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| Director-General’s Opening Statement to the 35th session of the Industrial Development Board |
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| Wednesday,December 17,2008 Posted: 18:51 BJT(51 GMT) | | From:UNIDO Article type:Reproduced |
UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION
Opening Statement
by
Kandeh K. Yumkella
Director-General
at the
thirty-fifth session of the
Industrial Development Board
Vienna, 2 – 4 December 2008
[SLIDE 1]
INTRODUCTION
Mr. President, Excellencies,
Distinguished Delegates, Ladies and Gentlemen,
It is my great pleasure to warmly welcome you to the thirty-fifth session of the Industrial
Development Board.
Let me start by expressing my gratitude to and confidence in our President, Ambassador
Bazoberry Otero of Bolivia. Together with the members of his Bureau, and based on the
experience of our thirty-fourth session, we can be confident of smooth proceedings under
his able leadership.
Mr. President,
Distinguished delegates,
I. THE CURRENT GLOBAL CONTEXT
From the Food-Fuel-Finance (3-Fs) crises to the Volatility-Vulnerability-Viability
(3-Vs) challenge
At the time of your last Board meeting in May, the world was trying to grapple with the
Food, Fuel and emerging Financial crises, the so-called three-Fs. At that time, the World
Bank estimated that over 100 million people would be pushed below the poverty line and
that most of the gains we had achieved in reaching the MDG targets were at risk of being
wiped out. I say “emerging financial” crisis because at that time, we considered it a
mortgage crisis restricted to the housing sector. Six months later, we are beginning to
feel the impact on the real sectors – especially manufacturing – and some economists
describe it as the worst economic crisis in the past seventy years.
It is not for me to recount in detail the turbulence that engulfed the planet after a sudden
and sharp cut in the supply of credit, which evolved into a solvency crisis and which may
even engender a global deflationary trend. You are reading it in the papers every day.
You are feeling its effects. Leaders of the world have come together to start rebuilding
the system. To guard against a shock of this nature hitting us once more, such global
action is much needed.
These are volatile times. Volatility brings vulnerability to poor nations. Remember how
we reeled in shock as the price of oil hiked upwards and upwards. Where would this end,
we asked ourselves. And that was 2005. Since then, the shocks we have witnessed have
multiplied month by month. They are almost numbing. You know, the price of oil today
is actually more or less as it was in 2005 – but who could have guessed that only a few
short months ago? And who would dare to guess its price in two months time? We can
say the same for other commodities, such as food.
Robert Zoellick of the World Bank recently indicated that there is a risk of capital inflow
to developing countries drying up, exports dropping, investments falling off in response,
growth decelerating. Such a scenario would mean crises far beyond those experienced so
far, potentially undermining the viability of business and fragile governmental structures.
Instead of the three-Fs, we might talk about the three-Vs: volatility, vulnerability, and
viability.
[SLIDE 2]
As the Secretary-General has said: “we have heard much about how the problems on
Wall Street are affecting innocent people on Main Street; we need to think more
about those around the world with no streets"
What have we learned from the current crises?
As the debate rages on about what caused the crisis, how it should be contained, what the
impact on the real economy could be and how developing and transition economies will
be affected, some stylized facts are emerging:
1. Globalization has created even greater interdependence and market connectivity
than we assumed existed. Economic effects and impacts move faster than we ever
believed possible. For example, the crisis spread within eight weeks to engulf the
whole world, including countries as far apart as the United States, Iceland,
Hungary, Ukraine, Poland, China and South Africa;
[SLIDE 3]
2. The links between the financial sector and the real economy are more substantive
than initially thought; hence unfettered and excessive greed in Wall Street has led
to the closure of factories around the world, as well as job losses and misery for
innocent workers on every part of the globe. The Secretary-General put this
clearly just yesterday: “today’s financial crisis will be tomorrow’s human
crisis.”
3. Stereotypical solutions that may be based on ideology must give way to pragmatic
evidence-based solutions tailored to meet the specific realities of economies. As
former US President, Bill Clinton said on the World Food Day forum at the
General Assembly in October, “we literally blew it” because we assumed that the
markets can solve every problem or can correct themselves;
4. Smart public-private sector partnerships, backed by effective regulations, trump
total laissez-faire;
5. “Development doctors”, that is, practitioners of development policy, may need to
heal themselves first. We must have a sense of humility: when things go wrong
we should step back and reflect on our own possible mistakes. We, the purveyors
of development paradigms, cannot put the blame on the recipients.
Implications for multilateralism
The agenda facing the multilateral development system - already difficult – has been
further complicated by the crises. In addition to meeting the MDGs, addressing climate
change and the food crisis, we are now faced with a global economic recession and
deflation the likes of which have not been seen in over seventy years. In short, this
autumn the international community was exposed to new realities of globalization. Thus
the UN system, and for that matter UNIDO, cannot have a static vision.
1. Coordinated multilateral consensus and action is required on many fronts
Never has the world been more interdependent, never has it been more shaped by
technological, economic and social progress – and never has it been more vulnerable to
economic shocks. Functional and effective multilateralism is the world’s best hope for
progress, shared prosperity and peace – the best hope to fix the broken threads. And not
just the financial system, but also the multilateral trading system, the system to fight
climate change and encourage energy diversity, and the system to ensure predictable
multilateral development assistance.
Multilateral action requires a commitment to multilateral development assistance and a
completion of the Doha Round negotiations, plus an agreement on climate change in
Copenhagen. We must not lose our resolve here – at this moment in Doha, nations are
gathered to review the implementation of the Monterrey Consensus on Financing for
Development (FfD). But FfD has been presented with what Dr. Supachai of UNCTAD
has called a “double whammy”: not only must the Monterrey process deliver on the
commitments made in 2002, but now it must do so in a much changed, weakened,
international economic environment. Non-aid flows to developing countries are already
falling at an alarming rate: remittances have dropped by about 5 % and are projected to
fall much further as recession grips the wealthier countries. The OECD estimates a 40 %
decline in FDI to developing countries.
2. Trade matters for poverty reduction
[SLIDE 4]
As you can see from the chart on screen, the relationship between growth in income and
growth in trade is a strong one.
[SLIDE 5]
Yet, as this second chart shows, globalization is nonetheless starkly uneven. Income
disparity between Least Developed Countries (LDCs) and OECD countries has almost
doubled since 1980!
This underlines the importance of arriving at a rule-based, predictable, developmentoriented
trading system.
[SLIDE 6]
Just over a week ago, I was in Siem Reap, Cambodia, at the Ministerial Conference of the
LDCs, which UNIDO organized together with WTO. I was greatly heartened by the
commitment that the ministers gathered there made to further deepen their participation
in global trade. It was a particular pleasure to work closely with Pascal Lamy, who
reaffirmed both his resolve to finalize the negotiations in the Doha Development Round.
He also expressed his belief in the necessity for strong and growing Aid for Trade
measures to really translate Doha into reality.
Mr. Lamy also recognized that there must be stronger support for capacity development
to allow poorer countries and their enterprises to participate in trade at all. Trade
capacity-building is, of course, one of UNIDO’s main priorities and we are widely
recognized as a leader in Aid for Trade.
3. A new low-carbon or green industrial vision is needed
Earlier this year, when the price of a barrel of oil peaked at almost $160, it seemed that
interest in alternative sources of energy was peaking as well. Yes, there were legitimate
worries about certain types of biofuel production and the effect on food supply. But
nations and energy corporations around the world gave serious thought to strategies for
the low carbon era. There were moves to invest in research in solar, wind, and hydro
energy. Now that the see-saw has dipped back again, the temptation is to say, what’s the
hurry. But there are sound economic reasons for investments in renewable energy and the
infrastructure to support them. Such investments will stimulate demand in the short run
and have a positive impact on long-term productivity.
Last month, UNEP launched its Green Economy Initiative. It seized the chance to
redirect investment into the Earth’s natural capital – forests, peatlands, soil and waters.
UNIDO supports this fully. And our own Green Industry Initiative will complement it.
We aim to reduce the “climate footprint” of manufacturing activities, bring about more
efficient use of energy, materials and other resources, promote the design and
manufacture of environmentally friendly products, and respond to potential
environmental barriers to trade.
Green industry represents a real opportunity for the developing world. Those countries
that take advantage of it will have both the cleanest environment and the fasted-growing
business.
During my time as Chairman of UN-Energy, I have become more and more convinced
that renewables are the critical link between fighting global climate change and fighting
poverty. Developing countries need to expand access to reliable and modern energy
services if they are to grow. Lack of power already clips more than 2 % off the annual
growth rates of a number of countries in sub-Saharan Africa. If you take South Africa out
of the equation, the region’s remaining 700 million citizens have access to just the same
amount of electricity as do a quarter of the population of Germany!
[SLIDE 7]
UNIDO projects, like the one you see here in Western Rwanda, are built by locals, using
local materials. This mini-hydro facility powers not only small industries, but also 250
households and a medical clinic.
4.The role of industrial policy
The failure of some countries, and particularly LDCs, to reap the benefits of globalization
is in part due to the failure to build up an adequate industrial policy base. The prevailing
ideological view during the Washington Consensus era was that the market would take
care of the economy: it seemed at times that the only industrial policy to command
widespread support from economic gurus was that there should be none at all.
Yet developing countries could not have been expected to achieve what no other country
was able to do: to industrialize without industrial policy or to develop rapidly without
industrialization. The multilateral system needs to consider ways in which targeted
industrial policies can form the cornerstone of a new economic trajectory firmly rooted in
green growth.
II. RESPONSE OF UNIDO TO THE NEW REALITIES
Mr. President,
Distinguished delegates,
As some amongst you will surely know by now, pessimism is not in my nature. I believe
in the ability of the poor to lift themselves out of poverty through productive activities.
That is no blind faith – we have tangible evidence to prove it. No country has left poverty
behind without building a productive base, without entering into trade. And this means
investment in people, in developing capacity and in creating an environment in which
economic growth can flourish. We find “can do” people in all nations. But “can do”
policies are often missing.
The UNIDO Medium-term Programme Framework 2010-2013 (MTPF), which you will
be discussing at this Board meeting, must be forward-looking and must ensure that the
Organization is agile enough to assist countries in dealing with the issues I have just
mentioned. The MTPF must give consideration to the fact that factories are already
closing in emerging economies due to the financial crisis, that the potential investment
expected for clean technologies and green energy may not be realized, that governments
may not be able to fulfill their commitments to combating climate change, that the
bottom billion may be pushed much further below the poverty line of a dollar a day.
Within this context UNIDO, has established a solid base over the past three years to
ensure that it can contribute meaningfully to the new global socio-economic and political
realities. Over the past few years, we have positioned UNIDO as a respected niche
player within the United Nations development system, we have demonstrated that we can
be a conceptual leader and significant contributor through our contributions to the One-
UN initiative, our effective Chairmanship of the UN-Energy Group, and our new role as
co-convener of the technology transfer cluster of the Secretary-Generals’ climate change
initiative. In three years we have established a new Energy Branch and a Trade Capacity
Building branch both of which have already shown positive results – for example, the
current TCB programme portfolio is now at about 40 million euros with a pipeline of
over 400 million euros for 2010-2015; within one year the Energy Branch has conducted
three major global forums in Asia, Africa and Latin America and designed a US$150
million programme for the Global Environment Facility.
[SLIDE 8]
III. A SHARED VISION FOR UNIDO
In 2005, before you entrusted me with the responsibility for our Organization, I shared
with you my vision for a UNIDO, which, under my stewardship, would become a trusted
partner for its stakeholders. I promised to enhance its core functions; to make the most of
its capacity to contribute to the Millennium Development Goals (MDGs); to grow its
support for the LDCs and Africa; to consolidate partnerships at the country level; and, to
strengthen the Organization’s global forum activities.
It is for you, distinguished delegates, to judge – but I hope you will find that our
management and our staff have done their best to keep to my vows. My responsibility to
you as Director-General is to make UNIDO – your Organization – one that is fit for
purpose. That was true in 2005, and it remains true now.
1. UNIDO as a trusted partner
My vision was to see UNIDO complete its break with darker times and to make its mark
as a trusted partner for economic growth to benefit the poor. I believe we can say that our
financial performance over the past few years demonstrates an ever-increasing vote of
confidence in our work. In 2007 we reached an all-time high for funds mobilized for
technical cooperation – US$172.7 million.
[SLIDE 9]
The projections for 2008 show a further increase in our available uncommitted funds and
in our technical cooperation delivery. Our delivery is now twice what it was at the start of
this decade. Yes, I have worked my staff hard to achieve this. But we are all mindful that
we must deliver on your behalf. We need to earn your trust and will continue to do so.
[SLIDE 10]
UNIDO has been at the coalface of UN system-wide coherence before we even had a
name for it. Part and parcel of our recent reforms has been our alliance with UNDP. This
continues to go from strength to strength – tomorrow, in fact, we are launching our joint
project on business coalitions for climate change in China and South Africa. In this spirit,
we have built partnerships across the United Nations and the broader multilateral system.
We now work in synergy with UNEP, FAO, UNCTAD, ILO, ITC, IFAD and others
across the breadth of our technical activities.
Coherence is not merely about eliminating contradiction or duplication. Its value, above
all, is in releasing the full potential of the entire UN system’s developmental capacities
and expertise. The dialogue on System-wide Coherence: the Next Steps, which we hosted
in March this year, is one example of how we contribute to sustaining the momentum for
coherence. There is a lot more to say on this, but time is moving on. Hot off the presses
and – hopefully – landing on the desks before you as I speak, is our new publication,
“The Contribution of UNIDO to United Nations system-wide coherence: synergy at
work”. I hope that you will find it a useful illustration of what your Organization is doing
to rise to the challenge of Delivering as One.
[SLIDE 11]
The decision to vest in me the chairmanship of UN-Energy highlights, I believe, the
esteem in which my UN colleagues hold this Organization. This has been underscored
further by the Secretary-General’s invitation to UNIDO to serve as co-convener for the
focus area of technology transfer for climate change along with UN-DESA.
Let me also inform you that the global energy challenge was debated at the Chief
Executives Board (CEB) retreat last month, and that UNIDO, on behalf of UN-Energy,
contributed the key paper.
2. Enhanced core functions
Over the past few years we have continually re-moulded our organizational structure to
meet these shifting challenges while retaining our core thematic priorities. I have already
mentioned some of these innovations to you. But let me say a few more words about the
MTPF 2010-2013.
The draft MTPF represents a significant departure from previous documents, introducing
a number of major structural innovations. For the first time, it contains an overarching
development objective – “industrial development for poverty reduction, inclusive
globalization and environmental sustainability”. This explicitly links industrial
development to UNIDO’s well-established three thematic priorities. UNIDO’s orientation
toward results-based management is now copper-fastened, as illustrated in the
programmatic results matrix. The new MTPF further introduces a set of measurable
policy and institutional outcomes, which are to be achieved at regional and country
levels.
You will discuss these during the course of your deliberations at this Board. But I hope
you will see this as a solid example of our determination to embrace change to strengthen
our capabilities.
3. Enhanced UNIDO contribution to achieving the MDGs
The impact of the current crises will make achievement of the MDGs more difficult – but
more vital – than ever. Pro-poor industrialization, particularly through private sector
development, has always been at the heart of what we do.
I have battled to see economic growth against poverty placed firmly on the MDG agenda.
As Deputy Secretary-General Migiro said recently: without encouragement to engage in
productive activities, is it any surprise that the resourcefulness of the poor is often
devoted to the means of staying alive rather than to building long-term prosperity?
This year our own capacity to deliver on the MDGs was strengthened by my appointment
of a Special Adviser.
And I am pleased to see that the growth agenda is coming back where it belongs. This is
reflected strongly in the weight that the “One Programmes” in pilot countries give to
projects in support of productive capacities and industrial policy development.
[SLIDE 12]
Promoting the participation of women in industry, and especially women entrepreneurs
like these in Viet Nam, has been the main focus of our contribution to MDG3, on gender
equality. In July this year we convened prominent women and men from across the UN
system – including the Special Adviser to the Secretary-General on gender issues, Mrs.
Rachel Mayanja, representatives from development banks, the private sector, media and
Member States, in an Expert Dialogue meeting. Following its recommendations, the
UNIDO Executive Board is now in the process of adopting a comprehensive policy on
gender equality and the empowerment of women.
Another target of central relevance to UNIDO is MDG7, on ensuring environmental
sustainability. The IPCC tells us that greenhouse gas emissions have increased by 70 %
between 1970 and 2004. And industry is responsible for 65 % of this increase. We are
targeting this through our Green Industry Initiative, and our focus on clean and renewable
energy.
Our Montreal Protocol and Stockholm Convention programmes are successfully assisting
enterprises in eliminating ozone-depleting substances and persistent organic pollutants
respectively. Our collaboration with UNEP in building up National Cleaner Production
Centres has assisted industry worldwide to reduce waste and pollution and in cutting
energy and water consumption.
And we are making real policy contributions. Based on our expertise in developing
projects on energy management systems, we are now helping ISO to design a global
approach for a new standard on energy management.
4. Consolidation of support to the LDCs and Africa
UNIDO’s mandate is universal. But Africa and the LDCs warrant special attention. In
sub-Saharan Africa, progress toward meeting the MDGs has lagged behind most of all.
One of the most critical challenges for many LDCs is the need to provide employment to
growing populations. By 2020 there will be about 1.4 billion Africans. The majority of
these will be young people living in cities. Young people with no prospect of
employment hold little hope for the future. In order for the young women and men of
Africa to earn a living in their own countries, we must target the sector of the economy
with the most potential for job creation – and that is industry.
[SLIDE 13]
As you can see from the screen, the share of our technical cooperation delivered to LDCs
continues to grow, more than doubling in the last four years and now just under 18% of
total delivery.
Our partnership with the African Union and NEPAD through our technical cooperation
activities is stronger than ever. The number of expert group meetings on issues of
particular interest to Africa grows apace.
I mentioned our co-organization of the LDC Ministerial Conference, along with WTO.
And just last month, UNIDO supported the African Ministers of Trade and Industry in
the CAMI meeting in Durban, a prime example of how a UNIDO-led initiative has
blossomed – this was the second CAMI meeting to be fully “owned” by the African
Union Commission and to feed into the next summits of the African Union.
5. Stronger country-level partnerships
When I promised in 2005 to match the reforms made within UNIDO with stronger
partnerships at country level, the UN system was just about to embark on the process of
efforts toward improved coherence. Through the “Delivering as One” initiative, over the
past year an important dimension – and so far the most advanced one – of system-wide
coherence has been the drive toward coherence at the country level.
UNIDO has been actively participating in the “Delivering as One” pilot countries since
December 2006. Of course there will still be difficulties ahead. Some 90 countries will
roll out their UNDAFs over the next three years. The demand for a collective response at
country level will test our capacity – and that of other UN system bodies – to provide
leadership and effective headquarters support to innovative country-driven approaches.
Simplifying and harmonizing business practices will be a major challenge. This is a
particular concern to specialized agencies such as UNIDO as we are bound by
operational practices based on policies and rules determined by you, the Member States,
in governing bodies such as this Board. We hope that you will bear this in mind as we
move forward to strengthen further our country-level partnerships.
In tandem with these system-wide reform efforts, UNIDO adopted a new Field Mobility
Policy in 2006 to strengthen the field network, to increase professional staff capabilities
and to strengthen technical cooperation programming and implementation. As a result,
UNIDO’s professional field staff now numbers 66 people in total.
6. Strengthened global forum activities
Since the early 1990s, a number of UNIDO global forum activities, and in particular
research and publications, were downscaled or discontinued. As a result, gaps appeared
in international research on important and emerging industrial development issues of
relevance to industrial decision makers.
Technical cooperation remains our focus. But for a knowledge-based Organization like
us, it cannot be the only one.
In the New Year we launch our Industrial Development Report. Professor Paul Collier,
whose book “The Bottom Billion” captured the imagination of the world, gave you a
preview in September. I must admit I am quite excited about the finished result. In many
ways it represents a leap in product sophistication for UNIDO – a progressive, solid,
thought-provoking analysis of where industrial development is going, with some
arresting recommendations. And it’s a good read.
Our Annual Report for 2008 will devote a special chapter to our growing research and
global forum activities. Let me give you now a few examples of some of the major
activities we have undertaken recently:
[SLIDE 14]
Global forum activities – Ministerial conferences:
LDC Ministerial Conferences
Aid-for-trade – An industrial agenda for LDCs, Siem Reap, Cambodia, 19-20
November 2008
Conference of African Ministers of Industry (CAMI)
17th Conference, Cairo, Egypt, 19-21 June 2006
1st Extraordinary Session, Midrand, South Africa, 24-27 September 2007
18th Conference, Durban, South Africa, 24-28 October 2008
[SLIDE 15]
Global forum activities – Technical conferences
Regional Forum on CSR, Zagreb, Croatia, 9-10 March 2006
Ibero-American Ministerial Meeting on energy security, Montevideo, Uruguay,
26-27 September 2006
UNIDO/AU high-level consultative meeting on productive and decent work for
youth in West Africa, Accra, Ghana, 19-20 February 2007
International conference on Biofuels, Kuala Lumpur, Malaysia, 5-6 July 2007
Technology Foresight Summit, Budapest, 27-29 September 2007
[SLIDE 16]
1st Global Agro-Industries Forum (in cooperation with FAO), New Delhi, India,
8-11 April 2008
International Conference on Renewable Energy, Dakar, Senegal, 16-18 April
2008
[SLIDE 17]
Global Renewable Energy Forum, Foz do Iguaçu, Brazil, 18-21 May 2008
International Conference on Sharing Innovative Agribusiness Solutions, Cairo,
Egypt, 26-27 November 2008
[SLIDE 18]
Mr. President,
Distinguished delegates,
As we in UNIDO know more than most, reform is a complicated process. But it is a
rewarding and invigorating one. We have achieved a lot in the past few years – on
creating economic growth against poverty, on “greening” this growth. And for this I must
give much-deserved credit to my senior management team and to our great staff.
But as I enter the final year of my mandate as Director-General, and in the context of
these new global crises, I must confess that I am humbled by the challenges before us.
There is still much to do to improve our Organization further. That is why I wish to tell
you now that I stand ready to continue to serve you for a further term.
Development is a work in progress. We face some stark challenges. Many of the broken
threads of globalization need to be re-stranded. And in doing our part, I can assure you
that UNIDO will not be found wanting.
Thank you.
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