Agricultural investment crucial for economic growth in ex-Soviet states – UN

Increased investment in agriculture is crucial for boosting economic growth in seven ex-Soviet states in Eastern Europe and Central Asia where more than 50 percent of the population now lives below the national poverty line, the United Nations Food and Agriculture Organization (FAO) said today.

“Donors are clearly interested in the early transition countries and understand the need to do more on agriculture, given the importance of the agriculture sector to these countries’ economies,” FAO Investment Centre Director Charles Riemenschneider told a two-day meeting in Berlin sponsored by FAO, the European Bank for Reconstruction and Development (EBRD) and the World Bank.

The so-called early transition countries (ETCs) - Armenia, Azerbaijan, Georgia, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan - are the focus of an EBRD initiative that aims to stimulate market activity by using a streamlined approach to finance more and smaller rural projects, mobilizing more investment and encouraging ongoing economic reform.

Mr. Riemenschneider cited the EBRD’s ETC Fund, which pools donor funds to make it easier to match financing with projects, helping many qualify for EBRD loans or equity investment.

With financial support from the ETC Fund, FAO is working with the EBRD’s Group for Small Business in Kyrgyzstan and Tajikistan to review the state of financing to small and medium-sized agricultural enterprises.

At the two-day meeting, the World Bank will present two of its projects, in Moldova and Kyrgyzstan, which have been particularly successful models for deepening financial services in poor, predominantly agricultural economies.

The meeting is being organized by EastAgri, a network of funding institutions including private banks sponsored by FAO, the EBRD, the World Bank and the Central European Initiative (CEI), a forum for political, economic and cultural cooperation among 17 countries in Central and Eastern Europe.

Other topics of discussion include an examination of successful public-private partnerships in rural finance and agricultural development throughout the region, and the adjustments that western Balkan countries need to make to integrate their agricultural markets into European Union (EU) markets.

The meeting will also review issues limiting development of Ukraine’s agriculture sector, as well as greater coordination between donors and international financing institutions.