United Nations

                                                            ECOSOC/6116
                                                                        29 June 2004

For World’s Poorest, UN Action Can Mean Difference Between Life and Death, Economic and Social Council Told, as Headquarters Session Opens

High-Level Segment Aims at Mobilizing Resources for Implementing 2001 Brussels Programme of Action for 50 Least Developed Countries

NEW YORK, 28 June (UN Headquarters) -- For the 700 million women, men and children in the least developed countries (LDCs), United Nations’ decisions -- and their follow-up -- could mean the difference between opportunity and poverty, peace and war, life and death, Deputy Secretary-General Louise Fréchette told the Economic and Social Council (ECOSOC), as it opened its substantive session this morning. 

Placing international development cooperation and achievement of real progress on the Millennium Development Goals at the top of the global agenda, she stressed that, for the international community, working to achieve those Goals constituted a vital part of “keeping its word” and advancing the ideals of the Organization’s Charter.  Therefore, while sustained economic growth remained a sine qua non for success, specific measures must be taken to ensure that the “green shoots of economic growth blossomed into real progress” towards the Goals and brought benefit and opportunity to the poor.

The four-week session started today with a high-level dialogue focusing on the current developments in the world economy and international economic cooperation, as well as development challenges confronting the world’s 50 poorest nations.  The event is part of a three-day high-level segment on the theme:  “Resources mobilization and enabling environment for poverty eradication in the context of the implementation of the Programme of Action for the Least Developed Countries for the Decade 2001-2010”.

Adopted in May 2001 in Brussels, Belgium, the Programme of Action, a set of key commitments for implementing the Millennium Development Goals, includes seven specific commitments made by the LDCs and their development partners, including mobilization of financial resources, as well as governance, trade and sustainable development.

In his keynote address, Mathieu Kérékou, President of Benin, said that only mobilization of financial resources would ensure the implementation of the Brussels Programme of Action.  The LDCs Group hoped that the thinking on the session’s theme would be profound and exhaustive and that special problems faced by the LDCs would be addressed.

Real political will had to back up professions of commitment, he said.  The results so far had not been encouraging.  Official development assistance (ODA) had not increased, as pledged, and support for exports had negatively impacted the LDCs in world markets.  Rare preferential treatment for LDCs remained underutilized and, despite praiseworthy efforts, the LDCs continued to bend under the crushing burden of debt, resulting in the weakening of social protection infrastructure, conflict and the continued ravage of the AIDS pandemic.

The 2015 deadline of reducing by half the number of people living in poverty was approaching rapidly, he added, and global action was needed, which would take into account not only the economic components of the situation, but also social, humanitarian and environmental considerations.  It was up to the developed countries to increase ODA, promote direct investment, reschedule debt and open markets to LDC goods.  It was up to the LDCs to achieve significant progress in the areas of good governance, respect for constitutional legality for combating corruption, decentralization, and the process of national development without discrimination on the basis of race, sex and religion. 

Participating in the morning discussion were heads of multilateral financial and trade institutions of the United Nations system, including Rubens Ricupero, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD); Juan Somavia, Director-General of the International Labour Organization (ILO); Ibrahim Gambari, Under-Secretary-General and Special Adviser on Africa; and representatives of the World Bank, the International Monetary fund (IMF) and the World Trade Organization (WTO).  Statements were also made by Ministers from Qatar (on behalf of the “Group of 77” developing countries and China) and Ireland (on behalf of the European Union), as well as representatives of Ecuador, the United States, El Salvador, Jamaica, Bangladesh and India, and the Commissioner for Development and Humanitarian Aid of the European Commission.

“If we can’t deliver to the people of less developed, landlocked and small island countries, which are most in need, what is left of other issues?” Mr. Somavia asked.  The international community was also falling short on the tremendous potential of “fair globalization” that would create opportunities for all.  To address those issues, “decent work as a development tool” must become a global priority.  Employment, sustainable livelihoods and income-generating opportunities, were the sustainable way out of poverty.  A fair globalization was the external enabling environment for development, and global governance needed a serious upgrade.  Follow-up was a priority.

Mr. Ricupero acknowledged that the goal of poverty eradication was daunting.  Given current trends, extreme poverty in LDCs would jump from 334 million people in 2000 to 471 million in 2015.  Domestic resource mobilization in the LDCs was problematic, given that, after subsistence consumption, only $0.15 per person per day was left for investment in capital formation, public investment and the running of vital services.  Thus, alternative sources of financing must be found, including through improved ODA, increased immigrant remittances, foreign direct investment, trade and debt relief.

Other participants noted, however, that the present improvement in the world economic situation created a favourable environment for developing countries.  Among the reassuring statistics presented to the Council was the expected 3.75 per cent gross world product growth in 2004, compared to 2.7 per cent in 2003.  More countries, including developing ones, would see greater growth in their per capita income in 2004 than in any year since 2000.  The most rapidly growing group of countries included economies in transition, and the two most populous countries, China and India, were emerging as engines of growth for the world economy as a whole. 

The favourable economic conditions should not lead to complacency, however, warned the Under-Secretary-General for Economic and Social Affairs, José Antonio Ocampo, who insisted that the economic recovery should be used to address current potential weaknesses at all levels, reducing global and domestic imbalances and private sector debt, in both firms and households.

“If we are to withstand short-term downturns, it is imperative that we take advantage of the opportunities offered by current conditions to tackle some of our problems and to build defences against future shocks”, he said.  The agenda for long-term action was broadly agreed:  the focus must be on the fight against poverty and the attainment of the Millennium Development Goals and decisions of the global conferences.  To reinforce the actions already taken by the majority of developing countries themselves, it was necessary, above all, to make further progress on the triad of aid, trade and debt.

Those issues and mobilization of financial resources were also the subject of an Investment Promotion Forum in the afternoon, whose participants elaborated on various aspects of the problem in five round tables, which followed an opening statement by the President of ECOSOC, Marjatta Rasi (Finland), and statements by Mr. Ocampo and the Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, Anwarul K. Chowdhury. The questions addressed in the afternoon included local private sector development, the role of microcredit, measures to attract foreign direct investment, the role of trade preferences for promoting investment in the LDCs, the role of partnerships in mobilizing resources, and investment in human settlement in the world’s poorest countries.

During the organizational part of today’s meeting, the Council adopted its agenda and programme of work and granted observer status to an intergovernmental organization -- the World Deserts Foundation.

The 2004 substantive session will continue with a coordination segment (1 to 7 July), an operational activities segment (7 to 12 July), a humanitarian segment (12 to 14 July), and a general segment (15 to 22 July).  The Council will conclude its work on Friday, 23 July, with action on all outstanding proposals.

The Council will continue its work at 10 a.m. tomorrow with a high-level general debate on resource mobilization and creation of an enabling environment for poverty eradication in the LDCs.

Background

The Economic and Social Council (ECOSOC) opened its 2004 substantive session this morning.  For background, see Press Release ECOSOC/6115 issued 24 June.

Opening Statements

Economic and Social Council President MARJATTA RASI (Finland), opening the session, said that over the years the Council had evolved into a forum for policy debate, bringing together policy makers to discuss social and economic issues of global concern.  Considering this year’s theme, in the context of the programme of action for the least developed countries, was timely, as the world was gearing up to review progress in the implementation of conferences and summits.

She highlighted the growing engagement of non-governmental organizations (NGOs), other civil society organizations and the private sector as key partners in the Council’s work.  A series of NGO meetings had been held around the world, making significant contributions to the Council’s deliberations on the high-level segment theme.  The ECOSOC had succeeded in bringing key actors together to promote its policy directives, leading to the establishment, for example, of the ITC Task Force.  The Council could play a catalytic role in generating resources in the least developed countries to achieve their development goals.

Due to increased cooperation between ECOSOC, the World Bank, the International Monetary Fund (IMF), the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD) and other bodies, the special high-level meeting had developed into a strategic platform for discussion of, among other things, the Millennium Development Goals, she said.  The Council had been able to increase intergovernmental contacts between the Bureau and the Bank and the Fund.  The annual high-level policy dialogue on the current development in international economic cooperation put the Council in a unique position to provide a global perspective on the latest developments on the global economic scene.

One of the Council’s major achievements was its increasing involvement in countries emerging from conflict, she added.  In the last two years, the Council had played a role in countries in need, including Burundi and Guinea-Bissau.  During the session, the Council would assess the groups that would determine the way forward in its involvement in African countries emerging from conflict.  The Council had the potential to develop its role in that regard.  The Council had brought many strands of United Nations activities together, and there were now greater linkages in its own work.  For the first time, a special event would be held to discuss the theme of “relief to development”.  Both the humanitarian and operational activities segment had taken on a significant role in coordinating the work of the United Nations system organizations.

The Council was still exploring ways to increase its impact on the United Nations system and the world at large, she said.  The ways in which the Council could be more effective in the Organization’s reform efforts was also being discussed.  She was committed to making ECOSOC a more effective forum, focusing on policy coherence and challenges of great import to large parts of humanity.

Deputy Secretary-General LOUISE FRÉCHETTE conveyed the Secretary-General’s satisfaction with the segment’s focus on the development challenges confronting the 50 least developed countries (LDCs).  If multilateralism were to be meaningful, she noted, international development cooperation must be at the top of the global agenda.  Moreover, few felt the importance of such cooperation more than the 700 million women, men and children in the LDCs, for whom United Nations’ decisions -- and their follow-up -- could mean the difference between opportunity and poverty, peace and war, life and death.

No issue on the United Nations’ agenda was as important to the world’s poor than achieving real progress on the Millennium Development Goals, she stressed.  For the international community as a whole, working to achieve the Millennium Development Goals constituted a vital part of keeping its word and advancing the ideals of the Organization’s Charter.  Therefore, while sustained economic growth remained a sine qua non for success, specific measures must be taken to ensure that the green shoots of economic growth blossomed into real progress towards the Goals and brought benefit and opportunity to the poor.  Yet, based on current trends, very few of the LDCs were likely to achieve the poverty reduction goals contained in the Brussels Programme of Action and the Millennium Declaration.

The severe poverty of the LDCs was not only the result, but also the cause, of economic stagnation, she added.  Thus, while poor States must spare no effort in strengthening the efficiency, transparency and accountability of their governance, to invest more heavily in health, education and basic infrastructure and to do everything possible to support home-grown entrepreneurship and attract foreign direct investment, their efforts would only bear fruit if matched by the efforts of their development partners.

The quantity and quality of overseas development assistance must be stepped up, she stated.  Rich countries could make no better investment than to honour the promise of .20 per cent of gross national product (GNP) in aid to LDCs.  And channelling more aid through national budgeting processes and ensuring the sustainability of aid flows over the long term would make the aid given much more effective.

Other areas for improvement included reducing the crippling debt burden of many poor countries, she continued.  Real progress had been made through the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, but should be speeded up and, in certain countries, topped up.  If the debts of Iraq could be forgiven, why not those of the poorest nations?  Moreover, giving with one hand would not work, as long as the world continued to take away with the other.  The quotas, subsidies and tariffs stunting growth in poor countries and stifling their inability to trade must be reduced or eliminated, and the Doha development agenda revitalized.

MATHIEU KEREKOU, President of Benin, said that as his country held the presidency of the coordinating bureau of the least developed countries, it was his duty to extend the recurrent message of hundreds of millions of women, children and men living in poverty.  He hoped that, with high-level voices, more understanding and sincerity in relationships between people and States would occur through the Council’s work.

He noted that when the Third United Nations Conference on the Least Developed Countries adopted the Programme of Action for 2001-2010, the international community had set the main objective of reducing by half by 2015 the number of people living in poverty.  It was essential that the international community envisage concrete action to help reverse and halt the marginalization of LDCs.

Real political will had to back up professions of commitment, he said.  The results so far had not been encouraging.  Official development assistance (ODA) had not increased, as pledged, and support for exports had negatively impacted the LDCs in world markets. Rare preferential treatment for LDCs remained underutilized and, despite praiseworthy efforts, the LDCs continued to bend under the crushing burden of debt, resulting in the weakening of social protection infrastructure, conflict and the continued ravage of the AIDS pandemic.

Only the mobilization of financial resources would ensure the establishment of the Brussels Programme of Action, he said.  The LDCs Group hoped that the thinking on the session’s theme would be profound and exhaustive.  Special problems faced by the LDCs must be identified.  The 2015 deadline was approaching rapidly.  A real reduction in the number of individuals living in poverty required global action that took into account not only economic components, but also social, humanitarian and environmental considerations.

Continuing, he said it was up to the developed countries to increase ODA, promote direct investment, reschedule debt and open markets to LDC goods.  It was up to the LDCs to achieve significant progress in the areas of good governance, respect for constitutional legality for combating corruption, decentralization, and the process of national development without discrimination on the basis of race, sex and religion.

He appealed for a world crusade against hunger, poverty and famine to bring about a better future for peoples whose destinies could not be separated from that of the developing countries.  “Long live international cooperation, long live international solidarity”, he said.

High-level Policy Dialogue

JOSE ANTONIO OCAMPO, Under-Secretary-General for Economic and Social Affairs, pointed out that the world economy was currently growing at its strongest pace for the past few years. The gross world product was expected to grow 3.75 per cent in 2004, compared to 2.7 per cent in 2003.  More countries, including developing ones, were expected to see more growth in their per capita income in 2004 than in any year since 2000.  The most rapidly growing group of countries included economies in transition, which continued to recoup the setbacks they had suffered in the 1990s.  The two most populous countries, China and India, were emerging as engines of growth for the world economy as a whole.  Part and parcel of the current recovery was a much improved international economic environment, particularly from the point of view of developing countries.

As the focus of the high-level ECOSOC this year was on the least developed countries, it was encouraging that the LDCs as a group had grown faster than other developing countries since 2000.  Though that averaged a significant diversity of experiences and few countries had been able to achieve the 7 per cent target rate of growth called for in Brussels, it showed that higher growth was possible for those countries.  Ironically, relative strength during recent years arose, in part, because of one of the LDCs’ disadvantages:  they had been partially insulated from the downturn by their limited integration into the world economy.  More recently, the buoyancy of commodity prices had turned another of their disadvantages, their heavy dependence on commodities, into a temporary asset.

Today’s favourable economic conditions should not lead to complacency, however, he continued.  An immediate challenge for policy makers worldwide was the need to sustain the present robust growth over the long run.  If they reacted to fears of overheating and removed policy stimuli too soon, they ran the risk of choking off the economic recovery.  If they acted too late, they faced the danger of sowing the seeds of exuberance and inflation.  It was also necessary to take into account the risks to the world economy posed by the recent surge in oil prices.

The past few years had reminded the international community that economic cycles had not disappeared, he said.  The strength to weather adverse shocks was built up during upturns, and that meant that current favourable conditions should be used to address current potential weaknesses at all levels -- from reducing the global external imbalances, to reducing domestic imbalances, to reducing private sector debt, in both firms and households.

“If we are to withstand short-term downturns, it is imperative that we take advantage of the opportunities offered by current conditions to tackle some of our problems and to build defences against future shocks”, he concluded.  The agenda for long-term action was broadly agreed:  the focus must be on the fight against poverty and the attainment of the Millennium Development Goals and decisions of the global conferences.  At present, action fell short of what was required.  To reinforce the actions already taken by the majority of developing countries themselves, it was necessary, above all, to make further progress on the triad of aid, trade and debt.  Those were all matters that would be addressed this morning.  He hoped today’s discussions would advance the consensus that already existed on those matters and generate additional political will to ensure that decisive action was taken in the near future.

RUBENS RICUPERO, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), acknowledged that the goal of poverty eradication was daunting, noting that the number of people living in extreme poverty in LDCs would jump from 334 million in 2000 to 471 million in 2015, given current trends, according to UNCTAD’s LDC Report.  Furthermore, domestic resource mobilization in LDCs was problematic in terms of combating extreme poverty.  After subsistence consumption in the LDCs, only $0.15 per person per day was left for investment in capital formation, public investment and the running of vital services, including schools, law and order and health.  Thus, alternative sources of resources must be found, including through improved ODA, increased immigrant remittances, foreign direct investment, trade and debt relief.

There were three indispensable pillars to bringing about more dynamic performances and eradicating poverty in LDCs, he continued.  The first consisted of adopting a development strategy capable of mainstreaming both trade and development within the poverty eradication effort and required balanced development based on agricultural growth, export-led industrialization of processed agricultural products, diversification through management of mineral resources and employment-intensive technologies. The second consisted of improving the international trade regime to include issues beyond the scope of the WTO and reducing international constraints on LDC development.  Among such issues, commodity dependence and its link with extreme poverty deserved special attention.

The third pillar, providing finance and technical support for the promotion of LDCs’ production and trade capacities, constituted the “dark and forgotten side of the moon”, he concluded, given the worrying trend in recent years to increasingly shift assistance to LDCs away from production and infrastructure to basic human and social needs.  Massive investment in enhancing the production and trade capacities of LDCs was needed.  Moreover, HIPC assistance could be used to develop the productive sectors and should ensure that further debt relief was consistent with the development of productive and trade capacities.

AUGUSTIN CARSTENS, Deputy Managing Director, International Monetary Fund (IMF), said the challenges of achieving the Goals and of mobilizing the resources were daunting.  With the current trends, most developing countries would fail to meet most of the Millennium Development Goals.  While the first Goal of halving the global rate of income poverty between 1990 and 2015 might be achieved at the global level, that largely reflected progress in the world’s two most populous countries, China and India.  In other countries, progress was more uneven.  Africa, in particular, was likely to fall well short.

Preventing shortfalls would require vigorous efforts by all parties, he said.  While the Fund’s projections indicated an accelerating recovery in the world economy, countries throughout the world still needed to take significant policy measures to make the recovery durable.  Such a favourable economic setting provided an excellent opportunity to lay the groundwork for durable growth and enhanced support for the Goals.  The necessary steps had to include resolution of fiscal imbalances, timely outcome of the Doha round, and increases in aid commitment.  In that regard, he feared that insufficient efforts were being made.

He said the IMF was fully committed to the Monterrey consensus, focusing on areas of competence and expertise, and establishing a framework for sound macroeconomic policies and institutions.  The Fund was also striving to improve its surveillance tools, policy advice, technical assistance and financial support.  The key operational framework for that effort was the Poverty Reduction Strategy Paper approach. Prepared by member countries through a participatory process, those Strategy Papers provided a framework for governments to assess what needed to be done to meet the Millennium Development Goals. They also provided a basis for identifying appropriate policies, assessing external financing needs, as well as monitoring and evaluating progress.

The international community’s focus should be to help them effectively implement their home-grown strategies, he said.  Central to that effort was an appropriate alignment between the Strategy Papers, the national budget framework and the low-incoming lending facility, the Poverty Reduction and Growth Facility (PRGF). The Fund was working to ensure the macroeconomic design of PRGF-supported programmes was in fact appropriate for sustained high levels of growth and poverty reduction.  The Fund was also helping countries to absorb most effectively the higher inflows of aid.  Increased aid flows presented a number of macroeconomic challenges.  Government spending plans had to take account of the potential volatility and unpredictability of aid.

The Fund was also encouraging countries to adopt the trade policies that were in their best interests, he said.  A new financing policy, the Trade Integration Mechanism (TIM) had been introduced to assist member countries in meeting any balance-of-payment shortfalls that might result from multilateral trade liberalization. Debt relief was yet another critical component of assistance to low-income countries.  Thirteen countries eligible for the IMF-World Bank HIPC Initiative had now had a permanent write-off of a substantial proportion of their debt to multilateral institutions, as well as bilateral creditors.  Fourteen more countries were receiving interim debt relief.

Long-term debt sustainability would be an important challenge in the period ahead, he said. The IMF and World Bank staff had developed a debt sustainability framework for low-income countries, which combined two elements, including a template for analysing debt dynamics and the development of indicative thresholds for debt-burden indicators that depended on the quality of the countries’ policies and institutions.  The IMF had come a long way in refining its role in low-income countries.  The Fund would now be devoting more resources to work on low-income countries, Africa in particular.

The successful conclusion of the negotiations on the Doha development round was key for all countries, he said, including the reduction of trade-distorting subsidies in agriculture.  The Fund was committed to contributing to the international community’s effort to move forward on all fronts.  There was no question that the agencies needed to cooperate in a more pragmatic fashion on promoting growth, investment and employment.  That cooperation must be rooted within the specific-country context.

IAN A. GOLDIN, Vice-President, External Affairs, Communications and United Nations Affairs, World Bank, said that the Bank had seriously committed to working with countries to pursue expanded engagement.  Looking at development through the lens of the least developed countries helped create an important road map for the Council’s work.  The seven principal commitments embedded in the Brussels Programme of Action remained critical, not only to the success of the least developed countries, but also to development as a whole.  Failing to assist the lowest income countries could lock some 500 million people into poverty, endanger the Millennium Development Goals, and trigger regional and global instability.

The Bank had worked to provide help to the poorest countries in all seven areas of Brussels, he said.  Its International Development Association (IDA) continued to provide low-income countries with long-term, no-interest loans and full grants for programmes to build the policies, institutions, infrastructure and human capital needed for equitable sustainable development.  The goal of the IDA was to reduce inequalities both across and within countries by allowing more people to participate in the mainstream economy.  In 2003, IDA commitments had totalled some $7.4 billion, and it had paid out or dispersed some $7 billion.

“We live in a complex, uneven global economy, with an unbalanced world with huge opportunities, but also missed opportunities”, he said.  The proportion of people living in extreme poverty -- on less than $1 a day -- in developing countries had dropped by almost half between 1981 and 2001, from some 40 per cent to 21 per cent of the global population.  While rapid economic growth in East and South Asia had pulled 500 million people out of poverty in those regions alone, the proportion of poor had grown or fallen only slightly in many countries of the other regions of the planet.  In sub-Saharan Africa since 1981, there had been a near doubling of the number of people living on less than $1 a day, from 164 million to 314 million; namely, 47 per cent of the region’s population.

Gross domestic product (GDP) per capita in all developing countries had risen by 30 per cent between 1981 and 2001, he said.  Dramatic progress against absolute poverty had been made by China, where GDP per capita had gone up five times since 1981 and the number of extremely poor fell from over 600 million to slightly more than 200 million, or from 64 per cent to 17 per cent.  In South Asia, a 5.5 per cent average annual GDP growth rate in the 1990s had helped reduce the proportion of extremely poor from 41 per cent in 1990 to 31 per cent.

In marked contrast to East and South Asia, poverty actually rose in sub-Saharan Africa, he said.  Since 1981, a 13 per cent contraction in GDP per capita in sub-Saharan Africa had resulted in a near-doubling of the number of people living on less than $1 a day, from 164 million to 314 million.  Growth by itself was no guarantee that poverty would be reduced quickly, as its benefits were often slow in reaching the poor.

Vigorous extra engines must be added to the package of comprehensive development policies and actions, he said.  Explicit social investments were needed to achieve the Millennium Development Goals.  Two pillars must be focused on, namely, creating an investment climate in developing countries, and social inclusion and investment in human beings.  Access to markets for sustained growth was another building block in a comprehensive view of development. To achieve the Millennium Development Goals, the poorest countries needed much more aid, in addition to ongoing and future debt reduction.

The future could either bring greater imbalance or a positive pragmatism to face reality once and for all, he said.  Balancing the world implied agreement that it was out of balance.  In the end, development was not only about economics, but about moral values.  It was not only about numbers, but political will.  Scaling up the fight against poverty implied that all must work politically to ensure that poverty alleviation was central on the global agenda.

KIPKORKIR ALY AZAD RANA, Deputy Director-General, World Trade Organization (WTO), said that the multilateral trading system embodied in the WTO was about more than trade liberalization.  It was about rules that provided for stability, predictability and security; about ensuring that governments kept their trade policies within agreed limits; and about helping poorer countries to reap the full benefits of international trade.  That system had a record of solid achievement.  Since 1948, tariffs in the industrialized world had been cut by more than 80 per cent in eight rounds of negotiation.  Nevertheless, many barriers to trade remained, which situation made the Doha negotiations necessary.

At present, he stated, a window of opportunity existed to achieve substantial reform in trade in agricultural products.  And in unlocking agriculture and finding a way forward on the priority issue of cotton, equally important opportunities in other areas related to market access for non-agricultural products and trade in services could be achieved.

Never before had issues of importance to developing and least developed countries been given such prominence, he concluded.  The link between trade and development had been well established, and the Doha round constituted the first set of multilateral trade negotiations in which the needs and interests of developing countries had been declared an official priority.  In agriculture, the prevailing view was that least developed countries should be exempted from commitments to reduce tariffs and given preferential market access.  In non-agricultural market access areas, least developed countries were not expected to apply any agreed reduction formula to their tariffs nor to take part in any sectoral approach.  Other actions benefiting least developed countries included last year’s agreement on trade-related aspects of intellectual property rights (TRIPS), as well as initiatives for capacity building and technical assistance.

JUAN SOMAVIA, Director-General of the International Labour Organization (ILO), said:  “If we can’t deliver to the people of less developed, landlocked and small island countries, which are most in need, what is left of other issues?  But we are also falling short on the tremendous potential of building a fair globalization that would create opportunities for all.”

Continuing, he focused on a recent report -- “the first based on dialogue among a group of 26 non-like-minded personalities with different interests and experiences” -- which had been prepared by the World Commission on the Social Dimension of Globalization, under the leadership of the Presidents of the United Republic of Tanzania and Finland. The document clearly stated that the benefits were not reaching the people and the present path was not politically sustainable.  However, the report was positive:  the point was not to stop globalization, but to manage and shape it within open economies and open societies.  And that could be done.

The report contained proposals for action across a broad front on inter-connected policies, he said.  Based on ongoing work in different organizations, the recommendations were feasible and realistic.  It was an action plan for achieving the common goal expressed in the Millennium Declaration “to ensure that globalization becomes a positive force for all the world’s people”.  The report also took to heart the Brussels Programme of Action, which called for “strong actions ... to help LDCs to integrate beneficially into the world economy, reversing their marginalization in global trade, finance, investment and technology flows”.

“Quite simply, the Brussels Programme of Action cannot be implemented unless we build a fair globalization”, he concluded.  The Commission pointed out that all efforts needed to “begin at home”.  It was necessary to reinforce local communities and markets where people lived and wanted to stay, if given an opportunity.  There could not be a successful globalization without a successful “localization”.  National policies mattered in all countries -- developed and developing.  Developing countries needed sufficient policy space to define their own sequencing and priorities for integration into the global economy.

There should also be focus on fairness, fair rules of the game and outcomes, he continued.  There was a feeling by many that globalization had developed in an ethical vacuum based on a “winner-take-all” mentality.  In that respect, the Commission’s report reinforced the LDC Declaration at UNCTAD XI, which had taken place in Brazil earlier this month.  Specifically, it recommended substantial reductions in unfair barriers to market access, a more consistent and coherent framework for foreign direct investment (FDI) and competition policy, a level-playing field complemented by fair rules for the cross-border movement of people, and respect for core labour standards.  Special and differential treatment not only in trade and finance, but beyond.

The third area was financing for development, he said.  Aside from higher ODA levels, the ommission encouraged consideration of new and additional sources of funding.  The report also stressed that incentives offered in the competition between developing countries to attract FDI drained much-needed tax revenues.  That could be reversed through balanced cooperative arrangements, possibly beginning at subregional and regional levels.  Also addressed in the report were the issues of migration, proper channelling of development assistance, employment and enterprise creation and policy coherence.

“If I have to boil down the policy message, it is this”, he said in conclusion.  “Decent work as a development tool must become a global priority.  Employment, sustainable livelihoods, income-generating opportunities are the sustainable way out of poverty.  A fair globalization is the external enabling environment for development.  And global governance needs a serious upgrade.  Follow-up is a priority.”

Interactive Dialogue

Opening the interactive dialogue, AHMAD BIN ABDULLAH AL-MAHMOUD, Minister of State for Foreign Affairs of Qatar, speaking on behalf of the “Group of 77” developing countries and China, acknowledged that some LDCs had achieved real economic growth, but noted that the large majority continued to lag behind.  Moreover, many of those that had achieved growth would not be able to sustain it if their existing structural weaknesses were sustained.  Furthermore, initiatives on such issues as informal assistance, external debt relief, trade and commodities had not achieved comprehensive attention.  Official development assistance continued to be the main source of financing for LDCs, yet the need for increased informal assistance was evident.

TOM KITT, Minister of State for Development Cooperation and Human Rights of Ireland, speaking on behalf of the European Union, agreed that in reviewing current global economic development, the international community must pay particular attention to issues facing LDCs and detailed several issues that the European Union felt should be added to the agenda.  Among others, the impact of HIV/AIDS on the development of LDCs must be discussed.  The relationship between the spread of HIV/AIDS and future economic development was not fully understood, nor was there any comprehensive strategy to deal with HIV/AIDS in high-prevalence LDCs.  There was also a need to factor HIV/AIDS levels into HIPC initiatives.  He also stressed that it was important to ensure the successful conclusion of the Doha round, while also ensuring that LDCs had all of the gain and none of the pain.

POUL NIELSON, Commissioner for Development and Humanitarian Aid of the European Commission, reviewed the contributions of European Union member States to the development of LDCs, noting increases in levels of ODA, and adding that Union member States would progressively increase their contributions of ODA to 0.42 per cent of gross national income (GNI) in 2006.  The Union had collectively pledged at Monterrey to move its aggregate effort from 0.39 per cent to 0.8 per cent of GNI by 2009 and had identified the year in which it would achieve the United Nations’ 0.7 per cent target.  Moreover, the Commission itself had been mandated to monitor systematically its members’ compliance with those commitments.

Mr. Nielson also noted, among other aspects of the Commission’s policy, that €500 million had recently been allocated for the establishment of a water facility aimed at improving initiatives related to access to water and sanitation.  A similar initiative for energy was envisaged next.  Furthermore, an African peace facility had been endowed with €250 million, as it was the Commission’s view that support for peacekeeping must constitute an integral part of fostering development.  The Commission intended to support African solutions to African problems by providing the financial muscle to back up political resolve with concrete acts.  He also noted that the “Everything but Arms” initiative had started to show some benefit in terms of increased exports to Europe, but that opening markets would not alone ensure development for the LDCs.

Additionally, the representative of Ecuador noted that, in spite of increased flows of ODA, the situation of LDCs threatened to worsen if sustained assistance, and alternative forms, thereof, were not ensured.

The representative of the United States explained that recent global economic growth resulted from the sharp economic recovery in the United States.  Noting that stronger global growth was in the interests of the United States, as well as the world, she said that the United States and other development partners had reaffirmed their commitments at the recent Group of Eight (G-8) summit in Sea Island, Georgia.  The United States had pledged to lead by example and would, therefore, increase its allocation of core development assistance by 50 per cent over the next two years, through the Millennium Account.  To be eligible for funding, States must root out corruption, respect human rights and invest in the rule of law.  They must invest in schools and open their markets, removing bureaucracy and barriers to entrepreneurship.

The G-8 countries had a special responsibility to take the lead on trade liberalization, she affirmed, as global reductions in barriers to trade could help deepen and broaden economic growth.  Moreover, the creation of an environment of economic freedom that allowed private business to flourish should be placed higher upon the international agenda, as poverty alleviation required a strong private sector.  Developing countries must create conditions under which entrepreneurs could thrive, providing transparent legal frameworks and lowering barriers to start-ups.  Another area for increased attention was the flow of remittances.  There had been agreement among G-8 members to reduce the barriers to sending money back to immigrants’ families.

The representative of El Salvador asked for more information on the impact of the high cost of oil on the economies of the LDCs and the middle-income countries.  The current situation was poignant and had differing degrees of influence.  While high oil costs had had a positive impact in some sectors, in others it had had a negative influence on growth and development.  The ECOSOC was an ideal forum for debating the problem.

The representative of Jamaica, who is also Council Vice-Chairman, welcomed the improvement in the global economic outlook.  While the improvement was almost universal, there was also evidence of an uneven pattern.  While the global recovery had been stimulated by macroeconomic policies in the major economies, the sustainability of those policies was threatened by inflation and fiscal imbalances.  Other sources of concern were the rising oil prices, geopolitical instability and international terrorism.  While there had been growth in the prices of some commodities, such as oil, the same did not hold for agricultural products.  Greater efforts were needed to introduce arrangements to allow developing countries to benefit from integration in the world economy.

He outlined specific measures for international economic cooperation, including greater access to markets; greater diversity in policy options; measures to strengthen those with special needs in global trade and financial arrangements; effective debt reduction; increased promotion of renewable energy sources; greater participation for developing countries in decision making; and liberalization in the international labour market to allow for grater mobility.

Bangladesh’s representative noted that the growth in LDCs had been raised by his country’s strong growth.  Many positive statistics among the LDCs were largely reduced if Bangladesh was removed.  Only when his country had taken control of its own destiny was it able to bring about a “quiet revolution in societal transformation”.  Civil society had been critical to the process, demonstrating the need for close civil society and government partnership.

He pointed to the need for a strong middle class, a vibrant civil society and the establishment of democratic and pluralist institutions.  Free press and poverty were incompatible.  Changes must be effected from within, and not imposed from without.  If it stayed on course, Bangladesh would achieve the Millennium Development Goals on time.  Special programmes were needed for failing States.  He suggested that ECOSOC consider a voluntary form of development policy review for willing countries.  His country’s experience showed that development remained possible.  There was room for hope and optimism.  The amelioration of the pains of some were the responsibilities of all, he said.

India’s representative addressed the need to link discussions on trade, money and finance with the social dimension, including employment, as well as recommendations for making globalization fair and equitable. The ILO’s report addressed the need for better governance and a greater voice for developing countries in international decision-making. He asked the ILO representative how intergovernmental bodies could proceed with the consideration of the recommendations in the report, including how intergovernmental consideration of the report could contribute to the 2005 event for the comprehensive review of the Millennium Development Goals.

IBRAHIM GAMBARI, Under-Secretary-General and Special Adviser on Africa, said that the “dark and forgotten side of the moon” issue, highlighted by Mr. Ricupero, would come through Africa’s renaissance, which was the vision behind the New Partnership for Africa’s Development (NEPAD).  Highlighting the successes and progress already achieved by NEPAD, he noted that, in terms of agriculture, and following the approval of the comprehensive agricultural agreement, the NEPAD secretariat had moved the African agenda further ahead.  The African Peer Review Mechanism, which provided guidance at both the political and economic levels, had been established with the adherence of 19 countries.  And, with the African Union in the lead, progress had been made in the peace and security sector.

There were four areas in which African States wished to see increased attention from the international community, he concluded.  There must be concrete action with regard to debt relief and commodity prices; increases in official development assistance (ODA) and foreign direct investment; coherence in regard to terms of trade with Africa’s development partners; and recognition of the need to support the special needs of countries emerging from conflict.

Responding to the foregoing statements, Mr. RICUPERO said that the case of oil constituted an extreme example of commodity price instability.  The example could not be approached without taking into account that there was no policy in place to defend commodity prices.  Those that could defend themselves -- like oil producers -- did so, while those that could not -- like coffee producers -- did not.  There was also the issue that the oil market was characterized by growing scarcity.

Mr. SOMAVIA, meanwhile, agreed that there were several different levels at which the review of the follow-up to the implementation of the Millennium Development Goals should be conducted.  They included, among others, at the national level and, at the international level, within different bodies of the United Nations, including the General Assembly.

Investment Promotion Forum

In her opening statement, MARJATTA RASI (Finland), President of ECOSOC, said that today’s meeting was a culmination of a number of preparatory events, which had brought together representatives of international organizations, governments, civil society, the private sector and other players.  Among the main elements highlighted in those deliberations was the need to promote both foreign and domestic investments and to increase the efforts to fight poverty in the least developed countries.

A more equitable growth in the world’s poorest countries was needed, she continued, and a drastic increase in responsible investments in poor countries’ economies would create a positive impact on their economic development, job creation and the eradication of poverty.  There was growing recognition that solutions could only be found if the private sector was involved.  The ECOSOC had played a leadership role in that area.  The United Nations system could play an important role in creating partnerships, and the Council was truly developing into a policy coordination forum in that respect.

In recent years, ECOSOC had responded to the need to emphasize the important role of business in development, she said.  In recent years, its discussions had led to such important initiatives as the launching of a high-level task force to facilitate development of information and communications technologies (ICT) for the purpose of development and the efforts to promote sustainable development of Africa.  In 2003, in the context of the high-level segment of ECOSOC, the private-public alliance on rural development had been created.

JOSE ANTONIO OCAMPO, Under-Secretary-General for Economic and Social Affairs, said that mobilizing adequate resources and putting them to use was the best means of reducing poverty.  Domestic and foreign investments were key to accelerating growth.  Unfortunately, as a result of their limitations, the LDCs faced the greatest obstacles in harnessing such investments.  In recent years, those countries had made sustainable efforts to create a favourable environment for attracting investment, and he believed that high rates of investment and growth were possible in such countries, despite constraints.

There were significant variations among the LDCs, however, he continued.  While some least developed countries had been able to achieve the 7 per cent growth envisioned in the Brussels Programme, others had lagged behind.  Moving all LDCs to the required benchmarks would require international efforts, for they were unable to face the challenges of accelerating growth and attracting investments alone.

The afternoon Forum was expected to bring together all partners, he said.  The complex issue needed to be looked upon from all angles.  The five round tables to be held this afternoon would be useful towards that end.  The partnerships forged at the Brussels Conference should be further developed.  Concerted action must follow dialogue among partners.  The business sector was crucial for giving the poor opportunities for access to markets, and there had been encouraging experiences to that effect.  Too many countries and people were still marginalized.  To meet the targets agreed upon, it was important to ensure action to eradicate poverty.  It was important to reverse present trends, and he encouraged everybody to join the discussion in the spirit of producing results.

ANWARUL K. CHOWDHURY, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, noted that, with the 2002 establishment of the Office of the High Representative, the United Nations had expressed its support for the concerns of LDCs, and had emphasized the need for greater attention and intensified action on the part of all stakeholders.  Therefore, it gave him immense satisfaction to see this year’s ECOSOC session devoting such high profile attention to LDCs.  The session’s outcome should generate new momentum to fulfil the international community’s commitments to those impoverished nations.

During the interactive part of the high-level segment, he stressed, possibilities for improving the investment climate and flow of resources to LDCs should be explored.  The five simultaneous round tables to be held this afternoon would tackle issues of particular interest to LDCs, including foreign and domestic investment, the role of microfinance and microcredit in private sector development, trade preferences in promoting investment, partnerships in mobilizing resources and investment in the urban services sector.  The basic objective of each was to reduce poverty in the LDCs.

As the host of the round table on the role of trade preferences in promoting investment, he noted that international trade could become an effective mechanism for poverty reduction in LDCs, including by taking an honest look at ways of assisting LDCs to take full advantage of existing trade opportunities.  The main questions to be answered related to how trade preferences could generate increases in the level of domestic investment, as well as how they could be used to attract foreign direct investment, enabling LDCs to take advantage of market access privileges accorded by their development partners.

Round Table A:  Local Private Sector Development, the Role of Microfinance/Microcredit

Hosted by the United Nations Capital Development Fund and the ILO, the round table was chaired by the President of Benin, Mathieu Kerekou, and mediated by the Under-Secretary-General for Economic and Social Affairs, Jose Antonio Ocampo.  Keynote speakers included high-level representatives of financial and international institutions, banks, governments and the media, as well as experts in the area of microfinance.

Participants in the interactive debate agreed that well functioning microfinance systems were vital for the prosperity of poor people, the growth of local private sectors and creation of vibrant national economies.  Such systems could reinforce domestic resources through mobilizing savings and building industry innovation.  Small enterprises often had difficulties in securing credit, and it was important to facilitate their access to financing institutions.

According to the background paper distributed in the room, it was estimated that, in 2003, over 750 million poor and low-income people had access to microfinance worldwide, but that was a small proportion of the total.  While the number of poor people worldwide who had benefited from microcredit had quadrupled between 1997 and 2001, microfinance institutions in West Africa reached only between 8 and 15 per cent of the working population.  In most LDCs, the penetration rates remained below 2 per cent.

It was pointed out that one should not underestimate the importance of microfinance, for even though the actual amounts of loans involved were small, in aggregate they could represent a significant portion of the assets and liabilities of the LDCs’ financial systems.  For example, in 2001, some 540,000 savings accounts in Rwanda, with an average account size of $57, had pulled almost $40 million into circulation.

According to a survey conducted in Uganda, in a 12-month period, people who had access to the formal sector saved three times as much ($386) as those who saved in the semi/informal sectors.  Speakers agreed that it was important to establish reliable deposit, lending and capital flow systems.  Savings and credit instruments needed to be secure and sustainable, suitable for the demands of poor people.  From a national resource strategy perspective, credit provided to the poor represented an investment in the productive capacities of local communities, facilitated inclusion of poor people in economic flows, supported the growth of local markets and extended economic opportunities through new jobs.

Government policies were recognized as key for efficient financial mediation.  Even minor policy adjustments could have an important effect on the development of people-oriented banking systems.  Interest-rate caps, tax incentives, bankruptcy laws and liberalization of the financial systems were mentioned as among the measures that could be implemented.  Several speakers noted the need to create regulatory frameworks for the promotion of microfinance, which could stop corruption and prevent loan sharks from exploiting the needs of the poor.

A speaker said that, in many cases, it was the lack of information that prevented banks from financing small enterprises, and it was necessary to facilitate the establishment of reliable information systems.  Among other constraints, participants noted, that microfinance operations were perceived as high risk and lacking profitability.  Also, possible recipients of credit lacked awareness of the available options.  It was pointed out that the establishment of small entrepreneurs’ networks and cooperatives could facilitate access to credit and the development of financial services.  Another aspect was the training of qualified banking personnel.

Round Table B:  Attracting foreign direct investment in the least developed countries

In his opening remarks, SAM KUTESA, Minister of State for Finance, Planning and Economic Development of Uganda, suggested that the panel focus on several issues, including what investment promotion agencies could do to attract more FDI, and what host countries, transnational corporations and the international community could do to increase the benefits of FDI for the LDCs.

The panel was moderated by KARL SAUVANT, Director, Division on Investment, Technology and Enterprise Development, UNCTAD.  Before opening the floor for discussion, he said it was important to discuss not only the issue of attracting FDI, but also of LDCs benefiting from it.   Least developed countries were receiving FDI.  The flow of such investment this year had been some $5 billion.  While that was not as high as bilateral ODA, it was not insignificant.

MARIA LIVANOS CATTAUI, Secretary-General of the International Chamber of Commerce, said it was important to consider how the risks of investing in LDCs could be mitigated.  The private sector had been working on the problem of risk mitigation.  Several mechanisms were being studied, including devaluation liquidity facilities, local currency swap facilities, targeting donor co-financing strategies and project pooling.  While there were huge opportunities, it was important to work more openly with the private sector.  There were risks not only in setting up projects, but with infrastructures once the projects were set up.

ABEL RWENDEIRE, Managing Director, United Nations Industrial Development Organization (UNIDO), said it was important to ensure that commercial risk was guaranteed.  It was also important for developed countries to look at infrastructure issues.  Developed countries could partner by using ODA for infrastructure projects.  Individual investment promotion agencies in Africa had not had the capacity to set into motion credit rating systems, which would be useful for encouraging joint ventures.

EDWARD M. GRAHAM, Senior Research Fellow, Institute for International Economics, asked for more information on the devaluation liquidity facility.  In Indonesia, for example, the problem had been with contracts that called for payment in dollars.  With the sudden crash of the Indonesian rupee, dollar inflows for electricity projects had not been there.  The issue of who would bear the risk had not been addressed.  The contracts had been meant to be riskless.  The question was what happened if a crisis prevented completion of a project and who would absorb the loss.  Part of the problem in Indonesia was that the transmission facilities had not been built.

Ms. CATTAUI added that the issue was not only project completion, but payment for services rendered.  Regarding the issue of the liquidity devaluation facility, she said the expertise and organization issues in that regard were staggering.  In the case of Brazil, the idea was to have credit enhancement agencies take the risk that the private sector was not able to take.  The focus needed to be on ways to bring the experts together.  There was a great deal of inefficiency in the relationship between donors and recipients.  The business world was often up against the fact that some national markets were too small to be of interest.  Many countries did not have good relations with their neighbours.  Good regional relations made a difference.  The current fade of excessive reliance on bilateral arrangements was, in the long run, harmful to long-term interests.  Broadening regional marketplaces and good neighbourly relations were needed for good rules-based trade that made long-term sense for developing countries.

IFTEKHAR AHMED CHOWDHURY (Bangladesh) said the greatest risk mitigation was providing the investor with an appropriate environment for investment.  Bangladesh had had decent growth, a stable society and a strong middle class for years.  Even then, it had not been able to attract sufficient resources.  It was often an issue of image.  This morning, he had suggested that ECOSOC carry out development policy reviews.  It could also undertake investment reviews.

DAVID HARCHARIK, Deputy Director General, Food and Agriculture Organization (FAO), said the world community had not done enough to implement ideas that had been around for a while.  Official development assistance had gone down, not up.  Much remained to be done on the development of norms, standards, treaties and agreements.  Foreign direct investment could have a significant impact on the promotion of economic growth and food security, not just as a source of capital, but also for the introduction of technologies and access to markets.  In promoting national economic growth, FDI also increased the incomes of the poor and promoted food security.  However, the benefits of economic growth were not always evenly distributed to all parts of society.

Round Table C:  The role of trade preferences for the least developed countries in promoting investment

Bilateral and multilateral agreements providing trade preferences to exports from developing countries had been part of the international trading system for a number of years, starting with the Generalized System of Trade Preferences (GSTP), noted a background paper released in conjunction with the round table on the role of trade preferences for LDCs in promoting investment, although restrictions on implementation of the GSTP had gradually eroded the scheme.

Recently, however, growing concern over the dire economic prospects for accelerated growth had led industrialized countries to adopt trade preference regimes granting more favourable treatment to products originating particularly from LDCs.  Among such programmes figured the United States’ “African Growth and Opportunity Act” (AGOA) and the European Union’s “Everything but Arms” initiative.

That state of affairs formed the basis for this afternoon’s discussion, moderated by ANWARUL K. CHOWDHURY, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, and co-chaired by PAULA LEHTOMAKI, Minister for Trade and Development of Finland, and JAKAYA M. KIKWETE, Minister for Foreign Affairs and International Cooperation of the United Republic of Tanzania.  Acting as lead discussants were representatives from the European Commission and the non-governmental organization “LDC Watch”, as well as an Assistant United States Trade Representative for Africa.

As noted by the Under-Secretary-General, in his opening remarks, recent progress on trade preferences included the international commitment to develop a more realistic GSTP by January 2006 and the extension of the United States’ AGOA through 2015 -- to coincide with the deadline for achieving the Millennium Development Goals.  Moreover, the launching of a GSTP, dealing with trade relationship between developing countries, had been set for next year.

However, the consensus seemed to be that, while substantial, the steps taken thus far to provide trade preferences as a means of promoting investment in LDCs had been insufficient.  Opening the discussion, Ms. LEHTOMAKI stressed that preferential market access was only one -- and perhaps not the primary -- basis for investment decisions.  To promote investment, there should also be some consideration of the role of the donor community and of the domestic trade and investment policies prevailing within LDCs.  Overall, all measures to promote investment should be carried out in a coherent manner, in both LDCs and throughout the international donor community.

The way forward, suggested Mr. KIKWETE, must include the easing of restrictive practices by developing countries and increasing flows of foreign direct investment, as well as promoting domestic investment in national development.  As trade had always been an important engine in the promotion of growth and those countries with a larger share of international trade were also developed countries, developing countries had remained on the margins of the current global trading system, unable to utilize that lever of growth.  Increasing developing countries’ share of trade would be an important aspect of increasing their economic growth, and must address the serious supply-side constraints they experienced.

Among the points stressed, it was agreed that augmenting investment levels was key to developing supply capacities for LDCs, whose development had been constrained by reliance on single commodity markets.  As one participant pointed out, developed countries’ subsidies on cotton, among other commodities, had made it virtually impossible for least developed States to export to developed markets.  Thus, countries such as Burkina Faso were left dependent upon foreign support, either through ODA or FDI, and remittances from immigrants abroad.

However, it was not just ensuring market access for developing countries that was important, but also the development of South-South trade and the GSTP scheme, participants said.  Moreover, LDCs should seriously consider participating in a WTO negotiation and focus on building governance and production capacity at home.  Further, both the European Union and the United States remained committed to working with LDCs to promote the growth of their economies.

Round Table D:  Unleashing entrepreneurship:  The role of partnership in mobilizing resources for least developed countries

The round table, hosted by the United Nations Fund for International Partnerships and the United Nations Development Programme (UNDP), and chaired by POUL NIELSEN, European Commissioner for Development and Humanitarian Aid, addressed issues of regional integration, ensuring an attractive environment for local and foreign investments, necessity of growth of per capita income in order to achieve the Millennium Development Goals, the potential of the private sector in development, and institutional support for entrepreneurs.

Panellists, or “lead discussants”, moderated by MARK MALLOCH BROWN, UNDP Administrator, included CARLOS MARGARINOS, Director-General, UNIDO; CHARLENE LEA, Chief Executive Officer of the Housing Financing Corporation, South Africa; ANDREW KWAME PIANIM, Chief Executive Officer, New World Investment LTD, Ghana; BRUCE SHEARER, President, The Synergos Institute; and FREDERICK S. TIPSON, Director, International Trade and Development, Microsoft Corporation. 

According to a background paper distributed in the room, harnessing private investment towards the achievement of the Millennium Development Goals was critical.  The private sector could alleviate poverty by contributing to economic growth, job creation and poor people’s income, and could provide a broad range of products and services at lower prices.  It identified a “bottom of the pyramid” market of 4 billion consumers in the world who earned less that $1,500 a year.  Governments could act as facilitators of private sector development and avoid actions that impeded it.

Noting that, after 50 years of development policies, only now the potential of the private sector was being recognized, panellists urged strong growth of the local private sector, especially in Africa.  That continent was rich in natural resources and a big producer of commodities.  However, those products did not have an impact on the growth of the economy and were dependent on the global economy.  In order to grow a domestic economy, low inflation outcomes had to be created.  It was also important that development partners limit the burden put on the administrative and implementation capacities of their developing partners.

It was also important that entrepreneurs operate in an environment that made it easier to stay afloat and prosper.  Successful businesses must be buoyed by an institutional support system and not be hampered by delays and costs.  Nobody could function without effective partnerships, but effective functioning of partnerships depended on networks.  A next generation of software should bring partners together, the representative of Microsoft said.

Corporations today were interested in partnerships because they needed a better world to operate in, another panellist noted, otherwise the capitalist system would not survive.  There was an increasing interest in the corporate sector, out of self-interest, in improving human and business interests.  Corporations should be used for what they did best:  management skills; and research and development.  Businesses nowadays were often satisfied to break even in the “bottom” part of the market, while making money in the middle-income sector.

An example of an innovative partnership approach to housing financing for low-income people was given by Ms. Lea, CEO of the Housing Financing Corporation in South Africa.  As HIV/AIDS was one of the biggest problems in her country, and lenders were not willing to finance housing for low-income HIV-infected people, her corporation underwrote the risk of lenders for default, and ensured access to appropriate treatment for HIV/AIDS, so that infected people got back to health in order to earn money.  The Corporation was a partnership that cut across geographic boundaries, including the public, private and philanthropic sector.

Participating in the discussion, IBRAHIM GAMBARI, Under-Secretary-General and Special Adviser on Africa, pointed out that supply side constraints had to be addressed in order to unleash entrepreneurship in Africa.  Infrastructure was one of the main constraints.  Many African companies, if given the right support, could compete with European companies in road building, for instance, but lacked capital and marketing skills.  At the national level, private/public partnerships were important, but land reform, in order to register and transfer land, was needed, because land as collateral was important for raising capital.  He also noted that the climate for domestic investment had to be improved, as a major part of private African wealth was held outside of the continent.

Round Table E:  Investment in urban water, sanitation and sustainable human settlements

With many of the world’s poorest countries and regions in real danger of missing critical near-term development targets related to water -- chiefly the 2015 Goal of halving the proportion of people without access to sanitation and drinking water -- the Council, in a round table organized by the United Nations Human Settlements Programme (UN-Habitat), discussed strategies for boosting investment in urban water, sanitation and sustainable human settlements.

Opening the discussion, the UN-Habitat’s Executive Director, Anna Tibaijuka, recalled that just two months ago, the United Nations Commission on Sustainable Development had used its twelfth session to spotlight the dire situation.  With 900 million people still living in slums, more than one third of the world’s population still lacked access to improved sanitation and one sixth to improved drinking water.

At that time, she had warned that the struggle to achieve the Millennium Goals would be waged in human settlements -- in cities, towns and villages -- a point she strongly reiterated today, stressing that the Goals could only be achieved in the agreed time frame, through, among other ways, high-level commitment and strengthened governance at all levels, and substantial efforts at mobilizing and effectively using resources.  She urged the panel to share their views, as well as good practices and innovative approaches, that would particularly help the LDCs.

The participants included, MARIA MUTAGAMBA, Minister for Water, Lands and Environment, Uganda; BENJAMIN FOURNIER ESPINOSA, Minster of Water Management, Public Works and Infrastructure for Development, Mexico; ALOUNKEO KITTIKHOUN (Lao People's Democratic Republic); BILQIS A. HAQUE, Chairperson, Environment Planning and Research Centre, Dhaka, Bangladesh; and ALAIN MATHYS, Suez Environment, Paris.

SHEKOU M. SESAY, Minister for Presidential and Public Affairs, Office of the President of Sierra Leone, who chaired the discussion, said that so far, few LDCs had succeeded in prioritizing and integrating action on water, sanitation and human settlements through their national strategies.  There was also growing recognition that, even with the provision of greater budgetary allocation, the States could not do it alone.  State support must be complemented by local action to achieve progress on the ground.

He was also seriously concerned that, at the international level, faced with competing priorities, donors were investing leas and less in water, sanitation and housing per capita in many developing countries.  The Millennium Development Goals clearly called for policy changes in the rich countries for aid, debt, trade and technology transfer, he stressed.

The panellists, who focused on their regional experiences, stressed the need to attract outside investors, generate demand for good water and sanitation, promote equity -- in access and use -- and to make local communities feel that they were a part of the process.  One speaker from a landlocked country said that when his government looked at water management and sanitation strategies it had to focus on, among other things, the political situation, infrastructure, and administrative practices of surrounding, water transit countries.  A speaker from a developed nation agreed that rich governments were perhaps not paying enough attention to water and sanitation issues.  His government, which had begun to shift its focus to those sectors, had tried to fashion itself as a “donor in solidarity” rather than a “donor of charity”.

All the speakers agreed that providing clean, safe water was the basic necessity around which achieving the other Millennium Development Goals revolved.  A particular case was made for Africa, where many young girls had, in effect, “traded” their educations for water.  It had been estimated that some spent up to six hours a day fetching the precious, scarce resource.  The speakers also believed that sustainable human settlements development cut across the whole spectrum of social, economic and environmental challenges that were fundamentally related to sustainable development and poverty eradication.

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