IFAD strategy for rural poverty reduction

East and Southern Africa

The Context and Process of the Regional Strategy

1. This regional strategy paper represents part of IFAD's contribution to mapping out the path to attainment of the Millennium Development Goals. In January 2001, IFAD launched the Rural Poverty Report 2001, which addressed the challenge of global poverty reduction and highlighted the importance of rural poverty among the world's extremely poor people - drawing attention to the principal characteristics of extreme poverty and indicating essential steps towards reducing it in rural areas. To capture regional specificities, IFAD embarked on producing assessments of rural poverty for each of the five regions in which it operates - and strategies for action. The subject of the strategy is not only IFAD's own action, but also what IFAD, on the basis of nearly a quarter of a century of operations exclusively focused on rural poverty reduction, feels must be part of the general partnership to attain the Millennium Development Goals.

2. These assessments and strategies have been developed through intense reflection on IFAD's experience, particularly in the context of IFAD's Strategic Framework 2002-2006, but also through extended discussion with other stakeholders at the national and regional level: governments, civil-society institutions and international assistance institutions of all sorts.

3. A draft version of this paper was presented to a roundtable of participants in the Twenty-Fifth Session of IFAD's Governing Council on 20 February 2002. Discussions of the draft text during the IFAD Governing Council were highly participatory. Nonetheless, IFAD would like to give special recognition to the high-level panel that initiated the discussion, consisting of the Honourable Wilburforce Kisamba-Mugerwa, Minister for Agriculture, Animal Industry and Fisheries of the Republic of Uganda (Chairman of the Panel); His Excellency Mulatu Teshome, Minister for Agriculture of the Federal Democratic Republic of Ethiopia; the Honourable Roy Fanourakis, Minister for Agriculture and Cooperatives of the Kingdom of Swaziland; the Honourable Charles N. Keenja, Minister for Agriculture and Food Security of the United Republic of Tanzania; Mr Jorgen Maersk-Pederson, Minister Counsellor, Deputy Permanent Representative of the Kingdom of Denmark to the United Nations Food and Agriculture Agencies in Rome; and Mr James Sherry, Director, Programme Development and Coordination Group, UNAIDS (Joint United Nations Programme on HIV/AIDS). This document represents a revision of the draft regional strategy paper reflecting the discussions at that roundtable. Like all strategies that reflect and address the real world, it is a 'living' document. It will be subjected to lived experience and to further discussions with ever-widening circles of stakeholders. It does, however, reflect a certain current consensus, and it is, with its more comprehensive companion volume, Assessment of Rural Poverty: East and Southern Africa (IFAD, 2002), the basis of IFAD's operations and dialogue in the region.

Introduction

4. The World Summit on Social Development held in Copenhagen in 1995 was a watershed event. At this summit, the international community adopted the goal of reducing the proportion of people living in extreme poverty by half by the year 2015. At the Millennium Summit in 2000, world leaders reaffirmed their commitment to this objective and to measuring their performance against the comprehensive targets articulated in the Millennium Development Goals (MDGs).

5. Reviewing the situation today in rural areas of East and Southern Africa , where poverty persists and the number of poor and malnourished is growing, it seems clear that the challenge of a rapid and major reduction in poverty was vastly underestimated. It implied nothing less than a revolution in one generation. It assumed that fundamental processes were already in place to drive growth-based poverty reduction. It assumed a near-overnight transformation in the institutional and policy framework. It assumed profound changes in the nature of development assistance - and healthy increases in that assistance. At the same time, it misjudged the sheer scale of human and economic devastation resulting from the AIDS epidemic. Many of these assumptions have proven to be seriously overoptimistic, and progress in reducing rural poverty has been slow.

6. Yet the objective can be achieved if the challenge of development among the rural poor is directly and systematically addressed - for it is in rural areas that the large majority of the region's poor lead their lives. The basic human and natural resources that rural poor people require to put extreme poverty behind them do exist. However, the poor need focused help in establishing adequate access to national resources, and they need assistance in developing the capacity to control their own future and build and sustain new development paths. Their principal partners must be national stakeholders, but external assistance will be decisive in grasping new opportunities, and in grasping them today. In order for that to happen, a great deal must change. A revolution to enable the rural poor to overcome their poverty must be launched - by the poor themselves, by governments, by civil society, by the private sector and by donors.

7. IFAD’s strategy in East and Southern Africa ¹ complements its overall strategic framework for 2002-06. The framework emphasizes the necessity of significantly reducing rural poverty if the MDGs are to be achieved. It focuses the Fund’s own future work on enabling the rural poor to overcome poverty. IFAD will concentrate on critical areas in which its experience has given it particular strength: building the capacity of the rural poor and their organizations; improving equitable access to productive natural resources and technology; and increasing access to financial assets and markets. The objective is to make a decisive difference. That will not only involve using IFAD's own resources well. It will also involve catalysing a new coalition of all stakeholders within emergent coordination and focus mechanisms (such as poverty-reduction strategy papers (PRSPs)): recognizing the crucial role of rural poverty reduction in the reduction of global poverty; exploring new answers through innovation and concentration on impact; and investing in order to turn local successes into general solutions.

Regional Overview

8. The challenge in East and Southern Africa is special. It is the region in which poverty reduction is mostly clearly dependent upon rural development; national and rural development have been the slowest; and the greatest acceleration is needed if the MDGs are to be achieved as a regional as well as global objective. But it has actually suffered a general decline in development assistance and a dramatic decline in assistance to the principal livelihood base of the poor - agriculture. However, the region's uniqueness lies not only in the severity of the challenge, but also in the dimensions of the opportunity. Its rural assets in terms of people and natural resources can be the basis not only for sustainably graduating the rural poor from extreme poverty, but also for giving life to national growth processes.

9. For most of the countries of the region, substantial poverty reduction is something to look forward to rather than an accomplishment. Of the 21 countries, 15 are classified as low income, and 12 are classified as least developed countries. No less than 10 have an average per capita income of less than USD 400 per annum. The region probably has the highest concentration of poverty in the world, and the situation is not improving appreciably. Of the 14 low-income countries for which data series are available, only 7 increased their per capita gross national product (GNP) from 1990 to 1998. Two of the best performers, Ethiopia and Mozambique, have such low incomes that the improvement is not likely to have a widespread impact on the number of people living in extreme poverty. Reduction in that number was probably more marked in Uganda (which started from a higher per capita GNP), but this progress has inevitably been prejudiced by the downturn in coffee prices. At the end of the 1990s, growth did accelerate, reflecting a combination of internal reform and international economic buoyancy. Nevertheless, growth would have to increase six-fold to reach the 2015 MDGs for the region. In the current economic downturn, there is no immediate prospect of achieving that - or possibly of even maintaining the growth levels of the end of the last decade.

10. The 21 countries of the region have a total population of 350 million. Almost three quarters, about 260 million people, live in rural areas. More than half of the rural population lives in extreme poverty, and rural areas account for 83% of total extreme poverty. Some 85% of these extremely poor people depend on agriculture for their livelihood to a greater or lesser extent. Not simply agriculture, but smallholder agriculture, is by far the main income and livelihood source of the poor in East and Southern Africa . Agricultural development is not taking place in any overall way. From 1990 to 1998 agricultural growth exceeded population growth in only 7 low-income countries - and in most cases only very narrowly. With few exceptions, the general picture is one of static or declining agricultural productivity per worker. This bodes ill for the rural population - and for national economic systems given the dominant role of agriculture in overall employment.

11. Not simply poverty, but extreme poverty, is the normal experience of the majority of the rural population. Women are often poorer and more vulnerable than men. They share many of the problems of rural poor men, but bring even fewer assets and 'rights' to the challenge of overcoming them. Despite being the least empowered members of the rural community, their share of economic activity is disproportionally high - not least as rural poverty impels widespread male migration. The potential of women - as demonstrated across the full range of rural economic activities - makes their empowerment a key component in overcoming poverty.

Opportunities and Constraints

12. Perhaps surprisingly, the majority of smallholders in East and Southern Africa live and farm on land that has medium to high potential for increased production. Although about 38% of the land base is desert, arid, or semi-arid, these areas have a relatively low population; while the incidence of poverty there is high, only 14% of the rural poor live in such areas. The remaining 62% of the land base has medium to high potential for increased production. These areas have far greater population density, and it is here that no less than 86% of the rural poor actually live.

13. The smallholders in the Great Lakes areas of Burundi, Rwanda and Uganda are a classic example of poor farming families in high-potential areas. Many parts of these countries have two rainy seasons and temperatures that allow cropping most of the year. Even so, small farmers barely eke out a living. Medium-potential areas with enough rainfall for at least one good cereal crop could also produce far more than they do at present. In many parts of these areas, the maize yields obtained by the 'better' smallholder - with resources and knowledge to invest - are more than double those achieved by the 'average' smallholder. In more remote areas, with marginal agricultural resources, the opportunities for major development breakthroughs are probably more limited. But enabling poor people to better control and manage natural resources - and exploit opportunities to produce and sell non-staple items - does offer a path to the reduction of extreme poverty, better food security and the stimulation of other sectors. This in turn offers the prospect of much higher labour productivity and income in the medium-to-long term. Smallholder agriculture is the current basis of livelihoods - and the potential for its improvement represents the most immediate practical opportunity to reduce rural poverty and stimulate broad-based growth processes. This means that smallholder agriculture must itself become a priority growth area.

14. There are considerable constraints on becoming a better smallholder in rural Africa. The rural poor frequently have inadequate landholdings, face enormous difficulties maintaining the productive value of that land, and few enjoy the benefits of water-management systems permitting them to intensify their production systems. They need to work with others to develop the improved information and technology to build more productive, sustainable systems. At the same time, they lack capital - whether on small farms or among rural enterprises - and access to the financial services needed to invest in those production systems. Finally, crucially, a key determinant of rural poverty is isolation: lack of access to markets for inputs, products and services, and lack of skills to make markets work for them. Behind these 'absences' lies one great problem: the lack of opportunity for the rural poor to command policies and institutions that respond to their aspirations and possibilities. In this regard, there is a striking paradox in most systems of public resource allocation: the majority of the population are dependent upon agricultural development to reduce their poverty; but public investment in agricultural growth has become truly minute.

15. The existence of physical opportunities for growth, but the failure of approaches focusing on physical input and output issues, suggests that institutional and policy factors also play a decisive role, and that the solution must involve fundamental social and policy change. The present state of the rural poor in many areas has its roots in the colonial system and in the policy and institutional strait-jacket in which the African peasantry was encased. This included marginalization from much of the higher-value land and from markets, which were organized for the benefit of groups whose interests were at odds with the rural majority. The common thread in this scenario was that the rural poor were the objects of other people's policies and institutions rather than being the makers of their own circumstances. Inequitable price policies, irrelevant marketing arrangements, patterns of land tenure of colonial inspiration, and agricultural support directed towards maintaining untenable systems of production have all had an enduring impact on production, income and livelihood among smallholders. These are among the principal causes of rural poverty - and of the failure of rural development assistance to have an appreciable impact.

16. Over the past decade and a half, the world in which the rural poor find themselves has changed out of all recognition. Structural adjustment has modified the landscape of economic policy and institutions. It has been better at dismantling existing systems in rural areas than at building new ones, and this incomplete transition is at the root of the current predicament of many African smallholders. A flawed system has been discarded, but not enough has been built to help rural poor people relate efficiently and equitably to the economic reality of the market-led world upon which their well-being increasingly depends. Ironically, at precisely the time that African governments began reforming what might be termed 'anti-poor' policies and institutions in the rural world, much of the international assistance community actually reduced assistance to rural development. This, combined with low levels of national public expenditure, left huge groups of the rural poor without structured and equitable relations with any modern economic services. Today, many countries present what elsewhere would be recognized as 'transitional' economies: fundamental policy reform is quite advanced (although institutional reform is often less so), but development and change at the grass-roots level are very limited. In many areas, the rural situation is marked by continuing stagnation, poor production, low incomes and rising vulnerability. It remains to be seen how many countries will graduate from their 'transitional' state in the next few years.

17. The situation in rural areas is highly paradoxical: poverty is deep, but the opportunities for growth are enormous - not only for the rural poor, but also for the national economies of which rural areas are such an important part. Yet the necessary steps have not been taken to stimulate that growth as a vital contribution to poverty reduction. Improved rural social services - especially basic education - are essential so the poor can establish greater knowledge of and control over their environment; but poverty reduction also requires putting the economies of the poor on a new footing. PRSPs and the Debt Initiative for Heavily Indebted Poor Countries (HIPCs) represent an outstanding opportunity to develop a comprehensive approach and partnership for poverty reduction. However, an adequate balance between social and productive investment has not yet been reached. The approach that productive sectors are exclusively a private-sector concern has not generated hoped-for results, and renewed consideration must be given to the process of building the market economy in the rural areas.

18. In order to address this balance, governments must focus on rural poverty reduction not just as an element of their social policies, but as a central tenet of their economic growth plans. This requires that they create the enabling conditions that give rural smallholders a chance to survive and prosper in a new economic and political environment: access to resources (land and water, technologies, efficient and equitable links with markets, and financial services), a voice in institutional development, a favourable policy framework and an accountable public sector. But more than that, they must help establish the capacity and opportunity for poor people to formulate their own priority needs and to negotiate their satisfaction. The rural poor must have a voice in determining the policies and investments that affect their livelihoods. For the poor as well as the wealthy, enrichment and empowerment go hand in hand. The private sector must also play an increasingly important role in this process as a primary supplier of the capital, technology and services that the rural poor require. It will do this more rapidly if obstacles are removed. It will do it more fairly if the poor are better organized to manage market relations.

Enabling the Rural Poor to Overcome Their Poverty

19. Since its creation in 1977, IFAD has financed some 105 investment projects and programmes in the region, for a total commitment of USD 1.2 billion. It is currently supporting governments in their poverty-reduction efforts through 49 operational programmes. In contrast to the general trend in external development assistance, which is away from rural/agricultural development and Africa, IFAD's resources remain exclusively focused on rural poverty reduction, and sub-Saharan Africa remains the highest priority - currently absorbing 35-40% of new commitments. As a result, the Fund has emerged as one of the principal sources of development assistance for rural poverty reduction (and particularly for the economic activities of the rural poor) in East and Southern Africa .

20. IFAD's programme in the region has taken the growth potential of the smallholder economy as its starting point. It focuses squarely on the new opportunities and challenges associated with the region's incomplete economic transition. Particularly over the last decade, the Fund has worked with governments, the rural poor, community-based and non-governmental organizations (CBOs and NGOs), and donors to explore opportunities created by governments through political opening, decentralization and economic liberalization. The result is a wide range of activities based on small-farmer initiatives in developing new relations with the private sector and public services, as well as a new approach to resource access and management. The experience has been positive, and has shown that rural development assistance need not be overly complex and can be very successful at the level of improved nutrition, increased incomes and asset development. It has also underlined the fact that, for poverty reduction to occur on a wide scale, these sorts of activities need to be replicated and scaled up, and for sustainable success, there must be real change in the institutional and policy environment. These changes - e.g. monetary policy affecting interest rates, regulation of small-scale financial institutions, water-use policy, regulations affecting cooperatives and institutions, resource-management policy, regulation of interdistrict trade - are at the heart of the prospects of the rural poor. It is vital that they be addressed if programme-based development is to be sustainable and if rural development is to become a normal and widespread element of rural society.

21. On the basis of the lessons learned in IFAD's collaboration with rural development stakeholders, three cross-cutting principles will be applied in the design and implementation of all interventions in the region. First, the Fund will ensure that its support uses careful targeting. A growth-oriented strategy for rural poverty reduction must focus on where the poor are and what they do for a living. This means that its support will focus on areas of medium to high potential, where the greatest numbers of poor people live and farm, although this will not be to the exclusion of more marginal areas that have a higher proportion of poor people living in them. Within rural communities in those areas, IFAD must identify who the poor are; it must understand their livelihoods; and, working with them, it must analyse the constraints they face and the opportunities they have open to them. Targeting has always been at the heart of the Fund's efforts at poverty reduction; it will continue to be so.

22. Second, IFAD will invest in the empowerment of the rural poor to strengthen their own productivity and increase their assets. This empowerment embraces both access to material goods and organization in order to collectively assert influence - not only on government, but also increasingly on the private sector. It is not enough to elicit the views of communities or even the poor in programme design and management. The poor must be assisted in building the institutions, skills and knowledge needed to articulate viable livelihood strategies and contribute to their realization. At the same time, empowerment of the rural poor must emphasize the involvement of the marginalized majority. The Fund's drive towards participation at every level and empowerment of the voiceless will specifically address obstacles to inclusion of the marginalized in this process. Understanding and changing gender relations is crucial.

23. Third, the best guarantee that public policy and institutions will effectively facilitate the efforts of rural poor people to work themselves out of poverty is to ensure the democratic accountability of governments. IFAD will support the development of policies for rural poverty reduction and the establishment of institutions, structures and processes that enhance the ability of the poor to articulate their needs and monitor the performance of service agencies. Decentralization also offers the poor the potential to exercise more direct influence over the factors that shape their lives. The Fund's contribution here will be twofold: supporting decentralized public structures to ensure they have the human and material resources to handle local demands; and supporting the rural poor by building their capacity to exercise greater influence over local and national public institutions.

Strategic Thrusts

24. The three foregoing general principles also lie at the heart of the PRSPs. IFAD's contribution will be to seek their effective articulation in the lives of rural poor people, not only in general strategies, but in actual operationalization of programmes. In addition, the Fund has a more specific role that reflects its particular mandate and experience. It will concentrate on improving the way in which PRSPs and similar national poverty-reduction programmes address key constraints to economic growth among the rural poor. This catalytic role embraces: direct investment through projects, programmes and grants for innovation; the building of partnerships; policy dialogue; and knowledge-sharing. IFAD will focus on four principal 'thrusts' that are fundamental to the economic prospects of the poor: (a) promoting efficient and equitable market linkages; (b) developing rural financial systems; (c) improving access to and management of land and water; and (d) creating a better knowledge, information and technology system. Strengthening each of these as a firm foundation for smallholder growth will involve organizational development among the poor so as to articulate and pursue their interests, policy change to overcome obstacles to poor people's initiatives and direct investment in enhancing access to resources.

25. Within these thrusts, two momentous features of the landscape will exert continuous influence on the planning and programming of the Fund's resources - the HIV/AIDS epidemic and conflict/post-conflict situations. Each of the four thrusts, and IFAD's responses to these two threats, are discussed in the following sections.

A. Promoting Efficient and Equitable Market Linkages

26. Globalization requires collaboration, consolidation and knowledge if large-scale producers in the developed world are to survive and prosper. The same is true for smallholders in developing countries. The benefits of the global market do not come simply from being in the market but from being better organized to manage new relations of production and exchange. For smallholders a decade and a half ago, major markets were organized by governments, and exchanges were not critically influenced by their knowledge and organization. Nearly everywhere the situation has changed radically. Smallholders no longer face the fixed, pan-territorial prices that often represented a large tax on the value of their produce. Similarly, they no longer face a systematic shortage of inputs - assuming that, in today's world, they can afford to buy them. Prices, whether for selling produce or purchasing inputs, are now largely negotiated. New commercial relations must be struck with a myriad of suppliers and buyers. For some farmers - particularly those producing export crops in areas enjoying good communications - this has created major opportunities. For others - particularly those trying to produce and market staples at the agricultural margins - it has created major problems.

27. Smallholders are ill-equipped to extract the maximum from these new relations. They face an uncertain production environment and enormous constraints on physical access to markets. They also exchange with actors who have more resources, information, options, and - in sum - more economic power. The result is poor terms of exchange and little influence over what they are offered, whether it be financial packages, technology, manufactured inputs or land and water. Under these conditions, market organization becomes a critical determinant of poverty.

28. The situation is often no better on the other side of the market equation - that is, for the wholesalers who purchase farm surplus and those who sell technical inputs and provide finance to smallholders. An efficient private sector does not spring up overnight, especially given a history of limited 'space' for the operation of private traders. The absence of basic infrastructure further discourages the entry of efficient and competitive private-sector services. So does uncertainty about government policy on private investment. Neither the poor nor rural economic growth are served by an uncompetitive market structure.

29. IFAD has an important role to play in this area by influencing the rate of market development; promoting wider access of small-scale producers to markets (geographically and by poorer producers); and assisting in the establishment of more equitable market relations between producers and markets. It can make a difference in the following ways:

assist smallholders in relating more effectively - and on a more equal footing - with the private sector;
help the private sector provide more competitive and efficient services to smallholders, particularly for input supplies and produce marketing;
finance the provision of essential connecting infrastructure; and
work with governments to promote dialogue among the main stakeholders in order to generate the policy, institutional and legal context required for enhanced market linkages.

30. Since 1995 the Fund has become increasingly engaged in this area. After initially financing a number of NGO-implemented pilot activities, it is now supporting longer-term, larger-scale interventions in rural market linkages in Mozambique, the United Republic of Tanzania and Zambia. All involve investment in smallholder market organization and knowledge, storage and transportation infrastructure, creation of the conditions for greater private-sector investment and services, and improvement in the policy and regulatory environment. This issue is not restricted to improving existing marketing operations. It also embraces the need to support diversification of production, rural processing and value-adding activities in close association with a more developed and competitive private sector. Such operations will be at the core of IFAD's programme throughout the region.

B. Developing Rural Financial Systems

31. Financing for investment and for coping with household shocks is essential to raising production and efficiency among rural poor people, but a very small minority have access to it. Agricultural credit alone is not the answer to the viability of smallholder production. A more holistic view is required both of the causes of low on-farm investment and return among smallholder producers and of the broader financial service needs of rural households. At one extreme, this may mean a shift away from credit for agricultural inputs and towards improved farmer access to inputs. It certainly requires a recognition that there is demand among the rural poor for a broad range of financial services, including savings facilities, consumption-smoothing loans and financial transfers, all of which have important implications for better and more secure livelihoods. Above all, it demands support to the development of sustainable financial institutions rather than the provision of specific financial products.

32. In the wake of the collapse of parastatal agricultural credit systems, there has been considerable support to purely local initiatives. These are important but are not enough to satisfy the requirements of the rural poor. Smallholders need to develop user organizations that can both express their financial service requirements and exercise leverage over the larger financial system as it evolves, particularly in relations with upstream financial institutions. The issue, again, lies in empowering smallholders to work collectively to meet their financial service needs.

33. IFAD support for rural financial services has been an important area of intervention in the region and continues to be a programme priority. While there is no single appropriate model for financial-system development, the key areas will include: (a) assisting smallholders with their own organizational framework for capturing and recycling local savings; (b) identifying a viable linkage mechanism to formal-sector financial institutions; and (c) facilitating graduation of some smallholders to direct financial relations with upstream financial institutions (particularly to satisfy medium- and long-term investment capital requirements). In 2000 IFAD supported a major rural financial-system programme in the United Republic of Tanzania - investing in the development of grass-roots organizations, legal and regulatory improvements, and linkages with commercial institutions. This marked its return to rural finance here, within an approach reflecting a quite new economic and institutional context. A similar programme capitalizing upon the higher level of development of the microfinance industry in Ethiopia was approved in 2001, and a national programme is under development for Uganda. These and similar future operations represent a long-term commitment to making the institutional and policy environment serve essential smallholder finance requirements. In this as in other areas, the influence of national policies is great. Regulatory frameworks oriented to urban conditions and large-scale financial institutions, and maintenance of high rates of return on treasury bills, for example, cripple rural finance. The concerns of the rural poor must be better reflected in macro-policy. Development, even of the poor, is not exclusively determined by local factors.

34. The Fund's approach to strengthening smallholder access to finance is not restricted to formal financial institutions. Private-sector agribusiness is often willing to pre-finance smallholder inputs to ensure its supply of raw material. Indeed, the value of the smallholder inputs that it provides is certainly far greater than the level of credit from formal financial institutions. IFAD is actively exploring agribusiness investment in small-scale producers as part of its support to market-linkage development.

C. Improving Access to and Management of Land and Water

35. Land and water are at the heart of the economies of the rural poor. Smallholder access to both is generally very limited.

36. Accessing and controlling land. In southern Africa, where the landholding structure remains profoundly inequitable, improvements in the condition of the rural poor will depend on increased access to land. In other areas, the challenge will be to ensure that poor people continue to control their land in the face of pressure from outsiders in a better position to profit from market development. Women - the principal users of land - must develop stronger rights over the land they work. This is not an area where IFAD has had a strong presence. It will be. IFAD will support programmes of fair, orderly and consensual land reform in southern Africa. And it will stress secure access, individually and in communities, in all areas in which the rural poor (including marginalized groups) perceive emerging livelihood threats.

37. Maintaining the value of land. While access to land is a critical question for the poor; so is its quality. East and Southern Africa may suffer more from loss of soil fertility than any other region of the world. Given that land is one of the few assets controlled by the rural poor, countering the threat to soil quality through conservation of natural resources is a prerequisite to sustained poverty reduction. Smallholders need adequate control over land resources, access to technology consistent with their low-input capacities and access to capital to finance investments.

38. Arresting and reversing decline through the introduction of inexpensive technologies and practices is a real possibility, and it can (indeed, must) be combined with income growth. Water- and soil-conservation technologies - such as alternative tillage techniques or appropriate cross-cropping combinations - can provide long-term benefits to the natural resource base while offering immediate scope for increased production and subsequent intensification of production systems. These technologies also are normally not input intensive and therefore of special value to poorer households. They do, however, require accessible systems respecting local understandings - and land-management regimes that enable poor people to put their knowledge into action. Investment in smallholder land-management systems is central to the Fund's operations in, for example, Lesotho and Zimbabwe. It will be a stronger element of the portfolio as IFAD capitalizes upon its relations with the Global Environment Facility and the Global Mechanism of the Convention to Combat Desertification.

39. The introduction of sound technologies cannot, however, represent a stand-alone area of operations. Resource degradation and (apparent) mismanagement are themselves aspects of rural economic systems and thus shaped in part by issues of market access and competitiveness even in the most marginal areas. Population pressure is often identified as the cause of resource degradation, but there is no single inevitable agricultural or environmental outcome to population pressure. In areas with poor market access, it can lead rapidly to resource mining. Where there are good market connections and access to a profitable crop, precisely the same population pressure can lead to intensification involving major investments in resource management and improvement. IFAD's approach will embrace a whole-system approach, tackling conservation within the whole structure of the rural political economy - and the opportunities of poor people to effectively manage resources to improve their livelihoods.

40. Increasing access to irrigation and fostering sound water management. Water is an increasingly valuable global asset. The water assets of the region are considerable, and their contribution to rural poverty reduction should be great. Of the 18 million ha suitable for water management, only some 3 million are even partially managed. Only 2 million ha are irrigated (and almost half of these are in Madagascar alone), leaving major opportunities unexploited. Small farmers, in particular, have failed to benefit - a lost opportunity for the poor. IFAD is supporting water development and management for smallholders throughout the region (including Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Swaziland, the United Republic of Tanzania, Zambia and Zimbabwe). This is a long-term commitment.

41. Public investment in irrigation, usually 'scheme'-based, has produced disappointing results because of poor and non-participatory management, unsustainable operation and maintenance, and lack of systematic development of market opportunities for the high-value crops that justify the high investment and production costs. In the case of public irrigation schemes, the policy, legislative and institutional contexts have also been inadequate to ensure reasonable performance. IFAD is working with governments to transfer the management, operation and maintenance of schemes to irrigators. The process is a complex one, demanding that recurrent costs be minimized, revenues increased and scheme management improved. It requires, above all, training and capacity-building for irrigator organizations, but it also encompasses support for infrastructure rehabilitation, promotion of improved production technologies and improved commercial linkages to markets.

42. By contrast, private water-management initiatives have on the whole been viable and self-sustaining. There are extensive areas of cultivated wetlands, water advance-and-recession planting, and sound water-management/harvesting systems in dryland areas that have developed spontaneously and that are operated and maintained by farmers. Such systems are cheap, and they are viable for supplementary irrigation of a single crop, such as rice, but the yields are typically low. There is ample potential to increase them, especially through improved water management. Support to smallholders in developing such resources will be at the core of the Fund's new programmes in the region, but not to the exclusion of larger-scale investments where these are viable and accountable to small-scale users. The problems associated with irrigation management result in part from difficulties inherent in the management of collectively-held water-supply technology. IFAD has already started to promote individually-owned, farmer-managed technologies - such as treadle pumps, and will continue to do so.

43. While the debate on water rights is cast in a predominantly economic idiom (e.g. the need for water charges as a means of resource-use rationalization), the issue is also a political one. Those with political power will determine the economic 'answer' as to how water is allocated. At present, smallholders rarely have an organized voice in these deliberations. IFAD's strategy in this area will be to put smallholder users in the thick of the debate, to ensure their needs contribute to defining water policy and to support practical, cost-effective technical solutions.

D. Creating a Better Knowledge, Information and Technology System

44. The issue of smallholder development involves not only organizational empowerment, but also knowledge empowerment. The limitations of traditional 'agricultural extension' have been recognized - with its centrally controlled services that dictated the 'appropriate' path for smallholder development. The approach has been largely abandoned, but little has replaced it.

45. Smallholders need to interact with a broad range of technology and information suppliers, both public and private. Globally, the private sector is increasing its role in technology supply, and this will also occur in Africa (as it has already done among large-scale producers). But the practical impediments to the efficient and spontaneous emergence of private-sector technical services in rural Africa are daunting. First, it is not at all self-evident that there are private sector-operators that could provide meaningful technical assistance in many rural areas. Second, if knowledge is to be developed and acquired efficiently, suppliers of technology and information require organized, knowledgeable purchasers. Smallholders are extremely unprepared - whether through civil-society or other user organizations - to articulate their requirements in a focused and forceful way and to evaluate the recommendations from different sources. Finally, the poorest among them just do not have the purchasing power to pay - either for services provided or for the technologies extended and sold.

46. IFAD does and will assist smallholders in developing relations with new and more diverse suppliers (currently, for example, in Uganda) - in a context defined by their own interests. However, it is clear that the public sector will also continue to play an important role in rural technology development. In particular, it must develop and extend support in those areas that draw the least attention from commercial suppliers (improved soil- and water-conservation practices and low-input technologies for marginal areas, among others), and it must support the organization of poor farmers in order to access private services. The Fund will continue to work closely with government services in these areas, focusing not only on content, but increasingly on accountability to users as an aspect of assistance to decentralized public service organizations.

47. Technology decisions are also economic decisions. They involve commitments (to particular products at a given price) that can only be made rationally in the context of quality information about markets - and the organization to access them. Thus the issue is no longer one of 'extension', but of information systems that respond to the requirements of smallholder producers engaged in production, trade and technology exchange. Smallholders can no longer be approached as 'advice takers'. They must be reconstituted as seekers after diverse sources of information and as evaluators of what they receive. IFAD will be supporting the enhanced capacity of farmers to make their own informed decisions - including through such learning-based systems as farmer field schools.

Countering Threats to Livelihoods

48. The economic and policy challenges standing in the way of smallholder growth are made more formidable by ostensibly external shocks - exemplified by the HIV/AIDS epidemic and civil strife. Poverty is at work behind most crises: they are not only challenges to development, they are challenges of development. Building up resilience to crisis is an essential element of IFAD's strategy for growth among poor people.

49. HIV/AIDS and rural poverty reduction. The East and Southern Africa region is at the epicentre of the HIV epidemic. In 12 countries, adult HIV/AIDS prevalence rates range from 11 to 36%. In Botswana, Zambia and Zimbabwe over a third of 15-year-olds may die of AIDS. The majority of those suffering the impact of the epidemic live in the countryside and are extremely poor. In the labour-based economies of the poor, in addition to the human cost, the short-term effects on production and income are staggering. While these decline, families concurrently experience dramatic rises in expenditures (for medical treatment and transport, funeral costs, etc.). The longer-term effects of the epidemic on the transfer of generational knowledge, on traditional social-security mechanisms, and on the basic demographic and socio-economic characteristics of these societies are likely to be even greater. The HIV/AIDS epidemic is creating a new poverty dynamic. It is also driven by poverty. Poverty induces people into high-risk situations and activities, such as prostitution and migrant lifestyles - poor women are particularly vulnerable.

50. IFAD's response is two-fold: to extend its theme of knowledge empowerment at the community level into the realm of HIV/AIDS to support prevention; and to work towards establishing livelihood options for the poor outside high-risk activities. The Fund already works on the level of community-based knowledge and decision-making systems. It likewise works on opening up economic opportunities for marginal groups. And it is very much engaged in gender issues. More and better work on HIV/AIDS will mean more of this - including more targeting of at-risk groups, moving beyond a purely medical model for attacking the disease to recognizing the social elements of prevention and mitigation. IFAD has a long-standing engagement in Uganda in mitigating the impact of HIV/AIDS on orphans and women survivors. Its operations are expanding, including in the area of prevention. These activities must become a major part of the Fund's operations. They will require new partnerships and new types of resources for prevention, mitigation and adaptation. Significant grants for governments and communities must be mobilized if the pace of the epidemic is to be stemmed.

51. Responses to conflict and post-conflict situations. Smallholders have been afflicted by a succession of major crises arising from civil strife. No positive development process is possible in situations where the poor have lost all assets and where there is no basis for collective action. The issue is not only that without 'recovery' there can be no development, but also that the form of recovery exercises a decisive influence over subsequent development.

52. IFAD has been deeply involved in post-crisis recovery in Angola, Burundi, Mozambique and Uganda. Fortunately, this is no longer the overwhelming issue in the region. Nonetheless, the Fund will continue to enter rural post-conflict situations in order to balance the overwhelming emphasis on short-term relief (consumption support) with the building of durable new institutions and material assets consistent with long-term poverty-reduction objectives. This will involve flexible programme design, in terms of types of activity and time frame. Post-conflict investments will immediately support poor people in acquiring the assets they need to start producing - and to eventually re-enter normal economic relations. They will also strengthen institutions: capacity-building of local groups to cope with resource-conflict situations and establish common priorities for change; and assistance to governments in developing their own capacity to respond to a post-conflict situation and stimulate social and economic recovery. If durable solutions are to be found and the effects of future crises mitigated, governments must not be bypassed, but rather strengthened, in their post-conflict capacity.

Implementation Approaches

53. IFAD will use a number of tools to increase the impact of its country operations and their catalytic effect. This will be achieved primarily through enhancing the implementation effectiveness of country programmes. Knowledge generated through programme experience will be disseminated at national and regional levels to influence investment and policy decision-making. The promotion of in-country and regional partnerships will be an essential element of the approach.

54. Projects and programmes. Loan-financed projects and programmes and the country portfolios they constitute are the core of IFAD's involvement in the region. Its activities will increasingly involve larger and often longer-term programmes, focusing tightly on changes needed to enable the rural poor and their partners to establish growth paths that they can sustain. The objective is impact: improvements in income and assets - and putting the needed resources, organization and influence in the hands of the poor to sustain and expand that impact. In the majority of cases, such programmes will emphasize both institutional strengthening - institutions of the poor and of governments - and development and reform of the policy, legislative and strategic framework where appropriate.

55. The programme design process will evolve in response to this approach. First, it will emphasize local ownership. To a greater extent than in the past, it will be the task of governments, working with rural poor communities and civil society, to develop programmes within the framework of explicit poverty-reduction strategies. The role of IFAD will be more strategic, providing support and broad guidance. An important part of this process will be maximizing the participation of poor women and men and other stakeholders in programme planning and ensuring that institutional arrangements encourage their full participation in implementation and monitoring. Second, programme design will more explicitly take advantage of knowledge gained from other projects and programmes financed within the same thrust. The IFAD/NGO Extended Cooperation Programme has been an invaluable vehicle for piloting new approaches and technologies for rural poverty reduction within the region. This and other grant-based instruments will continue to develop the building blocks upon which larger, loan-based interventions are constructed.

56. IFAD will pursue a number of initiatives to improve impact orientation and assessment in the projects and programmes it finances. It will include support for management training of key staff of IFAD-supported programmes, as well as the promotion of impact-focused, participatory methods and approaches - particularly logical-framework-based approaches to planning, monitoring and evaluation. Networking and exchange visits within and across countries will also be encouraged. Annual regional implementation workshops conducted by IFAD and the United Nations Office for Project Services (UNOPS) have proven to be an invaluable tool in achieving this and will continue to be supported.

57. Policy dialogue. IFAD-supported programmes in the region centre on the four main thrusts (paragraph 21). Thus an increasing number will explicitly focus on assisting governments in developing sectoral or subsectoral policy frameworks supportive of rural poverty reduction. Even where the focus is not explicit, in more and more cases The Fund is pursuing dialogue with governments on policy issues during the course of implementation. At the same time, and as part of the empowerment process, it will assist grass-roots organizations in enhancing their advocacy capacity in local and national policy fora. This will be done through training and through facilitating dialogue between government and civil society at the local and national level. IFAD's medium-term role in policy dialogue lies not only in speaking on behalf of the poor but in supporting the capacity and opportunity of the rural poor to engage other stakeholders.

58. Nationally owned and driven poverty-reduction programmes are the frameworks within which issues are prioritized and actions coordinated. IFAD will seek to bring its experience to bear on this process. As appropriate, it will also participate in PRSP initiatives - directly or indirectly - and work to ensure that HIPC programmes place sufficient attention and resources in rural poverty-reducing investments. IFAD will work with its partners to develop appropriate pro-poor institutional frameworks for effective delivery of rural services. A key vehicle for accomplishing this will be the Multi-Donor Regional Hub in Harare, Zimbabwe, which the Fund is supporting.

59. Building partnerships. All IFAD operations depend on partnerships to achieve their objectives. These will be expanded in future programmes: greater involvement of the poor and their organizations (including CBOs and NGOs); joint commitment with government to effect key institutional and policy changes; and enhanced collaboration within the donor community. Partnership development is about creating a platform from which to establish a strong voice for the poor in the policy and institution-building process. It is also about better coordination among governments, donors and other organized development stakeholders. In addition to collaboration in programme development and implementation, IFAD will focus on partnerships that make an impact at the policy level: building broad coalitions of support to scale up positive local experiences to the level of national systems. Government will continue to be a key IFAD partner at every level.

60. The private sector is a key partner as well. The large-scale, formal private sector - particularly agri-business - is now probably the major development partner for smallholder producers in the region. Future progress depends on a broadbased, equitable expansion of these relations - something that will only happen on the basis of mutual interest. The private sector wants to make money. It can do so - and at the same time help poor farmers make more money - if it expands its commercial relations into the realm of self-organized smallholders aware of market options. IFAD will contribute to smallholder capacity to evaluate options and to combine with others to exploit them. The issue is one of ensuring that they have the means to maximize their returns within stable and sustainable relations with other private-sector actors. Similarly, the Fund will work to ensure that the private sector - small-scale and informal as well as large-scale and formal - has adequate 'space' to thrive. This objective will require both the establishment of an enabling policy environment and selective investments to spur sustainable private-sector activity in more marginal areas.

61. Knowledge-sharing. The timely generation and dissemination of knowledge of the dynamics of rural poverty and effective approaches to reducing it are crucial to enhancing direct, catalytic impact. IFAD's knowledge-sharing activities in the region will aim to: (a) give the rural poor, through its programmes, the skills, organization and information needed to better control their lives; (b) provide its partners working directly with the rural poor with the knowledge and focus they need to more effectively assist them in overcoming poverty; and (c) capture lessons and best practices from the experience of IFAD-supported programmes and disseminate these to broader audiences - at national and regional levels in order to catalyse policy and investment decisions and at the headquarters level to ensure that they are fed back into the programme and policy design process.

62. Learning from the poor and other partners and adapting their successful experiences to IFAD's programmes must also be prominent in the Fund's knowledge-sharing efforts. There is much that the indigenous technical and organizational knowledge of the poor can teach IFAD. There is also much to be learned from other donors, NGOs and researchers on how to work better with the poor. Examples include participatory planning tools, monitoring and evaluation approaches, targeting methods, and good practices in the strategic thrusts enumerated above.

Conclusions: Poverty and the Obstacles to Growth

63. In most of East and Southern Africa , poverty reduction in rural areas can only be achieved by increasing the assets and incomes in the hands of the poor themselves. The answer to their poverty is growth and development in their livelihood systems. It can be argued that sustained growth without growth in the smallholder economy is hardly possible. It is almost certain that growth without smallholders would not make a significant reduction in rural poverty - at least by 2015.

64. The development community should not be fearful that a growth approach to poverty reduction will exclude the rural poor - if it is based on the development of the assets and capacities of the poor themselves. When supported by the institutional and policy environment, targeted, responsive assistance can successfully expand the envelope of inclusion in the transformation process: from commercial farmers to 'master farmers', to smallholders, to women. That experience must be scaled up in a new rural development partnership. Such a partnership should focus upon creating conditions in which rural poor people can overcome the obstacles to growth - a growth that they can sustain and employ to satisfy the broad social needs they themselves define. That scaling up is IFAD's strategic objective in the region - pursued through country programmes that: focus on key economic empowerment issues while simultaneously addressing policy, institutional and resource issues; invest directly in the capacity and resources of the poor; mobilize additional resources for rural development from all stakeholders; and provide fora for the rural poor to engage in meaningful dialogue on the policy issues that shape their opportunities. Finally, just as local development is largely dependent upon national-level institutions and policies, so it is dependent upon the evolution of the international system of economic relations. The large majority of the rural poor in East and Southern Africa are farmers, and they work in economies that are becoming more and more open and subject to global factors. The key is not just global aid but, increasingly, global trade. Poor farmers in the region are very much affected by agricultural policies that have the unintended consequence of impoverishing agriculture in many developing countries. For the basis of sustained and expanding rural poverty reduction to be secured in East and Southern Africa , this must change - not by abandoning support to the rural society in developed countries, but by making that support more conducive to improvements in the rural environment and less conducive to the production of goods that violently distort global markets and block poor people's options to join the globalized development process.

1/ IFAD’s East and Southern Africa Division comprises 21 countries: Angola, Botswana, Burundi, Comoros, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Swaziland, the United Republic of Tanzania, Uganda, Zambia and Zimbabwe.