Keeping the faith

05 April 1996

The meetings of OPEC oil ministers still make headlines around the world, despite perceptions that the influence of the organisation is on the wane. The work of the OPEC Fund has never attracted such publicity although it is a better advertisement for the idealism that fired OPEC's founders than the scramble that so often surrounds OPEC ministerial meetings. Set up to help the world's poorest countries, the OPEC Fund celebrates 20 years of operations this year and remains above the politics that has always affected OPEC itself.

'The founders felt the need to have southsouth co-operation and that was helped by countries coming together,' OPEC Fund Director General Yesufu Abdulai said in an interview with MEED in Vienna on 26 February. 'The rules of the game are completely different - we can do many things that no one country can do on its own.'

The fund prides itself on the high principles that led to its creation. 'One has to understand the motivation of the OPEC vision. Most members are Muslim and nothing ranks higher than giving assistance. To share is not a sign of affluence, it's something that comes naturally.'

Nevertheless, the fund was created as the OPEC countries were enjoying rapidly rising incomes and global inflationary pressures were weighing heavily on some of the least developed countries. They were also in a position to help those countries directly. 'In the early years we assisted with financing budget deficits through our concessional loans for balance of payments support. We also devoted a lot to energy development and concentrated on helping countries to be more self-reliant, so they didn't have to import so much oil. We were a new institution and we wanted to ensure that money got to the recipient countries very quickly.' Contrary to an increasing trend for national development agencies to target their efforts on particular countries - - a selection that is sometimes influenced by trading prospects the reach of the OPEC Fund remains extensive. It operates in 93 countries in Africa, Asia, Latin America and the Caribbean, and Europe, providing project and programme loans, balance of payments support and technical assistance directly.

The fund also contributes and provides loans to other international agencies. These include the development agencies of member states, such as the Kuwait Fund or the Arab Fund for Economic & Social Development (AFESD), and the regional development banks in Africa, Asia and the Americas. By the end of 1994 the fund had approved total commitments worth $4,277 million and dis bursed $3,182 million.

'We couldn't decide to concentrate on a few countries. I do not see us trying to narrow our focus - the more we spread our assistance to the largest number of countries, the greater the impact we can have. We will always spread the little we have as widely as possible,' Abdulai says.

The partnership principle is central to the whole concept of the fund and has been a strong feature from the outset. A typical sector project supported by the fund might include co-financing from the host government, a regional development bank, the World Bank and a UN agency.

Loans are usually administered by an agency other than the OPEC Fund. This helps to contain the fund's overheads and keep it efficient. The fund has about 80 permanent staff based at its Vienna headquarters, a number that has risen only slightly over the years.

'To the extent that it's possible, it's a good strategy and our institution, more than many others, is based on the co-operative principle. We are present in more than 90 countries and we couldn't have done it if we hadn't co-operated from the fund's inception.'

Another key feature of the fund's policies has been to treat all comers equally and not to discriminate against any applicant on political grounds. Despite the boycotts and embargoes imposed by governments and other agencies the OPEC Fund has worked with countries like Myanmar, Nicaragua and Vietnam regardless. All that matters to the fund is that the money it provides is used appropriately. 'We ensure that the aid goes to good projects - - we are free to turn down projects if they do not qualify technically. Our members must be satisfied that the money is well spent.'

The pattern of spending has altered over the years and the fund's orientation has changed in response to new developments. 'As an institution you assess what you're doing as you go along.'

The initial emphasis on energy development and balance of payments assistance weakened in the 1980s. 'Circumstances were changing in many parts of Africa - there were droughts and famine. We slowly changed our emphasis from capital intensive projects to the social sector, to touch more of the people directly.'

Social projects enjoy less prestige and do not always attract the big donors but for Abdulai they presented the fund with an opportunity to be distinctive. 'It was one area where we could fill an obvious gap.Unless you provide basic needs - improved health and education - developing countries are not going to develop.' The fund does not carry the clout of the major multilateral agencies but believes it can help others to help themselves. 'We are modest in our assessment of what we can do. We don't believe we can solve the problems of the world.'

And the fund is ever keen to stress the extent to which responsibility is shared with others. 'When you co-finance with other agencies you cannot properly attribute all the success or failure to yourselves, even when we co-finance with a government alone. If the project succeeds, we are happy, but the fund has no projects in one sense. If it succeeds, the credit should go to the country.'

Circumstances have also changed for the OPEC states themselves. They are no longer generating the surpluses they enjoyed in their heyday but this has not affected the work of the fund. 'Members continue to make their payments. Not all the pledges have been drawn down and we have no need of further funds.' The problems that do arise are more often with recipient countries that fail to meet schedules for co-financing. 'If there are problems it is due usually to the inability of a country to deliver money in time.'

Looking to the future, Abdulai would like to see the fund consolidating its record while remaining receptive to new needs as they emerge. 'I do not foresee any major changes in direction. If we can deepen what we are doing now, that would be an ambition worth working for.'

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