IFAD calls for increased investment in agriculture at second European Forum on Sustainable Rural Development to meet in Berlin

IFAD 06/07

Rome, 14 June 2007 – More than 400 development practitioners and policy-makers from countries in the European Union and Africa will gather in Berlin next week for the Second European Forum on Sustainable Rural Development. The Forum is sponsored by the European Commission, the German Presidency of the European Union and the Global Donor Platform for Rural Development.

Rural development is expected to be high on the international policy agenda during the coming year, with the release of the 2008 World Development Report on Agriculture and Development, and the continuing G8 discussions on mobilizing resources for African development.

The President of IFAD, Lennart Båge, has been invited to speak at the forum’s opening panel, “Sustainable rural development in Africa”, on Monday 18 June. Båge will emphasize the need for increased investment in agriculture and rural development that benefits small farmers.

Three quarters of the world’s one billion poorest people live in rural areas in developing countries and depend on agriculture to survive. In sub-Saharan Africa, agriculture plays a central role in the region’s economy, accounting for 30 per cent of GDP, 40 per cent of exports and as much as 70 per cent of employment.

Yet aid for agricultural development from donors fell dramatically from the mid-1980s to the early 2000s. Between 1983 and 1987, the average annual Official Development Assistance (ODA) to agriculture was US$5.14 billion. By the 2000-2005 period, it had fallen to an average of US$3.3 billion.

More investment by national governments is needed in agriculture and rural development. Over the past two decades, increases in government spending on agriculture in East and South Asia have been clearly linked to rapid progress towards achieving the first MDG. Conversely, in sub-Saharan Africa, where we are not achieving the first MDG and extreme poverty remains high, the level of public expenditure for agriculture declined during the 1990s, and although improving, remains low overall.

Kevin Cleaver, Assistant President, IFAD who will also participate in the conference deliberations in the concluding session, said “As aid to agriculture and rural development in developing countries has declined, so has public investment in agriculture by developing country governments. This is largely because of new donor and government priorities outside of agriculture, combined with a new style of agriculture projects, which are smaller and require less money. Agriculture is often not the priority of ministers of finance”.

However, in recent years, some governments in Africa have increased their spending in agriculture and rural development to at least 10 per cent of their national budget, as outlined in the Maputo Declaration in 2003.

Studies show that investments in agriculture are more effective in raising people out of poverty than investments in any other sector. As small farmers earn more money, they stimulate local economies by spending more on equipment, goods and services, as well as on non-farm goods. Estimates by the International Food Policy Research Institute (IFPRI) show gains that range from an additional US$0.60 in non-agricultural income in Niger for every US$1 increase in farm income, to gains of US$1.88 in non-farm income for every US$1 in agricultural income in Burkina Faso.

The theme of this year’s forum is “Sustainable growth and poverty reduction in rural Africa: How can Europe be a more effective partner?” The purpose of the meeting is to review important economic, social and environmental changes underway in rural areas and to discuss practical ways to improve rural development policies and programmes in Africa

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IFAD is an international financial institution and a specialized United Nations agency dedicated to eradicating poverty and hunger in rural areas of developing countries. Through low-interest loans and grants, IFAD develops and finances programmes and projects that enable poor rural people to overcome poverty themselves. There are 191 ongoing IFAD-supported rural poverty eradication programmes and projects, worth a total of US$6.6 billion. IFAD has invested US$3.1 billion, with cofinancing provided by partners including governments, project participants, multilateral and bilateral donors. These initiatives will help about 82 million poor rural women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$9.8 billion in 751 programmes and projects that have reached more than 310 million poor rural women and men. Governments and other financing sources in recipient countries, including project participants, contributed US$9.2 billion, and multilateral, bilateral and other donors provided another US$7.2 billion in cofinancing.