Vice President, Operations of the African Development Bank Group

26 March 2006
Cairo, Egypt

Introduction

Your Excellencies,
Distinguished Participants,
Ladies and Gentlemen,

On behalf of Mr. Donald Kaberuka, president of the African Development Bank, its staff and myself, I would like to express my pleasure to participate in this important Plennary. At the outset, allow me to convey the best wishes of Mr. Kaberuka who would have liked to be here today but could not due to an earlier commitment.

In particular, he has asked me to express, on his behalf, his profound appreciation to the Government of Egypt in hosting this important event and to the ECA for inviting the Bank to be part of the discussions that assess the achievement of the PRSP process and the remaining challenges in meeting the Millennium Development Goals --goals which are dear to his heart and consistent with his Vision for the continent.

Finally, it is indeed a great honor and a privilege for me to be here to share the experiences of the African Development Bank on poverty reduction and to listen to the views of your excellencies and distinguished participants on the way forward for fighting poverty in Africa.

Your Excellencies,
Ladies and gentlemen

It is important to state upfront that we have achieved a great deal in the last few years in terms of galvanizing support for poverty reduction and achieving the Millennium Development Goals. It is equally noteworthy that we all face enormous challenges—challenges which require the continuation of concerted efforts at the national and global levels. We, therefore, look forward to listening to the various perspectives on the achievements so far and on the challenges ahead.

Permit me to begin my remarks with the recognition of the positive changes that have occurred in the continent since the reform Programmes were put in place beginning in the mid-1980s. In this regard, the economies of many African countries have begun to grow, and the deep macroeconomic imbalances that characterized most African countries have eased, as evidenced by the decline in fiscal deficits and inflation rates. There are also signs of improvements in systems of governance, social indicators that represent the well-being of the poor, and the climate for private investment. For instance, several countries have increasingly embraced democratic forms of government. Moreover, efforts are underway to address problems of rule of law, participatory development, and protection of property rights. The adoption of the PRSP framework in the last five years and the concerted effort for supporting the achievement of the MDGs has helped in this regard.

Despite this generally improving trend, however, the challenges facing the continent remain enormous. Poverty remains deep and widespread. For instance, the proportion of people living in absolute poverty amounts to close to half of the population in Sub-Saharan Africa. Income and gender based inequality is also very high compared to other regions of the world. In addition, the cycles of drought and famine have not declined as expected. On the health front the HIV/AIDS pandemic has yet to be checked and reversed and continues to have an enormous harmful impact on the economic and social fabric of an increasing number of countries. In fact, recent studies by a number of international institutions, including those carried out by the World Bank and the African Development Bank – confirm that with the exception of the countries in North Africa and may be South Africa; most African countries are unlikely to achieve the Millennium Development Goals. Yet, these studies also indicate that the majority of African countries can make substantial progress towards the MDGs, even if they may not reach the targets set for 2015. In order to achieve considerable progress, even more concerted efforts from both African countries and their development partners are required. This is a wake up call for all of us which leads me to highlight the PRSP experience in the last few years

Your excellencies
Distinguished participants

First, let me summarize the achievements. When the PRSP framework was launched in 2000, there was some skepticism about its viability for delivering on poverty reduction. In fact, there were concerns in the early days that it may turn out to be another “fad” of the early structural adjustment variety driven mainly by the Bretton Woods Institutions. Despite this early skepticism, the PRSP is now an accepted framework by African governments, national and international CSOs and the international development community. Accordingly, the ongoing effort towards harmonization of policies and procedures; the call for enhancement of development effectiveness, discussion on scaling-up of aid of high quality; support for further capacity building at the country level; and the plan to develop viable and coherent MDG-relevant Monitoring and evaluation systems are guided by the consensus built around support for the preparation and implementation of PRSPs. In addition, the effort to mainstream MDGs in PRSPs is gaining momentum. These are just a few of the achievements so far and I am sure we will be discussing more on the basis of case studies that will be presented in the next few days.

Your excellencies,
Ladies and gentlemen,

I would like to point out here that the work of the ECA-sponsored Africa PRSP Learning Group has contributed enormously to the strengthening of the ownership dimensions thus increasing the African voice in the PRSP process. For instance, the yearly discussions on the PRSP experience of African countries based on case studies and back-ground papers have informed the preparation and implementation of the first group of second generation PRSPs as well as capacity building efforts at the country level. In this regard, let me note with pride that the African Development Bank has been associated with the Learning Group since it was established in 2001. I would also like to assure you that the African Development Bank will continue to collaborate with the ECA, the AU, NEPAD, regional communities and others in strengthening further the ownership dimensions of PRSPs and in increasing the African voice at all stages of the PRSP process.

I would now like to highlight the persistent challenges.

Despite the many achievements highlighted above, several challenges remain. First, our understanding of the drivers of growth remains rudimentary. Indeed, there is a growing consensus that growth is a sin qua non for reducing poverty significantly and achieving the MDGs timely. However, a lot remains to be done in identifying the sources of pro-poor growth and the development of effective public actions and policies favorable to the achievement of such growth. To this end, analytical tools that would enable us to evaluate the growth prospects in a credible and operationally-relevant manner need to be developed further.

In addition, although agriculture’s contribution to GDP, employment, and exports is significant, recent reviews of the content of PRSPs show that the potential of this sector has not been fully realized. The role of infrastructural development in poverty reduction is also not articulated as in PRSP clearly and systematically. Furthermore, the coverage, in PRSPs, of the role of women in agricultural production, the constraints they face and remedial actions are weak. We, therefore, need to understand better the contributions of the agricultural sectors of African countries to the enhancement of food security, the reduction in rural poverty, and the achievement of the MDGs . Such efforts should enable us to prepare effective second generation PRSPs.

We also have to strike a “healthy balance” between the focus on the social sectors which was driven by the HIPC initiative and the productive sectors as demanded by African governments. Accordingly, we should channel additional resources in favor of the agricultural sector, infrastructural development, and gender equity in access to productive assets in order to enhance land and labor productivity, facilitate access to national and international markets for trade in agricultural products, and improve the quality and quantity of basic social services, especially by the poor in rural areas of Africa.

The education sector of many African countries also faces a number of challenges. In particular, the focus on primary education as a poverty reduction strategy at the expense of tertiary education needs to be reexamined. As articulated in the Africa Commission’s Report, it is time to revitalize higher education so that African countries can take advantage of the opportunities that globalization presents and mitigating the risks that participation in global markets entails.

Last but not least, all our efforts in poverty reduction are unlikely to bear fruit if the problems of capacity constraints in African countries persist. This is the case with the design and implementation of poverty reduction strategies, the participation of parliamentarians as well as Civil Society organizations, especially those representing women in the PRSP process, and engagement of African countries in international trade in this era of globalization.

Accordingly, we should be cognizant of the severe capacity constraints that many African countries continue to face. Such constraints have prevented many countries from developing realistic poverty reduction strategies and implementing them effectively; hampered the broadening and deepening of the participation dimensions of PRSPs and effective participation in negotiations involving the World Trade Organization. Part of the problem with inadequate capacity is that support is often fragmented and motivated by specific interests as opposed to holistic considerations in a country-led environment. It is, therefore, important to provide capacity building support in a prioritized, sustainable, and coordinated and demand driven manner.

Other challenges include addressing the fragility of donor harmonization of policies and procedures, increasing the quantity and quality of aid, and addressing the persistence of protectionism in international trade.

Your Excellencies,
Distinguished guests
.
Most of the work needs to be carried out by African countries themselves. For instance, it is crucial that these countries sustain and deepen the macroeconomic and structural reforms of recent years. In particular, further governance reforms and improvements involving the investment climate need to be carried out. These are essential to accelerating economic growth and promoting equity in all spheres of economic life. Greater commitment is also required to fight the HIV/AIDS pandemic. In addition, as highlighted earlier, African governments need to revisit the issue of channeling more resources to tertiary education, in order to enable the continent to take advantage of the opportunities that increasing globalization provides. Equal attention should be given to issues related to agricultural research, agricultural marketing and related institutions which have been marginalized in the past.
.
On the other hand, donors should ensure that they provide aid of high quality. They should also translate their pledges at Monterrey and other international fora to scale up development assistance for countries committed to designing and implementing policies consistent with the global effort to promote good governance, reduce poverty as well as increase equity, and achieve the MDGs. In this regard, it is important to emphasize – as recent studies have indicated – that many of the reforming countries can indeed effectively use additional resources.

It is equally important to harmonize approaches and procedures in order to reduce transaction costs on all concerned, improve efficiency, and lessen the demands on the limited capacities of African countries.

Donor countries will also need to continue to provide support to debt relief under the HIPC initiative. As recent cases have amply shown, HIPC countries are highly vulnerable to adverse movements in the prices of primary commodities. There is, therefore, a need to monitor closely the impact of the debt relief assistance provided under HIPC to ensure that debt burdens are reduced to sustainable levels. And regarding international trade, it is essential that the negotiations on the Doha Development Agenda are resumed as soon as possible. In particular, it is our hope that the donor countries will reconsider their stance on the important issue of agricultural subsidies.

In all these efforts, it is becoming clear that the poverty reduction strategies adopted by an increasing number of African countries have now become an important vehicle for assuring policy coherence at the national level. These strategies are also allowing the donor community to provide its support in a harmonized manner, as well as improve the effectiveness of such assistance. It is therefore essential that both African countries and the donor community explore ways and means of improving the harmonization of policies and procedures in a country-led environment. We are pleased to note that this Plennary will devote adequate time to discussing the experiences with earlier PRSPs and to set the stage for the preparation and implementation of second generation PRSPs.

At the regional level, the NEPAD initiative provides several opportunities for developing genuine partnerships and for effectively channeling support to regional initiatives. As you are aware, the NEPAD Heads of State Implementation Committee has given the Bank leadership roles in banking and financial standards and infrastructure. In both these areas we have taken important initiatives in cooperation with the IMF on banking and financial standards, and with the World Bank and other development partners on infrastructure development. Again, I would like to take this opportunity to note that lending for infrastructure is being given a very prominent role in Bank operations.

The African Development Bank and the PRSP- MDG Agenda

Distinguished Guests
Your Excellencies,

Let me turn now briefly to how the African Development Bank is addressing some of the important issues that this Plennary identified as critical for realizing the potential of PRSPs to reduce poverty and improve the prospects for achieving the MDGs

Results-Based Country Strategy Papers

First, we have decided to link the priorities in our Country Strategy Papers (CSPs)—the Bank Business Plan to PRSPs and related development Programmes. Accordingly, the new generation of CSP is informed by the poverty diagnostics, sectoral priorities, and monitoring and evaluation systems specified in PRSPs. In particular, we have embarked on ensuring that the preparation, implementation and monitoring of our CSPs are informed by the ongoing national and international results agenda. For instance, in the past year, we have changed the format for preparing country strategies to reflect the importance of improving results on the ground. In fact, our Results-Based CSPs are not only linked to PRSPs but also take into account the need to monitor and evaluate the Bank’s contributions to development effectiveness at the country level. Further, our RBCSPs are developed in a participatory manner both with the countries concerned, our other development partners including national and international CSOs. In addition, we have continued to stress the importance of greater selectivity in all our interventions. More and more, we are also mainstreaming MDGs in our RBCSs. Finally, with a view to enhance the capacity of our regional member countries, we continue to provide technical assistance in such areas as financial management, procurement, environmental management, the participatory approach, poverty analysis, and evaluation.

Allocation of ADF Concessional Resources

Second: I would like to give an overview of the procedures for the allocation of ADF resources—the consessional window to low income African countries. For these countries, we are using a system that is performance-based. This system is designed to ensure that the bulk of the resources are indeed allocated to countries with sound policies and strong institutions. For the ADF-X period, we have modified the system to give greater weight to issues related to good governance, poverty reduction, and gender equity. According to this system, strong performers receive more ADF resources compared to others. We have also developed a system to take into account the specific needs of post-conflict countries.

Harmonization

Thirdly, the Bank continues to harmonize its policies and procedures with other development partners. Much progress has been achieved in terms of procurement policies and procedures as well as in evaluation methodology. And in line with the recommendations of the Rome High-Level Forum, the Bank has developed a Harmonization Action Plan that includes operational activities aimed at mainstreaming the international harmonization agenda and the development of appropriate indicators for monitoring and evaluation of the Rome Agenda. To this end, we have collaborated with the World Bank and the UNDP in organizing several workshops that sensitized participants from Anglophone and Francophone countries about the details of the objectives and guiding principles of harmonization.

Support for MICs

Fourth: The Bank recognizes that the problems of poverty and inequality in some middle income countries are almost as bad as those in low income countries. We have taken steps to address these problems in a consistent and realistic manner. For instance, in some of these countries, efforts are underway to prepare poverty assessments, determine the causes of poverty and suggest remedial actions. In terms of assistance strategy for our middle-income countries, emphasis has been placed on improving the competitiveness of their economies to facilitate their integration into the world economy and thereby boost their growth rates. In addition, the promotion of small and medium scale enterprises in the private sector has been given high priority, given its potential to create large employment opportunities. The MIC Trust Fund also provides grant resources to the middle income countries for capacity building and project cycle activities.

Rural water and Sanitation Initiative

Fifth: Supplying clean water and improving sanitation can have multiple benefits that contribute to the achievement of the MDGs, including the immediate impact on improving the health and productivity of the general population, thereby contributing to poverty reduction; improving the health of women and to reducing child morbidity and mortality; and lessening the household chores of women and particularly girls, thereby promoting gender equality by allocating more time to education. Cognisant of these qualities, the Bank has launched a Programme for the provision of rural water supply and sanitation. The goal of the initiative is to accelerate access to these essential amenities in rural Africa with the aim -- in line with one of the MDGs -- of achieving 80 percent coverage by 2015 and 100 percent by 2025. The facility operates within the broad framework of NEPAD and the Africa Water Vision. The Bank has also established an African Water Facility hosted by the Bank, to extend technical assistance to its regional member countries as part of the Initiative, and in the context of the broader technical support that it provides for PRSP related work.

Private Sector development

Sixth: The Bank recognizes that the private sector has an important role to play in employment and income generation thus contributing to poverty reduction and social development. In this regard, the Bank’s Private Sector Development Department has been reorganized to make it more responsive to the challenges that the sector faces in Africa. Efforts are underway to ensure that it is staffed appropriately. In addition, the Bank has received financial support from the Japanese government to strengthen its activities in the private sector in the African countries incorporating the promotion of public/private partnerships including in MIC countries.

Post Conflict/Fragile States:

Seventh: The capacity of human resources and institutions in these countries is quite weak. To set the stage for subsequent operations, the Bank collaborates with its development partners to build institutional capacity in these countries. An important element of support in these countries is the development of statistical capacity to collect information for policy formulation, and implementation. A New Strategy is being developed to assist this group of countries attain the MDGs, with a specific focus on capacity building.

Knowledge Bank:

Eighth: The Bank recognizes that solutions to Africa’s development problems require a sound understanding of their causes. In this regard; it has taken specific and important steps to strengthen its research functions. For instance, its work on poverty reduction, the dynamics of growth, and the impact of oil prices of African economies will be increasingly. Arrangements are also being developed to disseminate widely both within the Bank and outside its operationally relevant findings and lessons from experience.

Improving Statistics capacity-International Comparative Programme (ICP)

Ninth: Given that many African countries suffer from the paucity of data necessary for poverty analysis, we have joined the donor community in supporting the Paris 21 Initiative. The Bank also supports the International Comparison Programme. Specifically, the Africa part is managed by the Bank. Part of this Programme is to support the capacity building efforts of African countries in developing monitoring and evaluation systems that are relevant for MDGs/PRSPs.

Conclusion

Your Excellencies,
Distinguised Guests

Permit me, before concluding, to indicate that given the Programme of the Plennary and the work of the African Development Bank that I just highlighted, it is clear that we all together in the fight against poverty in Africa. The discussions in the next two days will undoubtedly contribute to improvements in approaches that will inform the preparation and implementation of second generation PRSPs. This should in turn facilitate the achievement of the MDGs.

And I would like to assure you that the African Development Bank stands ready to cooperate fully with all African countries, the ECA, the AU and similar institutions in the ongoing effort to fight poverty in Africa thus paving the way for making poverty history.

I thank you for your attention and I wish you fruitful deliberations.