Six years on, where do we stand from the Monterrey promise?

Article by Lennart Båge, President of IFAD published in Al Rayah and Gulf Times

At the Financing for Development (FfD) Summit held in the Mexican city of Monterrey in March 2002, world leaders unanimously adopted the Monterrey Consensus, which defined the roles and obligations of developed and developing nations in meeting the multiple challenges, especially the Millennium Development Goals (MDGs). Six years on, it is time to take stock of progress towards meeting those challenges.

The FfD Follow-up conference, which Qatar will host in Doha from 29 November to 2 December 2008, will provide the international community with that stocktaking opportunity. But, the world is now facing new and even more pressing challenges ranging from the accelerated effects of climate change to high and rising energy and food prices. Fears of a return to the scenes of famine the world witnessed in the early 1970s are raising expectations of what can be achieved by the Doha conference.

With these new challenges accumulating on the threshold of the Doha conference, Qatar can again set a powerful example. It has already done so in the past. In 2005, for example, it hosted a consultation session on the seventh replenishment of IFAD's resources. On that occasion, Qatar was the first to announce a pledge of US$10 million that sparked the enthusiasm of other donors and enabled IFAD to expand its funding of projects around the world designed to help poor rural people overcome poverty.

Again at the G77 South Summit held in Doha the same year, His Highness the Emir of Qatar reaffirmed his country's commitment to development assistance and to meeting the United Nations benchmark of 0.7 per cent of Qatar's Gross Domestic Product for development aid, with 15 per cent going to the neediest among developing countries. At the same summit, Qatar pledged a contribution of US$20 million to the newly established G77 South Fund for Development and Humanitarian Assistance. Through this initiative, Qatar again showed its leadership and commitment to south-south cooperation and to fighting poverty. The FfD follow-up summit will be an opportunity for other donors, in particular the OECD countries, to follow Qatar's example and help poor countries meet today's challenges.

As the host country, Qatar can play an even bigger role at FfD Doha by directing the attention of the donor community towards the need for a greater investment in agricultural and rural development. This will not only help avert the risk of a food crisis but will also contribute to the achievement of the first MDG, to halve the proportion of extreme poverty and hunger by 2015. Three quarters of the world's almost one billion poorest people live in rural areas of developing countries. They depend on agriculture and related activities for their livelihoods. Changes in food availability and rising commodity prices have crucial implications for the livelihoods of poor and food-insecure people.

The Monterrey Consensus identified the mobilization of both domestic and international financial resources as part of six leading actions to meet the cost of helping developing countries realize the MDGs.  Key to meeting this challenge was the creation of domestic and international policy environments to facilitate sustainable foreign direct investment (FDI) flows to developing countries that would enable them to achieve their national development priorities.

Much progress has been made over the past five years. FDI flows to the developing world increased by 92 per cent between 2002 and 2006, rising to a record of US$325 billion. However, official development assistance (ODA) has not grown as expected and has even slowed down in the last three years.  The total global ODA from member countries of the Organisation for Economic Co-operation and Development (OECD) amounted to US$103.9 billion in 2006, down 5.1 per cent from 2005. The picture is more dramatic when it comes to development aid for agriculture. It has not so much fallen as plummeted. From 18 per cent of all aid in 1979, down to 3.5 per cent in2004, and to 2.9 per cent in 2006.

Against this trend, IFAD continues to finance programmes that have already reached more than 300 million poor rural people across Africa, Asia and Latin America, helping them to obtain access to land, water, financial services, markets and technology.  We have increased our programme of work by 10 per cent a year for the last five years, and this will continue this year and next. Nearly 50 per cent of IFAD funding goes to Sub-Saharan Africa, where the challenge is the greatest in terms of meeting the MDGs. Over the past 30 years, IFAD invested about 43 per cent of its global investments of US$10 billion, in 55 low-income member countries of the Organization of Islamic Conference (OIC) in Africa and Asia, including the Arab region. And we are enhancing the efficiency of our delivery, the effectiveness of our projects and the sustainability of their benefits.

Our projects and programs are driven not only by our mandate to enable poor rural people to overcome poverty, but by the proven record of agriculture as an engine for poverty reduction. According to the World Bank's 2008 World Development Report, GDP growth generated by agriculture is up to four times more effective in reducing poverty than growth in other sectors. The fact that the report was dedicated to agriculture is encouraging.

IFAD is also encouraged by another positive sign of potential funding for rural development; remittances. As, perhaps, the second largest external source of financial flows to developing economies, remittances represent, in more than 40 countries, more than 10 per cent of GDP, with approximately a third going to rural families. According to a recent IFAD study, remittances were worth US$300 billion in 2006, directly reaching more than 10 per cent of the population of the developing world. That is why IFAD is working to build rural financial systems through which remittances, can become a development resource.

The combined impacts of climate change, increasing demand and the use of biofuels means commodity prices are not likely to diminish unless and until the supply response of poor rural farmers is unleashed.  These farmers have the capacity to increase productivity and meet the growing demand for their crops. What they need is the financial and technical support to do so. This potential depends largely on the will of the international community to direct a larger proportion of ODA to agriculture and rural development.

At the FfD Follow-up in Doha, I am sure that we can together make a significant progress towards achieving this goal.

March 2008

Source: IFAD