IFAD grants: an overview

Introduction

In IFAD, grants have always been a key instrument in alleviating rural poverty. Since 1978, and excluding grants within the Debt Sustainability Framework (DSF), IFAD has committed approximately US$650 million in grants to support research-for-development and capacity-building programmes. Many of these programmes have had an impact on small-scale agriculture throughout the developing world. Through its support to the global agricultural research system, IFAD has succeeded in drawing attention to the priority concerns of poor rural people. It has also furthered understanding of the difficulties faced by people who live in resource-poor areas and who produce traditional crops and commodities under difficult rainfall conditions.

In December 2003, IFAD's Executive Board approved a Policy on Grant Financing which was updated in September 2005. The policy included new strategic objectives, allocation modalities and implementation procedures. Grant proposals are either country-specific, regional or international, depending on the nature of the potential innovation and impact. IFAD has also joined the larger international aid effort by adopting the Debt Sustainability Framework to address many countries’ debt problems by providing assistance on grant terms rather than through loans.

Context

The rapid changes triggered by climate change, globalization, the development imperatives following the Millennium Development Goals (MDGs) pledge, and the new challenges and opportunities posed by emergent technologies and associated products (and the policies that influence their markets) call for further and deeper exploration of fresh, innovative options for addressing rural poverty. Development and dissemination of sustainable agricultural technologies directly relevant to IFAD's target groups is a major objective of the grant programme. Improved farming systems require that technology focus on conservation and, where feasible, on upgrading the natural resources used by poor people. IFAD-financed research is addressing the challenge of developing technologies and institutional arrangements that provide income opportunities and better nutrition for poor rural people without mining their natural resource base.

Grants also have the potential to strengthen IFAD’s capacity to engage in strategic and catalytic activities in the areas of knowledge management, partnership and policy dialogue and analysis. Small grants for piloting innovative approaches in alleviating rural poverty can later be up-scaled through loans.

The Gleneagles Agreement, and the increasing awareness of the international community about the need to address debt, has brought about a rethinking of financing mechanisms to support poverty alleviation in member countries. The Debt Sustainability Framework (DSF) is part of the architecture of the support that multilateral financial institutions (MFIs) provide for debt relief and management in the poorest countries. The DSF is designed to ensure that the poorest countries’ development efforts are not compromised by the re-emergence of unsustainable debt levels. It ensures that new development assistance is provided to them on terms consistent with achieving and maintaining sustainable levels of debt, and it supports debt management at the country level.

Core principles

Drawing on the success of past investments in multi-location, international agricultural research, IFAD’s strategy is to support initiatives in adaptive research and related capacity building. This global and regional research strategy is based on three related core principles:

• The local institutional and technological problems faced by poor rural people in marginal, resource-poor areas are similar, although local specificities are distinct. They can best be addressed through multi-location research with a community participatory approach and through sharing knowledge across the sites.
• Many poverty-relevant research and development (R&D) issues require human and capital resource mobilization beyond the capacity of local and national organizations. For example, networks of national research systems linked to international agricultural research centres have proved to be better equipped and generally more effective in addressing a common set of problems.
• Cross-country and cross-regional learning is essential to reap the benefits of replicable practical innovations, building on the rich diversity of local knowledge and practices in rural communities.

In recognition of this potential, IFAD's grant portfolio continues to support the development of innovative R&D approaches to issues affecting poor rural people. Such approaches are increasingly relevant in the context of national poverty reduction strategies and in efforts to harness science and technology for the purpose of realizing them.

Activities eligible for country-specific grants are directly aligned with country strategies, as articulated in Results-based Country Strategic Opportunities Programme, and they support and complement IFAD’s loan portfolio while responding to issues deriving from country assessments under the Performance Based Allocation System (PBAS). The focus is on development of innovative approaches to technical and institutional issues confronting poor rural people. The issues are increasingly in the area of organizational and institutional development in non-agricultural areas, and they include rural finance, market linkages and pro-poor policy development. They involve mobilization and strengthening of the institutional capacities of both national and civil society organizations to address national and local issues and to support partnership formation, establishment of policy-dialogue platforms and pro-poor institutional transformation.

IFAD’s role in supporting the Global Agricultural Research System

Through the agricultural research programme and its link with the International Agricultural Research Centres (IARCs) mostly within the CGIAR, IFAD has played an important policy and advocacy role in promoting pro-poor agricultural research and in addressing crucial poverty issues. In 2003, for example, IFAD became a co-sponsor with the World Bank, Food and Agricultural Organization of the United Nations (FAO) and the United Nations Development Programme (UNDP) of the CGIAR. During 2008, the CGIAR undertook an extensive reform process that promises to change the way the entire global agricultural research system operates. The Change Management Programme was led by a Change Steering Team co-chaired by IFAD.

The grants programme has produced a number of successes in pro-poor international agricultural research, established effective partnerships with IARCs and strengthened national agricultural research systems (NARS) and institutions.  Through its support to the global agricultural research system, IFAD had succeeded in drawing attention to the priority concerns of the rural poor, furthering understanding of the difficulties they face.

Within the context of IFAD's leadership in promoting pro-poor research, in 1996 the organization helped establish the Global Forum on Agricultural Research (GFAR). GFAR facilitates cost-effective partnerships and strategic alliances with the aim of reducing poverty, achieving food security and conserving and managing biodiversity and natural resources. GFAR brings together the key participants in global agricultural research from seven constituencies:

• developing-country national agricultural research systems (NARS)
• advanced research institutions (ARIs) and universities
• non-governmental organizations (NGOs)
• farmers' organizations
• the private sector
• international agricultural research centres (IARCs), including the CGIAR Centres
• the donor community, including IFAD

IFAD continues to support the Global Forum for Agricultural Research (GFAR), which promotes worldwide collaborative research partnerships. As a member of the GFAR’s management team, IFAD works to build cost-effective research partnerships and strategic alliances to reduce rural poverty. IFAD continues to foster a progressive paradigm shift in agricultural research for development towards holistic ‘knowledge-intensive agriculture’ accessible to poor small-scale farmers. Among the elements that IFAD has introduced in GFAR operations are the principles of:

• bottom-up decision making complementarity
• demand-driven research implemented through equal partnerships among stakeholders
• research agenda priorities with a focus on the perspectives of farmers and rural communities
• multi-functionality and regional heterogeneity of farming and livelihood systems
• participatory research design and technology diffusion

Knowledge management and learning

IFAD continues to strengthen the research agenda by promoting higher performance in pro-poor impact achievement and measurement. Using the outcome of the programmes, IFAD supports knowledge sharing through the development of technical advisory notes (TANs). TANs are designed to introduce new, pro-poor technologies to a wider development community in the form of ‘good practice’ advice matched with specific socio-economic and agro-ecological settings, addressing also the policy and institutional environment. TANs provide development workers with technical and institutional options validated and verified through community participatory research - options that may provide replicable solutions to problems under similar socio-economic, cultural and biophysical conditions elsewhere.

Debt sustainability framework   

IFAD uses the DSF to decide the form of the organization’s financial assistance to countries eligible for highly concessional lending. To assess the debt status of a given country, IFAD uses the classification of countries in terms of debt sustainability that is produced by the World Bank and the International Monetary Fund in their country debt sustainability analyses. On this basis IFAD extends financial support to programmes and projects governed by the performance-based allocation system (PBAS) in countries eligible for highly concessional loans. The organization extends support on the following basis, in line with the International Development Agency (IDA) and the African Development Fund (ADF):

• countries with low debt sustainability: 100 per cent grant
• countries with medium debt sustainability: 50 per cent grant and 50 per cent loan
• countries with high debt sustainability: 100 per cent loan

IFAD grant policy

The Policy on Grant Financing, updated in September 2005, included new strategic objectives, allocation modalities and implementation procedures.

The Policy stipulates that:

• grants should focus on interventions where they have a significant comparative advantage over loans as a financing instrument
• grants should complement the loan programme.

The policy includes two strategic objectives, representing priority areas for IFAD’s regular grant resources:

• promoting pro-poor research on innovative community-based approaches and technological options to enhance field-level impact; and /or
• building pro-poor capacities of partner institutions, including community-based organizations and NGOs.

Agricultural research that benefits poor people remains a significant component, building on the success of IFAD’s past investments in this area.
Grants support greater devolution and decentralization of research. The objective is to enable poor communities to form partnerships with researchers from formal scientific institutions, building on farmer innovation, local knowledge systems and informal science within participatory research programmes.

The grant programme has the aim of broadening the impact of IFAD’s activities by promoting replication and scaling up of successful approaches in rural poverty reduction. This is achieved by:

• supporting participatory monitoring and evaluation of successful approaches to capture insights and lessons learned
• disseminating lessons learned to development practitioners
• using evaluation exercises as institutional learning methodology and fostering professional exchange between IFAD and its partner institutions
• enhancing partnership-building processes to strengthen the participatory design, implementation and impact assessment of results from IFAD’s loan and grant programmes

To increase IFAD’s influence on the poverty reduction efforts of the international development community, specific emphasis is placed on:

• strengthening partnerships with country-level institutions at the field investment and policy levels, especially with those institutions providing direct assistance to poor rural people
• providing support to communication and learning among participants, people working in rural development, and relevant networks
• supporting advocacy for rural poor people, both nationally and internationally

Following the approval of the Debt Sustainability Framework by IFAD’s Executive Board in April 2007 the grant programme represents up to 6.5 per cent of the proposed IFAD Programme of Work. The new Policy on Grant Financing is currently being revised and the new policy will be submitted to the Executive Board in December 2009.