Appendix K. World Bank Assistance to Agriculture in Low-Income Fragile and Conflict- Affected States

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1 Appendix K. World Bank Assistance to Agriculture in Low-Income Fragile and Conflict- Affected States The vast majority of operations in Agriculture and Rural Development (ARD) in fragile and conflict-affected states (FCS) fall under the growth and jobs pillar of this evaluation. International Development Association (IDA) assistance from the World Bank to Always FCS focused frequently on emergency projects which though often leading to satisfactory outcomes were only modestly strategic for achieving longterm sustained growth and employment. Conflict and Fragility Damage the Institutions that Support Agriculture Agriculture, rural development, and land policy are bound together in an integrated institutional system. Weak institutions are typically the cause for low Country Policy and Institutional Assessment (CPIA) ratings and hence FCS status because institutions that support agriculture are often damaged by conflict, resulting in the sector s fragility. The following are some examples of impacts on vital agricultural institutions during conflict: Production infrastructure systems (e.g., irrigation systems, water supplies for livestock) are destroyed The supply chains for factors of production (e.g., fertilizer, seeds, fuel, chemicals) are disrupted because traders reduce exposure to risk; productivity is compromised Rural communities are torn apart making the enabling environment for production fragile (e.g., farmers are caught between warring factions and endangered by land mines) and productivity is reduced Marketing systems are disrupted (e.g., through destruction of roads, community and village markets) and farmer incomes decline. Additionally, rights to land are abrogated by new political structures, or, a collapse of the rule of law may lead to confiscation of farm land making land rights more uncertain and increasing investment risks. Access to primary social services (e.g., education, health) is also constrained. Attendance becomes more costly because local movement is dangerous, leading to reduced human capital development. 111

2 Characteristics of the Agricultural Sector in IDA Countries The agricultural sector in Always FCS is relatively more important than in other IDA countries. Gross domestic product (GDP) generated from agriculture between 2000 and 2011 was on average 30 percent of total GDP in countries that are Always FCS compared with those that are Partial FCS or Never FCS which both generate 23 percent of total GDP from agriculture on average. Growth of GDP from agriculture in Always FCS has been lower than in other IDA countries since Trends in gross agricultural production for the three FCS country groupings reveal different average levels of production growth among them. 1 Average growth rates of agricultural GDP in Always FCS were 2 to 3 percent per annum (typically around the population growth rate) compared with 5 to 6 percent per annum in Partial FCS and 2 to 5 percent in Never FCS. The widest distribution of growth rates was among Never FCS, caused mainly by the low performance of the agricultural sector in Sahelian countries such as Mali, Niger, and Mauritania. It is significant, however, that the average growth rate for agriculture in Always FCS tended to increase after the mid-2000s (see Figure K.1). 2 Agriculture is the most likely source of jobs in conflict affected situations. 3 Analysis of household surveys shows that strong growth in the agricultural sector results in higher income growth for the poorest groups and poverty reduction. Low growth in the agricultural sector has stimulated migration from rural to urban areas, leading to high rates of urban population growth and a high proportion of the population in urban areas in Always FCS countries. Agricultural productivity is lower in the Always FCS group compared with the other two groups. Indexes of cereal yields in Always FCS are about half the average of yields in the other two groups. A feature of the trends in cereal yields in all FCS groupings is their high variability and virtually no growth. The Sahel again stands out with low yields because agricultural production technology is substantially lower than in other regions. Weak technology is clearly a serious matter and a cause for economic fragility for all IDA countries. It underscores the fact that growth in production is mainly attributable to increases in the area harvested usually in soil and environments that are marginally suitable for cereal production (such as in Sudan and Mali), or through clearing sub-tropical forests (such as the slash and burn systems in Cameroon). The expansion of cropping to marginal areas has become a serious environmental concern in Africa because it results in increased fragility of the agricultural sector

3 Figure K.1. Compound Annual Growth Rate Agriculture Value Added versus (percentage) Source: IEG computations based on World Development Indicators. The share of employment in agriculture in Always FCS ranges from 40 to 70 percent. Despite the somewhat lower average importance of the agricultural sector in the other two groups, employment in agriculture as a share of total employment is still high for many, ranging from 30 to 80 percent. There is no apparent association between the extent of conflict and fragility in IDA countries and the share of employment in agriculture. However, the data available on both employment in agriculture and GDP per capita do show that, for a cross section of IDA countries, as per capita total GDP increases, the share of the labor force employed in agriculture declines. 5 Access to rural roads is weak in all FCS. A major constraint for farmers in IDA countries and in particular for FCS is the distance from social services and markets due to inadequate rural road networks. This isolation is a major cause for poverty and fragility in rural areas. Figures K.2 and K.3 show data available from the IDA indicators on the percentage of the rural population with access to an all-season road in FCS and Never FCS. 6 Although the number of countries for which data are available is small, a comparison of the two figures suggests that access is slightly better in Always and Partial FCS compared with Never FCS, but the differences in access between the two groups are small. However, with the exception of Zambia, the data show that access to all season roads is much poorer among IDA countries in Sub-Saharan Africa than in IDA countries outside Sub-Saharan Africa. Nepal (a Partial FCS) with only 17 percent of the population having access to all-season roads has problems similar to Sub-Saharan Africa. 113

4 Access to All Season Road (% of Population) Figure K.2. Proportion of Rural Population with Access to All-Season Roads in Always and Partial FCS (percentage) Source: Based on available IDA indicators between FY00 and FY12. Lack of clarity on land rights can lead to conflict and fragility in rural areas. Agrarian history is littered with conflict over land rights. It has been estimated that less than 20 percent of occupied land in Sub-Saharan Africa is registered. 7 In most IDA countries in Sub-Saharan Africa there are traditional systems of customary land rights but arrangements for the access to and transfer of rights are often fragile because of a lack of agreement over interpretations of customary and statutory laws and the powers to enforce them. For example, at the root of the civil war in the Darfur region of in Sudan was the conflict between pastoralists (nomadic herders) who traditionally moved from North Darfur to South Darfur and beyond during the dry season to provide grazing for their livestock. In the past the nomads had used the region s vast common rangelands for grazing but as these areas became more frequently used by farmers for crop production, the farmers challenged the right of the nomads to use rangelands for grazing that had been transformed to agriculture use. The nomads objected to this constraint on their traditional grazing rights, leading to decades of conflict and violence. The Bank is addressing land rights issues in FCS. In May 2012, under the auspices of the Food and Agriculture Organization, the World Committee on Food Security endorsed Voluntary Guidelines on the Responsible Governance of Tenure of Land, 114

5 Access to all Season Road (% of population) Fisheries, and Forests in the Context of National Food Security. Since then, the Bank, the United Nations, and a number of development partners have formulated the Land Governance Assessment Framework, which is a diagnostic tool to help evaluate the legal framework, policies, and practices regarding land governance, and to monitor improvement over time. 8 There are no outcomes from this work yet, but it will address causes of conflict and fragility in many FCS. Figure K.3. Proportion of Rural Population with Access to All-Season Roads in Never FCS Source: Based on available IDA indicators between FY00 and FY12. World Bank Assistance to Address Fragility in FCS ANALYTICAL WORK The basis for Bank assistance to agriculture provided in Always FCS has not always been strategic. Table K.1 shows the comparisons between the timing of agricultural sector analysis and agriculture and rural development (ARD) investment for Always FCS. It shows that for the Always FCS as a group there were only six out of 21 countries in the group for which there was an analytical document on future strategy for the agricultural sector. In the six countries where formal agricultural sector reports were prepared, they were timely except in Liberia where the first investment operation during (after the resolution of the conflict) was approved prior to the completion of the sector report. The conclusion is that whereas the majority of Always FCS emergency investment projects were quickly prepared and approved 115

6 under emergency procedures, their design was not framed in the context of a medium- to longer-term strategy. For some countries where no formal sector analysis was available, notes on specific subsectors were prepared and they provided the rationale for specific projects such as in Sudan. 9 INVESTMENT PROJECTS During FY01 12, there were 336 IDA investments in agricultural and rural development with a total commitment of $10.4 billion. Table K.2 shows that total lending for ARD averaged 12 percent of total IDA commitments. The percentage varied relatively little between FCS groupings. Figure K.4 shows the trends in commitments between FY01 and FY12. For the agricultural portfolio alone, Table K.3 shows that core agriculture investments such as support for rehabilitation of agricultural production and strengthening relevant institutions such as drought management, horticulture, and livestock production systems, as well as a few projects focused on land administration in the three FCS groupings made up between 37 and 79 percent of the total ARD portfolio, while irrigation accounted for 7 to 19 percent, 10 and infrastructure (which excludes rural roads) 1 to 3 percent. The main difference between the projects in Always FCS and those in Partial FCS and Never FCS was that 55 percent of the Always FCS portfolio was allocated to community-driven development (CDD) type projects. The dominant contributor to this large allocation was the National Solidarity Program in Afghanistan which cost $1.45 billion or 91percent of all CDD projects in Always FCS. Table K.1. Summary of the Timing of Agriculture Sector Analysis in Relation to the Timing of Investment Operations in Agriculture for Always FCS ( ) a Country (Always FCS) Timing of delivery of first strategic agricultural sector analysis b Approval of first agriculture investment operation Approval of second agriculture investment operation Afghanistan None Emergency Horticulture and Livestock Project Emergency Irrigation Rehabilitation (May 2006) Project (May 2007) Angola None None None Burundi None Emergency Irrigation Rehabilitation Project (June 2004) Central African Republic Chad None Local Development Program Support Project 2 (March 2011) Comoros None Congo, Dem. Rep. Agro-pastoral Productivity and Markets Development Project (April 2010) None Food Response Project (July 2008) Agro-pastoral Recovery Project (May 2011) Emergency Agriculture Production Support Project (May 2012) 2006 (sector report) Agriculture Rehabilitation and Recovery Support Project (May 2007) Congo, Rep (policy note) Agricultural Development and Rural Roads Rehabilitation Project (July 2007) Forest and Nature Conservation Project (March 2010) Forest and Economic Diversification Project (May 2012) 116

7 Country (Always FCS) Timing of delivery of first strategic agricultural sector analysis b Approval of first agriculture investment operation Côte D Ivoire None None Eritrea None None Guinea None None Guinea Bissau None None Haiti 2005 (sector report) Strengthening the Management of Agriculture Public Services (GFRP) Project (April 2010) Kosovo None Emergency Farm Reconstruction Project (June 2000) Liberia 2008 (sector report) Agriculture and Infrastructure Development Project July 2007 Sierra Leone 2004 (sector report) Rural and Private Sector Development Project (May 2007) Solomon 2007 (sector report) Rural Development Program (September 2007) Islands Somalia None Sudan None Improving Livestock Production and Marketing Project (August 2007) Approval of second agriculture investment operation Smallholder Tree Crop Revitalization Project (May 2012) Revitalizing the Sudan Gum Arabic Production and Marketing Project (July 2009) Timor-Leste None Third Agriculture Rehabilitation Project (October 2004) Togo Unpublished Strategy Note Agriculture Sector Support Project (April 2011) Note: Some approval dates to be verified. a. Not including CDDs, development policy operations (DPLs), and Avian Flu projects. b. For some countries, such as Afghanistan, an agricultural sector report is currently being prepared. Table K.2. IDA Investment in Agriculture and Rural Development by FCS Grouping (FY01 12) Number and value of IDA credits and grants for agriculture and rural development ARD as proportion of total IDA credits Number IDA credits and grants Average credit and grant Percentage Category (US$ millions) (US$ millions) Always FCS 74 2, Partial FCS 67 1, Never FCS 195 6, Total Source: Business Warehouse. 117

8 US$ million Table K.3. Bank Assistance to IDA Countries for Agriculture and Rural Development (FY01 12) Always FCS Partial FCS Never FCS Total Subsector US$ millions % US$ millions % US$ millions % US$ millions % Infrastructure CDD 1, Agriculture , , Irrigation , Total 2, , , , Source: Business Warehouse. Figure K.4. Trend in Commitments for Agriculture and Rural Development Projects (FY01 12) 1, Always Partial Never RESULTS (EFFICACY) OF THE PORTFOLIO Figure K.5 shows the outcomes for 145 ARD projects (including CDD) which exited from the IDA portfolio between FY00 02 and FY As a group Always and Partial FCS were less satisfactory than Never FCS although the performance of Always and Partial FCS improved substantially over the last five years while the performance of Never FCS declined over the last three years to a point where 60 percent of the average outcomes of all groups were moderately satisfactory or better. 118

9 Outcome % Satisfactory Figure K.5. Trends in the Outcomes of IDA Projects for Agriculture and Rural Development (FY00 12, 3-year moving average) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Outcome % Satisfactory (Never FCS) Outcome % Satisfactory (Always + Partial FCS) 1 Gross agricultural production indexes (based on =100) published by FAOSTAT 2 However, changes in growth rates varied. For example growth of the agricultural production index for Afghanistan declined from 5.1 percent pa during to 2.7 percent per annum between 2005 and On the other hand for Togo for the same two periods it increased from 1.8 percent per annum to 5.1 percent per annum. 3 World Development Report, 2011, page Shoghik Hovshannisyan analyzed labor productivity measured by GDP per worker in agriculture on a PPP basis but found no differences between FCS and never FCS. 5 This issue has been discussed in more detail in the main report. 6 Access to an all-season road is measured as the proportion of rural people who live within 2 kilometers (typically equivalent to a 20-minute walk) of an all-season road. An all-season road is a road that is motorable all year by the prevailing means of rural transport. 7 World Bank Group Agriculture Action Plan ( ), 2013, page World Bank, The Land Governance Assessment Framework, Studies of gum arabic and livestock led to projects financed by the Multi-Donor Trust Fund National Sudan. 10 In the Always FCS group all of the irrigation investments were in Afghanistan. 119