Family farming: Investing in a sustainable future - OPEC Fund ...

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Family farming: Investing in a sustainable future

Interview with IFAD President: Moving beyond the cliché

Egypt plots new course toward economic recovery

OFID and OeEB launch strategic partnership

Art exhibition: Ecuador in focus

COMMENT

Small farmers, big prospects 2

SPECIAL FEATURE

Family farming: Investing in a sustainable future 4

Moving beyond the clichéInterview with Kanayo Nwanze, IFAD President 10

Great oaks from little acorns growWhy microcredits promise a big future for small farmers 14

OFID in the Field 18

Chain reaction: From smallholder to exporter 20

Far from the world, close to the sky 22

No surrender to the threat of nature 24

NEWSROUND

Member Country delegates gather at OFID HQ for annual briefing 26

Climbing the next rung on the production ladder Mozambique gets new aluminium plant 28

OFID and OeEB launch strategic partnership 30

OFID Diary 32

Meetings attended by OFID 35

148th Session of the Governing Board 36

Loan signature photo gallery 38

SPOTLIGHT

Using the past to secure the futureAdapting traditional farming systems in Guatemala 40

CONFERENCE WATCH

AIDS 2014 steps up from tragedy 43IAS Executive Director pays tribute to activists 45Overcoming HIV in conservative social settings 46OFID-sponsored delegates share their experiences 47

10th International Energy ConferenceEnergy access a matter of universal concern 48

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PERSPECTIVES

Egypt plots new course toward economic recovery Interview with new Minister of International Cooperation 50

Former Dominican President shares views on interregional cooperation 53

MEMBER STATES FOCUS

A feast for the senses OFID hosts exhibit of Ecuadorian art 55

Indonesia, Nigeria: Newly minted 57

OPEC

OPEC hosts first modeling applications workshop 59

PUBLISHERS

THE OPEC FUND FOR INTERNATIONAL DEVELOPMENT (OFID)

Parkring 8, P.O. Box 995, A-1010 Vienna, AustriaTel: (+43-1) 515 64-0; Fax: (+43-1) 513 92-38Email: [email protected] Mauro Hoyer Romero

EDITOR Audrey Haylins

CONTRIBUTORS Reem Aljarbou, Nadia Benamara, Damelys Delgado, Silvia Mateyka, Michelle Palacios, Shirin Hashemzadeh, Arya Gunawan Usis, Justine Würtz

PHOTOGRAPHS Abdullah Alipour Jeddi (unless otherwise credited)

PRODUCTION Susanne Dillinger

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COVER PHOTO: AGSTOCK IMAGES, INC/ALAMY

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OCTOBER 2014

ctober is an important month in the develop-ment calendar. On consecutive days, the world

marks the International Day of Rural Women (15th),World Food Day (16th) and the International Day forthe Eradication of Rural Poverty (17th). This year, thethree events carry more significance than usual—theyare all linked by the International Year of FamilyFarming.

Worldwide, there are an estimated 500 million familyfarms, the majority of them in developing countries.Together, they represent over 90 percent of all farmsand the bulk of global food production—and this de-spite accounting for just one-quarter of total landunder cultivation. In the developing world alone,small farmers—half of whom are women—feed andsupport around two billion people.

The fact remains, though, that the agriculture sector indeveloping countries is performing far below its poten-tial, yielding just 2,400kg per hectare. In comparison,developed country farms produce 4,000kg per ha.

With their specialized knowledge and collectivemight, smallholders have the capacity to help counterthe food shortages that currently see some 800 mil-lion people go to bed hungry every night. They alsohave a significant role to play in sustainable naturalresources management and poverty alleviation.

As influential as their contribution may be, however,small-scale farmers cannot unlock their potential un-aided. The obstacles standing in their way are simplytoo great. And most of them are outside their control.

In addition to the effects of climate change on theirresource base, small farmers have to contend with

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2 OFID QUARTERLY OCTOBER 2014

COMMENT

Small farmers, big prospects

insecurity of land tenure, commodity price volatil-ity, and limited access to inputs, services and valuechains.

Their productivity is further hampered by poorly de-veloped rural infrastructure, especially roads, energyand telecommunication services.

Under these conditions, there are limited opportuni-ties and even fewer incentives for farming families toinvest in their land and try to improve their yields.

For small farmers to realize their potential, invest-ment, support and motivation has to come from ex-ternal sources, including governments, the privatesector, NGOs and, of course, the development financecommunity.

As an institution with a long history of support torural development, OFID wholeheartedly supportsthe UN’s International Year of Family Farming.

Working through strategic alliances with the likes ofthe International Fund for Agricultural Development,the Food and Agriculture Organization and the WorldFood Program, among many others, we have con-tributed in a multitude of ways to the enhancementof smallholder farming in a large number of our 134partner countries.

OFID’s direct support to agriculture amounts to wellover US$2bn. These funds have been used to reinforceall aspects of the value chain, from crop and livestockproduction and artisanal fisheries, to agro-processing,marketing, trade and financial services.

We also support the sector indirectly by sponsoringagricultural research and other activities that foster

the exchange of knowledge, innovation and bestpractice.

Beyond that, we have invested substantial amounts inessential infrastructure: in rural roads to ease themovement of inputs and produce; in modern energysolutions to make irrigation systems and processingjobs more efficient; and in mobile phone networks togive farmers ready access to weather forecasts, com-modity prices and other important information.

Our strategy includes taking a gender-sensitive ap-proach wherever possible, in recognition of the criti-cal role played by women in smallholder farming.Despite their important contribution, women find itmuch harder than men to access productive resourcessuch as land, credit, information and extension serv-ices.

The FAO estimates that closing this gender gap couldresult in yield increases of up to 30 percent—a poten-tial, by our reckoning, far too great to be ignored.Hence our efforts to empower rural women and equipthem with the means and knowledge to lead moreproductive lives.

For OFID, fighting poverty has always meant takingthe battle to those fields where the need is most acute.And here lies the paradox. It is these very fields—andthe families that farm them—that hold the seeds fora sustainable future.

Nurturing these seeds means recognizing that poorfarmers are an integral part of the solution—not partof the problem. What’s more, they have an inherentright to our unquestioned support. Their soil is fertile.We should help them till it. �

OFID QUARTERLY OCTOBER 2014 3

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SPECIAL FEATURE

Family farming: Investing in a sustainable future

The development of agriculture has played a majorrole in human history and socioeconomic change. At its hub is family-based farming, which hasevolved into a key driver of economic growth, foodsupply, income generation and employment. Here, in recognition of the International Year of Family Farming, the Quarterly explores the vast potential of this vital sector and the obstacles thatchallenge it.

by Audrey Haylins

amily farming may be defined as any agri-cultural activity—crop production, live-

stock raising, fishing, aquaculture, forestry—which depends chiefly on family labor, includingboth women’s and men’s. Globally, there aremore than 500 million family farms, collectivelyrepresenting over 90 percent of all farms. Despiteaccounting for just one-quarter of total landunder cultivation, they are the leading form offood production worldwide. In the developingworld alone, family farms feed and supportaround two billion people.

The International Yearof Family Farming (IYFF) wasdeclared by the United Na-tions to highlight the broadpotential of the sector—for al-leviating food shortages; forprotecting natural resourcesand biodiversity; and for pro-moting sustainable develop-ment.

“By choosing to celebrate this year, we rec-ognize that family farmers are leading figures inresponding to the double urgency the world fa-caes today: improving food security and preserv-ing natural resources,” announced José Grazianoda Silva, Director-General of the UN Food andAgriculture Organization (FAO), at the officiallaunch of IYFF. He went on to point out that fam-ily farming was still the main food provider forbillions of children, women and men.

The climate challen geTheir important role notwithstanding, smallfarmers are up against numerous obstacles, manyof which are outside their control. These rangefrom climate change and constantly degradingnatural resources to insecurity of land tenure,commodity price volatility, limited access to in-puts and services, and weak value chains. Produc-tivity is further constrained by poorly developedrural infrastructure, in particular roads, energyand telecommunication services.

Small-scale farmers are without doubt oneof the most vulnerable groups when it comes to dealing with the effects of climate change. Inaddition to diminishing water supplies and degraded soil, weather-related influences, suchas droughts and floods, wreak havoc on harvests,leaving families hungry and without the extraincome usually earned by selling surplus pro-duce. Ocean ecosystems are also affected, withserious implications for communities that relyon fishing for their livelihoods.

For centuries, poor farmers have been thecustodians of Earth’s natural resources, often

managing wide tracts of land and forest. Overtime, and by necessity, they have become adeptat adjusting both to changes in their environ-ment and to climate variability. Nowadays, how-ever, things are happening so rapidly that theycannot keep up.

According to the International Fund forAgricultural Development (IFAD): “There is a newglobal consensus that a more systemic approachto sustainable agricultural intensification is re-quired that better preserves or restores the naturalresource base and increases the resilience of farm-ing systems to a changing climate.”

Because small farmers have such an intimaterelationship with the environment, they can playa key role in this transformation. Indeed, IFADnotes that many farmers are already adoptingnew systems. Often based on traditional tech-niques, such systems combine the benefits of cli-mate resilience and enhanced biodiversity withhigher yields and, as a result, reduced poverty.

Insecure access to land is another issue thatincreases small farmers’ vulnerability. Due to atoxic combination of population pressures, cli-mate change, declining soil fertility and biofuelsdevelopment, competition for land has neverbeen greater. With weak or unprotected tenurerights, small-scale producers—especially women—are at the mercy of more powerful or affluentplayers and constantly under threat of losingtheir livelihoods. Under such conditions, farmersare reluctant to invest in the long-term wellbeingof their land or to adopt new technologies.

Addressing the lack of tenure security is acritical factor in the food security-poverty allevi-ation equation. Right of ownership is importantnot only for agricultural production but also as ameans for farmers to diversify their livelihoods byusing their land as collateral, renting it out or sell-ing it.

Value chains: The vital linkEnvironmental and land challenges aside, mil-lions of smallholders struggle to eke out a livingbecause of weak or poorly-integrated valuechains. With restricted access to modern tech-nologies—including inputs such as fertilizers andpesticides—as well as to financial and agriculturalextension services, and, ultimately, to markets,the vast majority of poor farmers are trapped atsubsistence level, producing mostly staple cropsfor household consumption.

A tried and tested solution to this is for anNGO or other body to bring together the variousactors—smallholder farmers, input providers,processors, buyers, financial institutions andservice providers—and facilitate their working to-gether. This kind of arrangement is attractive to


SPECIAL FEATURE

F

GLOBAL DISTRIBUTIONOF AGRICULTURAL LAND

Note: All figures on agricultural land obtained from FAOSTAT.All figures on number and size of farms obtained from national authorities, as far as possible. SOURCE: GRAIN (MAY 2014)

Asia-Pacific

China

India

Africa

Latin America & Caribbean

North America

Europe

TOTAL

1,990,228

521,775

179,759

1,242,624

894,314

478,436

474,552

5,080,154

447,614

200,555

138,348

94,591

22,333

2,410

42,013

608,962

420,348

200,160

127,605

84,757

17,894

1,850

37,182

562,031

93.9%

99.8%

92.2%

89.6%

80.1%

76.8%

88.5%

92.3%

689,737

370,000

71,152

182,766

172,686

125,102

82,337

1,252,628

34.7%

70.9%

39.6%

14.7%

19.3%

26.1%

17.4%

24.7%

1.6

1.8

0.6

2.2

9.7

67.6

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all involved, as it shares the risk, maximizes out-put, sets up market linkages, and increases thecommercialization and sustainability of the com-modity chain.

With this kind of security behind them, sub-sistence smallholders can advance to producinga mix of staple and high-value crops and partici-pate in local and regional spot markets as bothbuyers and sellers. The difference this can makein terms of income can be considerable, generat-ing profits both for reinvestment in the farm andin the household.

In this context, belonging to a producers’ or-ganization brings many advantages to the small-scale farmer: bulk production, reduced coststhrough economy of scale and strengthened bar-gaining power with private sector actors. As partof a larger group, smallholders are more likely notonly to access a more sophisticated value chainbut also to move up the chain and capture mar-gins previously dominated by other players, in-cluding wholesalers, processors and exporters.

Energy the enablerAs a means of poverty alleviation, a tight valuechain is a game changer. However, a value chainis only as effective as the infrastructure that sup-ports it. Of paramount importance is access to areliable and affordable energy supply. Withoutelectricity, the productive day is shortened, irri-gation systems are inefficient, processing jobshave to be done by hand, and produce spoils, ei-ther because it cannot be processed fast enoughor cannot be properly stored.

Rural energy access is an issue high on theglobal agenda due its transformative effect onrural economies, livelihoods and living stan-dards. Making modern energy, including electric-ity, universally available is one of the three keygoals of the UN Sustainable Energy for All initiative,but possibly the most challenging. Rural areas aredifficult and expensive to reach with traditionalgrid systems, which also take years to extend andbring on line. However, there are several other so-lutions that are affordable, sustainable and, mostimportant of all, quick to implement.

Mini-grids, for example, are attracting grow-ing interest as a means of providing decentralizedenergy generation and distribution. Successfulmodels include hybrid systems, which can gener-ate power from both sources—for example, dieseland solar—or operate using just the one source.This type of flexibility makes for a more securesupply and reduces the chance of power cuts.Questions remain, however, over the financing ofsuch systems, which are unlikely to be supportedthrough public funds and thus demand new ap-proaches and business models.

The road out of povertyJust as important as energy is the condition ofrural roads, which often constitutes a major bot-tleneck to economic integration and growth. Anestimated one billion people—most of them agri-culture-dependent—have no access to all-weather roads. During the rainy season, this canlead to farming communities being isolated �


SPECIAL FEATURE

� for weeks at a time. Inputs cannot be delivered,markets cannot be reached, and harvested cropsgo to waste.

This is a major blow to food security, espe-cially when food surplus regions of a country areunable to evacuate produce to food deficit re-gions. It also compromises productivity and earn-ing capacity, with the resultant negative impacton household incomes and welfare.

The main obstacle to improved transporta-tion networks in rural areas is the very high costof the infrastructure, as well as the need to pro-vide services that are environmentally, sociallyand economically sustainable. Meeting the needsof agricultural communities, particularly those inlandlocked countries, requires emphasis on proj-ects that link producing areas with regional—andultimately national—road networks.

This would improve competitiveness andeventually open up opportunities for cross-bordertrade. With better access to domestic and interna-

tional markets, small producers can reliably sellmore produce at higher prices. This, in turn, actsas an incentive to invest in their own businessesand increase the quantity, quality and diversity ofthe goods they produce.

Information is powerMarket access on its own, however, is no guaran-tee of success. Small producers also need access toinformation about the market and the factorsthat influence it. And this is where informationand communication technologies play a vitalrole. Being unable to make informed decisions isan important reason why developing countyfarmers produce significantly less per hectarethan their developed country counterparts—amere 2,400kg compared to 4,000kg.

Using a mobile phone with Internet access,farmers can check weather forecasts, commodityprices and demand trends, and tap into sources


SPECIAL FEATURE

DEVE

LOPING

WOR

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118%

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101%

99% of all people working in agriculture live indeveloping countries

3% =16,000,000 PEOPLE

LABOR FORCE IN AGRICULTURE MOBILE PHONE PENETRATION

* predicted mobile penetration rate (GSMA)

Sources: GSMA, The World Bank, CIA- The Word Factbook, FAOSTAT.Mobile phone penetration rate = Ratio of the total of mobile connections to the total population.(NB Represents penetration by connections, which can surpass 100% due to multiple SIM ownership)

2000

2011

2005 2010 2014*

Mobile technology can bridge the information gap faced by farmers. With better access to quality and actionable information, farmers can make more informed decisions and boost their productivity and income.

Crop yields in developing countriesare 60% of the yields in the developed world

2400kg

4000kg

PRODUCE PER HECTARE

How do I protect my crops and livestock

from disease?

How can I get the best price for my

harvest?

What is the weather forecast and when shall I plant?

THE OPPORTUNITY FOR MOBILE: CLOSING THE INFORMATION GAP

Agricultural productivity gap: the opportunity for mobile


SPECIAL FEATURE

of information about combating crop pests andlivestock diseases. This can help them decidewhen and what to plant and guide them on howto maximize yields. However, for small farmers tobe able to benefit from these services, mobileproviders must make data plans more affordable.

While it is encouraging that mobile net-works in developing countries have expanded exponentially since 2010, mobile broadbandservices remain expensive and out of reach forlarge parts of the population, creating a huge gapin penetration between rich and poor countries.According to the latest projections from the UN,mobile broadband penetration will stand at just21 percent in the developing world, comparedwith almost 84 percent in developed countries bythe end of 2014.

Closing the gender gapCutting across the various issues that affect fam-ily farming is the crucial role of women, who rep-resent almost one-half of the developing world’ssmall farmers and make an essential contributionto food security and family nutrition. In additionto growing produce and raising small livestock,women are often exclusively responsible for theprocessing, storage and marketing of basic food-stuffs and for the preparation of family meals. Yet,in many developing countries, gender-based in-equalities limit women’s productivity and impactnegatively on the overall performance of the agri-culture sector.

Research conducted by the FAO shows thatwomen have more difficulties than men in ac-cessing resources such as land, credit, informa-tion and extension services. Compared withmen, women tend to farm plots that are only halfto two-thirds the size; to keep fewer and less valu-able livestock; and to be granted fewer andsmaller loans. They are also less likely to purchaseinputs such as fertilizers, pesticides, improvedseeds and mechanical equipment.

FAO estimates that closing this gender gapand improving women’s access to productive re-sources could result in yield increases of up to 30percent. Production gains of this magnitudecould, in turn, reduce the number of hungry peo-ple in the world by as much as 150 million.

Rural women are also on the front line of cli-mate change impact and, as such, are uniquelyplaced to lead mitigation and adaptation efforts.Their daily activities—collecting water, firewoodand fodder, and taking care of plants and ani-mals—are intimately linked to the environment.Over time they have garnered a wealth of knowl-edge and expertise and are acutely aware of theneed to protect fragile ecosystems and manageland, forests and water responsibly.

In spite of this, rural women are poorly represented at all levels of decision-making onenvironmental policy and natural resourcesmanagement. Acknowledging this anomaly andencouraging the participation of women in ruralproducers’ organizations is an essential step towards dealing with climate change and its related challenges.

The way forwardThere is clearly no silver bullet for transformingthe promise of family farming into a sustainablereality; the challenges are too diverse and complex. The solutions are there, but requirecommitted, concerted—and in many cases altruistic—action from all stakeholders. At theend of the day, it is not just small producers thatstand to benefit but the very future of our planetand its people. �

What are the impacts of the gender gap in agriculture?

Gender Yield GapWomen farmers typically achieve yields that are 20-30% lower than men. However, the vast majority of studies suggest that women are just as efficient as men and would achieve the same yields if they had equal access to productive resources and services. Bridging this gender yield gap would boost food and nutrition security globally.

This additional yield could reduce the number of undernourished people in the world by

Given equal access to resources as men, women would achieve the same yields levels, boosting total agricultural output in developing countries by 2.5–4%

100–150m or 12–17%

20–30%The yield gap between men and women farmers averages around

mostly due to differences in resource use

Source: FAO

OQ: The International Year of Family Farming rec-ognizes the importance of family farming for reducingpoverty, boosting food security, and preserving naturalresources. Could you briefly explain how small-scalefarming relates to each of these three goals?

KFN: As you know, the United Nations declared2014 as the International Year of Family Farming.This declaration reflects a growing appreciationfor the role played by family farmers throughoutthe world, and how this role is changing. By onecount, there are some 500 million small farmsscattered around the globe, mostly in developingcountries. In some countries, small farms are re-sponsible for up to 80 percent of the food pro-duced. Policy makers—as well as the businesssector—are moving beyond the cliché that allfamily farmers are poor, isolated and marginal-ized. Increasingly, they see a huge potentialamong smallholders for agricultural processing,management of production systems and invest-ment. In practical terms, agricultural projects aremoving away from simply compensating farmerswho are excluded from markets. Instead, familyfarms are viewed as a potential source of innova-tion, a space that can transform our approach torural development and poverty alleviation. If we

can unleash the vast potential of family farms,smallholders can be part of the solution to ruralpoverty and inequality and they can do so in amanner sustainable for the environment.

OQ: It is estimated that crop yields per hectare in thedeveloping countries are 60 percent of those in the de-veloped world. What are the main reasons for this dis-parity? And what can be done to rectify it?

KFN: You have to remember that three-quartersof the world’s poorest people live in rural areas indeveloping countries. And so do three-quarters ofthe world’s undernourished people. Rural peopleface a lack of access to markets, services, finance,knowledge and technology. In Africa, only about6 percent of the total cultivated land is irrigated.This compares with 37 percent in Asia. It is esti-mated that irrigation alone could increase outputby up to 50 percent in Africa. The gap between


SPECIAL FEATURE

Moving beyond the cliché

Family farmers should no longer be regarded as poor,isolated and marginalized, but as key sources of inno-vation and change. So says Dr Kanayo F Nwanze,President of the International Fund for AgriculturalDevelopment, in the following interview exclusivelyfor the Quarterly.

Interview by Audrey Haylins

Dr Kanayo F Nwanze

PHOTO: IFAD/MARCO SULASTRO

rich and poor is mainly a gap between urban andrural. These inequalities hold back small farmersand rural areas as a whole, and these gaps must bemet with focused and deliberate action. Incomeinequality can lead to slower or less sustainableeconomic growth. Clearly, neglecting rural areasnot only hurts rural people and crop yields, butholds back countries and national economies.With the right investments, small farmers canlead economic growth, and through innovationand the use of traditional knowledge, they canensure food security not only for themselves andtheir community, but for their country.

OQ: Women make up almost one-half of the develop-ing world’s small farmers, yet gender-based inequali-ties limit their productivity and impact negatively onthe overall performance of the agriculture sector. Whatsteps can be taken to close this gender gap?

KFN: It’s true that women play a much bigger rolein farming than is commonly recognized. Acrossthe subregions of Asia and the Pacific, women ac-count for as much as 50 percent of the agricul-tural workforce. Yet despite their oftenback-breaking labor, and their valuable knowl-edge of crop varieties and farming practices,much of women’s work is poorly paid—if it is paidat all. The consequences of this profound injus-tice extend far beyond the impact on womenthemselves. Evidence clearly shows that whenwomen have money, they spend a large propor-

tion of it on improving family nutrition and well-being—whether that means school fees, health-care or adequate clothing. So when women lackthe opportunity to earn and manage money, weare hurting entire families. Women are agents ofrural development and their empowerment cancontribute immensely to improved livelihoods intheir families, communities and countries. Withmore targeted support from donors, governmentsand NGOs—support that addresses the social andeconomic roots of inequality by engaging withboth women and men—we can enable thesewomen to fulfill their enormous potential.

OQ: What about rural youth? Could greater supportto family farming offer increased opportunities foryoung people and help address youth unemployment?

KFN: At IFAD, we know from experience thatyoung people are the most precious resource of arural community. Today, however, many ruralareas are losing their young people, because thereare often so few incentives for them to stay. Whenyoung rural women and men cannot get an ade-quate education, make a living or create a securehome, they move to sprawling cities or to foreigncountries that, they believe, offer more hope.Some make good and contribute to their commu-nities by sending money home. Too many othersbecome mired in urban poverty. This is a tremen-dous loss for their families and their nations. Targeted investments can make a difference. �


SPECIAL FEATURE

Farmers, including womenand youth, learn how to prepare cattle feed at afarmer field school in Zanzibar, Tanzania.

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� To start with, support for basic education is crit-ical in rural areas where schools are underfundedand poor children are often taken out of schoolearly and put to work. Young rural people alsoneed vocational training, apprenticeships and fur-ther education to give them relevant knowledgeand skills.

An IFAD-funded project in Madagascar, forexample, provides apprenticeships and job op-portunities for thousands of young rural workers,building a stable, skilled workforce for Malagasysmall businesses. In Tanzania, IFAD supportsfarmer field schools that use experiential learningto help farmers of all ages solve problems and ac-quire new techniques. Those who apply whatthey learn are reaping the benefits of higheryields, productivity and profits.

OQ: How important is investment in rural infrastruc-ture as a means of improving the conditions for small-scale farming?

KFN: One of the biggest challenges that ruralpeople face is lack of access—to markets, to serv-ices, to inputs, to knowledge. Where is the in-centive to improve production if there is no wayto get the product to market or to store it? For ex-ample, one-third of the rural population of sub-Saharan Africa lives five hours from the nearestmarket town of 5,000 people. Improvements ininfrastructure can play a huge role in raisingrural livelihoods and food security. Rural andurban areas are interdependent. Growing urbanmarkets can provide opportunities for smallfarmers, if they can access them. Greater invest-ment in infrastructure—not just roads, but mar-ket facilities, electrification, storage, watersupply and energy, and communication tech-nology—is essential.

OQ: How can the international finance commu-nity—especially DFIs like IFAD and OFID—best sup-port small-scale farmers?

KFN: Today we face unprecedented economicand environmental challenges—but nobody canface them alone. Partnership is essential to devel-opment and has always been central to IFAD’sbusiness model. We know that we are more pow-erful when we forge alliances for sustainable agri-culture with DFIs like OFID, but also withgovernments, other donors, the private sectorand of course small-scale farmers themselves.Since 1977, in addition to the US$15.6bn thatIFAD has invested in agriculture and rural devel-opment, it has mobilized a further U$22.8bn incofinancing and domestic contributions. Work-ing in partnership leads to greater impact.


SPECIAL FEATURE

“If we can unleash the vast potential of family farms,

smallholders can be part of the solution to

rural poverty and inequality and they

can do so in a mannersustainable for the

environment.”

The emergence of higher and more volatile foodprices, combined with dramatic droughts, floods,and famines, have concentrated world attentionon the question of how to feed a global popula-tion that is over 7 billion and growing. Small-holder farmers are part of the answer to thatquestion. In fact, most farms are small. Globally,85 percent of farms are under two hectares. Small-holders in the developing world pay a key role infood security. And yet, many of them are poorand hungry themselves. Three-quarters of theworld’s poor and hungry people live in the ruralareas of developing countries. But with the rightsupport—which includes investment, knowl-edge, finance and access—they can achieve foodsecurity and escape poverty. And this is where fi-nancial institutions can really make a difference,by channeling resources to sustainable agricul-tural and rural development.

There is much attention being paid in thepost-2015 development agenda discussionsaround partnerships. The partnerships that IFADcreates—which include business, small farmersand government—are key to gaining greater ac-cess to markets for small farmers so that they canincrease their incomes. But it is also by increasingour combined investment in women, infrastruc-ture and research and development that we canunlock a food secure world. Achieving povertyeradication and global food security will requirethe coordinated efforts of all actors—from farm-ers to other domestic investors all along foodchains, alongside research institutions, develop-ment agencies, educational institutions, and oth-ers—to work towards these common goals. Wealso need tools to build trust among these actorsand to hold each accountable for working to-gether for food and nutrition security.

OQ: What has IFAD been doing this year in terms ofadvocacy to promote the role of smallholder farmers?How satisfied are you with the response thus far?

KFN: Since 2009, when agriculture was placedback on the map after the commitments made atthe G8 in L’Aquila, IFAD has increased its engage-ment in high-level advocacy, pressing for inclu-sive, sustainable rural development at meetingslike the G8 and G20, the World Economic Forum,the Global Conference on Agricultural Researchfor Development and Rio+20.

We are seeing tangible results. For example,the concept of smallholder farming as a businesshas been embodied in G8 and G20 documents.The Camp David declaration that launched theNew Alliance for Food Security and Nutrition speci-fied smallholder farmers, particularly women, asprivate sector partners. Of course this year we

have been focusing our advocacy efforts aroundthe voices of small family farmers and ensuringthese voices are heard loud and clear in the post-2015 development agenda-setting process so thatsmallholder-centered rural development, alongwith sustainable, inclusive, job-rich growth, is re-flected into any new goals.

But IFAD doesn’t just advocate for the voicesof rural women and men. We invest in them sothat even the most marginalized rural people canraise their own voices and advocate for them-selves by participating in forums and processesthat impact their lives—locally, regionally and in-ternationally. For example, earlier this year IFADhosted the fifth global meeting of the Farmers’Forum, which brought together more than 80leaders representing millions of smallholders andrural producers from all over the world. Also, inresponse to a request for more systematic dia-logue with United Nations agencies, last yearIFAD developed and hosted the first global meet-ing of the Indigenous Peoples’ Forum. Peoplehave to be involved in development decisionsthat affect their lives.


SPECIAL FEATURE

OQ: How do you think this issue should be treated inthe post-2015 development agenda?

KFN: At IFAD we see the challenges of ensuring asustainable supply of nutritious food, preservingthe environment, and promoting the economicempowerment of rural women and men asclosely interwoven. This requires comprehensive,holistic actions, with strong links to all parts ofthe post-2015 development agenda. As we con-template a new development paradigm to suc-ceed the MDGs, we have to realize that toeradicate poverty and hunger, inclusive growthwill have to reach the remotest and most margin-alized areas. Given that 76 percent of the world’spoor reside in rural areas in developing countries,rural women and men must receive increased in-vestment if we are to eradicate hunger andpoverty and create a better and more sustainableworld. This is the message that IFAD is contribut-ing to the discussions of a post-2015 developmentagenda. �

Apprentices at a cartmakingworkshop in Madagascar. Inrural areas, off-farm skills arean equally important meansof earning a living.

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Great oaks from little

acorns growWhy microcredits

promise a big future for small farmers

A sustainable microfinance service for smallholder farmers is widely recognized as an impor-tant vehicle of development. Although it is fraught with risk,innovative approaches coupledwith the support of developmentfinance institutions offer the possibility of rapid progress.


SPECIAL FEATURE

by Arya Gunawan Usis

PHOTO: GUNNAR PIPPEL/SHUTTERSTOCK.COM


SPECIAL FEATURE

his is the story of 56 year-old Mao Bun-thoeun from Battambang province in

northwestern Cambodia. Mao earns her incomeby growing cassava and corn. With limited re-sources at her disposal, the quantity and qualityof the yields from her three hectares of land usedto be low. To help boost productivity, she and herhusband wanted to borrow from lenders in thevillage, but the interest rate was very high.

Fortunately, Mao heard about PRASAC, oneof Cambodia’s leading microfinance institutions.She decided to borrow US$2,500 over 12 monthsat an affordable rate of interest. With the pro-ceeds, she bought farming materials, fertilizerand pesticide. Her yields improved so much shewas able to pay off the loan in six months and ap-plied for a second loan to buy more land. Maonow owns seven hectares and can grow evenmore crops. In January 2014 she applied for athird loan of nearly US$3,500 for her expandingcassava plantation.

She said: “I am really happy when I see mycrop is growing well; that means I will get moreincome. I made the right decision in getting use-ful loans from PRASAC. I hope to get additionalloans to buy more cultivable land in the future.”

A similar happy story comes from KhimKhnak, a resident of Cambodia’s Kandal province.

Khim uses a motor cultivator to plow his paddyfield. Compared to the days when he had to dothe job by hand, the machine saves a lot of time.He can even earn additional income by lendinghis machine to fellow farmers.

The convenience that Khim enjoys is thankslargely to Amret, another prominent microfi-nance institution in Cambodia, whose credit en-abled Khim to buy his cultivator.

“Thanks to the loans provided by Amret,and because of the money I earned from my hardwork, my living conditions are now better,” hesaid.

Both PRASAC and Amret are OFID partners.

Big benefits for smallholder farmersMicrofinance is widely recognized as a power-Kful means of alleviating poverty. This appliesalso to microfinance provided to smallholder farmers.

According to Monika Beck, an expert andpractitioner in this field, agriculture is a businesslike any other. “Farmers need access to financialservices to realize the economic potential of theirenterprise. Financial support enables them topurchase inputs such as fertilizer and seeds as andwhen needed,” she told the Quarterly. �

With the help of micro-loans, Mao Bunthoeun has been able to expand her small cassava plantationfrom three to seven hectares.

“Farmers need access to financial services to realize

the economic potential of their

enterprise.”MONIKA BECK, KfW

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SPECIAL FEATURE

� “And microfinance has found ways to addressthese types of businesses in ways traditional com-mercial banks have not,” added Beck, who is Di-vision Chief of Financial Sector DevelopmentAfrica/Global and Regional Projects of KfW, aGerman government-owned development bank,based in Frankfurt. KfW is one of world’s leadingmicrofinance institutions and a partner of OFID.

Beck stresses that microfinance for small-holder farmers becomes more important when itis tied to food security. This is because the issue offood security is impacted by microfinance in twoways, depending on the type of crop.

“In the case of food crops, microfinance al-lows the farmer to buy better seeds which will in-crease productivity. The farmer can use theadditional produce for household consumption.In the case of non-food produce, like cotton orcoffee, the additional income from increased pro-ductivity will strengthen the farmer’s resilienceagainst economic shocks and famine by allowinghim or her to purchase food when needed,” Beckexplains.

Innovative measuresDespite the rapid development of microfinancein recent decades and its important role in devel-opment, microfinance for smallholder farmershas grown relatively slowly. The reason for this isthe specific risks attached to the agriculture sectorbeyond the general credit risk.

According to Beck, these challenges includepests, unforeseen weather circumstances andprice fluctuations. Another major risk factor is po-litical interventions in the form of sudden priceand interest rate caps as well as debt relief an-nouncements. Such actions can ruin repaymentmorale in the sector.

There are ways of overcoming these chal-lenges, however. Beck advocates developing spe-cific analytical tools in order to understand therisks and mitigate them, for example by ade-quately diversifying the portfolio.

She suggests further that microfinance insti-tutions need to invest in staff training to betterunderstand the business of agriculture and thespecificities of different crops and respective mar-ket dynamics. Insurance schemes, both at thelevel of institutions and end borrowers, are also

worth considering, as these too could contributeto minimizing risk.

She also proposes expanding the implemen-tation of some innovative steps that have beendeveloped recently. Traders or processors, for in-stance, have continuous access to smallholderfarmers through their regular business activities.Financial services can piggyback on this client ac-cess in order to reduce distribution costs—an ap-proach known as value chain financing. Marketaccess and access to knowledge can also be pro-vided, reducing risk at the same time. In addition,major insurance companies could also exploreforms of crop insurance.

Promising potential to growDespite the challenges, the potential of microfi-nance development for smallholder farmers ispromising. Beck cites the example of Azerbaijan’sAccess Bank, which launched a credit product forsmallholders in 2007, having previously focusedalmost exclusively on urban clients. The banknow runs an agro loan portfolio of US$130m withan average loan amount of US$2,400, and servesmore than 50,000 farmers with working capitaland investment loans. Some 47 percent of thebank’s micro-client base is smallholders. KfW alsohas investment in this bank.

Beck is keen to point out that the support ofdevelopment finance institutions is also neededto drive the growth of microfinance for small-holder farmers. “DFIs can contribute by provid-ing risk capital to the sector that can helpdemonstrate the feasibility of financially sustain-able operations in this sector, thus attractingmuch needed private capital in the medium tolong term,” she told the Quarterly.

Within this context, Beck mentioned theUS$20m investment that OFID had made—alongwith contributions from other institutions—inthe Microfinance Enhancement Facility (MEF), ascheme she manages. The MEF’s high perform-ance is reflected in its current outstanding port-folio of over US$500m. All told, the MEF hasdisbursed over 350,000 loans to microenterpre-neurs working with 90 microfinance institutionsin 33 countries. Fifty percent of clients live inrural areas and almost one-half are woman.

Beck stresses that microfinance for small-holder farmers becomesmore important when itis tied to food security.

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Important role of womenBeck describes the role of women as central to theprocess of empowering smallholder farmersthrough microfinancing. “This is because womenin general are more active in the agricultural sec-tor than men, and they are also known to be moreactive savers than men,” she explains.

Fatima, a resident of southwest Bangladesh,is another inspiring example of the sweet fruits ofmicrofinance. An illiterate farmer, Fatima lives inone of the poorest areas of her country and usedto work as a daily laborer. Her husband, Razzak,used to plant vegetables on their 0.6 hectare plotof land and spent long periods away from homeas a migrant worker to earn additional income toimprove their meager life. Despite their best ef-forts, they were unable to escape their impover-ished circumstances.

It was only after Fatima received loansthrough a microcredit project run by the Interna-tional Fund for Agricultural Development that

hope began to emerge. She used her first loan ofaround US$85 to expand her vegetable field andplant bananas. She also bought a calf. Having suc-cessfully paid off her credit, Fatima sought a sec-ond loan of some US$150, which she used todiversify her crops and buy a cow.

Now, Fatima’s land continues to producemore crops every year, and she is the owner of fivecows to be fattened and then sold. She has alsopurchased an additional 100 square meters ofnew land and employs workers to help managethe field. The family also has a water pump towater the plants and a rickshaw to transport theircrops to the market. More than that, Fatimah hastaken part in the decision making process in herfamily and even owns a plot of land in her ownname. “I’m making my dreams come true,” shesays.

Proof positive that, with microfinancing,great oaks from little acorns grow. �

As keen savers and with a good reputation for repaying loans on time, women play a crucial role inempowering smallholders through microfinancing.

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OFID in the Field

OFID works in many ways to help farming families improve their life chances. In addition to promoting access to technical and financial services, we reinforce all aspects of the value chain, from productionthrough processing to marketing and cross-border trade. To complement these activities,we support agricultural research and the exchange of knowledge, innovation and best practice. In the following pages, Damelys Delgado describes how OFID funding is helping to create new opportuni-ties for smallholder farmers in El Salvador,Lesotho and other African nations.

19

n sub-Saharan Africa, agriculture accountsfor approximately 30 percent of GDP, 50

percent of export earnings and provides between70 and 80 percent of all employment. The bulk ofagricultural yield is produced by small-scale farm-ers working two hectares of land or less.

The main African crops are cereals (maize,rice and wheat), oil crops (coconut, palm, soy-bean, sunflower), edible nuts and seeds (cashew,sesame), pulses, roots and tubers, and fresh fruitand vegetables.

The region, however, is far from reaching itsagricultural potential. According to an analysis bythe McKinsey Global Institute, Africa has almost600 million ha of suitable land that is not beingcultivated. This represents approximately 60 per-cent of the total land available for agricultureglobally.

Up to 70 percent of the people of sub-Saha-ran Africa rely directly or indirectly on farmingand agricultural labor. Their contribution, in ad-dition to self-subsistence, produces products fun-damental to the food supply chain, including forexport.

Olusegun Obasanjo, former President ofNigeria, has stated that Africa cannot increase itsfood production, create jobs or reduce poverty onthe scale required without unlocking the poten-tial of small-scale agriculture.

From Kenya to the worldAfter providing food for personal and local con-sumption, the remaining production of thesmall-scale harvest becomes available for sale.However, products alone do not create the mar-ket. To be commercially viable, it is also necessaryto create efficiency in the trade chain.

This means developing the logistics facilitiesto support the marketing and distribution of pro-duce. Large investments in such facilities are es-sential, and this is where the private sector playsa dominant role, representing a critical link ineconomic growth and poverty reduction inAfrica.

The Export Trading Group (ETG) owns andmanages a large vertically integrated agriculturalcommodity business with operations that in-clude procurement, processing, warehousing, dis-tribution and merchandising.

ETG started in Kenya in 1967, marketing lo-cally produced and manufactured goods in Eastand Central Africa. In the 1980s, it shifted its corebusiness to the agriculture sector and establishedseasonal warehouses in the countryside so thatcrops could be obtained directly from small-scalefarmers at the time of harvest.

As volumes grew, increasing numbers of per-manent warehouses were established and the


OFID IN THE FIELD

Chain reaction: From smallholder to exporter

By consolidating the output of hundreds of smallfarms, the Africa-based Export Trading Group is integrating smallholders into value chains andsecuring them vital access to export markets.

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ETG logistics and assets network began to takeshape, first in Tanzania and then in Malawi,Mozambique, Zambia, Uganda and Kenya. In ad-dition, trading routes were established inEthiopia, Sudan and Somalia.

In the 2000s, the company expanded fromprocurement and distribution of agriculturalcommodities to investment in commercial farm-ing as well as processing operations in Zambia,Mozambique and Tanzania. It also deepened itssupply chain in other emerging markets, mostnotably in India, with the establishment of addi-tional processing facilities.

ETG exports African agricultural commodi-ties within Africa and to the rest of the world andimports commodities from Asia and other coun-tries into Africa. Today, it has operations in morethan 40 countries, with a staff of around 7,000,and has recently expanded to parts of Asia, in-cluding India, Thailand, Vietnam and China.

OFID supports the trade expansion of ETGThe ETG Group is involved in approximately 29processing facilities and over 300 warehouses,representing more than 25 different commoditiesand agricultural implements The ETG valuechain allows African agriculture to become glob-ally feasible and provides better access to devel-oped markets around the world.

Currently, ETG has set up a network of morethan 300 year-round and numerous seasonal pro-curement centers, warehouses and silos, whichstore the raw commodities close to their point oforigin until sufficient mass has been reached tomake transport economically viable. Sales areguaranteed and the farmers are paid cash on de-livery.

In 2009, OFID started to support ETG’s tradeactivities, helping it to expand and increase itsvolume of traded goods. With broader access tonew markets, small-scale farmers are reaping thebenefits.

Tareq Al Nassar, head of OFID’s private sec-tor operations, stressed the vital role of the pri-vate sector in developing products, establishingservices, and creating market systems and busi-ness models that can help reduce poverty and cre-ate opportunities for all sectors of society.

“By supporting ETG’s trade expansion,OFID is fostering the work of small-scale farmers,securing markets for them, creating employment,and making a solid contribution to rural develop-ment,” he said. �


OFID IN THE FIELD

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n July 2014, it was reported around theglobe that a flawless diamond had been

discovered at the Letseng mine, which, at3,100m, is one of the world’s highest diamondmines. Such discoveries are not rare in the King-dom of Lesotho, where, according to current fore-casts, the mining sector could contribute as muchas 8.5 percent of GDP by 2015.

Very little of this wealth, however, willreach ordinary people in the mountains of a na-tion with one of the most unequal distributionsof income in the world. From time to time, theglitter of diamonds thrusts Lesotho into theglobal spotlight, allowing the world to observethe harsh reality of this tiny country. Consistingmostly of highlands, only nine percent of thearea is suitable for cultivation, and many of thevillages can be reached only on horseback, byfoot or by light aircraft.


Far from the world, close to the sky

In the South African enclave ofLesotho, OFID is supporting govern-ment efforts to boost productivityamong small sheep and goat farmerswith the aim of strengthening thecountry’s wool and mohair industry.

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PHOTO: IFAD/GUY STUBBS

Besides diamonds, Lesotho is endowed with anabundance of water, which constitutes an impor-tant source of income. The Lesotho HighlandsWater Project, developed in partnership betweenLesotho and South Africa, is a great boon to theeconomy. The bi-national project provides waterto the greater Johannesburg area, where the ma-jority of industrial and mining activity takesplace. South Africa realizes savings through thelower cost and Lesotho benefits from royalties,ancillary developments and hydropower.

Lesotho’s geography is stunning; the viewsfrom its many mountains breathtaking. As anadded benefit to adventure tourism and the grow-ing popularity of skiing, snow may fall in themountains at any time of the year. The landscape,however, reveals widespread poverty, which iseven higher in rural communities.

With an estimated population of 2.1 million,three-quarters of Lesotho’s inhabitants—the Ba-sotho—live in poverty. According to the WorldBank, more than two-thirds of households live onless than one dollar a day. Due to its mountainouslandscape, the country is more suited to livestockproduction than to arable farming. The revenuefrom sheep and goats is often the only source ofincome for rural families. Commonly referred toas small livestock, sheep and goats are kept prima-rily for the production of wool and mohair,which are the main agricultural exports.

Warm in winter due to its insulating proper-ties and cool in summer due to its ability to drawoff moisture, mohair is durable, naturally elastic,and flame and crease resistant. Considered a lux-ury fiber, like cashmere, angora and silk, mohairis more expensive than wool.

A thorny process Official sources state that about 45 percent ofLesotho’s total exports consist of textiles andclothing. Reports also point out that inadequateindustrial infrastructure prevents growth of thesector. Other restrictions that hinder investmentand production are underdeveloped logistical fa-cilities and delays in shipment to ports in SouthAfrica. These circumstances add to the problemof being geographically distant from currentmajor export markets.

To overcome some of these limitations andto help reduce poverty, government efforts havebeen framed within its national strategic devel-opment plan for the period 2012/13–2016/17,which was launched in 2012 under the slogan“Towards accelerated and sustainable economicand social transformation.”

The plan targets the expansion of the tex-tiles and clothing industry, with a view to in-

creasing exports and accessing larger markets. Inorder to improve the quality of livestock breed-ing, the plan aims to increase the accessibility ofrural dwellers to financial support and farm ma-chinery.

OFID helps to strengthen Lesotho’s plans Since the start of the decolonization process in1966, the Kingdom has been relying on interna-tional aid through loans and grants. OFID is a keydevelopment partner and is currently supportingthe Wool and Mohair Promotion Project, which isembedded in the national plan. OFID is covering30 percent of the total cost, with the remainderprovided by IFAD, the Lesotho National Mohairand Wool Growers Association (LNWMGA) andlocal government.

The project has been designed to improvelivestock nutrition, increase the quantity andquality of wool and mohair, and support theadoption of a more commercial approach to themarket.

From Maseru, the capital, Lefu Lehloba,manager of LNWMGA, explained that about30,000 small stock producers market wool/mo-hair through the association, which produces94 percent of the country’s clip. “The other sixpercent is provided by producers who marketthrough licensed private traders,” he clarified.

Lehloba also disclosed the association’s pro-duction figures for 2012/2013: three and a halfmillion kg of wool and almost half a million kg ofmohair, together accounting for an export rev-enue of around US$25m. Nearly all of this produc-tion goes to China and India, and to a lesserextent to the Czech Republic and Egypt.

Syahrul Luddin, OFID country officer forLesotho, told the Quarterly that the wool and mohair promotion project was a very importantintervention to improve rural food security andhousehold incomes.

“Livestock production is the backbone ofLesotho’s rural economy, and the project is ad-dressing the bottlenecks to its success: rangelandmanagement, livestock breeding and nutrition,and the marketing of livestock products,” Luddinpointed out.

While the project has national coverage, itfocuses on those areas with the highest povertyrates, directly benefiting approximately 200,000people.

Officially regarded as the world’s highestcountry, over 80 percent of Lesotho is 1,800mabove sea level. There, near the sky, OFID’s sup-port is like a downward staircase helping to bringthe Kingdom closer to the world. �


OFID IN THE FIELD

“Livestock production is the backbone of

Lesotho’s rural economy,and the project is

addressing the bottlenecks to its

success.”Syahrul Luddin, OFID


OFID IN THE FIELD

l Salvador, the smallest and most denselypopulated country of Central America, has

more than 300km of Pacific Ocean coastline, aswell as an extensive system of national parks andreserves, including colonial towns and archaeo-logical sites, all of them vestiges of a rich histori-cal past.

In addition, the country is positioned in oneof Earth’s most active seismic regions—the PacificRing of Fire—encompassing over twenty volca-noes. El Salvador’s location places it under theconstant threat of natural disasters. Earthquakes,hurricanes, floods, and droughts hit with alarm-ing regularity, leaving behind a trail of destruc-tion, with the most devastating effect on thepoorest regions.

Each year the country is involved in a con-tinuous recovery process. El Salvador’s Ministerof Agriculture and Livestock, Orestes Ortez, statedthat, just this year, ten percent of the harvest hadbeen lost due to droughts caused by atypical,warmer Pacific Ocean temperatures known as ElNiño.

According to World Bank estimates, the con-stant recurrence of destructive natural phenom-ena severely impacts El Salvador’s agricultureindustry, which produces 70 percent of the na-tion’s domestic requirements, as well as a third ofits export earnings.

Of the total 6.3 million inhabitants, approx-imately 40 percent makes a living from agricul-ture. Statistics produced by the InternationalFund for Agricultural Development (IFAD) indi-cate that 50 percent of rural poverty is due to in-equality of ownership and access to land, plus a

No surrender to the threat of nature

Concerted efforts are underway in El Salvador to blunt the effects of thecountry’s environmental vulnerabilityby fostering the productivity of smallholder farmers.

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PHOTO: IFAD/CARLA FRANCESCUTTI


lack of appropriate social and productive assets.Added to this is the country’s environmental vul-nerability, weak productive efficiency and lowlevel of competitiveness.

Hunger and the persistent scarcity of foodsupplies are evidence of rural poverty, which wasone of the main causes of the 12-year armed con-flict in the 1980s, as identified in the Peace Ac-cords of 1992.

Many of the rural poor are subsistence farm-ers or landless agricultural workers. With inferiorinfrastructure and an absence of basic services, aswell as weak institutions, credit is difficult to ob-tain. As a result, poverty is prevalent among thoseoperating small rural enterprises.

IFAD reports that one in three Salvadoranhouseholds is headed by women, a percentagethat increases in rural areas as a consequence ofwar and male migration. This means smallholderfarms are run mostly by women.

Tackling rural poverty In 2005, the government of El Salvador instituteda framework entitled the National System for FoodSecurity and Nutrition. As a component of the Na-tional Plan, this rural development platform fos-ters the productive capacity of the differentregions, focusing on social and economic invest-ments in areas of extreme poverty.

In 2010, OFID was requested, jointly withIFAD, to support the country’s food security strat-egy through the Rural Territorial CompetitivenessProject—Rural Dawn. Romulo Martínez, OFIDcountry officer, explained that the project, which

is the organization’s first operation in El Salvadorfor 26 years, forms part of the government’s Fam-ily Agriculture Plan (PAF). Its purpose is to boostboth subsistence farming and family-based com-mercial farming with the aim of reducing ruralpoverty and guaranteeing food security and im-proved incomes.

In addition, the project will seek to engagerural farmers in the food supply chain and commercialization process by establishing linkswith agroindustry. Martinez said that RuralDawn would support the consolidation of microand small rural businesses in eight out of four-teen country departments. “The program isgender and youth focused and will benefit approximately 200,000 people in total,” headded.

Rural Dawn is fully aligned with the en-hanced cooperation agreement signed by OFIDand IFAD in 2010, which focuses on the co-financing of food security and energy operationsas part of the water-food-energy nexus. RuralDawn is providing funds to protect more than18,000 hectares affected by draught. It is reforest-ing some 4,000 ha and providing specialized en-vironmental and water management support aswell as irrigation systems and equipment.

Martinez disclosed that energy efficiencywas being tackled through the provision of atleast 6,000 firewood efficient cook stoves, whichwould create healthier household environmentsand have a positive impact on overall opportuni-ties for rural poor women. With such a breadth ofactivities, Rural Dawn heralds a new and betterday for the farming families of El Salvador. �

OFID IN THE FIELD

The ‘Rural Dawn’ projectis fighting rural povertyand food insecurity byhelping small farmers toboost productivity and in-tegrate into local market-ing chains.

New format The agenda of MCIP 2014 consisted of acomprehensive package of presentationson the work of the departments and unitsof OFID, including case studies of successfulprojects. Also covered was the history ofOFID and an introduction to the institu-tion’s Corporate Plan.

In other sessions, delegates werebriefed on topical development issues, in-cluding the Global Partnership for EffectiveDevelopment Cooperation and the formu-lation of the post-2015 Sustainable Devel-opment Goals, which are currently beingprepared by the UN.

Based on lessons learned from the in-augural MCIP, this year’s program was ad-justed to make room for breakout sessionsafter the plenaries. Led by OFID officers,these smaller gatherings allowed partici-pants to gather more in-depth knowledgeabout specific subjects according to theirpreferences.

After three full days of intensive en-gagement with OFID, participants spentthe final morning at the OPEC Secretariat,where they received a briefing on the or-ganizations activities. �

he annual MCIP, which was initiatedin 2013 as a forum for information

exchange, held September 29–October 2 atOFID’s Vienna HQ. MCIP 2014 was at-tended by 21 participants from MemberCountry ministries of finance, foreign af-fairs and information as well as embassiesin Vienna.

In all, nine countries were repre-sented—Ecuador, Indonesia, Iraq, IR Iran,Kuwait, Nigeria, Qatar, Saudi Arabia andVenezuela. Four others—Algeria, Gabon,Libya and the United Arab Emirates—wereunable to attend. Two of OFID’s sister insti-tutions, the Kuwait Fund and Arab Fund,also sent representatives.

This year’s MCIP witnessed the pres-ence of Ecuador, following its readmissionto OFID this summer, after a break of morethan 20 years. The country was representedby three participants, including its Alter-nate Governor to OFID, Daniel Esteban Tor-res León.

Increased visibility for OFIDIn welcoming remarks, OFID Director-General, Suleiman J Al-Herbish said: “Theaim of this program is twofold: First, tobuild greater awareness about OFID and itswork; and, second, to create mutually-ben-eficial long-term relationships between youand us. The ultimate outcome, we hope,will be increased visibility for OFID in ourMember Countries.”

He went on to emphasize that OFIDshould not be thought of as a mere providerof development assistance: “In recent years,we have been not only implementing theglobal development agenda but activelyshaping it as well.”


Member Country delegates gather at OFID HQ for annual briefing

With a revamped format, OFID’s second Member Country Information Program (MCIP) gave participants the opportunity to dig deeper into the institution’s work and philosophy.

NEWSROUND


OFID Director-General Suleiman J Al-Herbish (right) with Mauro Hoyer, Director of Information.

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NEWSROUND

Program elicits positive responseIn a feedback survey, 80 percent of the delegates said the program

had been highly effective. They spoke encouragingly of the MCIP experience

and its contribution to their professional environment.

“For a country that has just rejoined OFID, theMCIP is a very effective learning platform for us.”

Daniel Esteban Torres León Ministry of Finance,

Alternate Governor to OFID, Ecuador

“The information we received from the MCIP willenable us to take an active role in OFID’s activities,including direct involvement in projects by providingour expertise, especially in the energy sector.”

Jose RosenbergMinister, Embassy of Ecuador, Vienna

“The MCIP has given me new knowledge aboutOFID’s role in international development. I would alsolike to give a thumbs up to the initiative to divide thepresentations into plenary and interactive sessions.This gave all participants an opportunity to get moredetailed information about sectors of interest.”

Miranda Ekawaty Mukhlis Second Secretary,

Embassy of Indonesia, Vienna

“The MCIP is a good event to learn about variousissues in the arena of international development.”

Talal Farhan El EnaziEmbassy of Qatar, Vienna

“The MCIP has opened my eyes about importantcontributions that OFID has made to poverty alle-viation, including through its program in fighting en-ergy impoverishment. I also admire the neatorganization of the MCIP.”

Habibollah Malakootifar, Counselor, Embassy of IR Iran, Vienna

“The duration of presentations in each session isfairly ideal, so participants can get enough knowl-edge to understand OFID. All presented informa-tion is useful.”

Shorouq Al-Khalil, Ministry of Finance, Kuwait

“Through the MCIP, I can take greater pride as aNigerian citizen, knowing that my country hashelped resolve development issues around theworld. I was also amazed to learn how robustOFID’s communication strategy is. I consider myselfvery lucky to be part of this event.”

Margaret E Umoh, Deputy Director,

Ministry of Information, Nigeria

“The information I received from the MCIP will bevery useful for my work, as I handle various affairswith a number of international organizations in Vienna.”

Dyar MukdadEmbassy of Iraq, Vienna

“I particularly liked the idea of the breakout ses-sions, which allowed me to learn more about thefields that are of relevance to my work.”

Muhammed Abdulrahman Al Mufadda Ministry of Finance, Saudi Arabia

“Even although several topics were not really in linewith my work, I was still able to enjoy them and geta better understanding about OFID and how it op-erates.”

Carolina LamusEmbassy of Venezuela, Vienna

“As a representative of one of OFID’s sister institu-tions, one of my take-aways was the information re-garding the private sector and trade financeoperations, something that we do not have yet atthe Kuwait Fund.”

Ayad Al-GharaballiAssistant Regional Manager, Kuwait Fund


NEWSROUND

art of the larger Midal Group, which hassimilar operations in Bahrain, Australia,

Saudi Arabia and Turkey, the OFID-sponsoredMidal Mozambique aluminium plant is in thefinal stages of commissioning and expected tocome on line before the end of this year.

With an installed annual capacity of 50,000tons, the plant will produce aluminium rods,wires and conductors for use in electricity trans-mission and distribution. It will be the sole alu-minium rod manufacturer in sub-Saharan Africa.

The plant will be supplied with aluminiumingots by the adjacent Mozal smelter, making itthe first local downstream manufacturing opera-tion to add value to Mozambique’s already prof-itable aluminium production. Until now, the580,000 tons of aluminium produced annuallyby Mozal has been exported.

In Mozambique, OFID’s first private sector invest-ment—a greenfield aluminium manufacturingplant—is poised to add a new dimension to thecountry’s mineral industry, bringing with it a hostof opportunities for job seekers, local businessesand the ailing electricity sector.

by Audrey Haylins

Climbing the next rung on the production ladder

P

PHOTO: ZSTOCK/SHUTTERSTOCK.COM


NEWSROUND

Said OFID Director-General Suleiman J Al-Herbish: “As a development organization, we areacutely aware of the importance of helping ourpartner countries to develop their manufacturingindustries and move up the production ladder.OFID’s US$12m loan to Midal is further evidenceof our commitment to this goal.”

Located on the outskirts of Maputo, the newplant is expected to have a high developmentalimpact in this post-conflict country, which overthe past decade has emerged as one of Africa’sleading economies.

Structural reforms and sound economicmanagement have triggered a boom in foreign in-vestment, led by the Mozal smelter which was thefirst major foreign investment in the country fol-lowing the civil war. In recent years, Mozambiquehas become a world-class destination for miningand natural gas development.

Despite these achievements and the wealthof natural resources, the country still faces multi-ple challenges in terms of poverty reduction andsustainable development.

Widespread benefitsAmong the many spin-offs expected from thenew plant are the positive foreign exchange im-plications. The move from raw materials to man-ufactured goods will generate significant exportrevenues and help replace products previouslyimported from South Asia and the Pacific.

Finished aluminium products have traditionallybeen a significant cost burden for the construc-tion industry and the national electricity com-pany EDM.

The factory’s establishment is consideredparticularly timely, as demand for aluminiumconductors is projected to grow significantly dueto increased investment in energy infrastructurein South Africa and across the sub-region. Theproject will also have a meaningful impact at themicro level.

“Priority has been given to localization at every stage of project implementation,” explained Midal Chairman Hamid Al Zayani, revealing that architectural, construction, accounting and transportation were just some of the services so far commissioned to localproviders.

In terms of job creation, Al Zayani indicatedthat the new facility would employ over 100Mozambicans directly in the factory. “Indirectly,however, we expect to generate four to five timesthat number,” he added.

Midal has already trained a team of Mozam-bicans at its parent company in Bahrain to enablethem to run the operations at the new plant.

Midal is also keen to use its expertise to help address some of Mozambique’s electricitychallenges and, according to Al Zayani, is already engaged in discussions on ways to reduce transmission losses by using more effi-cient materials. �

Area: 801,590 sq km

Population: 25.8 million

GNI per capita: US$510

Over the last decade, Mozambique hasposted one of the highest real GDP growthrates in the world, averaging 8% per year.

Its 2,470km long coastline positions it as a natural gateway to global markets forneighboring landlocked countries.

Its coastal waters are rich in prawns, one of the country’s leading exports.

Natural gas reserves discovered in 2012 are estimated to be the fourth largest in the world.

Mozambique plays a signif icant role in theglobal production of minerals, in particularilmenite, zircon and aluminium.

In 2012, aluminium accounted for 31.5% of national exports.

The country was the world’s leading producer of ruby in 2012.

Mozambique quick facts

MOZAMBIQUE

Madagascar

ZambiaMalawi

Tanzania

Zimbabwe

Botswana

Swaziland Maputo

South Africa

The move from raw materials to

manufactured goods will generate significant

export revenues and help replace products previously imported

from South Asia and the Pacific.


NEWSROUND

he agreement, which was signed in Sep-tember by OFID Director-General Suleiman

J Al-Herbish, and OeEB executive board membersAndrea Hagmann and Michael Wancata, aims toprovide a general framework for the developmentand implementation of joint projects.

Specific objectives include the exchange ofinformation on new business opportunities andinitiatives, the introduction of new counterpar-ties and markets, and the co-hosting of jointevents.

“OFID and OeEB have enjoyed an excellentrelationship since 2008, on both a professionaland a personal level. We are signing this agree-ment to scale up our joint activities which shallbecome more systematic and substantive,” saidMr Al-Herbish at the signature ceremony.

Mrs Hagmann explained that the signing ofthe agreement was not a starting point but an in-tensification of existing activities. “It was thenext logical step and a signal to our partners thatOFID and OeEB are placing their partnership ona new level,” she said.

OFID and OeEB launch strategic partnership

OFID is to strengthen its longstanding partnership withhost country Austria following signature of a cooperationagreement with the Oesterreichische Entwicklungsbank AG(OeEB)—the Development Bank of Austria.

by Silvia Mateyka

T

OeEB executive board members Andrea Hagmann and Michael Wancata.


NEWSROUND

Under the agreement, OFID and OeEB willfocus on various sectors essential for the economicadvancement of their common partner countries.These areas include finance, infrastructure, indus-try, agribusiness and, especially, energy.

“The importance of energy access for sus-tainable development cannot be overstated,” in-sisted Mr Al-Herbish, who expressed his hopethat an enhanced cooperation in the area of en-ergy access would be one concrete achievementof the agreement.

Energy poverty eradication and access tosustainable energy sources are common goalsshared by OFID and OeEB. Both institutions un-derline the importance of reliable access to en-ergy, as it plays a key role in the development ofpoor countries and the wellbeing of their popu-lations.

Mr Wancata outlined the number of trans-actions that had shown a broad overlap of inter-ests. “Alleviating energy poverty is another areawhere we can join forces and combine our expert-ise to expand our reach and effectiveness,” hestated.

OeEB finances projects that help developingcountries and emerging markets gain access totheir own sources of energy and use energy effi-ciently. In doing so, OeEB focuses primarily onrenewable energy.

“One of the values of Austria, which is acountry with a major source of renewable energy,is to have a clean environment. We think thatthese kinds of values should also be transportedto other countries as far as this is possible,” MrWancata added.

Stronger togetherThe cooperation with OeEB is the latest in a seriesof framework agreements that OFID has con-cluded in recent years with partners ranging fromthe World Bank Group, the Asian DevelopmentBank and IFAD, to the Islamic DevelopmentBank, the European Bank for Reconstruction andDevelopment and the Inter-American Develop-ment Bank.

These agreements enable OFID to increasethe impact of its activities and promote major is-sues related to the socioeconomic developmentof its partner countries.

“OFID is determined to continue on a pathof harmonization, coordination and joint actionswith other development institutions for the goodof its partner countries,” said Mr Al-Herbish. �

The newly initiated partnership with OeEB reflects the strong relationship thatOFID enjoys with the Austrian government. Alongside this association, OFID haslong supported the work of various Austrian NGOs operating in developingcountries. Over the last decade, this support has strengthened considerably.Among the most notable are partnerships with Hilfswerk Austria, Care Austria,Doctors for the Disabled, SOS Kinderdorf, and the Society for Austro-Arab Re-lations. Since 2003, OFID’s contribution to the development activities of AustrianNGOs has amounted to over US$6m.

Mandate

OeEB has been operating as the Development Bank of Austriasince March 2008. It specializes in the provision of long-term finance for the implementation of private sector projects whichcreate sustainable development in developing countries. Additionally, OeEB provides technical assistance, which can beused to enhance the developmental impact of projects. As ofend-2013, OeEB had committed a total €658m.

Development focus

OeEB finances projects that comply with the following criteria:

• Create jobs and national income

• Improve access to modern infrastructure and f inancing

• Support the supply of energy (in particular renewableenergy)

OFID and Austrian NGOs

About OeEB

OeEB's total portfolio by sector (%)

as at December 31, 2013

31

17

15

8

4

25

Energy & Climate

Microfinance

Infrastructure

SMEs

Industry

OtherssOther25

gy & ClimateEnerrg31

yIndustr

SMEs

uctureastrInfr

4

8

15 fi

ucture

nanceMicrof17


JULY 21

Emergency Grant approved

International Federation ofRed Cross and Red CrescentSocieties. US$500,000. To pro-vide essential food and non-food items, mainly medicalsupplies, to populations in needin Gaza.

JULY 23

Public Sector loan agree-ments signed

Burundi. US$11.2m. Enhanced HIPC Debt ReliefAgreement. The debt relief willcontribute to Burundi’s povertyreduction efforts by freeing upresources for the financing ofprojects in social sectors such aseducation and health.

Congo DR. US$10m. Integrated Agriculture Rehabili-tation Project. To rehabilitateproductive infrastructure, im-prove producers’ access to mar-

kets, and upgrade some 600kmof rural feeder roads in theManiema Province.

Congo DR. US$7m. Kinshasa University Hospital Re-habilitation Project. To raise thecapacity of Kinshasa UniversityHospital to 1,000 beds throughthe construction of two newbuildings and provision of med-ical equipment and vehicles.

AUGUST 4

Emergency Grant approved

World Health Organization.US$500,000. To support WHO activities to stop thespread of the Ebola virus in West Africa.

AUGUST 8

Public Sector loan signed

Egypt. US$55m. Assiut Power Plant Project. Toconstruct a 650MW power plantin the Assiut Governorate in

Upper Egypt, thereby contribut-ing to Egypt’s economic growthby providing a safer, more reliableand efficient electricity supply.

AUGUST 13

Public Sector loans signed

Gambia. US$5m. Support to the Basic and Second-ary Education Schools Project.Construction, rehabilitation andfurnishing of some 220 class-rooms, three libraries, numerouslaboratories and sanitary facili-ties, providing about 9,900 chil-dren access to education.

Mali. US$10m. Completion of the Extensionand Modernization of Bamako-Senou International AirportProject. To bring the airport upto international standards andprovide better links with re-gional and international mar-kets by constructing a newpassenger terminal capable ofhandling up to 1.5 million pas-sengers per year.

July–September 2014

Research Grants approved

Regional Center for RenewableEnergy and Energy Efficiency.US$100,000. To support theArab Program for SustainableEnergy Youth, a regional sus-tainable energy internship pro-gram.

Société Internationale d’Urologie.US$200,000. To develop the cur-riculum, training program andoperational plan at the GeziraHospital for Renal Diseases andSurgery in Sudan.

OFID-UNDP Mini Grants Com-petition Scheme. US$200,000.For three to five small innova-tive projects in the areas of en-ergy and water and economicgovernance and employment.

Al-Makassed Hospital,Jerusalem. US$200,000. To support the doctor residencytraining program at the hospital.

OFID is supporting WHO efforts to contain Ebola with a US$500,000 grant.

HE Abdelhadi Abdelwahid Alkhajah,the new Ambassador of the UAE,made a courtesy call on the Director-General on August 12.

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AUGUST 25

Research Grant approved

Global Forum on Law, Justice and Development.US$50,000. To support the Law,Justice and Development Week2014 and the African MiningLegislation Atlas Project led bythe World Bank under theGlobal Forum on Law, Justiceand Development framework.

AUGUST 27

Research Grant approved

Zenab for Women in Development. US$50,000. To increase women farmers’ productivity and economic em-powerment in Al Gadaref State,Eastern Sudan, and so tacklepoverty and food security.

SEPTEMBER 9

Public Sector loan agreements signed

Tanzania. US$16.35m. Third Poverty Reduction. To support rural households in obtaining access to enhancedsocioeconomic services and income generation activities,thereby benefiting over two million people.

Tanzania. US$10.2m. Third Education. To rehabilitateclassrooms and constructschools and additional class-rooms at primary and secondaryschools in Zanzibar, specificallytargeting areas with highpoverty levels.

Senegal. US$7m. Dakar’s ‘Zone Soleil’ Sanitation.For construction of a wastewaternetwork, sewage pumping sta-tions, and treatment plant toimprove sanitation infrastruc-ture in Pikine, a suburb of Dakar.

SEPTEMBER 10

Private Sector Line of Credit signed

Azerbaijan. US$10m. To sup-port UNIBANK of Azerbaijan toprovide microfinancing to indi-viduals and small entrepreneurs.

SEPTEMBER 16

Research grant approved

Arab Urban Development Institute. US$50,000. To support an upcoming confer-ence on Small Projects and Productive Families as a BasicFactor for Development: Therole of Municipalities, Publicand Private Sectors, and CivilSociety in Fostering and Assist-ing. It will be held in Manama,Bahrain, January 20–22, 2015.

SEPTEMBER 23

148th Session of the Governing Board

Public sector loans approved

Benin. US$3m. Cotonou East Coast Protection.To halt the erosion of beaches in Cotonou city and adjacentcommune Seme Kpodji, with a view to protecting vital socioeconomic infrastructureand the area’s 200,000 inhabi-tants.

Bosnia and Herzegovina.US$5.35m. Rural Business Development. To provide training, financial services andother support to help subsis-tence farmers transition to com-mercial farming and developnon-farm enterprises. This willincrease the income of about20,000 rural households.

OFID DIARY

On August 14, Mr Al-Herbish received the new Ambassador of Guatemala, HE Antonio Roberto Castellanos Lopez, accompanied by Sandra Noriega Urizar, Counselor.

Burkina Faso. US$10m. Ouagadougou Water Supply(Ziga-Phase 2). To build a treat-ment plant and distribution net-work for providing safe drinkingwater and sanitation services for approximately 2.2 millionpeople.

Burundi. US$20m. Food Security and Rural Devel-opment in the Imbo and MosoRegions. To rehabilitate irriga-tion schemes for rice productionand improve rural feeder roads,assisting around 2.3 million subsistence farmers.

Côte d’Ivoire. US$8.5m. Water Supply Project for Eastern Region of Côte d’Ivoire(Aboisso). To construct andequip a water supply and distri-bution system to provide cleandrinking water for nearly115,000 people.

Lao PDR. US$9m. Second Northern GreaterMekong Sub-Region TransportNetwork Improvement. By up-grading 143km of roads and re-pairing bridges, this project willhelp ease transport constraintsfor around 60,000 people.

Lesotho. US$12m. Wool and Mohair Promotion. Toimprove the incomes of around200,000 smallholder producersby providing access to capital,technology and training.

Nepal. US$30m. Community Managed IrrigatedAgriculture Sector (Phase II). The rehabilitation of about 160 irrigation systems in thecentral and eastern regions willhelp reduce poverty and im-prove the livelihoods of some218,000 inhabitants.

Nicaragua. US$9.4m. San Juan de Rio Coco–LasCruces Road. To enhance accessto social amenities and market-places for around 56,000 peopleby upgrading a 14km road thatpasses through key agriculturalareas.

Swaziland. US$15m. Manzini-Mbadlane Highway(Lot 2). The construction of a17km highway will ease thetransport of inputs and agricul-tural goods and boost access tosocial service for some 250,000Swazis.

Yemen. US$17m. Fourth Public Works. To imple-ment sub-projects that will increase the availability of ruralinfrastructure such as schools,health centers, roads and watersupply and sanitation systems.

Grants approved

Access to Water Foundation.US$400,000. To install waterkiosks and treatment machinesin impoverished, rural regions inSenegal, thus providing around125,000 people with safe drink-ing water.

Carter Center. US$500,000. To help eliminate blinding tra-choma in remote areas of Maliand Niger, benefiting over250,000 people.

Fundación del Valle.US$250,000. To support a socialpromotion and empowermentproject that will construct atraining center and offer skillstraining to more than 2,300marginalized young women inCameroon.

Human Appeal International.US$500,000. To install off-gridsolar energy systems at threehospitals, three schools and over90 households in the Gaza Strip.

Multi-Dimensional ResourceCenter, Nepal. US$400,000. Tointroduce improved cultivationmethods to over 3,700 house-holds in deprived rural commu-nities in Nepal.

Renewable Energy and EnergyEfficiency Partnership.US$800,000. To install over 800solar irrigation pumps on small-holder farms in Kenya and de-velop a solar power pilot schemeat two agri-food businesses inTanzania.

SNV Netherlands Develop-ment Organization. US$1m. Tosupport two biogas projects.One will enable around 750smallholder dairy farmers inKenya, Tanzania and Zambia tocool and store milk. A secondwill install sanitation andsewage treatment systems in 19boarding schools in Kenya andTanzania, benefiting 14,000children and staff.

UNESCO. US$300,000 andUS$1m. One project aims atboosting technical and voca-tional education and trainingfor youth in Côte d’Ivoire, Burk-ina Faso Guatemala, Mali, Morocco, Mozambique, Sudan,


OFID DIARY

On September 3, Mr Al-Herbish met with HE Ambassador Paul Robert Tiendrebeogo, the new Permanent Representative of Burkina Faso to the UN and other interna-tional organizations in Vienna.

Dr Lassina Zerbo, Executive Secretary of the CTBTO,visited the Director-General on September 11.

Surinam, Swaziland and TimorLeste. Another will install solarelectrification systems at 60rural schools attended by 12,600children in Cambodia, Djibouti,Malawi, Mali and Timor Leste.

UNRWA. US$600,000. To provide food aid to help ad-dress chronic food shortages inthe Gaza Strip, particularlyamong refugee households andbenefiting approximately30,000 people.

SEPTEMBER 26

Cooperation agreement with OeEB

An MOU was signed with theOesterreichische EntwicklungbankAG (OeEB—the Austrian Devel-opment Bank). See story page 30.

SEP 29–OCT 2

Member Country Information Program

OFID hosted its second MemberCountry Information Program.See story page 26.


OFID DIARY

Meetings attended by OFID

www.ofid.org

JULY 9

NEW YORK, USASixth Steering Committee meet-ing of the Global Partnership forEffective Development Coopera-tion

JULY 10–11

NEW YORK, USAFourth biennial High-level De-velopment Cooperation Forum

JULY 10–11

BRUSSELS, BELGIUMEighth European Communica-tion Summit

JULY 20–25

MELBOURNE, AUSTRALIATwentieth International AIDSConference

AUGUST 19–23

LINDAU, GERMANY Fifth Lindau Meeting of the Laureates of the Sveriges Riks-bank Prize in Economic Sciencesin Memory of Alfred Nobel

AUGUST 26–27

TEHRAN, IRAN Tenth International EnergyConference

SEPTEMBER 10–11

RIYADH, SAUDI ARABIAEighth Trade Finance Coordina-tion Group Meeting

SEPTEMBER 15–25

OXFORD, UKThirty–sixth Oxford EnergySeminar

SEPTEMBER 18

VIENNA, AUSTRIACongress of Vienna and itsGlobal Dimension Conference

SEPTEMBER 15–17

KHARTOUM, SUDANSeventy–fourth Heads of Operations Coordination Group meeting

SEPTEMBER 28–30

ROTTERDAM, NETHERLANDSDutch Development Bank(FMO) conference: Exchange onthe Future of Banking 2014

SEPTEMBER 30–OCTOBER 1

BRUSSELS, BELGIUMHigh-level meeting of the Euro-pean Union and internationalfinance institutions

Mr Al-Herbish (center front) at the Fifth Lindau Meeting on Economic Sciences which took

place in Lindau, Germany, August 19–23.

On September 12, Dr Mohammad Mazraati, Director ofInternational Cooperation of the National Development Fund of IR Iran paid a courtesy call on the Director-General.

148th Session of the Governing Board

Bader Ahmed Al Qaeed,Governor, Qatar.

Anastasi Mabi Daniel-Nwaobia,Governor, Nigeria.


OFID DIARY

Governing Board approves US$700m in new funding

Meeting in its 148th Session in Vienna, Austria, on September 23, OFID’s Governing Board approved close to US$700m for new development operations in over 35 countries. Eleven public sector projects attracted a totalUS$139m for activities in high priority areas, includingagriculture, water supply & sanitation and transportation.SMEs and energy services—including a first private sectoroperation in Nepal—were the focus of commitmentsworth US$275m under the Private Sector Facility. Trade financing totaled US$280m and comprised US$30m to enhance the trade finance activities of banks in El Salvador and Panama together with a US$250m increasein an existing program that supports trade flows in emerg-ing markets. Grants made up the remaining US$5.8m and will support ten development initiatives acrossa broad range of sectors. Further details of public sector and grant approvals can be found in the Diary.

Governing Board Chairman Abdulwahab A Al-Bader (right)with Director-General Suleiman J Al-Herbish.

Majed A Omran, Governor,United Arab Emirates.

Board Chairman Abdulwahab A Al-Bader (fourth from left) with Director-General Al-Herbish (third from left) and other membersof OFID senior management.

Ahmed Abdulkarim Alkholifey,Governor, Saudi Arabia.


OFID DIARY

LOAN SIGNATURE

US$5m for Gambian education sector Kebba Touray, Gambian Minister of

Finance and Economic Affairs, signed the agreement for a project that will guar-antee schooling for some 10,000 children

in the Greater Banjul area.

US$10m for Malian airportMamadou Hachim Koumaré, Minister ofEquipment, Transport and Disenclosure ofMali, with Mr Al-Herbish. The financingwill help modernize and expand Bamako-Senou International Airport.

US$17m in two loans for DR CongoCongo’s Vice-Minister of Finance,

Roger Shulungu Runika, signed agreements for an agriculture project

in the Maniema Province (US$10m) and to co-finance the rehabilitation of

Kinshasa University (US$7m).


OFID DIARY

The full list of loan and grant signatures can be found on pages 32-35.

US$26.55m in two loans for TanzaniaHE Philip S Marmo, Ambassador of Tanzania, signed agreements for an education project in Zanzibar (US$10.2m)and a third poverty reduction project(US$16.35m), which will benefit over twomillion people.

US$7m for Senegal’s sanitation sectorHE El Hadji Abdoul Aziz Ndiaye, Ambassador of Senegal to Germany, secured funding for a

wastewater treatment plant and network in a suburb of the capital Dakar.

US$11.22m in debt relief for Burundi

HE Dr Dr Edouard Bizimana,Ambassador of the Republic of

Burundi to Germany and Director-General Al-Herbish

conclude the agreement whichwill free up funds for invest-

ment in needy social sectors.


OFID DIARY


SPOTLIGHT

Using the past to secure the future

In Guatemala, Mayan women are rediscovering andadapting traditional farming systems to help feedtheir families and combat climate change. Here,OFID 2012 scholar Michelle Palacios explains howthe principles of agroecology can safeguard land,maintain species diversity, and provide poor familieswith decent work and food sovereignty.

PHOTOS: ALAS ORGANIZATION


SPOTLIGHT

groecology may be defined as “the study ofthe interactions between plants, animals,

humans and the environment within agriculturalsystems.” As a broad-based science, encompass-ing social, economic and cultural factors, it takesa multidisciplinary approach to agriculture andfood production.

In many parts of the world, agroecologicalprojects are generating new models of natural re-source management by revisiting ancestral expe-riences and adapting them to current conditions.

Particularly valid are indigenous traditionalfarming methods, which today represent a usefulresource in efforts to protect the natural world’sasset base, mitigate climate change through agri-culture, and provide opportunities to smallholderproducers.

In Latin America, small-scale farming pro-duces more than half the food consumed on thecontinent in a diversity of agroecosystems thatare adapted to the ecology and biodiversity of thedifferent production areas.

Agriculture occupies 30 percent of LatinAmerica’s total surface area and continues to ex-pand, largely due to deforestation. While it isoften the farmers who are responsible for clearingforest land, there are also situations where farm-ers have generated action to maintain the forests.

One of these examples is the effort of agroup of women, ALAS, in Guatemala, wheremuch of the rural population lives in marginaland exposed areas, in conditions that make themvulnerable to the negative impacts of climatechange. For them, the smallest changes in cli-mate can have a disastrous impact on their livesand livelihoods.

As is the case in the majority of developingregions, women in Guatemala represent morethan half of the country’s small farmers. Theirwork and knowledge play a key role in sustaininglocal food systems.

The bond of Guatemalan indigenouswomen with land is productive and reproductive,social and spiritual. Forests and the soil are sacredto them. The land is the mother and provider offood, the site of the home and garden, and theplace of community life and collective work.

The ALAS group is located in Sololá, a de-partment with a high indigenous population. Allbut six percent of the inhabitants belong to theethnic groups Kaqchikel, K’iche’ and Tz’utujil.

Sololá has one the most beautiful andlargest natural resources of the county—AtitlanLake, the second most visited destination by na-tional and international tourists. Around thelake are three major volcanoes: Toliman, Atitlanand San Pedro. All three have high biological andecotourism value. Despite the high level of �

A

The ALAS group ofMayan women are using traditional farming techniques to grow soya beans and build a niche market for their organic soy milk and soy milk products.


� tourism development, the volcanoes still havea natural forest cover of around 70 percent.

The ALAS group was founded in San PedroLa Laguna, one of the small towns that surroundthe Atitlan lake. It was formed with the help ofthe Federation of the Mayan People of the regionthrough its nutritional programs. The womenhad come to know each other through the feder-ation, where they had been able to express theirconcerns and experiences.

With the help of international programs,the women managed to legally constitute theirown association and set out to recover ancestralknowledge that would preserve the environmentand at the same time provide food security.

As most of the women were unable to reador write and some did not know how to speakCastilian, the recovery and gathering of knowl-edge took longer. In the end, though, they wereable to develop a number of agroecological proj-ects, which utilized diversification and crop rota-tion techniques to ensure a regular and plentifulsupply of produce.

One of the major tasks the group faced wasconvincing local consumers to buy organic prod-ucts, which tend not to be appreciated inGuatemala. In fact, the domestic market for or-ganic products is almost non-existent, so the ma-jority of producers sell to international markets.However, this is not an option for smallholders,for whom the administrative and logistical as-pects of exporting are too much to handle.

The ALAS women got around this obstacleby producing organic soy milk and selling it more

cheaply than cow’s milk, which is poorly con-sumed in the region because of its high cost.Using the principles of agroecology production,the soybeans were grown in soil exposed bychanges in climate. This led to the planting of or-ganic coffee for protection of the soil and as a sys-tem of forest recovery.

The result was an agricultural system thatallowed for the kind of continuous productionnecessary for subsistence. The system wasadapted to local conditions and has proved asuccess in spite of the marginal environment,unpredictable climate conditions and a low orzero use of external inputs such as fertilizers andpesticides.

This type of performance is associated withthe high level of agrobiodiversity found in tradi-tional agroecosystems, which are less vulnerableto catastrophic loss because of the broad diver-sity of crops grown in different spatial and tem-poral arrangements. The women of the groupcontinue to maintain this diversity as a meansof confronting environmental change and satis-fying future social and economic needs. �

Guatemalan Michelle Palacios has a Master’s in envi-ronmental development from Spain’s Complutense deMadrid. Her studies were prompted by her involvementin the ALAS program, where she was responsible for thegender and environmental components. Through herresearch, Michelle was able to measure how the use ofagroecology techniques and gender integration influ-enced the impact and sustainability of the program.

Guatemala’s stunningLake Atitlan is surroundedby a string of volcanoesand is rich in animal andplant life.

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he opening day of AIDS 2014 was un-derstandably overshadowed by the

death of several of the world’s top HIV spe-cialists. They were among the 298 peoplekilled on flight MH17 from Amsterdam toMelbourne on July 17.

Joep Lange, former president of theInternational Aids Society (IAS), and fiveother IAS employees were aboard the plane.Professor Lange was a professor of medicineat the University of Amsterdam.

Since the early 80s Lange had dedi-cated his career to researching the diseaseand specialized in developing drugs to treatHIV infection. In 2001, he founded thePharmAccess Foundation that aims to pro-vide anti-retroviral drugs to the world’spoor.

Despite the tragedy, 12,000 partici-pants, from all over the world, were, if any-thing, even more determined to make themost of the biannual conference. At the

opening session, IAS 2014 InternationalChair, discoverer of HIV, and Nobel Prizewinner Professor Françoise Barre-Sinoussisaid: “The tremendous scale-up of HIV pro-grams has transformed HIV from a deathsentence into a chronically manageable dis-ease.”

She continued: “Nevertheless, theseremarkable achievements are still notenough. Twenty-two million people still donot have access to treatment.”

The theme of the Melbourne confer-ence, ‘Stepping up the pace,’ was a step fur-ther from the traditional themes of accessto treatment, mother-to-child transmissionand infection prevention, which were thefocus of AIDS 2012 in Washington DC. �


CONFERENCE WATCH

Event: 20th International AIDS ConferenceTheme: Stepping up the pace

Hosted by: International AIDS Society

Venue: Melbourne Convention Centre, Australia

Date: July 20–25, 2014

BY REEM ALJARBOU AND JUSTINE WÜRTZ

Thirty-five million people have been lost as a result of HIV or AIDS related causes, but hope remains that a global community can end the epidemic.

AIDS 2014 steps up from tragedy

Françoise Barre Sinoussi (left) with AIDS 2014 co-chair Sharon Lewin.

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� Among the list of high-level speakers atAIDS 2014 were former US President BillClinton, UNAIDS Executive DirectorMichel Sidibé, Global Drug CommissionerSir Richard Branson, and artist and activistSir Bob Geldof. The participation list in-cluded the world’s top AIDS researchers,community leaders, people living with HIVand policy-makers.

The main message was that HIV con-tinues to effect populations disproportion-ally. Underlying discrimination against themost vulnerable people on social, legal andeconomic levels aggravates the situation.

Michel Sidibé stated: “Too many arebeing left behind today. If the world wantsstability, peace and sustainable develop-

ment, we cannot run away from the needsof lesbian, gay, bisexual, transgender andintersex people, sex workers, people whoinject drugs, prisoners, migrants, womenand girls, and people with disabilities.”

Despite the approaching deadline forMDG success, Sidibé was optimistic: “If weare smart and scale up fast by 2020, we willbe on track to end the epidemic by 2030.”

He went on to point out that thiswould require a new, ambitious target: 90percent of people tested, 90 percent of peo-

ple living with HIV on treatment and 90percent of people on treatment with sup-pressed viral loads,” said Sidibé.

If the epidemic is to come to an end by2030, access to information, care and treat-ment must be available to all people. Theconference declaration entitled NobodyLeft Behind aims to tackle these inequali-ties. It concludes: “An end to AIDS is onlypossible if we overcome the barriers of crim-inalization, stigma and discrimination thatremain key drivers of the epidemic.” �


CONFERENCE WATCH

Former US President Bill Clinton told the conferencethat an AIDS-free generation was within reach.

AIDS 2014 attracted some 12,000 participants representing all stakeholder groups in the fight against HIV.

OFID’s special program against HIV/AIDS

In 2001, OFID took steps to consolidate and strengthen its involve-ment in the global effort against HIV/AIDS by creating a special pro-gram. As of September 30, 2014, more than US$86m in grantf inancing had been approved through the program. Today, OFID isworking with a broad coalition of strategic partners to f ight thepandemic in over 100 countries. The institution’s interventions covermany areas, including awareness, prevention, testing and counseling,as well as care, treatment and support.

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OQ: The conference has been overshadowed bythe devastating loss of delegates travelingaboard MH17. How does this affect the goalsIAS hoped to achieve in Melbourne?

OR: The tragic loss of the Malaysian AirlineMH17 impacts our conference delegates,partners, and our community as a whole.The AIDS community lost giants such asJoep Lange and many researchers and dele-gates. These colleagues were traveling to theconference because of their dedication tobringing an end to AIDS. The conference isa dedication to their work, and we will keepthem in our hearts and most importantly,keep their vision alive.

OQ: We were able to meet some of the delegatesOFID supported to attend the conference, andtheir stories were quite inspiring. What role dothese young delegates play at an event like this?

OR: That kind of scholarship support forindividuals from the developing world isabsolutely crucial. We wouldn’t be a globalconference if we didn’t have funders whocame forward and actually said yes we aregoing to support people who have lessmeans to attend. You have folks here fromall over the world who are coming fromsmall villages, who have never stepped ontoa plane before, who suddenly realize theyare part of this massive global communitycommitted to ending AIDS. It is life-chang-ing for them and it’s at the heart of our con-ference. I don’t think our conference wouldbe half as successful if we didn’t have thosepeople here. Absolutely not.

OQ: You and others at IAS speak quite fre-quently of the thirteenth AIDS conference inDurban 2000 as milestone. Why so?

OR: At Durban, a young boy named NkosiJohnson, who was 11 years old, steppedonto the stage in front of an audience of10,000 delegates and told his story. At thattime in South Africa, anti-retroviral therapywasn’t allowed and it was a dark time for thefight against AIDS. The government wasn’tsupporting it, and there wasn’t a lot ofmoney or financial support given bydonors. Nkosi, stood up on the stage anddemanded his medication, which was al-ready available elsewhere in the world. Theworld changed on a dime with him stand-ing up there.

Sixteen years later, treatment is avail-able all across South Africa and the govern-

ment spends all of its own money on treat-ment, largely because of donors whostepped in. Nkosi passed away the yearafter he spoke at the Conference. This iswhy the twenty-first AIDS conference,which will be held in Durban, is a massivemoment for us. We need to say look at howall these donors have changed the face of

an entire nation of people. We also need toreflect on how far we have come with HIV.It is also important for us to see how peo-ple are living there now. There is no ques-tion that South Africa is one of the leadingeconomies in the world because we con-tributed to the fight against HIV/AIDS.And 2016 is going to be another colossalmoment for HIV/AIDS.

OQ: One of the most valuable aspects of theseAIDS gatherings is that they have a mix of re-searchers, experts, and activists. How do yousee this affecting the outcomes of the confer-ence?

OR: My own roots are in activism, so I ofcourse think this is great. I think that theHIV/AIDS community has learned that theonly way we can end the epidemic is ifeveryone is involved—researchers, donors,governments, activists and the pharmaceu-tical industry. I think it has been a funda-mental part of who we are as a conference,and it is what makes the outcomes so cru-cial to the community. �


CONFERENCE WATCH

IAS Executive Directorpays tribute to activistsNewly appointed International Aids Society ExecutiveDirector, Owen Ryan discusses the future of HIV/AIDSand the legacy of 2014.

Owen Ryan, IAS Executive Director.

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PHOTO: INTERNATIONAL AIDS SOCIETY/STEVE FORREST

t is still the case that key affectedpopulations (KAPs) are those most

vulnerable and likely to be exposed to HIV.Their status remains severely unaddressedin many regions, with HIV continuing toaffect them disproportionately.

Conditions are particularly severe inthe Middle East and North Africa (MENA)region, where the epidemic is one of thefastest growing in the world. Knowledge ofHIV continues to be limited and subject tomuch controversy. Testing and treatmentare often inaccessible.

The situation is exacerbated by a com-bination of social, legal and economic in-justices. Such factors continue to increasethe barriers KAPs face and limit their accessto services they need and deserve. Deliver-ing awareness prevention, treatment andcare for this group remains critical to the re-versal and eradication of HIV.

The OFID satellite session OvercomingHIV in Conservative Social Settings waschaired by Head of Grants, RachidBencherif. Co-chairs were Dr YaminaChakkar from UNAIDS, and Dr KhadijaMoalla and Dr Manoj Kurian, both from IAS.

Panelists shared experiences of themany challenges faced, including the con-tinued enforcement of discriminatory, stig-matizing and harmful laws targeting KAPs.They also highlighted a lack of demand forHIV services plus low coverage of HIV test-ing and counseling, treatment coverage,and adherence.

It was concluded that a top-down ap-proach to these issues was essential. Accord-ingly, strategies to address discriminatoryattitudes must be targeted at the highestlevels of cultural, religious and governmen-tal leadership.

Panelists called for increased network-ing and cooperation among professionalsengaged in the HIV response in MENA inorder to support united efforts and posi-tively influence policy and practice. Thiswould hopefully pave the way for active di-alogue and a reduction of contagion. �


CONFERENCE WATCH

Overcoming HIV in conservative social settingsAs part of its contribution to AIDS 2014, OFID chaireda satellite session on HIV in challenging social settings.It was the only opportunity to discuss culturally sensitive strategies and interventions.

The panel of experts exchangedviews and experiences in tacklingHIV in countries where cultural andreligious tradition define perceptionsof the disease and hinder efforts toprevent it.

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PHOTOS: OFID/REEM ALJARBOU


CONFERENCE WATCH

OFID-sponsored delegates share

their experiencesOFID has extended grants totalling US$1.74mto enable participants from developing countries to attend the AIDS conferences. In Melbourne, OFID sponsored 47 delegatesfrom more than 20 developing countries. We met some of them and heard what theyhad to say.

Nancy Ansah, Ghana President, Society for Woman

and AIDS in Africa, Ghana branch

“At such conferences we are able to learnabout new trends in advocacy and re-search. When we go home, we implementour local programs with the internationalknowledge and experience we havegained. At the opening ceremony it wasdeclared that the world is looking to end AIDS in 2030. Thisis very important to take home, so we can also work towardthis global vision. We think it is achievable, and if we all puttogether our strengths, HIV will lose this fight.”

Geoffrey KinaalwaCountry Coordinator,

Mityana Uganda Charity, Uganda

“My charity focuses on the HIV/AIDS community in rela-tion to water access and use, enabling communities touse medication and treat themselves healthily. This con-ference has helped us to interact with other NGOs, andgiven me new ideas to help my own community. I am also

learning that offer-ing services for HIVdoesn’t stop atcounseling, therapyor testing. It goesbeyond, toward hy-giene, water, sanita-tion and economicempowermen t .”

N. Bibaa LundiReach Out Organization, Cameroon

“I am so excited that I was given the delegacy as this is thefirst international conference I have ever attended. I knowcoming to a gathering like this will let me meet many peopleworking in the same areas of intervention, where we can ben-efit and share experiences that I can take back and imple-ment. It is such a great opportunity”

Moses NsubugaNamusoke Asia Mbajja

People in Need Agency, Uganda

“The organization I work for offers psy-chological support and social skills train-ing to young people and those born andliving with AIDS. We focus on young peo-ple and their transformation into adoles-cence. They have not been supportedthrough the education or health sys-

tems. We try to create a world of hope and happiness forthem despite living with HIV/AIDS. I was able to bring youngpeople from our organization to this conference through thesupport of donors. It is a great opportunity for us to showcasewhat we do and share with other professionals”


olutions formerly regarded as impos-sible or unaffordable were nowadays

achievable both technically and economi-cally, stated the declaration.

It was imperative, however, that all therelevant institutions and organizations ac-quired a wealth of experience and expertisein supporting countries in the use, expan-sion and shift towards sustainable energyfor development.

The declaration went on to emphasizethat practical, effective and large-scale ac-tions were needed to support capacity de-velopment, mobilize public-privatepartnerships and massively scale up suc-cessful and innovative solutions to over-come extreme energy poverty.

OFID Director-General Suleiman J Al-Herbish delivered a keynote speech at theconference’s opening ceremony. He spoke

about the challenges of modern energy ac-cess and OFID’s pioneering role in champi-oning the cause through its flagship Energyfor the Poor Initiative (EPI).

Al-Herbish highlighted the need forthe petroleum industry to take a more effec-tive stance in providing global energy secu-

CONFERENCE WATCH

Event: 10th International Energy Conference and Exhibition

Theme: Eff iciency in Resource Management—Excellence in the Energy Industry

Hosted by: Iranian National Energy Committee

Venue: Niroo Research Institute, Tehran, IR Iran

Date: August 27–28, 2014

BY SHIRIN HASHEMZADEH

In a final document released at the end of the Tenth IEC, delegates called on all countries—developed and developing—to facilitate the universal provision of modern energy services.

Energy access amatter of universalconcern

Mr Al-Herbish called on the petroleum industry to engage more in the fight against energy poverty.

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CONFERENCE WATCH

rity, while at the same time contributing tothe eradication of energy poverty.

He pointed out that while renewableenergy sources were growing faster thanother fuels, all accredited outlooks indi-cated that the world would continue to relyon oil and gas as a major source of energyfor the foreseeable future. This placed ahigh level of responsibility on the industry,he argued.

Al-Herbish went on to cite examples ofhow energy poverty eradication was a win-win situation for the petroleum industry.Using flared gas for local energy needs, forinstance, would not only save the environ-ment, but also improve the health andlivelihoods of local communities and leadto better relations with the operator com-panies.

He concluded: “I am sure you willagree that the oil and gas industry has a roleto play in this honorable struggle of bring-ing modern energy to the poorest. Actingtogether, our resources can surely make ahuge difference to progress towards afford-able, clean and efficient energy for all.”

In the special session, Financing in Developing Countries and the Fight against

Energy Poverty, OFID experts introduced theinstitution’s activities and financing win-dows. The session included case studies ofprojects implemented under the EPI and fi-nanced using a variety of instruments.

Focus on energy practices and policiesHeld biennially, the IEC contributes to theanalysis of problems and challenges facing

organizations and institutions in the en-ergy sector and helps to identify appropri-ate solutions.

This year’s delegates—representingthe energy industry, governments, the sci-ence community and academia—were ableto engage in discussions on three main top-ics: Energy Resource Management, Energyand Economics, and Energy Technologyand Environment.

The various presentations, technicalpanels and workshops tackled subjectsranging from managing conventional en-ergy production to renewable technologiesand from regulating policies relevant to lowcarbon emissions to risk management as-sessment.

A parallel exhibition showcased themost recent achievements in the develop-ment of products, solutions and servicesthat meet the needs of both consumers andutility systems while accommodating criti-cal economic and environmental objec-tives. �

Boosted by its Energy for the Poor Initiative, OFID’s energy portfolio as ashare of total operations increased from 19 percent in 2007 to 35 percent in2013. Since November 2007, OFID has provided more than US$2bn for en-ergy operations in 43 countries. When the co-financing share of other devel-opment institutions is added, the impact on the ground exceeds US$15bn.

OFID’s EPI in numbers

19% to 35%

PHOTO: IEC 2014


PERSPECTIVES

OQ: You were handed your portfolio only very re-cently. Have you had time yet to set some goals?

NE: I have only been in the job for a month but,yes, I have given considerable thought to what Iwant to achieve. It is a completely new role. Be-fore, we had a single ministry for internationalcooperation and planning. But now that the dif-

ficult times are behind us and we’re on a freshtrack, we intend to have more cooperation withthe world. So, the President and Prime Ministerdecided to establish a separate ministry for inter-national cooperation.

My main role is to increase economic coop-eration with all bilateral and multilateral tracksand to diversify the sectors that are benefitingfrom this assistance. The most important thing isthat the cooperation should be in line with theneeds and priorities of my country. Another goalis to try to be more engaged in trilateral coopera-tion. Egypt, the financial institutions and othercountries of the South have different things tooffer. The institutions have the money needed.Egypt has the expertise. And countries such asSudan have a lot of potential in the agriculturalsector, for example.

One of my main goals is to try to make a realassessment of the economic assistance that has

Egypt plots new course toward economic recovery

As her country moves toward stability and democracy, Egypt’s newly appointed Minister of International Cooperation, Dr Naglaa El Ehwany,outlines her goals and aspirations for the future.

Interview by Audrey Haylins

Dr Naglaa El Ehwany, Minister of International Cooperation, Egypt.


PERSPECTIVES

been given to Egypt in the last five years. Much ofthis was given in a routine way and had no realimpact on growth, poverty and employment. Iwant to draw lessons from the past, make thingsbetter for the future and optimize the economicassistance to Egypt.

The goal of the government is that the futureshould witness more cooperation in the sense ofpartnership and not aid. Aid alone does not builda country. It can help you overcome current chal-lenges, but in order to invest, produce and grow,partnership relations between all countries arenecessary. The main goal of my ministry is notonly to administer the aid but to have deeper andmore fruitful cooperation with our partners.

OQ: What would you describe as the main challengesfacing Egypt as it works to revive its economy after thesetbacks of the past few years?

NE: Historically, the Egyptian economy has suf-fered from many problems. Even when we wereachieving a high level of growth in the late 1990s,the benefits were not reaching all segments of so-ciety. Then there are the longstanding structuralchallenges to be dealt with. These have been ag-gravated since 2011, not by the revolution itselfbut by the events that accompanied it. In the lastthree years we have experienced a slow rate ofgrowth, a high rate of unemployment and infla-tion, and a high and dangerous budget deficit—almost 14 percent of GDP. Too many vulnerablegroups have been hit by these developments.

That said, since the revolution of June 30,2013, I think we are on the right track toward amore stable and democratic country. On the po-litical front, we have a new constitution, anelected president, a new government and we areon our way to the parliamentary elections. Nowthat we have political stability, the government isstarting to implement an economic recovery pro-gram. The program has four pillars: 1) economicgrowth and employment; 2) social justice; 3) fiscaland monetary balance; and 4) legislative and in-stitutional reforms.

The most important measures includebringing the public debt under control, reform-ing the tax system, and setting a minimum andmaximum wage to remove distortions. We arealso reforming the energy subsidy system, whichis something that hasn’t been touched for 40years, but which will now make energy more af-fordable for the poor. In addition the governmentis trying to improve the quality of public services,especially for the most vulnerable groups.

OQ: What role does the private sector play in this newvision and what is being done to attract foreign invest-ment?

NE: One of the most important pillars of this re-covery program is to improve the investment cli-mate through legislation to encourage the privatesector and foreign investors. So we are looking atregulating the Principal Bank for Developmentand Agriculture—which is a very important insti-tution—and restructuring cooperatives and state-owned enterprises. We also want to bringinformal enterprises—which represent around 40percent of the economy—under the umbrella �

Although endowed with abundant energy resources, Egypt is struggling with demand challenges.

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� of the formal sector. To alleviate poverty, weneed to create more decent and formal jobs.

The government is also trying to upgrade in-frastructure and has launched a number of megaprojects. Perhaps the best known of these is thedigging of a second water channel for the SuezCanal, which got underway in August this year.When President El Sisi launched the new water-way, he emphasized that all the companies in-volved in the construction were civil, privatesector agents. The government is also very keento promote public-private partnerships.

OQ: Egypt is fully committed to the Millennium Development Goals and has already achieved manytargets at the national level. What is being done,though, to address the still prevalent gender dispari-ties?

NE: Women in Egypt play a very important rolein the family, in educating children and work-ing. Unfortunately, this is not apparent in theofficial statistics. These tend to show a low rateof participation among women, but this is be-cause the figures do not include the womenwho are working in rural areas. To summarizethe challenge: In the upper and upper-middleclasses you will find women in high-ranking po-sitions such as government ministers, univer-sity professors, doctors, judges, and so on. But,when we come to the lower classes, we find a dif-ferent picture. Maybe this has to do with educa-tion and the cultural roles in the country. Forthe time being, the government is aware thatwomen should have more attention. In all theinitiatives we undertake, priority is placed onthe economic and social empowerment ofwomen. And we always emphasize to ourdonors that all projects should have a gendercomponent.

OQ: How is your government dealing with the highlevel of youth unemployment? What kind of opportu-nities is it creating for young people?

NE: Yes, here we have a real challenge—nearly 90percent of the unemployed are young people. Sowe, as a government and in cooperation with theprivate sector and NGOs, are trying to create de-cent jobs for the youth. We are focusing on theemployment-intensive sectors of the economy.We believe that the main challenge in Egypt rightnow, in addition to education, is vocational train-ing, in order to match the outcome of the educa-tion system with the needs of the market. So wehave a two-pronged initiative. On the one hand,we are providing the relevant training to helpyoung people secure a job. And on the other

hand, we are helping to equip them with thetools and knowledge to become self-employed en-trepreneurs.

OQ: And what about the regional disparities?

NE: This issue is a big concern. Upper Egypt, forexample, has been neglected for many years, sowe have launched a huge program for infrastruc-ture development and poverty alleviation there.In fact, most of the loans and grants from our de-velopment partners are directed at Upper Egyptand an area called “The Golden Triangle” whichlinks the Nile and the Red Sea. Here we are under-taking mega projects to develop new industries,mining, and tourism.

OQ: Turning to the energy sector, we know that Egypthas significant primary energy resources, but faces se-rious demand challenges. What steps are being takento address these? And are efficiency measures and re-newables part of this solution?

NE: We do admit to having an energy problem inEgypt. As you rightly point out, this is due to in-creasing demand coupled with the growing pop-ulation. And at the same, the instability andinsecurity of the last three years has made it diffi-cult to bring more power plants on line. Now,however, the Ministry of Energy and Electricityhas a clear plan for the period 2015–2017. First,the aim is to build more plants, and this is wherethe support of the international and regional fi-nancial institutions comes in. Second, we aremaking a huge effort to maintain and upgrade ex-isting plants and introducing efficiency measuresto rationalize the consumption of electricity. Thenew tariff plan completely reforms energy subsi-dies and prices, which have traditionally beenvery low. I am sure that this, too, will lead togreater efficiency. Meanwhile, renewable energyplans are ongoing, and we already have manysolar and wind projects.

OQ: Today you have signed a US$55m loan agree-ment with OFID for the Assiut power plant project.How does this project fit into government plans for theenergy sector?

NE: First of all, the project is in Upper Egypt, thevery area we are trying to develop. Secondly, theplant will be connected to the national grid, so itwill benefit not just the people in the governorateof Assiut, where it will serve more than 3.5 mil-lion people, but it will also help increase thecountry’s total power generation capacity. Forthese reasons, the project is directly in line withour strategy and our needs. �


PERSPECTIVES

“Aid alone does not build a country. It can

help you overcome current challenges, but

in order to invest, produceand grow, partnership relations between all

countries are necessary.”

t’s not every day that OFID wel-comes a head of state—incumbent

or otherwise—to its Vienna headquarters.But September 18, 2014, was one such occasion. Accompanied by AmbassadorRamón Quiñones, former Dominican Pres-ident Leonel Fernández made a courtesycall on OFID Director-General, Suleiman JAl-Herbish.

The Dominican Republic is a long-time partner of OFID, having received some US$180m in funding for the publicsector and an additional US$8m for grant-financed projects.

“OFID has made and continues tomake a very significant contribution to de-velopment in our country,” Fernández toldthe Quarterly. Three OFID-sponsored publicsector projects were implemented duringFernández’s presidency.

Ironing out inequalitiesThe Dominican Republic, home to about 10million people, has the ninth largest econ-omy in Latin America and the secondlargest in the Caribbean and Central Amer-ica region.

As the most visited destination in theCaribbean—based on World Bank statis-tics—the country’s economic progress isdefined by the tourism sector, with morethan US$5bn in annual revenues. The year-round golf courses are among the top at-tractions on the island.

Despite the country’s strong eco-nomic growth, led by mining and tourism,a number of challenges remain, a fact Fer-nández willingly concedes.

Of primary concern is the economicinequality. More than one-third of the pop-ulation lives below the poverty line, themajority of them in rural areas. Fernándezbelieves that improvements in the social se-curity program could address this issue.

“Currently we have four million peoplewho have access to the social security pro-gram. We need to widen this to at least an-other four million,” he said.

Another worry is the unemploymentrate, which stands at over 13 percent. “Thegovernment needs to reduce this to lessthan two digits in the next four years,”stressed Fernández. �


PERSPECTIVES

Former Dominican President shares views on interregional cooperation

Three-time President of the Dominican Republic,Leonel Fernández Reyna, reflects on his country’sdevelopment progress and his bid to foster relations

between Latin America and the Arab region.


Leonel Fernández remains enigmaticabout his plans to run for a fourthpresidentialterm.

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� The former president also outlined thecountry’s energy sector challenges. Al-though some progress had been made inthe development of power plants, therewere still some issues with distribution, heacknowledged.

All of these problems are added to bythe need for more accessible and betterquality education, as well as improved secu-rity in relation to the illegal drug trade andtransnational crime.

Food security championIn terms of domestic consumption, agricul-ture is the most important sector in the Do-minican Republic, and in second place,after mining, in terms of export earnings.

Fernández is proud of the fact that thenation is self-sufficient when it comes tofood security, but believes that his coun-try—along with several others in the re-gion—could play an even more importantrole: “If we could invest in new technologyin order to improve our competitiveness, wewould be well placed to serve as the bread-basket to the rest of the world,” he argued.

Food security is an issue that Fernán-dez has long championed. Responding tothe price hikes triggered by cynical specu-lators around the time of the 2008 eco-nomic crisis, he led moves to curb financialspeculation on food commodities.

A resolution to this effect was adoptedunanimously by the UN General Assemblyin 2011. Since then, commodity marketshave been regulated in the United Statesand the European Union, as well as otherparts of the world. As a result, food priceshave been relatively more controlled.

A bridge for LAC and the Arab worldFernández has also been instrumental inbuilding bridges of cooperation and under-standing between Latin America and ArabWorld. During his presidency, he helped topromote a facilitation role for his countryand region in the Israel-Palestine peaceprocess. This dialogue led, in 2012, to theestablishment of the Council on Arab Rela-tions with Latin America and theCaribbean (CARLAC).

The new body was charged withboosting the relationship between the tworegions through trade, public and privateinvestment, and joint ventures, amongother areas. Fernández chairs the CARLAC

board of some 60 prominent personalitiesrepresenting both regions.

Fernández told the Quarterly that theidea behind the establishment of CARLACwas to connect the 700 million people fromLatin America with the 250 million peoplein the Arab world. Collectively, the two re-gions make up one-seventh of the worldpopulation. “We share the same problems,needs and aspirations in terms of economicand social development, peace and secu-rity,” he stated.

Fernández also pointed out thestrong historical and cultural ties betweenthe two regions. Brazil, for example, has 20million people of Lebanese origin—morethan in Lebanon itself. In the DominicanRepublic, there are people of Syrian,Lebanese and Palestinian descent, who mi-grated to the country at the end of theWorld War I and after the collapse of theOttoman Empire.

Many of these people hold promi-nent positions in the Dominican Republicand other Latin American countries. Fer-nández describes this diaspora as “impor-tant capital” for cooperation in numeroussectors.

“It makes perfect sense to create abridge of communication to address issuesof common interest between the two re-gions. For instance, my region could helpsort out some of the food problems facingthe Arab world. By the same token, ourArab cousins could help us resolve our en-ergy security issues,” explained Fernández.

Fernández was the first elected presi-dent of the Dominican Republic under theDominican Liberation Party (Partido de laLiberación Dominicana). He served threeterms: 1996–2000, 2004–2008, and mostrecently 2008–2012.

Since leaving office in 2012, Fernándezhas been busy with the Fundación GlobalDemocracia y Desarrollo (FUNGLODE) orGlobal Foundation for Democracy and De-velopment, a non-profit organization thathe founded in 2000.

There is speculation that he will standin the next presidential election in 2016.Invited to confirm or deny his candidacy,he laughed: “This is the question manypeople ask me. For me, it depends on thewishes of the Dominican people. That iswhy I always answer, ‘it depends on howthe wind blows’.” �


PERSPECTIVES

Mr Fernández with OFID Director-General Al-Herbish.


MEMBER STATES FOCUS

cuador brought a moveable feast toVienna for the occasion. What better

way to celebrate a reunion some 22 years inthe making?

The exhibition’s opening reception onSeptember 25 left nothing and no one un-touched by Ecuador’s vibrant spirit.

It was attended by a host of dignitariesincluding Ecuadorian Finance Minister,Fausto Herrera, and Ecuadorian Ambassa-dor to Austria, Wilson Pastor Morris.

“Your esteemed country could nothave chosen a more opportune time to re-join OFID,” said OFID Director-General,Suleiman J Al-Herbish in his welcome ad-dress.

“In 1993 you left a lending institutionbut today you are returning to a globallyrecognized player in the international de-velopment arena.”

Mr Herrera spoke next, conveyingwarm greetings from President Rafael Cor-rea Delgado.

“We are full of enthusiasm to workhand in hand for economic and social de-velopment within the framework of South-South cooperation,” said the Minister

“For Ecuador, OFID is a bridge to otherregions of the world—in Africa, Asia andthe Middle East—with whom we are seek-ing closer ties to share knowledge and expe-riences within the most constructiveworking environment possible.”

Citing Ecuador’s recent progress in re-ducing its number of poor by 22 percent,Mr Herrera also expressed his government’scommitment to the OFID motto UnitingAgainst Poverty. �HE Fausto Herrera, Ecuador’s Minister of Finance

A feast for the sensesIn late September, OFID had the honor of hostingEcuador in Focus, a two-week exhibition featuringpaintings by three of the returning Member Country’smost renowned artists.

by Nadia Benamara

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� “Ecuador wants to join forces in pursuitof this objective so that the natural, finan-cial and human resources that each of theOFID Member Countries possesses areplaced at the service of those who need oursupport.”

Artists Miguel Betancourt, HernanIllescas and Juan Luis Millingalli were alsoin attendance.

Their exhibited works reflectEcuador’s rich and varied culture. Distinctin style and subject matter, they are equallybold in expression and rife with saturatedcolor.


MEMBER STATES FOCUS

An inviting array displayed some ofEcuador’s most important exports, rangingfrom long-stemmed roses, coffee, bananas,chocolate and cocoa to brightly patternedtextiles and the deceptively named‘Panama hat’.

Also provided was entertainment inthe form of the Matices dance troupe,which performed traditional dances fromthe Ecuadorian highlands.

The exhibition ran from September 25to October 10, 2014, and is the latest in a se-ries featuring the art and culture of OFIDMember and Partner Countries. �

Energetic lines and jumbled shapes reveled in concert across Miguel Betancourt’s‘Symphony in Red’—a distant view of a city spread low beneath a mountain rangeand cloaked in the vestiges of a long-set sun.

‘New City of Quito’ afforded a more close-up impression of city life with shapestransformed into houses, alleyways, windows and doors. Lines multiplied, stringingup and across building-fronts before disappearing overhead. The canvas pulsed

though there was not a human in sight.

Juan Luis Millingalli captured pastoral life inthe pristine Andean landscape with greatdelicacy in ‘Dancers on the way’ and ‘Bulls inthe open f ield.’

His f inely detailed brushwork in ‘Dark green forest’ and ‘Pine flowers’ conveyed ajoyous appreciation of Ecuador’s natural environment, which he deems “the naturaltreasure of our beloved country.”

Hernan Illescas’ densely textured ‘Symphony of the Lira’ evoked not so much a f ish,though it was unmistakably that, as an ancient sage—one who might (at any mo-ment) utter priceless wisdom or grant a long-harbored wish.

Its body was comprised of symbolic shapes rather than scales, some familiar—likethe neck of a stringed instrument coursing through its middle—others not. Illescashimself says his art is informed by the search for truth, while inspired by the ancestralcalls and mythical beings he imagines around him.

“Some answers rest in my paintings,” he writes in his artist statement. “But theyonly open the door to a maze of new questions, and these questions are revealedwhen you look at the paintings.”

Juan Luis Millingalli Hernan Illescas

Miguel Betancourt

est known for coining the BRIC acronym, former Goldman Sachs

economist Jim O’Neill has more recentlybeen championing the MINT countries—Mexico, Indonesia, Nigeria and Turkey.

Their common denominators includefavorable demographics, market proximityand (with the exception of Turkey) large-scale commodity production.

O’Neill predicts the MINTs will re-shape the world economy over the comingdecade as a result.

“And if that’s the case, they will be the most successful places in terms of in-vestments too,” he told Reuters press inMarch.

Any number of developments fromnatural disasters to war or even an electioncan of course change a country’s trajectory.

But as the fastest (and most consis-tently) growing economies in the group, In-donesia and Nigeria are well on their way tofulfilling that promise.

Unlike China and much of the develo-ped world, all MINTs are expected to boostproductivity dramatically thanks to young,rapidly expanding and urbanizing popula-tions.

Of the four, Indonesia has by far thelargest population. Nigeria, however, isquickly catching up and on track to becomethe third most populous country in theworld (overtaking both Indonesia and theUnited States) by 2050, according to the la-test UN projections.

News that Nigeria had surpassedSouth Africa as the continent’s biggest eco-nomy could not have come soon enough.

Its ‘rebased’ GDP calculation thisApril—the first in 24 years—revealed an

economy near double in size and far morediverse than previously assumed.

Retail and wholesale trade proved tobe the biggest drivers of growth, while pre-viously underweighted industries such astelecoms, IT and financial services outpa-ced oil and gas.

The nation’s long dominant resourcesector still made up 14 percent of GDP(down from 32 percent), while its prolificentertainment industry—wholly unac-counted for under the old data set—genera-ted an impressive US$550-610bn.

This year, the MINTs as a whole willoutperform both the BRICs and the G8 onat least one noteworthy count.

According to London-based researchservice WealthInsight, the group will seethe largest growth in millionaires, definedas individuals with net assets of US$1m ex-cluding primary residence.

Indonesia will hold the global leadwith a 22 percent increase, which translatesinto more than 8,000 newly created millio-naires. �


MEMBER STATES FOCUS

Indonesia, Nigeria: Newly minted

As part of the recently conceived MINT group of fast-emerging economies, the future has neverlooked brighter for OFID Member Countries Indonesia and Nigeria.

by Nadia Benamara

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Indonesia

• 4th largest population in the world• 240 million inhabitants• median age 28 years• life expectancy 70 years (2010)• 16th largest economy in the world• GDP of US$868bn• annual growth 5.8%• per capita income US$3,475 (2013)• 303 million mobile phone subscriptions• 16% of population uses Internet (2013)

Nigeria

• 7th largest population in the world• 160 million inhabitants• median age 18 years• life expectancy 50 years (2010)• 26th largest economy in the world• GDP of US$510bn• annual growth 7%• per capita income US$3,006 (2013)• 120 million mobile phone subscriptions• 38% of population uses Internet (2013)

Fast facts

Medan Manado

Padang

SemarangJakarta SurabayaYogyakartaBandung

Australia

PapuaNew

Guinea

MalaysiaThailand

CambodiaVietnam

Philippines

Brunei

Singapore

INDONESIA

NIGERIA

Niger

Benin

BurkinaFaso

Togo

Ghana

Cameroon

Abuja

Kano

Kaduna

Maiduguri

Ilorin

Ibadan

LagosBenin City

Port Harcourt

Aba

Sources: United Nations Population Division, World Bank, International Telecommunication Union

� Nigeria will rank third overall (behindIndia) with a 10 percent increase and some1,600 Nigerians set to enter a new class ofwealth.

Increasing inequality—a hallmark ofthe BRICS—is a major concern given thatNigeria (along with many other countries)has seen an attendant rise in poverty. In anAugust interview on Washington DC’s Na-tional Public Radio, Nigerian finance mi-nister Ngozi Okonjo-Iweala emphasizedthat a great deal more than economic

growth was required and that job creationwould be key to tackling poverty in Nigeria.

“Most Nigerians don’t want hand-outs,” said Okonjo-Iweala. “They wantjobs.” While banking and IT have been at-tracting significant numbers of the dias-pora home to Nigeria in recent years, thehigh skill sets required keep many growthindustry jobs out of reach for much of thepopulation.

Nollywood—as Nigeria’s film industryis known—already employs over a million


MEMBER STATES FOCUS

Indonesians made history with the swearing-in of President Joko Widodo on October 20, 2014.

The 53 year-old former governor of Jakarta is the nation’s secondpopularly elected leader but the first to rise from outside the ranksof its elite.

Having campaigned on a platform of economic growth and moretransparent governance, Widodo won 53 percent of the July 9vote.

His majority was unanimously upheld by Indonesia’s ConstitutionalCourt despite a heated challenge from rival campaigner, PrabowoSubianto.

As the candidate of Indonesia’s main opposition party (PDI-P), Wi-dodo distinguished himself through his down-to-earth style andpeople-centered focus. He succeeds President Susilo Bambang Yud-hoyono, who was constitutionally barred from seeking a third term.

Indonesian election: A new wind blows

Joko Widodo is the first Indonesian leader to rise from outside the ranksof the elite.

Nigeria’s “Nollywood” film industry is the country’s largest employer after agriculture.

people, making it the country’s largest em-ployer after agriculture.

Despite the challenges of job creation,both Nigeria and Indonesia are developingenormous consuming classes, whichshould make them increasingly attractiveto local and multi-national businesses.

McKinsey Global Institute’s July 2014report on Nigeria offered an even better re-turn on investment: If growth can be mademore inclusive than it has been, the insti-tute estimated that Nigeria could lift morethan 70 million out of poverty by 2030.

Indonesia will see an additional 90million people join its consumer class (cur-rently estimated at 140 million) by 2030,according to McKinsey. That’s strongergrowth than anywhere in the world apartfrom China and India.

Consumer confidence levels havebeen top or near top of the Asia-Pacific re-gion and remain steady after hitting a two-year high in July, according to Bank ofIndonesia’s monthly survey of 18 cities.

With Internet access increasing by anestimated 20 percent annually, Indonesiansare also some of the most active socialmedia users in the world. More than 95 mil-lion tweets relating to Indonesia’s presi-dential race were published between thestart of the year and election-day, accordingto a Twitter report. ‘Jokowi’ (as PresidentJoko Widodo is commonly known) toppedthe list, capturing 22 percent of total Twit-ter mentions. �

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PEC hosted its first Workshop onRoad Transportation Modeling and

other Modeling Applications in September,at which it was stressed that the Organiza-tion’s modeling tools and capabilities arekey to ensuring that research carried out atthe OPEC Secretariat in Vienna is both ac-curate and up-to-date.

“Indeed, they (the models) are a pri-ority area and regarded by the OPEC Boardof Governors as critical,” Dr Omar S Abdul-Hamid, Director of OPEC’s Research Division, said in closing re-marks to the one-day meeting,which he described as being“very fruitful.”

OPEC’s reputationAbdul-Hamid, who earliermade the workshop’s welcom-ing address, stressed to assem-bled delegates from MemberCountries, that so much impor-tance is placed on this area ofwork because the Secretariat’smodeling efforts affect not onlyresearch quality but, in thelarger context, OPEC’s reputa-tion on the international scene.

“I cannot emphasize strongly enoughjust how important the various modelsused in the Research Division are to theoverall work of the Secretariat, our lastingties with Member Countries and the bene-fit of the Organization as a whole,” he af-firmed.

“And they will become increasinglyimportant in the years ahead as OPEC andthe global energy sector in general has toaddress new innovations in overcoming theinevitable challenges that characterize the

intricate and often volatile business we arein,” he told the workshop.

Some 24 experts from OPEC MemberCountries, including OPEC National Repre-sentatives, attended the gathering, whichfeatured in-depth presentations offering acomprehensive overview of the ResearchDivision’s five modeling applications.

Delegates also heard a report on theglobal transportation outlook to 2040, de-livered by a thermodynamics expert from aGerman automotive consultancy firm.

The workshop was specifically held toinform Member Countries of the utiliza-tion and aims of the Secretariat’s modelsand to gain their views and suggestions onhow best to maintain their optimum per-formance going forward.

As the Research Division Director saidin his opening remarks, the Secretariat con-siders the input of Member Countries asbeing invaluable for giving a broader, con-certed view as the Organization takes stepsto fine-tune the models currently in usewithin the Research Division.

Five models in useThe applications comprise the OPEC RoadTransport Model (ORTM), which encom-passes many features to simulate futuretechnology scenarios for the road sector;the OPEC World Energy Model (OWEM),which dates back to 1984; the World Oil Re-fining Logistics Demand (WORLD) model,the Oxford Global Economic Model(OGEM), with its integrated GDP forecastmodel, and the E3 Models in Environmen-

tal Studies, very much still awork in progress.

“All these models are es-sential for the efficient func-tioning of the Organization,particularly in support of theConference’s decision-makingprocess, where they provide de-tailed forecasting and analysisof the international oil market,the global economic situationand related issues,” said Abdul-Hamid.

He stressed that the mod-eling tools represent the foun-dations of the ResearchDivision’s day-to-day activitieswith regard to providing up-to-

date and accurate information, statisticsand data flow that are vital for the smoothrunning of the different departmentswithin the Secretariat.

Abdul-Hamid explained that thebackground to the workshop’s examina-tion of the models arose from a report prepared by the Research Division’s Mod-eling Assessment Task Force (MATF),which was presented to the 13th SpecialEconomic Commission Board meeting inSeptember last year, together with theagreed follow-up. �


OPEC

OPEC hosts first modeling applications workshop

Effective modeling tools vital for Secretariat’s workReproduced courtesy of the OPEC Bulletin

Dr Omar S Abdul-Hamid (left), Director of OPEC’s Research Division, and Dr Adedapo Odulaja, Head of OPEC’s Data Services Department.

O

Turning to the workshop’s agenda,proceedings began with a presentation onthe global road transportation outlook by2040 by Dr Philipp Adomeit of FEV GmbHof Germany.

This provided participants with a de-tailed overview and outlook into differenttechnologies and fuels to be implementedby the automotive industry in the comingyears. The impact on future demand forgasoline and diesel was analyzed, alongsidethe share of alternative fuels, such as natu-ral gas.

Adomeit maintained that transportfuels for passenger cars would be gasolinedominated and—according to FEV analy-sis—reaching a demand plateau by 2030–35. Diesel and compressed natural gas(CNG) would play a more important rolefor cars beyond 2035.

Generally, he said, the share of dieselas a road transport fuel will increase and ex-hibit the strongest growth potential in ab-solute numbers among all road transportfuels. Adomeit’s comments were followedby presentations on the five models cur-rently in use.

In-depth presentationsSecretariat Energy Models Analyst,Mehrzad Zamani, gave detailed informa-tion on the ORTM, the objective of whichis to provide a granular analysis of the roadtransport sector.

It projects oil consumption, sales andstocks by vehicle type, fuel economy, andvehicle miles traveled for passenger cars andcommercial vehicles.

This was followed by a presentation bySenior Research Analyst, Garry Brennand,on the longstanding OPEC World EnergyModel (OWEM).

OWEM is a large-scale and wide-rang-ing econometric model, maintained anddeveloped in-house, with almost 600 equa-tions and identities. Its key modules focuson oil demand by sector and oil supply, andcover 11 regions.

The afternoon session began with apresentation on the WORLD model, madeby Senior Research Analyst, Dr Jan Ban.

WORLD, an optimization modelbased on linear programing techniques, isused by the Secretariat for projections andsimulations of downstream oil operations.

Modeling and Forecasting Analyst, Af-shin Javan, then took the workshopthrough the OGEM, explaining, amongother things, the advantages and disadvan-tages of Vector Auto Regressions (VAR) incomparison with the Computable GeneralEquilibrium Model.

In the final presentation, the Secre-tariat’s E3 Models in Environmental Studieswas outlined by Research Analyst, Dr EleniKaditi.

This application has become increas-ingly important in quantitatively assessingthe impacts of diverse policy strategies onfuture economic development, climatechange and energy demand.

There was lively debate between eachpresentation as delegates asked pertinentquestions and made valid observations andsuggestions on the future workings of therespective models. �


OPEC

� “The Board regards the close assessmentand monitoring of the Secretariat’s model-ing tools as a critical issue for enhancingboth the Organization’s research activitiesand its international standing going for-ward,” he affirmed.

The MATF report, he outlined, as-sessed in detail the current performance ofthe respective models, indicating theirstrengths and areas for improvement.

“Importantly, it highlights that intoday’s ever-changing world, energy mar-kets, the players and the dynamics, to-gether with estimation and forecastingtechniques are constantly evolving.

“In recent years, better and more effi-cient software, qualified data and modelingpractices have improved the performanceof such models and reduced the uncertain-ties regarding future trends.

“Hence, the need for the OPEC Secre-tariat to keep abreast of all the latest devel-opments, in order to continue deliveringhigh-quality analysis and fulfilling the re-quirements of the Conference and MemberCountries,” he stated.

Abdul-Hamid noted that the reportprovided a list of recommendations for thefurther improvement and enhancement ofthe models in existence, which the Secre-tariat had already started to implement.

The Board felt it pertinent to tap theexpertise of Member Countries, “to gainyour views on the Secretariat’s modeling ca-pabilities and to ensure their continuedbest practice. I am sure your involvement inthis venture will greatly assist us in solidify-ing our plans and boosting this vitally im-portant area of the Secretariat’s work,” hetold delegates.

Dr Philipp Adomei, FEV GmbH, Germany.

Parkring 8, A-1010 Vienna, Austria

P.O. Box 995, A-1011 Vienna, Austria

Telephone: (+43-1) 515 64-0

Fax: (+43-1) 513 92-38

www.of id.org

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