IFAD Experience and Strategyfor Poverty Alleviation

in Central and Eastern Europe and the Newly Independent States

Seminar on Policies for Achieving the Millennium Development Goals in the ECE Region: Reducing Extreme Income Disparities

Geneva 2-3 October 2003

Active Borrowing Countries

• Albania

• Armenia

• Azerbaijan

• Bosnia & Herzegovina

• Georgia

• Moldova

• Romania

• The Former Yugoslav Republic of Macedonia

Geneva Seminar, 2-3 October 2003

Outline of Presentation Overview of IFAD’s portfolio Lessons Learned as Related to

Institutions & Policies Dimensions of Rural Poverty IFAD’s Strategy and Policies

Geneva Seminar, 2-3 October 2003

IFAD Portfolio in the CEN Region

Approved projects: 17 in 8 countries 11 ongoing and 6 completed Total IFAD investment USD 178 million Total project costs USD 380 million Each of IFAD’s Dollars has generated USD 1.14

from cofinancing New project pipeline (2004-2006): 3 in 3

countries Moldova (2004), Azerbaijan and Armenia (2005)

for a total of USD 40 million

Geneva Seminar, 2-3 October 2003

Profile of IFAD Portfolio by Country

Albania: USD 35 million for 3 projects in irrigation, rural finance and mountain areas development - in addition to cofinancing from ISDB, UNDP, SNV and DFID

Armenia: USD 36 million for 3 projects in irrigation and rural finance - in addition to cofinancing from IDA

Azerbaijan: USD 18 million for 2 projects in irrigation, rural finance and mountain areas development - in addition to cofinancing from IDA

Bosnia & Herzegovina: USD 33 million for 3 projects in rural development, livestock and rural finance in addition to cofinancing to EU, ISDB, IDA and OPEC Fund

Geneva Seminar, 2-3 October 2003

IFAD Investment by Country

• FYR Macedonia: USD 16 million for 2 projects in rural finance and SME development - in addition to cofinancing from SIDA

• Georgia: USD 14 million for 2 projects in irrigation, rural finance and mountain areas development - in addition to cofinancing from IDA

• Moldova: USD 8 million for 1 project in rural finance and SME development

• Romania: USD 16 million for 1 project in rural finance and SME development in mountain areas - in addition to cofinancing from GTZ

Geneva Seminar, 2-3 October 2003

Lessons Learned as Related to Institutions & Policies

Institutional vacuum for support services to farmersPolicy change is needed to

invest in private sector capacity-building

Weak rural financial servicesAppropriate legal and

institutional enabling environment is needed to promote MFI in rural areas

Geneva Seminar, 2-3 October 2003

Lessons Learned as Related to Institutions & Policies

Unreliable output marketsMarket reforms are needed, to enable

private sector investment Weak government institutions in

policy formulation and regulationPolicy change is needed to use loan

funds for institution building

Geneva Seminar, 2-3 October 2003

Lessons Learned as Related to Institutions & Policies

• Transitional economy requires a strong public-private partnership– Policy reform is needed to promote devolution of responsibilities to

end-users through local institutions and civil society (such as water users associations for maintenance and management of irrigation infrastructure)

– Empowering end-users requires investment in capacity-building

• Incomplete land reform (inefficient land distribution, inactive land market, slow and complex land registration)– Institutional reforms are needed to encourage land consolidation,

speed up registration and simplify land transactions

Geneva Seminar, 2-3 October 2003

Dimensions of Rural Poverty:How Many Poor?

4.0 million rural poor live on less than two dollars per day.

12.3 million rural poor live on less than four dollars per day.

Geneva Seminar, 2-3 October 2003

Dimensions of Rural Poverty:Qualitative Aspects

Income is not an adequate measure of rural poverty in the region.

Lack of control over resources. Lack of education and health

facilities. Poor water and sanitation.

Geneva Seminar, 2-3 September 2003

Dimensions of Rural Poverty: Vulnerable Groups

Mountain area communities Rural wage earners Rural women The elderly Ethnic minorities Internally Displaced Peoples

(IDPs) and refugees

Geneva Seminar, 2-3 October 2003

IFAD Strategy:Strategic Objectives

Support the transition with sustainable programmes in agriculture to contribute to rural poverty reduction.

Income diversification for the rural poor. Increase competitiveness of small farmers

through appropriate grassroots institutional development and policy advice to governments.

Rational utilisation of national resources.

Geneva Seminar, 2-3 October 2003

IFAD Strategy: Operational Approach

Investing in innovative projects and pilot schemes.

Targeting the poorest groups with focus on causes of rural poverty.

Transferring of management functions to end-user groups.

Supporting research and capacity building programmes through grant financing.

Leveraging financial resources through partnership with other donors.

Geneva Seminar, 2-3October 2003

IFAD Strategy:Opportunities for IFAD

and Catalytic Role Institutional development

Capacity building at many levels

Market linkagesFacilitate the building of private sector

marketing institutions

On-farm investmentsCapital and technological assets

Geneva Seminar, 2-3 October 2003

IFAD Strategy:Opportunities for IFAD

and Catalytic Role

Non-farm rural economy Community development for sustainable

use of common resources. Rural financial institutions

Responsive to the needs of small farmers, rural women and the landless.

Geneva Seminar, 2-3 October 2003

IFAD Contacts

A. Slama, PN Division Director, and/or for: Albania, Armenia and FYR Macedonia

Henning Pedersen, Country Portfolio Manager, IFAD Rome• Tel: +3906-5459-2635, e-mail: h.pedersen@ifad.org

• Azerbaijan, Georgia and Bosnia & HerzegovinaAbdalla Rahman, Country Portfolio Manager, IFAD Rome

• Tel: +3906-5459-2348, e-mail: ab.rahman@ifad.org

• Romania and MoldovaPietro Turilli, Country Portfolio Manager, IFAD Rome

• Tel: +3906-5459-2303, e-mail: p.turilli@ifad.org

Geneva Seminar, 2-3 October 2003