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Keynote Address by His Excellency Olusegun Obasanjo, President of the Federal Republic of Nigeria

19-20 February 2002

I am indeed pleased and honoured for the opportunity to raise with this distinguished and esteemed audience issues of mutual concern to both developed and developing world. I bring to you the good wishes of my Government, and the entire people of Nigeria.

My visit to IFAD has a special significance, as this is my first official engagement here since the Fund was established about a quarter of a century ago. At that time, I was Nigeria's Military Head of State and I recall with satisfaction the central role that Nigeria, as a member of OPEC, played in getting the organization established. I am gratified that our collective vision and optimism at that time have been amply vindicated and justified by the impressive performance of IFAD in addressing its core mandate of combating hunger and rural poverty in the developing world.

The theme of this Session of the Governing Council "Financing Development – The Rural Dimension", has a special appeal to me because it touches directly on a subject that constitutes a major plank and inspirational focus of Nigeria's present development strategy. The theme is appropriate and well timed to set the tone for the upcoming Mexico Conference on Financing Development.

Mr Chairman, it is indeed an unsavoury – if not embarrassing – paradox that, although the issue of poverty has been succinctly brought to the center-stage of international discourse, especially in the last one decade, and in spite of the giant strides that have been made in the field of Science and Technology in an increasingly inter-dependent world, the incidence of poverty continues to escalate in most developing countries, particularly in South Asia and Sub-Saharan Africa. The target of reducing by half, the proportion of the world's extreme poor by 2015, set by the Copenhagen Summit on Social Development in 1995, re-affirmed by the World Food Summit in 1996 and further re-affirmed by the Millennium Summit in September 2000, remains largely a mirage.

We are all aware of the consensus within the international community that the co-existence of pervasive extreme poverty among a large segment of the world population, side by side with the bewildering affluence of a small minority, is ethically unacceptable, socially unjust, economically inefficient and politically dangerous. Yet, there are today, 1.2 billion people, an estimated 500 million of whom live in South Asia and 300 million in Africa, struggling to survive on less than one US dollar a day.

For most developing countries, sixty to seventy percent of this segment of the population lives in the rural areas, which have remained centres of deprivation, often lacking in economic opportunities and choices, as well as the enabling infrastructural facilities such as potable water, rural feeder roads, energy and communication, needed to improve the quality of life of rural dwellers.

Furthermore, we continue to live with this paradox of an increasingly widening gap between the rich and the poor countries, even when technological innovations have reduced the world into a "global village". Progress with the commitment to poverty reduction has been slow. According to the Rural Poverty Report 2001, published by IFAD, the rate of poverty reduction in 1990 to 1998, was less than one third of what is needed to reduce by half, extreme poverty during 1990 to 2015. In Sub-Saharan Africa, it was six times less. While the share of development aid going to low-income least developed countries, which accounts for over eighty-five percent of the poor, stayed around sixty-three percent, agricultural aid virtually collapsed.

We may ask what has happened? What has gone wrong and what remedial action must we take? These are questions which we are hoping this esteemed Council would find answers to in the next two days of your deliberation in order to meet the target we have set for ourselves.

At the 21st FAO Regional Conference for Africa, held in Yaounde, Cameroon in February 2000, it was recommended that national governments should commit a minimum of twenty-five percent of their budgets for agriculture and rural development programmes. Regrettably due to various factors, notably falling commodity prices and competing needs for education, health, social and economic infrastructures, law and order, African countries have generally not been able to achieve this target. The import of all this is not difficult to see: our rhetorics simply have not been matched by appropriate action!

Mr Chairman, I recall that one key element of the first commitment of the World Food Summit Plan of Action, is ensuring an enabling political, social and economic environment for the eradication of poverty and for durable peace. Implicit in this statement is the tacit acknowledgement of the inescapable relationship between poverty and durable peace. Poorly functioning agricultural systems tend to heighten rural poverty, which in turn provides a fertile ground for discontent and, ultimately, political unrest. The solution to this problem lies in our collective resolve to sincerely commit ourselves to raising the standards of living of the rural poor by raising agricultural productivity and market access which will, ultimately, not only ensure adequate food on the table but also provide jobs both on and off-farm, raise incomes and thereby pave the way for a more stable society.

The failure to improve the quality of rural life is largely responsible for the rural-urban migration, which has today become a common feature of most developing countries, especially those in Sub-Saharan Africa. Consequently, the social infrastructural facilities in such urban settlements rapidly become inadequate and over-stretched resulting in social tension and sometimes outbreak of violence.

In my country, after a long period of military rule, we inherited collapsed economic and social infrastructures in both urban and rural sectors. I am glad to note that our efforts in rehabilitating infrastructural facilities are beginning to pay off. Many rural areas are now linked to the national grid of our electric power distribution network. Rural roads are being rehabilitated. We have introduced a Universal Basic Education programme, thereby improving on the universal primary education that had been in place. Telecommunications in both urban and rural areas have similarly been improved. We have developed pragmatic agricultural and rural development policies and strategies designed to improve agriculture production and living standards in the rural areas. Indeed, the President of IFAD, Mr Båge, joined me about ten weeks ago in Abuja, to launch the planned policies and strategies.

Mr Chairman, there are those who hold that the first step towards peace, both within and outside national borders, is the eradication of hunger. Personally, I think the first step towards universal durable peace is eradication of poverty, which is the root cause of hunger. Durable peace will continue to elude humanity until there is social justice and until the rural sectors of our populations are reasonably empowered and mainstreamed into the national development goals and strategies. I daresay that if developing countries continue to yield to the ever-increasing demands of the urban elite at the expense of the rural poor, the scourge of rural-urban drift will be accentuated, thus creating a ripe environment for social and political instability.

As we are all aware, the mainstay of the rural economy is agriculture. Unfortunately, as has been severally observed, the hopes that the WTO Agreements raised for the rural world have since been dashed by the strategic protection given by the developed countries to their agriculture through export subsidies, tariffs, quotas and other restrictions on commodity imports from the developing countries. Under these circumstances globalization and the present one-way trade liberalization can only worsen the economic plight of the rural poor in the developing world.

My friend, Mr Bill Clinton, one of the greatest men of our time and a great champion of globalization, is reported to have once said: "If the wealthiest countries ended their agricultural subsidies, leveling the playing field for the world's farmers, that alone could increase the income of developing countries by twenty billion US dollars a year". Well said. But why have the subsidies not been removed? Why has the playing field not been levelled? Why have the millions of farmers in the developing world not been given an equitable chance to improve their agriculture and income? To these questions, Mr Clinton simply said, "It is not as simple as it sounds". But why not?

Lest I am misunderstood, let me state clearly that globalization and market-oriented economy have tremendous potential for mankind, but I also hold the view that globalization should have a human face. Putting it differently, and to paraphrase my friend, Dr. Mahathir Bin Mohammad, the Prime Minister of Malaysia, globalization should work much harder in the service of the very poor in the long-term interest of the very wealthy.

Given the multi-dimensional nature of poverty, developing nations on their part must evolve intervention measures that are multi-targeted and multi-faceted, encompassing economic, social, political and institutional factors. The New Partnership for African Development (NEPAD) offers a unique platform for the industrialized countries to enter into a genuine partnership with Africa, based on mutual interest and shared commitments.

Mr Chairman, poor access to credit remains a very crucial factor militating against rural productivity and income. It is thus imperative that developing nations must put in place financial systems for the rural poor, ranging from micro-finance institutions and community banks to efficient agricultural development banks, as well as commercial banks, offering a wide and potentially exciting range of instruments that could open the door to savings mobilization and credit and insurance services to the poor groups. All tiers of government and non-governmental organizations (NGOs) must be involved in rural empowerment. The decisive role which project beneficiaries themselves must play in the formulation and implementation of development programmes must be fully explored.

Mr Chairman, let me now briefly touch on what I consider the appropriate focus and action to be taken by each of the major actors – the International Community, National Governments, Multilateral and Regional Financing Institutions, including IFAD. At its establishment, IFAD was given a very specific mandate, namely: to assist developing countries in combating rural poverty by mobilizing and providing financial resources on concessional terms for agricultural and rural development projects. Its major clients were the poorest of the poor. From information available to me, it is evident that this mandate is being pursued with clarity of focus and distinction – thanks to the able leadership of the past and present Chief Executives of IFAD, the dedication of IFAD staff and wise guidance of IFAD governing bodies.

Mr Chairman, with twenty-five years of operation and experience in designing projects and programmes to combat rural poverty, IFAD has no doubt, acquired considerable advantage and is becoming a knowledge-based organization in this regard. IFAD must continue to strive to build on its comparative advantage and strength. Strict adherence to its unique mandate is what makes it what it is. The emerging synergy between IFAD and multilateral organizations in addressing the problems of rural poverty is commendable and should be strengthened. Strategic partnerships with other stakeholders, national governments, multilateral, regional and bilateral donor agencies, other international financial institutions and non-governmental organizations, should be strengthened to optimize resource utilization for greater impact on poverty reduction.

Mr Chairman, the very reasons which informed the establishment of IFAD still remains as valid as they were twenty-five years ago. The global economic circumstances of today have even further strengthened the validity and reinforced the justification for its creation. It is however sad to note that IFAD's field exposure has been severely curtailed by funds constraints, in spite of the commendable performance of the Fund. In this respect, I am pleased to note that in spite of our own very difficult economic circumstances and the rapid decline in contribution by several member states, Nigeria's commitment to IFAD's resources has remained strong, and we have been consistent with making our contributions.

The restructuring of IFAD, which was concluded in January 1995, was intended primarily to enhance resource mobilization in a more predictable manner. While we appreciate the efforts that have been made by most member States in the face of budgetary constraints, I regret to note that this expectation is yet to be realized. Member states that are in a position to do so, should increase their contributions to the resources of IFAD. We would also encourage increased co-financing of development projects among international financial institutions so as to benefit from economy of scale. Rural poverty reduction must remain at the center of the global development agenda, and IFAD with its comparative advantage should serve a major catalyst for implementation. We would urge the industrialized nations to increase the present official development aid to agriculture and to reverse the declining trend.

This address would not be complete without reference to the problem of financing health services, especially HIV/AIDS, tuberculosis and malaria in the developing countries and in the Sub-Saharan Africa in particular. As we are all aware, the HIV/AIDS scourge has reached an alarming and pandemic proportion in many countries. Prevalence rates have continued to rise in most of Sub-Saharan countries where new HIV infections are occurring among the more productive segments of the population, and at a higher rate than ever before. The HIV/AIDS situation which has been compounded by natural, and sometimes man-made disasters, and the heavy debt exposure of the affected countries, is undermining poverty eradication programmes in the affected countries.

Mr Chairman, Honourable Members of IFAD Governing Council, Your Excellencies, Distinguished Delegates, I have in this address attempted to share with you, some of my thoughts about a very topical issue which, as I said at the beginning of my address, is very dear to my heart.

Mr Chairman, I would like to submit that rural poverty has far-reaching dimensions and implications for the social harmony and stability of the entire global community. In discussing financing for development, we must take full cognizance of the central place of rural development and rural poverty reduction in the strategies to be fashioned out for a global agenda.

Indeed there is unanimity of mind on the issues, but what appears to be lacking is the unanimity of will to confront the problems. I therefore urge the international community represented by you, distinguished delegates, to rise to the occasion and address the issue squarely. In this respect, I would like to suggest that one of your recommendations to the Mexico Conference on Financing Development should be the establishment of an IFAD-led global coalition comprising all stakeholders to combat rural poverty.

I thank you all.