CHECK AGAINST DELIVERY

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Opening Statement by Dr. Kandeh Yumkella Director-General at the thirty-second session of the Industrial Development Board

Vienna, 29 November 2006

Mr. President, Ministers, Excellencies, Distinguished Delegates, Ladies and Gentlemen,

It is my great pleasure to welcome you to the thirty-second session of the Industrial Development Board. It is a special privilege to address an audience that includes several dignitaries whose presence contributed significantly to our festivities yesterday. I wish to express my gratitude once again to the Ministers from Côte d’Ivoire, Haiti, , Sri Lanka, the Syrian Arab Republic and Uruguay and indeed to all of you who joined our celebrations, for being with us on this important occasion.

I would also like to reiterate my special thanks to the Austrian Ministry of Foreign Affairs and to the City of Vienna, for their support and generosity in making this event a success.

As we turn to the official part of this Board session, I wish to express my confidence in our President, Ambassador Soltanieh of the Islamic Republic of Iran. Together with the members of his Bureau, and based on the experience of our thirty-first session, we can be confident of smooth proceedings in the days ahead.

Mr. President, Distinguished delegates,

It was about a year ago that you entrusted me with the task of guiding UNIDO through the next four years of its history. This year has been both challenging and exciting. Much has been done, and much has been achieved. The measures I have taken have spanned a wide spectrum, from administrative and structural refinements, staff assignments and a review of core managerial processes to innovative programmatic enhancements. I have also travelled extensively to meet our stakeholders in all regions of the world to reassure them of UNIDO’s commitment and support. In addition, we at UNIDO have contributed actively to the intense debate on UN coherence. I will revert to all of these issues in the course of my statement.

TC delivery [slide 1]

At the outset, I take pride in presenting to you a positive picture in terms of UNIDO’s technical cooperation (TC) delivery figures. Cumulative data for the first ten months of 2006 show that the value of our TC services amounted to US-$ 97.6 million. This represents an increase of more than 4 per cent over the corresponding figure for 2005, and an even more impressive increase of almost 11 per cent relative to the more directly comparable year 2004, the first year of the past biennium. These increases have been achieved in spite of many challenges that my management team, like all other new administrations, has faced.

In the June Board session, I reiterated my commitment not only to continuous improvement but also to improvement within continuity. I stressed my belief in the benefits of stability and the need to minimize any operational disruptions. The TC data that I have just cited show clearly that our determined yet cautious approach has paid off. Against this backdrop, my expectations for the future are bold and ambitious – but not, I hasten to add, unrealistic [slide 2]. I firmly believe that in the medium-

2 term, say five years from now, we should be able to raise our annual delivery of TC services to US$ 150-170 million based on our core strengths, thematic priorities, sharp focus and carefully selected strategic partnerships.

While we have been increasing our services and establishing the foundations for robust growth, I am also pleased to report that our Member States have reciprocated by placing an ever-increasing degree of confidence in UNIDO. This is demonstrated by an impressive collection rate of assessed contributions, of around 93 per cent, so far during 2006. While I urge all Member States to settle their arrears and pay their contributions in full and on time, we have shown in the past, e.g. through payment plans, that UNIDO is sensitive to the constraints some of you have been facing.

Quality focus

Mr. President, Distinguished delegates,

I wish to assure you that I will never compromise on UNIDO’s quest for excellence. Increases in TC delivery must not and will not be achieved at the expense of quality. I will keep challenging my staff to generate tangible impact. We will strengthen our capabilities and refine our approaches to measure the results achieved for our beneficiaries. I am fully committed to the principles of results-based management, or RBM. While we are in the process of refining our own RBM systems, which have been recognized as being among the most effective introduced within the UN system, we are also eager to learn from the experience gained by our sister agencies. We recognize that RBM is an imperative, but we also recognize that it is not easily achieved. Responding to this system-wide challenge, indeed all UN executive heads agreed at the meeting of the Chief Executives Board last month to move towards a more harmonized approach to RBM. To this end, the High-level Committees on Management and Programmes have established a joint working group, which will report to a joint session of the two committees in early 2007. UNIDO will, of course, contribute actively to these deliberations.

My yardstick of success therefore transcends the simple financial value of TC delivery. It is based, instead, on the degree to which our programmes reduce , create employment, generate exports, abate pollution, and provide energy for productive services, to mention just our key outcome dimensions.

Strengthening delivery capacities

Our ambitious programme development drive –which I will further elaborate on shortly – requires the build-up of commensurate delivery capacities. You will recall that in the June session of the Board I informed you of the status of recruitments since I assumed office. I also informed you that I had launched a comprehensive exercise of reviewing available skills and identifying critical skills gaps in the Organization, in particular in new growth areas. This exercise has now been concluded and has provided us with a sound basis for meeting UNIDO’s recruitment needs in a targeted and focussed manner.

I am now in a position to give you a comprehensive overview of recruitment activities undertaken since May 2006 when we commenced recruitment actions:

3 So far 65 professional positions have been advertised. The recruitments for 33 of these positions have been concluded. This includes the four Director-level positions at headquarters. Of the 65 professional positions, 34 were advertised to both external and internal applicants while 31 were open only to internal candidates. The latter figure includes the 23 field positions that were advertised internally in accordance with the provisions of the new field mobility policy.

I also informed the Board in June of my intention to strengthen UNIDO’s competitive selection process through the introduction of assessment centre techniques. I am pleased to announce that these techniques have already been successfully implemented for the recruitment of professional staff.

Enhanced programme development

Mr.President, Distinguished delegates,

UNIDO is now embarking on a dynamic exercise of developing new programmes. The scope is truly vast, and I am determined to make 2007, my second year in office, a year of a new programme development. Our preliminary projections suggest that UNIDO will formulate close to 40 major new programmes and projects during this period. These are expected to include some 20 integrated programmes or other country-level programmes as well as ten sub-regional, regional, and South-South cooperation programmes. [slide 3]

In particular, our renewed South-South industrial cooperation programme will gain greater momentum, especially through the establishment of more South-South industrial cooperation centres. I want to convey, once again, my sincere gratitude to the Governments of China and India for pioneering this concept with UNIDO already in 2006. The dedicated Centres just established in these countries will become fully operational in 2007, expanding their outreach and demonstrating their capabilities through programmes with impact. In the coming years we hope to be able to establish similar centres in other countries like Brazil, Egypt and South , which we perceive as important sources of technologies relevant for other developing countries.

We are also giving increased attention to sharpening our poverty focus, primarily around the powerful concept of value chains. In this connection, a special thematic retreat was organized for the first time ever in October 2006, where three of our branches discussed how to frame and organize their work jointly around this concept. Similar thematic retreats are planned for the areas of trade capacity-building and environment and energy in 2007. In addition, a number of experienced staff members will be assigned the task of cross-organizational management of our three thematic priorities, including the forging of strategic inter-agency partnerships.

In the context of our poverty-related theme, and with a view to enhancing our dialogue with the poorest among our Member States, we will organize a special LDC Ministerial Meeting during the nest General Conference in 2007.

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Mr. President, Distinguished delegates

The issue of inter-agency cooperation is particularly close to my heart. I believe firmly in the need for UNIDO to work together with complementary organizations to broaden our response to the development needs of our Member States. I am therefore determined both to intensify cooperation with our existing partners, such as UNEP, whose Executive Director will be addressing this meeting through a video link shortly, and other organizations with whom we have so far only cooperated on a case- by-case basis. Specifically, I would like to cite the recent signing of an MOU with FAO, which provides for the placing of UNIDO staff in Rome, hosted by FAO, in order to develop closer links and prepare joint programmes in the areas of agro-based industrial processing and biofuels. In this context, closer cooperation has also been agreed with IFAD.

Our programme formulation activities in 2007 will also continue to give emphasis to issues related to energy and . The recently published review on the economics of climate change by Sir Nicholas Stern highlights the need for firm action in this area. It notes not only that climate change presents very serious risks for the world at large, but also that it will be the poorest countries and people – who have contributed least to the problem – who will suffer the earliest and most profound impacts of climate change. Fortunately, the review acknowledges that scope still remains for stabilizing the climate at high but manageable costs, and provides specific recommendations on collective action to adapt to climate change. UNIDO will certainly expand its contributions in this area, especially by facilitating the transfer and adoption of technologies with reduced greenhouse gas emissions.

To this end, and in accordance with the decision taken at the last session of the Board, UNIDO has taken steps to gain direct access to funding from the Global Environment Facility (GEF) beyond the area of persistent organic pollutants (POPs). The other focal areas of GEF in which we believe that UNIDO could benefit from direct access include climate change, international waters, land degradation, and certain types of biodiversity. I made this point at the Third GEF Assembly in Cape Town last August and I anticipate that we will be granted improved access to GEF funding at the forthcoming meeting of the GEF Council.

Improving managerial and administrative systems

If we do gain improved access to GEF resources, we will also be required to accept the more stringent fiduciary standards, which are expected to be adopted by the June 2007 meeting of the GEF Council. I am committed to personally drive the process to ensure UNIDO’s compliance with these standards.

Similar adjustments will also be required in conjunction with the move towards full compliance with the new International Public Sector Accounting Standards (IPSAS), which the UN system’s Panel of External Auditors considers an essential component of good governance, accountability and transparency. IPSAS were approved by the General Assembly last July for adoption by the UN by 1 January 2010. At the same time, the General Assembly also approved the adoption of a new Enterprise Resource Planning system to replace the existing UN Integrated Management Information

5 System (IMIS) and again, this will require a targeted response from UNIDO. As a first step in this direction, after careful analysis, we have decided to discontinue the migration of UNIDO Human Resources and Payroll System to the IMIS. UNIDO will continue to explore various possibilities to find an optimal system that will facilitate full compliance with IPSAS. Detailed information on the adoption of IPSAS will be provided to the future sessions of the governing bodies in order to enable them to take informed decisions.

While financial system reforms will thus be a key challenge ahead, we have already achieved major reforms of the Organization’s human resource management policies and systems. Milestones include the new field mobility policy; the sophisticated and transparent recruitment process; the empowerment of Unit Chiefs; and the rewards for excellence, teamwork and innovation, which you witnessed during the UNIDO 40 celebrations yesterday. This delivers on the promise in my Inauguration Speech: “New avenues for career development and new approaches to human resource management will be initiated with the highest degree of transparency and integrity. The importance of field experience and mobility for staff will be highlighted, and I will introduce a field rotation scheme – which will not exclude even the senior management of the Organization. A culture will be nurtured based on motivation rather than control…I shall encourage creativity, stimulating learning, challenging routines, awarding excellence and search for organizational innovation.”

I will continue on this path towards achieving excellence. A further overhaul and rationalization of our core processes is underway, and rotations of managers will be effected wherever necessary in the interest of greater effectiveness.

UN reform process

Mr. President, Distinguished delegates,

The adoption of new management systems by UNIDO represents only one small aspect of the much more wide-ranging process of adjustment and reform currently being deliberated upon in New York and the capitals of Member States. A significant development has been the recent submission of the report of the High-level Panel on System-wide Coherence established earlier this year by the Secretary-General. As I indicated in my statement to the last session of the Board, UNIDO has fully embraced this laudable initiative from the outset, and actively supported its implementation, inter alia by hosting a meeting of the Panel in Vienna last May.

Against this background, I am pleased that the main recommendations of the Panel are broadly in line with the approach advocated by UNIDO [slide 4]: Sharpening and aligning the focus of our work to internationally agreed development goals; Forging alliances with complementary partners to strengthen synergies; Actively pursuing inter-agency cooperation in our thematic priorities, especially under the auspices of the CEB; Integrating our activities at the country level; Continuously improving the quality and efficiency of our programme delivery; and Harmonizing our business practices with the rest of the UN family.

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In helping take the recommendations of the Panel forward, UNIDO will closely follow the review processes that will shortly be underway at various levels, specifically the [slide 5]: Consultations to be led by the President of the General Assembly; Views to be presented by the Secretary-General and his successor; Common position to be developed by the CEB; Consultations among specialized agencies with similar interests; and Dialogue among UNIDO Member States

I consider it essential that our position on the detailed recommendations of the Panel draw on these consultative processes and build on the views of our Member States. While welcoming the overall thrust of the Panel’s report, we would need to seek clarification on a number of issues relating to the multiple roles envisaged for a strengthened UNDP under the “One UN” concept.

More specifically, we would need to seek assurances that: The “One Programme” proposal would be country-owned and led, and ensure that the full range of expertise available in the UN system, especially the specialized agencies, is drawn upon; The “One Budget” proposal would provide adequate, stable and predictable multi-year funding; The “One Office” proposal would provide for sufficient flexibility for specialized agencies to adopt the most cost-effective arrangement for their field representation while also contributing to coherence at the country level. The proposal for a stronger partnership between UNEP and UNDP in the cross-cutting area of sustainable development would not lead to a take-over by UNDP of environment-related projects of the sectoral agencies. The role and functioning of the CEB would not be undermined but strengthened in the review process.

In the months ahead, UNIDO will participate actively in the consultative processes relating to the recommendations of the High-level Panel. To keep abreast of developments and ensure that the perspective of UNIDO is given full consideration in the relevant fora, I have decided to appoint a Special Adviser on UN System Coherence, who will be posted in our New York Office.

UNIDO/UNDP Cooperation Agreement

Mr. President, Distinguished delegates,

As the Board is aware, UNIDO has for some time sought to achieve increased coherence in its TC services by entering into various forms of partnership with other development organizations. One of the most important of these partnerships is our agreement with UNDP, which has recently been the subject of a thorough joint assessment by both agencies. The report of this assessment is a prominent item on the agenda for this IDB, and I look forward to your substantive discussion and policy guidance. At this stage, I only want to make a few brief points on the Agreement, and to commit myself to close consultations with Member States on this issue over the coming months.

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The joint assessment underlines that the Agreement is of real value and should be continued. Yet it also calls for modifications to ensure that the Agreement fulfils its potential. The joint management response by the UNDP Administrator and myself reflects these conclusions and emphasizes UNIDO’s and UNDP’s commitment to achieving the aims of the Agreement and the related Framework. A joint task force will be established soon to take this objective forward.

In essence, the Agreement is aimed at increasing UNIDO’s ability to help countries achieve sustainable industrial development through a cost effective presence in a larger number of countries. To this end, it is my intention to expand the number of UNIDO Desks beyond the current 15 planned for this year to 20 by the end of 2007 and 30 by the end of 2009. However, I would like to assure Member States that any such expansion will not be at the expense of the established UNIDO field representation, and will certainly not result in the closure of any of the existing country offices. I would also like to emphasize that each proposal to open a new Desk will be subject to a careful assessment of the prospects for programme development and for raising additional funding in that country. Finally, we shall pay special attention to a long-term strategy for financial sustainability of UNIDO desks through a combination of funding arrangements. First signals that some donors may be considering to invest in UN system coherence in general, and in our model in particular, have been received. In addition, possible self-funding schemes by host countries, will be considered.

Clearly, the Agreement provides a concrete example of coherence and cooperation between different parts of the UN System. It is a step towards the “One Office” objective and is consistent with the move towards “One Programme” and “One Budget”.

Public advocacy

Mr. President, Distinguished delegates,

Member States have frequently recommended that UNIDO should take further steps to strengthen its profile and enhance its visibility. At its last meeting in June, the Board adopted a decision to this effect.

We have taken important steps in recent months to implement this decision in all its dimensions, namely contributing to intergovernmental and inter-agency bodies, promoting partnerships within and outside the UN system, and advocating UNIDO’s mandate in major international events.

Specifically, with regard to promoting partnerships, we have strengthened or initiated partnerships with FAO, UNEP, GEF, IAEA, the Ibero-American Secretariat, Microsoft, the African Business Roundtable, the African Union, the Crans Montana Forum, and the EU. In the case of the EU, we have formally inaugurated our new Brussels Office earlier this month, to facilitate a close liaison between UNIDO and the European Commission. The special panel discussions with the ITC and WTO, which we are hosting today, offer further testimony to our desire for strong partnerships.

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Turning to advocacy in major international events, UNIDO hosted the fortieth meeting of the Chairmen and Coordinators of the G-77 Chapters in Vienna last June, and the Energy Security Summit for Latin America and the Caribbean last month. Similar meetings of this kind are planned for 2007, with a second Energy Security Summit being planned for the LAC region in Brazil, and others for the Asian and African region in Malaysia and Algeria, respectively. In addition, a Food Security Summit will be hosted jointly with FAO in India in the second half of 2007, and UNIDO will contribute substantively to deliberations of the African Union Summit for 2007, which has chosen industrial competitiveness as its principal theme.

Finally, my senior management team and myself have taken a bruising travel schedule upon ourselves throughout the year to present UNIDO to stakeholders in a large number of countries in all regions. In this connection I would like to express my deep gratitude to the Permanent Representatives of the many countries we have visited for their invaluable assistance in facilitating these missions, and in many cases for accompanying us on these missions. Thank you very much indeed!

At the same time, we are also taking steps to enhance the impact of our publications programme. The Annual Report and the Industrial Development Report are both being completely revamped to make them into powerful tools for communicating our key messages.

Summary and outlook

Mr. President, Distinguished delegates,

In conclusion, allow me to recapitulate my principal messages [slide 6]: First: we have achieved programmatic continuity, and in so doing have further increased the level of our TC delivery; Second: we have introduced managerial innovations that have increased our efficiency ; Third: we have been a proactive partner in the UN reform process and will continue to support steps in this direction, while expressing our legitimate concerns where necessary; Fourth: we have worked hard, with visible success, to raise the profile of UNIDO in the global development community.

These achievements notwithstanding, we will continue to press ahead to strengthen UNIDO. I have presented this session of the Board with a detailed overview of the activities we propose to undertake in the 2008-2011 period, which complements the equally comprehensive review of the implementation of the 2006-2009 medium-term programme framework that I submitted to the last session of the Board. I also plan to call a retreat of my senior management team early next year to launch a review of our corporate strategy, which needs to be brought in line with our three thematic priorities and the evolving external economic environment.

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Mr. President, Distinguished delegates,

With this brief outlook into the future I would like to close my statement for today. Not however without deeply thanking H.E. Madame Haruko Hirose, the new Japanese Ambassador in Morocco, for her contribution, commitment and dedication to UNIDO and not without warmly welcoming Mr. Yoshiteru Uramoto, who will soon join UNIDO as her successor in our management team.

Thank you very much for your attention.

10 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Industrial Development Board, Industrial Development Board, nd 32 Session, 29 Nov. - 1 Dec. 2006 32nd Session, 29 Nov. - 1 Dec. 2006

Opening Statement of Director-General Kandeh K. Yumkella

www.unido.org www.unido.org Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 1 Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 2

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

TECHNCIAL COOPERATION DELIVERY excluding SRA) in US$ million TECHNCIAL COOPERATION DELIVERY PROJECTION (excluding SRA) in US$ million (as at October) (as at December) 110 170 160 projected for 2011 = 150-170 100 97.6 93.8 150 88.2 90 84.7 11% 140 81.4 130 80 74.3 74.8 120 average 2002-2005 70 68.7 68.5 110 = 97.1 112.9 59.4 100 60 98.8 90 94.7 50 80 81.8 40 70 60 30 50 20 40 30 10 20 0 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 3 Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 4

1 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Programmes to be formulated 2007 Country Regional + SS Afghanistan Mongolia AMU Angola Morocco Arab / African Cambodia Namibia CEMAC Cape Verde Oman GCC China Pakistan LAC El Salvador Paraguay Maghreb Equatorial Guinea Rep. Congo (Braz.) SADC Gabon Rwanda India Syria South South: Lebanon Timor Leste India Liberia Zambia China Libya

Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 6

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

UNIDO approach in line with recommendations of Coherence Panel

• Sharpened focus aligned to internal development goals

• Alliances with partners to strengthen synergies

• Thematic inter-agency cooperation within CEB

• Integration of activities at country level

• Continuous improvement of programme delivery

• Harmonized business practices with UN family

Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 8

2 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

UNIDO position will draw on Coherence Panel review process

• Consultations led by President of the General Assembly

• Views of Secretary-General

• Common position developed by CEB

• Consultations among specialized agencies

• Dialogue among UNIDO member states

Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 9 Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Principal messages

1. Programmatic continuity and TC delivery increase

2. Managerial innovations have increased efficiency

3. Proactive partner in UN reform

4. UNIDO profile raised

Opening Statement of DG Kandeh K. Yumkella 32nd Session IDB, 29 Nov. - 1 Dec. 2006 11

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