During the last decade, country performance criteria and conditions of good governance have increasingly gained importance in development cooperation. During the cold-war period, the flow of aid, in particular by major bilateral donors, was strongly influenced by strategic foreign policy interests. Very often, political considerations prevailed over developmental objectives. However, development itself, in particular rural development, was perceived as a predominantly economical or technical problem. This perception has changed considerably over the last years.

What has emerged is a basic consensus amongst donor and recipient countries: sustained development in the interest of the poor calls for more than growth and the determined implementation of economic reforms; it has to be related to a process of empowering the poor. Therefore, development assistance aims to combat poverty; to do this efficiently, it has to ask for -- and contribute to -- an environment conducive to this process.

The mission of the International Fund for Agricultural Development (IFAD) as it evolved over the last 20 years in a way anticipated this basic reorientation of development policy. In its lending policies and criteria, the Fund set general governance-related guidelines for its interventions that still seem valid. The guidelines state that "the recipient country's commitment to a development strategy directed towards the rural poor, manifested in appropriate policies and institutions, is an important factor" and that "performance criteria should take into account efficiency in use of resource flows to agriculture".

These criteria reflect a salient characteristic which distinguishes IFAD from, for instance, the Bretton Woods Institutions: the Fund does not intervene at the macroeconomic but at the local level, using grass roots as an entry and reference point. However, IFAD projects not only provide the means to directly improve the livelihood of the rural poor, such as small-scale irrigation, extension or micro-credit. They also aim to improve the institutional framework that enables the development of the poor by using instruments which ensure that their interests and concerns are adequately heeded and reflected.

Such instruments can be the empowerment of grass-roots organizations and the strengthening of the locally-based institutions serving them. Hence, IFAD's focus on the local level does not at all imply that structural changes at intermediate and macroeconomic levels are not intended. They definitely are, but the approach is bottom up.

In fact, IFAD in many countries complements the work of the World Bank and other multilateral financial institutions (MFIs) which have focused on the macro level and therefore have tended to follow, until relatively recently, a top-down approach.

In El Salvador and Paraguay, for example, policy dialogue with the national Government started with project implementation in some rural districts. This led to the enactment of specific laws by Congress related to rural credit and the establishment of trust funds that enabled the rural poor's access to financial services. In Chile, as a consequence of IFAD's cooperation, local development councils, comprising representatives of the rural poor and of regional and central governments, have been established in order to select and coordinate public investments in rural areas.

In Syria, agricultural development policies pursued a highly "top-down" approach for decades. The Badia Rangelands Development Project incorporates for the first time in Syria a truly participatory approach. Groups of beneficiaries, cooperatives and traditional associations are involved in all stages and aspects of project implementation.

In recent years, a number of bilateral donors have assisted countries in the adoption of a democratic system with free elections. This is certainly not a task of IFAD. At the village level, however, IFAD can assist in the creation of water-user associations, managed by the people themselves. In Mauritania, for example, IFAD's local intervention has brought the Government to adopt a law that, for the first time, recognizes the right of locally-governed associations to run the oasis. IFAD cannot promote at governmental level the general concept of accountability, but it can support the emergence of sustainable local institutions, such as savings and credit organizations, whose management is democratically elected and accountable to its members (an example is the P4K Project in Indonesia). In the case of socialist centralized economies, IFAD's mandate does not encompass national policy reforms aiming at the adoption of the general right to ownership or the liberalization of markets. Based on its mandate to help the rural poor, IFAD can however support, as it does in the Democratic People's Republic of Korea, the notion of private ownership at the local level, by providing credit to individual households for the purchase of livestock that is privately owned and sold in "free" local markets.

In many countries, the biggest challenge to improving performance and governance is fighting corruption. Again, IFAD's role is not to address this sensitive issue at the national level, e.g. by helping countries to introduce institutions and regulations to enhance the transparency and accountability of the administration. But IFAD's decentralized approach and its increasing efforts to help Governments implement decentralization policies for the benefit of the rural poor do contribute a lot to making government services at the local level more efficient and transparent. If people have a say in the design and the monitoring of projects, public resources intended for improving productivity are generally not diverted for "non-productive" purposes. This is one reason why IFAD insists on the inclusion and capacity-building of community-based organizations as a constituent element in virtually all of its projects. This is why IFAD has convinced its partners in Ghana, Senegal and Guinea, i.e. the Governments and the World Bank, to extend decentralization programmes beyond the district level to village and community organizations. In Sudan, too, IFAD projects focus on building the capacities of village communities to plan and implement sub-projects that enhance on- and off-farm income and provide access to rural financial services. This is irrespective of perceptions of democratic legitimacy and equity at the national level, but it certainly does foster, in an exemplary way, democratic governance and transparency at the local level, for a start.

The poor, being the most vulnerable sections of the population, are also the most severely hit by political unrest and civil wars. Moreover, perpetuated poverty, which may result from political instability, can become a source of new internal conflicts.

In this context, IFAD has recently approved a number of projects through which it plays an important role in the recovery process in several countries in Central America, as well as in Rwanda and Burundi. The success of these projects is due in part to IFAD's not "waiting" for a well-governed administration at the national level, but responding in a timely manner to the need to rehabilitate the basic physical and institutional infrastructure necessary for production-oriented and sustainable income generation in the hard-hit rural regions. In Rwanda and Burundi, IFAD was the only international donor that maintained activities, even during the armed conflicts. In Cambodia, it is playing a distinctive role in post-crisis recovery, aiming in particular at preventing new conflicts from emerging.

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