No. I am just making a few preliminary remarks before I get into my speech. I am reacting to what Deputy Lenihan said. He supported our efforts in development co-operation generally. In fact, when I originally mooted the idea of establishing an all-party Joint Oireachtas Committee to deal with this whole area, that was one of my fundamental reasons, because I felt the best way of making progress in the area of development co-operation was to establish an all-party consensus. The views expressed by Deputy Lenihan and the underlying philosophy in his speech are very much in accord with our outlook. I believe that through the all-party committee we will have an opportunity of developing this underlying philosophy and that we will have an Irish approach in relation to development co-operation — not a Fine Gael approach, a Labour approach or a Fianna Fáil approach, but an Irish approach.
Mention has been made of the humanitarian approach in our development co-operation efforts but Deputy Lenihan has rightly broadened the scope and referred to the other issues. Of course there is the issue of the economic approach and the question of interdependence figures largely. I would agree also with the remarks that were made in the political context. It is clear that unless the developed world takes fully its responsibility towards the Third World, there will be a situation of further destabilisation in that area, a situation of revolution and of coup in various countries. There would possibly be a general destabilisation in the Third World.
Small nations such as ours who have such interest in international peace and stability cannot but be affected by such a prospect. If one looks at the history of the past ten or 20 years, one finds that a huge proportion of the various conflicts that have been experienced in that time, have been in the Third World. Undoubtedly, the state of underdevelopment in those countries and the problems resulting from that situation have contributed in large measure to that political instability.
I speak in favour of the Bill and I endorse the statement of the Minister for Finance. As Minister of State with specific responsibility for Irish relations with the developing countries, I have a special interest in the adoption of the Bill which is designed to enable the International Development Association to continue their activities during their fiscal year, I July 1983 to 30 June 1984.
The Minister for Finance has outlined the technical circumstances which have made the Bill necessary and also the financial problems facing the International Development Association and which have led us, together with most other donors, to make this additional extraordinary contribution to the organisation. Those less familiar with the international development organisations may ask, and not unreasonably, why we should give more money to any international organisation at a time of severe financial restraint at home. This raises fundamental questions for giving assistance to developing countries, questions which go perhaps beyond the scope of this debate.
At the outset I mentioned that there are other factors but I wish to deal here with the humanitarian aspect of the help. If we consider those countries that are being helped by the international development associations, we cannot deny that their problems are much worse than ours, that we are so much better off than they and that at the very least we have a moral obligation to help them. Sometimes statistics pass over people's heads but there are times when it is necessary to keep repeating figures in the hope that they will penetrate. In the Third World today there are 800 million people living in absolute poverty. In the context of my responsibility, I am asked from time to time why we would not mend the potholes at home before giving thought to problem abroad. It is essential always that we continue to make the effort so that people will put the position in perspective and realise the difference between not being able to travel comfortably along a by-road as opposed to a situation in which people do not have enough food. The other statistic which is very relevant is the question of relative prosperity. I am not denying that we have problems but let us not forget that in the global community of almost 160 nations, we are the 25th richest. That must be borne in mind and continually impressed on people if for nothing else than to show cause and justification for making our effort in the development co-operation area.
It is worth noting that we have a great tradition of caring for and helping people in developing countries. For decades Irish missionaries and voluntary organisations have been providing assistance that was much needed and much appreciated by the countries in which they work. More recently the Government have extended their involvement in this area and in the last decade Ireland's official programme of assistance to developing countries has expanded rapidly. Much of the public interest in Ireland centres on our programme of bilateral assistance which is concentrated in four countries in Africa. Three of these countries are classified as least developed which means that they are among the poorest countries in the World and that consequently their need of outside assistance is greatest. The International Development Association concentrate on helping the poorest countries and so we have a very special interest in their work. The Bill provides us with a useful opportunity to look at the International Development Association and their work and see how they relate to our overall programme of assistance to developing countries.
As I have said, the International Development Association concentrate on the poorer among the developing countries, what are known as the low-income countries. Of their total lending, 80 per cent goes to those countries who have a per capita GNP of less than $410. To put the figure in perspective, a corresponding figure for GNP per capita in Ireland is approximately $4,800. That is more than 11 times greater than that of the low income countries. We are experiencing difficult economic conditions at home and rightly we are concerned with the protection of our living standards but as we do so it is worth remembering the enormous gap that separates us from the least developed countries and that what for us would be a very small drop in living standards would be for them a major catastrophe. If, with other countries, some of which may be richer than ours and some of which may be poorer, we can help in raising the living standards of the developing countries, there will be a return from that in economic terms. We are developing areas which not only will be markets for our goods but which will provide a return even in economic terms. However, the present gap is huge and unfortunately the situation is becoming worse rather than better.
Although the gap separating the richest and the poorest countries — is already very great unfortunately, it is getting worse instead of better. The economic recession which we have all experienced in recent years has affected the poorest countries much more severely than it has the developed countries. This is partly explained by the low level of development of these countries when the recession began, the scarcity of natural resources in most cases and their weak capacities to withstand the pressures imposed by the recession. Another factor was the high increase in the price of oil and oil-based products. Most of the poorest countries rely very heavily on imported energy supplies and the steep increases in these costs have been a severe drain on their scarce reserves of foreign exchange. We must also recognise that the policies adopted in developed countries to combat the recession exacerbated its effects on the poorest countries. The anti-inflationary strategies, with the consequent high interest rates and stagnation in demand and consumption, resulted in depressed commodity prices, higher import prices and higher borrowing costs for the poorest countries. All of this led to huge indebtedness and a sharp deterioration in their terms of trade. We can see the effects of this in low income countries by looking at the average annual growth in per capita GDP in the last decade. From 1973 to 1980, annual growth averaged 3.2 per cent. Over the last two years, however, this has declined to less than 2 per cent per annum. Since 1970 exports from low income countries have risen at an annual rate of 11 per cent but imports have risen even faster, at an annual rate of 16 per cent. This has led to a substantial increase in the current account deficits which rose from 1.7 billion dollars in 1970 to 12 billion dollars in 1980. These countries rely heavily on external aid to finance these deficits. Official aid finances almost two-thirds of the current account deficits of the low income countries and the International Development Association alone accounts for 10 per cent of this total. The International Development Association has also been an important source of investment financing for low income countries and now accounts for 9 per cent of all official aid to developing countries.
Over the last 22 years the International Development Association has committed 27 billion dollars in aid. A total of 15 billion dollars has been disbursed on over 1,300 projects in 78 developing countries. The International Development Association uses three principal criteria in assessing whether a country is eligible for assistance. The first is the relative poverty of the country concerned; secondly, its credit-worthiness, in other words, the extent to which it is able or, more importantly, unable to raise loans from other, more commercial sources; thirdly, the capacity of the country to use external aid effectively and the extent to which there are suitable projects available for assistance.
In 1980 the upper limit for eligibility was a per capita income of 730 dollars. In fact, as noted earlier, 80 per cent of the International Development Association's lending goes to countries with a per capita income of less than 410 dollars.
Clearly, as developing countries improve their situation they grow beyond the income level which makes them eligible for assistance from the International Development Association. Of the 78 countries that have received assistance, 27 have graduated and are no longer eligible for the highly concessionary terms offered by the International Development Association. In some ways this is a measure of the success of this International Development Association — the fact that it has been effective in helping countries to, as it were, leave the school and get on to another level. That is something worth noting.
The countries which have graduated from the IDA have become clients of the World Bank whose terms are less concessionary than those of the IDA although still much more favourable than commercial loans. The IDA is, of course, an integral part of the World Bank and the same criteria for assessing and approving projects are used by both organisations. They also complement each other in their spread of assistance. During the period 1979 to 1982 83 per cent of IDA loans went to low income countries and 1 per cent to middle income countries while, for the World Bank, the corresponding proportions were 8 per cent to low income countries and 66 per cent to middle income countries.
The largest concentration of IDA activity has been in South Asia and Sub-Saharan Africa which, between them, account for 84 per cent of total commitments in the period 1961 to 1982. The major beneficiary was South Asia which received 59 per cent of total commitments compared with 25 per cent for Sub-Saharan Africa. The largest single client has been India with 39 per cent of total commitments.
Just as the geographical distribution of the IDA's assistance has changed over the years, so also has the pattern of lending. This reflects the changing needs of developing countries and also changes in developmental thinking. In the early years of the IDA's operation, the main objective was to accelerate economic growth. The assumption was that once the basic infrastructure was installed, growth would follow and this in turn would lead to a reduction of poverty and higher living standards. In line with this approach, there was a heavy concentration on infrastructural projects in the earlier years, chiefly railways, roads, ports and power plants. These projects received 40 per cent of total commitments during the first decade of the IDA's operation.
The theory however, proved simplistic and inadequate. Efforts to industrialise did not generate enough employment and the neglect of agriculture led to food deficits and balance of payment imbalances. It became clear that agriculture was a key priority in development and the emphasis in the IDA's lending changed accordingly. From 1961 to 1970 agriculture and rural development received 23 per cent of total allocations, a figure that almost doubled to 42 per cent in the period 1977 to 1982.
Over the last 22 years the International Development Association has played a major role in the development of the agricultural sector in developing countries. It has achieved particular success in South Asia where the reliance on agriculture has been reduced from 50 per cent of GDP in 1960 to 35 per cent in 1980. Many of us know of the green revolution which began in the sixties with the introduction of higher yielding seeds and fertilisers. We sometimes forget that proper irrigation systems were essential for the success of these new techniques. It was in this area in particular that the IDA played a major role. The IDA also provided assistance for improved drainage and flood control which, in countries where 90 per cent of the rice grown depends on the monsoons, is of crucial importance.
The green revolution was not entirely successful. Its critics argue that it took no account of local conditions or the traditional approaches of local farmers. Some of these criticisms are undoubtedly valid. There is no doubt that, for this approach to be successful, it requires very close co-ordination and also investment in other areas such as transport, storage and pricing policies. It is clearly difficult to get all of these factors right at the same time and it has not always been possible to do so. What the green revolution has done, however, is to show that half-heartened, amateurish approaches are quite inadequate. We need sustained, professional strategies in order to gain the maximum benefit from the resources available. We know this from our experience here in Ireland. We are very much aware of the difficulties involved in the transition from old to new methods. So we can appreciate the complexities and pitfalls inherent in the green revolution approach.
Despite all this, the effects of IDA assistance in India, for example, has been dramatic and 25 million hectares of land were brought to irrigation in the period 1960 to 1980. In the same period there was a six fold increase in fertiliser consumption to over five million tonnes per year. Grain production increased at a rate of 3 per cent per annum during the Seventies, which led to India becoming self-sufficient in grain production for the first time.
This example is very often quoted and one would wish that the successful operations which have been carried on in India could be repeated elsewhere and that the same results could be achieved. There is no doubt that the effects of the IDA programmes in India are a dramatic example of what can be done in this area. They also indicate the opportunities that can be lost unless countries like ours contribute to the continuation of the IDA work.
The same progress, unfortunately, has not been recorded in Sub-Saharan Africa, the other major area of concentration for the International Development Association. In fact, the food supply situation there is getting worse. During the seventies food production increased at less than half the rate of population growth. This led to growing food deficits and greater reliance on food imports and food aid. The poor performance in Africa has been influenced by several factors: sharp rises in the price of oil and oil based products, frequent droughts, wars and civil disturbances and, not least, poor pricing policies; and economic infrastructures.
The question of food security is becoming one of the major issues in the North-South dialogue and one in which we, as an agricultural country, have a special interest. As Deputies will be aware, the four countries in which Ireland's Bilateral Aid Programme is concentrated are in Sub-Saharan Africa and a substantial part of our assistance to these countries is devoted to the agricultural sector. In addition, within the EEC framework, we are considering new approaches, on the basis of EEC Commission proposals, for tackling the food deficit situation in Sub-Saharan Africa. The most important of these proposals is called the food strategy approach which seeks to develop a comprehensive and coherent programme for each developing country which will lead ultimately to self-sufficiency in food production. We cannot emphasise too strongly the importance of finding a solution to the food production problem. Until we remove the scourge of hunger and under-nourishment, we cannot hope to tackle effectively the longer term development problems.
Ireland has strongly supported the food strategy approach by the EEC. A number of countries have been selected and there are some indications that the food strategy is the correct one because it marries, as it were, the aid operation to the policies in the country itself and the result of this marriage will, I believe, have a great chance of success. If the early indications of success in these countries such as Mali and Ruanda and others continue, they will set an example for an extension of this policy and I hope that in the coming years most countries with food production supply problems will be involved in this food strategy approach.
The second largest area of IDA lending is basic infrastructure. Over the last 22 years, one-third of total commitments have been allocated to this sector, chiefly to the areas of transport, energy, and telecommunications.
The heaviest concentration has been on transport, mainly roads and railways. These are obviously essential for the development of the economic infrastructure in developing countries. Because they are so capital-intensive, however, they are usually beyond the scope of most bilateral donors. In general, it falls to the multilateral institutions such as the International Development Association or the World Bank to provide funds on the scale required to finance these projects.
The same applies to the energy sector, where, in most cases, the enormous investment required for power generation and transmission systems this can only be provided by multilateral organisations. By contrast, in the field of telecommunications, financing is often available from the equipment suppliers and the role of the International Development Association has been mainly to provide technical advice and financial planning. Again, we know from our own experience the importance of adequate telecomunications services for industrial and economic development.
Another area where the International Development Association have provided assistance is water and sewerage systems. Deputies may recall that during the recent visit to Ireland of the Executive Director of UNICEF, Mr. James P. Grant, he stressed that water borne diseases are the leading cause of infant mortality in developing countries. It is no harm to give statistics here for the record. These statistics show that the rate of infant mortality from hunger, disease, malnutrition and related diseases is 40,000 children every day. It is such an enormous figure it is hard to comprehend, but it cannot be repeated too often in an effort to get through to people the enormity of the problem. For example, the city of Cork has a population of about 130,000. It is hard to imagine that in three days the entire population would be wiped out if the same conditions applied there. Possibly this will bring home to people the significance of the statistics.
It is vital, therefore, to provide clean water supplies and there is an obvious spin-off in terms of better health from doing so. The International Development Association have also invested directly in social services, including health and education activities and also urban development. This latter area is one which is posing ever increasing and ever more pressing problems in developing countries as the number of people drifting to the cities from the rural areas grows. The IDA have done valuable work in addressing the problems of urban poverty and have pioneered programmes to find solutions to urban shelter problems.
Industry is another sector which has received substantial assistance from the International Development Association, more than two billion dollars since 1961. In the early years of the association much of the assistance in this area was devoted to large scale projects specialising in import substitution, for example fertilisers in India and textile plants in Egypt. Increasingly, however, the emphasis has been placed on small and medium scale firms which tend to create more jobs. Once again, we can see the parallels with our own situation here in Ireland and the approach of our own Industrial Development Authority is now placing a higher priority on this sector also.
More than one tenth of the International Development Association total commitments have not been tied to particular projects. This form of assistance is called programme assistance. It is intended to ease foreign exchange constraints and is usually accompanied by policy advice to help a country's overall performance. The IDA's assistance in this area has been concentrated mainly in South Asia with India receiving half the total. Initially the programme assistance to India was used to help private industries with necessary imports. More recently it has been used to help bridge chronic current account deficits. This sort of assistance is extremely useful for developing countries especially for overall policy reform and economic management. At times it can be more urgently required than project assistance. Generally speaking, programme assistance is beyond the capacity of most bilateral donors and so there is an important role for international organisations such as the International Development Asociation. Indeed, there may be justification for increasing the IDA's activities in this area and shifting their operations more in the direction of programme assistance.
The International Development Association are not only involved in providing financial assistance but also in providing assistance to governments in developing countries on a broad range of policy issues. When the IDA assess projects, they carry out a detailed analysis of all the factors affecting the project including the constraints on development, whether they be financial, infrastructural, or political. These analyses form the basis for a policy dialogue with the recipient country in which the IDA advise on policy reform and on creating viable development institutions so that the maximum benefit can be derived from the financial assistance provided.
Institutional support and technical assistance are also central factors of our bilateral aid programme. We are unable to provide large sums of capital aid and we see our primary role as helping developing countries to set up the necessary administrative, managerial and technical systems to direct their own development efforts. We can see the effects of this in our priority countries where the assistance we are providing has helped these countries to use more effectively the aid they receive from other sources. A good example of this is Lesotho where extensive assistance from the International Development Association for the extension of the rural educational infrastructure was implemented by Irish technical assistance which was provided to the Lesotho Ministry of Works. This institutional approach, where we aim to build up the development structures, goes to the very heart of our development policy. In our view the primary responsibility for developing the Third World rests with these countries themselves. We can help them to develop the proper policies and structures but it is up to them to take overall charge of and responsibility for their own development.
The objectives of the IDA are, of course, shared by a number of other aid institutions and programmes which have recognised that certain areas of the world and certain types of development call for special and original aid instruments. The European Community's policy for development co-operation is comprised of several aid instruments, the best known of which is the Lomé Convention. However, the programme of financial and technical assistance which the Community draws up each year for non-associated developing countries is of considerable importance to those countries which the Lomé Convention does not cover. Over the period 1976 to 1983, total commitment credits of IR£735 million have been made available under this programme to assist some 30 countries in Asia, Latin America and Africa with a total population of some 1,350 million and an average per capita income of $310. The major recipient of aid in the period has been India which accounted for over 40 per cent of the total commitments. The other major beneficiaries were Bangladesh, Indonesia, Pakistan and Thailand. It remains one of the policy guidelines of this programme that aid shall be directed to the poorest developing countries and the poorest groups in their populations and shall be aimed essentially at developing the rural sector, with particular emphasis on improving food supplies. Indeed, the 1982 programme of financial and technical assistance to non-associates, as in previous years, was almost entirely concentrated on the rural sector. The particular emphasis on food production and agricultural services involving the support of projects on rural development, rural credit, irrigation, drainage and water supplies is reflected in the fact that this sector accounted for almost 82 per cent of total commitments. We can see here a very close connection between the patterns of assistance provided by the EEC and the IDA.
Provision is made for the co-financing of projects with member states and other aid agencies under the EEC's programme and, while the overall share of co-financing in total programme commitments in 1982 at 35 per cent was slightly lower than in previous years, it still continues to play an important part in the programme.
Within the framework of the Lomé Convention the Community has singled out the least developed countries for special treatment not least in taking a broader definition of the term "least developed". Whereas the UN list is based on criteria such as per capita gross domestic product, share of manufacturing and rates of illiteracy, the Community's definition takes into account liability to natural disasters, lack of material resources, disfavour by geography, landlocked states and island states, and low productive potential. Under the 5th EDF the programmable resources for the LDCs amount to IR£1,243 million. Therefore, on a per capita basis the LDCs receive on average double of what was received by the other ACPs. These financial resources consist essentially of grants and/or special loans or risk capital. Similarly, access of the ACP LDCs to EIB risk capital is facilitated as a matter of priority.
Looking at the experience of the International Development Association over the last 22 years a number of points emerge. The first is that small scale projects are often more effective than large scale projects. The association have recognised this and in several areas, including agriculture and infrastructure, they are now tending to support smaller scale projects which have a greater chance of helping the poorest people. The second point, as noted earlier, is that the effective use of IDA funds requires adequate implementation capacity on the part of the recipient country. This means having the right policies, the right structures and properly trained people to run them. As I have already said, this is the area in which we feel that our bilateral assistance to developing countries can be of most use, but it is equally important that other donors also recognise the importance of structural and policy reform in developing countries. This is an area in which developing countries themselves have a very great responsibility for only they can effect the necessary changes that are needed.
A further point is that there is a vital need in the poorer regions of the world to increase food production in order to combat famine and poverty and to obviate the need for food imports and the growing dependency on food aid. In order to achieve this, there is a clear need for research which will help to overcome these food shortages. The spectacular gains which have been achieved in wheat, maize and rice production since the late sixties through the application of new varieties and improved technology have been pioneered in international centres of research of the Consultative Group on International Agricultural Research (CGIAR), a co-operative research system which is administered through the World Bank, and of which the World Bank, FAO, United Nations Development Programme and donor governments are the financial sponsors. Ireland has been a contributor to the CGIAR system for the last three years, our contribution being directed to research on the improvement of livestock production in Africa, potato, wheat and maize production, and support for national research capabilities in the developing countries themselves. There is no doubt that moneys spent on research, such as the rice, wheat and maize improvements which have eliminated huge deficits in parts of Asia and Latin America, can have a very high rate of return, not only in financial and economic terms, but in the human terms of saving millions of lives which would otherwise be lost through hunger. While there have been some very important gains in recent years in the production of food grains, especially in Asia, as a result of scientific and technological breakthroughs, some 300 million people in sub-Saharan Africa and Latin America subsist on roots, tubers and coarse grains which have not shared the production increases of these cereals. We must, therefore, continue to support research in this area so that the latest advances in science and technology are applied to the most fundamental and urgent problem of all, namely the elimination of hunger.
I have outlined the activities and the experience of the International Development Association over the last 22 years at some length because the organisation is experiencing a difficult time at present. Each replenishment of the IDA has always been more difficult than the previous one, but the present one, the sixth replenishment, has proved especially difficult and indeed the purpose of the Bill before us today is to help preserve order in the financing of the IDA. In many quarters today multilateral development organisations have become unfashionable. They are criticised, often justifiably, for being over-bureaucratic, for being too slow and for being insufficiently responsive to local needs and circumstances. There is a general preference nowadays for bilateral aid, often — it must be said — because this form of aid can be tied to the procurement of goods and services from the donor countries, although I am happy to say that this is not a feature of Irish assistance. Despite shortcomings, multilateral organisations have an important role to play in the development process. Developing countries prefer to deal with them because multilateral aid is predictable and usually untied. We also need the positive and constructive influence that they can bring to bear on policy making in developing countries.
The history of the International Development Association over the last two decades shows that, on the whole, they have been a valuable and important instrument for development and have been a major support for the low income countries which are so reliant on external aid for their very survival. We in Ireland have always seen the poorest countries as the major priority for our bilateral aid. We share a lot in common with the approach and the philosophy of the International Development Association. The association is a significant part of our aid to developing countries, accounting for almost 10 per cent of the total last year and it will continue to be an important part of our overall assistance to developing countries in the future.
I would urge Deputies to support this Bill and, in doing so, to reaffirm their support, not only for the International Development Association but for the work of all those, and especially those Irish people engaged in helping developing countries in their development efforts.
It is important that we in this House remember the work of our people abroad. Indeed, many do not realise how many are working in developing countries, trying to assist them. Through the programmes in my Department and through the APSO agency there must be 500 or 600 people officially involved in the aid efforts, but we cannot forget the approximate 5,000 missionaries scattered over the globe, most of whom are involved to a greater or lesser degree in helping the peoples of the countries in which they reside at present. It is important that in the Parliament of their own country they should be remembered and that we place on record our appreciation of their work, be they missionaries, members — as a large number are — of voluntary organisations, or people who are abroad in an official capacity. I am very glad, as Minister of State with special responsibility in this area, to put on the record of this House my appreciation of the work that they are doing and, if nothing else, to let them know that even though they are very far away — in many cases many thousands of miles — they are not forgotten. They are appreciated as ambassadors of this country.
In the light of our efforts at official and voluntary level and the support we have given in the past to the International Development Agency, and particularly so because of its present difficulties, it is very important indeed that we make this additional contribution and join with the other countries which are making a similar special contribution to enable them to continue their work.
