1st Joint Annual Meetings of Addis Ababa, Ethiopia Statement by Dr. Maxwell M. Mkwezalamba
Chairperson I am delighted to make an introductory statement at this important and historic First Joint Annual Conference of the African Union (AU) Conference of Ministers of Economy and Finance and the United Nations Economic Commission for Africa (ECA) Conference of African Ministers of Finance, Planning and Economic Development. The AUC attaches great importance to this Conference and in this regard, I wish to sincerely thank you all for attending this important Joint Conference. Please permit me also to take this opportunity to thank and congratulate the Government and the People of the Federal Democratic Republic of Ethiopia for hosting this Conference. ExcellenciesDistinguished Ladies and GentlemenThe theme of this conference “Meeting Africa's New Challenges in the 21 st Century” could not have come at a more opportune time, having gone eight years on from the onset of the dawn of the 21 st Century. It is common knowledge that issues like Growth and Employment, Climate Change, Good Governance and Building of Capable States, and the Millennium Development Goals (MDGs) are some of the key challenges facing Africa in the 21 st Century. Of course, these challenges are not new, but have emerged as pertinent and critical issues that need to be addressed in order to reduce poverty for the majority of the populace and promote sustainable development of the Continent. Should we indeed agree that these are the New Challenges in the 21 st Century, then the question is the following: “How can Africa with its numerous resources, potentials and its strategic position in the world economy, albeit its limitations, meet these new challenges in the 21 st century? In the area of growth and employment, employment creation has been identified in Africa as the key to the fight against poverty and as the most direct and arguably, most important channel through which growth will reduce poverty in Africa . African Heads of State and Government have made a pronouncement on this, including during their Extra-Ordinary Summit on Employment and Poverty Alleviation held in Ouagadougou , Burkina Faso , in 2004 when they adopted the Ouagadougou Declaration and Plan of Action on Employment and Poverty Reduction. As we are all aware, African countries have in recent times experienced impressive and remarkable economic growth rates, with most countries on the continent achieving real gross domestic product (GDP) growth rates of at least 5 percent per annum within the last three-four years. According to the Issues Paper for this Conference on “Meeting Africa's New Development Challenges in the 21 st Century”, in 2007, 25 countries in Africa achieved real GDP growth rates of 5 percent or more. It is also further reported that that overall, the continent grew by 5.8 percent in 2007 and that this growth rate is likely to be maintained in 2008. However, this growth has failed to generate adequate employment and significantly reduce poverty owing among others to its dependence on the capital-intensive extractive industry, which is essentially an enclave economy with little, if any, linkages to the rest of the economy. The 5.8 percent growth rate is also less than the rate required in order to reduce poverty and attain the Millennium Development Goals. It has also been observed that the relatively high economic growth rates may not be sustainable owing to their having largely emanated from increases in demand for Africa 's commodities and price of fuel. It is a fact that the benefit from economic growth is derived when high rates of economic growth lead to sustained increases in productive capacity, employment opportunities and rising productivity. The challenge facing the continent, therefore, is how to promote sustainable growth and ensure employment creation. Among the options available include: raising factor accumulation (physical and labour capital), promoting economic diversification, investing in infrastructure, managing demographic pressure, creating a conducive environment for private sector participation, supporting micro, small and medium-scale enterprise (MSME) development, promoting regional integration, and taking advantage of the emergence of China and India as major global actors to expand trade and investment opportunities. The recent past has witnessed an escalation in food and energy prices, with likely adverse consequences for growth and employment, governance, and peace and security. According to the Issues Paper, demand and supply factors account for the rise in food prices. The increase in consumption in China and India , for example, and the increased use of grain in biofuel (ethanol) production help to explain the increase in food prices. And the rise in energy prices is negatively affecting the supply side through increases in production costs, especially in agriculture and transport sectors. Some proposed solutions to averting the increase in food prices include increased application of farm inputs such as fertilizers, adoption of high crop yielding varieties, farm mechanization and irrigation. This may require some government intervention, as has happened in Malawi in the last three years when the Government subsidized fertilizer prices. In line with the Comprehensive Africa Agriculture Development Programme (CAADP), countries should allocate at least ten (10) percent of their budgetary resources to agriculture. Regarding oil price increase, following the Decision of the Assembly of Heads of State and Government held in Khartoum , The Sudan, in January 2006, the African Union Commission and the African Development Bank are undertaking feasibility studies on the establishment of an oil fund to mitigate against oil price increases for oil importing countries. The establishment of this Fund needs to receive the support of Ministers of Finance, Economy and Planning. Climate change was comprehensively discussed yesterday. All I need to say is that climate change is high on the African Union agenda because of the threat it poses to Africa , notably in the areas of achieving the Millennium Development Goals (MDGs) (such as constrained agricultural production and increasing food insecurity), growth and employment, as well as peace and security. In January 2007, for example, the Eighth Ordinary Session of the African Union Assembly of Heads of State and Government held here in Addis Ababa considered the challenge of climate change. At the end of their deliberations, our Leaders called upon African countries to develop policies and strategies to combat this challenge. In addition, they called upon Africa's development partners to support African Union Member States and the Regional Economic Communities (RECs) to effectively integrate climate change adaptation and mitigation measures into their development plans and/or poverty reduction strategies. On their part, the AUC, the ECA, and the Global Climate Observing System (GCOS) have already taken steps in this direction by launching a plan of action, “Clim Dev Africa ”, which aims to mainstream climate information into political decision-making processes. This Conference may wish to come up with financing mechanisms that African countries should consider to finance the technological options available in mitigating the adverse impact of climate change. It would also be useful to discuss whether there is need to create new regional facilities for financing climate change interventions. Finally, the Ministers may wish to exchange views on how climate change mitigation and adaptation may be integrated into national and regional development frameworks, including national development plans and/or national poverty reduction strategies. Regarding governance and capable state, as a challenge, available evidence suggests that Africa has made considerable progress in improving systems of political and economic governance, but there have also been some setbacks. The capacity of the state in administering regulatory and technical capacities is still inadequate in many African countries. Corrupt practices continue to exert heavy economic and social costs. A major issue is how to tackle tax evasion and corruption in the tax system, which remain rampant in many African countries. This not only reduces the government's revenue base and capacity to deliver basic services, but also thwarts transparency and good economic management. Issues surrounding improving public financial management are, therefore, key. But what measures should be put in place to improve public sector financial management? The NEPAD's African Peer Review Mechanism (APRM) forms a collectively agreed upon mechanism for good political and economic governance on the continent. As an integral part of the African Union's NEPAD Programme, the APRM aims at fostering the adoption of policies, standards and practices that lead to democracy and political governance, economic governance and management, corporate governance and socio-economic development. To date 28 countries have acceded to the APRM and reviews have been completed for seven? countries. The challenges, however, include lack of adequate financial resources for undertaking the reviews, and implement the recommendations arising out of the reviews (APRM National Plans of Action). The question, therefore, relates to how the National Programs of Action can be integrated in national development plans and/or national poverty reduction strategies. Regarding the HIV and AIDS epidemic, which was extensively discussed yesterday. The availability of long-term financing for health in general and the HIV and AIDS epidemic in particular is a challenge that requires urgent attention. African Heads of State and Government have committed to allocate at least 15 percent of their budget to health and yet many African countries have not done this. The international community has also pledged support to the financing of HIV and AIDS, However, delivery on this pledge has not been forth-coming. The questions here are: • What is the scope for additional private financing of HIV and AIDS treatment and care, and mitigation in Africa ? • What possible new international financing mechanisms can countries consider? • What measures should countries adopt to increase allocation to health to meet the minimum 15 percent of national budget agreed in the Abuja Declaration, taking into account comments made yesterday that focus should be on outputs rather than inputs and also there are competing demands on government budgetary resource? Finally I wish to pose the attainment of the MDGs by the target date of 2015 as another serious challenge. Both the ECA Conference of Ministers of Finance Planning and Development of 2007 and the African Union Conference of Ministers of Economy and Finance of 2005 have discussed this issue and recommendations have been made to our Heads of State and Government. However, existing evidence suggest that many African countries are off-track in meeting the MDGs. The UN Secretary general has launched an initiative to mobilize international support for the attainment of the MDGs in Africa . I challenge this Conference to come up with innovative proposals that will ensure that Africa attains MDGs by the target date of 2015, including how MDGs can be mainstreamed in national development plans and exploring alternative financing sources, both domestic and foreign. Excellencies Distinguished Ladies and Gentlemen These are some of the challenges facing us in the 21 st Century. The Conference may come-up with additional challenges. Your task is to discuss these challenges and any others you may deem relevant and propose actionable policy recommendations.
I thank you very much for your kind attention.
|
