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View the documentSpecial address: the scope for public action to reduce chronic hunger

Macroeconomic reform: its impact on poverty and hunger

Nancy Birdsall

My former colleagues in the World Bank have given me a tough topic and a challenging audience. I am delighted to have the opportunity to address a group among whom are many with on-the-ground experience in working in and managing programs to combat hunger. I see it as an opportunity to try to affect somewhat how you think about the problem we all face.

I want to convince you of the centrality of economy wide reforms for the reduction of poverty and the defeat of hunger. You and your constituents need to be involved in and engaged with efforts of the World Bank, my bank (the Inter-American Development Bank), and other multilateral institutions in encouraging and assisting governments in the difficult task of reforming their economies.

I start from the premise that chronic hunger is not a food production problem, but a poverty problem. A strategy to combat chronic hunger bools down to a strategy to combat poverty.

I will talk about three points. Let me state them briefly and then discuss each one.

· First, the importance of shared growth to the reduction of poverty. By shared growth I mean growth that benefits everyone, that lifts all boats, including the boats of the non elites. To reduce poverty, economic managers in most poor countries (and officials of the multilateral agencies that work with them, and members of the community of nongovernmental organizations) must worry not only about growth itself, but about the pattern of growth, and must aim for shared growth.

· Second, that structural adjustment can and has reduced poverty, including in the short run. Adjustment is not only necessary, but is at times a major contributor to reduced poverty and hunger

· Third, that in reducing poverty and eliminating hunger, transfers and other compensatory programs can help, but are not a substitute for adjustment and shared growth.

Background: Poverty and Hunger

The relationship between poverty and hunger is clear: poverty is the root cause of chronic hunger, and hunger probably contributes to poverty, for example, by reducing the amount of energy available for manual labor. As most of you know, South Asia and Sub-Saharan Africa, which have the highest percentage of poor, also have the highest percentage of hungry people The relationship over time also holds. In Latin America and Sub-Saharan Africa poverty increased between 1985 and 1990, and these regions also experienced a rise (or no change) in hunger. In East Asia and South Asia, where poverty decreased, so did hunger.

Poverty, in turn, and therefore hunger, are in part a function of country income per capita. Cross country statistical analysis indicates, not surprisingly, a close relationship between average per capita income and average per capita consumption of calories It is also true that no matter what the level of average income, growth of average income is associated with growth of average per capita consumption.

More interesting is that much of what is not explained in the statistical analysis is due to differences. among countries in the distribution of income for any given average income, countries with less equal income distributions have more poor people, who are more likely to be hungry.

Managing Shared Growth: Lessons from East Asia

This brings me to my first point: managing shared growth. Income distribution within a country is the result of initial conditions at some past time and economic and social policies since then Policies of shared growth over time can make a difference to income distribution, and through distribution to poverty and hunger.

Why doesn't growth in some countries lift all boats? Why did growth reduce poverty so much more in Indonesia than in Brazil? I believe we should be more cynical in thinking about this question. Let us star. from the premise that where the elites have political as well as economic power, in e absence of managed efforts government policies are likely to favor the elites. Often such policies contravene the market A prime example is import substitution policy. Import substitution policy helps industrialists and those who get privileged access to foreign exchange, and via overvalued exchange rates permits cheap imports of consumer goods for the urban middle class, but it reduces the local currency proceeds of the exports of rural farmers and reduces demand for the labor of poor urban workers Given the powerful combination of political and economic power among elite groups in many developing countries, including in the poorest, a trickle down laissez faire approach to growth is simply not likely to reach the non elites.

To offset this tendency, a policy stance we can label shared growth is critical. Active management to reach non-elites Noms key to the phenomenon of shared growth described ire recent work by the World Bank on East Asia 2 In Hong Kong, Indonesia, the postwar Republic of Korea, Malaysia, Singapore, Taiwan (China), and Thailand new regimes faced a formidable challenge from the communists, either externally, internally, or both The need to build legitimacy with the working class in both rural and urban areas was no doubt pressing To ensure the continuing support of the working class non-elites, leaders aggressively used a variety of mechanisms: strong support for public education at the primary and eventually at the secondary, level in all these countries; land reform in Korea and Taiwan (China); housing programs in Hong Kong and Singapore; massive investment in rural infrastructure in Indonesia; and credit and export guarantee programs for small and medium-size enterprises in Taiwan (China), and since the 1980s in Korea (where the shares of small and medium size enterprises in manufacturing employment and value added had risen to 51 and 35 percent, respectively, by 1988).

In addition, these countries avoided the false conflation of social policy with labor policy and worker entitlements. In Korea and Singapore, and to some extent in Malaysia, the government actively managed the labor movement to suppress radical political activity, and in Thailand and Indonesia labor unions were routinely suppressed out of fear of communism As a result of rapid growth and rising productivity, wages rose, generally in line with market forces, but not ahead of market forces The governments did not allow the mechanisms that elsewhere permitted a group of privileged workers in the formal sector labor force to reap huge rents through unionized pressure or interest group politics to be created. This suppression of labor rights had high costs, of course, in terms of loss of human rights The lesson is not necessarily that such rights should be suppressed, but that wages above market rates, need to be avoided if the benefits of growth are to be broadly shared.

Three aspects of shared growth in East Asia seem to have been key first, that there was active management (usually to supplement, catalyze, or strengthen market forces not to override the market); second, that the emphasis was not on direct transfers, but on improving opportunities (this was not a populist approach); and third, that the distinct) on was not between the poor and the rest, but between the elites (which elsewhere in the developing world include privileged public sector and public enterprise labor as well as industrialists and large landowners) and the rest In East Asia, the elites were also attended to, but not to the exclusion of the non-elites.

The programs noted above were not necessarily the core economic ingredients of shared growth, however. Three ingredients of the East Asian growth experience were fundamental to shared growth and the rapid reduction in poverty: a relatively level playing field for agriculture, an export push that created high demand for labor, and a universalist approach to public social and infrastructure investments.

In the fast-growing economies of East Asia direct and indirect taxation on agriculture has been lower than elsewhere in the developing world. In the last three decades, many governments in other regions favored manufacturing and hurt agriculture by overvaluing their currencies and protecting domestic industries that manufactured agricultural inputs and the goods rural households The exchange rate that resulted from restrictions on manufactured imports reduced the domestic currency proceeds of agricultural exports Industrial taxation acted as a hidden tax on agriculture, raising the price of agricultural inputs to subsidize industry Figure 1 compares the taxation of agriculture in selected East Asian countries Taxation has been higher for three decades in Pakistan, the Philippines, and Sri Lanka than in Korea (where agriculture is now protected) or Malaysia Thailand's level of agricultural taxation was relatively high in the 1960s and 1970s, but was reduced in the 1980s, while taxation in the Philippines rose.

Low taxation of agriculture has been associated with high growth. If we compare agricultural growth rates across regions for the period 1965 to 1988, we find that agricultural income and productivity have grown fastest m East Asia, one percentage point or more every year for twenty five years, than in other regions Increases in productivity contributed to and reinforced relatively slower rates of growth of employment in agriculture, as workers moved into even more rapidly expanding manufacturing and other employment. Other factors, of course, also contributed to success in agriculture in East Asia, but the policy of not penalizing the farmers was clearly key.

The second key ingredient of shared growth was East Asia's export push. Complemented by the rapid growth of agricultural output, the export push meant the demand for labor was high, the result not only of rapid growth of agriculture and manufacturing, but of relatively labor-intensive growth The export push strategy, including use of the exchange rate as a commercial tool and the need for global competitiveness, reinforced the tendency to rely heavily on labor, the most plentiful factor of production, and to minimize the antilabor bias associated with protecting capital-intensive industries. Equally important for shared growth, demand for unskilled labor has been relatively high, in Korea in the earlier decades, and more recently in Malaysia and now in Indonesia and Thailand. Combined with a rapidly increasing supply of skilled labor brought about by a rapid expansion of education, the result has been a relatively small wage gap between skilled and unskilled labor, which in itself contributed to a better distribution of income and a greater sense of shared growth.


Figure 1. Intervention and growth in the agricultural sector selected East Asian countries and decades.


Figure 1. Intervention and growth in the agricultural sector selected East Asian countries and decades.

Finally, East Asia is noteworthy for its universalist or saturation approach to public investment in infrastructure and in basic social programs. Table 1 shows the much Lower disparity in public investments in water and sanitation between rural and urban areas in East Asia compared to other regions (top panel) and the smaller differences in access to electricity (bottom panel). This lack of urban bias is an excellent proxy for the universalist emphasis in East Asia. In the case of electricity we can compare Thailand, which in 1984 had 78 percent of its urban population and 40 percent of its rural population benefiting from electricity with Brazil, which in 1981 had more than 95 percent of its urban population benefiting from electricity, but less than 20 percent of its rural population.

Also extraordinary has been the emphasis on education and health services. In the [ace of scarce resources, the universalist emphasis induced governments to concentrate their resources at the lower, more basic levels of services, where unit costs are lower and where the poor are more likely to benefit. For example, developing countries in general have a similar average percentage share of spending on education as East Asia, roughly 3.4 percent of GDP, but in East Asia most of that public spending has gone to primary and secondary education, with about 15 percent going to university education, compared to 24 percent in Latin America and South Asia, and at times even more in Africa.

Table 1. Comparison of rural and urban public investment, selected economies and years.

Rural urban disparities in access to services, 1987-90 (100 = rural-urban parity)

Economy

Water

Sanitation

Korea Republic of

54

101

Thailand

126

102

Indonesia

168

113

Other Asian countries

65

39

Latin America

58

47

Sub-Saharan Africa

43

30

Percentage of population served by electricity

Economy

Urban

Rural

Indonesia. 1984

39

10

Malaysia, 1983

85

55

Thailand, 1984

78

40

Other Asian countries

Bangladesh 1981

20

2

India 1981

<25

15

Sri Lanka. 1982

35

8

Latin America

Argentina, 1987

>95

5

Bolivia, 1981

72

9

Brazil. 1981

>95

19

Fast and West Africa

Cd’Ivoire, 1981

93

20

Liberia. 1982

86

4

Senegal. 1982

83

12.

Source: World Bank The cast Asian Miracle.

Korea and Venezuela provide an extreme example of the contrast. In 1985 public expenditure on education in Venezuela was higher as a percentage of GDP than in Korea: 4.3 percent compared to 3 percent. However, more than 40 percent of that public education spending went to higher education in Venezuela compared to 10 percent in Korea. As a result, more than two times as much in GDP terms was available for spending on primary and secondary education in Korea. This saturation approach at the lower level in Korea brought girls into school with all the benefits for children's health and education that are associated with mother's education.

Ironically, total enrollment rates at the tertiary level are higher in East Asia than elsewhere as the private sector has expanded to absorb the high demand generated by the much larger pools of graduates of good quality public secondary schools.

Structural Adjustment Can Reduce Poverty.

Let me go to my second point, about the benefits of structural adjustment for reducing poverty. For many countries a period of structural adjustment is a necessary first step on the path toward economic growth. People often hold this adjustment, associated with recession and cuts in public social sector spending, responsible for expanding and worsening conditions of poverty. However, we must ask whether or not the poor or would have benefited from less adjustment. The answer is almost certainly not. In Lima, Peru, the poor suffered disproportionately between 1985 and 1990, when President Garcia attempted to reactivate the economy by stimulating consumer demand, raising minimum wages, reducing taxes, and postponing external debt payments.

After an initial spurt of growth, the lack of adjustment led to an estimated 55 percent decline in average consumption, and a 60 percent decline among the poorest 20 percent of Poverty increased from less than 1 percent of the population to mot-e than 17 percent.

In Latin America throughout much of the 1980s, lack of adjustment was associated with high and rising inflation. While inflation stabilization usually means more unemployment and lower real wages in the short run, accelerating inflation also reduces real wages and increases poverty. Using data for 1977' to 1989 for seven Latin American countries, Cardoso found that real wages fell by about 14 percent when inflation doubled. She concludes that while there were years in which real wages declined in response to stabilization policy, the decline caused by a lack of policy and the resulting high inflation totally dominated the scene between 1977 and 1989. This is particularly significant given the findings of Morley and Alvarez. In their study of the 1989 recession in Argentina, they conclude that the decline in real wages caused by inflation was one of the most significant contributors (much more so than unemployment) to the rise in poverty during this period. Similarly, in a subsequent study of Brazil, Cardoso reports that real wage losses in the 1980s hurt all groups including the poor [they hurt the middle class the most), and that increases in the minimum wage worsened inequality, probably by reducing formal sector employment. By 1974-91 reducing the rapid inflation that erodes real wages, adjustment policies may actually prevent a worsening of poverty and hunger.


Figure 1 Premium on the parallel market for foreign exchange.

Lack of adjustment is also associated with import substitution facilitated by trade protection and overvalued exchange rates. The combination tends to lead to capital-intensive industrialization, which limits labor demand and weakens the incentives for the productivity gain that help drive up wages. If labor demand is weak, there is little hope for improvements in employment or the wages of the poor. As I mentioned in invoking the experience of East Asia, growth in labor demand is a critical component of shared growth that benefits all groups.

Unfortunately the best evidence for the effects of lack of adjustment on the poor and on poverty and hunger comes from Africa. Africa's poor growth performance in the 1980s and the failure to reduce poverty were caused by many factors, including severe terms of trade shocks and low initial levels of human capital. However, lack of adjustment also played a role: exchange rates were consistently overvalued (in countries with flexible rates), resulting in high black market premiums, and trade regimes were highly distorted with high non-tariff barriers (see figures 2 and 3). High black market premiums reflected governments' efforts to defend overvalued exchange rates by restricting access to foreign exchange. It was the poor who suffered the most from resulting higher parallel market prices for imported goods and from lack of access to highly rationed investment and consumer goods.

Of course, structural adjustment is almost always recessionary in the short run, implying employment and wage declines and reductions in public services. The poor may be affected by these changes, and even if they are affected proportionately less than other groups, they can least afford any losses. However, initial conditions in the world's poorest countries, where chronic hunger is great, and the nature of adjustments needed in those countries imply that the poor lose relatively less than we might think, and can have offsetting gains as a result of adjustment reforms Let me suggest at least four ways in which adjustment can help the poor.


Figure 3. Outward orientation of selected country group, 1965-85.

First, adjustment policies, especially devaluation and real depreciation of the exchange rate, raise the producer price of agricultural tradables. Among economies with the largest numbers of poor and hungry are those with large agricultural sectors producing tradables, and within economies, many of the poorest houses holds are in the agricultural sector Morley of the Inter-American Development Bank points out that although recessions in Latin America hurt the poor, in at least one case, Venezuela from 1981 to 1986, rural poverty declined during a recession, and that during the adjustment-led recoveries the decline in rural poverty has generally been greater than the decline in urban poverty. They also note that in Costa Rica, even though per capita income in 1987 was still below its pre-adjustment 1980 level, poverty had declined because the rural poor gained from adjustment reforms.

Second, elimination of subsidies to owners of capital through directed credit programs and through preferential access to rationed foreign exchange means the poor may gain access to services and goods they could not obtain, and may enjoy lower prices for those services and goods. In Africa, where rationing was most severe, the urban poor benefited quickly from the elimination of such subsidies.

Third, stabilization and adjustment reduce inflation, which, as I mentioned earlier, is associated with declining real wages, and especially hits the urban poor.

Fourth, in Africa, deregulation of the public sector monopolies of marketing boards raised rural incomes by eliminating the large taxes on producers extracted by the marketing boards At the same time, consumer prices of food staples have not necessarily risen, because limited supply kept parallel market prices so high in the pre-adjustment period. In Tanzania, real consumer prices for maize, rice, and beans all fell sharply between 1985 and 1987, when food crop marketing was first being liberalized, and even in 1992 were below the levels of the early 1980s. At the same time, the rural poor—the poorest in most countries and the most likely to suffer from chronic hunger—are relatively insulated from rises in the official prices of some consumer goods following depreciations, if only because they often rely heavily on nontraded food goods for their own consumption and because they had no access to cheap, but rationed, food imports before.

Finally, one effect of adjustment, often decried, is probably neutral in its effects on the poor. Cutbacks in spending on social programs do not hurt the poor, at least in the poorest economies, for a simple reason: the poor benefited relatively little from them in the first place.

None of this is to say that we should be sanguine about the design of adjustment programs Adjustment programs can and should be better designed so as to maximize their effects in reducing poverty. Where general food and energy subsidies are cut, the resulting fiscal resources can at least in part be directed toward targeted food programs for the poor. Where social sector spending is cut, the cuts should come from reductions in the types of social services that benefit the rich, and from reductions of redundant and politicized employment rather than from reductions in expenditures on drugs, fuel, books, and the other complementary inputs that ensure adequate quality for the poor and others. More emphasis on reducing deficits by enforcing broadly based and progressive taxes and by eliminating exemptions and loopholes that favor elites and less emphasis on cutting public investment in rural roads and schools is clearly in order.

These aspects of better design imply strength the adjustment process, not weakening it. Think of adjustment as a difficult political and social process of taking away privileges enjoyed by the elite, such as special access to economic favors and to social subsidies. In this light, better design of adjustment simply becomes another aspect of what I have called shared growth.

Transfers Cannot Substitute for Shared Growth and Adjustment

Finally, I come to my third point. During the adjustment process, transfers and other compensatory programs to redistribute income to the poor can also make sense and should certainly be tried, especially because even a small drop in income during a recession can take the poor across the line into chronic hunger. However, transfers, targeted employment, and other short-run safety net programs cannot substitute for a political shift to shared growth and the development of a new social and political consensus In the short run, such programs are easy to mount because they do not require contesting the economic position of the elites, especially given that international resources can usually be galvanized for these attractive clearly pro-poor programs. (In fact they are not easy to mount all that quickly.) However, without a new consensus, widely shared, they will be difficult to sustain fiscally, and thus politically, and to the extent they compete with scarce local administrative, technical, and political resources for implementing more universal programs, they present some tradeoff for those concerned with a frontal attack on the causes of poverty.

Conclusion

Let me conclude by restating my main objective: to convince you that you cannot ignore the need for economic and adjustment reforms if you want to eliminate hunger. Transfers and targeted programs can help, but they are not a substitute for the fundamental challenge of developing a new consensus around the idea of shared growth and the need for structural adjustment.

Reasonable people with reasonable skepticism will ask: how can we propagate the idea of shared growth in settings where it hasn't taken hold? After all, in East Asia, shared growth emerged as a reaction to specific events after the war.

I don't pretend it is an easy task, but I do see reasons for optimism. In Latin America, for example, the recent efforts of government leaders in Chile, Costa Rica, Mexico, and Peru represent the beginnings of a new consensus about the need to ensure that all groups benefit from growth To build on those efforts and to extend them to other regions, the international financial institutions can focus more on the need to develop some social consensus. A technocratic approach is not enough And community and nongovernmental organization groups can focus more on the reality that economic reforms, including structural adjustment reforms, are politically difficult to undertake precisely because they take away the elites privileges, and recognizing this, might take up anew the mandate to represent the interests of the poor in pushing for such reforms precisely because the poor stand to gain from them.

Notes

1. The views expressed here do not necessarily reflect those of the Inter-American Development Bank or of its members. A note on which these remarks are based, including technical references and sources, is available from the author.

2. World sank' The East Asian Miracle: Economic Growth and Public Policy especially chapter 4 (Washington, D.C Oxford University Press, 1993).

3 Paul Glewe and Gillette Hall, The Poor in Latin America during Adjustment: A Case Study Of Peru, 198590, World Bank Living Standards Measurement Study, Working Paper No. 86 (Washington, D C: World Bank 1992).

4. Eliana Cardoso, "The Macroeconomics of Poverty in Latin America" (Boston: Tufts University and National Bureau of Economic Research, 1992).

5. Samuel A. Morley and C Alvarez, "Recession and the Growth of Poverty in Argentina" (Washington, D C.: InterAmerican Development Bank, 1991). Processed.

6 Eliana Cardoso, "Cyclical Vacations of Earnings Inequality in Brazil," Revista de Economia Politica (forthcoming).

7 Samuel A Morley, Structural Adjustment and the Determinants of Poverty in Latin America (Washington, D C: Vanderbilt University and Inter-American Development Bank, revised March 1993). Processed.

Discussant remarks

Carlos Heredia

As Dr. Birdsall has pointed out, high growth rates are not enough to tackle poverty and hunger In 1993 a greater percentage of the population of Latin America is struggling with hunger and misery than in 1980, despite the claims by the governments and by multilateral institutions that the right policies are in place We have countries like Venezuela, in which rates of annual growth of the gross domestic product of 9 percent do nothing to alleviate the poverty of the majority of the population.

We can no longer bear with this increase of misery and social degradation. This is why civil society is mobilizing, through its institutions and organizations, to take care of the problems that governments are unable or unwilling to tackle. The World Bank's poverty alleviation programs do not attack hunger at its roots. Rather, World Bank supported macroeconomic policies tend to polarize our societies by concentrating income and resources in the hands of the few, and narrowing economic and social opportunities for the poor.

Social development programs compensate for the damage done by structural adjustment only to a very limited extent. Civil society cannot and will not remain idle in the face of widespread hunger, and yet hunger is not the only challenge we face. We must also grapple with the monolithic nature of World Bank policies and operational procedures, which serve to shut down the voices of civil society.

A strategy by civil society to combat hunger is not merely an issue of economic policy It is above all a political issue NGOs and other organizations of civil society cannot afford to deal only with social policy, while the economic and political elites, the establishment, make all major decisions about macroeconomic policy. It has been said, and it cannot be repeated enough, that a good social policy starts with a sound economic policy, and our definition of the latter is one that benefits all groups of society, not only those that have political clout or economic might. In Latin America four out of every ten people are suffering hunger as we speak. Where are their voices in this debate? The World Bank, despite claims to the contrary, appears to have a laissez-faire attitude toward hunger in the same fashion that a military president of Brazil said in the 1970s, "Brazil is doing fine. It is the people who are doing poorly."

Let us listen to the people to find out what is really happening and what people really want. The people I work with in peasant communities in rural Mexico want credit, available in a timely manner and in sufficient amounts to enable them to finance their small-scale productive operations. They don't want charity, they don't want aid They want credit What they actually get is educed credit for the production of basic goods and basic grains and for regions considered to be less productive, and a preferential targeting of scarce credit funds to agribusiness.

What small farmers want is to stay and work on their land, but they are being forced to migrate to cities, or in the case of Mexico, to the United States, because agribusiness controls not only the land, but the resources needed to make it productive.

People want food security, by which they mean the ability to either purchase or produce the food they need. But under World Bank policies, more and more countries are pushed to increase their agricultural exports while increasing numbers of their people, including their farmers, go hungry.

People want long-term job creation programs and income-generating activities, and they want to earn a decent living from their work. But what they get is so-called poverty alleviation programs, which are often, as in the case of Mexico, controlled by political elites who choose the beneficiaries on partisan grounds and are immune from any democratic means of accountability. They also get wage suppression as a condition for foreign investment. For industrial workers in Latin America, this led to a 35 percent drop in wages between 1980 and 1991, according to the international Labour Organization.

People want to break out of the cycle of poverty. Instead, poverty is on the rise. In Brazil, the world's third largest food exporter, where per capita income is now US$3,000 per year, the United Nations says that the number of people living on less than US$1 per day increased by 40 percent during the 1980s. That is why the core of Brazil's hunger problem is not food supply, but purchasing power.

Let's go beyond the numbers and look at the human dimension of all this. And remember that these effects are not separate, not discrete They combine to overwhelm individuals and communities. Let's take the case of Maria Martinez, an Indian-Mexican woman in the state of Oaxaca in the south. Maria has to work sixteen hour days while the men of the household go to the United States as migrant laborers, because as small farmers they cannot compete with cheap food imports. She has no voice in local affairs because elections are stolen. She has had to pull her two older girls out of school to help her with her work on the farm. She has no access to credit, to health care, to education. The communal land she lives on and around which her cultural and religious life revolves is now for sale to the highest bidder, thanks to World Bank privatization schemes. Her family can barely survive, and she is one of the 17 million Mexicans that according to World Bank statistics earn less than US$350 per year.

Contrast this with the fortunes of Carlos Slim, whose assets grew by US$1.5 billion thanks to his purchase of Mexico's state-owned telephone company, which was recently privatized. This amount is roughly equivalent to the 1992 budget for the social investment fund to address the needs of 17 million Mexicans living in misery.

It is because of women like Maria Martinez and men like Carlos Slim that we must not only address the immediate consequences of hunger, but also the urgent need to come up with new development alternatives that, unlike structural adjustment, put up front the needs of millions of unemployed, underemployed, hungry, and landless people in our countries. We are not only talking about the countries of the South. Millions of people are also hungry in Europe and in North America, which also struggle with the enormous contradictions in these societies.

The best development strategy for a given society will be the one that, first and foremost, derives from the population's expressed needs and priorities. The basic criteria for assessing the soundness of any strategy should be the following. What is its contribution to ending misery and decentralizing power? What is its environmental sustainability? To what extent are governments and multilateral agencies held accountable under this strategy, especially to the poor, who are supposedly the beneficiaries of these policies? This approach implies a direct involvement of small producers, in agriculture, industry, and services, that allows for economies of scale and technological advances to work, while being flexible enough to permit the creativity of each producer to flourish. Strengthening small and medium size business at the regional level is extremely important, because that is the basis for economic and political decentralization.

Unfortunately, what Josue Castro said about Brazil fifty years ago-and fifty years is the lifetime of the Bank—not only remains true today, but applies to an increasing percentage of the population in countries of both the North and the South He said, "Brazil has a population of insomniacs those who cannot sleep because they are hungry, and those who stay awake out of fear of those who don't have anything to eat."

Hunger is a human, not a technical, drama. It affects us all one way or another. The Bank has to look beyond the statistical characterizations of poverty and wake up to the call of the poor. There is no reason, no argument, no theory that can justify the persistence of hunger. We are out of time, and we will accept no more excuses. The Bank has to change.

I will now briefly address some of the points Nancy Birdsall raised. I found her approach of shared growth interesting, although it is unfortunate that in my home country we have not been able to witness that. I am being educated about economics in Southeast Asia by friends in the Bank and by friends in the NGO community in that part of the world, but in Mexico, we have not had that kind of growth. In fact, we are having very low growth now, despite pledges and promises that with structural adjustment, which has been ongoing for more than ten years now, we would have higher growth. The rate of growth in Mexico for 1993 is projected at 1.3 percent, and it was supposed to be 6.0 percent to cope with an increasing work force going into the labor market.

We have not had that kind of growth because of three main factors. The first factor is because we have had a deliberate strategy to suppress wages, a deliberate strategy to suppress labor rights—and this came up during the North American Free Trade Agreement (NAFTA) debate—precisely because the Mexican government refused to include labor rights, industrial organization, collective bargaining, and the right to strike in the NAFTA side agreements to lock in the high productivity/low wage model.

The second factor is that we do not have a democratic system in place. We do not have a checks and balances system; we do not have an independent judiciary; we do not have clean, fair elections. So when people are not free to express their will to change the government, little can be done to attain shared growth.

And the third reason is that economic policies have been designed largely, supposedly, to address the issue of poverty and poverty alleviation, but they have fallen far short of most people's needs. We are told that they will mature over time, and that the benefits of adjustment will be found at the end of the road.

When one of the top Mexican bankers was asked, "When do you think the benefits of adjustment from 1982 to 1992 will materialize for the poor?"—we had asked the Bank the same question and Bank staff said maybe five years—this banker said, "´Nell, maybe twenty-five years."

We have asked the Bank to work with us on this. We wrote a paper, a research report, on structural adjustment in Mexico, and we are discussing it with the Bank. We invited the Bank to go and visit the communities with whom we work in Mexico, and they said, "Fine, we'll go, we'll visit the communities." That was in October. Today, what do I find on my desk? 1 find a fax from the Bank telling me that well, the Bank missions will visit more communities, but only after close consultation with the Mexican government, and not necessarily through our NGO.

So I put forward the challenge again to the Bank. Are you afraid of facing the poor, face-to-face, in a setting in which you can exchange views about your programs? What is wrong with doing that? What is wrong with talking to the very beneficiaries of your policies?

Workshop spokesperson remarks

Shafika Nasser

I find myself in a very awkward position, because being a physician and nutritionist speaking to economists, we are always at a disadvantage. Yet in the world of today we always believe in, and we are trying to push forward, the idea of interdisciplinary approaches, particularly to a problem that affects a lot of people today, and that is the problem of hunger.

A few years ago, with the green revolution, with our knowledge of nutrition, we thought the world would get rid of malnutrition, as we call it technically. But today we are seeing more malnutrition, more starvation, and more deaths from starvation than ever in the world.

The group that met yesterday to discuss macroeconornic reforms came up with about eleven items, but then we decided that we could put them together in fewer visions. The first of them would be the vision that by the year 2000 we will have more participation by people in developing macro-economic reforms that affect their lives. These people have to be informed to be able to discuss and choose what is best for them, because it is going to affect them. As a physician, I consider this as a sort of informed consent. We have to develop the tools and mechanisms and refine them, instead of denying that it is feasible. Participation should be not only by the poor, but by all sectors of civil society. Mr. Preston has said that he wants to ensure participation of the poor in the development as well as the implementation of projects. This is a very big statement, and we hope it will be fulfilled.

The second vision is that we would like macroeconomic reforms to be people-centered by the year 2000 with people's well-being, the investment in human beings, measured not only by progress, by economic development, by monetary measures, but by social development criteria The human development index should include measures of nutritional status. When the United Nations Development Programme has been trying to put forward various indices that could be used for longevity, life expectancy, education criteria, and monetary criteria, but I think nowadays we have to concentrate on nutritional criteria.

The third vision is that by the year 2000 we would like the progress of countries to be measured correctly, taking into consideration natural resources that have been depleted.

The fourth vision is government priorities. We would like to see that the burden of debt is faced, because when governments decide they want to cutback, they usually cut expenditures on health, education, or subsidies of essential foods. We have to reach a consensus as to how much of this could be included or not included in an adjustment program.

The last vision is equity. By the year 2000 we would like to see macroeconomic reforms directed to address gender equity between men and women, inter-regional equity between people and children, and designed so as to create more opportunities for people.

In short, we would like these visions to be covered in our reflections, and I was glad to hear from Dr. Birdsall that some of the visions—at least the first one were part of her intervention.

Workshop spokesperson remarks

Nancy Alexander

The workshop group asked me to highlight areas of agreement and disagreement

First is the issue of participation Mr. Preston has called for participation to he the norm in Bank projects, but there is a great silence about participation in macroeconomic reform policies As it stands now, only a handful of government officials, principally the finance minister of a country, shape economic reforms with the donor institutions. However, our workshop thought that representatives of local communities, unions, farmers, women's groups, environmentalists, consumers, and so on should have a voice in shaping the economic reforms as well as the projects that shape their destiny.

NGOs generally felt that such participation was vitally important in relation to the transparency and accountability of Bank-funded operations. Many Bank staff felt otherwise. This is puzzling to me Bread for the World works to shape the United States' adjustment program every day: its tax policies, its deficit reduction strategies, its fiscal priorities, and so on Clearly the United States has a richer infrastructure in democratic institutions than, for instance, Mali. But it would seem to be a necessary goal to build the capacity of communities and organizations to shape economic reforms This can only happen if adequate information about proposed programs is available to them. Currently, information is not generally available to the people or to the representatives of all the stakeholders.

Information should also be made available to government ministries other than the finance ministry—in a way that ensures that they have a role in shaping policies that benefit poor and hungry people and protect the environment. The resources of other donor agencies with a strong knowledge of and experience in reducing poverty and hunger, such as the United Nations Children's Fund and the United Nations Developments Fund for Women, should regularly be called upon I understand that this is not currently the case.

The second issue is equity Our recommendation is that the Bank and borrowing country governments do more than minimize the adverse effects of adjustment by integrating relief measures, which are often too little too late, into reform packages. The Bank and governments should ensure that poor people, especially women, benefit.

Although economic growth is important for the reduction of poverty and hunger, the nature and pattern of growth is critical. The Bank and governments should promote a development strategy based on the principle of equity, with a goal of ensuring that the productive capacity of all people is fully realized.

The group was strongly in favor of the following declaration from the International Conference of Nutrition: "Our priority should be to implement people-focused policies and programs that increase access to and control of resources by the urban and rural poor, raise their productive capacities and incomes, and strengthen their capacity to care for themselves." We want to see Bank policies that do that. Specifically, the Bank needs to emphasize strategies to eliminate gender bias, promote land reform and secure tenancy, reduce massive income differentials, and give priority to hunger prone groups and regions.

Policy dialogue between governments and civil society and between the Bank and governments should result in adjustment packages proposed to the board that are explicitly designed to invite participation, to meet targets that can be monitored during a specified time frame, and to give feedback to ensure that mid-course corrections are made as necessary to achieve goals These goals should include human development and quality of life criteria, not just economic criteria.

The third issue is government policies. There was some agreement that progressive taxation policies that are actually implemented should help rectify skewed, unjust patterns of growth and income. The participants also agreed that excessive military expenditures should not be allowed to sap resources that could otherwise be used for investments in people and productive capacity.

Most participants in the workshop agreed that relieving debt is important so that it does not create ate an unreasonable burden in relation to the size and dynamism of an economy. However, the participants were unable to agree on how to relieve debt, including the growing proportion of multi lateral debt. People from developing countries stressed that these heavy burdens make them vulnerable to and too dependent on the conditionality imposed on their governments by the international financial institutions. They also disagreed about the implications of a double standard relating to the enforcement of adjustment conditionality, one standard for rich countries, another for poor countries. For example, the United States, while still the world's largest economy, is the world's largest debtor, has the world's largest military budget, and is the world's largest arms merchant Like many other powerful economies, the domestic U.S. subsidies, especially agricultural and textile subsidies, and other protectionist policies make for an unequal global playing field.

Bank officials contended that poor countries should continue to liberalize their economies despite the vagaries of external conditions Many NGOs argued that an emphasis on servicing fickle demand in rich countries must be balanced. with the need for self-reliance.

The United States considers the production of certain crops and manufactured goods as essential to its national security, and some NGOs argued that the standard of security should be afforded to developing countries as well.

Floor discussion

A number of participants commented from the floor; then the speakers responded

Participants' Comments

First floor participant: When the World Bank attempts to implement structural adjustment in any country, this is viewed as interfering in the country's natural sovereignty This intrusion is tolerated only if the assistance is sufficiently badly needed Therefore, the Bank should revise the methodology for having the poor participate in discussions with governments so that this becomes standard procedure.

Second floor participant Carlos Heredia, what country in the world, at any point in time, would you hold up as a model for the type of policy that you were advocating?

Third floor participant: This morning Ismail Serageldin suggested that we keep in mind equity, stability, and participation, and many other speakers raised these same issues. I wonder if we looked not only at equity, but also at stability and participation, whether there would be such a model.

Fourth floor participant In reference to Carlos Heredia's statement on structural adjustment, I would point out that a recent study by the United Nations and Mexico's Department of Statistics shows that poverty declined from 18.8 percent in 1989 to 16.1 percent in 1992. Wages have not been suppressed. Real wages in Mexico increased 30 percent in real terms in the manufacturing sector between 1988 and 1992. The rural sector has declined, largely because it was heavily subsidized, and total credit to the private sector increased by 12 percent in real terms.

Regarding Nancy Birdsall's point about protection for the private sector, Mexico opened its economy, but left its agricultural sector virtually closed. For example, the price of maize was almost twice the international price until very recently, and this shielded the poor from some of the consequences that rapid opening would have brought about. More recently, the government replaced the price subsidy with an income support scheme, so now Mexico has the best of both worlds in that the rural poor are protected, but at least agriculture has the right incentives.

Finally, the Mexican government is aware of the problems of income distribution, and in recent years expenditures in the social sectors have been increasing faster than any other components in the budget, and according to a recent budget proposal, in 1994 total expenditure in the social sectors will represent more than half of total programmable expenditure.

Speakers' Responses

Carlos Heredia: I do not hold up any one country as a model to be imitated or to be taken as a blueprint for any other country What we are advocating is a set of policies that put people first The way a particular country implements those policies is subject to that country's particular political and geographic conditions.

In regard to the proportion of the population in Mexico that is living in extreme poverty, according to our case studies and regional statistics, poverty has worsened, even during the last three years Wages have been are being suppressed in Mexico Let me give you an example. Ford Motor Company wanted to increase wages in 1992 over the wage ceiling fixed by the government and strictly enforced There was a 9 percent wage ceiling, and Ford wanted to raise wages from between 12 and 15 percent Mexico's secretary of labor called Ford to say that Ford could not go above the wage ceiling.

Now as for the decline in the rural sector, I do not take the rural sector as a whole I consider the rural sector by looking at small producers and at agribusiness and big producers, and I do see a strong bias in the policies induced by the Bank and those adopted by the Mexican government toward big business, agribusiness, and big producers I do not think it is acceptable to take overall figures and then say that more money is going into the countryside, so there will be more production and people will benefit That is not true We have to look at the aggregate figures for particular subsectors of the rural population and sin how they are faring And I have to say that the statistics have been manipulated in Mexico in such a way that even the Financial Times, which cannot be accused of populism or leftism, came out with an article that stated how unbelievable it is that the Mexican government claims that the unemployment rate in Mexico is 33 percent. Not even the people who compile those statistics believe that.

Ismail Serageldin: In connection with the question on equity, sustainability, and participation, the point Carlos Heredia made is important, that even if things may be improving in the aggregate, they maybe worsening in certain areas, and there may be pockets that need special attention It is not acceptable if while many things are improving, for the few or the not so few things continue to be bad, and even less acceptable if they are worsening.

Nancy Birdsall: One of the speakers said that there must be some participation through civic society or civil society in the discussion of economic policy reforms in developing countries.

That is something we can all agree with However, I would see the issue as one not of whether economic reform and adjustment are necessary, but of improving the design of economic reform and adjustment.

If we start from the premise that adjustment takes away privileges the elite enjoy, it is easier for us—both those from nongovernmental organizations (NGOs) and those representing international financial institutions to arrive at some sense of common vision about the need for and design of these reforms if we are to overcome hunger. For example, where food and energy sub sidles are cut because of adjustment programs, let us ensure that the new fiscal resources are targeted to the poor, if necessary, through food supplementation programs Where social programs are cut, let us ensure that the cuts come from those programs that benefit the rich, and not from the basic education and health services that benefit the poor Where deficits must be brought down, let us work together to ensure that more of the success in bringing down deficits comes from developing broadly based, progressive taxes that do actually tax the relatively rich, and not only from cutting public investments In schools, roads, and so on that benefit the poor.

Now the question about East Asia. All these countries are not a model for everything. On sustainability, I think we can take heart that many of the countries in East Asia, especially in the last five years, have vigorously adopted programs to deal with natural resource degradation, pollution, and other urban problems, in part because incomes are rising.

On participation, clearly different models exist We may not believe that the model in East Asia makes sense for other parts of the world. Nevertheless, we have to recognize that the likelihood of people being more involved in both political and economic decisions increases in those countries whose approach is along the lines of what I called shared growth: not taxing agriculture, pushing exports, not closing up economies, and so on.

What I see in countries such as Costa Rica and Chile, and especially and increasingly in Mexico, is an eagerness, and certainly a willingness, on the part of powerful political groups to extend the difficult economic reforms they have undertaken to embrace larger social reform as well We have to recognize that shared growth and a social agenda are also extremely difficult from a political point of view, and so these governments can benefit from and need the support of their citizens in a participatory way in changing things. This is where I see tremendous potential for much more constructive dialogue between the multilateral institutions and those of you who are concerned with these vital issues.

Ismail Serageldin: The real answer to the issue of participation by the poor in the design of adjustment programs is not whether a World Bank delegation will somehow go and pick some representatives of poor communities at random from around a country and involve them in negotiations about the money supply or the interest rate, but whether or not the civil society in most developing countries can be strengthened. It is here that we need to take President Masire's words to heart, because he has had remarkable success in Botswana in maintaining an uninterrupted, multiparty, parliamentary democracy that has respect for human rights and pluralism, that is refocusing toward social benefits, and that is achieving universal primary education and reductions in infant mortality, and he stood today before us and said that there has to be a role for NGOs. With leaders like that, with that kind of openness in a country, and with a civil society actively affecting the policies of its government, the voice that will be heard in the debate and the discussion will be a pluralistic voice that will enrich the discussion. We must not set aside the invisible poor, those who are hungry and who have no political voice.

Special address: the scope for public action to reduce chronic hunger

Ketumile Masire

Our purpose in gathering together here is not simply to talk about ways of reducing global hunger, but to seek consensus on concrete actions that can be taken now that will make a difference. I hope this conference will be a turning point in moving in that direction.

The response to the World Bank's initiative in organizing this gathering-inspired by the example and leadership of Congressman Tony Hall— is heartening. I am encouraged by the active participation in this conference of representatives of so many NGOs that are directly involved in activities aimed at overcoming hunger Their presence is a further sign of the growing cooperation between international development agencies, governments, and citizens' movements This could be a powerful coalition.

The task we face is a formidable one, but I am confident that by working together we can make real progress toward our ultimate goal of ensuring that no one, however poor, anywhere in the world goes to bed hungry Hunger is not just a problem the developing countries face. The hungry are found everywhere in the North and in the South—and this need not be so We have enough land and we possess the technology to produce enough food to ensure that everyone has enough to eat In short, the problem is essentially one of policies and purchasing power The challenge is to find effective ways to provide households with food and economic security.

I have not come to this meeting as a nutrition expert, or as a food economist, or even as a farmer, although I am one I am here as a political leader, because I recognize that hunger is not only an economic problem, but is also a political problem.

As we have heard, chronic poverty affects more than a billion. people Perhaps a better term to describe their hunger is as hidden, because it less obvious than the acute hunger of those suffering from famine, and consequently tends to be a neglected issue Food is the most basic of our needs It is regrettable indeed that despite so much affluence in the world, so many people go hungry.

Let me explain what I mean Other speakers have rightly distinguished between acute hunger caused by short-term emergencies and chronic hunger or long-term "endemic deprivation," to use a term favored by Professor Amartya Sen. Taking the case of acute hunger, I am convinced that there is no famine that we cannot overcome if we have the political will to recognize the onset of famine conditions and to mobilize public and private resources, locally and internationally, to deal with it We demonstrated this last year in southern Africa when we faced the worst drought in living memory, and overcame it. In South Africa alone, which is the largest producer of food in the region, cereal production fell from about 8.0 million tonnes in a normal year to 2.6 million tonnes. Throughout the region about 18 million people were short of food. Yet no widespread deaths occurred, and in some places children were even better fed than in years of plenty This was the result of improved food distribution by the famine relief programs mounted in the region.

When Botswana achieved independence in 1966, it was emerging from another terrible drought Its effects remain embedded in our collective memory. Through cash-for work programs and targeted feeding for school children, infants, and lactating mothers we managed to avert a disaster. At the height of the drought we were feeding almost one-third of our population It can be done. It was done.

Not all famine situations are acts of God. Some are man-made, such as those caused by civil wars. Such man-made tragedies derive from political misdirection, and their solution is, by definition, a political one. We, the political leaders, should always resort to peaceful resolution of conflict rather than the violence that is now afflicting the people of Angola, Burundi, Somalia, the Sudan, Bosnia, and Georgia.

The international mechanisms put in place after World War II—the UN system, the Security Council, UN peace-keeping forces, and the High Commission for Refugees-cannot cope with the terrible consequences of the breakdown of civil order occurring within member states.

Today the world faces a crisis that has grown to frightening proportions. The end of the East-West ideological conflict has lessened political controls in some parts of the world, but has also unleashed an outbreak of ethnic conflicts. The UN system was designed to take care of conflicts between states, but that is not the main problem facing the world today. We need new initiatives, new thinking, and a new political commitment to deal more effectively with the civil strife that now threatens all societies I look forward with keen interest and concern to hearing the proposals that Secretary General Boutros-Ghali may make later today on these matters. However, I am personally convinced that above all else we must seek to strengthen, and not to weaken, the UN system. We must give the secretary general the resources and the full mandate to assist effectively countries that are in domestic turmoil.

Regional organizations have a role to play too. One of the initiatives of the Global Coalition for Africa has been to explore ways to strengthen the role of the Organisation of African Unity in conflict resolution. More active mediation is one possibility. A pan-African mechanism for mobilizing peacekeeping forces is another. The key ingredient for success is imaginative and constructive political leadership I would like you all to note that as co chairman of the (Global Coalition for Africa, I will continue to dedicate myself to this task that I believe is so important for the future of our continent.

The suffering from famine is deeply etched in our conscience because of the high media attention it is given and because of the large numbers affected. Estimates indicate that at any one time between 40 and 50 million people around the world are affected. Nonetheless, I believe that we should give most time during this conference to discussing ways to lessen chronic hunger, the form of hunger associated with poverty. By that I mean a household's inability to produce enough food or to obtain the income to buy enough food for the family Chronic hunger deserves most of our attention because it affects such a vast number of people, and because we seem to have been less able to tackle it Although it is more deeply entrenched, it is not intractable.

With political determination governments can do vastly more than what is being done today to reduce chronic hunger We know this is true because countries at the same level of per capita income vary significantly in the proportion of their population that suffers from hunger.

During the 1960s and 1970s Sri Lanka showed us how a developing country could successfully administer a food voucher program that greatly reduced malnutrition throughout its population Costa Rica has much less malnutrition than its neighbors in Central America Since 1950 China has also achieved remarkable improvements in nutrition, even though it also suffered the worst famine in human history in the late 1950s In Africa we can draw similar lessons from the experiences of different countries Overall, however, the number of people in the world suffering from chronic hunger—roughly one in five is regrettably high and unnecessarily high We can and must do a much better job of targeting assistance to those most in need.

At the conclusion of the International Conference on Nutrition in Rome last year, governments committed themselves to preparing national nutrition strategies. It is quite tempting at such international events to make commitments that are no more than declarations on paper, and so many national strategies and action plans are being called for, such as environmental strategies, poverty strategies, sustainable development strategies, AIDS strategies, women-in-development strategies, health strategies, and water resource management strategies. Governments risk being overwhelmed. For this reason I fear that the call for a national nutrition strategy may be forgotten Let us therefore try to focus at this meeting on a few priority areas that governments could act upon and that are more likely to make a real impact on reducing hunger.

Acceptance of the hunger present in our societies is akin to an acceptance of poverty, and in that lies a great danger We see poverty as a long-term problem that countries will only overcome gradually as development takes place. The danger is that we will treat hunger in the same way, accepting it as a condition of underdevelopment, but that is a mistake. Hungry children become disadvantaged adults with low productivity This perpetuates the state of underdevelpment We can break this vicious cycle of poverty by targeting our efforts to reach those most in need.

Some have argued that for poor countries the only way out of the hunger trap is to become self-sufficient in food Sometimes people even argue that countries that promoted the expansion of cash crops did so at the expense of food crops, and in that way increased the prevalence of hunger. I do not subscribe to those views. In Botswana for years we subsidized production of our staple food crops heavily, even though the farming conditions we face as a semi-arid country are largely not favorable for cultivating food crops or achieving food self-sufficiency on a sustainable basis The soils are sandy and rainfall is erratic both over time and space. It is for this reason that our policy now is to achieve food security and not food self-sufficiency The revised policy gives farmers the latitude to produce crops of their choice, including cash crops, depending on the suitability of their land.

This food security policy has three components: · At the national level we follow our comparative advantage in producing livestock and drought resistant sorghum and other crops such as cowpeas and sunflowers We finance the importation of food to meet our food deficit by exporting minerals and manufactured products and by promoting tourism.

· At the household level our goal is to ensure that every family has sufficient basic income to buy the food it needs This means helping the food insecure groups by providing labor-intensive public works programs whereby people can earn a wage; distributing food rations to selected pregnant and lactating mothers, children under five, and those at school; and issuing food coupons to the destitute. This is in addition to our efforts to diversify income and employment opportunities in manufacturing, tourism, and other sectors of the economy.

· We intend to maintain a strategic food grain reserve equal to at least three months of consumption to cover future drought emergencies, which seem to befall us for three or four years in every ten.

Despite these measures, between 10 and 15 percent of the population suffers from malnutrition That is low for Africa, hut not low enough. We recognize that we need to improve the targeting and management of our food programs. I hope some of the priorities identified by the experts here today will help us to achieve this.

I started this address by emphasizing the political dimension of hunger. I recognize that in mounting public programs to combat hunger, different political problems must be faced. While I believe that over time the benefits of economic growth do trickle down and that poverty is reduced, as East Asian countries have dramatically demonstrated in the past ten years, it is nonetheless a slow process If we are to reduce the numbers who are hungry in the short and medium term, we can only do so by transfering income from the better off to those in greatest need.

Charity begins at home, and each country must play its part. My own country spends some US$14 million each year on domestic food programs The U. S. government, I believe, allocates nearly US$40 billion each year for such programs. However, for the poorest of the developing countries, external aid, especially food aid, is vitally important The United States has been a major supplier of food and we are grateful to them for that I am told that the U.S. Congress appropriated US$15 billion for food aid in 1993, but that at the same time US$3. 5 billion went for military aid. In the post-cold war era, 1 would hope that these two figures might be reversed To put these figures in the context of Africa, let me remind you that total external food aid to all of Sub-Saharan Africa is no more than US$1 billion per year.

The domestic food programs are only short term measures The ultimate goal, as I have already stressed, is to raise the incomes of the poor. The challenge for political leaders is to support programs that enhance their citizens' ability to be self-reliant. In developing countries this means supporting programs that include land reform and targeted credit for the poor who can offer no collateral, for example, along the lines pioneered by Grameen Bank in Bangladesh.

Above all we must work harder to overcome the discrimination women face Regrettably, they and their children constitute the bulk of the hungry In southern Africa 80 percent of the rural poor are women with no land, no access to credit, and usually no coverage by public services such as agricultural extension.

I believe that a heavy responsibility rests on the shoulders of political leaders to adopt policies that will help the hungry, but governments cannot shoulder this task alone They need to work with the private sector. In this context, let me underline the importance of well-functioning markets In developing countries the private sector is generally reluctant to invest in remote and rural areas because of the lack of infrastructure Governments under such circumstances are forced to establish agricultural marketing parastatals to encourage agricultural development by purchasing and selling produce For most small farmers this service is necessary for some time until the private sector is fully developed Unfortunately, experience has shown that such parastatal organizations tend to be inefficient, wasteful, and costly. Thus promoting the development of a strong and competitive private sector by creating a conducive environment for its growth is preferable in the long run. Private voluntary associations and community based organizations also have a major role to play.

As I said at the beginning, 1 am delighted to see so many NGOs participating in this conference. The growth of NGOs strengthens civil society and buttresses the growth of democracy. By promoting a participatory approach and actively involving the beneficiaries in hunger programs, NGOs foster sustainable development and self-reliance. They can achieve an impact beyond that of governments. NGOs have a vital role to play that is complementary to the role of government I am much aware of the important contribution that such organizations have made in providing emergency relief operations in Sub-Saharan Africa. For example, during 1987-90, on average, 20 percent of bilateral cereal food aid to Sub-Saharan Africa was channeled through NGOs In the case of noncereal food aid, about 30 percent was channeled through NGOs.

The experiences gained from our recent drought have demonstrated that hunger is a multifaceted problem. I am convinced that we have to act proactively to reduce the vulnerability of our populations to food shortages. The imperative need to ensure that no one dies of hunger is a challenge that confronts all humanity Our ability to meet this challenge will succeed only if we focus our efforts and share responsibilities. The alleviation of poverty is a long-term objective, but the reduction of hunger is an immediate challenge that we must take up and win. Let us all rededicate ourselves to that goal.