FUND FOR AGRICULTURAL DEVELOPMENT (IFAD)
President of IFAD
on Financing for Development
18 March 2002
Ladies and Gentlemen,
I am honoured to have the opportunity to address
the Ministerial session of the International Conference on Financing for
The vision underlying the FfD was provided by world leaders at the
Millennium Summit when they affirmed their commitment to reduce poverty
by half by 2015 and achieve the other Millennium Summit development goals.
Today, over 1.2 billion human beings still
are in extreme poverty, trying to survive on less than one dollar per day.
Some three-quarters of them, about 900 million, live in rural areas and
the majority of the poor will still be rural by 2025. Development cooperation,
if poverty reduction is its primary goal, must focus on where the poor
are - the rural areas.
The substance of development assistance is
as critical as its direction. Certainly, investment in health and education
are vital, particularly in view of the AIDS pandemic and other mass communicable
diseases. But since the bulk of the poor and vulnerable are in rural areas,
the bulk of social sector expenditure should also be in rural areas, especially
for primary health and education systems.
Yet, social sector investment by itself is
unlikely to be sustainable without rising output and incomes. Tanzania
for example in the 1970's and early 80's achieved impressive growth in
social investment and social indicators. Yet these proved hard to sustain
in the light of the failure to raise production and incomes at a comparable
pace. Thus a balance is needed between investment in the social sector
and investment to support the productive activities of the poor.
Most of the 900 million rural poor depend
on agriculture and related trades and services for their survival. Creating
the conditions in which smallholder farmers, especially women farmers who
in many countries produce the bulk of food crops, and other poor rural
groups can increase their productivity and incomes is the most effective
way to reduce poverty. This requires policies that encourage rural and
Unfortunately, trends in ODA in recent years
have been exactly the opposite. In fact between 1988 and 1999, the share
of ODA allocated to the rural sector declined sharply and the volume of
ODA for agriculture fell by nearly 50%. By OECD estimates, ODA to agriculture
now represents only about 8% of the total. Eight percent of ODA to support
the livelihood of threequarters of the poor. Does that make sense?
Historically, apart from a few mineral rich
countries, economic growth and development have been initiated by growth
of agricultural productivity and output. This was as true of England in
the eighteenth century as the Asian tigers
in the twentieth. Today, in many low-income countries, smallholder
agriculture and related rural employment account for a large proportion
of total employment, and a substantial part of exports. In these countries,
unless agricultural productivity and growth are enhanced, it is difficult
to see how sustained economic growth can be fostered.
Reducing poverty by half in twenty-five years
is a goal well within reach. In fact, a number of countries in East Asia
and even provinces in India, which are larger than many countries, have
achieved reductions of fifty percent or more in poverty levels between
1975 and 2000. So the task is certainly do-able. The challenge is to adopt
appropriate policies and mobilise the resources for the task.
Reports prepared for this Conference and for
the Development Committee suggest that to achieve the Millennium Summit
goals, ODA needs to be raised by USD 50 to USD54 billion per year, approximately
doubling the current level. Since three-quarters of the poor are in rural
areas, it would be reasonable to expect that a comparable proportion of
these resources is also channeled to the rural sector, with better balance
between social sector investments and investment in productive activities
Doubling ODA is certainly an ambitious target,
but what is especially important is that Monterrey should show the way
ahead towards raising development assistance to higher levels.
IFAD is an agency, which throughout its quarter
century of operations, has maintained an exclusive focus on poverty, particularly
rural poverty. This year's Governing Council of IFAD, the annual meeting
of its Governors, adopted as its overall theme, Financing Development
- The Rural Dimension.
At the Governing Council at which President
Obasanjo of Nigeria was the keynote speaker, Governors representing the
Fund's 162 member states, reflected on these ideas in their statements
and at a policy dialogue held during the Council session. Let me quote
a few elements from the closing statement of the Chairman in which he summed
up the discussions on behalf of the Council.
"Governors noted that the present rate
of poverty reduction must be accelerated substantially in order to achieve
the target. Further noting that the large majority of the poor live in
rural areas where agriculture and related activities are the main source
of livelihood, Governors also emphasized the importance of increasing the
rate of rural and agricultural development. This is critical in order to
step-up overall national growth rates and create the conditions in which
the rural poor can work their way out of poverty.
In this regard, His Excellency President
Obasanjo, stressed that, "Rural poverty reduction must remain at the centre
of the global development agenda ".
Or as expressed by the New Partnership
for Africa's Development (NEPAD), "Improvement in agricultural performance
is a prerequisite of economic development. Bilateral donors and multilateral
institutions have paid too little attention to the agricultural sector
and rural development, where more than 70% of the poor people in Africa
reside. The entire donor community must reverse such negative trends."
The Millennium Summit in 2000 raised the hopes
for a new partnership, with developing countries undertaking far-reaching
reforms, and developed countries providing greater development assistance
supportive trade and other policies. Achieving this will require strong
and sustained political will and leadership from both sides. The hundreds
of millions of poor whose voices have remained unheard so long, deserve
Statements at the Conference