|
Ms. Hilde F. Johnson, Minister of International Development
Ladies and gentlemen,
Intro - Poverty And Millennium Development Goals (MDG)
From the Nobel podium last December, President Jimmy Carter reminded the world that the gap between rich and poor is widening. He said, rightly, that this growing chasm is the single most important challenge of our time. Some simple facts illustrate this chasm all too clearly:
- 1.2 billion people live on less than a dollar a day.
- The richest 1 per cent of the world population earns as much per year as the poorest 57 per cent.
- 1.6 billion people have no access to electricity. Eighty per cent of these live in Africa and India.
- At the current rate of progress it will take 130 years to eradicate hunger in the world.
- The average Norwegian man can expect to live until he is 75 years old. The average man living in Mozambique or Angola can expect to live until he is 38 years old.
But in spite of these deplorable facts, the situation is not entirely bleak. A common global understanding of the gravity of the situation has finally been achieved, in the form of the Millennium Development Goals.
The MDGs state that, by 2015, the proportion of people living in extreme poverty and hunger and the proportion lacking clean drinking water must be halved. The ratio of children dying before the age of five must be reduced by two-thirds. The ratio of deaths among women giving birth must be reduced by 75 per cent. The spread of HIV/AIDS must be reversed. All children, girls as well as boys, must be offered primary education.
The MDGs have placed the interests of the poor and underprivileged at the top of the international political agenda. Heads of state, including the G8 leaders, cite them frequently, and are agreed that poverty is the greatest scourge of our time. They are saying that they will combat it by co-operation and by financial assistance. This, ladies and gentlemen, is a major breakthrough in international politics.
To achieve the MDGs and win the war on poverty, changes must be made and resources mobilized in at least four areas simultaneously.
First, international framework conditions for debt reduction, trade and investment must be improved and made more supportive of the MDGs. We must ensure consistency and coherence between the goals the international community has set itself and the framework that same community is putting in place to achieve them. In the long run fair international framework conditions are crucial for ensuring sustainable development and freedom from poverty.
Second, the poor countries themselves need to put their house in order. They need to assign priorities, draw up strategies, invest in human resources and implement poverty-oriented policies. Good governance, democracy and human rights must be promoted in order to combat poverty and make development sustainable. These are also preconditions to attract domestic and foreign investments and to make full use of development assistance.
Third, the Official Development Aid (ODA) should be increased considerably. We need a doubling of ODA if we are to reach the MDGs. We also need to get more poverty reduction out of every dollar or krone. To achieve this we must improve our own ability to deliver assistance efficiently and in a consistent manner within the priorities set by the recipient countries, rather than according to our own priorities. We need more and better aid to put it bluntly. The Norwegian government has pledged to increase its development assistance from its present level of 0.93 per cent to 1 per cent of GNI by 2005. We would encourage all other industrial countries to follow this example and honor their commitments made in Johannesburg regarding increasing ODA.
Fourth, we must make a greater effort to mobilize the resources of private sector and of the civil society for the achievement of the MDGs. There is a lot of unexploited potential in these sectors. Entrepreneurs and agents of change must be given better framework conditions, and NGOs and the media must be strengthened so that they can fulfill their roles as watchdogs in democratic societies. [top]
Norwegian Action Plan
In March last year the Norwegian Government launched an action plan to combat poverty in the South. The plan takes the MDGs as its main point of departure and outlines how Norway will contribute to their achievement.
The plan emphasises the close relationship between development assistance policy and policies in other areas such as debt, trade, investment, agriculture, environment and energy. Our policies in these areas are surely part of the broader development framework and have an important bearing on the development prospects and the situation of poor people in developing countries.
Thus, in order to effectively fight poverty, our national policies in different areas must form a coherent whole. We are presently reviewing our policies in a number of areas to make them more coherent and supportive of the MDGs. Moreover, we are working to improve international framework conditions for developing countries as regards investment, debt and trade.
The action plan maintains that human rights must continue to be an integral part of Norwegian development policy. This is because the realisation of fundamental human rights is both an important goal in itself and because the fulfillment of these rights liberates forces that create and stimulate development.
The action plan also stresses that capacity building for good governance will continue to be one of the most important areas for our development co-operation. Good governance with the many dimensions this concept entails, is also a precondition for the development of a flourishing and well functioning private sector. [top]
Private sector development and trade
Private sector development in developing countries is crucial for ensuring economic growth and reducing poverty. However, economic growth alone is not sufficient to combat poverty. Such growth must be accompanied by policies that promote equitable social distribution - one of the aspects of good governance.
Establishing favourable conditions for the private sector is a national responsibility. A comprehensive approach that addresses issues at all levels, from micro to macro, in the public and in the private sector, at the national and at the international level, is necessary. This also includes trade and export opportunities. But, the responsibility lies not only upon the developing countries.
We are currently strengthening our focus on trade and private sector development in our development co-operation programmes. Our efforts are rooted in the plans and priorities of our partner countries, as laid down in the overall strategy for Norway's support for private sector development in developing countries, which was launched in 1999. The overall objectives are to create economic growth by stimulating private sector development; promote investment; and strengthen trade with and among developing countries.
To identify opportunities for Norwegian support for developing the private sector and stimulating economic growth, and the obstacles that must be overcome, we have recently carried out country reviews in several of our partner countries. The country reviews have been based on the development plans and needs of the developing countries themselves, and on areas where Norway has special expertise. The three main areas for enhanced co-operation identified are:
1. political and institutional framework conditions and infrastructure for private sector development,
2. export opportunities and trade,
3. risk capital and investments
First, the issue of framework conditions and infrastructure. Not surprisingly, the inadequacy or lack of framework conditions is a recurring obstacle to private sector development in our main partner countries. We are now increasing our assistance to strengthen institutional and macro-economic framework conditions in co-operation with our partner countries and other development actors. We are giving more priority to assistance to financial sector management and we are attacking corruption on a broad scale. We are stern supporters of a UN Convention on Combating Corruption and are pleased that the negotiations so far have proved fruitful and constructive.
It goes without saying that improved governance will have a significant effect on the private sector's ability and willingness to invest more resources in developing countries.
One important aspect within the framework conditions is property rights and the formalisation and registration of such rights. The formalisation of property rights and registration of assets are also important vehicles in mobilising and releasing resources for the poor. This is the main message of the Peruvian economist Mr. Hernando de Soto, with whom we have engaged in close co-operation over the last year. Mr. de Soto claims that one of the main factors contributing to underdevelopment is that the assets of the poor, such as property rights, are not part of formal property systems and the formal economy. If we can assist in the formalization of property rights and the registration of assets, the resources of poor people can be put into use for instance by serving as collateral for loans for investing in economic activities of different kinds.
Political and institutional framework has to be complemented by physical infrastructure. That is why support to infrastructure like energy, water, roads and electricity are receiving increased focus, among others by the World Bank. For a while now there has been under-investment in infrastructure in many developing countries. Fortunately the pendulum is now swinging back.
Norway has recently established a new fund for private sector development and infrastructure in the World Bank, to which it has so far allocated NOK 53 million. The fund gives priority to infrastructure development, particularly infrastructure that benefits the poor.
The Norwegian Investment Fund for Developing countries - NORFUND - is a major tool in our development co-operation and a potentially important actor in infrastructure development. Since 2002 the fund has received earmarked funds allocated to investment in the energy sector. Norway's focus in the context of energy is on renewable energy sources. Norfund has embarked on an interesting co-operation with the Norwegian company Statkraft for the purpose of investing in small hydropower plants in developing countries. In my view this type of co-operation is a good, concrete example of the kind of partnership that was recommended in Johannesburg.
Linked to private sector development is trade and export - the second area of focus identified in the reviews mentioned earlier.
Clearly we cannot achieve systematic and sustained poverty reduction without more trade and economic growth in the poorest countries. Measures and policies for promoting trade must be included in developing countries' own development strategies as well as in co-operation agreements with development partners.
The old slogan "Trade, not Aid" has now rightly been adjusted to "Trade and Aid", or even more targeted "Aid for Trade".
The Doha Development Agenda of the WTO is important in this respect with its clear focus on the need to improve market access for developing countries and increase technical assistance and capacity building to enable these countries to participate more fully in the globalized world market. Uniform, multilateral rules are necessary to ensure a harmonized and predictable trading framework for all partners, and in particular for developing countries.
Improved market access for developing country products, in both developed and developing markets, is important for sustained economic growth and poverty reduction. Tariff reductions on a most favoured nation basis in the WTO will provide predictable market access for all countries. In addition the Generalised System of Preferences provides preferential access to developed country's markets for many developing countries, in particular the least developed.
Norway granted duty- and quota-free access to the Norwegian market for the least developed countries as of 1 July last year. We are now providing increased technical assistance in order to build capacity and competence in these countries so that they can benefit from the new market opportunities in Norway and elsewhere. Norwegian companies and importers have major contributions to make in terms of technology and knowledge transfers, product development and market access. We have therefore initiated close co-operation with the Norwegian private sector to stimulate increased trade with countries in the South.
Norway will also consider further improvements in market access for products of particular interest to developing countries - in particular agricultural products and textiles - through the WTO and the Generalized System of Preferences.
Even though the improved market access for the Least Developed Countries (LDC) has not so far triggered an avalanche of imports, there is no doubt that the long-term prospects give some hope. But as was confirmed by the country reviews mentioned earlier, market access has to be followed up by technical assistance and capacity building to develop export products that can sell on our markets. We are presently intensifying our efforts to promote increased exports from our partner countries and facilitate greater participation by developing countries in the multilateral trade negotiations.
The US Growth and Opportunity Act is an example of how successful such a strategy can be. As a result of improved market access for 38 African countries from 2000 until the present, exports to the US, excluding oil, have increased by 50 per cent. The difference between the US and the Norwegian markets is of course enormous. Still, it is worth analyzing these results to see whether we can learn something from them.
The third area of focus is risk capital and investment. No doubt that foreign direct investment is extremely important for developing trade and private sector in developing countries. FDIs are far more important than ODA. In addition to providing capital for the development of businesses and enterprises FDIs have an important role in the transfer of technology, knowledge and also market access.
The problem is that only a very small amount of Foreign Direct Investments (FDIs) find its way to the poorest countries. The spectacular rise of FDIs throughout the 1990s has been a hallmark of globalization. But the spread of FDIs clearly marks the division between the world of those who have access to economic opportunity and those who remain outside. More than ¾ of the FDI flows go to the industrialised countries; developing countries' share is around 20 per cent (19 per cent in 2000), of which the least developed receive 2 per cent. Of total FDI flows, only 0.3 per cent go to the least developed countries. Far too few companies have seen the potential value of active engagement and investment in markets in the South, including the least developed countries. We have not really taken on board the fact that five sixths of the world's population live in the South! A vast market, in other words, from a commercial and business policy point of view, as well as from a development perspective.
One of our main tools for promoting investment and private enterprise development in poor developing countries is NORFUND. The Fund provides risk sharing and investment - directly or via local venture funds - for the development of businesses and private enterprises in developing countries. NORFUND invests in profitable undertakings, but assumes in total, a greater burden of risk than ordinary commercial banks or investment funds. Thus NORFUND can make tangible contributions for promoting economic growth and poverty reduction in poorer developing countries. [top]
Summing up
I would like to end as I began, with our common goal: to combat poverty. We need the private sector investors if we are to win this fight. We need to join forces and co-operate to achieve the Millennium Development Goals.
We must work together to include those who today are being excluded from the global wealth creation. Only then will we be able to ensure that globalization does not damage, but benefits the poorest countries. To quote Secretary-General Kofi Annan:
"The main losers in today's very unequal world are not those who are too much exposed to globalisation. They are those who have been left out. Our only hope of significantly reducing poverty is to achieve sustained and broad based income growth."
Therein lies a major challenge. It can only be met by constructive co-operation between the authorities, the private sector and the civic society. I am confident that we can make a very positive contribution to this endeavour, and I know that the private sector itself is well aware of this.
The challenge cannot be met unless we are aware of the vast potential that lies in the human and natural resources in the developing countries. Private sector development in these countries has a central and logical place in the reality of a globalized world. It is here that you can make a difference. It is the private sector that can help establish a basis for wealth creation. This is what leads to economic growth, to greater prosperity - and ultimately to the eradication of poverty. [top]
|
