No. 20 - May 2002
No. 20 - Mai 2002
No. 20 - Mayo de 2002

From the Director

After a period of relative neglect by many financing institutions, agricultural and rural development seem again to be rising to the top of their agenda. This comes from a recognition that over 70% of poor people in developing countries live in rural areas, where agriculture and its directly associated industries and activities remain the key to achieving sustainable growth. The long negative trend in rural commitments by most multilateral banks and funds will not be reversed overnight, but there are signs that interest is shifting back to the rural sector and that agricultural development and food security are priorities for action.

The High-level Panel on Resources Mobilization, convened in June 2001 by FAO's Director-General, was a significant step in helping recognize the causes of declining support for rural development by the financing institutions, and identifying means of reversing this worrying situation (see "Why are investments in agriculture and rural development falling?" in UPDATE #19). As a direct response to the Panel, in relation to Eastern and Central Europe and the CIS, EBRD and FAO's Investment Centre organized a forum in Budapest in March 2002, reported above. Also in March at the Monterrey International Conference on Financing for Development, FAO, IFAD, WFP, the World Bank and regional financing institutions participated in an important side-event that attracted considerable attention to rural, food security and hunger issues.

Within the major investment institutions, our largest partner, the World Bank, recently initiated a comprehensive new Rural Development Strategy, and several regional development banks have already reviewed, or are revisiting, their rural lending experience with a view to revitalizing and strengthening their support to the sector. These positive developments are a welcome precedent for the success of the upcoming World Food Summit: five years later in Rome. Indeed, the multilateral agencies, regional banks and others are key players in achieving the all important investment goals of the Summit. The recent moves within these institutions to bring rural and agricultural development to centre stage provide an excellent opportunity for them, in alliance with other partners, to tackle rural poverty, promote agricultural growth and combat food insecurity in our member countries.

David Forbes Watt

Depuis 10 ans, la FAO et la BERD coopèrent activement pour mobiliser de l'expertise technique de haut niveau en appui aux projets d'investissement de la banque. Par ailleurs, au-delà de ces actions ponctuelles, la BERD s'appuie sur la FAO pour assurer une meilleure coordination des interventions des agences de développement dans la région.

Dans cette optique et pour donner suite aux délibérations du Groupe de travail sur la mobilisation des ressources lancées en juin 2001 (voir UPDATE #19) dans le cadre du Sommet mondial de l'alimentation: cinq ans après, a été organisé le forum de Budapest. Sous la présidence de David Hexter, Vice-Président adjoint de la BERD, le séminaire a rassemblé de nombreux décideurs d'organismes de développement et de banques privées opérant dans la région, notamment la BERD, la Banque mondiale, la Commission européenne (CE), l'OCDE, le Crédit Agricole, Rabobank et Raiffeissen Bank. Les participants ont reconnu que l'investissement agricole avait de multiples implications. S'il peut servir de moteur à la croissance économique, il a également de fortes incidences sociales, alors que les autres secteurs peinent à émerger. L'agriculture polonaise occupe, par exemple, 22% de la population active totale, alors qu'elle ne représente que 5% du PIB.

L'activité importante de la BERD dans le secteur agro-alimentaire, se traduisant par plus de 2,2 milliards de dollars EU investis dans 150 projets - pour la plupart privés - démontre que l'investissement agricole (même s'il est généralement perçu comme risqué) peut être synonyme de succès financier. Une analyse rigoureuse de la viabilité financière des projets est bien sûr nécessaire mais les exemples présentés à Budapest montrent l'importance d'agir à d'autres niveaux: amélioration de l'environnement institutionnel, mise en place de politiques agricoles cohérentes ou encore financement des services publics. C'est précisément sur ces aspects que la contribution financière et technique de partenaires comme la Banque mondiale, la CE ou la FAO s'avère déterminante.

Pour renforcer les échanges d'expériences entre leurs institutions et ainsi assurer plus de cohérence dans leurs interventions, les décideurs présents au forum ont décidé de créer un réseau régional de professionnels du financement agricole et agroalimentaire. Le Centre assurera la coordination de ce nouveau réseau informel.

Contact [email protected]

NEPAD: Supporting African agriculture by investing in rural infrastructure

A human rights-based approach to food security

The 'Right to Food' is central to the 1948 Universal Declaration of Human Rights and the 1966 International Covenant on Economic, Social and Cultural Rights. It signifies economic and physical access to a balanced diet for everyone at anytime, within the cultural norms of society and without withdrawal of resources from other basic needs. Twenty of the 140 signatory states have Right to Food in their Constitution.

Since the 1996 World Food Summit, the Right to Food movement has gained new momentum. Developments such as the accelerating globalization of the food sector and the HIV/AIDS pandemic have given renewed urgency to the plight of society's weakest and most vulnerable members and their basic human entitlement to a food-secure, healthy life.

The Right to Food obliges states to establish food and nutrition objectives, policies and strategies and to secure the means for their implementation. It helps to sharpen focus on the hunger problem, mould food policies and streamline existing resource allocation. In countries where policies favour markets, transparency, due legal process and democracy, the Right to Food is attained with less effort and cost than where the reform process lags.

According to the UN Sub-Commission on Protection and Promotion of Human Rights, ensuring the Right to Food calls for a progression of successively more intensive actions by the state: respect; protect; facilitate; provide. The first three types require mainly political will and legislative and administrative measures to allow people to pursue their own food security, whereas provision of food or means for its procurement is a last resort that may require states to seek external aid. For wider application, the Right to Food needs advocacy and practical support. More countries need to give it explicit recognition in their national legislation. International assistance agencies need to help states gauge policy and operational implications and step up global advocacy using multiple-track (ethical, economic, geo-political) justification of the Right to Food. A step forward is the actual international discussion and, hopefully, adoption of a Code of Conduct supported by over 800 non-governmental organizations that details the obligations of the different parties in ensuring the Right to Food. Efforts are also needed to mainstream food and nutrition issues into national poverty reduction strategies of countries eligible for international debt relief and concessional financing. The upcoming WFS: five years later, to be held at FAO from 10 to 13 June 2002, will provide an international forum to marshal global support for the Right to Food and, through this, to seek elimination of chronic hunger worldwide.

In addition to promoting general growth-enhancing rural investment, FAO's Investment Centre is assisting countries to deal with the hunger problem by assessing its dimension, providing policy advice and integrating targeted anti-hunger components into a new class of rural development projects. These typically operate at village level and support small-scale rural operations, are highly participatory and community-driven as well as gender- and minority-conscious, and are implemented through special delivery mechanisms including social (rural, community, infrastructure, etc.) funds and may be piloted by FAO's Special Programme for Food Security.

Roland Schurmann, FAO IC

Proyectos financiados por el GEF

En la FAO, el punto focal del Fondo para el Medio Ambiente Mundial (el "GEF") es el Centro de Inversiones que, en colaboración con las direcciones técnicas de la FAO, posee una amplia y diversificada experiencia en materia de preparación y seguimiento de proyectos financiados por el GEF. Además de la experiencia técnica en protección ambiental y conservación de recursos naturales y familiaridad con las políticas y principios operacionales del GEF, el Centro ha acrecentado el conocimiento en temas globales asociados con las cuatro esferas de actividad del GEF (diversidad biológica, cambio climático, aguas internacionales y agotamiento de la capa de ozono) así como en diversos temas específicos asociados con sus programas operacionales, tales como la conservación de biodiversidad (terrestre, acuática y agrícola), el manejo integrado de ecosistemas y de plagas, el control de contaminantes orgánicos persistentes, y energías renovables en la producción agrícola.

Prueba de esto es el trabajo llevado a cabo en América Latina y el Caribe, el cual se ha diversificado enormemente e incluye un número creciente de estudios y proyectos nacionales y regionales. En esta región, el Centro ha proporcionado asesoría a 21 proyectos financiados a través del GEF/Banco Mundial. Estos proyectos abarcan 13 países y cubren las cuatro esferas de actividad. El tipo de apoyo varió desde la preparación y supervisión de proyectos de tamaño mediano (donación del GEF de hasta un millón de dólares EE.UU.) o regulares (hasta 15 millones de dólares), hasta la formulación de la estrategia nacional del GEF. De las tendencias y enseñanzas recogidas se destacan: la importancia del fortalecimiento de las capacidades humanas e institucionales para lograr las metas y los objetivos del GEF en la movilización de recursos, en la sustentabilidad o sensibilización de la sociedad en general en cuestiones ambientales globales; la movilización de recursos, la cual es más exitosa cuando se trata de un proceso que inicia en la etapa de formulación del proyecto y continúa durante todo el ciclo del mismo; las ONG involucradas en la ejecución de los proyectos, las cuales deben ser conocidas por las comunidades locales del área del mismo. Cuando los proyectos incluyen el desarrollo de actividades económicas alternativas, existe una tendencia a ignorar la importancia de los aspectos financieros en la promoción de estas actividades. Lo anterior se debe a varias razones, entre ellas: a la falta de capacidad institucional; a los mercados limitados para los productos y servicios no tradicionales; y al tamaño mediano de los proyectos, lo cual podría afectar la replicabilidad de los mismos ya que el acceso al crédito es indispensable si se contempla el manejo colaborativo de la biodiversidad.

Contactar [email protected]

Private investing in aquaculture and horticulture in Saudi Arabia

As official development assistance to agriculture has declined, involvement of the private sector in all aspects of agricultural development has become crucial. Over the next 20 years, private and public sectors combined will need to invest an estimated additional US$31 billion a year in agriculture to keep up with increasing demand for food in developing countries - US$19 billion for investments at farm level and the rest for expanded rural infrastructure and social services.

When Saudi Arabia requested FAO to study the potential for private investors to join its development efforts in the Jizan Area and Tihama Plains, the Investment Centre organized a team of experts to explore investment possibilities in the area, focusing on aquaculture, subtropical fruit and vegetable production and agro-industry. The team reviewed existing data, interviewed local experts for firsthand information and looked at a range of variables from environmental and climate issues to costs of inputs and availability of skilled labour. The resulting study analysed investment options within an incentive structure offered by the Government that had set aside 54 000 ha of coastal land and 94 000 ha of agriculture land for development, and offered Government support in the form of physical infrastructure, tax schemes, loans and export incentives.

The Centre presented the report in January 2002 at the Agricultural Investments Forum of Jizan Area and Tihama Plains, organized by the Saudi Arabian Ministry of Agriculture and Water. Some 2 500 participants attended, including representatives of 30 international companies from 18 countries. The Ministry has now set up a contact point to provide guidance for interested investors and some have already met with Saudi and international staff and banks to discuss possible ways forward.

This type of initiative, bringing together private industry, international organizations and national governments, is a positive move towards achieving food security worldwide.

Christian.Miczaika, FAO IC

Reconstruction of Afghanistan

The Investment Centre has been closely involved in the renewed international effort to reconstruct Afghanistan. This has been carried out in collaboration with FAO's Emergency Operations and Rehabilitation Division and main donor agencies, particularly the Asian Development Bank, the World Bank and USAID. Following agreements reached in Islamabad last November, the Centre worked with its partners, including international banks, IFAD and WFP, to prepare a preliminary needs assessment (PNA) as a basis for a pledging conference held in Tokyo in January 2002. This work resulted in a set of guiding principles and estimates of investment requirements for the agriculture sector - some US$200 million for early rehabilitation and US$1.5 billion for reconstruction and development over a 10-year period. The Tokyo Conference endorsed the PNA findings and pledged a total of US$4.5 billion for rehabilitation and reconstruction for all sectors.

Centre staff have since participated in a series of missions to Afghanistan to better define the investment activities required. A multi-donor mission in February 2002 agreed with the Government that a series of Quick Impact Projects (QUIPs) would be required to help jump-start production and employment in the rural areas. This would be complemented by efforts to create an effective and efficient institutional and policy environment in line with international best practices and studies that look at longer-term issues facing the agriculture sector, such as the creation of a viable rural financial system. A multidisciplinary Centre mission working with the relevant ministries has proposed QUIPs with a total cost of around US$30 million to improve irrigation, revive horticulture and livestock production, and rebuild essential facilities of the Ministry of Agriculture. These proposals are under review by donors and the Government.

Contact [email protected] 

Briefly noted . . . . . .

The Centre continued support to the Horn of Africa Initiative and preparation of a regional food security programme for CEMAC countries (TCP). It participated in the HUB Executive Committee for FAO and in studies on soil fertility for WB, gender in IFAD projects and in Ethiopia on natural resources management and food security (TCP). It started formulation in Kenya and Uganda for community food security pilot projects (TCP) and in Ethiopia for pastoral development (WB/IFAD). The Centre carried out identification for agricultural policy and capacity building in Lesotho (WB) and coastal integrated development in Madagascar (FAO). Preparation work was undertaken on soil and water management in Benin (FAO), agriculture in Cameroon and the Democratic Republic of the Congo (WB), livestock in Mauritania (WB), a Solidarity Regional Bank study for UEMOA countries (FAO), community development, forestry and environment in Cameroon (WB), fisheries development in Cape Verde (AfDB), agriculture services in Guinea and Chad (WB), food safety standards in Ghana (WB), South-South cooperation in Malawi (SPFS), the Rahad irrigation rehabilitation and modernization programme in the Sudan (FAO), the country programme in Zambia (WFP), and an implementation completion report (ICR) on agricultural research in Mali (WB). It formulated a livestock plan for Mali (WB), reviewed the rural/agricultural sector in Nigeria (WB) and assisted FAO-MIT collaboration in Senegal (FAO). The Centre helped appraise irrigated farming systems in Mauritania (FAO), disaster mitigation in the country programme in Senegal (WFP) and agricultural advisory services in Uganda (WB). It supervised projects in Burkina Faso on small-scale irrigation, irrigation policy in Lesotho, the cotton subsector in Uganda, agricultural sector investment in Zambia (WB), SPFS in Guinea (FAO/AfDB), rural infrastructures in Mali (FAO/WB) and soil fertility and agricultural extension II in Tanzania (WB).

ASIA AND THE PACIFIC

The Centre identified a regional programme for food security in the Pacific Islands (FAO) and assisted HIV/AIDS mitigation in Asia (WFP). It carried out sector work on fisheries strategy in East Asia and the Pacific (WB), investment options for Terai Areas in Nepal (FAO) and investment opportunities in Viet Nam (FAO). It continued preparation for Gansu and Xinjiang pastoral development in China (WB). It supervised WB projects in India on integrated watershed development, Orissa water resources consolidation, Uttar Pradesh and Uttaranchal forestry, land administration and management in the Philippines, land titling in Sri Lanka, improvement of the cotton subsector and rural enterprise support in Uzbekistan, and community-based rural infrastructure and forestry sector development in Viet Nam. It prepared ICRs for WB on agricultural research and forestry resources management in Bangladesh, state farm commercialization and forest resource development and protection in China, and forestry research, education and extension in India. The Centre reviewed the agriculture sector in Myanmar for UNDP and integrated development of low-yielding land in Henan Province, China (WFP).

The Centre undertook identification work on Araucania rural development in Chile (IFAD) and seeds in Venezuela (TCP). It provided pre-investment assistance on poverty reduction in Peru (FAO) and did studies for WB on deforestation in Brazil and sierra rural development in Peru. It organized an IDB seminar in Brazil and undertook sector work for WB on irrigation modernization in Mexico, natural resources management in Uruguay and land tenure in Venezuela. For SPFS, it formulated technical assistance in Mexico (TCP) and a UTF proposal in Peru (FAO). Project preparation continued for WB in Brazil for Santa Catarina natural resources and poverty alleviation (also appraised), watershed management in Dominican Republic, rural investment in El Salvador, sustainable rural development of Mojana in Colombia (TCP) and agricultural diversification in Saint Kitts and Nevis (CDB). For WB, it appraised sustainable integrated management and the Guarani aquifer system for Argentina, Brazil, Paraguay and Uruguay, and water resources management and GEF watershed protection in Chile. It supported supervision of WB projects for poverty alleviation and agricultural development in Argentina, land management in Brazil, GEF Bauda and Andes in Colombia, indigenous people in Ecuador, rural development in marginal indigenous areas and water resources management and municipal development in Mexico, rural poverty in Panama, natural resources management in Paraguay, and irrigation, natural resources management and GEF indigenous management of protected areas in the Amazon in Peru. It supervised coffee diversification in Guatemala (TCP) and the regional SPFS in CARIFORUM countries.

Projects were identified on integrated forest development in Morocco (WB), national food security in Jordan (FAO), fisheries in Kazakhstan (UTF-Japan) and for West Delta in Egypt (FAO). Desk studies were done on Afghanistan rehabilitation (FAO) and a draft forestry code for Kazakhstan (WB). The Centre helped formulate WB projects on Shah-Dag rural environment in Azerbaijan and Sana'a basin water management in Yemen. It prepared projects for Matruh natural resources management II in Egypt (WB/IFAD), North Bekaa regional development in Lebanon (TCP) and North West II in Tunisia (also appraised) (WB/UTF-Japan). It evaluated rainfed agriculture in Morocco (WB) and supervised WB projects on irrigation rehabilitation in Azerbaijan, Kyrgyzstan and Lebanon, the environment in Azerbaijan, and agricultural support services and water sector in Tunisia.

The Centre identified WB projects in Bulgaria on local investments and hazard mitigation in Romania. In Bulgaria, it helped prepare the special action programme for agriculture and rural development/EBRD facility (FAO) and water pollution reduction in Slovenia (EBRD). It supervised WB projects in Albania on microcredit and agricultural services, agricultural reform and irrigation development in Armenia, emergency farm reconstruction in Kosovo, protected areas development in Georgia, irrigation rehabilitation in Macedonia and agricultural reform in Turkey. It reviewed the wholesale markets regulatory framework in Croatia for EBRD. For WB, it prepared an ICR on East Anatolia watershed in Turkey, an agricultural sector note for FYR Macedonia and an EU policy note for Slovakia.

 
Projects approved for financing . . . . . .

Since UPDATE #19, 18 projects, formulated with substantial inputs from the Investment Centre, were approved by financing institutions and governments for total investments of US$1,122.68 million (the balance between total project cost and loan or grant is provided by the recipient government and beneficiaries) for: Albania: Pilot Fishery Development $6.66m ($5.60m IDA); Benin: Participatory Artisanal Fisheries Development $25.99m ($10.01m IFAD, $10m AfDB, $3.3m other sources); Brazil: Sergipe Rural Poverty Reduction II $28m ($20.80m WB); Burkina Faso: Support to SPFS $5.20m ($2.50m IsDB); Cambodia: Land Management and Administration $33.90m ($24.30m IDA, $7m Bilaterals); Ecuador: Rural Land Regularization and Administration Programme $16.88m ($15.20m IDB); Ethiopia: Rural Financial Intermediation Programme $88.73m ($25.69m IFAD, $37.50m AfDB); Ghana: Northern Region Poverty Reduction Programme $59.58m ($12.34m IFAD); India: Karnataka Rural Water Supply and Sanitation II $193.44m ($151.60m IDA); India: Rajasthan Water Sector Restructuring $180.20m ($140m IDA); India: Uttar Pradesh Water Sector Restructuring $173.70m ($149.20m IDA); Mozambique: Artisanal Fisheries Development $23.64m ($20.32m AfDB); Niger: Private Irrigation Promotion II $48.39m ($38.72m IDA, $1m Bilaterals); Niger: Support to SPFS $5.18m ($2.30m IsDB); Nepal: Western Uplands Poverty Alleviation $32.56m ($20.30m IFAD, $4m WFP); Russian Federation: Grain Warehouse Receipts II $143m ($50m EBRD); Sierra Leone: Artisanal Fisheries $15.33m ($12.89m AfDB); Tanzania: Agricultural Marketing Systems Development $42.30m ($16.35m IFAD, $14.46m AfDB, $5.57m Bilaterals).