Your Royal Highness,
Excellencies,
Esteemed colleagues,
Ladies and gentlemen,

On behalf of IFAD, and of all the Rome-based United Nations agencies, it is my great pleasure to welcome you to this high-level event on financial inclusion.

Today we have the honour of welcoming Her Royal Highness Princess Máxima of the Netherlands. As the UN Secretary-General’s Special Advocate for Inclusive Finance for Development, Princess Máxima has brought world attention to an issue that cuts to the heart of the work we do. We look forward to hearing about her experiences and her perspective.

All of us here today share a common goal of reducing poverty and improving food and nutrition security. 

At IFAD, our starting point is always the 2 billion people who live in the rural areas of developing countries. Most of these women, men and children are poor.

We work to create the conditions for poor rural people to grow and sell more food, increase their incomes and determine the direction of their own lives.

To do this, and to invest in their on-farm and off-farm businesses, poor rural people need access to a range of financial services, from savings and loans to insurance.

Yet today, only about 10 per cent of poor rural people in developing countries have access to even the most basic financial services from formal institutions.

For poor women and children, microfinance is particularly important. In rural societies, women are often on the lowest rung of the social ladder. But when women are able to take out loans and manage their household savings, their status improves. So does household food consumption, and the quality of life for children.

IFAD has long recognised the importance of rural finance, perhaps because we are a financial institution ourselves. Indeed, IFAD was a major source of early funding for the Grameen Bank.

Today,  IFAD is one of the world’s largest lenders supporting rural finance for poverty reduction.

Our total outstanding investment in rural finance is more than US$900 million. Last year, our efforts reached more than 4 million active borrowers and close to 5 million voluntary savers. Nearly 70 per cent were women. The average loan size is US$220, not much by international banking standards but enough to make a huge difference to the lives and livelihoods of poor rural women and men.

We know that inclusive financial systems are essential for poverty alleviation and improved food security, but we also know there is no single model.

Rural microfinance, like all forms of sustainable development, must respond to and respect local needs and conditions. This isn’t always easy. At one IFAD-supported project in northern Pakistan, the microfinance element and the formation of women’s groups were seen by some as un-Islamic.

For four years, project staff worked with local community leaders to help local people realize that the project was not there to attack their religion or their culture. Gradually the project was accepted.

Today, the community has been transformed. People are growing more food, earning more money and educating their children. About 140 women’s organizations have been formed and women are starting small businesses.

Islamic Microfinance, or Sharia-compliant financial services, are gaining momentum in a number of IFAD-supported rural finance projects.

We have also seen striking results at an IFAD-funded project in Bangladesh, where farmers can take out seasonal loans to cover the costs of crop production.

The project pioneered a form of microfinance geared to the needs of the local community. For example, more than half of its loans were seasonal.

The loans were made up-front, to cover the costs of crop production. Repayments followed four to six months later, in one single instalment to reflect the farming cash-flow cycle.

Easier access to credit has made it possible for farmers to buy better seeds, plant their crops at the right time, increase production, and get better market prices for crops that were planted early.

These are just a few examples of innovative, inclusive finance. In recent years we have also expanded our work in weather index insurance, banking beyond branches and – importantly – remittances.

Your Royal Highness,
Ladies and gentlemen,

Let me leave you with one final thought. Over the next five years, diasporas throughout the world will send home more than US$2.5 trillion in remittances to developing countries. Almost 40 per cent of these funds will be destined for rural areas, which are often cut off from financial services.

While it is estimated that only a fraction of these remittances are invested directly in agriculture, the amount is still significant. In fact, it equals four times the amount of global ODA to agriculture.

IFAD and its partners are actively establishing effective and inclusive rural financial services and investment opportunities for migrant families and their communities at home.

The potential returns for society are enormous. But we know that we cannot succeed on our own. This is why we have been partnering with leading institutions through IFAD’s  Financing Facility for Remittances, including  the U.S. Department of State, with whom we launched The Diaspora Investment in Agriculture initiative.

I hope that today’s event will be an opportunity to further deepen our partnerships and to identify innovative solutions to the challenges we face, so that together we can make financial inclusion a reality for millions of poor rural women and men across the globe.

Thank you.

Rome, 21 March 2013