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Stimulating growth through agricultural and food investment
Meeting focuses on poorest transition countries in Central and Eastern Europe
and Central Asia
4 May 2006, Rome – Economic growth in the countries of Central and Eastern
Europe and Central Asia will require increased investment in agriculture as
many of these economies are deeply rooted in the farm, the UN Food and
Agriculture Organization (FAO) said today at a meeting in Berlin called to
ensure that agricultural investments yield optimal results for these countries.
The two-day meeting, sponsored by FAO, the European Bank for Reconstruction
and Development (EBRD) and the World Bank, and hosted by the German
Corporation for Technical Cooperation (GTZ), will explore, among other issues,
promising approaches to rural finance in the so-called early transition
countries (ETCs) -- Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, the
Republic of Moldova, Tajikistan and Uzbekistan.
These seven countries, where more than 50 percent of the population lives
below the national poverty line, are the focus of an EBRD initiative that aims
to stimulate market activity by using a streamlined approach to financing more
and smaller projects, mobilizing more investment and encouraging ongoing
economic reform.
“Donors are clearly interested in the early transition countries and
understand the need to do more on agriculture, given the importance of the
agriculture sector to these countries’ economies,” said FAO Investment Centre
Director Charles Riemenschneider.
Riemenschneider cites the EBRD’s ETC Fund, which pools donor funds to make it
easier to match financing with projects, helping many qualify for EBRD loans
or equity investment. With financial support from the ETC Fund, FAO is working
with the EBRD’s Group for Small Business in two early transition countries –
the Kyrgyz Republic and Tajikistan – to review the state of financing to small
and medium-sized agricultural enterprises there.
“FAO is assessing the demand for credit in rural areas so that it can make
practical recommendations to the EBRD on how to reach rural clients through
existing partner banks,” said EBRD Banker Sabina Dziurman. “To do that, we
also want FAO to draw on past success stories, as well as past failures, of
the donor community.”
The World Bank, for instance, has an extended portfolio of rural finance
interventions in every ETC except Tajikistan. At the meeting, the World Bank
will present two of its projects, implemented in Moldova and the Kyrgyz
Republic, which have been particularly successful models for deepening
financial services in poor, predominantly agricultural economies.
EastAgri, a network of funding
institutions, including private banks, committed to improving their
agricultural and agribusiness investment portfolio in Central and Eastern
Europe through information sharing, has expanded its coverage to include early
transition countries, where it hopes to disseminate lessons learned in rural
credit, agriculture and agribusiness investment.
The network, initially launched by the EBRD and FAO, emphasizes on the need
for a demand-driven approach, where investment flows to commercially viable
ventures. As Sam Fankhauser, Director of Policy Studies and Sector Strategy at
EBRD’s Chief Economist Office, says: “Countries in transition often don’t have
the luxury to provide much social protection to their agricultural sector.
Investing in financially sustainable projects throughout the food chain is a
way to provide income to rural populations.”
The Berlin meeting is being organized by EastAgri, which is sponsored by FAO,
the EBRD, the World Bank and the Central European Initiative (CEI), a forum
for political, economic and cultural cooperation comprising 17 countries in
Central and Eastern Europe.
Representatives from international financing institutions, development
agencies, donor governments and the private sector, as well as from the
ministries of agriculture in a number of the countries concerned, are expected
to attend.
Greater coordination
Other topics of discussion include an examination of successful public-private
partnerships in rural finance and agricultural development throughout the
region, and the adjustments that western Balkan countries need to make to
integrate their agricultural markets into European Union markets.
For the western Balkans, discussion will focus on the type of support that
donors and funding institutions can provide pre-accession countries in the
region to facilitate this process, such as a proposed EBRD multidonor trust
fund for the western Balkans, similar to its ETC Fund.
According to Kaj Mortensen, who heads the EU’s programme to prepare the
agriculture sector and rural areas in candidate countries for EU membership,
the collaboration of partners like the World Bank and EBRD is an advantage to
the process.
“The World Bank’s project in Croatia is helping the country’s agriculture
sector ready itself for the challenges and benefits of accession,” said
Mortensen. “Not only will it strengthen Croatia’s capacity for absorbing EU
financial assistance and facilitate implementation of the EU Common
Agricultural and Rural Development Policy, it will also help strengthen
government institutions in areas that are key to improving access to EU
markets for Croatian food products.”
Participants at the meeting will also review issues limiting the development
of Ukraine’s agriculture sector, as well as current and planned interventions
by donors and international financing institutions with a view to achieving
greater coordination of assistance.
“There is a lot of interest from donors in Ukraine’s agriculture sector,” said
World Bank Lead Sector Economist Julian Lampietti. “The World Bank wants to
make sure that its new projects are aligned with the support being provided by
the EU and other donors in order to maximize the overall impact of all donor
activities in the country.”
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