IFAD Asset Request Portlet

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Statement by Lennart Båge, President of IFAD

Twenty-Seventh Session of IFAD's Governing Council

18 February 2004

Mr Chairman,
Distinguished Governors,
Ladies and Gentlemen,

May I welcome you warmly to Rome and to this Twenty-Seventh Session of the Governing Council.

We are honoured to have among us the President of Burkina Faso, His Excellency Blaise Compaoré. His wise and courageous leadership of the country has made him one of the most eloquent spokesmen for Africa’s perspectives, especially on international trade issues.

It is always a pleasure to welcome our colleagues from our sister agencies in Rome, Jacques Diouf, Director General of FAO and Jean-Jacques Graisse, Deputy Executive Director of WFP. Their presence reminds us of the strong complementarity, and close and growing cooperation, among our three agencies.

Mr Chairman,

This last year has seen considerable turbulence in international affairs but also a growing awareness of the underlying problems that lead to conflict and terrorism. It is now clear that the existence of mass poverty, with hundreds of millions of people trapped in a cycle of deprivation, hunger and vulnerability, cannot provide a stable and peaceful international order. Poverty on this scale is a matter of security as much as humanity.

The Millennium Summit and the Millennium Development Goals have inspired most development agencies to adopt poverty reduction as one of their principal aims. Yet few of them give priority to rural areas where the majority of the poor live. Nine hundred million of the world’s 1.2 billion extremely poor live in rural areas. They are smallholder farmers, herders, landless labourers, indigenous people and others that depend on agriculture and related activities for their livelihood. A high percentage of them are women and girls. To achieve the MDGs, the pace of rural development must rise sharply. In most low-income countries, this means that the smallholder farm sector must become more productive and dynamic.

IFAD is one of few development institutions to focus explicitly on rural poverty and, in particular, on helping producers raise their productivity and incomes and work their way out of poverty. In the rural sector of many low-income countries, the Fund is a major source of financing, and in some countries, especially in sub-Saharan Africa, IFAD is the most significant source of multilateral support for agricultural and rural development.

Thus, while most development agencies now concentrate on poverty, they do it differently and in complementary ways. IFAD’s focus on helping the rural poor raise their productivity and output harmonizes well with the larger IFIs and other UN agencies that support infrastructure, health, education and capacity-building.

Mr Chairman,

There is today a growing awareness of the importance of rural development and agriculture in achieving the MDGs. The G8, at their summit last year, emphasized that “we deem it necessary to increase productive investment in rural and agricultural development”. Countries like Canada are enhancing support for agricultural and rural development. For their part, developing countries are giving renewed attention to agriculture and the rural sector. The African Union, at its last summit, pledged to increase budget allocations to agriculture to 10 per cent. The New Partnership for Africa’s Development, NEPAD, is giving special priority to agriculture. At IFAD we are working closely with NEPAD to support its efforts to promote rural development in Africa.

For the first time, the High-Level Segment of ECOSOC last year was devoted to the theme of rural development. In opening ECOSOC, the Secretary-General, Mr Kofi Annan, underlined the new global partnership for development, emphasizing that “All this can happen only with a real commitment to bring rural development back to the centre of the development agenda”.

As recognition of the centrality of rural poverty has grown, attention has concentrated on ways to foster conditions in which smallholder farmers can increase their productivity and output. There is now over forty years of experience in promoting development. Perhaps the most important lesson we have learned is that we must listen to the poor, and that the poor must lead their own development.

For this they need secure access to land, water and other assets, more productive, sustainable technology, accessible and effective markets and supportive institutions. Most importantly, they must be able to organize themselves and gain a stronger voice in local and national decision-making.

The world faced by the poor is changing, offering new opportunities but also new risks. Far-reaching reforms adopted by many developing countries mean that investment decisions and prices are determined by market factors rather than governments or public institutions. Moreover, as the background paper for the Governing Council Panel on Trade and Rural Development brings out, local and national markets are increasingly linked to global markets.

Look at what has happened in recent years to coffee and cocoa prices and their consequences for poor farmers in Latin America and Africa. Look at cotton. We’ve just heard the eloquent and moving words of President Compaoré in his description of the serious effects of subsidies on poor cotton farmers in Burkina Faso and other African countries.

High hopes have been placed on the Doha Development Round. A key aim of the Doha Round is to create a level playing field for developing countries by addressing trade restrictions and subsidies on agricultural commodities.

Success in the Doha Round is vital, as it will open new market opportunities for smallholder farmers. But as the panel paper stresses, to take advantage of these opportunities poor farmers will need to increase production and move up the value-chain through processing, packaging, labelling, quality control and better marketing. The challenge before the development community is two-fold.

First, it is to finance programmes that directly help poor rural groups raise productivity and engage effectively with market agents to draw full benefit from their higher production. Second, we need to build on the knowledge and insights gained from them to trigger wider policy and institutional changes to mainstream poverty reduction in today’s market-based economies. In other words we need to complement strong micro foundations with effective macro approaches to reduce poverty rapidly.

This is a challenge to which IFAD intends to respond fully.

Mr Chairman,

Over the last three years, we have taken significant initiatives to enhance both the strategic policy context of IFAD operations and to improve our internal systems to deliver the highest impact in a cost-effective way. The Strategic Framework, the regional strategies and COSOPs, together with the action plans for the Fifth and Sixth Replenishments, have strengthened the Fund’s strategic approaches to poverty eradication. They have also given us the means to engage in dialogue on poverty reduction.

Last year IFAD provided some USD 435 million in loans and grants. These interventions will directly reach about ten million poor men and women, many in sub-Saharan Africa, which remains the most challenging area for poverty reduction. In the coming years we would like very much to raise IFAD’s lending level significantly to reach many more of the rural poor. This will enable us to make full use of IFAD’s capacity to develop innovative interventions in support of the efforts Member States are making to eradicate poverty.

I saw for myself, during a visit to Ethiopia last year, how these projects can change people’s lives. The Special Country Programme has made it possible for farmers like Kenem Demisse, in the Oromia region, to grow three crops a year. Now, instead of just one crop of maize, she grows peppers, tomatoes, beans and other vegetables for her family and to sell in local markets. This earns her cash income to improve her house, buy fertilizer and seed and pay for schooling and health care.

Another important innovation has been water harvesting from mountain springs to provide safe drinking water in villages like Offa in the Southern Region. Before, villagers like Almaz Konse had to fetch water from several kilometres away, and the water was not safe. Now she has clean, safe water in her own village, a revolution in her life.

The Pastoral Community Development Project in Ethiopia, approved last year, builds on these previous efforts to help smallholders diversify their production. The new intervention will provide 450 000 poor herder households the opportunity to grow crops and undertake non-farm activities in addition to livestock growing. This project, developed jointly with IDA, is located in four regions in which frequent and severe droughts have depleted livestock holdings and lack of social and economic services has eroded health and productivity.

The project is completely demand-driven. The beneficiaries will themselves choose the investments to be made and the economic activities they will pursue. Droughts and disasters unfortunately are never very far from the lives of poor people in this area. An important feature of the new project is an early warning system, together with disaster contingency planning. The latter will allow rapid responses from project funding and, perhaps more importantly, from other sources of emergency relief when the next drought strikes.

The resource-poor areas in which many poor farmers and herders live are at serious risk of desertification and land degradation. The Fund’s extensive experience in supporting programmes for sustainable poverty reduction in such areas led to its selection to host the Global Mechanism of the UN Convention to Combat Desertification. IFAD is now also an executing agency of the Global Environment Facility, which strengthens its role in fighting land degradation. IFAD and the other members of the Facilitation Committee including the World Bank, UNDP and the regional development banks, have helped the Global Mechanism develop an ambitious business plan. The aim is to help Member States develop action plans to combat desertification and to mobilize the resources to implement them.

In many rural areas, poor roads and weak markets remain a major problem, and the income farmers receive suffers considerably from the lack of nearby markets and difficulty in accessing national or external markets. I saw the effects of this in Ghana. There, poor farmers using improved varieties had raised cassava production by 60%. But the local markets could not absorb the increased production and prices fell sharply, depriving these farmers of much of the benefit of their hard work.

So increased production is the starting point, but accessible and efficient markets are equally important to give the poor a ladder out of poverty.

Take the case of a programme approved for Guatemala last year, the National Rural Development Programme. The thrust of the programme is to empower poor farmers and landless labourers, many of whom are indigenous people, often a forgotten group of the poor, by creating the conditions for them to increase productivity and enter the mainstream of national development. The intervention will help smallholders and other rural producers link with agro-processing firms, wholesalers and other market agents to enable them to access national and even external markets.

This programme and comparable IFAD-supported interventions in El Salvador, Honduras and Nicaragua are generating important insights on the adequacy of the policy framework. Drawing on these, a dialogue will be undertaken with the Guatemalan Ministry of Agriculture to help shape effective institutions and policies for rural development and poverty reduction and to support the Government’s decentralization strategy.

Mr Chairman,

In our experience policy dialogue is most effective when firmly based on field experience. Working with beneficiaries, borrowing governments, civil society and the private sector in designing projects is itself a form of micro policy dialogue to develop new approaches and models.

In the Nampula Fisheries Artisanal Project in Mozambique, for instance, a need was identified to modify legislation governing the mesh size of the fishing nets that were legally permitted. The project also helped persuade the Government to increase the exclusion zone for industrial fishing to three miles instead of one. In The Sudan, as a result of the Gash Regeneration Project, the Government has developed a new legal framework for land access and the size of holdings, particularly important in this flood-irrigated zone that is susceptible to overuse and degradation.

Rural finance provides another example. The effectiveness of self-help groups, pioneered in the Fund-supported Tamil Nadu Women’s Development Project and the Maharashtra Rural Credit Project in India, has led to self-help groups being adopted by the Government as a core element in the country’s antipoverty programmes. More generally, our experience in fostering microfinance institutions has led us to work with many countries to develop regulatory and legislative frameworks for rural finance systems.

Access to secure land rights has emerged as a major issue for rural poverty reduction. In IFAD we host the International Land Coalition, a unique entity that brings together civil-society organizations and multilateral and bilateral development agencies. The Coalition is supporting initiatives in several countries to utilize market-related and other mechanisms for land reform. It also serves as a network to share knowledge on best practices in this critical area.

Developing effective models that allow poor rural producers to engage successfully with the market is now, I believe, especially important. Recognizing the growing role of markets in the economic life of poor rural producers should not mean laissez faire. In fact, there is a greater responsibility on governments and their external partners to shape supportive institutions, policies and practices that will help the rural poor benefit from, rather than risk being further impoverished by, liberalization and globalization.

IFAD is engaged in harmonization efforts and in coordination mechanisms such as PRSPs, sector-wide programmes and UNDAF in this perspective – to bring the realities that confront the rural poor into the policy-making process. Many of the earlier PRSPs gave inadequate attention to agriculture and rural development. The Fund is trying to address this and to ensure that the needs of the rural poor, often a large majority of the population in low-income countries, get appropriate policy attention and funding.

The Round Table on the Eastern and Southern Africa region tomorrow is devoted to the theme of Sector-Wide Approaches and Budget-Support Mechanisms. I am sure it will offer a valuable opportunity for countries in the region as well as their development partners to review the experience of sector-wide approaches and see how the Fund could best contribute to them. The other five round tables will deal with issues of importance to each of their respective regions. The panel and round tables are part of our continuing effort to make the Governing Council into an interactive forum that will allow Governors to share their ideas in an effective way. The aim is to make the Governing Council week a major platform for an annual dialogue on eradicating poverty and hunger, and accelerating agricultural and rural development.

Mr Chairman,

In parallel with strengthening the Fund’s strategic and operational framework, we are implementing an extensive change agenda.

This includes the Performance-Based Allocation System and enhancing the Fund’s field presence in borrowing countries. There is also a new policy on grants to expand the total volume of grants and use them to help improve performance where it is poor, and in specific situations like post-conflict countries, where more flexible financing mechanisms are required.

Innovative approaches to helping rural poor groups to work their way out of poverty has always been a core concern of our operations. Now, with the stimulus provided by a contribution by the United Kingdom of USD 10 million, we have formulated an Innovation Programme to make the generation and application of innovative practices more systematic in all our programme development.

We are also undertaking measures to strengthen our capacity to assess the impact and results of operations. The Result and Impact Management System is developing a systematic methodology for this, while the new independent status of the Office of Evaluation will ensure authoritative evaluations.

A new activity-based approach to the Fund’s budget is being implemented with the aim of looking at budget expenditures in terms of outcomes and results rather than inputs and costs. Our overall processes for financial management and human resource management are also being modernized to make IFAD a 21st century institution. To underpin this modernization, the Strategic Change Programme is putting in place an information platform to support the efficient management of human and financial resources.

Another major initiative agreed by Member States is the Independent External Evaluation. It has the mandate to assess the Fund’s contribution to rural poverty reduction in a comprehensive way. My colleagues and I attach great importance to this initiative and we look forward to contributing to its work. I am sure that the evaluation will generate valuable knowledge, not only about IFAD, but on the most effective ways to overcome rural poverty.

Mr Chairman,

Let me here say a word about IFAD staff. In any institution, the quality and dedication of its staff is its main asset. I have been deeply impressed by the commitment of IFAD staff to poverty reduction and their unstinting willingness to contribute their time to carry out the Fund’s mission.

These last three years, when there have been so many initiatives underway, have been particularly demanding of staff. I can only say that I am happy and proud of the way they have responded.

Mr Chairman,

IFAD has 26 years of operational experience in combating rural poverty in widely varying economic, social and ecological conditions. Financing poverty programmes with an investment value of from USD 700 to 900 million per year that reach about 10 million rural poor, IFAD is now in the mainstream of the effort to eradicate poverty and achieve the Millennium Development Goals.

We have always tried to look at poverty from the perspective of the poor as producers actively, if unequally, engaged in the market. In the market-driven environment that the rural poor increasingly face, IFAD’s experience of working with the poor as producers, especially poor rural women, is directly relevant.

The MDGs and the new recognition of rural development provide the context to intensify IFAD’s contribution to poverty eradication, and the strengthening of the Fund’s strategic approach and work processes provides the opportunity. But we need the resources to respond to the needs of the poor countries of Africa, Latin America and Asia as well as to the expectation in other developing and transitional countries to find innovative solutions to poverty.

The Seventh Replenishment negotiations that will start next year provide a timely basis for this. In the last replenishment, developing and developed Member States reaffirmed the value they place on IFAD by raising their contributions significantly. The Seventh Replenishment, I hope, will not only consolidate these gains but achieve a quantum increase in the total contribution level.

Mr Chairman,

Mass poverty – some 1 200 million people condemned to stunted lives of chronic deprivation – is not only a moral outrage in this 21st century. It is equally a growing danger to the stability and well-being of society in a globalizing world.

Mass poverty will be ended. The question is not whether, but how long. How many more years or decades, how many more hundreds of millions of lives wasted in misery will it take? We have the knowledge, and certainly the resources, and the poor have the talent, the skills and the capacity to work their way out of poverty. What they need is the opportunity, and what we must do is find the collective will to create that opportunity.

With your support, IFAD with its quarter century of ground-level experience in combating poverty, stands ready to be at the forefront in the collective effort to bring that day as close as possible.

Thank you.