AfDB President declares 2010 “successful but momentous year” at Annual Meetings Opening Ceremony

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In talks to aid Egypt after USD 500 million Tunisia support, willing to help Libya “when the time comes”

The African Development Bank Group (AfDB), which pledged US$ 500 million in budget support for Tunisia in May 2011, is in discussions with Egypt for similar support, and is also willing to assist Libya “when the time comes”, the president of the AfDB, Donald Kaberuka, said on 9 June 2011 in a speech at the opening ceremony of the AfDB’s Annual Meetings in Lisbon, Portugal. He also called for more European help for North Africa.

Mr Kaberuka also reaffirmed the AfDB’s intention to return to its headquarters in Abidjan, Côte d’Ivoire, from its current temporary base in Tunis, when the conditions are right.  

On the question of Côte d’Ivoire, he said: “I send my best wishes to the people of Côte d’Ivoire, the host country of our headquarters.  The resolution of the crisis there is a great relief for the Ivorian people, for West Africa and for Africa as a whole”.

He added that the resolution of the crisis also paved the way for the Bank’s return to headquarters in Côte d’Ivoire “when the conditions, facilities and services permit”.

He also pledged the Bank’s support for the country on the “long road to national reconciliation and recovery.  We know very well that that is not an easy task, but we are ready to play our part, together with the international community”.

He went on to say the AfDB Boards the previous week had agreed emergency budget support of USD 130 million for Côte d’Ivoire, and that the funds would be fast-disbursing.

Mr Kaberuka then turned to the issue of Tunisia, saying the Tunisian people had always supported the Bank during the eight years of its temporary relocation there.

For the AfDB, 2010 had been a “successful but momentous year”.  The Bank was in robust financial health and had made a solid performance despite the turbulence of the Tunisian revolution and its aftermath.  He noted that very few institutions of international significance, if any, had gone through kind of experience the AfDB had done in both its headquarters and temporary headquarters.

Over the previous three years, he remarked, the Bank had proved itself, and responded with speed and effectiveness, particularly in its response to the global financial and economic crisis, but that now it was time to wind down from that higher level of operations and revert to its traditional mission.

The AfDB had now to answer to new challenges – the discontent and troubles in North Africa and lately in sub-Saharan Africa, and its volatile mix of youth unemployment, social and economic exclusion, and lack of real democracy and government. “Skyrocketing food prices” were now added to the unsettling combination.

With the new social networks reaching everywhere now, he said, the young were all too aware of their lack of opportunity, freedom and hope.  

Turning to the state of Africa, Mr Kaberuka said several economic reports concluded that there was a new economic momentum.  “Africa has bounced back from the global financial crisis, bruised but fitter”, he said.

Even so, he went on, the buffers and cushions that had helped it weather the financial crisis had diminished, and now there was the problem of rampant food price inflation.

There were also constraints on Africa’s ability to grow.  A major constraint, he said, was lack of energy which limits the continent’s ability to create wealth and employment.

Even so, he said: “We remain very optimistic about the prospects for the African economy, provided the international environment does not worsen but remains benign”.  Africa’s economies were forecast to grow at between 5.6 percent and 6 percent annually.

However, Mr Kaberuka maintained that to lift more people out of poverty and to make lasting social gains, there had to be sustained growth.  Under Africa’s current conditions, the “bare minimum” growth rate for such gains was seven per cent.

As a result, Africa had to focus on what were the main drivers of growth.  They were, he said, infrastructure, transport, energy and connectivity.  Without improvement, they stood in the way of faster growth and integration.

Even so, economic growth was not enough; evidence has shown economic growth that is not equitable or broad-based does not create sustainable jobs or opportunities for the young and for women, he said.

He described the explosion in the number of unemployed graduates in Africa.  He acknowledged there were no straightforward answers, but that the Bank would explore the broader framework and the implications for the Bank’s activities.

Young people, he said, had protested on the streets about jobs and opportunity, he said, but he maintained that the unrest was not just about “bread and butter”, but also about freedoms, opportunities and how they were governed.

They were questioning the quality of their leadership, he said.

The starting point for inclusive growth was strong, accountable institutions, and he identified priority areas of operations to spur inclusive growth.

They included helping small farmers, many of whom were women; supporting small and medium-sized enterprises, which generated jobs; providing quality education; access to safe water and sanitation; gender equality; safety nets for families vulnerable to economic shocks; government that is closer to the people it serves; corruption, which was a tax on the poor; migrant transfers in to Africa, currently running at US$ 40 billion a year, and dealing with Dutch disease.

Those were all areas, Mr Kaberuka, said where the AfDB had significant experience, and went on to describe some ways where the AfDB’s strategy could contribute.

For instance, there are the families subject to shocks, who were living on more than $2 a day, but could fall back into poverty – the ‘floating poor’.  For these families, Mr Kaberuka said: “Through our policy-based loans, we will seek more effective ways to support sub-national level programs, in the provinces, municipalities, closer to the people”.

He went on to report on the progress made by the Bank on the commitments it made when it received approval at the 2009 Annual Meetings in Abidjan for a 200 percent general capital increase, and a “generous” replenishment of the African Development Fund.

The Bank had created a policy draft proposal for its new Disclosure Policy.  The draft is now on the Bank’s website, and Mr Kaberuka said the Bank welcomed all comments on the document.

Another commitment was a regular corporate accountability exercise, involving both client survey and a staff survey.  He said the staff survey was completed, and that the client survey was underway.

On the commitment to decentralization, that too was underway, with a full-time dedicated team in place to roll out the roadmap and ensure efficient implementation.

He confirmed that the revision of the Bank’s Income Model, to ensure the institution’s sustainability to unforeseen stresses, was in place.

Also, the AfDB was committed to more private sector activities in fragile states and low income countries, saying: “I confirm that within the framework of our revised risk management system, we will be able to securely scale up our activity in low income countries and always consistent with sound banking principles”.

Turning to the question of climate change, he said the upcoming Durban conference would be a good opportunity for Africa to state clearly the particular problems the continent has when it comes to climate change.

For instance, there would be the question of concluding the agreement made in Cancun in 2009 to establish the Green Climate Fund.

For Africa, he said, the important question was finding a mechanism to deal with the continent’s specific concerns – protecting its forests, clean energy, fragile states and small island economies.

Mr Kaberuka noted that Africa had been poorly served so far when it came to climate funds. Over the previous four years, it had access to only 12 percent of total climate funds disbursed around the world.

Coming to the subject of South Sudan, he said the Bank was ready to welcome the new country.  He said: “We should work together to help this new-born African state to get off on the right foot”.

Finally, he turned to the question of Somalia, saying: “The tragedy in Somalia has gone on too long”, remarking that the Bank was ready to help when Somalia takes the long march to reconstruction.