Chapter

2 Opening Remarks

Author(s):
Saleh Nsouli
Published Date:
September 2004
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Author(s)
Saleh M. Nsouli and Omar Kabbaj 

Welcoming Address, Saleh M. Nsouli

On behalf of the International Monetary Fund, it is a great pleasure to welcome you to this high-level seminar on the New Partnership for Africa’s Development (NEPAD), and to thank you for taking part in the discussions over the next three days.

I am especially pleased and honored that His Excellency the President of the Republic of Senegal has graciously agreed to be with us in today’s opening session and to deliver the keynote address. As all of you know, President Abdoulaye Wade is a leading architect of NEPAD, and Senegal remains pivotal in its support of this new initiative. It is particularly fitting, therefore, that this seminar takes place here in Dakar.

I am also delighted that the president of the African Development Bank, Mr. Omar Kabbaj, has joined us. It is his interest in capacity building in Africa that led to the establishment of the Joint Africa Institute (JAI) as a collaborative effort of the African Development Bank (AfDB), the World Bank, and the IMF.

I hope that last night’s reception by the JAI has given you a good opportunity to meet each other and renew previous contacts, as well as to get to know Mr. Michael Bauer, the new director of the JAI. This seminar very much exemplifies the interests and efforts of the JAI, which has always collaborated closely with its three founding institutions. I would like to take this opportunity to thank Mr. Bauer and his colleagues at the JAI, as well as my own colleagues at the IMF, particularly Mr. Norbert Funke and our resident representative in Dakar, Mr. Koffi Yao, for all their work in organizing this seminar. I also wish to thank the Senegalese authorities for their warm welcome and splendid cooperation in this undertaking.

Despite the progress made by an increasing number of African countries since the early 1990s toward macroeconomic stability and reform, Africa’s overall growth performance has remained inadequate, and poverty is still widespread. In sub-Saharan Africa, almost half of the population today lives on less than $1 a day. There can be no doubt that reducing poverty should be the highest priority.

Launched in 2001, NEPAD represents a promising vehicle for achieving faster growth and poverty reduction in Africa, based on sound political, economic, social, and environmental policies and reforms. Although previous continent-wide initiatives have not achieved the desired results, there is hope that this time the outcome will be different. This expectation is based on three new building blocks that are critical for successful reform:

  • The extent to which ownership and leadership of the development agenda is now African, anchored in the recognition that countries themselves have primary responsibility for improving economic and social conditions

  • The wide, new acceptance of the role of good governance in fostering growth and reducing poverty

  • The new appreciation and extent of support for this initiative by the international community.

It is encouraging to see how much enthusiasm NEPAD has already attracted. A critical issue now is how NEPAD’s strategic framework will be effectively translated into action. The move from a basic framework to an operational blueprint will depend largely on the resolve of individual countries and the steps they take—including setting more-specific quantitative objectives, pursuing consistent macroeconomic policies and structural reforms, enhancing capacity building and strengthening institutions, successfully implementing the African Peer Review Mechanism (APRM), and transforming partnerships with donors through mutual commitments and accountability.

Many, but not all, of these issues are closely linked to the core mandate of the IMF. Recognizing that poverty reduction and sustainable development will depend importantly on peace, security, democracy, and human rights, this seminar will focus on governance and policy issues, including the policies and reforms to consolidate sound macroeconomic conditions, foster trade and regional integration, attract foreign direct investment, and build effective institutions.

I believe that there is substantial convergence between Africa and the international community on the themes and issues that need to be addressed. Yet many questions remain: What exactly needs to be done? Who should do what? What do we expect from one another?

IMF’s former managing director, Horst Köhler, has emphasized, “The IMF is committed to support NEPAD wholeheartedly.” Apart from its financial assistance to many African countries, notably through the concessional Poverty Reduction and Growth Facility, the IMF has responded to NEPAD’s requirements by intensifying its support of capacity-building efforts in the region. The IMF Institute has expanded its training activities in Africa to help build up the capacity of government officials to design and implement macroeconomic policies, including through the JAI. Furthermore, it has recently inaugurated the first of five African Regional Technical Assistance Centers. The IMF is also pursuing its work on internationally agreed codes and standards of good practice, which African leaders have endorsed, and is preparing the related country reports. In addition, together with the World Bank, the IMF is implementing the enhanced Heavily Indebted Poor Countries (HIPC) initiative, providing substantial debt relief to African countries and thereby releasing more resources for economic and social development purposes.

Although NEPAD offers unique opportunities to African countries, both individually and collectively, it also faces major challenges. It is my hope that this seminar will allow us to gain a deeper understanding of key questions such as these:

  • Which policies and measures now envisaged under NEPAD need to receive highest priority?

  • Which critical reform elements have not yet received sufficient attention?

  • What can be done to overcome potential risks and speed up implementation of programs?

  • How can the APRM be carried out effectively?

  • How should responsibilities be shared among countries, regional communities and institutions, bilateral donors, and international organizations?

  • How can the expectations and actions of Africa best be aligned with those of the international community?

I look forward to stimulating presentations and discussions on these and related issues.

Opening Address, Omar Kabbaj

I shall begin by focusing on the African Development Bank’s approach to NEPAD, touching upon the major challenges that NEPAD must address to ensure its success. It is appropriate to emphasize once more the support that AfDB is giving to the NEPAD, as well as the assistance program we are planning.

What Direction Should NEPAD Take?

Throughout and beyond Africa, NEPAD has been hailed as a major initiative capable of revitalizing and refocusing our development efforts. There are several reasons for the esteem accorded NEPAD since its inception:

  • First, NEPAD is something we can call our own. It epitomizes the determination of African policymakers to take ownership of the development process in individual countries and the continent as a whole. Experience of the past decade has shown that ownership is a prerequisite for a successful development initiative. And a key ingredient of such ownership—and this is a first for our countries—is the agreement on establishing the APRM to monitor progress in implementing agreed-upon development programs.

  • Second, NEPAD reflects not only an unflinching assessment of the current challenges confronting the development process in Africa. It also reflects the new realities emerging directly from the rapid globalization of the world economy. This approach has enabled African policymakers to design a development program that is simultaneously realistic and pragmatic, and consistent with lessons from the recent past. Observe, for example, the high priority that NEPAD attaches to judicious macroeconomic policy, the importance of mobilizing a substantial volume of domestic resources, and the private sector’s key role as an engine of growth.

  • Finally, NEPAD reflects key values and principles that must underpin the development process in Africa. NEPAD has highlighted the crucial importance of good governance and the need to honor democratic principles and human rights, while focusing on the quest for a peaceful resolution to the many conflicts currently affecting the African continent.

While emphasizing that African countries must absolutely take charge of their own development process, NEPAD acknowledges the decisive role that external assistance will continue to play. Accordingly, it has called for the establishment of a new type of partnership between African countries and the donor community, predicated on shared principles and a firm commitment to meet their respective obligations and achieve the agreed-upon objectives. I am pleased to observe that our call has been heeded and has garnered substantial international support. Over the past 18 months, NEPAD has gained backing from a number of organizations and countries, including the European Union, the United States, Japan, and the Scandinavian countries. The endorsement received from the leadership of the Group of Eight (G–8) countries at the Kananaskis Summit in Canada, as embodied in the G–8 Africa Action Plan, is a further indication of the broad-based support for NEPAD.

The assistance provided by Africa’s development partners will be assessed in three areas. First, we must measure the progress achieved in boosting official development assistance (ODA). Second, we must determine whether the indebtedness of Africa’s poor countries has been brought down to a manageable level. Third, we must examine the degree of openness in industrial country markets as well as the attendant opportunities for African exports. Major setbacks notwithstanding, progress in these three key areas has been achieved.

We welcome the commitment by donors to increase by $12 billion the annual contributions of ODA by 2006, half of which will be allocated for Africa. However, this figure falls short of recent estimates of the resources African countries will need to expedite attainment of the Millennium Development Goals. For example, the 2002 Global Poverty Report, prepared by a team from the international financial institutions and led by AfDB, estimates that the additional requirements of 30 African countries with reform programs are approximately $20–25 billion a year. We trust that the donor community will continue to increase its ODA in order to accommodate the poorest countries’ need for concessional resources.

In the area of debt relief, the Heavily Indebted Poor Countries (HIPC) initiative—in which the African Development Bank Group plays a major role—has begun to achieve appreciable reductions in the debt burdens of the poorest countries. Twenty-two African countries have thus far met the eligibility criteria for debt relief. We welcome the latest additional contributions announced by donors to ensure full funding for the HIPC initiative. However, given the recent unfavorable trends in commodity prices, we must continually review the debt relief accorded the poor countries to help keep their indebtedness within manageable bounds.

With respect to broadening access to markets and abolishing industrial country trade subsidies that stand in the way of African exports, we hope that the pledge to work toward the duty-free and quota-free importation of all products originating in developing countries will materialize as quickly as possible. We are therefore encouraged by recent trade initiatives such as the European Union’s Everything-but-Arms Initiative, and the African Growth and Opportunity Act (AGOA) signed into law in the United States. We also welcome the agreement to launch the Doha Development Agenda in the context of the World Trade Organization negotiations. We cannot hide, however, our disappointment with the retention and, in some cases, the strengthening of key domestic agricultural subsidies paid by the European Union and the United States. We urge our development partners to reconsider their decision, which blocks the growth of agricultural exports from Africa and other developing countries.

We are encouraged to observe how quickly NEPAD has won support for its ideas and objectives among African countries and their development partners. Nevertheless, a number of challenges lie ahead. Allow me to review the most important.

First, NEPAD’s success is clearly attributable to the fact that our policymakers and countries are committed to the partnership’s economic and policy ideals. We therefore welcome the agreement recently reached by the Heads of State Implementation Committee entrusted with implementing NEPAD, with particular reference to the jurisdiction and arrangements for implementation of the APRM. The fact that the APRM will focus on political, economic, and institutional governance and can already claim an initial group of 12 member countries is a genuine breakthrough. I would like to point out, however, that proper and effective functioning of the APRM is key to the credibility of the entire NEPAD initiative.

Second, the goals, ideals, and action programs of NEPAD must be disseminated as widely as possible. This is essential if NEPAD is to enlist the broad-based support of civil society and private sector organizations on the African continent and elsewhere. Major initiatives have already been adopted, such as the private sector forum organized by the Senegalese government in early 2002 and the stakeholder consultations organized by the African Development Bank. Clearly, however, much remains to be done.

Third, NEPAD’s success will depend on continued support for African countries from the international community. As I have indicated, key steps have been taken in this direction, including actions to increase ODA, reduce debt, and expand market access. We cherish the hope that the international community will commit to increased funding in these and other areas so that our countries can achieve NEPAD’s objectives.

The African Development Bank and NEPAD

I would like to review the support that AfDB has given NEPAD, as well as other actions that AfDB plans to take in the near future to benefit NEPAD. Our efforts in this area reflect our conviction that the success of this important initiative requires the full support and involvement of African regional and subregional organizations; it is also our belief that the goals of NEPAD are consistent with the AfDB’s philosophy.

The NEPAD has identified a number of priority action areas that focus on the need to bridge the gaps between Africa and other developing regions. Such a strategy is in keeping with AfDB’s philosophy, which is geared essentially toward reducing poverty and promoting sustainable economic development. In addition, at the national level, AfDB’s philosophy focuses on agriculture and rural development, education, health, good governance, and private sector promotion. At the regional level, AfDB emphasizes cooperation and integration. The AfDB also seeks to incorporate gender equity and sustainable environmental management into all its operations. This explains why NEPAD is giving a fresh impetus to our programs, particularly those aimed at stimulating economic cooperation and integration at the subregional level and across the African continent. For all these reasons, AfDB has been committed to providing the requisite technical assistance right from the start.

The Committee of Heads of State responsible for implementing NEPAD has called upon AfDB to play a lead role in two areas, namely infrastructure and banking and financial regulations. Furthermore, AfDB is working with the Economic Commission for Africa on governance issues.

With regard to infrastructure, AfDB has prepared a short-term action plan encompassing a list of priority investments and a package of regulatory and institutional reform measures required to promote the NEPAD initiative. This plan was submitted to the NEPAD implementation committee, which endorsed the plan in full. We are well aware that, in the field of infrastructure, full private sector participation will be essential, given the vast resources required to carry out the investments involved. Accordingly, AfDB has launched a number of initiatives to encourage partnerships between the public and the private sectors. We have high hopes that these initiatives will strengthen AfDB’s catalytic role in the implementation of NEPAD in general and in the development of physical infrastructure in particular.

Moreover, we have designed a mechanism to facilitate the implementation of banking and financial regulations within regional member countries. This mechanism was reviewed and endorsed by the governors of the African central banks and representatives of finance ministries during a workshop at our annual meetings in Addis Ababa, May 2002. In addition, AfDB has submitted to the NEPAD secretariat a draft paper on money laundering.

The AfDB has also adopted a number of initiatives in support of NEPAD, in particular by organizing a NEPAD stakeholder consultation to exchange views on strengthening the role of nongovernmental and civil society organizations. Moreover, AfDB devoted the symposium at its most recent annual meetings to NEPAD, in order to discuss other ways of advancing the NEPAD initiative.

In the months ahead, AfDB will continue to work closely with the NEPAD steering committee to fine-tune the action plans that AfDB has prepared in the areas of infrastructure and banking and financial regulations. The AfDB plans to set up a small unit headed by experts to focus on NEPAD-related activities. The AfDB is also willing to designate an infrastructure expert to work with the NEPAD secretariat and to assist it in coordinating activities related to infrastructure. In this connection, I wish to thank the Canadian government for its pledge of Can$10 million to strengthen the capacity of regional economic associations to design and implement infrastructure projects.

In addition to infrastructure and banking and financial regulations, we have indicated our willingness to contribute to the peer review process in the areas of economic and corporate governance. In this respect, the country economic studies contained in the African Economic Outlook, a publication produced in cooperation with the OECD Development Centre, may prove a source of useful data and analysis.

Along with technical assistance, AfDB stands ready to assist NEPAD in mobilizing resources to support the development efforts of regional member countries, whether in connection with national programs or with NEPAD’s own strategy. The successful outcome of the Ninth Replenishment of the African Development Fund assured us that AfDB Group will continue to have effective access to substantial resources for financing poverty-reduction projects and programs in low-income member countries. With particular reference to the AfDB, we have allocated some $500 million for the financing of multinational projects. We expect to use this money to mobilize additional funds from other sources to complement regional integration efforts in the NEPAD environment and in other settings.

Conclusions

In closing, I would like to mention that NEPAD has favorably impressed policymakers as well as civil society and private sector organizations in Africa and elsewhere. This, I believe, is largely attributable to NEPAD’s clear vision and philosophy, as well as its guiding principles and ideals. The NEPAD initiative is eminently well suited to facilitate our countries’ efforts to achieve rapid and sustainable development.

The NEPAD was launched at a time when the international community had taken a number of steps to support the development efforts of countries in Africa and other developing regions. These initiatives include adoption of the UN Millennium Development Goals; the pledge (made at the 2002 Monterrey Conference on Financing for Development) to boost ODA; the commitment to sustainable development (renewed at the 2002 Johannesburg Summit); as well as a variety of trade initiatives undertaken by the European Union, the United States, and the Doha Development Agenda.

African countries must seize the historic opportunity afforded by these initiatives. Furthermore, NEPAD should serve as the nexus for our efforts to expedite the implementation of our development action plans. Failure is not an option, so we must do everything in our power to succeed. Development institutions—be they national, regional, or international—must strengthen their commitments in favor of NEPAD to provide the necessary assistance. For its part, the African Development Bank stands ready to provide whatever support may be requested of it.

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