Growing the Rural Nonfarm Economy to Alleviate Poverty : An Evaluation of the Contribution of the World Bank Group
Most of the world’s poor live in rural areas and rural non-farm activities are an important part of their livelihoods strategies. However, for the poor to benefit from the rural non-farm economy (RNFE), they need to overcome a host of human, physic...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/708691509117647052/Growing-the-rural-nonfarm-economy-to-alleviate-poverty-an-evaluation-of-the-contribution-of-the-World-Bank-Group http://hdl.handle.net/10986/28971 |
| Summary: | Most of the world’s poor live in rural
areas and rural non-farm activities are an important part of
their livelihoods strategies. However, for the poor to
benefit from the rural non-farm economy (RNFE), they need to
overcome a host of human, physical, financial, institutional
and social capital constraints. The World Bank Group has
highlighted the RNFE in its strategies. From 2004 to 2014,
the BankGroup implemented 1,141 projects, valued at $46.5
billion that included support for RNFE activities. However,
the Bank Group currently lacks an articulated approach to
developing the RNFE to alleviate poverty. Many units have
products in this space, but there is no coordinating
mechanism. There is a gap between poverty and
growth-oriented approaches in the RNFE. Those designed
toreach the rural poor have reduced vulnerability and
increased access to services but have notgenerated
sufficient, sustained income to lift the rural poor out of
poverty. Those RNFE projects with a growth aim—mainly value
chain approaches—achieved increased revenues but mostly
withoutevidence of benefits for the poor. Spillover effects
are not measured. Efforts to bridge this gap asked
approaches adept at service delivery to achieve earned
income goals beyond their original design. Where IFC’s
investments in food processing have had strong links to
rural areas, they have generally generated positive rural
employment outcomes and demonstrated links to the RNFE.
However in its agribusiness portfolio, there was little in
project design that targeted or tracked benefits for the
poor.IFC’s retail investments linked to rural areas seek to
increase the availability of goods and drive down costs for
rural consumers. However, none of the investments tracked
consumer benefits (costs) and only a few included local
sourcing. In spite of examples of where market power has
adversely affected poor value chain participants, the risks
imposed by market structure, its impact on the poor, and
related mitigants are rarely treated explicitly in project
documentation. The Bank has been a leader in researching
the RNFE, including its link to poverty. But there is a
gapon the diagnostic and analytics side that has been
addressed occasionally but not systematically. Addressing
binding constraints is key to linking the rural poor to
productive activities in the RNFE. Bank–financed rural
transport projects have not measured their contribution to
local economic gains,in spite of intentions to achieve this.
Rural connectivity is being achieved through synergies
between transport and agriculture lending but mainly in
transitioning economies. Basic literacy and skills are
critical enablers in the RNFE, but dialogue is lacking
between the Agriculture and Education GPs. Although many
value chain projects include a skills component, impact is
not assessed. The delivery of sustainable, low-cost rural
financial services requires research, piloting, and scaling
up of innovative business models to reach the underserved.
World Bank support has extended some financial services to
the poorest rural segments, but subsidization raises
questions about sustainability, crowding out, and potential
for politicization. IFC investments reach countries with
high exclusion rates, but only a fraction caters to the
lower end of the retail segment. |
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