focuses on: Fostering an enabling environment for broad-based and sustainable rural growth Enhancing agricultural productivity and competitiveness Fostering nonfarm economic growth Improving social well-being, managing and mitigating risk, and reducing vulnerability Enhancing the sustainability of natural resource management. Fostering an Enabling Environment for Broad-Based and Sustainable Rural Growth An appropriate macroeconomic policy environment and a supportive institu- tional framework are essential to growth and poverty reduction and for the suc- 8 cess of World Bank supported activities in the rural sector. World-wide trade policy reform. Because so many of the poor derive their liveli- hood directly or indirectly from agriculture, developing countries have a huge stake in the full integration of agriculture under multilateral trade rules. A major reason both for the limited growth of agricultural trade and for the inability of developing countries to enlarge their share of this trade is high protection in the large markets of the indus- trial world. High subsidies and other forms of trade protection impair developing coun- tries' ability to compete in global markets with farmers from the industrial world. They also encourage surpluses that have been sold on world markets, depressing world prices and undermining the potential contribution of agriculture to global prosperity. REACHING THE RURAL POOR The potential economic welfare benefits of global agricultural trade reform for the developing world are estimated at US$140 billion annually. For the developing countries, the impact of agricultural trade liberalization by the industrial countries alone amounted to more than 50 percent of the official development assistance given to developing countries in 2001 (figure 1). These countries are the developing world's largest potential market for agricultural products. Considering the potential for significant increases in income in developing countries from agricultural trade, it is crucial that the industrial countries liberalize their agricultural markets by removing trade barriers to open market access for developing countries' products and by phasing out subsidies. The World Bank will continue to assist its clients in improving their own trade policies using the system of multilateral trade rules to expand their trade, thereby enhancing their development prospects. The Bank's comparative advantage is that it can combine trade policy analyses with significant expertise for a comprehensive view of the ways agricultural trade liberalization, globalization, and market integration can promote growth and rural development. This capacity can be used to support better agricultural and trade policies through: Increased advocacy for trade liberalization in both industrial and developing countries Mainstreaming agricultural trade liberalization and trade-capacity development in the Bank's country assistance and operations Figure 1: Potential Gains from Full MultilateralTrade Liberalization (percentage of income) Agriculture and Food Other Sectors 9 0 1 2 3 4 5 Low- and Static middle-income countries Dynamic High- Static income countries Dynamic World Static Total Dynamic Note: Static gains refer to results holding productivity constant. Dynamic gains allow productivity to respond to sector-specific export-to-output ratios. Source:World Bank, 2001. A RENEWED STRATEGY FOR RURAL DEVELOPMENT Facilitating capacity building through technical assistance and training on trade- related issues Increased assistance in the area of standards and sanitary and phytosanitary regulations Conducting analytical work at both global and country levels to identify key areas for future policy reform. Sound policy environment in develop- 3 Bulgaria: Agricultural Sector ing countries. The developing countries, Adjustment Loans I and II too, have work to do if they want to gain Bulgaria elected a new government in 1997 with a long-run benefits from trade liberalization. strong commitment to market reform. The government Their domestic policies must allow domes- eliminated export bans and controls on profit margins tic producers to respond to changing on agriculture and food products, eliminated most domestic and foreign conditions. The import quotas and duties on cereals, and liberalized World Bank will continue to assist its clients markets. The Bulgarian adjustment program had the full support of the elected government and Parliament. in their efforts to improve their own policy environment for rural development and World Bank provided sector adjustment loans were thereby enhance their development designed to promote efficiency in the agricultural sec- prospects (box 3). The nature and degree tor, generate rural jobs, raise living standards, and of the reforms will be influenced by the enlarge consumer choice by: extent of agricultural trade and subsidy reform in the industrial countries. The Promoting a land market, including restitution of 80 percent of the designated land area and Bank's policy agenda will focus on: enactment of several administrative measures to facilitate land transactions Improving the macroeconomic frame- work for agricultural and rural growth by Developing a private grain market by privatizing the grain marketing agency and limiting the state correcting remaining biases in the grain reserves to agreed amounts macroeconomic environment Espousing the principles of nondiscrimi- 10 Privatizing state agricultural enterprises, including natory taxation and reform credibility agreed numbers of grain mills, seed, and food industries in both theory and practice Supporting an enabling policy environ- Privatizing irrigation systems through ment for agricultural trade and market decentralization by transferring management of operation and maintenance to water user access by reducing trade barriers and associations on at least 100,000 hectares anti-export bias in order to promote growth in agricultural trade, by widening Improving agricultural financing according to access to foreign markets, by reducing agreed criteria protection for nonagricultural goods, Liberalizing trade in most agricultural products and by developing policies to minimize Improving forest legislation and increasing comm- the effects of declines in world com- unity-based participation in forest management. modity prices on farmers Introducing sound food and agricul- tural policies; supporting the develop- ment of effective markets for agricul- tural inputs, outputs, and services; removing obstacles to effective mar- ket operations Designing and targeting safety nets that directly protect the poor, partic- ularly rural dwellers Assisting in the establishment of com- plementary legal and regulatory frameworks that support private enterprises Improving the operation of land mar- kets and land administration, promot- ing land reform for countries with inequitable land distribution, and pro- moting equal access to secure land holding, especially by women. Good governance and institutions. Good governance and institutions are indispensable for sound rural develop- ment; poor governance inhibits develop- ment. Overcentralized institutional struc- tures characteristic of many government administrative systems also sap the effec- tiveness of development investments and 11 policies. That is why, based on empirical evidence, the Bank has made institution- al reform central to its new strategy. In the decentralization process, local governments must be given sufficient fiscal resources to discharge their new responsibilities. Political decentralization is also neces- sary, as it promotes accountability and governance reforms at the local level. This is especially important for rural areas because most rural people have had a weak political voice at the national level. The Bank will encourage governments to concentrate on: providing public goods; establishing legal, administrative, and regulatory systems that correct for market A RENEWED STRATEGY FOR RURAL DEVELOPMENT failures; facilitating efficient operation of 4 Latvia: Agricultural the private sector; and protecting Development Project and the interests of the disadvantaged. Rural Development Project Decentralization offers great scope Latvia's emerging private rural economy has received for improving delivery of public sector support from the Agricultural Development Project functions. Facilitating further decentraliza- (ADP) and the Rural Development Project (RDP). tion in rural areas is an important part of the policy agenda outlined in the strategy. No commercial banks in Latvia were interested in To promote the development of effective serving small private farmers when ADP was institutions for rural development, the launched in Fiscal Year (FY) 1994. The Agricultural Bank will support: Finance Company (AFC) was set up with a squad of mobile credit officers who took financial services to the farmers instead of waiting for them to come to Strengthening of local administrative a site, often far away. The idea of "taking the bank capacity to the clients" eased farmers' transportation prob- Transfer of responsibility for services lems. In four years, with only 42 staff members, AFC to the administrative level closest to approved US$43 million for 2,860 subloans, with high repayment rates at around 93 percent. The the users loans were offered at market interest rates in the Enhanced accountability for public local currency, Lat, and U.S. dollars. The AFC, now administration at every level merged with a commercial bank in Latvia, continues Participatory approaches, including to serve the rural population. increased political space and participa- tion in decision-making bodies for The RDP supports a wide variety of rural entrepre- women neurs. Approved in FY98, the project was directed at helping the government build its rural policymaking Economies of scale in government capacity in preparation for membership in the functions European Union. One of the RDP's innovations was Appropriate private sector involve- the "special credit line" with a government bonus of ment in the delivery of public services, a matching grant for small farmers and rural entre- with public accountability. 12 preneurs borrowing for the first time. First-time bor- rowers received a small portion of the loan as a bonus after they had fully repaid their loan. Some Rural financial services. To achieve 1,300 of these small loans have been made, each for broad-based economic growth and a maximum of US$4,000 equivalent. Most of these reduce vulnerability, people and enter- loans went to rural, nonfarm entrepreneurs--tourist prises in rural areas need access to finan- services, hairdressers, tailors, doctors, and other serv- cial services. Many developing countries ice providers--and only 20 percent to farmers. Repayment performance is outstanding at around 98 have no formal financial institutions to percent. The RDP also successfully introduced par- provide services. Supply-driven agricul- ticipatory approaches to rural development by cre- tural credit has proven unsustainable and ating Local Action Groups. Two group leaders unsuccessful and is no longer supported received a United Nations Award of Excellence for by the Bank, although many countries community-led development. still use it. REACHING THE RURAL POOR To ensure new and innovative approach- es, the Bank will strengthen its support for the development of financial products and institutions that fill the special needs of poor rural clients. This will include financial instruments for income genera- tion and reduction of financial risk and recognize the multiplicity of potential delivery mechanisms, suppliers, and users of rural financial services (box 4). To this end, the Bank will: Continue to expand its menu of instruments in rural finance and test 5 The Agricultural Growth ­ them for effectiveness, replicability, Poverty Reduction Connection and sustainability Continue to support provision of cred- A 1 percent increase in agricultural GDP per capita led to a 1.6 percent gain in the per capita it to farm and rural nonfarm enterpris- incomes of the poorest one fifth of the popula- es where market failures inhibit the tion in 35 countries analyzed.a flow of liquidity, while observing sound A 10 percent increase in crop yields led to a market development approaches and reduction of between 6 percent and 10 percent discipline in financial intermediation in the number of people living on less than US$1 Work to narrow gaps in knowledge a day.b In Africa, a 10 percent increase in yields about the relation between financial resulted in a 9 percent decrease in the same services and poverty. income group. Wheat prices would have risen 34 percent, and Enhancing Agricultural rice prices 41 percent, more between 1970 and Productivity and Competitiveness 1995 in the absence of international agricultural 13 With so many poor rural residents research. and changes in the agricultural sector-- The average real income of small farmers in compounded by the deteriorating natural southern India rose by 90 percent and that of resource base--agriculture has never landless laborers by 125 percent in 1973­1984, been more important than it is today in as a result of the "Green Revolution."c achieving Bank goals. International experi- Sources: a. C.P. Timmer, 1997. How Well Do the Poor Connect to ence has demonstrated the direct the Growth Process, Consulting Assistance on Economic Reform relation between agricultural growth and Discussion Paper 178 (Cambridge, Mass.: Harvard Institute for rural poverty reduction (box 5). International Development); b. Irz , L. Lin, C. Thirtle, and S. Wiggins, "Agricultural Growth and Poverty Alleviation," Development Policy Agricultural development also induces Review 19(4): (2001); c. P. Hazell and C. Ramasamy, 1991. The Green economic growth in other rural sectors Revolution Reconsidered: The Impact of High-Yielding Rice Varieties in by generating demand for inputs and South India (Baltimore, Md.: Johns Hopkins University Press). A RENEWED STRATEGY FOR RURAL DEVELOPMENT providing materials for processing and marketing industries. Future Bank activi- ties will therefore focus on: Providing an enabling policy and institutional environment to foster agricultural growth Supporting sustainable intensification of production through the use of new technologies Enhancing the quality of food produced Encouraging, partly through demand- driven extension services, more efficient use of farm inputs and reduction of post-harvest losses Increasing the productivity of water use Supporting agricultural diversification, especially into high-value products Strengthening farmer-to-market linkages Enhancing food safety and addressing competitiveness through quality con- trol and supply chain management Applying differentiated strategies to fit various farm types Supporting the development of 14 physical and services infrastructure. A Refocused Agenda for Agriculture The new agenda set by this strategy expands and refocuses the Bank's existing sup- port program for agriculture with a number of important new features. These include shifting the emphasis from: a narrow agricultural focus to a broader policy context--including global factors; a focus on crop and livestock yields to market demands and incomes; staples to high value crops; primary production to the entire food chain; a single farm type approach to heterogeneity; REACHING THE RURAL POOR public to public-private partnerships, including community driven development; avoidance of issues to a head on approach (biotechnology, forestry, water). Policy and institutions. Reaching the Rural Poor treats agriculture as the leading pro- ductive sector within the rural economy and closely linked to nonfarm activities. The strategy recognizes that the production of staple foods is the main source of income for many poor rural households, but that--to get out of the poverty trap--they must diversify into livestock, higher value crops, and nonfarm activities. The Bank's experience has shown that agricultural investments are more effective if set within appropriate pol- icy and institutional environments with adequate infrastructure and market develop- ment. In their design, future Bank­supported activities in agriculture will incorporate successful aspects of the lessons learned (box 6). Agricultural science and new technology. Beyond providing an enabling policy and institutional environment, Bank support for agriculture will stress 6 Underlying Factors of Success in sustainable intensification through the Agricultural Development application of science. Since most high potential agricultural areas have Policies must neither discriminate against reached the limits of their exploitable agriculture nor give it special privileges. This means, land and water resources, much of for example, that agriculture should be taxed lightly, their future growth in productivity using the same progressivity and instruments as for depends on inputs of knowledge. Public other sectors. and private investments in science and The economy should be open, employment- technology will receive continued Bank sensitive, and oriented toward smallholders. support. The Bank will also invite global The importance of external markets, including spe- policy dialog to ensure fair access to cialty and niche markets, should be fully recognized new technologies and will continue to and exploited. 15 provide leadership and financing to the Foreign direct investment should be recognized system operated by the Consultative as an integral part of the agricultural development Group on International Agricultural process. Research (CGIAR), a major provider Land reform is essential where land is very of international public goods in agricul- unequally distributed. ture. The Bank remains committed to Rapid technological progress is needed, and helping developing countries assess, both the private and public sectors have important roles in research, extension, and financing. explore, and safely use biotechnology and other new technologies and to pro- Rural areas need substantial investment in education, health, and infrastructure, such as roads. mote environmentally sustainable pest management systems (box 7). The needs of women--a neglected group of farmers and farm laborers--must be built into programs. A RENEWED STRATEGY FOR RURAL DEVELOPMENT Agricultural extension services. To bring new technology to farmers, agricul- tural extension services are crucial and can also play an important role in deliv- ering information on rural development, business development, and marketing. In the poorest countries, government will have a role in financing extension. Elsewhere, the private sector, nongovern- mental organizations, and universities can compete to provide extension services subject to periodic review by local insti- tutions. Water productivity. Water is becom- ing a scarce and precious commodity, and agriculture is a major user. Getting 7 Mali: IPM Special Initiative-Capacity "more crop per drop" is therefore Building and Policy Reform essential. Future investment priorities Cotton is a basic higher value crop and a main for agricultural water use will concen- source of export revenues for Mali. About 90 trate on making existing systems more percent of Mali's pesticide imports are used on productive, because irrigation manage- cotton. In the 1990s, due to pesticide resistance ment is often poor and the potential for and inappropriate use, pesticide costs crept up steadily while yields stayed flat or declined. constructing new irrigation systems is Evidence of occupational health problems and limited. This will require: ensuring the pesticide residues in food mounted. Based on a integrity of infrastructure, for example, comprehensive status report produced by a local repairing leaks in irrigation canals; research institution and a stakeholder policy addressing adverse environmental 16 workshop, an Integrated Pest Management (IPM) impacts; providing demand-driven irriga- Special Initiative was developed. The Initiative takes a problem-focused view, cutting across tion to improve the livelihoods of poor project components. producers; and improving management and cost-effectiveness. Irrigation and Policy reform elements include expanding partici- drainage development and improve- patory farmer training for IPM, strengthening ments will be viewed in the context of regulatory controls, building capacity for moni- toring environmental and human health impacts, integrated watershed and catchment and adjusting fiscal and economic incentives systems. Bank­supported investments in (eliminating hidden subsidies for cotton and food irrigation will be on a smaller scale than crop pesticides, providing sustainable funding for in the past, with the emphasis on water regulatory and training activities by eliminating use on farms, rehabilitation of existing import duty exemptions for pesticides). irrigation systems, and participation by REACHING THE RURAL POOR farmers and other private investors in management. Market expansion and diversification. Markets are now the driver for agricultur- al growth. Food retailers and processors today source from around the world. Consumer demands and market and trade liberalization are opening new niches and specialized markets for agricultural produce, offering farmers an opportuni- ty to diversify into high-value, high-quali- ty items such as fresh fruit and vegeta- bles, fish, and flowers. Therefore, the Bank will focus on strengthening farmers' connections to markets through supply- chain management structures, improving product quality, establishing appropriate post-harvest systems, and assisting clients in refining methods of product certifica- tion and improving food safety. Farm-type tailored strategies. Better technology, access to inputs, and product markets improve poor farmers' income- earning capacity. But they do it in differ- ent ways, depending on farm types, pro- duction systems, and market opportuni- 17 ties. Future productivity increases there- fore depend on tailoring technologies to specific groups of farmers in more narrowly defined production and market environ- ments. Accordingly, the Bank is committed to using a different strategy for each major farm type: commercial, family, and subsistence. Extension and advisory services will be strengthened and broadened to address the knowledge and management services needed by farmers and other rural households. To link farmers to input and technolo- gy providers, strong producer organizations and community-driven groups should work toward and increasingly function in an inviting environment for private investment. Physical and services infrastructure. Farms, households, and other components of rural systems need a minimum bundle of rural infrastructure services to function efficiently. A RENEWED STRATEGY FOR RURAL DEVELOPMENT These basics include: An adequate supply of safe drinking water. Unsafe water is a major con- tributor to diarrhea, a frequent cause of death among children in rural areas. Health and education infrastructure. Clinics and schools are needed to ensure quality health care and educa- tion. Transportation infrastructure and services.Without roads and railroads, farmers cannot send their produce to markets outside their localities, and trade cannot expand. 8 Peru: Roads Bring Markets Information systems. Marketing today to the Rural Poor depends on adequate information about what people want, at what New roads in the Sierra countryside, built under price, and who can supply it. the Peru Rural Roads project, have made the out- Adequate and dependable energy side world and its markets more accessible for the supplies. Energy is essential for virtu- area's 3 million poor. ally all activities in rural areas. The program's design was innovative with a strong poverty focus, grassroots participation, and collab- Adequate infrastructure of every type is oration among key players--the Ministry of imperative for agricultural and rural Transport and Communications, the Inter-American development. The Bank thus intends to Development Bank, the World Bank, and more enhance its support to clients' efforts to 18 than 20 nongovernmental organizations. An insti- put in place the basic physical and social tutional collaborative framework was set up to infrastructure for rural economic growth make the most of each stakeholder's best talents. (box 8). The program reduced the isolation and facilitated the integration of the beneficiary communities, Fostering Nonfarm enhanced economic opportunities, and spurred Economic Growth local entrepreneurship. More than 11,000 km of If poverty is to be reduced, a flourishing rural roads were rehabilitated, and 32,300 sea- agricultural sector is essential in most sonal unskilled, and 4,700 permanent, jobs were created in 410 local road maintenance enterpris- developing countries, but agriculture es. This innovative partnership program received alone cannot do the whole job. Rural a 2001 World Bank President's Award for communities also need nonfarm income- Excellence. producing activities. Nonfarm activities, REACHING THE RURAL POOR often with linkages to agriculture and natural resources, have important multiplier effects (box 9). They are also an important source of employment for rural women. Developing effective support to the rural nonfarm economy is therefore an essential part of the Bank's rural strategy. The Bank will work with clients and others to exploit current oppor- tunities, seek new ones, and tackle the removal of barriers that exclude rural people from diversified employment and business activities. Its interventions will address the institu- tional support needed by a diversified rural economy at the national, subnational, com- munity, and local levels. Strengthening skills and organization capital. The Bank will support future labor market and enterprise development in rural communities. Skills needed range from functional literacy and numeracy, to specific labor-market skills, to managerial and administrative skills for enterprise development, including market assessments and detection of business opportunities. Close attention will be paid to women's demands and needs. Research links growth in nonfarm activities to declining poverty for both male- and female-headed households, but the drop is faster for woman-headed house- holds. Trade, professional, and other common interest associations, and cooperatives will also be promoted. Promote local economic development 9 Madagascar: Rural Nonfarm and intersectoral linkages. Recognizing Investment Benefits the Poor that many ministries and private players share sectoral responsibility for the rural Aqualma, a shrimp-processing and export company in economy, the Bank will support formation a remote corner of Madagascar has become one of the of cross-ministerial and other working country's top private enterprises, with exports of US$26 million in 2000. groups nationally and locally, with both public and private participation. Such Established in 1992 with support from the groups at the subnational and local levels International Finance Corporation, the company has had should address local-level competitiveness a profound impact on the local economy and living 19 and the wider enabling environment of conditions. Of Aqualma's 1,200 employees in 2001, 80 percent had never previously held a wage-paying job. both the farm and nonfarm sectors and identify and seek means to remove barri- Employees and local villagers gained access to educa- ers (legislative, regulatory, taxation, infra- tion and health services through the primary school structure, and financial). and clinic established by the company. The project generated many connections with small local enterpris- Strengthening the supply chain and es during the construction and operational phases. product linkages. Trends in consumer Future plans include expanding production on a new markets, quality requirements, and com- site, for which a community development plan and a petition require better planning and conservation management plan to protect biodiverse coordination of supply chains from input habitats are being developed. A RENEWED STRATEGY FOR RURAL DEVELOPMENT suppliers, primary producers, traders, and processors, to retailers. Competitiveness depends on effective and flexible logistics and low transaction costs within the chain. The public sector's role is to create adequate conditions for the development of efficient pri- vate sector supply chains, promote investment in physical infrastructure, and support effective subcontracting systems and quality inspections through appropriate legal frame- works and enforcement systems. Support micro-, small, and medium enterprises. The development of small rural enterprises requires first and foremost a good investment climate. This will be promoted through assessment and policy dialog. Especially in rural areas, the development of small and medium enterprises (SMEs) is inhibited by lack of a skilled labor force and public and private financial, technological, and other services. The Bank will promote SME development by supporting commercial business development services (box 10), and, through small and medium enterprises, efficient service delivery, especially in rural infra- structure services. Recognize and support labor mobility. 10 Kenya: Entrepreneurs Build Migration and labor mobility are essential Market for Business Services aspects of economic development, The Kenya Micro and Small Enterprise Training job creation, and poverty reduction. and Technology Project, an innovative World Bank Therefore the Bank will support policies project with a rural component, has been using that increase mobility through information vouchers since 1998 to enable small, local on, for example, labor legislation, communi- rural entrepreneurs to purchase skills and man- cations, and skills development as well as on agement training. As a demand-side instrument, welfare and entitlements. Particular atten- the voucher project departs from the old approach of supporting public training institu- tion will go to policies that minimize the tions. Now, diverse suppliers are packaging potential for social tensions and environ- their services for rural entrepreneurial clients. mental damage. 20 Skilled craft workers have emerged as the leading providers of training. Local private agencies Improving SocialWell-Being, handle voucher allocation. Managing and Mitigating Risk, More than 25,000 vouchers have been issued, and ReducingVulnerability 60 percent of them to women entrepreneurs. To improve social well-being and minimize Among training recipients, employment and the vulnerability of the rural poor, the Bank income have increased 50 percent. The project will endeavor to improve access to nutrition subsidizes up to 90 percent of the cost of each and health services, help mitigate the effects voucher, but cost-sharing percentages rise with of HIV/AIDS, increase access to rural edu- second and third vouchers. Rural entrepreneurs now frequently purchase training without vouch- cation and improve its quality, and help ers from providers who have demonstrated the improve food security for the rural poor. To value of their services. achieve these objectives and foster broad- REACHING THE RURAL POOR based growth and sustainable management of natural resources, the Bank will also pro- mote inclusiveness and removal of barriers that exclude individuals on the basis of gen- der or ethnicity from economic and social opportunities. Health and nutrition. The Bank will stress governments' obligations to ensure that resources for health care reach the rural poor. The Bank will also emphasize the importance of improving dietary quality and micronutrient status. Supplementation and fortification, including biofortification through purposeful plant breeding, are important strategies to combat micronutri- ent deficiencies. HIV/AIDS. HIV/AIDS is threatening the progress made in agricultural and rural development in the past 40 years, particu- larly in developing countries where 95 percent of the infected population live. Combating the disease is therefore a core element of the Bank's strategy to support rural development, especially in Africa. The Bank gives high priority to stopping the spread of HIV/AIDS, helping communities cope with its impacts, and mainstreaming 21 HIV/AIDS issues in Bank operations. Rural education. Universal primary education with gender equality and quality improve- ments will be the Bank's top priority in education. In addition, the Bank will promote litera- cy and training opportunities for unschooled rural youth and adults and ensure that invest- ments in agricultural and vocational training programs are in line with current needs. It will also support development of curricula appropriate to the needs of rural and agricultural populations and piloting of new approaches to private education. Food security and risk. As articulated in the World Development Report 2001 on poverty, a workable strategy for reducing poverty must enhance security by reducing the A RENEWED STRATEGY FOR RURAL DEVELOPMENT risk of natural, financial, and health shocks and by enabling households to mitigate their consequences. But policies, institutions, and investments still have to be designed and adapted to directly manage, reduce, or counteract the special risks of rural residents, par- ticularly the poor. In addition to deepening the understanding of household and community risk and vul- nerability, the Bank is promoting new policies and instruments for managing and coping with risk (box 11). In doing so, it will seek to avoid potential market distortions and dis- incentives from risk management. Instruments that can play a role in this strategy include new types of insurance based on weather rather than yield outcomes and novel mechanisms for commodity price insurance. New instruments being assessed for their effectiveness include market-based financial products not yet readily accessible to many of the poor--such as forward contracting, hedging, and pool pricing. The Bank is also exploring ways to help poor people learn about and use insurance and to reduce costs for primary insurers and reinsurers. Targeted transfers are one way of reducing income and health uncertainties for the poor and vulnerable. However, such programs face special challenges in rural areas due to dif- ficulties in defining targeting criteria, collecting beneficiary contributions, and administer- ing programs in sparsely populated communities with undeveloped infrastructure. The poorest countries, the ones that need poverty programs the most, also have the great- est need to be selective to avoid compromising macroeconomic stability or reducing investment in human and physical capital. 22 REACHING THE RURAL POOR World Bank­supported programs and 11 Some Management and Coping policy advice are based on the experi- Strategies for Crop-Related Risk ence that many targeted food security programs are more cost-effective than Providing more and better information. generalized food subsidies. Today, food Sound information on markets, weather, and insecurity for most households boils down technologies can reduce uncertainty in a risky to lack of access or purchasing power for world. an adequate diet and lack of complemen- Insurance. Insurance is a device that allows tary inputs such as safe water to maximize the insurer to pool risks among many clients in the nutritional impact of the food eaten. return for a fee or premium. New mechanisms Food assistance may be given to families for insuring against commodity price risks are (rather than individuals), but any food being explored in a donor-supported initiative assistance should be a part of a compre- operated out of the Agriculture and Rural Development Department of the World Bank (the hensive nutrition program for vulnerable Commodity Risk Management Program). Still children or health programs for pregnant experimental, price insurance arrangements will women. The Bank is also emphasizing operate--possibly in conjunction with credit strengthening informal support programs instruments--to reduce downside risk to both building upon traditional rural community lenders and small-scale borrowing producers. To overcome some of the problems associated with structures. Although these informal safety traditional crop insurance, the World Bank and nets frequently fail in times of shared several partners are testing novel rainfall-based hardship, this risk may be reduced with insurance policies. The International Finance support from government. Corporation is investing in a global facility to develop weather-index insurance in emerging Social inclusion. An important priority economies and financing the establishment of a weather-based insurance scheme in Morocco. The of the rural strategy is to help Bank is testing a weather-based insurance make institutions more responsive to the scheme for poor pastoralists in Mongolia. rural poor, thereby improving social arrange- well-being and reducing vulnerability. Bank Contract marketing. Marketing ments allow farmers in many countries to reduce 23 activities in this area focus on price risks for commodities not yet produced or institutional reform to establish minority for inputs needed in the future. The most rights and opportunities and to important alternatives, from a risk-management strengthen the political voice of perspective, include cooperative marketing with women, refugees, ethnic minorities, the price pooling and forward contracts for com- modity sales or input delivery. landless, and the disabled. It is now widely acknowledged that one of the most Income diversification. To reduce fluctua- critical factors in revitalizing rural develop- tions in income, a variety of cropping practices, investments in livestock and nonfarm income, ment is to raise the productivity of and migration can help farmers diversify their women farmers. In most of the develop- income sources. Traditional risk-coping strategies ing world, women do most of the agricul- may also serve this function. tural work. Women are usually in charge A RENEWED STRATEGY FOR RURAL DEVELOPMENT of household food security, yet in some areas they are constrained in their access to, and ownership and control of productive resources such as land and finances. Decentralized development efforts such as community driven development (CDD) offer the potential for increased community participation in all aspects of rural developent as well as offering greater inclusion of all social groups in rural decision making. Enhancing Sustainability of Natural Resource Management Agriculture, as a heavy consumer of natural resources--especially water and soil nutrients--has an obligation to play a commensurate role in their conservation. Many producers are already concerned about the deteriorating land and water base in their areas, and public awareness of environmental issues adds urgency to the search for solutions to conservation issues--many of them global in nature. Increasing the efficiency and sustainability of water use in agriculture and improving irrigation system performance are key strategic conservation goals. Ensuring sustainability of intensive agricultural production systems will take, as a priority, careful management of natural resources, especially in fragile production environments. To promote conservation and restoration of natural assets in rural areas, the Bank has developed guidelines and strategies for the environment, forestry, and water. Devoted entirely to sustainable development, The World Development Report--2003 was released at the World Summit on that topic in August 2002. The Bank will link rural develop- ment, especially in agriculture, to effective sustainable resource management. The 24 Bank's objectives in this regard include: Reducing desertification and other types of land degradation Improving water management Enhancing sustainable fisheries man- agement Sustaining production of forest prod- ucts while protecting the environment Protecting biodiversity Incorporating knowledge about climate change into rural development planning. REACHING THE RURAL POOR The strategy promotes innovative approaches to using natural resources most efficiently to meet agricultural productivity goals while protecting the long-term productivity and resilience of natural resources. Such approaches take into account the interactions among soil, water, solar energy, plants, and animals as well as the social and economic well-being of the people who use these resources. Strategy Implementation The new strategy provides guidelines and focal points for maximizing the results of World Bank support to clients' rural development efforts. The approach is flexible, action oriented, and client driven. The goal is to transform rural develop- ment activities in the Bank from compart- ments of sector departments and divi- sions into a coherent, multisectoral effort, supported by internal budgetary and plan- ning frameworks conducive to efficient implementation. Key Thrusts in Implementation 25 Raising the profile of rural develop- ment in national policy The Bank will support the development of locally organized national rural development strategies and capable client-country institutions that articulate and work to fulfill the needs of rural inhabitants, specifically the rural poor. To have an impact, such efforts must be aligned with national development strategy processes and supported by high-quality and focused analytical work by client coun- tries, the Bank, and other development partners. The main thrust of this joint effort will be to strengthen the voice of the rural poor in national planning processes. The Bank will recommend the participation of all stakeholders in rural areas and foster a holistic approach reflecting the multisectoral dimensions of a sustained A RENEWED STRATEGY FOR RURAL DEVELOPMENT drive to reduce poverty. The Bank will 12 Possible Areas for Scaling-Up provide analytical work to deepen and and Innovation expand the understanding of rural areas in Policy and institutions client countries. The improved analytical Agricultural policy reform platform will be a foundation for better Development of rural strategies decisionmaking on resource allocation-- Institutional reform and capacity building and more effective advocacy by rural rep- Participatory planning resentatives in client countries, members of the Bank's rural development staff, and Agricultural productivity and competitiveness other development partners. Land reform and administration Research and extension Scaling-up innovations and successful Information technology--marketing investments in rural development and knowledge Reaching the Rural Poor pays close attention Irrigation and drainage Support for producer organizations and to identifying and scaling-up good-practice user groups investments both within countries from Food safety and agribusiness pilot initiatives and from one country to other countries or continents (Box 12). Nonfarm rural economy Rural finance, including microfinance Scaling-up good practices must become Development of the rural nonfarm economy an integral part of national rural develop- including businesses Private sector role in service delivery ment strategies. Good practices are Infrastructure and local economic acquired after years of development redevelopment, including small towns experience and often gained through pilot projects. Innovation through pilot projects Strengthening social services and will therefore also be supported. Effective reducing risk and vulnerability intervention--with its socioeconomic and Rural health and education service provisions Community-driven development and district gender impacts--must be locally validated 26 programs and adapted. Scaling-up does not mean Social inclusion with focus on women and the Bank will apply the same approach girls everywhere. Innovative methods of learn- Commodity, climate, and disaster risk ing and information sharing among coun- management tries and development partners need sup- Emergency reconstruction port. Mechanisms for capturing, validating, Sustainable natural resource disseminating, and adapting good practices management have to be developed concurrently. Key Soil fertility lessons learned from this process and Watershed development good and innovative practices will be Community natural resource management Community forests shared with development partners as an Fisheries essential part of this effort. REACHING THE RURAL POOR Improving the impact of bank operations in rural areas. To improve t h e i m p a c t o f p r o j e c t s a t completion and the quality of project and program preparation, major atten- tion will be given to identifying and shar- ing improved procedures to sharpen the focus on poverty and the long- term development impact of Bank­sup- ported rural operations. This will include reviewing both the quality enhancement and assessment of projects for their pro- poor features, as well as supporting new and innovative work addressing both poverty impacts and sustainability of interventions. The Bank has estab- lished a task force to improve the guide- lines on the different aspects of project sustainability now being applied through- out the Bank and their application. The task force will work closely with ongoing Bank-wide initiatives to enhance pover- ty impacts and the alignment of rural interventions with the Millennium Development Goals. Pursuing the bank's global and corpo- rate priorities. High-quality, high-impact 27 operations to reduce rural poverty will require continuing international commit- ment to key global public goods and a constant awareness of their connections to rural poverty. This can be done by ensuring that: the interests of the rural poor are safeguarded in an increasingly global world; new and appropriate technology for poor farmers and rural communities is readily accessible; and the poor countries can deal with the challenges of global climate change. The Bank will help build the capacity of client countries so they can take full advantage of opportunities in the ongoing Doha Round of trade negotiations of the World Trade Organization. The Consultative Group on International Agricultural Research complements the Bank's efforts to enable developing countries to realize their full agricultural technology and production potential. The Bank's current support for the CGIAR will be broadened to programs A RENEWED STRATEGY FOR RURAL DEVELOPMENT to meet the new challenges in science and technology for the benefit of poor farmers in developing countries. Operational Levels for Implementation Reaching the Rural Poor outlines the frame- work for action at three different levels of current Bank operations. The corporate strategy provides the conceptual underpinnings and macro- economic foundation as well as the overall implementation thrusts. Based on the Bank's track record and analysis of best practice, the corporate strategy identifies a menu of interventions and instruments that may work under differ- ent country conditions and perform- ance indicators that the Bank can use to gauge its progress in aligning its resources and promoting rural develop- ment. The corporate strategy also pro- vides a vehicle to convey the Bank's message on rural development to external partners and audiences and garner interest and collaboration of partners around rural poverty reduc- 28 tion efforts. The regional action plans, built upon local consultations, differentiate region-specific needs in line with the overall message of the corporate strategy (box 13). The plans provide a differentiated framework for actions at the individual country and subregional levels. At the country-program level, the strategy emphasizes strengthening of the analytical under- pinnings for country dialog and a framework and incentives for improving cross-sectoral support to poverty reduction interventions in the context of the Country Assistance Strategies (CASs). Within countries, the national rural development strategies will be locally developed and driven, reflecting national priorities for rural areas and agriculture. The process of national REACHING THE RURAL POOR dialog, together with these national 13 Regional Priorities strategies, will guide the rural develop- ment aspects of the CASs, as well as the Poverty Reduction Strategies, and pro- The six regional action plans reflect rural devel- vide the specific demand for further opment agendas fully consistent with the overall Bank operations. Bank rural development strategy. Each has a poverty reduction focus and a multi-sectoral Strategy implementation relies heavily on approach with increased emphasis on the private sector, yet they all maintain a region-specific stimulating the demand for rural devel- character. The diversity in these plans is a major opment from the two main groups of strength of this undertaking. The Africa action decisionmakers, the clients and the Bank- plan places major emphasis on the institutional country teams. At the client level, the foundation for reducing rural poverty. It advo- Bank will support the preparation of cates support for government efforts to decen- tralize, and enhance the participation of rural national rural strategies that integrate communities. The East Asia and Pacific the needs of the rural poor in national regional plan calls for financing programs that policy dialogs.At the level of the country directly attack poverty through targeted produc- teams and other decisionmakers, it will tivity enhancing investments in very poor areas. seek to improve the quality and the The Europe and Central Asia region impact of Bank operations in rural areas focuses on sustainable rural productivity growth and the completion of the transition process in by sharpening the focus on poverty, using the rural areas. In the Latin America and the most appropriate instruments, seek- Caribbean region, the action plan puts spe- ing economies of scale, and scaling-up cial emphasis on rural and urban dynamics, and investments that have proven effective in adopts a Local Economic Development approach reducing rural poverty. Several donors to addressing rural development built around increased participation of local actors including have indicated their interest in cooperat- local and sub-national governments, private sec- ing with the Bank. Though probably tor and organizations of civil society. The slower to materialize, an approach that Middle East and North Africa action relies on stimulating demand and moni- plan places a high priority on rationalizing water 29 toring lending trends closely is more management and policies. The focus of the appropriate to the country-driven South Asia regional action plan is the enhancement of human and social capital devel- nature of Bank programs, and more sus- opment in rural areas, as well as decentralization. tainable in the long term, than relying on Major gender concerns across the regions are preset lending targets. women's illiteracy, lack of access to social servic- es, economic infrastructure and resources. What the Bank Needs to Change For further details, see: From Action to Impact: the Africa Region's Rural Strategy 2002; Reaching the Rural Poor in East Asia and Enhancing bank-wide multi- the Pacific Region 2002; Reaching the Rural Poor in Europe and sectoral cooperation in the rural Central Asia 2002; Reaching the Rural Poor in the Latin America and the Caribbean Region 2002; Reaching the Rural Poor in the space. One of the greatest challenges Middle East and North Africa 2002; South Asia Strategy and Action will be to ensure that rural poverty is Plan for Rural Development 2002. A RENEWED STRATEGY FOR RURAL DEVELOPMENT truly reflected in Bank-supported programs and operations in the manner and form envisaged in this strategy. Each level of the Bank decision making structure must become an integrated part of the implementation process. This will entail new and innovative relations between all Bank units active in rural areas.The implementation of this strategy also requires that operations in rural space are designed in a multi-sec- toral fashion and that self-standing sectoral operations are coordinated within an over- all strategy. Specific regional organizational arrangements are proposed to improve coordination of activities in the rural space and to achieve the strategy's objectives. These arrangements would operate within the framework of existing management structures. Improving the application of instruments. Addressing rural poverty in a compre- hensive fashion requires that an evolving set of instruments, with the right focus, are applied to Bank operations in rural areas.The balance between the dif- ferent instruments is a complex implementation issue.There is clearly no one "golden rule" as to the optimal distribution between different Bank instruments of program- matic, adjustment or investment lending, or between economic, social or natural resource outcomes. Nevertheless, some general directions for Bank operations in rural areas are: The diversity of needs within rural areas between regions, countries, and sub-country regions requires the use of a broad set of instruments supporting a number of sec- toral interventions, within the framework of the Country Assistance Strategies. Traditional investment projects will continue to play an important role, however they should be blended with the new type of operations 30 such as the Learning and Innovation Loans, the Adaptable Program Loans, and the Poverty Reduction Support Credits, etc., according to country requests and new conditions; The broader use of new instrument modalities, such as programmatic lending, should be pursued after careful assessment of lessons from field experience and assurance of an adequate rural focus. REACHING THE RURAL POOR Improving linkages to development partners. There is growing consensus among international development part- ners--including the Bank, FAO, IFAD, EC, regional development banks, and major bilateral agencies--that national and global poverty reduction targets will not be met unless poverty in rural areas is reduced. Understanding what it takes to meet the needs of the rural poor has never been closer, as many agencies have recently taken stock of their experiences and redefined their approaches and commitments to poverty reduction in rural areas. The further development of relations with international partners aimed at improving the distribution of labor among the various partners is based on the Bank's and the partner's specific comparative advantages. Coordinated support to client countries for the development of national rural development strategies, in conjunction with Poverty Reduction Strategies and Country Assistance Strategies, will be a major focus of the Bank's interactions with international partners. 31 Improving linkages to the private sec- tor and civil society. Increasing links and improving relationships with the private sector and civil society within a country frame- work are among the top priorities for the Bank in each region.The Bank's links to rep- resentatives of civil society and nongovernmental organizations have increased dramat- ically over the past ten years. Internet websites and information sharing now provide the opportunity for increased direct dialogue and interaction between the Bank and NGOs.The consultation process on regional action plans and the new corporate frame- work for the rural strategy proved to be a valuable and productive means of enhancing relationships with both large numbers of NGOs as well as with the private sector across all regions. In a rapidly globalizing world, links with multinational companies that have an impact on rural development are also essential. A RENEWED STRATEGY FOR RURAL DEVELOPMENT Monitoring Implementation Progress and Managing Risks. This strategy presents a program for revitalizing Bank activities in rural areas and increas- ing the effectiveness of the Bank's work in reducing rural poverty. Reaching the Rural Poor pays close attention to monitoring and evaluation of strategy implementation. The targets and benchmarks will be used against the current baseline for evaluating progress over a five-year period. The Implementation Monitoring framework is designed around results- based management principles, expressed as inputs, outputs, outcomes, and impacts. The Bank's Agriculture and Rural Development Board will work closely with senior Bank man- agement to ensure alignment of the rural strategy implementation framework with emerging Bank work on results-based management. Several risks are inherent in implementing the strategy. Some of these depend on events that are beyond the control of the Bank and of the countries concerned. The main risks perceived are: Not all sectors operating in rural areas take up the challenge of rural poverty reduction. The necessary institutional arrange- ments, incentives framework, and appropriate staff skills mix are not addressed. The opportunities do not materialize for the institutional learning and inno- vation that are expected to emerge in the context of a sharpened focus on programmatic lending operations. 32 The Bank, its country partners, and other stakeholders cannot mobilize country buy-in to intensifying emphasis on attacking rural poverty. The client countries do not achieve long-term growth and do not address issues related to enhanced and more equitable access to assets for all. The successful implementation of the new strategy is a challenge for both the Bank and for its clients and partners. The Bank recognizes that it cannot work alone. It will deepen rela- tionships with client countries, strengthen existing alliances and forge new ones with other development partners, the private sector and organizations of civil society to broaden the understanding of rural development issues, share experiences, build capacity, and mobilize the necessary resources to overcome rural poverty. REACHING THE RURAL POOR Rural Development Strategy Background Papers prepared in conjunction with Reaching the Rural Poor (these documents can be viewed at http://www.worldbank.org/rural): 1 LongTerm Prospects forAgriculture and the Resource Base 2 The Role ofAgriculture in Economic Development 3 Rural Poverty:Trends and Measurements 4 Rural Non-FarmActivities and Rural Development:From Experience Towards Strategy 5 What Has Changed Regarding Rural Poverty SinceVision toAction? ­ 6 Community Based Rural Development:Reducing Rural Poverty from the Ground Up 7 Risk Management in Rural Development ­A Review 8 The Role of Rural Producer Organizations in theWorld Bank Rural Development Strategy 9 Agricultural Extension Investments:Future Options for Rural Development 10 Rural Infrastructure,Development,and Poverty Reduction ­ Challenges, Linkages, and Actions 11 Land Degradation for Selected Regions and Some Consequences for Rural Development 12 PromotingAgro-Enterprise andAgro-Food Systems Development in Developing and Transition Countries 13 Scaling-Up Issues and Options:Supporting Good Practices and Innovation 14 Farming Systems and Poverty (FAO andTheWorld Bank) A RENEWED STRATEGY FOR RURAL DEVELOPMENT inks based y so with per pa The World Bank ecycledr 1818 H Street, NW on Washington, DC 20433 USA Printed