Mr. Olav Kjørven, State Secretary, Ministry of Foreign Affairs, Norway

Future challenges in combating poverty

Keynote address, Norwegian Church Aid, Joint Roundtable Conference, 19 May 2003

Ladies and gentlemen,

I am very grateful to the Norwegian Church Aid (NCA) and to Dan Church Aid for the opportunity to speak to this distinguished gathering on a very important topic at a crucial time. I commend you for organising a joint roundtable with your local partners. This is development co-operation and coordination in practical terms. I also commend you for including your local partners already at the beginning of a process which will result in a new strategic plan for the NCA. I welcome the opportunity to present my Government’s policy on poverty eradication in relation to this process, and to discuss the future challenges of governments and civil society alike in our joint efforts to combat poverty.

The Millennium Development Goals

Poverty is an old phenomenon. NCA and DCA are today continuing a line of work that started with the founder of the church, a poor carpenter’s son some 2000 years ago and even. Even the prophets before him. The chasm between rich and poor is the single most important challenge of our time. Some simple facts illustrate this chasm all too clearly:

- 1.2 billion people live on less than a dollar a day.

- The richest 1 per cent of the world population earns as much per year as the poorest 57 per cent.

- The proportion of people living in extreme poverty decreased from 29 per cent in 1990 to 23 per cent in 1999. However, during the same period the number of people living in extreme poverty in Africa south of Sahara increased from 242 million to 300 million.

- At the current rate of progress it will take 130 years to eradicate hunger in the world.

But in spite of these deplorable facts, the situation is not entirely bleak. A common global understanding of the gravity of the situation has finally been achieved, in the form of the Millennium Development Goals (MDGs).

The MDGs state that, by 2015, the proportion of people living in extreme poverty and hunger and the proportion lacking clean drinking water must be halved. The ratio of children dying before the age of five must be reduced by two-thirds. The ratio of deaths among women giving birth must be reduced by 75 per cent. The spread of HIV/AIDS must be reversed. All children, girls as well as boys, must be offered primary education. We shall promote gender equality, empower women and ensure environmental sustainability. We shall develop an open, rule-based, predictable, non-discriminatory trading and financial system. And we shall develop a global partnership for development.

We now have a concrete plan outlining how to fight poverty. The MDGs have placed the interests of the poor and underprivileged at the top of the international political agenda. Heads of state, including the G8 leaders, cite them frequently, and agree that poverty is the greatest scourge of our time. They promise to combat it by co-operation and by financial assistance. This growing conceptual agreement, understanding and concern, the emerging consensus and political awareness constitute a major breakthrough in international politics. The next step is a shared commitment to implementation on the ground.

(Development as freedom)

What is Development about? We know development is about basic needs, growth, equality: But I would like to bring to your attention an other way of seeing development; development is, in its essence, about freedom. About expanding people’s freedom. We celebrated 17th May Saturday - this must be a pertinent time to dwell for a second on the idea of development as freedom.

Development at freedom

What is development about? One of the most influential development thinkers of today, the Nobel laureate dr. Amartya Sen, argues that economic growth is only one of many factors involved in reducing poverty and improving well being. In his view, development is the removal of "various types of unfreedoms that leave people little choice and little opportunity to exercise their reasoned agency, ." - - or to realize and enjoy their inherent capabilities.

Sen’s interest in development economics was raised early on, in the famine of Bengal in 1943. Findings on the food-situation at that time lead him on to relating development to entitlement and democracy; There was no less food available in the famine year of 1943 than in the non-famine year of 1941 - the difference was the stagnating wages to labourers as prices rose in the war-time boom. So, what had happened, argues Sen, is that labourers had suffered a reduction in their ability to command power over food.

Thus the thesis: "Starvation is the characteristic of some people not having enough food to eat. It is not the characteristic of there being not enough food to eat."

Later on, in his comparison of the development of India and China, Sen compared food security in China and India. Although China was ahead of India in most conventional development indicators, such as life expectancy and literacy, China suffered a disastrous famine between 1958 and 1962 (the great leap forward). There was no free press, no alternative political thinking. Sen’s conclusion is that such a catastrophe could not have happened in democratic India- with free press, universal suffrage and more soon room for autonomous economic behaviour.

Why do I dwell on this? Because we need to see our development agenda in the wider political context. What we know about development now has been influenced by a number of successes and failures. When we now embark on the road to a new development paradigm - which I believe we are - the rights- and democracy argument is a vital prerequisite for understanding the overall challenge we face. It is multifaceted - it is complex - but there are some guiding principles to remember.

Development must be about expanding peoples’ freedom, - the freedom to live a life that each and every one of us has reason to value. What’s for sure: It cannot be about gross domestic product, as such. Certainly, sensible economic policy and physical investments have their central place. The same is definitely true for investment in education and health. But equally important are political voice, participation in decision-making, opportunities for engaging in open, public debate, protection and equality under the law and the opportunity to take economic initiatives – to own, buy and sell assets - as individual and collective entities. Freedom has intrinsic values. As human beings we have certain inalienable rights, human rights. But freedom also has instrumental functions.

Amartya Sen has documented how, for instance, freedom of expression can bring about social changes, such as getting more girls to attend school. Or, how improved respect for civil rights can spur increased private economic activity and thus economic growth.

Freedom is dynamic. When people are literally at free, energy is released. Things start to happen. In my view there is an interesting corollary from this perspective of the Amartya Sen to the works of his Peruvian colleague Hernando de Soto. De Soto argues that the poor do possess assets, but the problem is that the assets of the poor are not formally recognized. Houses, land, unincorporated businesses in their possession are not adequately documented. Therefore these assets cannot readily be turned into productive capital. Poor people have great difficulty accessing credit or exercising other opportunities and benefits associated with ownership. Hence, the right to act as free economic actors is not fulfilled. This largely overlooked issue deserves much more attention, in my view. We are talking about a phenomenon of gargantuan-enormous proportions. Some 80% of people in development countries live and work outside the formal economy. Without formal control of their assets. Their capital is dead. It is real - trillions of dollars. But it needs to be brought to life. We are now discussing with de Sotos Institute in Lima possibilities for co-operation on this, exciting new development agenda. In a sense it is structural adjustment, but in a very different form. It is not about macro economy. It is about wholesale legal reform. It is about empowerment of the poor. And guess what? The agenda is being driven by government leaders in the south.

Now - the challenges ahead:

(Five fronts)

In order to reach the MDGs and win the war on poverty, changes must be made and resources mobilised:

Firstly, international framework conditions for debt reduction, trade and investments must be improved and made more supportive of the MDGs. We must ensure consistency and coherence between the goals the international community has set for itself and the framework that same community is putting in place to achieve them. In the long run fair international framework conditions are crucial for ensuring sustainable development and freedom from poverty.

This has implications for the UN, the World Bank and the rules of the game in international trade. The importance of trade is its potential to increase welfare. We emphasise trade and aid, and even aid for trade. We must make global trade work for people. Globalisation must be inclusive. And we must intensify our national efforts to increase trade with countries in the South. I believe we need a renewed dialogue between governments and the civil society on how to improve international framework conditions for debt reduction, trade and investments. Permit me to say so - in my view some NGOs have a rather simplistic negative view about the value of trade for development.

Secondly, the poor countries themselves need to assign priorities, draw up strategies, invest in human resources and implement poverty-oriented policies. They need a national agenda for social inclusion and empowerment. I would argue that this must encompass the formalisation of property rights. Good governance, democracy and human rights must be promoted in order to combat poverty and make development sustainable. This is precisely the point of Amartya Sen. These are also preconditions to attract investments and to make development assistance constructive. It is a fact that development assistance is most efficient in countries with better governance. This is now more widely understood than before. And some of the brightest thinkers on the subject are indeed from the south (Sen, de Soto).

Thirdly, official development assistance (ODA) should be increased considerably. Resources must be reallocated for constructive purposes. UN statistics show that in 2002 the world’s total military spending amounted to USD 850 billion. The total development co-operation assistance in 2002 amounted to USD 50 billion. We need another USD 50 billion per year to be able to reach the MDGs. In this context I am convinced that we need to carefully scrutinise how alternative use of at least a part of the military spending could help promote poverty reduction and peace. In addition to increasing the quantity of assistance, we need to improve the quality. We need to get more poverty reduction out of every dollar or krone. To achieve this, we must improve our own ability to deliver assistance effectively and efficiently. We need to focus on donor accountability. In other words, we need more and better aid, to put it bluntly.

The Norwegian government has pledged to increase its development assistance to 1 per cent of GNI by 2005. The budget for 2003 shows that we are moving towards this goal. But as a whole, the OECD countries are performing rather poorly, despite some gains this year, after a decade of stagnation. We encourage all donor governments to firmly commit themselves to reach the three-decade old UN official development assistance target of 0.7 per cent of GNI.

Fourthly, the private sector and civil society must be mobilised for the achievement of the MDGs. There is a lot of unexploited potential in these sectors. Hernando de Soto has indicated the way in the area of property. There are other agendas as well. Entrepreneurs and agents of change must be given better conditions. NGOs and the media must be strengthened so that they can fulfil their roles. This includes, for the NGOs, service delivery and advocacy, including the "watchdog" function. I will return to this issue in a little while.

Fifthly, we must prevent violent conflicts and ensure peace, - durable and sustainable peace. Peace is the major precondition for development. Without peace and stability, our fight against poverty is doomed to fail. Without peace the MDGs will remain just that – optimistic goals, as opposed to a new and better reality for the most deprived. Yet, peace and human security remain an elusive proposition for far too many people.

Peace is often the subject of intervention by politicians essentially engaged in foreign relations - not so often by us in the development field. But given the sheer magnitude of negative effects from conflict on development - I will spend some moments on the topic.

Some 40 countries are currently experiencing armed conflicts. Others are perched precariously on the verge of conflict, and still others are in early stages of post-conflict reconstruction.

Mass violence is usually a result of deliberate political decisions by leaders. Internal conflicts revolve around relations of power. They are often based on a perception of gross injustice or violations of rights.

Last week, the Word Bank released a study of 52 civil wars and reconstruction processes. Of the main findings, I would like to turn your attention to the thesis that rather than ethnic conflict, it is often poverty and the struggle over natural resources that are the main causes of civil conflict around the world. Poor countries are by far the most vulnerable in terms of falling into civil strife and large scale violence. This is especially so if they depend on mineral resources such as oil, diamonds, gold, etc. As Eva Joly points out, there is a direct link between economic crime in OECD countries and many such conflicts. It is an ugly spectacle of resource exploitation, arms, trade, wars being fought and money laundering on a grand scale. Well, this is quite a strong argument in favour of stepping up the fight against corruption and initiatives to obtain more transparency into the financial flows of companies dealing in these resources. This is a key recommendation of the study.

In addition to helping prevent conflicts, the international community can assist in conflict resolution or, as I prefer to call it, peacemaking. Norway has had the honour to be invited by the parties concerned to facilitate a number of peacemaking processes.

But getting the parties to the negotiating table and into a situation where they dare to opt for peace is only one part of the story. The less acclaimed, but certainly not less important, part is what must be done to consolidate – or build – peace by addressing social and economic development as well as political and security issues.

The responsibility for peace-building rests with the parties to the conflict, but the international community can help build the necessary competence, capacity, institutions and processes for non-violet conflict resolution.

Peace-building includes reconciliation, good governance, democratic development and respect for human rights. A vibrant civil society must be nurtured. Refugees and internally displaced persons must be repatriated and reintegrated. Mines must be cleared and light weapons must be controlled. Ex-combatants must be disarmed, demobilised and reintegrated. Security sector reform may be necessary. The issue of legal action and truth commission must be addressed. Efforts to build peace must also include long-term measures to promote high-quality and accessible education and health services. And it must include processes and measures to stimulate productive sector development. A secure legal framework for poor entrepreneurs is certainly a key part of this.

The elements of peace-building are like the colours of a pallet: they can be mixed in innumerable ways. The mix will vary depending on the context, but in most contexts practically every element has to be addressed in one way or another.

Peace-building inevitably concerns development, but it differs from conventional development to the extent that it is explicitly guided and motivated by a primary commitment to the prevention, avoidance and resolution of armed conflict, and the maintenance of sustainable peace.

I have noticed a tendency to equate post-conflict situations and transitional assistance. We need to realise that peace-building normally is a long term effort. We must be impatient for results, but patiently involved during the time it takes to reach the goals we have set for our involvement in combating poverty and promoting peace. The World Bank study I quoted above, clearly points to some valuable conclusions about timing of the inflow of assistance from abroad - we need to take a closer look at these.

New paradigm in development co-operation?

In the past years we have witnessed a process of changes in the way we look at development co-operation which in my opinion amounts to a process towards a change of paradigm. There is a marked recognition of the importance of development co-operation. This is no longer a marginal issue for the specifically interested. Development co-operation is interlinked with security policy, political dialogue, trade and investments.

Key elements of the new paradigm are:

- We are moving from donor – recipient aid to development co-operation between partners.

- National ownership and international coordination are fundamental parts of a joint platform for operational involvement.

- Strategic frameworks, such as PRSPs or other relevant planning documents shall form the basis for involvement. We no longer need one strategy for every donor. But we must be careful not to lose critical voices.

- Mutual accountability can no longer remain a theoretical concept. We need to focus more on good donor practices and donor accountability in order to match the accountability we so readily request from our partners.

- Donors must harmonise their procedures in order to ease the administrative burden of our partners.

- Division of roles and responsibilities within a joint framework in accordance with comparative advantages must become a reality.

- We gradually move from projects to programmes, basket funding and budget support.

- Policy dialogue, not politicisation of assistance, but dialogue on democracy, good governance and human rights is not only necessary, but also more legitimate than before. We are not neutral on these issues.

- We witness an increasing recognition of the importance of closer co-ordination between bilateral and multilateral assistance, and between humanitarian, transitional and long-term development assistance. This is now usually reflected in the UN administrative set-up in partner countries.

- We also witness an increasing emphasis on multilateral funds as a mechanism to strengthen the role of national authorities in decision-making as regards development co-operation assistance. The Afghanistan Reconstruction Trust Fund is one example of this.

- Last, but not least, we see a growing tendency to view development as the process of expanding people’s choices, people’s freedom and respect for human rights.

Development is in this sense far more political than in the past.

Although new policies and approaches are emerging, we stil have discussions - view differ. We still experience a lot of flagswaving - thinking - many actors have too much attention on the possibility of putting their own flag on top of an initiative or a project . We still see proposals from major actors who have not moved away from the single-project approach for important sectors. There is most certainly a rather useful discussion about financing for development - although some times I believe that some painful but necessary simple decisions might do the trick. Discussion and critical voices is necessary - but my main argument remains - we are moving towards a new development paradigm. (To put the money where the mouth is, however, is another challenge.) But, we still have a long way to go in order to bridge the gap between rhetoric in international forums and realities on the ground.

The Norwegian Action Plan

In march 2002 the Norwegian government launched an Action Plan for Combating Poverty in the South towards 2015. The plan takes the MDGs as it s main point of departure and outlines how Norway will contribute to their achievement. The action plan reflects the new paradigm in development co-operation and tries to take a comprehensive and coherent approach.

Civil society – roles and challenges

Let me now return to the roles of the civil society and the particular challenges facing NGOs in efforts to combat poverty.

The emerging development co-operation paradigm with its emphasis on national ownership and coordination of plans and resources, presents new challenges not only to governments, but to NGOs as well. These challenges cannot be ignored.

The Norwegian government gives generous financial support to and through civil society organisations in Norway and in developing countries. Funds are provided by the Ministry of Foreign Affairs (mainly humanitarian assistance) and NORAD (development co-operation). We have flexible contractual arrangements, close contact and fruitful co-operation. In addition to the service delivery and advocacy roles in the South, Norwegian NGOs are also involved in, and play a crucial part, in development education. The advocacy role of NGOs is an invaluable element in order to mobilize support in Norway for a high level of ODA and a progressive development co-operation policy. That we sometimes differ in opinion is natural and valuable - and that ideal demands go further than the Government can deliver from time to time - likewise.

We appreciate that the NCA and other NGOs have decided to focus on solidarity with the poor and present challenges to the rich and powerful. We fully support the rights based approach adopted by most NGOs and the implementation of activities through local partners. In fact, here you are on the cutting edge. Norwegian NGOs, and in particular church based NGOs, have played and will continue to play a very important role in peace-making processes and peace-building efforts. We have close co-operation between the government and NGOs in Norway, and we can relatively easily play complementary roles. We do that with the NCA in Guatemala, Kosovo, Mali, Sudan, Ethiopia and Eritrea. One mutual challenge is to improve our capacity to help prevent violent conflicts, not only to deal with them once they have broken out or have ended. The faith based organisations can be particularly helpful in efforts to make religion a tool for justice and peace rather than a justification for violence. Religion should be made part of the solution rather than part of the problem.

The NCA , and I am sure DCA, is involved in many countries that are on the verge of conflict, in a conflict or in a post conflict situation. It is important to ensure that all interventions are peace and conflict sensitive in conflict prone societies. As you have understood from the discussions about conflict prevention above, we need to look closer into the issue of peace and conflict impact assessment. This is an issue which has been largely ignored until now.

The NCA has considerable operational experience, long-term presence in many countries and important contacts, competence and capacity. The knowledge and trust that have been built over the years are important elements in the future endeavours to combat poverty and promote peace. Many of your local partners have well established structures and broad support which makes it possible to mobilise civil society. This is absolutely key in order to really succeed in development and peace building. We must not measure success based on numbers and capacities at head quarters, but in terms of reach, work, results in the field. Added to this is the vertical network on the national and international levels which facilitates policy dialogue and influence.

One challenge is for NGOs to adapt projects and programmes to national poverty reduction strategies (PRSPs) or other relevant planning documents and national coordination mechanisms. NGOs must be part of the dialogue about which combination of actors and channels is optimal in a given context. How can actors complement each other? We all need to realise that there is no need for everyone to do everything everywhere! Far too often have we witnessed that too many organisations, with their own administrations, strategies, plans, reporting requirements and ad hoc projects enter the scene with ensuing detrimental distortions on employment, salaries and prices, and with less than satisfactory results for the poor they want to help. It is necessary to be more focused on selected countries and specialise in a manageable number of thematic areas, such as the NCA already has done with the focus on HIV/AIDS, water and violence. If so, the number of minor projects will decrease and participation in larger programmes may become more attainable, maybe in fewer countries.

In order not to overburden fragile administrative capacities, it is necessary to create appropriate coordinating mechanisms. And recipient countries are often overburdened by demands - in Tanzania, the finance minister one year had to issue 10 000 reports. Our embassies have a special responsibility to maintain a continuous and open dialogue with NGOs receiving funds from Norway.

NGOs can help promote the voice of the poor in a critical and realistic approach to PRSP processes. Civil society partners in the South, quite rightly, question the quality of PRSPs and how inclusive the PRSP processes are. Keep up the pressure!.

Norwegian NGOs mainly work through local partners. This is probably far more effective and far less expensive than the former mode of operation with large numbers of expatriates involved.

Institutional co-operation between NGOs in the North and South is an important mechanism for nurturing a vibrant civil society in the South. In addition, we also maintain the opportunity to channel funds directly from our embassies to local NGOs that are considered to be sufficiently mature to be implementing agencies on their own.

NGOs involved in service delivery face new challenges as a result of privatisation and commercialisation of basic services. I understand that this issue will be dealt with on Wednesday so I will not dwell on it now. I only want to emphasise that basic services must be expanded to reach poor populations, second, they should maintain a satisfactory standard and, third, be economically affordable to the poor.

NGOs face the demands for specialisation and rationalism. Many of them have succeeded to a considerable extent, such as the NCA. And they face the challenges of PRSPs, coordination and macro policy programmes as opposed to micro level projects.

There are certain dilemmas here. Adaptation to these expectations may turn NGOs into mini NORADs. NGOs (like the rest of us?) face largely contradicting demands. They are also expected to define their unique characteristics, ideology and value base which distinguish them from others and form the rationale for their existence. I fully understand that this is a formidable challenge to which there is no easy answer.

Part of the new development co-operation paradigm is an increasing emphasis on multilateral financing mechanisms, such as in Afghanistan and Sri Lanka. The idea is that multilateral funds will strengthen the role of the national government in the partner country, enable them to make decisions about priorities, coordinate donors and help (re)build the state, in particular in post conflict situations. Funds may, in a transitional period, be administered by the UNDP or the World Bank, but the crucial point is that such funds must contribute positively to national decision-making and state building.

However, if transitional assistance is increasingly channelled through multilateral funds or organisations, NGOs may continue to face a "gap" between humanitarian assistance and longer term development assistance. If so, how will that influence their role in peace-building? I am convinced that NGOs have important functions in peace-building, and we will continue to make good use of NGOs, such as the NCA, where you can deliver the goods. On the other hand, we will not be equally generous to the whole range of NGOs everywhere. The number must be limited, comparative advantages are essential, national ownership is crucial and international coordination a must. We also emphasise the importance of local partners as the key actors with broad reach.

The NCA and other church based organisations have crucial roles to play as spokespersons for the poor and as those who challenge the rich and powerful in the North as well as the South.

I am looking forward to a continued close dialogue with the NCA on how we can move forward together for a just world. ( KN’s motto). You may not need to drastically change the strategy you already have, - or maybe you do - but you may need to make some difficult priorities as regards geography and thematic issues, and you may have to rethink how you work within a changing context. I will particularly challenge you to think about what it might mean for an organisation such as your own, and indeed the church, to look at development explicitly as freedom. And, what if de Soto is right, that a key to development is the lack of formal property rights among the poor? What should that imply for you? For the Cchurch? Remember, you are all engaged in microfinance. Now, what is microfinance but a compensatory mechanism for poor people without any property rights?

Dear friends. I have tried to identify some key issues and challenges. However, let there be no doubt. You are all doing the Lord’s work. Keep it up.

I wish you every success in your endeavours to develop a new global strategy plan, and look forward to the discussion.