Second High-Level Forum On Aid Effectiveness; Harmonization, Alignment and Results

2 March 2005 - Paris, France

Your Excellencies,
Mr Chairperson,
Honorable Delegates and Guests,
Ladies and Gentlemen

It is a great pleasure to participate in this Second High Level Forum on Aid Effectiveness. I am delighted to have the opportunity to meet with colleagues from partner countries and donors, international financial institutions, the United Nations system, parliamentarians and representatives from the civil society, to show our engagement in the harmonization initiative, and to share IFAD’s perspective.

First of all, allow me to state, clearly and unequivocally, that we endorse the harmonization initiative including the fundamental principle of partner country ownership and leadership in establishing and implementing their national development goals. The importance of this principle for the achievement of the Millennium Development Goals cannot be overstated. As an international financial institution and a member of the international development community, IFAD is committed to advancing the harmonization process and to improving aid effectiveness and development impact in support of effective country leadership. We have taken significant steps towards adapting to existing harmonization standards and practices and we look forward to further progress in this area.

The last decade has witnessed a transformation in international development assistance, involving both an unprecedented consensus on development objectives at the international and national levels, and a commitment on the part of a large number of development assistance stakeholders as to how those objectives may be pursued more effectively. The Paris Forum draws our attention to the contribution that ownership and alignment can make toward achieving the MDGs as we look forward to the MDGs review at the General Assembly later this year.

Since we met in Rome two years ago, IFAD has undertaken a review of its procedures and practices including in the procurement and financial management areas. We are identifying ways to amend, as appropriate, some of these policies, to facilitate harmonization. A set of “Guidelines on Project Audits” has been issued and, already, we have seen a significant improvement in the timely submission of audit reports. We are working together with our partners to strengthen the quality of these reports. At our last Executive Board session in December 2004, a revised set of “Procurement Guidelines” was approved and these were finalized, in close consultation with the Multilateral Development Banks and other partners. Both sets of Guidelines emphasise using national procedures wherever these have been assessed as satisfactory to meet our members’ requirements. And in 2003, our Executive Board approved alignment of our strategic planning and country programs with country-owned development strategies, including Poverty Reduction Strategies.

Both the Rome and Paris Declarations call for greater alignment with partner country budgeting and project implementation systems and procedures. We support this proposal and, for many years, we have focused on programs developed and implemented with national institutions and systems. By far, in most of the countries where IFAD is active, lending is made through country budget and financial management systems. And we are working to further harmonize and simplify our common procedures and requirements, including, strengthening national capacities as well as avoiding the creation of parallel systems to implement projects.

We agree that alignment of donor systems and procedures with partner country systems and procedures is an important step to facilitating the smooth flow of aid resources. Yet we should not let our concern with the means of development to distract us from the ends of development – and the achievement of the MDGs. At IFAD, we have made considerable progress in determining the allocation of aid resources. We have developed a system that is based on a transparent assessment of partner country’s capacity to address the challenges faced by the rural poor. This is also in line with country-led poverty reducing programs. We have also adapted our operational approach to reflect a more programmatic agenda and we are currently reviewing our operating model in order to strengthen the capacity of our country teams to engage more actively in implementation support, policy dialogue, partnership building and knowledge management within the framework of country-led harmonization.

We are participating in a sector-wide approach program in Mozambique and we are bringing a policy document to our Executive Board on our future participation in SWAPs. We recognize the enormous potential of these instruments as well as the complexity of utilizing them in the agriculture and rural development sectors. We will work closely with other partner countries and donors wherever it is felt a SWAp would be an appropriate mechanism to address the issues in these sectors.

We commend the focus which this Forum has placed on capacity strengthening. We feel that strengthening development planning capacity through improved monitoring and evaluation of all partner development programs and projects--whether domestically or externally funded--will result in ever more responsive development strategies. The focus on strengthening the feedback processes of lessons learned -- from both successful and unsuccessful projects and programs -- is essential to identifying the path forward for each partner country.

As well, we feel that an essential component of an effective monitoring and evaluation system is strengthening beneficiaries’ input to the process, and we are increasingly doing that in our operations. In this regard, more emphasis should be put to strengthening the capacity of grassroots community organizations. These are the people the Millennium Development Goals are intended to serve and we dedicate our institutional efforts to better serving these goals.

We are also pleased to be associated with the Microfinance Donor Peer Reviews initiative which has brought together 17 development assistance agencies working together to improve aid effectiveness in the area of microfinance. The work of this group of donors is confirming that by aligning our microfinance programs with good practices we can have a far greater impact in addressing market failures that prevent poor people from accessing the financial services they need.

For IFAD, the key to achieving the MDGs is clear: significant progress in rural development. Without increased agricultural productivity, improved access to both domestic and global markets, improved terms of trade, and increased disposable income for the rural poor, achievement of the MDGs will continue to be off track. Clearly, there’s a need for us to use our resources more effectively to achieve greater and more sustainable impact.

We will continue to align and harmonize our efforts on the basis of borrowing country priorities and processes, because we are convinced that the key to success is country ownership, alignment of donor activities with country development strategies and improved monitoring and evaluation. And we see a need to redouble our efforts to seek new and innovative solutions to the needs of the rural population and the agricultural sector.

Once again, thank you for the opportunity to bring IFAD perspective to the table today. I can assure you that we will continue to do all that is within our mandate to ensure the success of this important Initiative. We look forward to discussing progress in achieving the MDGs at the General Assembly later this year and to ever closer collaboration with our partner countries and donors in development as this Initiative continues.