Statement of Mr. Suleiman J. Al-Herbish, Director-General of OPEC Fund for International Development
On the occasion of the 27th session of IFAD's Governing Council; Rome, 19 february 2004

Mr. Chairman of the Governing Council,
Mr. President of the International Fund for Agricultural Development,
Excellencies,
Ladies and Gentlemen,

It is a great honor for me to address this eminent assembly. I thank you, Mr. President, for what I realize is a true privilege. At the same time I feel on home ground, given the nature of the relationship that binds the OPEC Fund and IFAD. The two institutions trace their origins back to a moment in the history of development and cooperation, when the OECD and OPEC countries pooled resources to create institutions, such as IFAD which, some few decades later, bear witness to the foresightedness of their founders.

On a personal level, and as a witness to those founding events, I would like to state my full appreciation of the work that has been achieved and my great admiration for IFAD’s commitment to the development of the rural world and its vindication in the international arena.

Mr. Chairman,

I am mindful of the presence in this assembly of profound knowledge, of experience, and, no doubt, a whole host of success stories. There is also no doubt that your assembly needs no diagnostics and even less advice. Our presence here is to benefit from this unique gathering, to learn and to apply this learning to our operations. I will therefore limit my intervention to a brief outline of our perceptions of agriculture and perhaps more appropriately of the rural world.

Mr. Chairman,

In our operational programs, we have dedicated close to 80% of our financing to the economies of low-income countries. Our commitment to the eradication of abject poverty is so absolute that the rural world has become our world as much as it is that of IFAD. Agriculture is the mainstay of the economies of the countries in which we operate. The contribution of the sector to national outputs is close to one-third, a much larger share than the average of all developing countries, which stands at less than 10%. Frequently, the sector is the major exporter and invariably it is the major employer. Its fabric is that of smallholders, not always organized and frequently cut off from potential markets by inadequate infrastructure.

With IFAD, we share a field of intervention. Indeed we share many of our operations. More than operations even, we share a concern for the 900 million people that are recognized as undernourished. We share the view that the rural world needs more empowerment. We view economic and social welfare in rural areas as a pre-requisite of national progress.

We learn from you, Ladies and Gentlemen, that development of agriculture in isolation from other sectors is at best difficult, at worst a misuse of resources. There can be no agriculture if there is no water, fertilizers, pesticides, selected seeds, crop variation and other inputs and techniques. There can be no productive agriculture if there is no energy, mechanical power, and above all, incentives to produce. Even subsistence agriculture requires technology, albeit the simplest. Access to markets and to credit have often constituted the demarcation between lucrative agriculture and agriculture for survival.

Ladies and Gentlemen,

Let me put the issue very colloquially: Knowing what it takes is indeed necessary, but doing something about it is of more interest to all of us.

The task is decidedly not easy and the contribution of all is essential. We strongly believe that the lead can only come from beneficiary countries. Central governments need to guarantee the legal and economic environment. Local governments must assume more and more responsibility for self-propelling and sustainable rural development, and civil society must advocate pro-poor policies to the extent of the available means. As often advocated by IFAD and other specialized organizations, rural development must be given a central place in the Programs and Strategies for Poverty Reduction (PRSPs).

Even more relevantly, as financial institutions we share a concern, and for some of us a responsibility, for the lack of investment in agriculture. We recognize that too often, investment programs are decided not by the priorities defined by governments but by the priorities of donor governments and donor agencies. We talk about beneficiary countries being in the “driver’s seat’’. Let us make sure that they have the required fuel for their engines.

At the international level, we must recognize that we live in a world of contradictions and inconsistencies. FAO informs us that there is no shortage of food and that total production is more than adequate to meet the nutritional demands of the whole world. The World Food Program, on the other hand, tells us that there is famine and starvation in large parts of this same world. Informed agencies tell us that while we are trying to find money to encourage farmers to produce others are succeeding in providing money not to produce.

If one billion dollars a day is spent on agricultural subsidies in the developed world how much would be needed to lift us to the lofty principles of globalization? If three dollars of subsidies per day are given for a cow, where can we find the extra dollar per day to extract fellow humans from abject poverty? We all know, by now, that food insecurity will continue to be a feature of our world for some time to come and so will poverty, bad health and poor education. And yet we remain optimistic.

The resources exist. The know-how is not lacking, nor is goodwill. It befalls all of us to turn enabling factors into action plans. The Monterrey consensus may well just blend with the Washington consensus. At any rate we must all do what we can to transcend the Cancun incident and work to achieve sooner what Cancun has apparently postponed. There is a price to pay; it is the price of contradictions and inconsistencies. Let us translate this price into a cost, the cost of establishing this most awaited global house.

In the OPEC Fund for International Development we have in the last few years pursued a strategy built on four pillars, all of which have a direct positive impact on agriculture and general economic growth.

The first pillar is for us to contribute to the dialogue between donors and recipients for the creation of a cooperation framework, which preserves the right of the recipient countries to define their own priorities and their right to control the flow of funds and direct it towards national objectives. Our contribution is most active in international fora and in consultative meetings. It is in this context that we place in particular, our contribution to the debt relief for highly indebted poor countries (HIPC). Whatever form it has taken for each country-case, our contribution is truly additional. It comes from our own resources. It did not come from any so-called Trust Funds. It is a true sacrifice.

Under the second pillar, we continue to enhance the level and the quality of our financial interventions. Our programs are on a constant increase. Eighty percent of our funding has gone to low-income countries. The sectors that have benefited most are precisely those that are now dubbed the Millennium Goals. Twenty percent of our operations have been in agriculture, chiefly in primary crops and livestock production. Transport, water, energy, education and health make up the bulk of the balance of our operations. Rural electrification and rural roads, dams and water supply take the lion’s share of these investments. They contribute directly to the growth of agriculture and to the development of its enabling environment. Our efforts in education and health are essentially located in rural areas where, we feel, they are most needed and probably most efficient.

Under the third pillar of our strategy, we are endeavoring to deal with capacity building and emergency situations. While we are trying to build the future, we must not be oblivious to the importance of institutions for the coherence of individual projects and their sustainability. Nor should we be oblivious to the all-important principle that the outcome of economic development is human welfare. Emergency situations such as natural disasters, outbreaks of famine and the HIV pandemic are, for us, not just charitable actions but true economic challenges.

The fourth and last pillar of our strategy is to build up our efficiency and to be always relevant.

A key aspect of our drive for efficiency continues to be on the path of cooperation and harmonization with our sister organizations and like-minded international financial institutions. In addition we are actively forging strategic partnership with the national institutions of our beneficiary countries, sometimes contributing to their creation when they did not exist.

We realize that we need to be adaptable if we are to continue to be relevant. We are working hard to develop our institution to meet the challenges of a fast-evolving world. We are now in a position to work with the Public Sector as well as the Private Sector. Moreover, we are prepared to help bring together public and private funds in clearly defined and mutually beneficial partnerships. We are formulating policies to enable us to work in the economic field with not-for-profit institutions. We are diversifying our instruments to meet diverse situations.

Mr. Chairman,
Ladies and Gentlemen,

In conclusion, I would like to end on two notes, firstly by reiterating that we are resolutely optimistic. The OPEC Fund has committed close to US$4.9 billion and disbursed 75% of it. We believe that in so doing we have kept our cost of intervention low to allow most of our funding to go to those for whom it was intended. We have worked on projects and programs that have been devised and supervised by your own experts and institutions. We have followed your lead in the choice of priorities. It is our hope that our cooperation has met at least part of your expectations. We do realize that more funds are needed and that continued close cooperation is essential. I am confident that the new programs that will soon be operational will show an OPEC Fund even more committed than in the past. As to cooperation, we invite, Ladies and Gentlemen, your advice. We need your help and we count on it.

On the second note, I would particularly like to share with you one of the resolutions pronounced by the Heads of State of OPEC Member Countries at their second Summit in Caracas in September 2000 in which they resolved and I quote “To emphasize that economic and social development and the eradication of poverty should be the overriding global priority. To this end, OPEC will continue its historic record of taking the issues of the Developing Countries into full consideration, inter alia, through their individual aid programs, as well as through the OPEC Fund for International Development and the International Fund for Agricultural Development; and urges the industrialized countries to recognize that the biggest environmental tragedy facing the globe is human poverty”.

Thank you for your attention.