Business Day (Johannesburg)

19 October 2010

Africa: World Bank Study Suggests Ways to Increase Farm Output

Johannesburg — The World Bank's Independent Evaluation Group (IEG) has released its report into world farming techniques and has suggested ways for African farmers to improve growth.

The "Growth and Productivity in Agriculture and Agribusiness: Evaluative Lessons from World Bank Group Experience" report has drawn on the World Bank Group's experience in supporting agricultural growth in the past decade.

The report points to areas where increased funding can translate into higher impact.

Agricultural growth remains central to poverty reduction, as one billion people worldwide continue living in extreme poverty, many in rural areas.

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

In the 1990s waning donor and government interest led to a decline in agriculture support by the WBG.

But the Bank reports this was reversed in the mid-2000s with the food crisis and the increasing recognition of the importance of agricultural productivity to growth and poverty reduction.

WORLD BANK FINANCING DROPPED OFF

From 1998 to 2008, the WBG provided $23.7 billion in financing for agriculture and agribusiness activities in 108 countries, 28 of which were in Sub-Saharan Africa.

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

But evaluation shows agricultural projects have performed above the WBG average in Latin America and the Caribbean, Europe and Central Asia, and East Asia.

While productivity growth was strong over a sustained period in China and India - results from Sub-Saharan Africa, have been weak.

Lessons of experience from Bank Group's work in important areas - such as water use and irrigation, rural infrastructure, know-how on supply-value chains, and gender mainstreaming are vital to agricultural growth.

Some of the country cases indicate how the expansion of rural infrastructure in China, India, and Mali yielded better outcomes in agriculture.

REPORT SAYS SUB-SAHARAN GROWTH IS IMPERATIVE

According to Nalini Kumar and Miguel Rebolledo Dellepiane, the co-authors of the report, "A key challenge for the WBG going forward is to increase the effectiveness of its support in agriculture-based economies, notably in Sub-Saharan Africa, where the needs are greatest. The report recognizes that many of the issues that were identified as impediments to agricultural growth in the region are fundamental components of WBG's current Agriculture Action Plan FY2010-2012."

Mlungisi 'Lulu' Johnson, Chair of Portfolio Committee on Agric, Forestry & Fisheries told Business Day that the huge gap between commercial farming institutions and smallholders is growing.

"The gap is there because of problems - not only with smallholders obtaining accessible and affordable financing, but also training. Education is key. Smallholders need to learn business skills, run their farms as businesses," he said.

"There is a huge gap with the provision of finance, especially in terms of affordability and accessibility for smallholders. So-called 'development institutions' are not speaking to the need. There is very little, if any, financial support from so-called development organisations, who operate as if they are commercial lenders."

"For example, look at the Land Bank. It is doing well at the corporate level, but it is one thing to have profits and be financially stable, and it is something else to be relevant to the reason why you are there. Institutional investors are calling the shots, and the role that these investors are playing supercedes their role in a developmental state."

"It is high time that the government does away with the those kinds of institutions, to nationalise the Land Bank," he said.

Click here for report.

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