Since the start of 2020, much of the world’s attention has been focused on the COVID-19 pandemic. At this challenging time, we are reminded of the importance of international cooperation and of the need for a strong global, multilateral system. Many of our global problems – including disease, hunger, inequality, conflict and fragility – can only be solved by countries acting together.
We also have been made keenly aware that in a crisis, it is the poor and vulnerable who suffer most. When economies go into recession, those working in precarious jobs in informal employment – often women and young people – and the operators of small and medium-sized enterprises tend to be hit hardest. And people living in countries that lack the resources to deal with crises are even more vulnerable. With this in mind, it is crucial that, in tandem with providing necessary emergency aid, the global community continue to address the needs of the most vulnerable people so that when the next crisis comes along, we are better able to protect those most at risk of being left behind.
It has been gratifying to see that our investments in activities towards better livelihoods and greater resilience for rural people have made them more able to cope with the COVID-19 pandemic.
In 2019, new approvals for IFAD projects and programmes increased to a record US$1.67 billion, enabling us to do more in improving the lives of rural people now, as well as building a sustainable future for their families and communities.
At the same time, the pandemic – especially its socio-economic consequences – is threatening past development gains. We have responded with a coordinated package of measures, as part of the overarching United Nations framework for response, to protect rural livelihoods from the impacts of the crisis, including a dedicated Rural Poor Stimulus Facility that addresses short-term disruptions in rural activities, with a focus on food systems. While it is true that IFAD’s core business is mid- and long-term sustainable development, not emergency humanitarian aid, we have a critical role to play in building the resilience of rural people to the impacts of crises in both the short and the long term.
How IFAD is adapting to the challenges of today
Globally, 79 per cent of the world’s poorest people live in rural areas, most depending on small-scale agriculture for their income. Many are net buyers of food. Rural areas are also where most of the world’s hungriest people live.
These structural issues need to be addressed in our response to the COVID-19 pandemic and in the post-COVID-19 recovery. We cannot afford to move from one emergency to the other. We need to prioritize investments and policies to ensure that the next time crisis strikes – be it a global pandemic or a local weather event – people, economies and the environment are resilient enough and in a position to avert the worst outcomes.
IFAD’s mandate has proven to be very relevant in a rapidly changing world. Progress made in 2019 builds on recent institutional reforms aimed at maximizing IFAD’s contribution to ending poverty and hunger. We continued to pursue decentralization, and to move beyond single project interventions to more holistic approaches to address systemic issues.
A number of steps were taken to strengthen key areas in preparation for IFAD’s Twelfth Replenishment (IFAD12). To enable us to do more, we are also continuing to develop a financial framework that blends replenishment contributions with debt financing. While replenishment contributions will remain the bedrock of IFAD’s financial model, the new framework will allow us to expand our programme of loans and grants and reach more rural people around the world. At the same time, we are strengthening IFAD’s overall Enterprise Risk Management approach, and especially our financial risk framework, to ensure the financial sustainability of our new model.
In 2019, we established a robust Capital Adequacy Policy that strengthens the management of our assets and liabilities to protect our balance sheet and mitigate the financial risks of borrowing. In addition, the IFAD Private Sector Engagement Strategy 2019-2024 was approved. The Strategy will help us to mobilize additional funding by reaching out to private sector partners who are in a position to invest in rural areas. Another initiative aimed at assembling investment in rural areas, with a focus on job creation for young people, is the Agri-Business Capital Fund (ABC Fund), launched at IFAD’s Governing Council 2019 by IFAD, the European Union, the African, Caribbean and Pacific Group of States, the Alliance for a Green Revolution in Africa, and the Government of Luxembourg.
We also need to continue to enhance the quality of our programme of loans and grants. In 2019, there was an intense corporate focus on design quality. We have strengthened our quality assurance processes to improve the quality at entry of country strategies, loan-funded projects and grant-financed activities. We have further streamlined our design and review processes, ensuring that lessons learned are widely disseminated to inform future designs.
Improving the quality of our work also necessarily means developing the skills and capacities of staff in the context of our adaptation to a decentralized operating model and to deliver not only more, but better. Throughout 2019, we supported staff in developing skills to adapt to the changing needs of IFAD, for example through a new leadership development programme for supervisors, an executive coaching programme for directors, professional qualification programmes such as International Coach Federation certification, and an expanded e-learning platform.
In addition, to step up efforts to empower rural people through our operations, we gave precedence to initiatives to support our priority themes – climate change and environment, gender, youth, and nutrition. New tools and approaches include:
I am pleased that the 2019 results indicate we are ahead of our IFAD11 targets set under all four priority themes.
The year also saw the creation of the Change, Delivery and Innovation Unit, which has spearheaded a business process re-engineering exercise to reduce bureaucracy and promote an efficient and positive working environment. A new bottom-up approach was taken for budget preparation in support of IFAD’s shift towards a more decentralized operating environment, and we successfully implemented a new budget planning tool, Oracle Hyperion, refining the budgeting process and making it less prone to error.
These and other efficiency improvements have allowed us to plan an increased US$1.67 billion programme of loans and grants within a zero-growth administrative budget.
As we move ahead to IFAD12, we are acutely aware that the world – and the challenges facing rural people – have changed profoundly.
The COVID-19 pandemic threatens past development gains and it calls for targeted investments to prevent the health crisis from becoming a food and poverty crisis. IFAD has responded quickly, in coordination with the United Nations system, in the context of our existing work and mandate, building on our experience of working in situations of fragility, crisis and post-crisis. We are determined to do what is needed to ensure that the rural people we serve do not fall back into a situation of poverty and hunger.
Key steps taken in 2019 ensure we are in a solid position to drive recovery efforts in rural economies in a post-COVID-19 world, as well as being able to step in to address the short-term impacts of the crisis. Having enhanced our country presence, boosted our work to mainstream key themes, reformed our financial framework and improved overall efficiency, we are well placed to continue to step up our efforts to end poverty and hunger in a changing world. And we remain convinced that the rural women and men we work with are key actors in driving us all to achieve these goals.
Gilbert F. Houngbo
President of IFAD