PWB CHAPTER 3: DEVELOPMENT SERVICES TO MEMBER NATIONS

Major Programme 3.1: Policy Assistance

Achievements

378. The Major Programme provides advice and assistance to countries on national development policies and strategies in the agro-rural sector. It provides support to the formulation of policies and strategies to create favourable economic environments for food security and agricultural and rural development and in ensuring that agriculture is considered in macroeconomic adjustment programmes. It contributes to national capacity building for policy analysis, formulation, planning and implementation.

Programme 3.1.1: General Coordination and Support

379. Coordination of Policy Assistance. The programme is carried out by the Policy Assistance Division (TCA) and supports Policy Assistance Branches and Units (PABs and PAUs) in the formulation of agricultural policy and preparation of strategies for sustainable agricultural development and food security. It supported five countries in policy and strategy formulation, in collaboration with PABs and PAUs. It represented FAO in Consultative Group and Round Table meetings for programme development and supported implementation of the World Food Summit Plan of Action, including the participation and contribution of PABs and PAUs in implementation of the Umbrella Programme for Training in Uruguay Round Follow-up and Multilateral Trade Negotiations on Agriculture. One-day national workshops were organized on World Food Summit follow-up, including preparation of four regional TCP projects to assist countries. Assistance was provided for preparation of revised strategies for National Agricultural Development: Horizon 2010. Priority issues were identified at regional and national level for food security, sustainable agriculture and rural development. The programme assisted in selection of themes and preparation of briefs and papers for the Regional Conferences.

380. Food and Agriculture Policy Training. Training activities covered policy analysis, sector and sub-sector planning and analysis, investment project planning, decentralized development planning and development of methods and approaches for training carried out by FAO in the policy area. Work included:

• design and provision of capacity-building services in policy formulation and analysis through field projects financed with extra-budgetary funds;
• preparation and implementation of regional or sub-regional training activities with Regular Programme (RP) funds;
• preparation and publication of training materials.

381. Backstopping was provided for 25 capacity-building projects. Through extra-budgetary funding, 41 national and four regional courses and training workshops were carried out. In collaboration with partner institutions, mainly from developing countries, support was provided to 13 regional or sub-regional courses/workshops. A training manual providing guidelines for the preparation of agro-industrial policies was published, recent manuals were translated and published in various official languages and preparation of training manuals covering decentralization policies, policy impact monitoring, water-management policies, analysis of agro-food sub-sectors and formulation of agriculture strategies was initiated. An updated, Windows-based software to formulate investment projects was released. Updating began on FAO training methods and approaches in policy formulation and analysis based on the assessment of new training needs and FAO comparative advantages. New learning systems utilizing on-line methods have been reviewed and pilot distance-education courses carried out using the Internet. In-house training of staff from Regional/Sub-regional Policy Assistance Branches/Units on policy matters had been included in the PWB but due to limited funding, only one training activity was organized, a workshop in Rome on Uruguay Round agriculture-related agreements and multilateral trade negotiations.

382. At the request of the Director-General, an important unplanned activity was undertaken on the Umbrella Programme for Training in Uruguay Round Follow-up and Forthcoming Multilateral Trade Negotiations on Agriculture, as described in the following box.

Programme 3.1.2: Policy Assistance to Various Regions

383. The programme covers policy assistance provided by Regional and Sub-regional Offices and includes conducting sector/sub-sector reviews and analysis of selected policy issues. Support was provided to 24 countries on issues related to:

• household food security and sustainable development of small holding farmers (Asia);
• assessment of parastatal reform policies on agricultural development and food security (Africa);
• water policy and management (Near East);
• linkages between modern agro-industries and small-scale agriculture (Latin America);
• agriculture and food sector integration with the market economy (Europe).

384. Support on trade issues, including intra-regional trade and the impact of the Uruguay Round on agricultural production and food security, was provided to 50 countries. A Ministerial Round-table, Beyond the Asian Crisis: Sustainable Agricultural Development and Poverty Alleviation in the next Millennium was organized.

385. FAO representatives were assisted in identifying programmes for technical cooperation in 35 countries. In support of the FAORs, Common Country Framework (CCF) and United Nations Development Assistance Framework (UNDAF) documents were discussed with government officials and UNDP. Areas for FAO involvement in UNDP programmes were identified. UNDP resources for Policy and Programme Development (SPPD) and Technical Services (STS) were tapped in 27 countries and for one regional activity for Asia.

386. During the biennium, 65 policy assistance missions and 50 programming missions were undertaken; 35 field projects were formulated and 60 projects backstopped. Support was provided to agricultural policy networks in Asia and the Near East. SPFS participating countries were also assisted through the identification of constraints that prevent farmers from adopting improved technology and management practices and the formulation of proposals to overcome the identified limitations. Support was given on identification of specialists to assist the formulation of emergency rehabilitation plans and in the preparation of agricultural development strategies.

Programme 3.1.3: Legal Assistance to Member Nations

386.a The Programme, which is delivered by the Development Law Service of the Legal Office, provides extensive advice and support to developing countries on legislation for agriculture and rural development. Advisory assistance was provided on new issues in fisheries law arising from recent international agreements, with projects in Malaysia and Namibia, and on the complex problems of pastoralism in Mali and Burkina Faso. Assistance was also provided on forestry legislation, plant protection, water and land tenure. The legislative database continued to expand with approximately 5,000 full texts being put on line during the biennium, in addition to 6,500 abstracts.

Table 3.1-1: Legal Assistance to Member Nations (Selected Performance Indicators)

Major Programme 3.2: Support to Investment

Achievements

387. The major programme assisted developing and transitional countries by providing an even wider range of investment support services than in the past. Resources were concentrated on assistance in formulating investment projects to attract funding from multilateral institutions lending for agriculture, rural development and environmental interventions. Investment support services are carried out by the Investment Centre Division (TCI) under agreements with the principle multilateral financing institutions:

• World Bank (WB);
• International Fund for Agricultural Development (IFAD);
• European Bank for Reconstruction and Development (EBRD);
• African (AfDB), Asian (AsDB), Inter-American (IDB), and Islamic (IsDB) development banks;
• United Nations Capital Development Fund (UNCDF);
• sub-regional development banks.

In addition, the Investment Centre also provides technical assistance to the World Food Programme in formulation, evaluation and appraisal of WFP country strategies, programmes and projects, the latter often resulting in countries receiving food aid for development.

388. The underspending of US$ 3.5 million, shown in the above table, mainly resulted from the need to reduce expenditure during the biennium when the anticipated sharp rise in income failed to materialize. Based upon 1996-97 reimbursements related to the FAO/World Bank Cooperative Programme and informal discussion taking place when the PWB 1998-99 was being prepared, income and reimbursements for support to investment were expected to be well above the level formally agreed between FAO and the World Bank. Unfortunately, the higher income projection proved to be overly optimistic and thus expenditures had to be kept within the lower level of resources available.

389. Preparation of projects for financing by the Global Environment Facility is assuming increasing importance. The Investment Centre is backed by staff from FAO technical divisions and expert consultants.

390. The major programme encompasses the FAO/World Bank Cooperative Programme (CP), which assists member countries in preparing projects for financing by the World Bank/International Development Association (WB/IDA), and the Investment Support Programme (ISP), which helps countries obtain funding for projects from other associated financing institutions. Currently, 75 percent of the costs of the assistance provided by FAO through CP are paid by the World Bank; missions carried out through ISP are partly reimbursed under cost-sharing arrangements with the institutions concerned. ISP is responsible for assisting member countries in preparing investment projects for domestic financing and formulating technical assistance projects.

391. The number of projects prepared with substantial Investment Centre assistance and approved for financing was marginally lower in 1998-99 than 1996-97 (Table 3.2-1) but similar to the two previous biennia. In 1998-99, financing was approved for 76 projects, compared to 88 in 1996-97. Total investments were US$ 4.7 billion, compared to US$ 5.5 billion in 1994-95 and US$ 5.4 billion in 1996-97. External financing commitments were US$ 3.2 billion in 1998-99, slightly lower than the US$ 3.5 billion in 1996-97.

Table 3.2-1: Investment Centre Assisted Projects Approved for Financing

392. With regard to sources of funds, the percentage of external financing committed to the above projects varied from 1996-97. Chart 3.2-1 shows that the World Bank remained the dominant partner in 1998-99, committing 85 percent of the total funding (up from 75 percent). IFAD financed 5 percent (down from 10 percent), regional development banks 7 percent (down from 13 percent) and other sources 3 percent (up from 2 percent). It should be noted for IFAD that while its contribution to total external financing declined, FAO cooperation and the resultant reimbursement increased almost 50 percent in 1998-99.

393. With IFAD and the regional development banks returning to past levels from the high 1996-97 values, total investment fell below US$ 5 billion in 1998-99 (Chart 3.2-2).

394. The conventional approach to investment project formulation, with phases of identification, preparation and appraisal, has evolved into a seamless process in which the country, the financing institution and the Investment Centre may all be engaged throughout, from initial concept to approved financial package. Thus the Investment Centre, in addition to playing a major role in formulating the projects, also contributes specialised assistance, albeit on a smaller scale, at critical stages in the processing of a much larger number of projects. With the growth in national project preparation capacities, the Investment Centre assumes full responsibility for project preparation less frequently. Resources are increasingly used in backstopping national preparation teams, requiring shorter, smaller and more frequent missions. The number of missions has thus risen from 678 in 1994-95 to 1,059 in 1998-99 (Table 3.2-2).

Table 3.2-2: Investment Centre Missions

395. The range of services provided by the Investment Centre has broadened. The number of investment projects for which formulation was completed (Table 3.2-3) was essentially the same: 64 in 1996-97, 66 in 1998-99. In 1998-99, the Division assisted 46 countries in preparing to launch or extend SPFS and setting up arrangements for South-South Cooperation. In the same period the Division operated 24 TCP projects (8 related to SPFS), and backstopped 31 TCP projects (21 related to SPFS).

Table 3.2-3: Number of Project Formulations Completed

396. Project design methodology was adapted to changing national priorities and financial institution requirements. Attention focused on promoting fuller participation of beneficiaries in identification and implementation of projects with the aim of improving project relevance, impact, sustainability. There was also increased focus on assessing the environmental impact of projects. The main project areas were natural resource management including forestry development; provision of improved agricultural inputs and services, soil conservation and optimising use of water resources, including small-scale irrigation. More projects included private sector development components. During 1998-99 the Investment Centre was particularly involved in mobilising funds and preparing projects for rehabilitation assistance, integrated with emergency relief provided by FAO, UNDP and WFP to Kosovo, Central American countries devastated by hurricane Mitch, the Democratic People's Republic of Korea and Angola.

397. Changes in regional distribution of projects approved for financing in 1998-99 are shown in Table 3.2-4. Projects in Africa increased from 36 percent in 1996-97 to 40 percent in 1998-99, in the Near East and North Africa from 6 percent to 11 percent and in Europe from 15 to 17 percent. Projects approved in Latin America and the Caribbean declined from 25 to 18 percent and from 18 to 14 percent in Asia and the Pacific.

Table 3.2-4: Investment Centre Assisted Projects Approved for Financing by Region

398. Distribution of external financing by region in 1998-99 compared to 1996-97 (Table 3.2.4) remained virtually unchanged in Africa (US$ 559 million, from US$ 530 million) and Europe (US$ 244 million, from US$ 278 million). There was an increase in external financing in the Near East and North Africa from US$ 137 million to US$ 568 million, with greater support to development projects in the Maghreb countries. External funds committed to Asia and the Pacific declined from US$ 1,115 million to US$ 941 million, reflected in a drop in approved projects. Those committed to Latin America and the Caribbean declined from US$ 1,416 million to US$ 899 million. Value of investment by region is shown in Chart 3.2-3.

399. External funding committed to Least Developed Countries (LDCs) remained steady. A slight decrease from 16 percent in 1996-97 to 15 percent in 1998-99 was matched by a decrease in projects from 29 to 26; the number of projects remained about one-third of the total (Chart 3.2-4).