Twenty-fifth Anniversary Session of the Governing Council of IFAD

Statement by Lennart Båge President of International Fund for Agricultural Development (IFAD)

Rome, 19 February 2003

Today we celebrate our 25th anniversary. We are proud of our achievements in fighting hunger and poverty. We are anxious and eager to do more.

We are fuelled by an inner rage when we see the gross violation of human dignity and human dreams that is the result of persistent poverty. Together with all of you, we want to strengthen our partnership and our common resolved to eradicate poverty.

I am grateful to the President of the Italian Republic, His Excellency Mr. Carlo Azeglio Ciampi, the Secretary General, His Excellency Mr. Kofi Annan, and His Eminence Cardinal Sodano, the Secretary of State of the Holy See, for being here today and expressing their strong solidarity and enduring support for the rural poor.

I also want to thank Mr. Jacques Diouf and Mr. James Morris for their contributions this morning and for working so closely with us to apply the strengths of the Rome-based United Nations agencies to the global problems of hunger and poverty.

Mr. Chairman,
Mr. Secretary General,
Your Excellencies,
Distinguished Governors,
Ladies and Gentlemen,

We mark IFAD’s 25th anniversary in a time of great global insecurity. I am deeply grateful that you have made it a priority to be here today in a time of great uncertainty with a risk of war.

But the fact that we are here together in this room is a sign not only of our commitment to the rural poor, but of our commitment to each other. Since the beginning of IFAD, all of us – OPEC countries, OECD countries and developing countries – have pooled our resources and knowledge to fight the scourge of rural poverty around the world.

Despite progress, our task is still daunting. Poverty is still with us. As you heard today, one in five of the world’s people live in extreme poverty and desperation.

Clearly, in our quarter century we failed to eliminate poverty. But I take heart because we have succeeded in four fundamental ways that will enable us to achieve our goals in the future.

Fighting poverty is now a global priority

Decision-makers throughout the world now know that the consequences of poverty – epidemic disease, migration, environmental devastation and armed conflict – do not respect national borders. They affect us all – no matter where we live.

The priority now given to fighting poverty is evidenced by the international community’s commitment to the Millennium Development Goal of reducing extreme poverty and hunger by 50% by 2015. Countries, UN agencies, international organizations, non-governmental organizations and many others are now guided by the same light – the light of the Millennium Development Goals.

Rural development is being recognized as a key to achieving the Millennium commitments

Our second area of success is the growing global awareness that we can only achieve the Millennium Development Goals by fighting poverty where it exists. Of the 1.2 billion poor people living on less than a dollar a day 900 million live in rural areas and depend on agriculture and related activities for their livelihoods. Through your efforts and those of our partners, we are making rural poverty a universal issue.

This awareness is critically important because funding for agriculture and rural development has dropped by 50% over the past 15 years – even though agriculture is the main income-earner, main employer and main engine of economic growth in most developing countries.

We all know that most countries that have halved poverty during the past 50 years have done so through a development process that started with growth in agricultural productivity, production and income. China and South Korea are examples. There are many more.

There are signs that we are learning from recent history and that the decline in investment in rural development has been reversed. Consider the global commitments made by world leaders at the 2002 Monterrey conference on financing for development. Consider that rural development is the theme of the next high-level session of ECOSOC. Consider that countries are using the power of the Millennium Development Goals to reinforce their own efforts to fight rural poverty.

There is progress

While the number of extremely poor people has remained the same over the past 15 years, the share of the global population that is poor has declined significantly. Hundreds of millions of poor rural people have overcome poverty. Never in the history of mankind have there been so many people who are NOT poor. Never in the history of mankind have so many poor people worked themselves out of poverty as over the past 25 years. The significance of this achievement is that halving poverty over 25years is do-able.

We know better what to do

The 4th and last achievement that I want to highlight today is the most profound and gives me the most cause for optimism. When we have succeeded, it is because we have listened to the rural poor. In our 25 years, we have learned more about how to win the battle against rural poverty. Today, we know much more about what works and what doesn’t. What we are doing today is based on decades of experience and practice.

Ladies and gentlemen,

Today I will highlight some of the lessons that we have learned – lessons we are sharing with our partners around the globe and with others who are joining the fight against rural poverty. Lessons that now form the backbone of IFAD’s strategic directions. Lessons that we are applying in some of the harshest and most remote parts of the world.

The poor must lead their own development

When we listened to the poor, we learned that to reduce poverty unequal power relations have to change to ensure that everyone has a voice in decisions that affect their lives. In response, we have worked with the rural poor to strengthen their own organizations so that the poor could advance their own interests. This approach must include ensuring that the poor are fully part of shaping national poverty reduction strategies (PRSPs).

We learned that for change to be lasting, the rural poor must be the driving force behind their own development. Only when this happens can we build a solid foundation for long-term peace, stability and sustainable development.

When the poor are empowered, communities become more resilient and able to cope with change, hardship and disasters. Fifty years ago droughts in Asia often led to famine. Today, it is no longer the case because the institutional capacity to respond has deepened and democratic structures have given the poor a voice and a say.

Today, in Africa, where 38 million people are threatened by famine, we see immediate causes such as droughts and floods. But its structural causes are rooted in the weakness of institutions and infrastructure, and the vulnerability inflicted by poverty. In Africa, the famine demands our urgent support but equal attention must also be given to the underlying causes.

The urgency of the need in Africa is made all the greater by the HIV/AIDS pandemic that threatens the very foundations of African societies. Fifteen years ago HIV/AIDS was not seen as a major problem because the rate of infection was low. Today, we see the devastating consequences of lost time in Africa where an entire generation of farmers is disappearing. Far more than a health issue, the social and economic impact in Africa is catastrophic.

While we engage in Africa, we must help prevent the same thing from happening elsewhere by building HIV/AIDS prevention and coping strategies into every project we do.

We are working actively with the New Partnership for Africa’s Development (NEPAD) to meet rural challenges on the African continent.

The rural poor are bankable

Beginning with our support for the Grameen Bank in Bangladesh in the late 1970s, IFAD has tested and supported micro-finance programmes around the world that enable groups of poor people to borrow and save. With small loans borrowers, especially women, made farm improvements, purchased seeds, livestock and equipment, and started small businesses.

With repayments near 100%, we learned that the poor are effective entrepreneurs – agents of change, rather than objects of charity. We later built upon our experience to develop entire rural finance systems that provide a ladder out of poverty.

Take our programme in Tanzania in a region where 90% of the rural people are poor. The programme builds micro-finance institutions that are owned and managed by the villagers themselves. It strengthens the capacity of these institutions to respond to the needs of the poor, creates a regulatory framework and links them to commercial banks. It also helps villagers learn to use financial services wisely. We believe the programme will help more than 1.5 million people transform their lives.

The poor must have access to land, water, information and technology

The rural poor, particularly women and indigenous peoples, told us that uncertain land tenure was a major barrier to development. In response, we supported farmers’ efforts to secure the right to farm their lands and to formalize traditional rights to use forests, rangeland and other natural resources.

We also worked on access to water. Water scarcity is perhaps the most rapidly growing global challenge to poor people’s livelihoods, as well as to peace and security. Large-scale irrigation projects are not enough and often not even the best way to serve the rural poor.

At IFAD we have focussed on small-scale projects designed and managed by local water-user associations. The results are improved agricultural productivity, a reduction in water-borne diseases and relief, primarily for women and girls, from the exhaustion of carrying water long distances every day.

The poor told us they needed information and better farming technology. In response, we supported research on the kinds of crops and livestock that poor farmers depend on and we helped develop agricultural extension services that meet their real needs, especially those of women. Agricultural productivity increased.

The poor need access to markets

Over the past decade developing countries have undertaken far-reaching reforms and adopted market-oriented policies. Caught in economic transition without skills and assets, many poor people were left behind. They told us they needed access to markets: to roads, skills, information and power to negotiate with more powerful market intermediaries. We responded by supporting farmer’s associations and providing training and financial services, which helped them participate in the new market economies. As trade liberalization and globalization expand, more opportunities will arise for the rural poor. But will the poor be able to take advantage of them?

When subsidies and trade restrictions distort agricultural markets and prices, poor producers will not benefit fully from their investments and may not be able to sustain them. Dealing with agriculture from a development point of view in the Doha Round of trade negotiations is perhaps the single most important action we can take to bring about widespread poverty reduction.

Women are agents of change

The rural poor taught us early on about the role women play in the rural economy. Women produce and prepare most of the food, generate income, search for fuel, carry water, and care for their families. They are the architects of family food security yet they themselves are often last in line – vulnerable to poverty, malnutrition, disease and despair.

About 70% of the world’s extremely poor people are women. In developing countries, women own less than 2% of all land and receive only 5% of extension services. Despite their important role in agriculture, African women receive less than 10% of all formal credit available to small farmers and just 1% of the total credit that goes to the agricultural sector.

Yet, our experience at IFAD has shown that with specific kinds of supports women can become the agents of change that ultimately transform their lives and those of their families, as well as their communities. What they need are things most of us take for granted – mutual support, training, the opportunity to participate in decision-making and access to credit. Much of this comes together in self-help groups.

Indigenous peoples require special attention

IFAD has been working with indigenous peoples since its inception simply because the majority of the Earth’s 300 million indigenous people are rural and poor. Our work with them has taught us much: the importance of secure land tenure, the value of respecting and nurturing diversity, the necessity of participatory approaches and the need toinvest over extended periods of time to achieve results.

The rural poor drive economic growth

The development of many industrialized countries was launched by growing RURAL productivity, incomes and surpluses.

We have learned from our work that reducing rural poverty should not be seen only as a humanitarian goal. In most low-income countries the rural poor represent the large minority, often the majority of the population. Raising the productivity and mobilizing the potential of poor rural producers would place growing income in their hands and generate food surpluses for urban populations.

Better-off groups in relatively advanced sectors usually enjoy access to institutions, productive assets, financial, technical and other services. If the poorer, rural part of the economy can be made more productive, these better-off producers will be able to build on growing rural output and buying power, to enhance their own production. Rural development and urban progress can then join together in a virtuous cycle, raising the economy to a higher path. A stagnant economy on the other hand will not only entrench poverty further but stifle growth across the economy.

If Africa is to grow by 7% to reach the Millennium Development Goal targets, much of the growth has to come from the rural economy.

Let’s consider the impact of IFAD’s investments for a moment. In the past 25 years the Fund has provided over 8 billion US dollars in financing to rural development programmes that leveraged a total investment of more than 22 billion US. We did this by leveraging additional contributions from external co-financiers and host country governments and institutions.

In this way, each IFAD dollar generated nearly two additional dollars for the rural poor. Currently, IFAD finances projects and programmes valued at about 1 billion US dollars a year. These projects provide support to an additional 10 million poor rural people a year – over 200 million since the inception of IFAD.

These 10 million are just the direct beneficiaries. We know that our investments in rural development help not just the rural poor but society as a whole. When we think about IFAD’s investment in rural development, it’s important to consider the catalytic effects on the economies of developing countries and the way that poverty reduction improves quality of life for both rich and poor by encouraging stability and enhancing security.

Fighting poverty protects the environment

The rural poor are often the first victims of environmental degradation. When they are desperate for food and income, they have no choice but to put pressure on the lands and resources they depend on for survival. The resulting degradation ultimately increases poverty by destroying the basis of their livelihoods.

But with the right kinds of investment, our experience with the rural poor shows that they can reverse environmental damage and greatly improve agricultural productivity – especially when traditional methods are encouraged.

More secure access to land, technology, financial services and the opportunity to organize themselves more effectively enable rural farmers to break the link between poverty and environmental degradation. This has global consequences because the rural poor are often the stewards of the world’s natural resources.

At IFAD we are applying all these lessons and sharing our knowledge widely. The results are encouraging. The poor are using credit and better technical methods to increase their productivity and incomes, and to protect the natural resources upon which they depend. At the same time they are gaining confidence, dignity, self-respect and power.

I saw for myself during a visit to the Maharashtra Rural Credit Programme in India in November how extremely poor women had raised their incomes and their position in their communities. I was struck by their self-confidence and their ability to share their opinions and to negotiate with government officials.

The women told me how participating in self-help groups had changed their lives.

One told me “I’m not alone anymore.”

Another said “I have the courage to go to the bank and ask for a loan.”

A third explained that “When one of us is beaten, we all go as a group to talk to her husband – together.”

In Maharashtra, I saw firsthand, what the formal external review found: “There are clear indications that IFAD has made direct and indirect contributions to achieving the Millennium Development Goals of eradicating extreme poverty and hunger, promoting gender equality and empowering women, and ensuring environmental sustainability.”

Mr. Chairman,

Over the past two years we have been strengthening IFAD to make it even more responsive to the needs of the rural poor. We developed an overall strategic framework last year to guide IFAD over the next three years. Then we aligned our regional strategies. We are now working to ensure that our resources are allocated to achieve our objectives.

We are deeply aware that the resources entrusted to us are to help the rural poor. Over the past decade IFAD’s administrative budget has been reduced or kept to zero real growth, while over this period our programme of work has grown by nearly a third.

We are determined to raise our efficiency even more. We are doing this by using information technology to strengthen the management of our financial and human resources and our administration. We are also enhancing our effectiveness by building stronger partnerships with other development agencies.

Our collaboration with our Rome-based sister UN agencies, for example, is greater than ever. They are also our partners in the Global Mechanism and in the International Land Coalition, both of which IFAD is proud to host.

We have also strengthened our cooperation with other United Nations organizations, the World Bank and other international financial institutions. Our long-standing collaboration with the World Bank has been deepened over the last year by our work together to scale-up rural poverty programmes in selected countries. With the Inter-American Development Bank we are developing a new partnership for rural poverty eradication in Latin America which will also engage other bilateral and multilateral agencies working in the region.

Partnership with civil society organizations has long been a key element at IFAD. Together we have joined hands from grassroots to global levels, to help empower the poor. In fact, almost all our programmes directly involve non-governmental organizations and civil society institutions as key partners.

Our long-standing collaboration with civil society is being complemented by a growing collaboration with private-sector entities. The challenge is to foster conditions that attract private sector investment for initiatives that increase the productivity of poor regions and poor peoples.

Mr. Chairman,

I am pleased to report that the Fund’s Member States have successfully completed the negotiations for its Sixth Replenishment. The consultation report sets out guidelines on major policy issues, including the performance based allocation system, field presence, results and impact measurement, a more independent evaluation function and an independent and external evaluation of IFAD. The report together with the replenishment resolution is before this Council for adoption. The agreed Sixth Replenishment is at a significantly higher level than the previous Replenishment, with many member countries from all parts of the world increasing their contributions substantially.

I am grateful for the trust you have placed in us.

I see this result as a first step towards fulfilling the pledges made at the Conference on Finance for Development last year to increasing development assistance and investing a greater share in rural development and rural poverty eradication.

At this Governing Council I am completing two years as President of IFAD. These years have been challenging for me, but extremely rich and satisfying. This is in many ways due to the staff of IFAD. Their dedication to eradicating rural poverty is truly inspiring. Their hard work is our greatest asset.

I would like to introduce the newest member of IFAD senior management team, the new Assistant President for Finance and Administration, Ms Ana Knopf, from El Salvador. She comes with a distinguished background from the Inter-American Development Bank and I am delighted to welcome her to IFAD.

Mr. Chairman,

Our job is to enable the RURAL poor to overcome their poverty. The meaning of our mission was never so clear to me as the day last year when I was interviewed on radio by two Mayan teenagers from the Yucatan Peninsula.

Strongly rooted in their culture and traditions, they had great aspirations. They wanted to influence decision-makers around the world. They had clear goals for the future. They told me they would reach them.

What a privilege it is to support them.

Thank you for your strong support and for working with me this year.