IFAD President Opens Council with a Call for More and Better Directed Help fro the Worlds Poor

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IFAD President Opens Council with a Call for More and Better Directed Help fro the World's Poor

Press release number: IFAD 12/02

Rome, 19 February 2002 – Mr. Lennart Båge, President of the International Fund for Agricultural Development (IFAD), called Tuesday for more and better directed resources to combat rural poverty to meet the Millennium development goals.

Speaking at the 25th session of the Governing Council, the President spoke of the growing realisation that “chronic poverty is a source of instability and a breeding ground for desperation.”

In spite of the goals set by the September 2000 Millennium Summit in New York, in which the international community pledged to cut by half the number of people living in extreme poverty by the year 2015, the ranks of the poorest of the poor are continuing to grow. Around 1.2 billion men, women and children live desperate lives on the equivalent of less than USD1 per day.

And in spite of the international commitment to fight poverty, development aid is showing an alarming rate of decline. Countries of the Organisation for Economic Cooperation and Development (OECD) gave an average of just 0.22% of their gross national income in Official Development Assistance (ODA) in 2000, a figure way below the target of 0.7%, which was set by the international community as long ago as 1970.

Some estimates suggest that the level of ODA needs to be doubled if the Millennium Summit goal is to be achieved. A recent joint report prepared by the World Bank and the International Monetary Fund put the extra figure needed at USD 54 billion per year.

Yet resources aimed at combating poverty also need to be better channelled if they are to help the people who really need them, Mr. Båge told the IFAD conference.

“International development cooperation must increasingly focus on where the poor are – the rural areas – and the sources of their livelihood – agriculture and related activities,” said the IFAD President in his opening address on Tuesday, at the start of the two-day session. “Since a great majority of the poor live and work in rural areas, there should be greater balance in the way ODA is channelled between rural and urban areas.”

Three-quarters of the world’s poorest people live in rural areas, often in remote and isolated regions where access to land, water, finance and markets is scarce. Yet progress towards helping this vital sector has been hampered in recent years. Aid for agriculture has dropped from 20% of overall relief spending in the late 1980s to a present figure of just 12%.

At the same time, domestic public investment in agriculture has also fallen, said Mr. Båge. For example, in sub-Saharan Africa, the figure spent on the rural sector dropped from 6.2% of total expenditure in 1990 to 3.9% in 1998. Given such trends, said Mr. Båge:
“It is hardly surprising that during the last decade the rate of poverty reduction fell compared to the previous two decades.”

Welcoming ministers of finance, agriculture and other top officials from 162 members states to the IFAD meeting, Mr. Båge recalled that the year since the last Governing Council had been a turbulent one for the world.

“The tragic events of 11 September and their aftermath have reminded us of the close interlinkages of our global society,” said the Swedish President, who was addressing his first Governing Council since his election as head of IFAD last April. “They have brought forth a new recognition of the importance of inclusive political and economic processes and the imperative of making globalisation work for all.”

One side effect of the events of 11 September had been to deepen the global economic downturn, exacerbating the plight and the vulnerability of the poorest people in the world, he added.

As part of its contribution to the debate on how to kickstart more and better aid to the world’s poorest people, IFAD has chosen ‘Financing Development – the Rural Dimension’ as its theme. The IFAD conference comes almost exactly a month before the International Conference on Financing for Development, which will be held in Monterrey, Mexico from 18-22 March. The IFAD meeting aims to deliver a strong message to the Mexico conference on the importance of agriculture and rural development for poverty eradication.

Guest of honour at this week’s Rome meeting is President Olusegun Obasanjo of the Federal Republic of Nigeria. Welcoming him, Mr. Båge paid tribute to the Nigerian President’s “role in the restoration of democracy and his leadership in his own country, especially his part in shaping the New Partnership for African Development (NEPAD),” which, he said, offered a new start for Africa. NEPAD is an initiative launched in July last year to galvanise development on the African continent and halt the marginalisation of Africa as globalisation becomes more prevalent.

Reviewing some of the Fund’s activities over the past 12 months, the President highlighted IFAD’s new Strategic Framework 2002-2006, which aims to make the organisation more effective. The framework is designed to help IFAD achieve its mission of Enabling the Rural Poor to Overcome Their Poverty — chosen to illustrate the Fund’s approach to eradicating poverty in the coming years.

In his speech, Mr. Båge announced changes in IFAD’s investment policy, with the aim of reducing the organisation’s vulnerability to fluctuating financial markets. Investment earnings represent a share of IFAD’s resources, but recent volatility on international markets has led to a decision to cut the Fund’s exposure to equities. The other two sources are reflows from previous loans and contributions from member states through a replenishment process. The Sixth Replenishment will be under discussion this week after the Governing Council.

The long-term cost implications of IFAD’s participation in the Debt Initiative for Heavily Indebted Poor Countries (HIPC) are now well over USD400 million, Mr. Båge told the conference. Yet until last year, IFAD had received only one contribution, from the Netherlands, to finance these, he said. In recent months, however, Belgium, Germany, Italy and Switzerland have announced contributions for IFAD’s HIPC requirements, he added. Several countries have also recognised IFAD’s eligibility to access resources from the World Bank administered HIPC Trust Fund.

IFAD is a specialized agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 603 projects in 115 recipient countries and in the West Bank and Gaza for a total commitment of approximately USD 7.3 billion in loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty. IFAD makes the greater part of its resources available to low-income countries on very favorable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.

Programme of the 25th Session of IFAD's Governing Council | Statement by the President of IFAD