New WB Project Focuses on Poverty Reduction Through Industrialization

The World Bank’s Board of Executive Directors approved a $100 million loan to increase income generating opportunities for poor farmers in China’s Guangxi Zhuang Autonomous Region, through the establishment of cooperatives and partnerships with agribusiness enterprises in agriculture value chains and rural tourism.

In 2015, the government of China set an ambitious goal to eliminate rural poverty by 2020. One of the key poverty reduction programs is poverty reduction through agricultural industrialization, which aims to develop local agriculture-based industries by creating economic opportunities for poor rural households in partnership with various stakeholders.

“Farmer cooperatives play an important role in the agricultural industrialization approach by enabling farmers to engage with the rapidly changing food market, improving production efficiency, adopting new technologies and standardizing agricultural production. The Guangxi Rural Poverty Alleviation Pilot Project will support the establishment and strengthening of farmer cooperatives in ten counties in the karst and hilly areas to link poor rural households to the modern food value chains,” said Paavo Eliste, World Bank’s Lead Agriculture Economist and Team Leader for the project.

Project-supported activities will include: a cooperative development fund, which will provide grant financing to new or existing cooperatives for their investments in production, processing equipment and training; the provision of matching grants to finance enterprise investments that demonstrate innovative linkages and benefit-sharing arrangements with targeted cooperatives of poor farmers; the construction or improvement of rural public infrastructure, such as production roads, small-scale water storage facilities and irrigation systems, and public market facilities; setting up and operating Business Incubation Centers to support existing and start-up businesses in rural areas; and the scaling-up of the government’s comprehensive household credit rating program.

The Guangxi Rural Poverty Alleviation Pilot Project will cover 54 townships and 117 administrative villages, of which 95 are classified as poor villages. More than 85 percent of the residents in the project villages are ethnic minorities. Cooperative membership would target around 60 percent of the poor households in the villages, and women are expected to make up at least 40 percent of active cooperative members. About 64,000 households, or some 260,000 people, are expected to benefit from the project.

Guangxi, in south China, is one of China’s poorer provinces. Among a total population of more than 55 million in 2015, about 43 million live in rural areas and 4.5 million live below the poverty line. In the last two decades, the World Bank has been working with Guangxi to reduce poverty through a series of projects, notably the Southwest Poverty Reduction Project in the mid-1990 and Poor Rural Communities Development Project in the mid-2000.