The Role of Investment in Tackling Poverty
Fourth International Islamic Economic Forum
April 29, 2008
Kuwait
Excellencies
Ladies and Gentlemen
I would first like to express my pleasure for this opportunity to participate this evening in the plenary session on the important topic of poverty, and in particular the role that investment can play in confronting this issue.
On the topic we are discussing this evening, I would like to address the following points:
1- Observation
Poverty is a phenomenon that varies in levels and severity from region to region and within countries that suffer from this issue. The persistence of poverty is a major obstacle to achieving sustainable development and can threaten social security and political stability in those countries.
Despite the development efforts made by the governments of developing countries, donors and development institutions over the past few decades, the issue of poverty has attracted great attention from the international community. In September 2000, the United Nations adopted a declaration that includes the Millennium Development Goals (MDGs) and stipulates the achievement of these goals by 2015. The MDGs are eight goals, the most important of which is the eradication of extreme poverty and hunger, so that the proportion of people living in poverty and suffering from hunger in the world is halved.
Since that date, efforts have been made to achieve these goals. Today, at the halfway point of the target date, the results reflect varying progress in different regions and between countries in the same region, but the overall picture indicates that current efforts are inadequate.
After this brief note, I now turn to the subject of our discussion to ask
The question: How can investment help in efforts to tackle poverty?
2. Investment
The complexities of poverty, its causes and consequences, and the interconnectedness of the effects of poverty reduction activities call for investments in various sectors such as education, health, water and sanitation, agriculture, as well as capacity building and empowering the poor by providing them with productive assets, including appropriate technology.
Taking into account the limited financial resources in developing countries, these countries have tended to attract more foreign direct investment, in addition to the official development assistance they receive, as evidenced by the economic policies adopted by these countries to create a favorable domestic environment to attract foreign direct investment to improve economic growth and thus alleviate poverty.
Although foreign direct investment can help alleviate poverty under certain conditions and policies, the progress made in achieving the Millennium Development Goals indicates the urgent need for more concessional resources to finance investments in sectors such as agriculture, health and education, especially for the provision of safe drinking water and basic health services.
3- Investing in Agriculture
The world has recently witnessed a sharp rise in food prices as a result of factors such as climate and weather change, increased consumption in some large developing countries that have recently achieved high growth rates, and food supply shortages due to the use of more land available for agriculture to produce crops for biofuels.
The shortfall in food supply, accompanied by unprecedented price increases, points to the serious implications for international efforts to reduce poverty and the consequent risks to social security in affected developing countries, especially low-income and food-deficit countries.
This recent situation calls for an adjustment in development programs by giving more attention to the agriculture sector to secure basic food crops and maintain progress towards poverty reduction. The agriculture sector is particularly important given the high percentage of the population working in this sector in most developing countries and the concentration of poverty in rural areas. Public and private investments can work together to develop this sector, whether through land reclamation or the introduction of modern farming methods and mechanization.
4- International efforts
Achieving the goal of poverty reduction requires mobilizing the efforts of the international partnership for development, including the efforts of developing and developed countries, donor countries, national, regional and international development institutions, the private sector, civil society and non-governmental organizations.
In this regard, I would like to point out that Kuwait, through the Kuwait Fund, provides its assistance to Arab and other developing countries to contribute to financing their investments in various sectors such as agriculture, water and sanitation, transportation, energy, communications, education and health, as well as supporting small and medium-sized projects implemented by national development banks and the operations of social funds to create new job opportunities and improve income levels through investment in small businesses and projects. To date, the Kuwait Fund has been able to provide assistance to 101 developing countries by contributing to the financing of 737 projects with soft loans with a total value of about 14 billion dollars. Most of the beneficiary countries are in the low-income category, where the funded projects contribute to stimulating economic growth
and support the ability to alleviate poverty and improve living standards.
In this regard, I would like to express our appreciation for the efforts of the Islamic Development Bank and its initiative aimed at helping sub-Saharan African countries achieve the Millennium Development Goals by focusing on sectors, primarily agriculture and food security, through the establishment of a special program for the development of Africa, with a target amount of $12 billion to finance investments and operations to achieve the desired goals. The State of Kuwait has supported this initiative by contributing to the resources of the aforementioned program.
5- Summary of Observations
There are great challenges facing the achievement of the desired goals to eradicate extreme poverty and hunger, but there are also opportunities for success represented in supporting and strengthening the existing global partnership, by fulfilling the commitments made by each partner, especially providing the necessary resources for investment in sectors capable of contributing to poverty reduction and providing the necessary and basic requirements such as food crops production, drinking water and sanitation, in addition to investment to provide health services and education, and support micro-enterprises.
Such investments in different sectors can be designed to include the contribution of the public sector, the private sector, and donors individually or collectively as required in each case, while ensuring that the poor benefit adequately from these investments.
In order for investments to play their role in stimulating economic growth and thus contribute to poverty reduction, this requires a local environment conducive to doing business, characterized by economic and political stability, supported by all necessary reforms, as well as a favorable external environment that allows the entry of developing countries' goods into global markets.
May God's peace, mercy and blessings be upon you