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IFAD Strategy for Rural Poverty Reductionin Central and Eastern Europe and the Newly Independent States PN DivisionProject Management DepartmentFebruary 2002: 

IFAD Strategy for Rural Poverty Reduction in Central and Eastern Europe and the Newly Independent States PN Division Project Management Department February 2002

The CEN Countries: 

The CEN Countries Albania Armenia Azerbaijan Bosnia & Herzegovina Georgia Moldova Romania The Former Yugoslav Republic of Macedonia

Slide3: 

The Strategy Formulation Process Regional Poverty Assessment Internal IFAD Workshops & Management meetings IFAD Strategic Framework 2002-2005 Draft Regional Strategy Paper IFAD Governing Council February 2002 Regional Strategy Workshop, Bucharest December 2001 Final Regional Strategy Paper IFAD Senior Management Review November 2002

Outline: 

Outline The Challenge of Transition The Dimensions of Poverty Key Lessons from IFAD Experiences Proposed Strategy

Challenge of Transition:Economic Considerations: 

Challenge of Transition: Economic Considerations Rural poverty in CEN Region a unique challenge to IFAD. Abrupt termination of central planning and state services. Production and marketing chains dissolved. Dramatic fall in economic output and living standards; growing inequality. Agriculture has become a way of coping with poverty.

Agriculture in Transition:Farming Systems: 

Agriculture in Transition: Farming Systems Shift from large to small-scale production systems with limited asset base. Many new farmers trapped in subsistence farming. With enabling environment, agriculture has the potential to become an engine of poverty reduction and growth.

Agriculture in Transition:Land Reform: 

Agriculture in Transition: Land Reform Equitable, but inefficient land distribution Small and fragmented plots Incomplete legal framework for land transactions. Ongoing land registration offers new opportunities for on-farm investments and access to credit.

Agriculture in Transition: Input Markets: 

Agriculture in Transition: Input Markets Input supply system has collapsed. High input prices have lead to declining use and productivity. Private networks starting to develop - offer new opportunities for a competitive input market.

Agriculture in Transition:Output Markets: 

Lack of reliable output markets is the most significant institutional constraint to increased agricultural productivity. New private outlets starting to emerge. Proximity to EU member countries offers a competitive opportunity for trade. Agriculture in Transition: Output Markets

Agriculture in Transition:Support Services: 

Agriculture in Transition: Support Services Weak research & extension facilities, but human capital remains. Agroprocessing firms are left with obsolete equipment and lack markets. Formal credit institutions are reluctant to lend to small farmers. Emerging financial services offer good prospects for investment.

Dimensions of Rural Poverty:How Many Poor?: 

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.

Dimensions of Rural Poverty:Qualitative Aspects: 

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.

Dimensions of Rural Poverty: Vulnerable Groups: 

Dimensions of Rural Poverty: Vulnerable Groups Mountain area communities Rural wage earners Rural women The elderly Ethnic minorities Internally Displaced Peoples (IDPs) and refugees

IFAD Portfolio in the CEN Region: 

IFAD Portfolio in the CEN Region 17 loans in 8 countries since 1993 Total IFAD investment USD 178 million Total project costs USD 380 million Each of IFAD’s Dollars has generated USD 1.14 from cofinancing

Key Lessons: 

Key Lessons Institutional vacuum for support services Success requires increased capacity and long-term commitment Mountain areas development approach requires: Programmatic approach Partnerships among donors

Key Lessons: 

Key Lessons Rural financial services Output markets Unreliable output markets Need to involve private sector in market development

Key Lessons: 

Key Lessons Non-farm rural economy Off-farm services needed to enhance poverty reduction to enhance landless poor Group formation Success requires clear benefit, focus and members’ ownership Capacity Building & Training Needs strengthening, but governments reluctant to use loan funds

Strategic Objectives: 

Strategic Objectives Support the transition with sustainable programmes in agriculture to contribute to rural poverty reduction. Income diversification for the rural poor. Rational utilisation of national resources.

Operational Approach: 

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.

Opportunities for IFAD and Catalytic Role: 

Opportunities for IFAD and Catalytic Role Institutional development Capacity building at many levels Market linkages Facilitate the building of private sector marketing institutions On-farm investments Capital and technological assets

Opportunities for IFAD Lending and Catalytic Role: 

Opportunities for IFAD Lending 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.

Action Plan Pillars: 

Action Plan Pillars Policy dialogue: catalytic role of IFAD in several policy areas. Strategic partnerships with bilateral, multilateral and private investors Knowledge sharing: cross-fertilisation, workshops & seminars, dissemination of IFAD findings Impact management: beneficiary evaluation, qualitative & quantitative surveys, work with others to develop better indicators

Bucharest Workshop: Recommended Priority Thrusts: 

Bucharest Workshop: Recommended Priority Thrusts In partnership with other donors, IFAD will: Build capacity of local institutions that empower the rural poor. Promote the adoption of enabling policies. Foster market linkages by the private sector. Focus on disadvantaged areas of extreme poverty (such as mountain zones and isolated communities).