Conference of African Ministers of Finance, Planning and Economic Development Statement by Donald Kaberuka, President, African Development Bank Addis Ababa, 2 April 2007
Chairperson Excellencies, Ministers, Ladies and Gentlemen 1. I am glad to be here to reaffirm the growing cooperation with the ECA and to share our perspectives on how to accelerate progress to the MDGs – and economic growth in Africa Our growing collaboration with the ECA in domains as varied as statistical capability, trade issues, public sector reform and regional integration are precisely aimed at providing support to our countries for the MDGs. I want to pledge my support and thank Abdoulie Janneh for your leadership 2. This is not the first time leaders of Africa at different levels tackle the issue of the MDGs; we know the facts:
3. Monitoring, measuring progress require a good statistical base, I am pleased about our cooperation here, and to report about the Bank's recently completed intensive data collection exercise in 48 African countries. We have just published the first results and I understand they were also presented to the meeting of your experts last week. I would like to take this opportunity to thank all the 48 participating countries for the excellent work and their collaboration over the past 18 months that has generated the input data which gives a sound statistical base. It is critical that we as Africans are able to produce such comprehensive information on our economies. The AfDB, on its part, will ensure that the efforts by countries are adequately supported in order to maintain the credibility of the process and the results. 4. Today I want to explore further with you a bit further some of the issues around economic growth, which of course is a necessary condition for MDGs, I am referring to economic growth which is:
5. Let me share some of my thoughts:
The choice we make is significant, as Africa will be the battleground for natural resources, energy, arable land, water, etc. This new landscape calls for a paradigm shift in our thinking. Probably we have been thinking too much backwards not forwards. Today the choice we make on issues of infrastructure, regional integration will critically influence our ability to enable Africa grow faster in this new landscape. 6. Today, the world is mesmeric by the Dramatic Growth in China but we see also that is relative wages between and other countries change, some of the jobs are going to places such as Vietnam. But wages are lower in Africa. On closer analysis shows, we see issues of poor infrastructure but also skills levels. Recent studies show that the real challenge for Africa is indeed the level of investment but above all productivity of investment of course competitiveness is about relative wage levels, loyal hard working labour. But ability to master technology, skills, and ability to produce higher value good and services are critical in our ability in the coming years to attract investment and jobs. Africa is the next frontier but how do we prepare: President Mkapa this morning articulated issues of the Business Climate, the risks and costs of doing business investment in H.Education, tech education is another. Let me touch on another issue I wish to put on the table. In the 1960's Africa's economies were growing but could not keep up with bourgeoning populations and poor infrastructure. 7. In the 1970's and 1980's even the limited growth was curtailed by internal and external factors. We extend the period of structural adjustment, but it is now nearly over it, is in its very last laps – With few exceptions, most countries getting to be mature stabilizers. The next phase, require, at country to make certain choices in the timing, sequencings and phasing of policies. There is an intellectual and bureaucratic challenge on the issue of POLICY SPACE. We, today, all acknowledge Asia's progress. If you asked visitors to China in 1972 after the Cultural Revolution – could they have predicted this? Doubt even arose in the 1997 financial crisis. Two things are clear: First, Asia's success in reducing poverty is strongly correlated to economic growth. Yes, it is still a region of paradox, and still contained ½ of humanity's poor people. They still indeed have challenges of addressing market failures, invest directly in MDG related targets and pick out poverty pockets like Nepal, Bhutan, etc. But by 2015 – the region will have attained MDG 1, halving income poverty. By 2020, poverty will have been conquered.
It will be a major player world global issue But and this is my second point, they have not always followed conventional paths, they were able to exercise policy space while adhering to key fundamentals essential for a sound economy. This is the case for issues like the relative role of the State, the political economy, managing currencies, democracies and so on. 8. Today much of Africa is growing. It is fragile and there are risks, the growth has benefited from debt relief, internal reforms, policy gains, peace but also favourable external environment, especially commodity prices. This raises some issues of external risks = unexpected change – down cycle in commodity recession in major economies? Received wisdom is that current world imbalances will not lead to desirable adjustments. But of course, no one is certain how it will all unwind World economy – in 5 th year unpredicted growth
Are good times here to stay? We must look forward and plan carefully Again the dominant view – is that risk of sudden, excessive correction is unlikely although we must contend with risk of revival of protectionism But of course the biggest risk of all is political stability and risk of backsliding What happens is the 5/6 large countries containing half of Africa's population with major spillover effects will be key. We all know that, Africa's nemesis has always been that of high level of unpredictability of policies It is obvious to all of us that continual pace of growth can only be maintained in regional context, larger regional markets for goods and services which can only increase diversity and improve efficiency of resources use and Africa's competitiveness AfDB Role Focus on core areas that are linked to economic growth while keeping focus on MDGs • New VP INFR , REG INT Private Sector Water (MDGs). We are giving emphasis to roads, energy, mass transit systems, water and sanitation. This will absorb 60% of our resources. • Beginning to look at impact of climate changes and urban explosion • We have reorganized internally, expanding our capacity and to complement with other institutions. • We are making of our strong balance sheet and very sound financial position, strong shareholders to support our countries along this path. This year alone, we committed 3.5 bn. and are looking to triple our private sector operation. Today we are engaging our donor to ensure the Gleneagles commitments to ensure sustainability of ADF and IDA after Debt cancellation:
Today, we see in LATAM, ASIA, that Poverty can be eliminated. The world knows what, how to deliver – It has the resources. Africa knows that it must mobilize its own efforts, resources, join up its energies for economic growth. But it will not happen if no political stability and stability of policies, which are fully owned and if we do not make that extra effort to interact our markets. I want to assure you of AfDB as your partner in:
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