We have been part of the problem

The World Bank calls its latest rural development strategy ‘holistic’: it seeks to reverse the decline in rural development funding by emphasising demand-driven projects across a far broader spectrum than before. Besides farming, it aims to improve healthcare and education, give a stronger voice to the rural poor, build roads and promote non-food enterprises and micro-finance. The strategy’s chief driver is Kevin Cleaver, Ph.D., a U.S. economist, who became Director for Agriculture and Rural Development in March, 2002. He oversees 300 professional staff and a total portfolio of outstanding loans and credits of about $15 billion to rural development and agriculture throughout the developing world. Mr. Cleaver spoke with Timothy Nater about the changes needed in donor and partner-country behaviour.

Nater: For you, what are the main trends in agriculture and rural development?

Cleaver: In the industrialised countries, there’s a dramatic change going on in the supply chain. Agricultural production is being increasingly dictated by what the consumers want in terms of quality, safety and high production standards. With that, you see the supermarkets, food processors, importers and exporters going back directly to the farms for contract-farming deals. This means an industrialisation of farming, the growth of larger and larger properties, even in emerging economies, like Brazil. Along with this, innovation is continuing apace. The Green Revolution is not over — in fact, it’s accelerating, with the biggest push coming out of the USA, Canada, Europe and Japan. With biotech, we’re just seeing the tip of the iceberg, greater production per hectare, qualitative change and new products.

On the consumer front, I detect increasing reluctance among taxpayers to go on paying for large subsidies for their farmers. Last year, $90 billion in subsidies went to US farmers alone. My prediction is that, in the near future, we’ll see an end to heavy subsidization, and that agriculture will compete more and more on the basis of productivity, efficiency, technology and the ability to please the consumer, and less on the extent of government largesse.

Of course, these trends are least visible in poor countries. Small farmers there are being left behind by the supply-chain developments and the technology revolution.

So, what can we do for small farmers in poor countries?

We’ve been presiding over a decline in foreign assistance to agriculture and rural development. From a high of $3.5 billion in 1995, World Bank lending in this sector had fallen to $800 million by 2002. Looking at other donors, we in the World Bank discovered that they, too, had reduced assistance to agriculture and rural development. So our first objective is to reverse the decline in assistance, simply out of recognition that most of the world’s poor live in rural areas and are directly or indirectly dependent on agriculture.

We also decided we had to improve the quality of what we were doing. One reason for the decline in assistance was that many of the projects for agriculture and rural development were unsuccessful. The sector that I’m director of in the World Bank had become the poster-child for poor-quality projects. We also saw that other donors who also published self-evaluations had the same sort of failure rate. The rational consequence for donor agencies was to ask themselves, “Why should we send good money after bad?”. Their answer was to redirect aid elsewhere, and simply get out of the rural development business.

Nater: What had gone wrong?

Cleaver: We started examining the 60% of projects that we got right to see which ingredients were missing in the ones that went bad. Along with other donor agencies engaged in the same self-examination, we discovered that we had been much too focused on government services.

Agriculture is a private business, and farmers, however small, are private businessmen. Input suppliers and processors, too, are private. We in the donor community, perhaps because we’re all bureaucrats ourselves, had treated agriculture as if it were an affair of governments. We were setting up our programmes as public-sector affairs. Of course, it’s not about taking government out of agriculture, but about ‘right-sizing’ the role of government. Government programmes can’t just serve government bureaucrats with nice cars, computers and air-conditioning. Their purpose is to serve farmers and farming.

The other thing we decided to do differently was to stop ignoring or criticising the agricultural revolution in rich countries and start asking how we, as donors, could adapt some of its technology and supply-chain management techniques to benefit poor farmers. This, and the drive to reinvigorate public investment in rural infrastructure and improve land administration in many developing countries, was the main focus of the World Bank’s new agriculture and rural development strategy in 2003. Other donor agencies soon followed suit with new strategies of their own.

But were the new strategies coordinated?

We started in 2003 presenting the World Bank’s new agricultural and rural development strategy in various forums, mainly to my counterparts, the directors of agriculture and rural development in other donor organisations. And what struck us was the sheer number of major players in this field. There were some 30 donor agencies doing the same thing, not just the bilateral bodies but also the international financial institutions — the African Development Bank, the Asian Development Bank, the IFAD, the European Commission, the Canadians, the Japanese — not to speak of major NGOs like CARE and Oxfam.

What I and my colleagues realized is that we had been part of the problem. Kenya in the 1980s was a good example. Each donor would come in with its own strategy for agricultural extension, its own agricultural credit system, its own view on what local government policy should be on subsidies and taxes. The French, the British, the Americans, all had different views, based on their different cultures and historical experiences. Each of us, the World Bank included, introduced our own separate approach, and the net result was havoc and confusion and waste. Most of the donor projects couldn’t be sustained after the donors left. Many recipient countries wound up hopping from one donor to the next, becoming cemeteries for failed projects.

Are donors becoming part of the solution now?

My counterparts and I got together and said, given that we’re inventing new agricultural and rural development strategies, let’s admit our past errors and do something better. We needed a new mechanism, an alliance not only to coordinate our overall approach to the new strategies we had started to work on, but also to make sure that, this time, our desire to coordinate at the top would find expression at the country level. This led to the creation of the Global Donor Platform.

And that’s how we identified our four pilot countries, Nicaragua, Burkina Faso, Tanzania and Cambodia, where we could act immediately and make sure our colleagues and subordinates who work there on the ground actually implement a coordinated work programme, jointly finance projects and encourage government programmes that are sustainable after the donors have left.

Nater: Why is coordination so difficult?

Cleaver: We, the managers of rural development and agriculture in the donor agencies, need to rally our people at the country level around the idea that they’re all working for the same client, the partner-country, and not just for the World Bank, or the GTZ or DFID, for example. And, in so doing, we all need to work together as a team. In the end, we’re all going to be better off, because our joint programmes will be more sustainable after initial financing ends.

How to do that? I’m now of the opinion that we, the donor-agency directors of rural development and agriculture, will have to get involved in countries personally and directly. What I saw in Nicaragua in February this year has convinced me of that.

I went there at the behest of the Global Donor Platform, so I was wearing a multi-donor hat, not the World Bank hat. Now, the Platform picked Nicaragua because it’s a very poor country and because, or so we were told, it had relatively good donor cooperation. This looked like low-hanging fruit to us, something we could set up as a model for good donor collaboration.

The truth of the matter is, the donor representatives in Nicaragua do talk to each other very nicely and have lots of personal contacts. But in terms of action, it’s business as usual. Everybody has their own little project — the Germans, USAID, the World Bank, and so on. They’re not acting in a coordinated, collaborative manner, but very much as donor agencies did in the past. I’m very concerned about that.

Who are the worst offenders?

The best-behaved donors are the smallest ones, like the Swiss, the Finns or the Danes. The Finnida representative in Nicaragua was disarmingly honest about why: she told me that the smaller donor countries like hers didn’t have much of a history in Nicaragua. They worked together with other donors because they had nothing to lose, whereas the Germans and Americans, for example, had been there a long time and had big projects on the ground, meaning they had a lot to lose by ceding sovereignty and sharing collective control of projects with other donors.

It’s a problem of size, too. The Finnida representative benefits back at headquarters in Helsinki if she can announce collaboration with the World Bank, whereas the Bank representative’s manager back home is likely to ask, “Who the hell is Finnida?”.

It struck me that the need is very great and is only going to be met when senior managers go to these places and knock heads together. And that’s what I did. I admitted to the Nicaraguans that the donor agencies were part of the problem. I said to them, “Ladies and gentlemen, we have to behave differently. Otherwise the evaluators of our new strategy will say the same things about us donors that we are saying about our fathers, that we’ve botched it because we were unable to see past our own narrow institutional and personal needs and unable to work together as a team, assisting our client.”

How successful have country ownership and direct budget support been so far?

If you want ownership by both the government and the civil society it represents, then the old donor-driven projects have to become a thing of the past. We have to ask the government, with maximum participation of the private sector and NGOs and the farmers themselves, to come up with their own programme. In an ideal world, all the donors would have to do then is to send a cheque to fund their programme, hence the notion of direct budget support. But there are problems with this approach.

Nater: What’s dangerous about sending a cheque?

Cleaver: The first danger is that the cheque gets spent on something else, like a new airport, military hardware or a presidential palace. Or maybe it just gets stolen. I have seen this happen. Cheque-writing is a hazardous practice.

My view, quite controversial here in the World Bank, is that cheque-writing in support of locally-owned poverty-reduction strategies works best in middle-income countries that are true democracies with real transparency and good governance — Estonia or Bulgaria, for example, where I’ve seen it work very well.

The cheque-writing approach works least well, or not at all, in the least-developed countries that, ironically, most need the money. The institutions and structures are simply lacking.

In Nicaragua, too, the safeguards need more work, along with their whole new sector-wide process. It’s a very ambitious, mainly public-sector driven approach called PRORURAL and I have some serious concerns with the plan as it was presented to me last January.

However, on the positive side, the Nicaraguan government has recognised that they need their own comprehensive, coherent productive rural sector programme, and not just a hodgepodge of whatever the donors want to finance. Together with many of the 22 donor agencies on the ground, they’ve begun to take initial steps towards significant changes in their productive rural strategies, and a more coherent sectoral expenditure programme. That makes them an ally of the Global Donor Platform. But achieving these ambitious goals needs concerted, demonstrated commitment by both the Nicaraguan government and donors to change the way they do business, and a more central role for the private sector.

How about the Global Donor Platform’s plans for a Code of Conduct for rural development?

We need some broad guidelines with relevance and application for all countries, but we’re just at the beginning. Yes, there are some universal principles we can put down on paper, not just for our staff and colleagues but also for partner-countries, our clients. But we have to walk a fine line here. Many colleagues complain that principles are too abstract, that they can’t cover the full variety of existing conditions. Critics will ask, how can you develop guidelines or a code of conduct with relevance for countries as diverse as, say, Nicaragua and Russia? General guidelines will need a great deal of adaptation to specific situations on the ground. And guidelines must make apparent to field-based donor staff, especially those that don’t yet have wide experience in different countries, that a good, agriculture-sector programme is not just for the Ministry of Agriculture.

What is the future of the Global Donor Platform?

The Global Donor Platform will eventually include all major donors. Together, our knowledge and experience base is huge, and we can now tap into that, as opposed to just into our own institutional bases. The first fruit of this is the Platform’s joint donor narrative paper The role of agriculture and rural development in achieving the Millennium Development Goals. We did this together. It’s a very broad framework, not a blueprint for getting things done but a common global vision of how agriculture and rural development play into the livelihoods of people, what the broad objectives are and how they could be met. That has given me confidence that we can now take the next step, which is to look at the modalities, at best practices, at the ‘how-to’, and even agree on how to adapt and apply these things at the local level, on a case-by-case basis.

How much more will it cost to do rural development right?

The total amount of all worldwide aid spending in 2004, from all sources, amounted to a little more than $75 billion. A good chunk of this goes to rural development. But we could make much, much better use of this money. Better coordination between donors, a reduction of waste and more transparency in the ways that we and our partner-countries operate would all have a big pay-off, while staying within the $75 billion ceiling. I know that many, including Jeffrey Sachs and the UN Hunger Task Force, on which I have served, are calling for vastly expanded aid. I don’t think it is very wise, or even very useful, to vastly expand our aid amounts. I think we have to show efficiency gains first. We have to show a reduction in waste and an increased project success rate. We must first make sure these various aid budgets are being used well and that there is hard evidence of that, in independent evaluations. Only then should we ask for more money.