Mr. Chairman; Ladies and Gentlemen; Dear colleagues:
Let me first of all, welcome formally all our visitors and say how pleased we are to host this 61st meeting of the Chief Operations Officers of the Arab /OFID and Islamic Bank Coordination Group. Let me also recognize the presence of special guests at this opening session.
OFID is pleased to play an active role in your coordination efforts. We are particularly grateful to all the institutions of the Group for their trust in our commitment and in our capacity to contribute to this remarkable and highly praised process of dialogue, harmonization, alignment, effectiveness and adaptation.
Cumulatively and collectively, the Group is reporting more than US$75 billion in signed, mostly concessional, loans. In 2006 alone, it is reporting close to US$3.5 billion for some 160 signed loans. The Group has every reason to be proud of its record. It is the record of countries that are themselves developing and, as such, it should be considered exemplary. In my view, this record deserves more recognition. I am glad to note, therefore, that the complex issue of reporting fully on Arab Aid is included on your agenda.
With my colleagues, I have reviewed the points you plan to discuss in your meeting. I have noted their pertinence and reflected on the many important challenges you have identified and are addressing. I am particularly pleased to note that the issues that were discussed in the last meeting of Heads of Institutions, which took place here in Vienna, are at the forefront of your debates.
We in OFID are proud of our record but we are also aware of the many challenges confronting us. I have no doubt that the feeling is the same in your own institutions. We should therefore not rest on our laurels but forge ahead, as the tasks of development are never ending.
I have been asked by my colleagues to run a pro-active debate and encourage questions and comments. I am pleased to do so and encourage you to put forward your questions and your comments.
They will not be only for me but rather they will, I hope, be part of our internal dialogue, linking the operators and the policy makers for the progress of our institutions, which need to be more relevant and more effective than ever.
At OFID, we are in the process of reviewing our work, assessing our achievements and measuring the challenges ahead of us. We have drawn a balance sheet which we find full of promise, and we look to the future with confidence. Before elaborating on these remarks, I would like to spend a few minutes describing the environment in which we all operate. I will also try to put across - however briefly - our views on the many subjects of relevance to our work.
Mr. Chairman:
The governments of our partner countries are under pressure to deliver rapid progress on a broad front. Advances in media and telecommunications have brought information to the most remote villages. With this development and gains in education and democratization, population demand for basic needs is becoming imperative and urgent. Poverty is less accepted; education, health and sanitation have become basic rights. This means that progress has to be social if it is to be developmental at all.
At the same time, we note that social development cannot be sustained if it is not the fruit of economic development. For economic development to take place there must be economic growth, a growth that is sustainable in every sense.
At OFID we believe that our support to social projects is beneficial in its own right, because social development is an important factor of more general development. However, this support cannot be effective if productive infrastructure is not developed at the same time.
This leads me to state that developing countries - especially the low income nations - need a fair and comprehensive deal from their Donor Partners on whom they depend so much for their development.
This deal must include an enablement of economic growth. In practice, this means unrestricted access to developed countries’ markets; investments that add value to raw materials locally; and access to technology and other inputs - such as energy - without constraints and impediments.
Aid, therefore, is not enough - even when it is actually delivered (which is not always the case). Globalization is not morally acceptable, if it is built on a vision where only the fittest survive. Aid is in vain if it is not accompanied by economic growth.
In our eyes, globalization should mean an opportunity for all. It should mean more comprehensive support to development, and not just hard conditioned-aid that is more than reversed by unfair trade practices. (We know for a fact that subsidies given by industrialized countries for agricultural products, where developing countries should have a relative comparative advantage, dwarfs development aid).
The sacrifice made by our Member Countries in helping the development of other countries will not furnish concrete results if it is limited to financial flows. We must struggle for a fairer world economic order. This why at OFID, and I am sure also in your institutions, we believe that we have a role to play in helping developing countries make their case in international fora.
Helping them make their case involves engaging other donors. I am glad, in this respect, that your agenda includes the question of talking to what is now known as “emerging donors” (e.g. China). Time will tell whether the emergence of these donors can strengthen, and whether a dialogue with them could further strengthen South-South cooperation.
Addressing traditional donors, we must stress that our times leave no room for a very poor world facing a very rich world. Development Aid is not just an expression of human care. It is a contribution - in many ways - in the best interests of developed countries.
Progress towards 0.7% is overdue and the commitments made should be honored in volume as well as in quality.
Harmonized and aligned Aid Institutions, of which the Arab/OFID and Islamic Bank group constitute an important part, must promote more systematically a comprehensive development framework that is not imposed directly or indirectly by Donor Countries.
We must aim at a broad partnership, in which our partner countries can find a hope for development, which alone will encourage the reforms that are needed and that must be seen to be productive for them to be politically feasible.
Mr. Chairman:
I will now turn to developments at OFID. I shall limit myself to broad points and leave the details to your questions and comments.
As I stated earlier, in the past few years we have been extremely busy, delivering our service and reflecting on ways and means of tackling the challenges we have identified. As a result we have devised a new Corporate Plan and drawn up a number of business plans, which we are constantly monitoring to ensure their adaptation to a changing environment.
Our new Corporate Plan aims at consolidating the mission of the institution, looking at it in the context of the developments that have taken place in terms of the development paradigm, and in terms of the visions of our own countries as to their role in the development arena.
We are most encouraged by the enthusiastic support of our Member Countries for the institution in general and for our plans to develop it further.
We have developed a policy framework and have enhanced substantially our operations.
In terms of policy framework:
- Recognizing the new development paradigm we take note of the differentiated roles of governments and economic agents, while recognizing that this differentiation depends on the level of institutional and economic development of each specific country.
- Generally, we differentiate between low-income countries and middle income countries, whose needs are often similar, but whose capacity to develop with their own means differ.
- We continue to believe that poverty can only be eradicated by economic growth and that economic growth is accelerated by good governance at government level and at the level of other institutions including economic entities.
- We believe that all OFID’s activities should aim at poverty alleviation, institutional and capacity building, and sustainable development.
With this policy framework, OFID is enhancing its operations through an expanded franchise, new facilities and new products.
In terms of franchise, we are now able to fund public operations and private sector operations with short, medium and long term loans for long term investments as well as working capital.
In terms of facilities, we run five facilities:
- Public sector for low income countries, which benefits identified countries under a lending program.
- Public sector for middle income countries: which also benefits identified countries under a lending program.
- Blend facility, which complements the first two facilities without prior identification of beneficiaries.
- Private sector facility, which finances entities which are predominantly privately owned.
- Trade facility, which benefits both public and private clients and countries.
In terms of products three facilities offer Euro and dollar denominated loans with fixed or variable interests charge, and technically all facilities offer guarantees. However concentration of this product is presently on trade.
Generally, the level of operations is to increase substantially in the coming years, consolidating the present trend. In 2006 OFID committed US$700 million in loans and grants. In the next three years we expect our operations to average US$1 billion per year, with a large part benefiting low income countries.
Our presentation of our programs would be incomplete if we did not mention our efforts to enhance our operational capacity and above all our reliance on our network of development partners where our sister organizations take pride of place.
I will stop at this point to leave room for your comments and questions. If we have time, I will raise some of the challenging developments in the mode of operations of other institutions and discuss their relevance to us.