The Fight Against Hunger:
Report from the Millennium Project Task Force on Hunger
Friday,October 17, 2003
Speaker:  Dr. Kevin Cleaver

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Communicating the Message to the Donor Community
DR. KEVIN CLEAVER
UN Hunger Task Force Member
Director of Agriculture and Rural Development, World Bank

            I don’t have a Power Point for you. Let me introduce myself to you again so you’ll know where I’m coming from. My name is Kevin Cleaver, and I’m the Director of Agriculture and Rural Development at the World Bank. And you may be saying to yourself right now, this guy has a relatively easy task here. All he has to say is that he’s going to provide the money for the plans that you have just seen, and sit down. And in fact my conclusion will be that we will provide money for the plans that you have seen, but it’s more complicated than that. Let me get into this.

            Donors, including the World Bank, but the donor community more broadly, are the major source of funding for agriculture and rural development in developing countries. And the poorer the country, the more important the donor as a financing source is. So countries like China, for example, donors are much less important, India now. But in most of Africa, donors still provide the preponderance of the resources.

            Let me describe to you – some of you, I know, know the donor community, but let me describe to you what we’re up against.

            Every Western European, North American and some Asian (Japan) countries have a bilateral aid agency which provides grants and loans for development purposes, including agriculture and rural development and food security and hunger reduction. And most of them do this on the basis of some combination of foreign policy objectives, maybe country targets – it’s well known in the United States, a lot of U.S. aid is targeted to three countries – sometimes commercial objectives, sometimes humanitarian and development objectives, most often a combination of this.

            So, recognize that the hunger task force is going to be making an appeal to donor agencies to have a lot of other objectives which are quite complex and not always totally related to the development business at hand.

            And then there’s a group of multinational agencies of which the World Bank is one. In fact, we’re the largest provider of assistance to agriculture and rural development, but there are regional development banks – the Asian Development Bank, the African Development Bank, the Inter-American Development Bank – there’s the International Fund for Agricultural Development, the FAO, the European Commission.

            All of these institutions are governed by multiples of governments. They’re not independent; they don’t sit out there in space. They’re run by governments. And those governments bring the same foreign policy and commercial and humanitarian and development objectives that they have in their own development bilateral aid programs. So if anything, these multinational institutions are more complicated, fraught with conflict.

            The idea of the World Bank as a homogeneous entity is simply not true. The World Bank is owned by the governments of the world. And all of the conflicts that you read about in the paper are also played out in our board of directors and in our policies.

            Now yesterday you heard from Sakiko Fukuda-Parr from the UNDP that official development assistance, foreign aid, in total from all of these institutions, has been stagnant at about $50 billion a year. And you heard Jeffrey Sachs, quite rightly, lament the fact that it’s not increasing. And he compared the needs with that paltry $50 billion.

            You should also know that within that $50 billion, the share going to agriculture and rural development, going to the kinds of things that the task force is advocating an increase in, has actually been declining. In 1980 it was about 30% went to agriculture and rural development. Now it’s about 8%.

            So, not only are we as a task force confronted with this very complex multiple of donor agencies, which are so vital in providing the resources for the kinds of things that we want to see happen, but the interest in those kinds of things – despite all of the stuff that you’ve heard here from people that support agriculture and rural development – has actually been waning quite significantly.

            And it’s interesting to ask and to discuss for a second – Why this decline? – because unless we understand why agriculture and rural development has been declining, we in the task force, I think, will be less effective in mobilizing resources for what we want.

            And the first factor is – in fact, it’s the conventional wisdom that many of the agriculture and rural development of the past that were supported in the 70s and the 80s in particular, didn’t work very well. And in fact in the World Bank the worst record in terms of success rates for any sector that we have is indeed in agriculture and rural development, about 60% success, 40% failure.

            Many of these projects were of the – some of you may know – the integrated rural development where we look for synergies. We did a lot of the things that you’ve just heard – rural roads, rural education, rural health, extension and research – all packaged together in a synergistic whole.

            The donor-supported marketing and Agroprocessing, run by government agencies for the most part, parastatals. The donors put billions of dollars into big irrigation projects, many of which were successful but many of which also had social and environmental consequences which weren’t always positive. Rural infrastructure tended not to be maintained at the end of the investment period.

            So there was a disillusionment with agriculture and rural development that contributed to the decline in every single donor agency in their assistance for this business.

            The second factor was that other objectives arose. If you go to other task force meetings in other places, you will hear equally impassioned claims for additional resources, for water, for urban, to deal with HIV-AIDS, to deal with the Digital Divide (you may have heard that one), to deal with the environment. In fact, the Environment Department of the World Bank is as big as the Agriculture and Rural Development. When I started at the World Bank, there was no Environment Department, as you may know and probably guessed. Now we do as much environmental work as agriculture and rural development.

            So other objectives arose to compete for that fixed amount of aid going into developing countries and another reason why it declined.

            The third, which perhaps is less well known, is that many of the donors, including the World Bank, have moved to more of a demand-driven approach. Rather than the donor defining what the recipient country should do, we’ve learned from people like actually Dr. Swaminathan here, that donor projects need to be embedded in the will of the people that are recipients. So, most donors now want to respond to demand rather than simply supplying.

            And the unfortunate truth of the matter is that much of the demand for much of the developing world is not for agriculture and rural development. There is a very strong urban bias, and if you want evidence of this, all you have to do is look at the proportion of public expenditure programs of most developing countries – not Uganda, incidentally; that’s one of the exceptions. Most of the public expenditure programs are not allocated to the kind of things that this task force is talking about. Quite the contrary – these kinds of things are neglected there. The demand from the countries themselves has not been forthcoming. And following the demand, what you have is a more urban-biased donor program than was in the past.

            And, finally, my favorite – my personal favorite I saved for last, but many would put it up at front – is that agricultural production is often not very profitable and not very productive in an economic sense. Institutions like my own are required by the governments that own us to calculate economic rates of return for the projects that we finance. And the prices that are used in those calculations are international prices. And this absolutely distasteful level of industrial country subsidies that you heard about – the $300-350 billion dollars a year of agricultural subsidies – according to every study from every academic in every country, has driven down world prices for agricultural commodities and resulted in a reduced profitability and economic viability of those projects.

            And I would relate that to the very first point that I made, that many of the agricultural projects that the donors financed are not very productive and are rated as not very successful. One of the reasons for this is that the agricultural prices have declined to such low levels, in part because of these subsidies, that we are caught in a vicious, downward spiral.

            So those are the four main reasons. Now, why is this so important to the task force? Well, we are confronted with this situation. We feel, as a task force, and I think that you heard some of the conviction of the people – Pedro and Sara and Chris – that presented the substantive content of this, that we have something we believe can work. We have something that we believe can work on a fairly significant scale in very poor countries and that it can be done very quickly. But we’re confronted with the situation where there has been a decline in interest in the donor community and in many of the countries that we want to convince.

            So what can be done? You’re going to hear from Richard the public campaign, so I won’t go into that. But I think, let me share with you what has happened in the World Bank. We have recognized that, despite these issues that I have mentioned, there really is no alternative to generating agricultural growth and focusing that agricultural growth on the poor, to development. As Sara said – I was interested and you may have noticed a parenthetical expression that she introduced – there simply isn’t another sector that is going to generate this kind of growth in very poor countries that are rural and agriculturally based. If it’s not agriculture, what is it going to be? It’s going to be microchips?

            So there isn’t an alternative, and I think that many donor agencies, despite these constraints, despite the subsidies, despite the distortions on world markets, are willing to give this another crack – and this is where the task force comes in. In order to give it another crack, we need a model or models that work in various places.

            So my interest, quite frankly, and I think, I hope, other donor interests will be in recognizing the material that’s being generated by this task force as a model or a series of models – it’s not just one model; it’s certainly not one size fits all – that can be supported by donor funds to bring back the resourcing of rural development.

            Another factor:  Now that we have some time that has lapsed since the big push in the eighties on rural development, there have been a lot of academic studies that have looked in much more detail at some of these projects. And in fact there’s a revisionist theory or information, empirical information that’s coming forward, that suggests that a lot of these projects actually weren’t so bad, particularly if you factor in this distortionary price environment.

            The Green Revolution itself, believe it or not, was financed in large part by donors. The Consultative Group for International Agricultural Research, which supported Dr. Borlaug and thousands of people like him doing agricultural research, was financed by donors.

            The National Agricultural Research Systems, which were the counterparts of the International Agricultural Research Centers, were financed by donors. And recent material suggests very high rates of return, very high rates of return to this kind of material. Evanson just published something in Science if you’d like to read a very nice piece about this, suggesting that the investments in agricultural research and extension in developing countries were getting rates of return of 40-50%.

            So there is a revisionist view out here that’s helping us to sell the case that this can be done. Now, what do donors need to do to get behind this?

            I think, one, we as a task force can offer them this good model that they can support – and we’re talking about billions of dollars of support. That’s number one.

            Number two, very important that the developing countries themselves need to get behind this model. Because as I’ve said, most donors are no longer willing simply to impose their will or impose their models on countries. Those of you who participated this morning and listened to the Ugandan minister, you have noticed that he talked about “his” program,” “his country’s program.” This is the way it has to be – we have to fit what we want to do, in their program.

            So it’s doubly difficult for the task force. We’re going to have to convince many, many governments – and Chris talked about NEPAD in Africa – that this is a good model to support, that they want to put their resources into it, too. So it is a big effort.

            And the third point – and this is my own personal hobbyhorse – is that the donors, in order to do this more effectively than they did in the past, are going to have to reform the way they do business, including the World Bank. And I offer you three important reforms that I think are important to push and I hope that this task force pushes as well.

            Number one:  The time frame for projects needs to be much longer. Some donors work on an annual basis, if you can believe it – a one-year project. You can’t accomplish much in a year. You can deliver some seeds, maybe some subsidized fertilizer (some people seem to like that), but you cannot build institutions and have long-term impact with a one- to three-year project. You need to think in the longer term. So that’s number one.

            Number two:  Projects cannot simply supply goods and services; they have to have built into them capacity-building and institution-building. If we’ve learned one thing in the last 10-15 years, it’s that. We simply can’t provide technical assistance from Iowa State to Country X and think that that’s going to build capacity and build institutions. People themselves have to learn to fish; we can’t do the fishing for them.

            The third is the most difficult of all – and that’s donor unilateralism. For those of you who have worked in the field, think about what you have seen in terms of donor projects. The donors like to put their flag up on their projects. Donors like to go it alone; they don’t like to cooperate. Now, we all know that there are projects that are co-financed, so there are exceptions to this. But, fundamentally, the donors, because of the foreign policy and the commercial and the different ideologies of development, go it alone. And the result of that in any given country is literally hundreds of projects that compete, that introduce different mechanisms, different approaches and leave nothing. The donors have to give up the unilateralism and come together.

            And what I think that we need to do (this is very ambitious) is to recommend the creation of a consultative group for hunger reduction – let’s focus it on this objective, “for hunger reduction” and agriculture and rural development, if we want to make it more ambitious – which consists of not only the donors but the NGOs. There are now NGOs that are as important in terms of financial transfers as some of the donors.

            NGOs, donors, foundations, private sector – in a consultative group for the purpose of financing and supporting this task. And I think that if we succeeded in that, we would kill several birds with one stone. We’d mobilize a lot of money, we would help the donors to get back into the rural development and agriculture business, and we could contribute to solving this problem of lack of coordination (is an understatement) – competition, messiness – that’s brought to developing countries by the donor community itself.

            Thank you very much.