The Challenge of Ending Rural Poverty - Address by Lennart Båge

Mr. Secretary of State, Mr. Minister,

Your Excellencies,
Friends and Colleagues,

I am deeply happy to have the opportunity to participate at the Third UN Conference on Least Developed Countries, at this panel organized by our sister agency in Rome, FAO. I am happy also to see the other panelists are from Belgium, with whom IFAD has developed a unique multilateral/bilateral collaboration in the Belgian Survival Fund Joint Programme, and Bhutan, Senegal and Pakistan, with all of whom we have long-standing operational collaboration against poverty.

Mr. Minister, Mr. Secretary of State,

Last September, at the Millennium Summit, the world's leaders declared their commitment to reduce the proportion of those living in extreme poverty by half by the year 2015. This target provides a specific goal to inspire our efforts and a benchmark to measure progress. The Millennium Summit poverty target is ambitious but it is within reach as the example of many countries in East Asia over the last 25 years show us. Perhaps for the first time in history, there is a real prospect of making a substantial reduction in poverty within a specific time frame. It is an opportunity that must not be lost.

The international community has long recognized the special difficulties that least developed countries face. In IFAD, over the last twenty years we have provided LDCs with financing of USD 2.6 billion for projects whose total investment cost was USD 6.4 billion, and currently provide LDCs nearly USD 200 million per year. Unfortunately, total ODA for LDCs has declined in recent years, from USD 17 billion in 1990 to USD 12 billion in 1999.

The large majority of the least developed countries are in Africa. These countries, like other LDCs, have been especially vulnerable to the disruptions caused by falling commodity prices, conflicts and natural disasters, as well as the AIDS pandemic. Overall, the rate of poverty reduction in Africa, for example, is far lower than that required to achieve the Millennium Summit target. And in some LDCs, poverty levels, life expectancy and other social indicators have actually worsened in recent years.

This situation calls for a new approach to ending poverty among the least developed countries, an approach supported by focused domestic policies and enhanced international assistance.

Reducing poverty by half in least developed countries, especially in Africa, will require a much higher rate of economic growth, about 7% per year, than has been achieved in the 1990's. The majority of the poor in most LDCs live in rural areas, depending on agriculture and related trade, services and processing activities for their livelihood. Women, sadly, form a growing majority of the poor, with equal obligation for farm work in addition to their household tasks, and yet even more deprived than men of assets, services or support. The only way to achieve a higher rate of growth in these countries is to engage the under-utilized capacities of the poor through broad-based rural development, centered on growing agricultural production.

The rural poor rarely have the same voice in decision making as the better off and urban groups. Thus the pressure of budgetary limitations and reform programmes has fallen disproportionately on investment in the rural sector. Services and infrastructure there have eroded and rural health and education facilities have been starved of resources. Not surprisingly, poverty levels in rural areas are often double those in urban areas. In Burkina Faso for example, 52% of the rural population is absolutely poor, while only 16% of the urban population is. In Bolivia, the figures are 82% and 34%. Access to health services is similarly uneven. It is not a coincidence that while the AIDS pandemic has been contained in affluent countries, it is ravaging poor ones, especially in rural areas.

Unfortunately, the share of international assistance for rural and agricultural development over the last decade has actually fallen even as overall ODA declined, resulting in a 40% reduction in aid to the agricultural sector in developing countries. International financial institutions have also sharply reduced their lending to agriculture, with the proportion now well below 10% of total lending.

If we want to achieve the Millennium Summit targets, these trends must be reversed.


Earlier this year, IFAD, drawing on the lessons from its 23 years of operational experience to combat rural poverty, and relating these insights to the experience of other institutions, brought out its Rural Poverty Report 2001. The Report reviewed in depth the causes and dynamics of poverty and the most effective approaches for reducing poverty levels.

The starting point was to look at poor groups not as objects, or a burden on society, but as subjects, with the capacity to become the primary agents of change. Instead of looking only at their needs, we should build on their strengths. The poor, especially women, are hardworking and often effective micro-entrepreneurs, whether as smallholder farmers, herders, artisanal fishermen or in petty trades and crafts. They are knowledgeable, indeed experts, on their own situation and circumstances.

Creating the conditions that allow these groups to use their capacities more productively is often called the empowerment of the poor, one of the central themes of the Poverty Report. Key elements in this process of empowerment include allowing the poor to gain a stronger voice and influence in institutions that affect them, both at the local and national levels, as well as promoting better access to health, education and economic services like credit and savings. Yet empowerment will serve little purpose if the material means for increasing production and incomes are not available to the poor.

The IFAD Poverty Report identifies four central factors: assets, technology, markets and institutions.

Land and water rights both in terms of legal title as well as protection of customary use rights are vital for poor farmers and herders. While past experience of land reform has had problems, innovative market-based initiatives for agrarian reform are showing interesting results in Brazil, the Philippines and elsewhere and need to be pursued vigorously.

Poor producers in LDCs rarely enjoy effective access to technology and in any case the technology available is often not responsive to their priorities. Innovative approaches to extension, both in terms of better public and market-based services, have been developed and need to be expanded to cover a larger proportion of rural producers. At the same time, agricultural research has to be directed at the crops and animals grown by poor farmers in dry land zones, for the benefit of the many and poor, not only the few and better-off.

As more countries adopt market-oriented policies, access to fair, efficient markets is of central importance for poor producers to get full value of their efforts. Unfortunately, markets in many rural areas remain underdeveloped, dominated by a few traders and suffering from high transaction costs. Poor farmers thus have to sell cheaply in the glut following harvest but pay high prices for inputs and other items. However, a recent IFAD supported national programme in Mozambique is showing that rural producers can be helped to organize themselves in marketing groups and gain up to date information, enabling them to get fair prices. If such initiatives could be expanded, the market could become a powerful ally in the effort to end poverty.

Finally, institutions. Those who control institutions usually benefit the most, and the poor rarely control institutions. Changing this and building institutions in which poor people have a strong voice is perhaps the most difficult challenge for poverty eradication.

Progress in the empowerment of the poor and improving their access to the material basis of production depends first and foremost on the people and governments of the least developed countries themselves. They need a policy orientation more supportive of rural and agricultural development, with greater resources channelled to rural health, education and infrastructure on the one hand, and to support the productive activities of the poor on the other, within a comprehensive development framework.

At the same time, the international community has an equal responsibility to offer stronger support to the efforts being made by the least developed countries.

The first imperative is to reverse the decline in. ODA. Of course foreign direct investment offers a growing potential to help increase the production capacity of LDCs. Yet in many such countries, larger ODA is essential to build the conditions, in terms of health, education, infrastructure and services, to attract private investment. We thus need to redouble our efforts towards achieving the 0.7% ODA target as well as refocus development assistance resources - by IFIs as well as bilateral donors - on rural areas and agricultural development.

As LDCs liberalize their domestic economies, it is only reasonable to expect that industrialized countries will provide better market access for their produce. The recent decision by the European Union to allow duty-free imports from Least Developed Countries of "Everything but Arms" is a welcome step in that direction but should be regarded as a first step. Agricultural subsidies in the OECD countries remain several times as large as total ODA and health and quality standards, as FAO has reminded us, often serve as trade barriers. The elimination of such restrictions on agricultural trade would significantly enhance exports from LDCs and allow them to diversify their agriculture and become beneficiaries from globalization, rather than its victim.

Mr. Minister, Mr. Secretary of State,

Over the last three decades, we have learned a great deal about eradicating poverty. What has become particularly clear is that outsiders do not have to solve the problem of poverty, rather the task of both governments and aid agencies is to help remove the shackles that keep the poor trapped in poverty. Our experience in IFAD, with poverty projects in 114 developing countries, 43 LDCs among them, has repeatedly shown that even the poorest groups, whenever offered the opportunity, seize the chance eagerly to raise their incomes and output and build more secure and productive lives for their families.

The challenge of ending rural poverty is to give the poor that opportunity.

Third United Nations Conference on the Least Developed Countries - Brussels, May 15, 2001

As prepared for delivery at the Interactive Thematic Session Enhancing Productive Capacities: The Agricultural Sector and Food Security