Resource Mobilization for Establishing a Fund for Poverty Reduction: High Level Delegation Sets out to Meet Heads of States in Member Countries



In line with the mandate given to the Islamic Development Bank within the framework of the Ten-Year Program of Action adopted at the 3rd Extraordinary Summit of the Organization of the Islamic Conference (OIC) held in Makkah al Mukarramah, Saudi Arabia, in December 2005, the IDB Board of Governors at its 31st Annual Meeting held in Kuwait in May 2006 entrusted the IDB Board of Executive Directors and the Management to undertake necessary steps to establish a special fund for reducing poverty in the member countries. The objectives of the Fund are: (i) reducing poverty; (ii) eliminating illiteracy; (iii) eradicating major communicable diseases such as malaria, Tuberculosis and AIDS; and (iv) building the human and productive capacities particularly in the least developed OIC countries. The idea of launching the Fund was also well received by the United Nations General Assembly to which the IDB was invited in November 2006.

The Fund has already received contributions from 21 member countries including Saudi Arabia and Kuwait which have generously pledged US$ one billion and US$ 300 million respectively. The Fund is scheduled to commence operations immediately after adopting its regulations at the 32nd Annual Meeting of the Board of Governors to be held in May 2007 in Dakar, Senegal. The Fund is envisaged to take the form of a Waqf, thus ensuring appropriate use of the seed capital of US$ 10 billion.

Resource Mobilization Drive

A high level delegation led by H.E. Abdoulaye Diop, the special envoy of H.E. the President of the Republic of Senegal and the current Chairman of the IDB Board of Governors, and accompanied by H.E. Dr Ahmad Mohamed Ali, President of IDB, are currently on a tour of several member countries starting with Iran, Algeria, Libya, etc., to meet with the Heads of States for resource mobilization for the Fund. In the words of the President of IDB, “this Fund is the best example of solidarity among the member countries of IDB towards fighting poverty in which each member country participates not as a donor or receiver, but according to its financial ability and the will to help others”. Thus, the Fund is one of the best examples of south-south cooperation in which, in addition to the major donors such as Saudi Arabia and Kuwait, 11 of the least developed member countries in Africa have also announced their contributions, in line with the cherished spirit of solidarity.

The High Level Delegation will apprise the Heads of States on the status of establishment of the Fund and solicit generous financial support of the member countries towards the realization of the Fund. Given the noble objectives and the gravity of poverty in the least developed countries, member countries will be urged to commit their contributions with immediate effect in order to enable the Fund commence operations soon after the Annual Meeting of the Board of Governors scheduled to take place in Dakar, Senegal during 29-30 May 2007.

Fund Background

Among the long-standing commitments of the IDB to meet the developmental needs of its member countries and the LDMCs in particular, one of the key objectives is to reduce poverty using south-south approach with specific Islamic characteristics. The Bank’s Vision 1440H (2020) also presents a unique approach by making “human dignity” the cornerstone of the Bank’s development agenda. It includes ‘empowerment’ as a core value; makes ‘reducing poverty’ its strategic objective; and identifies ‘human development’ among its priority areas.

IDB: Past Role in Reducing Poverty

So far, through its concessional financing aimed at some of the poorest member countries, IDB has financed various projects for around US$ 4.2 billion, half of which was for pro-poor activities. The Bank’s financing has given priority to meeting ‘basic needs’, including employment opportunities, providing market outlets especially for the rural poor, improving basic rural and pre-urban infrastructure such as the supply of drinking water and electric power, and expanding education and health facilities, etc. It has established a series of development programs for women and implemented a range of training and capacity-building programs for women to promote their participation in the process of economic and human development, and poverty reduction. In all its programs, the Bank has concentrated on five key sectors that form the core of poverty reduction efforts, namely education, health, rural and agricultural development, water supply and sanitation, and transport and power.

IDB – Poverty Reduction Programs in Key Sectors
Education: 4566 primary schools; 576 secondary schools; 59 colleges and universities; 204 vocational training centers.
Health: 2683 primary healthcare units, 97 district and regional hospitals; 23 specialist and referral hospitals and other health facilities.
Rural & Agricultural Development: 15,800 water points; at least 300,000 hectares of irrigation; 88 veterinary centers; 7000 km of rural and feeder roads.
Water Supply & Sanitation: 610 km of water piping and networks; 29,700 boreholes.
Transport & Power: 4,934 km of trunk roads; 14,000 MW of power supply; 11,312 km of transmission lines.
Special Assistance Program (social sector projects in non-member countries as well as relief and emergency assistance in member and non-member countries): US$565 million for 1,017 operations.
NGO & Women in Development: 62 operations worth US$1.2 million.


The IDB Position on Poverty

The IDB views poverty as having four dimensions which go beyond the scope of income of a nation comprising Opportunities – lack of access to the labor market, employment opportunity, mobility problems and time burdens; Capabilities – lack of access to public services such as health and education; Security – vulnerability to economic risks and to civil and domestic violence; and Empowerment – being without voice and without power at the household, community, and national levels.

While the Bank recognizes the complex issues in defining poverty, it takes the view that the eight Millennium Development Goals (MDGs) agreed at the United Nations Millennium Summit in September 2000 are helpful in defining and identifying poverty. These MDGs are now at the center of national development plans and poverty reduction programs, reflecting national ownership and consensus building. The MDGs are also directly compatible with the Bank’s 1440H Vision. This was in fact amply illustrated through the IDB’s participation in one of the Thematic Debates of the UN General Assembly held in 2006 at which it announced the launching of the Fund and commitment to the goals of MDGs. However, the Bank also retains the freedom to adapt any of the MDGs to suit particular country’s special needs and circumstances.

Enormous Task Lies Ahead

The poverty reduction task facing the Bank and its member countries remains enormous. About 40%, i.e. just under 400 million of the 1 billion people estimated to be in absolute poverty in 2002 lived in 31 of the 56 IDB member countries.

The IDB will tailor its poverty reduction activities to mainly six activities: promoting pro-poor growth; addressing the barriers and issues faced by women in economic development; emphasizing human development especially in health care and education; providing social safety nets for the poor; raising public service levels; human and productive capacity building, and fostering full ownership and commitment by member countries.

Experts’ Group Meeting on Poverty Reduction

These and other strategies towards an approach to reducing poverty in member countries in the light of the Fund was discussed at an Expert Level Group Meeting which was held at the IDB Headquarters on 13-14 February. Towards achieving maximum efficiency and effectiveness, the Bank will approach country level programs based on national poverty reduction strategies of the respective country and identify eligible projects. It will also agree on implementation arrangements with the countries concerned and conduct review of the impact and benefits of the program as the paramount priority is for achieving results for the member countries.

The Expert Group Meeting also identified several types of priority programs and projects for financing, such as, integrated sector projects aimed at addressing the root causes of poverty; supporting institutional infrastructure; promoting cross-cutting projects and programs that impact on poverty reduction like the environment and women (the Bank believes that no poverty reduction strategy would be successful without mainstreaming the role of women in its operations). Similarly, emergency relief and support for longer-term reconstruction will be provided.