Enabling poor rural people
to overcome poverty



Madam Chairperson,
Excellencies,
Distinguished Governors,
Guests,
Ladies and Gentlemen,

On behalf of all of us at IFAD, it is my privilege and pleasure to welcome you to the thirty-fourth session of the Governing Council.

These are difficult days for those of us concerned with the state of rural poverty and global food security. With floods – in Australia, Brazil, and Sri Lanka – once more in the headlines; with recent droughts in China, Kenya and Somalia; with food prices soaring in many parts of the world. Climate change, social unrest, a world that is becoming overcrowded as the population grows, to a projected 7 billion this year, and 9 billion by 2050. And the instability created by financial markets and the collapse of economies. 

It is clear that there is nothing simple about reducing poverty and ensuring food security for today or for tomorrow.

Operating in this complex environment is a challenge, but it is one that IFAD is well positioned to meet. Today, I am pleased to be able to report on the progress we have made that is paving the way for IFAD to be more efficient, more agile and, most importantly, more effective in contributing to global food security today, and in the years ahead.

Highlights of 2010
When we met at our Governing Council last year, I showed you where we were coming from and what we had achieved in 2009. Since then, we have reached a number of milestones. We have increased the amount of cofinancing by about 140 per cent to a total of 1.6 billion dollars; our disbursements reached a record of 457.6 million dollars; we continued to expand our country presence, with 30 country offices approved by the end of last year; and we introduced our first-ever Medium-term Plan. This is a three-year rolling workplan that will help IFAD make the most efficient use of every resource to reduce rural poverty.

And there is ongoing reform on many fronts, including human resources management, administrative efficiency, financial management and organizational effectiveness.

The details of these, and of all our operational achievements in 2010, are reported in depth in our annual report. A draft is available for you to read at your leisure.

So instead of elaborating on our past achievements, I would like to look ahead – to where we see IFAD in 2015, the end point of the Millennium Development Goals. We must never lose sight that our work is closely intertwined with the first of these goals – to reduce by half the proportion of people living in extreme poverty and hunger.  

IFAD’s new thinking
Rural areas of our planet hold the key to solving some of the most critical challenges facing humanity. The development of rural areas is central to overcoming hunger and poverty, mitigating climate change, achieving energy security and protecting the environment.

You will have noticed that there has been a subtle but important change in IFAD’s thinking in recent years. The contexts and prospects for agricultural development are changing rapidly. We have seen fast growth in the reach of supermarkets, locally, nationally and globally, and the development of modern, consolidated value chains for agricultural products. These new and evolving markets offer opportunities for poor rural people to generate more income than ever before, but only if they are able to offset the high entry costs.

As a result, while our core mandate and our target population have not changed, we are sharpening our approach.

Rather than romanticizing the concept of lifting poor rural women, men and children above the poverty line, like a plague that can be eradicated by charity and humanitarian gestures, we are advocating the proactive creation of vibrant rural economies. Rural economies where young people see a future for themselves; rural economies that offer a range of attractive opportunities for people to choose from; rural economies that allow them to fulfil their individual aspirations.

IFAD’s aim is to enable smallholder farmers and other poor rural people to have a significantly better standard of living than they do today. They will then be able to spend and invest in their own livelihood opportunities and in the local economy.

To achieve this – and I believe this is the pivotal issue – it is essential to recognize that we are not going to get people out of poverty if we operate in a mode of ‘business as usual’. For a transformation to take place, there must first be a change in mindset. The first step is recognizing that farming of any scale is an economic activity, a business. And businesses need clear links along the value chain – from production to processing, marketing, and consumption.

The second step is to unlock the potential of an asset that all of us have, whether rich or poor, landed or landless. That asset is our ability to be creative, to be innovative, to be entrepreneurial. A poor person, even if they have land, will remain poor if they are not creative. But a poor person, even if they are landless, can break out of poverty if they have the means to be creative and innovative.

Achieving IFAD’s aim calls for three types of investment: Investment of political capital to spearhead a transformation of the rural sector. Investment in human capital to develop and equip poor people, particularly the young; and investment of financial capital.

Take Elysée Nkundabagenzi of Rwanda. In her community, where people were extremely poor and malnourished, she and her neighbours received small loans, goats and cows, and training on how to establish a kitchen garden.

Elysée now produces enough vegetables and milk to eat, and extra to sell in the market. She can send her children to school and buy health insurance. And she has been able to move out of her grass hut into a new house.
In all of the IFAD-supported programmes and projects I have visited, I have been impressed, even awed, by the desire and the ability of people to transform their own lives when the right investments have empowered them to do so.

Investing in young rural women and men is also crucial for vibrant rural economies.

Current events show the energy, creativity and power of young people, and also the importance of ensuring they can see a future for themselves in the societies in which they live.

In rural areas, these young people are the next generation of farmers, producers and workers. Give them the skills and confidence they need to run profitable farms or start businesses, and they will become the upstanding citizens and community leaders of tomorrow. Ignore them, and they will have little option but to leave their homes and families to search for work in the cities seeking better lives but often finding only more misery. 

Creating more vibrant rural economies
IFAD is already taking steps to create more vibrant rural economies. The programmes and projects we support are generating the conditions for smallholders and other poor rural people to become entrepreneurs in the new, evolving markets. This includes advocating reducing transaction costs, supporting rural producers’ organizations, expanding financial services into rural areas, and ensuring that small farmers have access to infrastructure, utilities and information – taking full advantage of existing and emerging information and communication technologies . Encouraging partners to invest in good governance is another key ingredient.

Indeed, the IFAD of 2015 will capitalize on what IFAD already does best: advocating for poor rural people; bringing partners together to fund sustainable rural development programmes; empowering poor rural people; and expanding our ‘bottom up’ model so that poor rural people are true partners in their own development.

IFAD has an absolute advantage when it comes to working with and advocating for smallholders. As an international financial institution and a United Nations specialized agency, we are the only such organization dedicated exclusively to reducing rural poverty in developing countries.

We have a proven track record in rural and agricultural development spanning more than 30 years, because we have stuck firm to our focus even during times when many donors and governments were turning their attention to other areas.

Partnership
Increasingly, our national and international development partners are investing their own resources through IFAD’s programmes through co-financing. Let me quote one figure from our results in the first year of the Eighth Replenishment of our resources – that is, 2010 – that speaks to the strength of our partnership-building: For every dollar contributed to the replenishment, IFAD mobilized another six dollars more from its partners for rural development programmes.

Our traditional partnerships will continue to define IFAD in 2015. But in recent years, we have expanded our partnership strategy to involve the private sector.  We see responsible private-sector engagement as an essential element in optimizing economic opportunities in rural areas. We will be looking to attract private-sector investments through partnerships with IFAD. Simultaneously, we will be looking to invest in and strengthen the small and medium-sized enterprises necessary to underpin thriving rural economies, such as agroprocessing, marketing and financial services. We will also increase our partnerships with the agro-industrial and agribusiness sectors.
Unless the rural space is transformed into vigorous and competitive economies, poor people will remain behind and unable to participate in new economic opportunities.  

IFAD will also look at new and innovative financial partnerships that can help us further expand our programme of work. One example is the Spanish Food Security Cofinancing Facility Trust Fund, which was approved in 2010. Through a loan of over 285 million euros – equivalent to about 400 million dollars – from the Government of Spain, and a grant of 14.5 million euros, we will be able to scale up our operations, while at the same time continue to provide much-needed financial support to small-scale farmers.

The new Spanish Trust Fund is testament to IFAD’s credibility and reliability as a partner in rural and agricultural development, and to its ability as an international financial institution. Indeed, IFAD has recently received endorsements from the OECD’s Development Assistance Committee and the Multilateral Organisation Performance Assessment Network as being a strong, results-focused organization.

Our experience and our investment in efficiency and transparency are paying off. IFAD is highly trusted by our Member States, by farmers’ organizations, and by women and indigenous peoples.

We have worked to build this trust – on the ground, where we are creating new country offices and extending our presence; in Rome, where our biennial Farmers’ Forum brings together leaders of farmers’ organizations from around the world to interact with IFAD staff and partners; and within our newly established Indigenous Peoples’ Forum, which I am happy to announce has been formally established at IFAD, following a workshop held over the last two days. Itsfirst global meeting is expected to be in 2013 in conjunction with IFAD’s Governing Council.

Rural Poverty Report
Looking to the future, the IFAD of 2015 will also be shaped by the findings of our recently released Rural Poverty Report. The report is the most comprehensive and current assessment of the state of rural poverty. Our work is already being guided by its findings, including four essential steps to eliminate poverty and hunger.

These are:

  • To help poor rural people better manage the risks they face
  • To sustainably increase agricultural production recognising the profound impact that climate change is already having
  • To facilitate equitable access to new and changing marketplaces by viewing smallholder farms first and foremost as businesses
  • To encourage the growth of non-farm rural jobs

Conclusion
As IFAD looks to the future, we will continue to scale-up the work we do on the ground, while also expanding our advocacy efforts for rural development. Because we know that smallholder agriculture can lead economic growth in developing countries and lift millions out of poverty, but only if it is market-oriented, profitable and environmentally sustainable.

And it is beginning to happen. Look at Viet Nam. Look at the United Republic of Tanzania. Look at Ghana. In each of these countries, smallholders are leading agricultural and economic growth.

With your continued support, IFAD will have the strength, creativity and determination to rise to the challenges of operating in an ever-more complex environment – and to successfully meet those challenges head on.

We are now actively working to meet this challenge in the Eighth Replenishment period. In order to provide for the timely review of resources before this period expires, the Executive Board has endorsed a draft resolution for the Establishment of the Consultation on the Ninth Replenishment of IFAD’s Resources, for approval during this session of the Governing Council.

I encourage you to give this timely consideration in order to authorize the beginning of the Consultation.

As we turn our attention to these matters, and other areas of business over the next two days, I hope that we will all be able to keep the vision of IFAD in 2015 in mind. For the work we do today will lay the foundations for the achievements of tomorrow.

Call to action
To ensure that these achievements materialize, I would like to issue a call to action to each and every one of us in this room today.

To our developing country members, I call on you to make tangible commitments to investment of political capital, of financial capital and in human capital at home to create the conditions for successful rural development. Because change cannot be imposed from outside, it must be cultivated from within.

To our donor country members and other partners, I call on you to recognize where countries have shown the commitment, by supporting them with the right policies and investments.

And to IFAD staff, I call on you to work tirelessly to scale up our support to rural development on the ground, to show results, and to champion a new and more dynamic vision of rural development.

The future is in our hands.

Thank you all for your attention.

Rome, 19 February 2011