Montreal — Statement by Donald Kaberuka, President of the African Development Bank Group at the Conference de Montreal, 5-8 June, 2006 on Seizing the Opportunity in Partnership and Global Prosperity
Your Excellencies,
Ladies and Gentlemen,
1. Allow me begin by saying how very pleased I am to be here today, attending for the first time, the "Conference de Montreal". My heart felt appreciation to President Desmarais and his team, and for the honor of serving on the Board of Governors of the Conference, which offers us an opportunity to consolidate existing partnerships, explore new business opportunities and expand the horizon of those ongoing.
2. I am indeed pleased to acknowledge the strong linkages that bind the AfDB and our partners in Montreal, representing government, the business and academia. I look forward to strengthening these linkages during my tenure.
3. During my flight to Montreal, I was reading an article in the latest issue of the Economist magazine entitle "Can India Fly"? speculating about the future, given what it called "the world's most bureaucratic bureaucracy, lousy infrastructure and lousier Fabian economic ideas, the article concluded by saying that the issue is not whether India can fly, but how high? And how much higher still if some of the impediments were removed". As I have often done before, my mind that went back to Gunnar Myrdal's book "The Asian Drama" and a comparison to today's Africa.
4. The theme of this Conference Partnership and Global Prosperity could not have come at a better time. We are indeed living in a period of unprecedented global prosperity. Yet, paradoxically, greater not less, poverty for millions across the globe; and greater rather than less uncertainty for the world as a whole. None of us, however resource rich or impoverished, powerful or weak, can overcome these challenges alone—we can only do so in partnerships across a wide constellation of human endeavors that address economic development, epidemics, security concerns, and environmental degradation.
5. As we watch progress in Asia with massive increases in the flow of capital, know how and technology to the region, we are witnessing the up-liftment of millions of Asians out of poverty. And yet, for millions more in Africa, South Central Asia, Latin America and the Caribbean, living with diseases, abject poverty and insecurity remains a stark reality. The prevailing sense of hopelessness in parts of our world which have not yet joined the global trend of growth and prosperity, especially among the youth, is epitomized by the new generation of 'boat-people' drifting in the high seas—off the coast of West Africa; attempting to reach the shores of fortress Europe.
6. It is self evident that the greatest challenge of our time is that of generating shared growth and prosperity. Addressing this challenge requires intensified global partnership between governments, business and civil society, and demands special efforts in certain excluded parts of our world.
7. As Francis Fukuyama aptly put it, " globalization has meant that societies are increasingly inter-penetrated economically and culturally; a technological change or significant new investment in any major country can lead to job losses, new cultural influences or environmental damage even in countries many thousands of miles away."
8. We know what needs to be done and how it should be done to remedy the problem. Now, the challenge at hand is to mobilize the political will to get it done. What ought to be our goal and our responsibility was defined in the framework of the Monterrey Consensus; at the heart of which was a framework for "Mutual Accountability"
9. Yet, despite the laudable intentions articulated in the Monterrey Consensus, we are realistic enough to know how complex the real world is and how difficult it is to bring about decisive change that is both legitimate and effective.
10. Today, more than at any other time, we have an adequate sense of what should be done to generate shared and sustainable growth in the world. It is certainly not about lack of resources—in fact it is not even about resources alone. I submit to you it is all about political will. The will to create in our countries—in our continent—conditions which bring about a positive investment climate. Political will to implement the commitments made at the UN Millennium Summit in 2000; by African leaders at the NEPAD on one hand and those made by the G8 at Genoa, Kananaskes and Gleneagles.
11. My view is that we have reason to be optimistic. I am aware of the challenges Africa faces to consolidate good governance and sound investment climate; the challenge to get the Doha Trade Round concluded; the challenges we face to give effective voice to poor countries in the world arena.
12. Let me share with you two reasons for my optimism; and allow me to begin with situations in Africa. Firstly, after the 1980's described as the "Lost Decade" and the 1990's the years of "Afro-pessimism", it is now quite apparent that Africa is beginning to turn the corner.
i) The number of countries in conflict is at its lowest ever– although some countries continue to face natural or man made catastrophes and disasters—on balance prospects for much of Africa are more favorable today than they have been in past years.
ii) Economic growth, for the fifth year running, is ahead of population increase—I am aware of the impact of a buoyant global economy, notably high oil and commodity prices, as well as increased external support in the form of debt relief and budgetary support. But what I am suggesting is that Economic reforms, after decades of painful transitions, are beginning to bear fruits in forms of stable—putting into place sound macroeconomic conditions; a reformed financial sector; strengthened public institutions and progressively conducive policies for the private sector as the engine of growth.
iii) Democratic governance and constitutionalism is consolidated. Despite an odd military putsch here and there or other unconstitutional acts, on balance, across Africa, electoral succession of power, wider and more inclusive political space and greater freedom is expanding.
13. This said, however, enormous challenges remain to bring about sustained economic reforms—rather than stop-and-go reforms; to curb abuse of power and impunity especially with regard to corruption; to lower aid dependency; to promote the private sector and create conditions for a prosperous expansion that creates wealth and reduce poverty. In this regard, it can not be over-emphasized that we in Africa bear the first responsibility to deliver on our part of the compact; by ensuring a peaceful and well governed continent remains paramount.
14. My second reason for optimism is the international environment. At the Millennium Summit in 2000 world leaders agreed on the Millennium Development Goals for 2015. Since that time, we have witnessed unprecedented international mobilization in the favor of low-income countries.
i) The Monterey Summit on Financing for development
ii) The Commission for Africa
iii) The Gleneagles G8 resolutions on debt, aid and trade
iv) The ongoing searches for innovative financing mechanisms
15. I am pleases to see that some of these decisions are already being implemented. On debt cancellation, I am pleased to report that the African Development and the World Bank, joined by the IMF, together have cancelled approximately 50 billion dollars worth of debt. This will not by itself solve the development finance constraints, but it will provide significant fiscal space for the countries concerned to expand health, education and infrastructure.
16. We have agreed, of course, to do everything we can not to weaken the financial integrity of these financial institutions to finance development in the future. It is imperative to find additional resources, which will enable eligible countries to finance the MDGs. I hope and expect that in the coming 10 years, significant and high quality resources will flow into low-income countries, in accordance with the commitments made.
17. For decades now, Africa has been viewed through a prism of a continent whose development challenges are seen as insurmountable in the short-term, rather than a continent of opportunities. I am fully aware of the historical, external and internal factors which have brought us to this perception.
18. However, as the young in Africa today look at China, India and Vietnam, and look at their own continent, they see a young Africa with 60% of the population under 25 years of age; a continent soon, of 1 billion people, rich in natural resources; an Africa finally at peace with itself, and finally getting the institutions and economic management right. These young African look to the future—not of aid and debt relief—but of trade and investment; just as India and Vietnam are doing. It is the challenge of this partnership and all of here present to strive to realize these possibilities.
19. To this end, I see several critical factors:
First, the Doha Trade Rounds; we are encouraged by the efforts by Pascal Lamy in getting a deal which builds on the progress of Hong Kong. It is crucial for this process to remain on track and succeed as a truly development round—meaning that it frontloads the concerns and interest of developing countries. I believe a win-win situation is possible for all. In this context, the special program to enable low income countries benefit from the opportunities created—aid for trade—is critical for us, and we at the will be working with other IFIs and the WTO for a framework.
Secondly, Governance and the Investment Climate; We in Africa are fully aware that reducing the risk and cost of doing business is paramount – and to that extent sustained efforts to continuously promote a positive investment climate and ensure good governance is a precondition for benefiting from a new and open trade regime.
20. Thirdly, Infrastructure; A sound investment climate means also the availability of affordable energy, telecommunication, and reliable means of transport. Four decades after independence, Africa faces an enormous infrastructure gap; yet it is also clear that, like India is showing that closing the digital divide would provide opportunities to leapfrog the infrastructure challenge.
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21. Fourthly, Regional Integration; Contemporary Africa is 53 states and over 800 languages, with very high cost inter-country and inter-regional communication. These historic and physical barriers continue to impose unacceptably high cost on Africa which we must address through better infrastructure and policy convergence.
22. Fifth, Skills and Training; Africa is a young and growing continent and its ability to effectively participate in the global economy is largely a function of its ability to ride on this demographic dividend.
The Role of the African Development Bank
23. The Bank, alongside its partners, and with the support of countries like Canada, has contributed significantly to Africa's economic development to the tune of about 55 billion dollars since independence, in agriculture, education, health and infrastructure. Today it is repositioning to bring about an Africa that is a full player and beneficiary of the global economy.
24. In repositioning the Bank, we will focus on promoting governance, institution building, a healthy and skilled population and sound infrastructure; all of which are necessary conditions for trade and private sector activity within Africa and between Africa and the rest of the world. Over the coming years, we will intensify our focus on water, infrastructure, and private sector growth. In this regard, I am happy to count on Canada's support, both at the government and that of business--many of whom located here in Montreal, and have partnered with us for years.
25. Let me take this opportunity to invite you to join us in taking this partnership to higher heights.
26. The "Conference de Montreal" provides a unique opportunity for all of us, government, business, academia and civil society to do a reality check—on our global village. The experience shared and lessons drawn should but reinforce our partnership. I believe the Regional Development Banks like the AfDB and the AsDB partners of this conference have a special role to play in effectively translating this partnership into practical implementation for global and regional prosperity.
27. Ladies and Gentlemen, allow me to conclude once more on a note of optimism, I am convinced that the international compact borne at Monterrey is slowly materializing. We must maintain momentum. For my part and the AfDB we look forward to coming back to this great city of Montreal next year and hopefully to report on progress on our partnership and an Africa steadily joining in on global prosperity.
I thank you for your kind attention.
