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Ottawa, April 29, 1997
1997-039
Statement prepared for the Development Committee
The Honourable Paul Martin, Minister of Finance of Canada
Washington, D.C.
April 29, 1997
Delivered text is official version
It is a particular privilege for the Development Committee to be addressed this year by Mr. Kaijuka, the Ugandan Minister of Planning and Economic Development, on the new initiative proposed by the African Governors of the Bretton Woods Institutions, the "Partnership for African Capacity (PACT)". Mr. Kaijuka's presentation could not be more timely. Africa has emerged as our pre-eminent development challenge and is a key focus in several international fora. Africa was at the centre of the recently concluded IDA negotiations and will be a priority at the upcoming G-7 Summit in Denver.
I would like to commend Mr. Wolfensohn for his efforts in helping to bring this important initiative to the attention of the Development Committee and for committing the Bank to a leadership role in coordinating donors' participation. I would also like to congratulate Mr. Kaijuka on Uganda's strong economic reform performance -- Uganda is truly leading by example.
Why Africa Now?
There can be no doubt that improving the living conditions in Africa is not just desirable -- it is also achievable. Africa has produced some real success stories. A number of African countries have surmounted huge economic and political obstacles to bring about economic growth and poverty reduction. In 1995, fifteen African countries' GNP grew by five per cent or more, while four of these experienced growth rates in excess of ten per cent.
But many countries, particularly in Sub-Saharan Africa, continue to struggle to provide even the basic needs for their populations. Despite substantial international assistance, living conditions remain dire in a number of these countries; in some, economic growth has actually declined and social indicators are worsening. International donors have an obligation, both to the poor in Africa, and to their constituents at home, to ensure that multilateral and bilateral assistance is as effective as possible in helping to improve Africa's living standards and reduce poverty.
Canada is strongly committed to working with African countries, in collaboration with other donors, to help make a real difference to Africa's future. One of our priorities is to assist the heavily indebted poor countries, many of whom are in Africa, to reduce their debt burden to sustainable levels. Canada has also joined with others to help African countries committed to economic reform through the Special Program of Assistance for Africa. Collectively, we now need to build on such experience to move ahead to meet the evolving challenges of African countries. One way we can do this is through working with development partners to support the poverty reduction objectives of "Shaping the 21st Century".
The Challenge for Africa
The Partnership for African Capacity proposed by the African Governors of the Bretton Woods Institutions goes to the heart of Africa's development challenge. The initiative is based on two simple, but powerful principles: any plan to help African countries must be managed by Africans; and, it must ultimately improve their capacity to help themselves. Underlying this initiative is a critical lesson coming out of our development experience -- without a true sense of recipient ownership of development programs, results will not be sustainable.
The initiative is also based on a recognition of the African continent's rich diversity. The partnership among a range of African countries in developing this initiative will help to ensure that the continent's varied capabilities, natural and human resource bases, and political and social systems are represented. Ownership of the initiative by Africans, rather than donors, will also reduce the danger of African being treated as a monolithic whole, as has sometimes been the case in the past.
To help Africa in its capacity building efforts, we must broaden our thinking to address capacity constraints across all sectors and socio-economic levels. It is not only the public sector that must be strengthened, but the private sector and civil societies, as well. A range of abilities are needed, from designing and implementing public policies, to better understanding markets and technologies, to improving organizational structures at the community level.
But capacity building requires more than training and institutional support. A number of complementary actions must be taken if the initiative is to be successful. I see three key areas for further action.
Priorities for Capacity Building
1. Improving Governance: Capacity building can only be achieved in a climate of macroeconomic and political stability. It is well recognized that efficient public sector management, including transparent and accountable budgets and public policies, is essential. Another key aspect is accelerated trade liberalization, including improvements in regional trade liberalization. The allocation of scarce public resources must focus on meeting basic human needs and social development objectives, avoiding unproductive expenditures, especially excessive military expenditures. This point was underlined at a symposium co-hosted by Canada and the OECD Development Assistance Committee, held March 18-19 in Ottawa. The trend towards tying lending programs to the effective use of resources should be further encouraged.
But perhaps the biggest constraint to economic progress in some parts of Africa has been political repression, continuing civil unrest and conflict. Political liberalization and greater respect for individual rights and freedoms must be a priority. While donors, particularly the international financial institutions, can assist countries coming out of conflict situations, the ultimate responsibility for good governance lies with the developing countries themselves.
2. Enhancing Information Sharing: The rapid pace of globalization threatens to widen the information gap between Africa and the rest of the world. Those countries that do not have access to this information risk being left behind. Recognizing this threat, an action framework has been developed through the African Information Society Initiative, to build Africa's information and communications infrastructure. However, information sharing is not only about technology. It is also about improved regional cooperation among African countries, for example, in developing common infrastructure and sharing lessons learned in economic policy and political liberalization.
To build on and broaden this and other initiatives, Canada and the World Bank will co-host a major international conference, "Global Knowledge 97" in June of this year. Developed and developing country leaders, private sector experts, NGOs and academics will come together to share experiences, strategies and tools in order to build new information partnerships and improve the knowledge capacities of the poor, continuing the dialogue launched at the 1996 Information Society and Development Conference hosted by South Africa.
3. Enlisting the Private Sector: There is no doubt that any capacity building effort must enlist the skills and resources of the private sector, with the domestic private sector in Africa becoming the acknowledged engine of growth. The exponential growth in global private capital flows is by now well known - in 1996 net private capital flows rose to $244 billion, about four times the level of official development assistance.
Perhaps, what is less known is that this private capital reaches a limited number of middle-income countries and only one or two low-income countries, predominantly in Asia and Latin America. At this point, for the majority of the poorest countries, private capital cannot replace concessional assistance. But, looking to the future, it is hard to conceive of any country with a heavy reliance on aid achieving longer term sustainable growth. The reality of the changing global economic situation impinges on Africa, as it does on all of us; if the private sector is not welcomed, countries will simply be left behind.
The World Bank's Role in the Private Sector
Supporting private sector development is an area where the World Bank can play a crucial and growing role. In recent years, the Bank has moved in this direction. But the impact of its efforts on the poorest countries has so far fallen below the potential. More creative thinking is needed, as well as a willingness to try out new approaches, for example, through pilot projects in the higher risk countries. Exploring how guarantees can be expanded to sub-sovereign levels, that is, to states, provinces and municipalities is one promising area. In line with broader efforts to promote regional cooperation, designing guarantees at the supra-national level, that would allow the private sector to invest in projects across borders, is another possibility.
Much progress has been made in the World Bank Group in developing mechanisms to facilitate private sector development since President Wolfensohn took office and I know that he is committed to furthering these efforts. Broadening the Bank Group's guarantee program to help attract investors to the poorest countries is one positive step. Providing advice and assistance to improve regulatory and legal frameworks for an enabling private sector environment is another. By working together better, the Bank Group can move forward with these and other initiatives to help integrate the private sector better into the poorest countries' economies.
Improving Support for Development Cooperation
Turning to the background paper prepared for the Development Committee, we would all agree that strengthening development cooperation is essential to supporting capacity building. Donors have sometimes been guilty of working at cross-purposes or unnecessarily duplicating efforts. Each of us must endeavour to work to our comparative advantage to ensure that our assistance is well coordinated and that resources are used effectively.
To have a long term impact, sufficient concessional resources are clearly necessary. For those countries with limited absorptive capacity, as discussed earlier, we must work together to improve their performance to allow them to better access resources. But I also believe that there is a risk of focusing too much on resource issues. For most good performers, whether they are in Africa, or in the rest of the developing world, financial resources are often not the major constraint to longer term development.
For these countries, better designed and more innovative development programs that meet their unique and changing needs must be the first order of business. Moreover, sound policy advice is becoming at least as important as financial assistance in some of these countries; this is true for several of the Caribbean countries in the constituency Canada represents, as well. This underlines, once again, the need for an increasingly differentiated response if we are to effectively meet recipients' needs.
Conclusion
Africa faces many difficult challenges, but also many opportunities. The Partnership for African Capacity shows a commitment by African countries to take control of their future. The international community should strive to work in partnership with them to make this dream become a reality.
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| Last Updated: 2005-01-04 |
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