“The track record of what African Development Bank and World Bank have achieved over the last several years shows that our partnership with Africa on the regional agenda is starting to make a difference, Both banks share the conviction that regional integration is an important compliment to national programs of development and are committed to assist national clients to leverage effectiveness through exploiting regional solutions where these can provide economies, open new markets or help create important new regional public goods,” declares Mark Tomlinson, Director of the World Bank’s Regional Integration Department, Africa Region.
The African Union, Africa's principal organization for the promotion of accelerated socio-economic integration of the continent, recognizes the central role of Regional Economic Communities (RECs) and their subsidiaries in faciliting regional and sub-regional approaches to Africa’s development, encouraging African countries to pool resources to enhance growth prospects, to build and maintain international competitiveness, to support regional public goods and contain regional public goods. While significant strides have been made to enable RECs define their roles and functional areas in which they require strengthening, and for donors and partners to make resources available to support capacity development for RECs, the RECs themselves and development finance institutions (DFIs) still face daunting challenges in fostering regional integration and infrastructure development in Africa.
Q. State your impressions of the just-ended Consultation Meeting on Capacity Development Initiative for the RECs?
First of all, we’re very pleased to partner with AfDB in setting up this meeting and very pleased that the AU Commission is taking a lead role. It’s a very important initiative, which both banks consider central to the challenge of helping Africa develop more effective regional institutions. But, frankly, it is also a difficult and rather complex agenda. Along with AfDB we think the meeting – which was a brainstorming with RECs, the AU, UNECA, ACGF and other parties - was as successful as it could have been.
Q. The RECs and some African Heads of State seem frustrated by the gestation period. They say results are not coming in as fast as expected, and some RECs have complained that it takes years before some programs are financed. What’s the World Bank’s position with regard to this situation?
There’s clearly an impatience to see regional integration delivery bring more tangible results on the ground more quickly. But it is taking a long time to get some regional programs moving, particularly in infrastructure where the programs are usually large, technically complex and bring together clients and stakeholders often not so used to working together. Funding for project development also remains a problem. The AfDB and the World Bank can assist, of course, but our operational budgets do not permit either bank to invest several million USD in the technical development of a regional project. What we, the AfDB and the World Bank, mostly do is through our diligence to finish off the technical preparation and bring the project to a point where it is ready to be financed. We do not do the ‘heavy lifting’ of technical project development. Typically, preparation of an infrastructure project costs at least 2-3% of investment costs. That’s US $6-9 million for a $300 million transport corridor or regional power project. Neither bank has that amount of resources to devote to a single project but both banks have a responsibility to clients to move priority projects as soon as possible – and I am aware that the managements in Tunis and Washington are anxious that we do not drag our feet on internal processes. The project cycle is slow mostly at the earlier stage of project development. It is here that our partnerships with multilateral and bilateral donors are key to leverage the resources Africa needs to prepare feasibility studies, engineering designs, financial plans and safeguards assessments and so on – such as the AfDB is doing through the IPPF. The fact that the overall process is moving slowly has led to frustrations and resulted in the RECs becoming more involved in program and project definition, and even in project implementation. I am nervous that further broadening the functionality of the RECs into these areas risks sapping their professional capacity to create and drive regional policy discussion. Without alignment of policy at the national level, regional programs cannot move forward, irrespective of whether the technical planning is done or not. It would be helpful to have a clearer delineation of responsibilities for policy, program definition and project implementation between the strata of continental, regional and national bodies – and between policy bodies and technical organizations.
Q. For the World Bank is the issue financing projects or getting the RECs to coordinate their efforts and come up with viable bankable projects?
The issue is on both fronts. The financing needs for regional infrastructure are huge. But it’s not only about the hardware. The ‘soft’ side of the infrastructure agenda is also very important; it’s an area where both banks probably need to do more. There’s not much point in having trucks move quickly down a new corridor only to sit at the border because of continuing bottlenecks in customs administration. The ‘software’ is also important to leverage outcomes which countries can get from investments in hardware. RECs have an important role in driving the policy agenda in areas such as this – to create the political space in which policies are harmonized and such bottlenecks removed. Without effective RECs we can still assist Africa with the physical construction, and expect only part of the returns. The policy role of the RECs is critical to overall success of an infrastructure development. But I am not sure that the comparative advantage of the RECs is in doing the technical planning or getting a road constructed. This would seem to be an expensive use of their resources. Of course, there are also not considerable challenges on the hardware side as well. Share holders at both AfDB and the World Bank have recently completed two replenishments - and have increased regional resources in both banks by 100%. That’s tremendously welcome. But it’s also clear that the financing needs of regional infrastructure extend beyond the combined capabilities of AfDB and the World Bank, including the co-financing of our investment partners. If Africa is to go significantly faster on infrastructure development this requires leveraging a very considerable volume of private financing. There simply is no other way. Even if public financing was the preferred option, under any credible growth scenario there will not be adequate fiscal space. The trade-offs for governments are harsh: one power station costs about 100 hospitals; about 500 schools. A big part of the infrastructure agenda which we face, as development partners, is to utilize the resources which our shareholders are providing in ways that can assist Africa to make regional infrastructure more interesting to private financing. We must not be in the mindset that the increase in resources makes possible a few more public financings. That is not going to help Africa go where it wants to go. The challenge is to utilize these resources innovatively, to facilitate and catalyze new partnerships and new sources of financing, particularly private financing. We have to move away from ‘heavy lifting’ of investment financing towards a more facilitating role. Business as usual for the MDBs will not serve Africa very well..
Q. What is the World Bank’s experience in collaborating with the African Development Bank toward achieving those types of results?
It’s excellent. Assisting Africa to work regionally is not straight forward; neither for Africa nor the development partners. It’s a professional process of discovery for both the AfDB and the World Bank, but we’re putting our heads together to try to be as effective as we can in serving our clients. Both banks share the conviction that regional integration is an important compliment to national programs of development and are committed to assist national clients to leverage effectiveness through exploiting regional solutions where these can provide economies, open new markets or help create important new regional public goods. And so far so good: the track record of what the AfDB and World Bank have achieved over the last several years shows we’re starting to make a difference on the regional agenda.
Q. Regional integration is at the forefront of the Heads of State agenda, for good cause. Even the international community is now reinforcing its efforts towards African economic integration, and strengthening synergies between different initiatives aimed at empowering African countries to reap the benefits of regional integration and globalization and reduce poverty in the continent. But low capacity levels in some countries, inability by others to finance projects on their own, and political squabbles hinder the process. How should the AfDB and World Bank address these problems?
The issue for us as partners is to assist Africa to deliver more fuctional effectiveness from the very complete institutional architecture which Africa has established to drive regional integration, at continental, regional and national levels. What came up strongly during the consultation meeting here in Cape Town was the need to delineate roles and responsibilities, sort out over-lapping memberships of regional bodies and invest strongly in capacity development – but in a more strategic and coordinated way. Another issue mentioned repeatedly was to strengthen linkages between regional strategic thinking and national development plans –so that countries’ PRS explicitly reflect regional as well as national dimensions of development plans. The need for capacity development was stressed repeatedly, including developing at national level stronger capabilities to link with regional agendas and internalize these in countries’ planning. The AU who will be a strong champion seemed in this meeting to appreciate that the AfDB and World Bank are trying to assist its efforts to more strategically align capacity development efforts, and step-up progress on the alignment and harmonization agenda. Most RECs are still dealing with a large number of individual donor partners.
Q. On a scale of 1 to 10, the latter being the best score, how would you rate the World Bank’s performance in regional integration in Africa?
I think 10, in terms of trying as hard as we can. That starts with leadership at the top, with the president and the vice president for Africa. But as I said, we are learning how to do this as we go along, together with the AfDB and – of course – with our clients. I hope we will get a good pass mark in terms of development effectiveness. I think the replenishment by our shareholders and equally for the AfDB is a vote of confidence that seems to be going in the right direction, but I can’t pretend to you that we don’t make mistakes. We’ve done some things wrongly – but we have learned from those. It’s encouraging that at the World Bank the regional portfolio is showing promising signs: portfolio performance is matching that of single-country operations. A recent Bank-wide review of regional programs permitted cautious optimism that, notwithstanding generally greater complexity, regional operations can be as successful in delivering development outcomes as single-country programs. But regional work will remain tough and there’s no room for complacency. I imagine it’s the same for AfDB.
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Q. Are you looking forward to greater collaboration with the RECs and addressing their needs in a more forceful way?
We’re working towards fuller collaboration with the RECs. It seems to us, and I imagine that it will be difficult for regional integration in Africa to proceed more quickly without Africa having effective regional public institutions to create and drive policy debate on issues that need to be taken at regional level. Every regional initiative depends upon harmonization of national policies – to create the political space within which a regional initiative can develop. Here, the role of the RECs is absolutely critical. In everything from regional infrastructure systems, financial sector integration to regional public goods such as water resources, migratory diseases and fisheries we look towards the RECs to create the unified political space to unlock the potential for regional approaches. There’s a considerable regional agenda at the heart of Africa’s development challenges and this needs regional champions--effective public institutions. It is critical the RECs develop the capacity they need for this role.
Q. Climate change is affecting African countries directly and it’s going to hinder regional integration efforts. How do you see the World Bank and AfDB role in addressing this brewing problem? Should the DFIs play a central role in addressing climate change?
We are all at a very early stage in trying to understand and scope out what might be the impacts on Africa of additional climatic variability. With improved knowledge we will be able to consider how this is likely to impact national and regional programs of development – and what steps are feasible to help countries make development strategies more robust in the face of climatic variability. I do think that as partners we have a responsibility to help Africa build a fuller base of knowledge on this issue – and quickly. This will assist national governments and regional bodies to distill strategies of mitigation and adaptation. Who-does-what within the donor community will be determined by these conversations, and the respective comparative advantage of the different development partners. The only clear things at present are that climate change will add an additional layer of complexity into Africa’s development challenges – and it will require stronger development partnerships – including in financial terms – to assist Africa to wrestle the challenge successfully.
This report was prepared by Emmanuel K. Ngwainmbi, Communication and Marketing Expert at the African Development Bank’s NEPAD, Regional Integration and Trade Department. Dr. Ngwainmbi spoke with Mark Tomlinson during a Consultation Meeting on Capacity Development in Cape Town, South Africa.
