Issue 7 - November/December 2005

Pro-poor policy dialogue

In this issue

Pakistan earthquake

IFAD and the Government of Pakistan are working on arrangements for infrastructure rehabilitation and rebuilding of livelihoods in the disaster area.

read more

Back to top

Message from the Director of Asia and the Pacific Division

Investments for rural poverty reduction directly support a targeted number of people, within an approved budget constraint, to move out of poverty. When national policies are subsequently adjusted to incorporate the lessons learned from the successful replication and scaling up of innovative and effective programmes, all people are enabled to move out of poverty on a sustainable basis. Pro-poor policies enable all poor rural producers to overcome their poverty. Inclusive policies have been a major determinant in achieving the Millennium Development Goals in the well-performing countries.

Policies define the production possibilities of rural poor people, determine the profitability of their economic enterprises and constitute their incentive framework. In many countries, policies used to be biased against poor rural producers, especially smallholder farmers; in some countries, this is still the case. Currently, the dominant policy framework is founded on liberalization, government disengagement and market principles that shape an economically efficient allocation of scarce economic resources. However, markets left on their own do not establish conditions to function efficiently. They do not constitute level playing fields for the many small producers who have limited bargaining power to negotiate adequate terms for market participation. And many governments have shed a significant part of their institutional capacity to manage market or policy failure.

True to its fundamental faith in country ownership, IFAD’s approach is to strengthen the capacity of rural poor producers and their organizations to influence the policies that determine their livelihoods and market participation. IFAD-supported programmes provide training to small rural producers and capacity building to their organizations to enable them to define their policy needs and to express their voices in the policy arena. IFAD also helps to organize systems to ensure that their voices are heard. This process is particularly important where rural elites or other interest groups confiscate the democratic right of citizens to participate in policy enactment. Support is also provided to strengthen the capacity of policy-makers to include rural poor people in the policy-shaping process; strengthening analytical capacity and the capability to manage the political economy of policy change and enforcement is part of this support.

In its work to strengthen rural poor people’s voices, IFAD focuses on policies that secure access to: agricultural land and water, forests and fisheries; technology for increased rural productivity; inclusive rural financial markets; and local, national, regional and global markets for goods and services. The new pro-poor policy areas to be developed include policies that reduce risk and vulnerability and policies that create market-based risk-transfer mechanisms.

To achieve these goals, IFAD has adopted an integrated country programme approach that encompasses: annual consultations with governments on key policies of importance to the rural poor; periodic reviews of results-oriented country strategies; loan-funded investment projects; grant-financed capacity-building programmes at the country level, at times supported by regional knowledge management programmes; country-level supervision and implementation support to facilitate and monitor progress made towards the expected policy and institutional change outcomes; and different types of evaluation that help define the further policy innovation and knowledge development agenda. In order to enhance its effectiveness in this policy change agenda, IFAD forges partnerships with other development agencies to: harness broader policy analysis and dialogue capacity; and increase harmonization to foster alignment with national policies, strategies and systems. This newsletter shares some of IFAD’s experiences in this regard.

Thomas Elhaut

Back to top

Enhancing and mainstreaming policy dialogue through country-owned poverty reduction strategies

Poverty reduction strategy (PRS) processes set by 17 countries in the Asia and the Pacific region have become the primary strategic and implementation vehicles for reaching the national targets of the Millennium Development Goals (MDGs). These countries include Bangladesh , Bhutan , Cambodia , China , India , Indonesia , Kyrgyzstan , Lao People’s Democratic Republic, Mongolia , Nepal , Pakistan , Papua New Guinea , Philippines , Sri Lanka , Tajikistan , Timor-Leste and Viet Nam . Afghanistan will soon join this list, as it is currently developing its own framework for engaging in the PRS process.

In line with IFAD’s established policy and its evolving programme-based and policy-oriented approach, the Asia and Pacific division is improving its strategic alignment with country-owned PRS processes, expanding in-country partnerships and contributing to donor harmonization. This is in response to the request of several development partners for IFAD to promote the design and implementation of pro-poor PRS processes, and to ensure that these processes enable rural poor people to overcome poverty.

To achieve this goal, the Asia and the Pacific division will increase IFAD’s pro-active support to the design and implementation of PRS processes that take into account the needs of rural poor people. It will also improve IFAD’s role as an authoritative reference on PRS policies, programmes and operations in agriculture and rural development.

Expected outputs of this strategy include:

  • IFAD strategic alignment with the MDG national targets and PRS processes further enhanced
  • IFAD programmes integrated into PRS processes and viceversa
  • strategic alliances established with selected partners that have potential to add value to IFAD’s work
  • greater participation by rural poor people and improved policy dialogue in PRSs, country strategic opportunities papers (COSOPs) and other strategy activities
  • new rural poverty components introduced in PRSs

Nicola Favia, Senior Economist

Back to top

Regional programme on policy analysis and dialogue at the country level

Pro-poor policies are critically important in the fight against rural poverty. However, despite IFAD’s long-standing commitment to dialogue on rural policy issues, there are few examples of this happening systematically. The experience of other development organizations suggests that the use of non-lending instruments, especially country-specific analytical work and related capacity building, can be critical to developing effective processes of policy dialogue.

Taking this experience into account, IFAD has formulated a regional grant-funded programme to strengthen policy work at country level by focusing on:

  • building capacity of key government institutions to develop policy
  • policy formulation and implementation in key areas of agriculture and rural development
  • country and regional policy dialogue and knowledge sharing

Countries in the region have begun to develop policies and strategies with an explicit pro-poor focus. This is reflected to varying degrees in their PRS papers, MDG needs assessments, and in the establishment of institutions focusing on poverty issues. However, the development of new policies and realignment of existing policies towards the needs of poor people are often constrained by a country’s capacity to conduct sound analysis of options for achieving objectives, and their likely impact on the different stakeholders. This programme is expected to partially fill that gap.

The goal of the programme is to assist eight developing member countries in the region in reducing rural poverty through enhanced institutional capacity to analyse, formulate and implement pro-poor agricultural and rural development policies.

The programme objectives are to:

  • build capacity of key government agencies in the analysis, formulation, implementation and monitoring of pro-poor policies
  • promote sharing of experiences and lessons learned from successful pro-poor policies among countries through a knowledge network and international fora
  • promote greater participation of civil society and private sector in pro-poor policy dialogue and advocacy

This programme will be implemented in collaboration with the Food and Agriculture Organization (FAO) and participating countries.

Ganesh Thapa, Regional Economist

Back to top

Piloting household microcredit in the Democratic People’s Republic of Korea

DPR Korea’s economy is centrally planned. Agricultural production is based mainly on a collective system, under which cooperative farms are both the main production units and the basic rural organizations. Within this specific country context, IFAD is pursuing with the government the broader agenda of pro-poor policy transformation through interventions at the project level. The focus is on testing innovative and pragmatic ways for supporting household-based initiatives and activities. A pilot household microcredit scheme, which has gained government recognition for its impact on rural poverty reduction, is one of the successes.

IFAD introduced the pilot as part of the Crop and Livestock Rehabilitation Project , which started in 1998. It was implemented in the form of a Household Credit Revolving Fund, managed by the Central Bank and targeted at household-based livestock activities. All household loans were made for one year. A typical use of the loan before the price increase in July 2002 was a mix of animals such as two piglets, seven chicks, 11 rabbits, some duckling, plus some feed. After the price adjustment, borrowers typically purchased a piglet, a kid goat and a few chicks. Although some cooperative farms made loans to all of their households, overall a strong preference for targeting women was observed by the various project review missions. Moreover, the institutional capacity of the Central Bank, at both the central and county levels, has been strengthened for credit operations. Manuals have been developed, which incorporate basic modalities for sustainability of the credit scheme. Building on the experience of the Crop and Livestock Rehabilitation Project, the pilot of household microcredit scheme continues under the ongoing Uplands Food Security Project and the Italy-funded Household Sericulture Pilot Project.

Tian Ya, Country Programme Manager

Back to top

Challenging policy agenda faced by IFAD project in Iran

The Rural Micro-Finance Support Project has tested different rural finance mechanisms in Iran . Access to rural finance emerged as a development priority in a socio-economic study carried out at the beginning of project design. While 83 per cent of rural families expressed the need for credit, only 35 per cent of surveyed households actually got access to credit. Access by rural youth and women to credit was far lower: only 1.5 per cent of total samples. The project has introduced solidarity groups to enable rural women, youth and poor households to get access to credit and financial services without the need for collateral or guarantee. Eighty per cent of the 2500 rural people who have participated so far in the project are first time borrowers, with an average age of 30 years. Women’s participation has reached 53 per cent. The project management unit, hosted by Bank Keshavarzi, is now assessing and sharing the project results and discussing the policy issues required for mainstreaming and scaling up successful elements of the project. So far, the following topics have been identified and discussed:

  • introduction of savings habits
  • ensuring access by first time borrowers to credit
  • active promotion of women and youth access to financial services
  • targeting credit to poor households
  • replacing collateral with joint liability
  • developing interest rate policies
  • enhancing monitoring mechanisms

The project is funded by the Italian Government and Bank Keshavarzi (Agricultural Bank of Iran ) and is being executed by the International Enterprise for Development of Rural Micro Finance Services (DRMFS-International). Bank Keshavarzi provides over 70 per cent of institutional credit disbursed in rural areas. Bank Keshavarzi and DRMFS-International have also decided to test the Self-Help Group model that is expected to address the issues of institutional and financial sustainability of the groups. Bank Keshavarzi has invited IFAD to participate and share its experience and knowledge in micro-finance at a national seminar on “Micro-credit, rural development and poverty alleviation”, to be held in Teheran in December 2005.

Mattia Prayer-Galletti, Country Programme Manager

Back to top

Creating an enabling environment for pro-poor growth in Indonesia

Efforts to increase the capacity of communities to plan and manage their own development need to be complemented by efforts to create an enabling environment for pro-poor growth through responsive and effective public policies, institutions and services. The Rural Empowerment and Agricultural Development Programme in Central Sulawesi, Indonesia , has internalized this kind of knowledge and applies a value chain approach to agricultural development by building capacities and providing incentives for all involved, including marginal poor communities, to play effectively their part in the chain. With a strong focus on creating the supporting environment for rural enterprises, the programme will provide for applied rural technology and research, private and public agricultural extension, linkages with private sector companies and banks, investments in human capital and economic infrastructure.

The programme also includes a policy action initiative, which will support the government in policy coordination based on specific requests from rural poor communities. It will also finance the establishment of a National Programme Coordination Office, which will be in charge of policy coordination and communication for all IFAD-financed operations in Indonesia . The office will also be responsible for the establishment of a monitoring and evaluation system, which will help to monitor impact of all development and poverty reduction programmes of the Ministry of Agriculture, including attribution of impact against its PRS objectives and MDG targets.

While institutional arrangements envisage a strong partnership between the government and NGOs at all levels of implementation, the programme also opens up windows for policy dialogue and public debate on development, financial management and governance issues, in addition to crucial issues such as policies enabling access to land and forests and other common and private property resources by marginal communities.

This US$37.9 million programme aims to increase the incomes and improve the livelihoods of marginal communities in the fifth poorest province of Indonesia. The programme financing agreement is at the negotiation stage and the implementation is expected to start in 2006.

Rossella Bartoloni, Country Programme Manager

Back to top

IFAD Farmers’ Forum

Representatives of 20 rural producers’ organizations and four national apex rural producers’ organizations participated in a workshop organized by IFAD in Matale , Sri Lanka , on 9 and 10 October 2005 . The workshop is part of IFAD’s Farmers’ Forum initiative, which gathers selected leaders of rural producers’ organizations worldwide every two years, as a permanent side event to IFAD’s Governing Council meeting in Rome .

In preparation for the second Farmers’ Forum, which will take place in February 2006, the Asia and the Pacific Division will organize another national workshop in the Philippines , and a regional Farmers’ Organizations Workshop, to be held in Manila at the beginning of December.

Based on the expressed views, needs and aspirations of selected farmers’ and rural organizations, the purpose of the national Sri Lanka workshop was to prepare selected leaders of farmers in Sri Lanka to usefully and effectively contribute to the successful outcome of the regional workshop. The purpose of the regional workshop is to help IFAD deepen its knowledge on the extent to which the overall policy framework in selected countries is conducive to poverty alleviation.

More specifically, the purpose of the Sri Lanka national workshop was to:

  • provide farmers’ and rural organizations with a better understanding of IFAD’s mission, goals, national strategy and programmes
  • provide IFAD with a better understanding of the roles, strengths, needs and aspirations of farmers’ and rural organizations
  • provide IFAD with a better understanding of the way farmers’ and rural organizations perceive the national legal and policy framework for rural and agricultural development
  • identify some of the themes that could be discussed at the regional workshop

The workshop enabled IFAD to deepen its understanding of the specific policy issues that are perceived by the rural organizations as constraints to effective poverty reduction efforts, as well as of some of the opportunities for improving the legal and policy framework. Some of these issues will be brought to the attention of the government during the next national consultations on the performance-based allocation system (PBAS).

Due to the success of this first national workshop, the Asia and the Pacific division is looking into the possibility of expanding this initiative to other countries in the region in 2006.

Maria Donnat, Consultant

Back to top

IFAD support for rehabilitation following the Pakistan earthquake

On 8 October 2005, a devastating 7.6 magnitude earthquake struck close to Muzaffarabad in Pakistan-administered Kashmir . Approximately 73 000 people died and as many as 3 million lost their homes. With the winter snows beginning, and with relief workers still far from reaching many
remote hillside villages, a second disaster from cold and disease now
threatens. The unfolding situation is the largest disaster to hit Pakistan in over 100 years. The disaster area overlaps with three ongoing IFAD projects. The Northern Areas Development Project has reported little damage in the project area, however the AJK Community Development Programme and the North -West Frontier Province Barani Area Development Project have both reported major damage to project areas. Immediately following the earthquake, IFAD began discussions with the Government of Pakistan on how IFAD resources could be used to assist in the reconstruction efforts. An initial proposal was made at the Government/Donor meeting in Islamabad on 9 October. It has been agreed that IFAD will respond through a dual-track approach.

  • As a first step, IFAD and the Government are working on arrangements for re-programming existing ongoing IFAD projects in the disaster area. It is proposed that loan resources, some of which would otherwise have been cancelled at loan closing, be redirected to the
    enormous task of re-building village and community infrastructure and livelihoods. In this regard, IFAD's President has just approved re-programming of approximately USD 23 million of existing project resources.
  • As a second step, IFAD is fast-tracking a community infrastructure rehabilitation project for submission to the April 2006 Executive Board for approval. This new project is expected to cost US$25 million.

Both step 1 and step 2 are being refined in close consultation with Government and donors. IFAD is currently participating in the damage assessment mission being led by FAO's Investment Centre, and will coordinate with the multi-donor review work being led by World Bank, Asian Development Bank and other donors. An Information Note will be presented to IFAD's Executive Board on 12 December 2005 to provide a status report on IFAD's follow-up initiatives.

Nigel Brett, Country Programme Manager

Back to top

Useful links

About IFAD

The International Fund for Agricultural Development (IFAD) is a specialized agency of the United Nations, dedicated to eradicating poverty and hunger in developing countries. Its work in remote rural areas of the world helps countries achieve the Millennium Development Goals. Through low-interest loans and grants, IFAD develops and finances projects that enable rural poor people to overcome poverty themselves.

IFAD tackles poverty not just as a lender, but as an advocate for the small farmers, herders, fisherfolk, landless workers, artisans and indigenous peoples who live in rural areas and represent 75 per cent of the world's 1.2 billion extremely poor people. IFAD works with governments, donors, non-governmental organizations, local communities and many other partners to fight the underlying causes of rural poverty. It acts as a catalyst, bringing together partners, resources, knowledge and policies that create the conditions in which rural poor people can increase agricultural productivity, as well as seek out other options for earning income.

IFAD-supported rural development programmes and projects increase rural poor people's access to financial services, markets, technology, land and other natural resources.





Martina Spisiakova
Tel: 3906-54592295

Making a Difference in Asia and the Pacific

Issue 6: September/October 2005 - Gender & MDGs

Issue 5: July/August 2005 - Partnership

Issue 4: May/June 2005 - Rural Finance

Issue 3: March/ April 2005 - Donor Harmonization

Issue 2: January/ February 2005

Issue 1: November/ December 2004

Upcoming events:

IFAD Executive Board, December 2005 will consider the following programmes and grant for approval:
Bangladesh: Market Infrastructure Development Project in Charland Regions

India: Tejaswini: Rural Women’s Empowerment Programme

Pakistan: Microfinance Innovation and Outreach Programme

Nepal: Large Country Grant: Local Livelihoods Programme in Mid-Western Nepal

Bangladesh: PRSP Implementation Forum, Dhaka , 15-17 November 2005

Bhutan: Start-up workshop – Agriculture, Marketing and Enterprise Promotion Programme, January 2006

China: Monitoring and Evaluation – RIMS workshop, Hubei and Ningxia province, November 2005

Project management office workshop – Hubei province, early 2006

India: Loan Signing – Post-tsunami Sustainable Livelihoods Programme for the Coastal Communities of Tamil Nadu, Rome, 11 November2005

Indonesia: Financing Agreement Negotiations – Rural Empowerment and Agricultural Development Programme in Central Sulawesi , December 2005

Iran: Micro-finance at a national seminar on “Micro-credit, rural development and poverty alleviation”, Teheran, December 2005

Laos: Start-up Workshop – Rural Livelihoods Improvement Programme in Attapeu and Sayabouri, Attapeu, 1-2 November 2005

Maldives: Inception mission – December 2005

Pakistan: International donor conference on earthquake rehabilitation – Islamabad , 18-19 November 2005

Philippines: Loan signing – Rural Micro-enterprise Promotion Programme, Rome, 11 November 2005

National and regional farmers' organizations workshop – Baguio and Manila , 5-9 December 2005

Sri Lanka: Start-up workshop – Dry Zone Livelihood Support and Partnership Programme, Colombo, January 2006

Upcoming missions:

Evaluation-cum-supervision mission – Regional Gender Programme, early 2006

Project completion review mission – Agriculture Productivity Improvement Project, 25 October – 11 November 2005

Mid-term review mission – West Guangxi Poverty Alleviation Project, November 2005

DPR Korea
Inception Mission, December 2005

Mid-term review mission – Livelihood Security Project for Earthquake-Affected Rural Households in Gujarat - November 2005

Mid-term review mission – Jharkhand-Chattisgarh Tribal Development Programme - January 2006

Inception mission – Eastern Indonesia, October - November 2005

Mid-term review mission – Oudomxai Community Initiatives Support Project, 21 November – 5 December 2005

Pre-implementation mission – Post-Tsunami Agricultural and Fisheries Rehabilitation Programme, January - February 2006

Implementation support mission – Western Upland Poverty Alleviation Project, November 2005

Project design mission – Earthquake Rehabilitation Project, 15 November - 15 December 2005

Exit strategy mission – Barani Village Development Project, 1 - 24 December 2005

Sri Lanka
Pre-implementation mission – Post-Tsunami Coastal Rehabilitation and Resource Management Programme and Post-tsunami Livelihood Support and Partnership Programme, January - February 2006

Viet Nam
Inception mission – Tra Vinh and Ha Tinh Provinces, November - December 2005