Mr Chairman,
Distinguished Governors,
Friends and Colleagues,

Last year we made a commitment. To increase the programme of work by 10% and to strengthen the performance of our programmes and projects.

Today, I can give you the results. The programme of work in 2006 reached a record US$556 million. Slightly higher than the targeted 10% increase.  As the 2006 Annual Report on Results and Impact (ARRI) prepared by the Independent Office of Evaluation shows, overall performance has risen significantly, from 71% to 79%.

This gives us inspiration to carry on our work to implement the IFAD Action Plan for Development Effectiveness.  We are strengthening IFAD, to make it ready to meet the challenges ahead of us.  We are determined to put agriculture and rural development back on the international agenda.

The reason is as simple as it is serious.  The international community ought to spend more time and effort promoting development and fighting poverty where it is most needed.  In 2015, as it looks today, it is the poor women and men in remote rural areas that we will have failed the most.

IFAD has, since its inception, supported hundreds of millions of poor rural people.  But we could do more.  The development impact of IFAD's projects and programmes could and should be stronger.  To achieve this we have accelerated our reform process.

Let me give you the main outline:

We are increasing effectiveness.  We have specified our mandate, clarified our strategies, and defined measurable goals.  IFAD's role is to be where the rural poor are.  Our projects and programmes should enable poor rural people to increase their agricultural production.  They should be better designed.  The focus should be on means and assets that empower – that will make people self-reliant.  IFAD is not a humanitarian agency.  Our work should always be long-term, aiming at the most vulnerable and poor.  All this is made explicit in our new strategic framework.

We are strengthening innovation.  IFAD is a financer and innovator.  The close collaboration with local communities – scouting for innovations – is a hallmark. It makes IFAD suitable for exploring new technologies and new approaches.  Examples include women's self-help groups, linked to commercial banks in India.  Community-based management of small-scale irrigation and marginal rangelands in sub-Saharan Africa.  Market-based sustainable extension systems in Latin America.  Support for the usufruct rights of indigenous peoples over land and forest.  A new strategy for innovation will be brought to the Board in September.

But we must be better at replicating and scaling up the lessons learned.  Innovation will be closer linked to learning – and sharing.  This is a central part of our new results-based country strategies, and it is made clear in our knowledge management strategy.

We are working closer together with others.  IFAD is a unique partnership between OECD, OPEC and other developing countries.  Our key partners are national stakeholders - from farmers' organizations to governments. But they also include the OPEC Fund for International Development (OFID), the World Bank, IDB on remittances and IFPRI on strategic policy issues. In a new initiative with President Kaberuka of the African Development Bank, we are looking at new ways to work together starting with a joint evaluation of our programmes in Africa.  I see great scope for combining AfDB's support for infrastructure development with IFAD's experience in community-based poverty programmes to the benefit of millions of poor Africans.

We are implementing our new policies on targeting and supervision.  Targets and indicators are defined so that successes as well as setbacks can be recorded, analysed and become a central part of a learning process.  Accountability is key.

We are also committed to better alignment of our human and financial resources with our priorities, and a new approach to managing for development results with the aim to put us in the forefront of best practice. 

We are increasing our work programme by 10% per year.  For the Seventh Replenishment period 2007-2009, we are planning a programme of work of US$2 billion for about 100 programmes and projects – with a total investment cost of about US$4 billion.  With this we will reach approximately an additional 50 million poor people.  Statistics for agriculture are imprecise, but take Africa as an example; our financing for agriculture is roughly the same size as that of the African Development Bank, and half the size of the World Bank.

Mr Chairman,

The Millennium Development Goals gave the world unprecedented direction in its development efforts. The Financing for Development Conference held in Monterrey in 2002 gave new impetus to increasing aid flows and deeper debt relief. Several countries set timetables to join the few countries from the Arab world and Europe that have already reached the 0.7% target.

With the development goals and the funding goals established, the international community turned to delivery.  How to harness development resources in the most coherent and effective way possible behind the country's own efforts to eliminate poverty? The Paris Declaration on Aid Effectiveness calls on us to commit to the delivery of more effective aid based on the principles of country ownership, alignment, harmonization, managing for results, and mutual accountability. The reform of the UN development system is an essential part of this effort. I was proud to serve, under Prime Minister Diogo's leadership, on the Secretary General's High-level Panel on System-wide Coherence. Our report makes far-reaching recommendations to ensure that the UN really does – and I quote – "deliver as one, in true partnership and serving the needs of all countries". 

As a non-resident agency, IFAD will have to make a special effort to ensure that we are fully integrated into the collective UN effort at the country level.  The evaluation of the Field Presence Pilot Programme later this year will provide us guidance on how to enhance our country-level engagement. The aim is not to have flags and offices and cars, but to add real value to the UN's collective effort on the ground, particularly through working with local institutions.  Together with FAO and WFP, we are also exploring expanded and deepened collaboration in Rome.

The Millennium Summit was nearly 7 years ago. We are mid-way to 2015. I should be saying to you that we are on-track. That half of those who are suffering from poverty and hunger will have better lives in 2015. And I should be talking today about how we plan to reach the other half. And about how IFAD can help the global effort not only to halve but to eliminate absolute poverty altogether.

But I cannot. Globally, we are on track – to halve income poverty. But in many regions of the world, we are not. 

Geographically, most of the rural poor are in Asia but the slowest progress is in Africa. Common to both, and to other regions such as Latin America, poverty is mainly rural. Of the 1.1 billion people in the world living in absolute poverty, 800 million – that is three quarters of them – live in rural areas.  Some are moving to towns to find a better life or – as is all too often the case – to remain poor when they get there. But it is in the rural areas that most poor people live and will continue to live for the foreseeable future.  If we are serious about tackling poverty, it is in the rural areas that we have to tackle it.

This should be self-evident. Can you imagine a world of flourishing towns alongside a rural world that is either depopulated or that is impoverished?

The challenges that poor people in rural areas face are daunting. Travel to the hinterlands of Peru, Ghana or India or to any other of the many countries IFAD works in. These are the areas far from tourist trails or even the normal donor highways. The rural poor are the landless, small farmers, nomadic pastoralists, herders and artisanal fishermen. They are ethnic minorities or indigenous people. Above all, they are women, who now constitute the majority of the poor.

These are people with hope and dignity, with dreams and aspirations, living in rich cultures, just seeking an opportunity for a better life.

These are IFAD's target groups.  They make up a large part of the 800 million rural poor.  These poor, often forgotten, want to see their lives as a priority on the development agenda.

Mr Chairman,

Severe vulnerability is a permanent condition facing the poor - to uncertain weather conditions, disease, pests or strife. For IFAD, overcoming the vulnerability of poor farmers and herders has long been a key issue.  Climate change is profoundly aggravating this vulnerability.  We have already seen the effect in hotter summers and more extreme droughts and floods that threaten the livelihoods – and even the lives – of the poor.  Addressing their growing vulnerability must be a major concern for all of us.

In sub-Saharan Africa, the challenges are especially stark.  Agriculture accounts for 30% of GDP, 40% of exports and as much as 70% of employment.  Investments have been grossly inadequate in land and water management, small-scale irrigation, research, technology, extension, market access or provision of fertilizer and pest control.  Africa suffers from declining soil fertility and uncertain water availability and, in many places, HIV/AIDS is taking a heavy toll.  Even when farmers succeed in raising production, as I saw myself with cassava farmers in Ghana last year, lack of market linkages often means there is a local glut and prices collapse.

Investing in agriculture has a tremendous pay-off. Agriculture has the power to transform economies.  We have seen it in Asia.  We know it from Europe a century ago.  Agricultural revolutions have been the precursors of the industrial revolutions. There is a wealth of evidence to show that investments in agriculture can be just about the most effective investments you can make if you want to drive broader growth and to make a direct and immediate impact on poverty.  Studies show that investments in agriculture are two and a half times more effective in raising people out of poverty than investments in any other sector.

Yet the world is seriously under-investing in agriculture – aid for agriculture from all donors actually fell between 1995 and 2002.  There are some signs of reversal – the Declaration made in 2003 by African leaders in Maputo promising to invest 10% of their countries' budgets in agriculture is one example. And many donors have strategies that talk about the importance of agriculture. Kofi Annan has repeatedly called for an African Green Revolution. The Gates Foundation is giving priority to agriculture. And this year the World Bank's World Development Report will, for the first time in 25 years, have agriculture as its theme.

Comparisons are difficult to make as definitions are not always the same, but in rough terms, the World Bank spends about 12% of its resources on agriculture, the African Development Bank around 7%, the Asian Development Bank 5%, the Arab Funds about 4% and IDB 1%. Why not more? Well, there are good reasons. Each institution has its own priorities and strengths and responds to national demands. But when you add up all these good reasons, the result is that collectively we are under-investing in agriculture.

Mr Chairman,

IFAD programmes are making a real difference in the lives of people. Last year I visited Ghana together with Jacques Diouf and Jim Morris.  We met Alimatou Mahama, who lives north of Tamele in Northern Ghana.  She is a strong woman, proud and full of confidence.  She has used training, veterinary services and microcredits from an IFAD project to raise goats, an opportunity that women were previously denied. She still lives in a mud hut village, but is now able to send her children to school, to eat better, and to have her own income in a society where women used to have no voice and no influence.  Last year she had saved enough money to perform her hajj.  So where is the IFAD project?  It closed several years ago. But the difference it has made to Alimatou's life and that of her children lives on.

Twenty-seven years ago my predecessor, President Al-Sudeary, decided to invest US$3.4 million in a small but very exciting institution providing microfinance services to very poor women in Bangladesh. I pay tribute to his foresight and am very proud that IFAD played some part – small though it was – in the tremendous success of that institution. The institution I am talking about is, of course, the Grameen Bank. I was absolutely delighted that Muhammad Yunus was awarded the Nobel Peace Prize last year; there could not have been a more worthy winner.

Since then, we have supported microfinance projects throughout the developing world, currently providing about US$200 million a year.  Many other institutions have joined this effort. Microcredits can bring macro results. Today over a hundred million poor families benefit from the global microfinance movement.
Mr Chairman,

IFAD's work will be effective only if it fits into a wider context. The UN reform agenda is long overdue and, if we can keep up the momentum, I am convinced it will bring enormous benefits, especially to developing countries.  The "One UN" will be far better able to serve the countries in which we work, and IFAD will play its part.  Eight countries have already been selected as pilots for the One UN and IFAD is committed to participate fully.

Finally, let me say a word about my staff. Over the past year I have completely renewed my senior management team. Kanayo Nwanze, our new Vice-President, has a distinguished record in agricultural research and management at senior level.  Kevin Cleaver has long been known as a pillar in agricultural development, both in its theory and its practice.  Matthew Wyatt has hands-on experience in a bilateral agency and is a seasoned diplomat.  Jessie Mabutas has held many high-level positions in finance, human resources and IT management. We also have a new Secretary of IFAD; Paolo Ciocca has come to us from the highest levels of the Italian administration.  And I hope very shortly to announce the appointment of our new General Counsel.  Even before the Secretary General's High-level Panel called for transparent, merit-based recruitment throughout the UN system I was determined to implement it here in IFAD. The recruitment process has been fair and transparent and has involved the best external judgement, and I believe represents an example of best modern practice.  This is my senior management team that will be leading the process of change.  They will empower all staff to be involved, to contribute ideas, to bring forward their initiatives and to contribute both to the building of a transformed organization and to stronger development impact.

But it is, of course, IFAD's current staff who have made possible the progress we have made over the past year. I would like therefore to conclude by paying tribute to them. Their dedication, together with your support in the form of guidance, advice and resources, will help to ensure that IFAD continues to be a vibrant and innovative organization.

Next year we will launch the negotiations on the Eighth Replenishment. This replenishment will set our course in the run-up to 2015, a decisive factor in IFAD's contribution to achieving the MDGs on time.

Next year will also see the 30th anniversary of IFAD's establishment.  This will be a moment to look at the wealth of IFAD's experience in supporting rural poverty programmes over three decades and assess the lessons for the future.  We hope to make the Governing Council session next year a high-level conference on rural poverty, ways of achieving the MDGs and IFAD's role in this endeavour.  This discussion would, I believe, strengthen the basis for the Eighth Replenishment negotiations.

My vision is that IFAD will be known for the quality of its work with poor farmers; for its ability to develop innovative approaches to enhance productivity and livelihoods, and pass them to others to replicate and scale up; for its value as a partner: of governments, civil society, farmers' associations, the development community and the UN family; and, above all, for the sustained contribution it makes to reducing rural poverty across the developing world.

Thank you.