Keynote address by Mr Lennart Båge at the Economic and Social Council Substantive Session - 2-27 July 2001

Mr. President,
Your Excellencies,
Ladies and Gentlemen,

Last September, at the Millennium Summit, world leaders expressed their commitment to reduce the proportion of those living in extreme poverty by half by 2015. This Millennium Summit Poverty target provides a specific goal to inspire us and a benchmark to measure progress.

Overcoming poverty in Africa lies at the heart of the Millennium Summit target. Countries in the region have some of the highest incidence of poverty in the world, Madagascar for example with 72%, Niger with 63% and Zambia with 85%. Africa is a primary focus for IFAD which has supported in total some 277 programmes in the region with an overall investment cost of USD 8.5 billion.

Poverty of this scale produces vulnerable societies, leading to the breakdown of civil order, serves as a reservoir for communicable diseases and a trigger for crime. It should not be surprising that conflicts in the poorest areas of Africa have proved the most intractable. Nor that AIDS which has been contained in rich countries, is ravaging many parts of Africa especially the rural areas, where health and education services are particularly weak.

If we want to promote sustainable development and accelerate poverty reduction in Africa, we must focus on who the poor are, where they live and the sources of their livelihood.

More than three quarters of the poor in Africa are in rural areas, dependent on smallholder agriculture and related trade, services and crafts for their livelihood. Rural poverty is central in the poverty problematique in Africa. Yet over a long period of time this basic fact has often been ignored and too little investment made in rural development in terms of infrastructure and services. Even worse, price controls and policies restricting internal trade in farm produce and price controls discouraged agricultural production and growth.

Domestic shortcomings have been severely aggravated by external factors. The prices of commodities, which account for the bulk of Africa's exports, have fallen by nearly a third since 1995. Agricultural subsidies in developed countries, currently about six times larger than total ODA flows, distort world agricultural markets. The unequal international trade regime restricts the growth of agricultural exports and manufactures such as textiles in which some countries in Africa could have a comparative advantage.

These internal and external factors have combined to limit the current rate of poverty reduction in Africa to a far lower level than that required to achieve the Millennium Summit target. Tragically, in some African countries, poverty levels, life expectancy and other social indicators have actually worsened in recent year under the impact of the AIDS pandemic. In this context the Secretary General's initiative for a Fund to combat AIDS and other major diseases is vital.

This situation calls for a new approach to ending poverty, an approach supported by balanced domestic policies and enhanced and well-directed international assistance.

Reducing poverty in Africa by half by 2015 will require a much higher rate of economic growth, about 7% per year, than has been achieved in the 1990's. Given the importance of agriculture in total employment and in the livelihood systems of the poor, the only way to achieve a sustained higher rate of poverty reduction and development is to engage the under-utilized capacities of the poor through broad-based rural development, centered on growing agricultural production.

Mr President,

Earlier this year, IFAD, drawing on the lessons from its 23 years of operational experience in combating poverty, and relating these insights to the experience of other institutions, brought out its Rural Poverty Report 2001. The Report reviewed in depth the causes and dynamics of poverty and the most effective approaches for reducing poverty levels.

The starting point was to look at poor groups not as objects, or a burden on society, but as subjects, with the capacity to become the primary agents of change. Instead of looking only at their needs, we should build on their strengths. The poor, especially women, are hardworking and often effective microentrepreneurs, whether as smallholder farmers or in petty trades and crafts. They are knowledgeable, indeed experts, on their own situation and circumstances.

Enabling these groups to use their capacities more productively is often called the empowerment of the poor, one of the central themes of the Poverty Report. Key elements in this process of empowerment include allowing the poor to gain a stronger voice and influence in institutions that affect them as well as promoting better access to health, education and economic services like credit and savings. Yet empowerment will serve little purpose if the material means for increasing production and incomes are not available to the poor.

The IFAD Poverty Report on which we made a presentation to the ECOSOC Roundtable in February identifies four central factors: Assets, particularly land and water. Technology, including advanced technologies, relevant for the crops and animals grown by poor farmers in dryland zones, for the benefit of the many and poor, not only the few and better-off.

Thirdly access to efficient and fair markets. Finally institutions. Those who control institutions usually benefit the most, and the poor rarely control institutions. Changing this and building institutions in which poor people have a strong voice is perhaps the most difficult challenge for poverty eradication and sustainable development.

African countries in recent years have taken a number of important reforms in this direction. Democratisation and decentralisation are allowing wider participation in governance. Exchange rates have been made more realistic, commodity boards that strangled production in the past have been largely dismantled, trade and finance has been liberalised, and administered prices have given way to market prices that reflect opportunity cost.

The courageous policy changes and other initiatives that many African countries are making reflected for example in the OAU Millennium Action Plan, need to be supported by substantial new international assistance. Unfortunately ODA to Africa has dropped by 25% in the 1990's and tragically for poverty reduction, aid for rural development and agriculture has fallen even more. This has to be reversed. The HIPC Debt Initiative and the associated Poverty Reduction Strategy Papers provide an excellent opportunity, both to increase total funding to Africa and to ensure that it is focused on rural development.

Trade is perhaps even more important. The recent "Everything but Arms" initiative of the EU to allow duty free imports from the least developed countries is welcome in this context, but should be regarded as only the first step towards making the next Trade Round into a true Development Round. The elimination of trade restrictions and the reduction of subsidies in agriculture could significantly enhance exports by African countries and allow them to diversify their agriculture and become beneficiaries from globalisation, rather than its potential victims.

The additional cost in external resources required to support Africa's own efforts is modest, a very small fraction of the amounts spent each year on agricultural subsidies to which I referred earlier. Today we have a real chance of making a substantial reduction in poverty in Africa. It is an opportunity that must not be wasted.

Mr President,

Over the last three decades, we have learned a great deal about eradicating poverty. What has become particularly clear is that outsiders do not have to solve the problem of poverty, rather the task of both governments and Aid agencies is to help remove the shackles that keep the poor trapped in poverty. Our experience in IFAD, with operations in 51 countries in Africa, has repeatedly shown that even the poorest groups, whenever offered the opportunity, seize the chance eagerly to raise their incomes and output and build more secure and productive lives for their families.

The challenge of poverty and development in Africa is to give Africa's farmers and rural producers that opportunity.

Geneva, July 17, 2001