CHAPTER 3
OPEC FUND SUPPORT TO RURAL DEVELOPMENT AND AGRICULTURE
The OPEC Fund has been successfully supporting partner countries for nearly 47 years to enhance their agriculture sectors and promote rural development as a means to in- crease food security. The Fund understood early on the im- portance of domestic food production in that it helps not only in feeding people, but in that agriculture is a major source of income and employment for the rural population in partner countries, contributing to food production and economic growth. Food production also promotes the devel- opment of allied agro-industries and services that similarly create jobs, raise tax revenues, and help reduce the need to import food. This is all the more important when consider- ing the positive and direct impact of food production on the macroeconomy: a lower level of food imports helps conserve foreign exchange reserves, thereby keeping exchange rates more stable, and reducing imported inflation resulting from exchange rate weakening. Indirectly, there are many other advantages, ranging from boosting export revenues to re- ducing the need for food price subsidies. Agricultural and rural development initiatives funded by the OPEC Fund have sought to promote inclusive economic growth, improve access to social services, and create live- lihood opportunities thereby helping to improve the quality of life and economic well-being of people living in rural are- as. The OPEC Fund has been working with key development partners, including the World Bank, UN agencies, regional development banks, other international organizations, gov- ernments, and non-governmental organizations, to boost in- clusive sustainable growth through rural development. Some of the specific actions that the OPEC Fund has driven for- ward and supported include: • Investment in infrastructure such as irrigation systems, rural roads, and post-harvest storage facilities. • Capacity building to enhance the skills and knowledge of farmers and rural communities vis-à-vis sustainable and modern farming techniques, distribution of new crop varieties, and pest control methods.
• Climate-resilient agriculture that help rural communities adapt to and mitigate the effects of climate change, such as promoting drought-resistant crops, sustainable water management, and disaster risk reduction strategies. • Providing credit to MSMEs for on-lending to smallholder farmers and rural entrepreneurs, as well as helping fund financial services to private sector rural industries to help foster sustainable agricultural value chains and market-oriented approaches. • Policy and institutional support to strengthen country frameworks for agricultural development in partner countries, helping to create an enabling environment for agricultural growth. • Community empowerment, for example, helping farmers access markets and efficiently transport their products. Since its inception, the OPEC Fund has committed more than US$3.5 billion (15 percent of total commitments since the first loan was signed in 1977) in loans to food securi- ty projects (Figure 6) . Of these, the overwhelming majority (97 percent) supported agriculture and rural development, with the remainder consisting of food assistance (1 percent) and support to the agroindustry and fertilizer production (2 percent). Since this classification is based on the sectors as- signed to projects in OPEC Fund systems, it is considered to underestimate the OPEC Fund’s support to rural devel- opment since many projects classified under other sectors (such as multisector aid, transport, commodity aid energy and water and sanitation) have benefited food security, farmers, rural communities and agricultural development more generally. Most of the OPEC Fund’s food security support has bene- fited partner countries in Africa (69 percent), followed by Asia (20 percent) and Latin America and the Caribbean (7 percent) (Figure 7) .
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