International Fund for Agricultural Development (IFAD)

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1 1. What is IFAD? Università degli Studi di Pavia International Fund for Agricultural Development (IFAD) IFAD is an international financial institution and a specialized United Nations agency dedicated to eradicating poverty and hunger in rural areas of developing countries where the majority of the world s poorest people live. IFAD focuses on country-specific solutions, which can involve increasing rural poor peoples' access to financial services, markets, technology, land and other natural resources. IFAD's goal is to empower poor rural women and men in developing countries to achieve higher incomes and improved food security. 2. History The International Fund for Agricultural Development (IFAD), was established as an international financial institution in 1977 as one of the major outcomes of the first World Food Conference (1974). The World Food Conference was held in Rome by the United Nations under the auspices of the UN Food and Agriculture Organization (FAO). The Conference was organized in response to the food crises of the early 1970s that primarily affected the Sahelian countries of Africa. The conference resolved that "an International Fund for Agricultural Development should be established immediately to finance agricultural development projects primarily for food production in the developing countries". One of the most important insights emerging from the conference was that the causes of food insecurity and famine were not so much failures in food production, but structural problems relating to poverty and to the fact that the majority of the developing world s poor populations were concentrated in rural areas. 3. Structure With 165 member States (See Annex N 2), membership in IFAD is open to any state that is a member of the United Nations or its specialized agencies or the International Atomic Energy Agency. The member States are classified as follows: a) List A: Primarily OECD members (See Annex N 3) b) List B Primarily OPEC members (See Annex N 4) c) List C Developing countries. List C is further divided into: c.1. sub-list C1 Countries in Africa c.2. sub-list C2 Countries in Europe, Asia and the Pacific c.3. sub-list C3 Countries in Latin America and the Caribbean The Governing Council is IFAD's highest decision-making authority. Each Member State is represented by a Governor, Alternate Governor and any other designated advisers. The Council meets annually. Observers are also invited to attend sessions. These Observers consist of representatives from non-ifad Member States that have applied for Membership to the Fund, the Holy See and those United Nations Specialized Agencies, Intergovernmental Organizations and Non-Governmental Organizations whose Observer status has been approved by the Fund's Executive Board. All powers of the Fund are vested in the Governing Council which takes decisions on such matters as approval of new membership; appointment of the President of IFAD; matters pertaining to the permanent

2 seat of the Fund; approval of the administrative budget and adoption of broad policies, criteria and regulations. The Governing Council Sessions are chaired by the Chairman of the Governing Council Bureau which is composed of, for a two-year term, a Chairman and two Vice-Chairmen representing each of the three Lists of the Member States of the Fund. The Executive Board is the Fund's second main Governing Body. It is responsible for overseeing the general operations of IFAD and for approving its programme of work. Membership on the Executive Board is determined by the Governing Council. It is composed of 18 members and 18 alternate members and is presently distributed as follows: List A: eight Members and eight Alternate Members; List B: four Members and four Alternate Members; and List C: six Members and six Alternate Members; two each in the three regional sub-divisions of List C Member States. The Members and Alternate Members for the three-year term of office approved by the thirty-second session of the Governing Council in February 2009 are listed in the Annex N 6. The Board meets three times a year, in the months of April, September and December; the exact dates of which are decided upon by the Board. The Executive Board sessions are chaired by the President of IFAD. The President, who serves for a four-year term (renewable once), is IFAD's chief executive officer and chair of the Executive Board. The current President of IFAD is Mr. Kanayo Nwanze, who was elected for a four-year term in IFAD operates with well-motivated staff of the highest quality. Current level of staffing is as follows: 233 professional and higher-category positions 233 general service positions The professional positions exclude the positions of the President and Vice-President. In the Professional and higher categories, staff are nationals of 57 Member States, reflecting IFAD's adherence to the principle of equitable geographical distribution. Women make up 44 per cent of staff in the Professional and higher categories. IFAD engages the services of consultants for specific tasks, and of other temporary staff to enable it to meet its operational needs during peak periods and conferences. Under its Associate Professional Officer/Special Programme Officer Programmes, the organization benefited from the services of 18 professionals from nine donor countries: Belgium, Denmark, Finland, France, Germany, Italy, Norway, the Republic of Korea and Sweden. In the Internship Programme, IFAD had accepted 30 professionals from 16 countries: Belgium, Bolivia, Canada, Greece, Guinea, India, Iran, Italy, Kenya, Madagascar, Malta, Pakistan, Senegal, Sweden, the United Kingdom and United States of America. 4. IFAD Objectives IFAD will ensure that poor rural people have better access to, and the skills and organization they need to take advantage of: Natural resources, especially secure access to land and water, and improved natural resource management and conservation practices Improved agricultural technologies and effective production services

3 A broad range of financial services Transparent and competitive markets for agricultural inputs and produce Opportunities for rural off-farm employment and enterprise development Local and national policy and programming processes As reflected in the strategic framework, IFAD is committed to achieving the Millennium Development Goals (See Annex N 1), in particular the target to halve the proportion of hungry and extremely poor people by How does IFAD work? IFAD mobilizes resources from its 165 member countries to provide low-interest loans and grants to middle and lower-income members. Through these low-interest loans and grants, IFAD works with governments to develop and finance programmes and projects that enable rural poor people to overcome poverty themselves. Since starting operations in 1978, IFAD has invested US$10.8 billion in 805 projects and programmes that have reached more than 340 million poor rural people. Governments and other financing sources in recipient countries, including project participants, contributed US$15.3 billion, and multilateral, bilateral and other donors provided approximately another US$9.5 billion in co-financing. This represents a total investment of about US$24.8 billion, and means that for every dollar IFAD invested, it was able to mobilize almost two dollars in additional resources. IFAD tackles poverty not only as a lender, but also as an advocate for rural poor people. Its multilateral base provides a natural global platform to discuss important policy issues that influence the lives of rural poor people, as well as to draw attention to the centrality of rural development to meeting the Millennium Development Goals. 6. About Loans and Grants IFAD's objective and raison d'être are to fund, through loans and grants, rural development projects specifically aimed at assisting the poorest of the poor (small farmers, artisanal fishermen, rural poor women, landless workers, rural artisans, nomadic herdsmen and indigenous populations ) to increase their food production, raise their incomes, improve their health, nutrition, education standards and general wellbeing on a sustainable basis. In order to accomplish all these, nine major areas are supported: Agricultural development Financial services Rural infrastructure Livestock Fisheries Capacity-and institution-building Storage/food-processing/marketing Research/extension/training Small and medium scale enterprise development

4 Loans: IFAD provides loans to its developing Member States on highly concessional, intermediate and ordinary terms for approved projects and programmes. Lending terms and conditions vary according to the borrower's per capita GNI. Grants: IFAD provides grants to institutions and organizations in support of activities to strengthen the technical and institutional capacities linked to agricultural and rural development. Grants are limited to 10% of the combined loan and grant programme. In IFAD, grants have always been a key instrument in alleviating rural poverty. Since 1978, and excluding grants within the Debt Sustainability Framework (DSF), IFAD has committed approximately US$650 million in grants to support research-for-development and capacity-building programmes. Many of these programmes have had an impact on small-scale agriculture throughout the developing world. Through its support to the global agricultural research system, IFAD has succeeded in drawing attention to the priority concerns of poor rural people. It has also furthered understanding of the difficulties faced by people who live in resource-poor areas and who produce traditional crops and commodities under difficult rainfall conditions. Drawing on the success of past investments in multi-location, international agricultural research, IFAD s strategy is to support initiatives in adaptive research and related capacity building. This global and regional research strategy is based on three related core principles: The local institutional and technological problems faced by poor rural people in marginal, resourcepoor areas are similar, although local specificities are distinct. They can best be addressed through multi-location research with a community participatory approach and through sharing knowledge across the sites. Many poverty-relevant research and development (R&D) issues require human and capital resource mobilization beyond the capacity of local and national organizations. For example, networks of national research systems linked to international agricultural research centres have proved to be better equipped and generally more effective in addressing a common set of problems. Cross-country and cross-regional learning is essential to reap the benefits of replicable practical innovations, building on the rich diversity of local knowledge and practices in rural communities. In recognition of this potential, IFAD's grant portfolio continues to support the development of innovative R&D approaches to issues affecting poor rural people. Such approaches are increasingly relevant in the context of national poverty reduction strategies and in efforts to harness science and technology for the purpose of realizing them. Activities eligible for country-specific grants are directly aligned with country strategies, as articulated in Results-based Country Strategic Opportunities Programme, and they support and complement IFAD s loan portfolio while responding to issues deriving from country assessments under the Performance Based Allocation System (PBAS). The focus is on development of innovative approaches to technical and institutional issues confronting poor rural people. The issues are increasingly in the area of organizational and institutional development in non-agricultural areas, and they include rural finance, market linkages and pro-poor policy development. They involve mobilization and strengthening of the institutional capacities of both national and civil society organizations to address national and local issues and to support partnership formation, establishment of policy-dialogue platforms and pro-poor institutional transformation. IFAD has also joined the larger international aid effort by adopting the Debt Sustainability Framework to address many countries debt problems by providing assistance on grant terms rather than through loans. Eliminating loans and introducing a grant-only scheme for poor countries unable to sustain debt, IFAD enables the world s poorest people to escape poverty

5 The Debt sustainability framework is part of a unified effort by the world s biggest multilateral financial institutions to ensure that essential financial assistance does not cause undue financial hardship for those countries most in need. Debt sustainability is part of a broad debt management approach to ensure borrowing countries can manage their debt. It not only frees very poor countries from the burden of interest payments, it also allows them to take money that would have had to go to interest payments and use it for other essential services, such as clean water, health and education. IFAD has adopted the International Development Association's debt sustainability model. Poor countries with low debt sustainability ("red light" countries) now receive assistance on 100 per cent grant terms; poor countries with medium debt sustainability ("yellow light" countries) receive assistance on grant/loan terms; poor countries with high debt sustainability ("green light" countries) receive assistance on 100 per cent loan terms. The ratings have been determined using the country debt sustainability analyses of the World Bank and International Monetary Fund. Previously, poor countries received aid mainly in the form of highly concessional loans. 7. IFAD Principles The principles that guide IFAD decisions and actions (on regional, country and thematic strategies, poverty reduction strategies, policy dialogue and development partners) are the following ones: 7.1. Focused and selective IFAD focuses exclusively on its strengths in agriculture and rural development. IFAD works to create better economic opportunities for poor rural people, particularly in the areas of agricultural production and marketing Targeted IFAD targets poor, marginalized and vulnerable rural people who have the capacity to take advantage of the economic opportunities offered by IFAD-supported programmes and projects. IFAD gives special consideration to gender differences, and focus on women. IFAD recognizes the particular needs of indigenous peoples and ethnic minorities, especially in Latin America and Asia Empowering IFAD empowers poor rural women and men to take advantage of economic opportunities and achieve higher incomes and better food security for themselves. IFAD does this by building their individual capacities and helping them develop and strengthen their own organizations and communities Innovative IFAD encourages innovation and test new approaches. IFAD works with governments and other partners to learn from experience, and replicate and scale up successes In partnership IFAD works systematically with partners to solve problems and deliver results. Its key partners are developing country governments, poor rural people and their organizations, non-governmental

6 organizations and the private sector. IFAD also works with partners in the international development community, combining the best available skills and knowledge to develop new and innovative solutions to rural poverty Sustainable IFAD designs and manage programmes and projects for quality, impact and sustainability, following the lead of partner governments to ensure coherence with national policies and strategies. IFAD is committed to ownership and leadership by governments and poor rural people themselves. 8. IFAD Comparative Advantages IFAD has a comparative advantage in three broad areas. a) IFAD works with national partners to design and implement innovative programmes and projects that fit within national policies and systems. These initiatives respond to the needs, priorities, opportunities and constraints identified by poor rural people. b) IFAD enables poor rural people to access the assets, services and opportunities they need to overcome poverty. IFAD also helps them build their knowledge, skills and organizations so that they can lead their own development and influence the decisions and policies that affect their lives. c) IFAD tests new and innovative approaches to reducing poverty. It shares its knowledge widely and works with its member countries and other partners to replicate and scale up successful approaches. 9. Partners To accomplish its fundamental goals of rural poverty eradication, ensuring food security and helping prevent famines and with a view to mobilizing resources for the implementation of the Fund's mandate, IFAD has made efforts to consolidate existing and create new partnerships and to broaden its outreach. The Fund maintains strategic partnerships with a number of Bilateral Donors, in particular with the major Organization for Economic Co-operation and Development (OECD) countries. Key aspects of these strategic partnerships are contributions to IFAD core resources, the supplementary funds, cofinancing of IFAD projects, participation in the associate professional officer (APO) programme and participation in the Government of Québec's International Internship Programme. To build broad local ownership of the programmes it sponsors, IFAD also works in partnership with others: borrowing-country governments, poor rural people and their organizations, and other donor agencies. Its focus on local development has given it a role in bridging the gap between multilateral and bilateral donors on the one side, and civil society represented by NGOs and community-based organizations (CBOs) on the other 9.1. Working Together with FAO and WFP FAO, IFAD and WFP collaborate in many ways to further the global community's goal of eliminating hunger and poverty. By working together, they give Member Countries the benefit of their combined strengths.

7 IFAD has strengthened its ties to the other Rome-based UN agencies: the Food and Agriculture Organization (FAO) and the World Food Programme (WFP). Together, the three agencies are exploring ways to expand and deepen their collaboration and to make more efficient use of resources. FAO, IFAD and WFP are finding new ways to share policy and analytic functions, human resource management and training, financial processes and administrative functions. The High-level Panel on System-wide Coherence urged the three agencies to work together to help build long-term food security and break the cycle of recurring famines, especially in sub-saharan Africa. A joint mapping exercise between the agencies is identifying gaps and opportunities for greater collaboration in many areas, including agricultural investment, policy formulation and emergency aid. In April 2006, FAO, IFAD and WFP jointly established Food Security Theme Groups at the country level to combine the technical and outreach capabilities of the three agencies. The Theme Groups will operate within the One UN programme, ensuring that food security and hunger are adequately addressed by the UN country team. While the Rome-based agencies will jointly lead the groups and form their core, other UN agencies will be encouraged to participate, as well as national institutions, civil society organizations and other development partners. The groups will directly support countries development efforts in the areas of food security, agriculture and rural development and provide the basis for intensified UN-wide action towards halving the proportion of hungry people in the world by The Farmer s Forum The Farmers' Forum is a bottom-up process of consultation and dialogue between small farmers' and rural producers' organizations, IFAD and governments, focused on rural development and poverty reduction. Fully aligned with IFAD's strategic objectives, the Forum is rooted in concrete partnership and collaboration at the country and regional levels. Engagement with rural organizations at the field level and dialogue at the regional and international level are articulated as mutually reinforcing processes. Following consultations at the national and regional level,the Farmer's Forum meets every two years for a global consultation, in conjunction with the Governing Council of IFAD 9.3. Belgium Survival Fund The Belgian Parliament created the Belgian Survival Fund (BSF) in 1983 in response to the public calls to combat hunger in sub-saharan Africa. The following year, BSF and IFAD formed a partnership to pursue a common goal: to help poor people in rural areas overcome poverty and improve food security. Since 1984, the BSF Joint Programme has cofinanced 44 projects focused on improving the food security of the rural poor. The Joint Programme has a mandate to take a multidimensional and synergistic approach in its social and productive sector interventions. The projects that it supports target the most vulnerable populations in the most fragile parts of Africa. Under the Joint Programme, IFAD loan support is complemented by BSF cofinancing in the form grants to support health, water and sanitation, and education components. The Joint Programme helps maximize the performance of IFAD s investments and the complementary funding it provides in the social and productive sectors has been shown to result in a higher internal rate of return. A typical project under the Joint Programme is financed by a BSF grant (a maximum of 45% of total costs), an IFAD loan (a minimum of 55%) and contributions from other financial partners, including governments, NGOs, community-based organizations and other community groups. Local farmers' organizations and national microfinance institutions often contribute and participate in Joint Programme projects as they play a crucial role in strengthening the business skills of rural people.

8 9.4. The International Land Coalition: What is it? In November 1995 over 1,000 representatives of civil society organizations, governments, the Bretton Woods institutions, United Nations agencies and EU institutions came together in Brussels for the Conference on Hunger and Poverty. The conference recognized the importance of equity in access to land for rural development and resolved to create an alliance of civil society and intergovernmental agencies: the Popular Coalition to Eradicate Hunger and Poverty. In 2003 the organization was transformed into the International Land Coalition (ILC) as part of strategic focus on land access issues from the earlier wider mandate. The name reflects its identity (an international organization), its focus (land, which by definition includes natural resources) and its nature (a coalition of organizations). Its Vision: Secure and equitable access to and control over land reduces poverty and contributes to identity, dignity and inclusion. Its Mission is to promote secure and equitable access to and control over land for poor women and men through advocacy, dialogue and capacity building.