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‘The World Bank is committed to helping Africa out of the economic crisis’

By Vision Reporter

Added 3rd February 2010 03:00 AM

A speech made by Robert B. Zoellick, the President of the World Bank Group, during the African Union Summit in Addis Ababa, Ethiopia, on January 31.

A speech made by Robert B. Zoellick, the President of the World Bank Group, during the African Union Summit in Addis Ababa, Ethiopia, on January 31.

BY Robert B. Zoellick
A speech made by Robert B. Zoellick, the President of the World Bank Group, during the African Union Summit in Addis Ababa, Ethiopia, on January 31.

All of you, as African leaders, know the perils of this economic crisis. But you also know about Africa’s opportunities and its potential to be another source of growth for the world economy. I have always believed that the African Union will be a cornerstone of Africa’s development. It draws us together to recognise Africa’s interdependence, its gains from integration: Whether for energy, transport, water, trade, movement of people, security, and of course information and communication technology (ICT).
Sub-regional integration is also a driver of economic opportunity in Africa. Regional economic groups in Africa are expanding their roles in areas as diverse as security and trade liberalisation. The COMESA, EAC, ECCAS, ECOWAS, IGAD and SADC are solid pillars on which stronger African economic integration can be built.
I hope we are now on a path to global recovery. But we still face considerable risks in 2010. And we have to repair the damage done by the crisis. It has a human face. We estimate that 64 million more people worldwide will fall into extreme poverty because of the crisis; and an additional 30,000 to 50,000 babies may die in sub-Saharan Africa. I want to report to you briefly how the World Bank Group responded to support those in greatest need.
Since the fury of the crisis hit in the middle of 2008, all the units of the Bank Group have committed $88b to support our clients, breaking all our records. The International Development Association (IDA), which provides grants and no interest loans, committed $7.8b to sub-Saharan Africa in the year ending last June, a 36% increase over the prior year. We are boosting the International Bank for Reconstruction and Development (IBRD) lending to Africa, too, with over $4b to Botswana, Mauritius, Seychelles and South Africa, up from $30m in 2008. With more capital, I would like to further expand the bank’s lending, in combination with knowledge services, to the region. We have also sought to learn lessons from the past, in particular the need to help countries with targeted social safety nets. Many Africans suffered food and fuel price crises before the financial crisis. We created a new Global Food Crisis Response Programme (GFRP), which has already approved $710m for 21 African countries. Our Financial Crisis Response Fast-Track Facility has sped up approval processes of $2b in IDA grants and no-interest loans.
The World Bank has tripled support for safety net programmes such as school feeding, nutrition, conditional cash transfer projects and cash-for-work. We partnered with strong UN programmes in the field, such as those of the World Food Program (WFP) and with NGOs. Women and girls are a particular focus of these programmes. For instance, we procured 510,000 tonnes of fertiliser in Ethiopia, worth $244m for the 2009 production season. In Sierra Leone, GFRP provided $4m to support over 360 cash-for-work projects, creating jobs for 16,000 vulnerable people, rehabilitating 475km of roads and developing 656 acres of arable swamps and woodlands.
In the Central African Republic, $3.25m from GFRP has allowed the World Bank to partner with the WFP on school feeding, providing 120,000 students in 374 primary schools and pre-schools with two daily meals.
Scaling up trade finance through the International Finance Corporation (IFC), the World Bank’s private sector arm, has been another key element of our response to the crisis. The body’s Global Trade Finance Programme (GTFP) currently covers 27 countries in Africa, with a total of $789m in approved trade lines. Over 80 % of the trade finance supports SMEs.

In the Democratic Republic of Congo, IFC has invested in two microfinance banks, ProCredit and Advans, which provide a full menu of credit and savings products to micro and small entrepreneurs.

Even while dealing with the crisis, we need to be building for future productivity and growth. Last year, the World Bank invested $3.6b in infrastructure in sub-Saharan Africa. These projects create jobs today, while improving growth prospects for tomorrow. Under the Joint International Financial Institutions action plan for Africa, launched in May 2009, the World Bank joined an alliance of international financial institutions, led by the African Development Bank, to support development in Africa. Commitments to Africa will be increased by at least $15b over the next two to three years.

The World Bank Group global lending for agriculture increased from an annual average of $4.1b in 2006-08 to $7.2b last year, of which $2b was by the IFC. The biggest share of Bank and IDA lending in agriculture was targeted at Africa, reaching $1.7b last year. For example, in Nigeria, the World Bank is expanding its Fadama project to include 19 more states. It has already boosted the incomes of 2.3m farm families in 12 states by an average of 60%.

We have also been supporting Africa’s efforts to strengthen country-led agricultural investment programmes through the Comprehensive Africa Agriculture Development Programme. In Ghana, IFC is providing a guarantee to Stanbic Bank to finance intermediaries that purchase cocoa from family farms in the country. More than 100,000 farmers will benefit from this facility.

At the request of the G-20, the World Bank created the Global Agriculture and Food Security Programme (GAFSP), a financial coordination mechanism that will operationalise the pledges to agriculture and food security made at L’Aquila in July last year. The body will be jointly run by donors and recipients. We look forward to partnering with the African Union to ensure that GAFSP finances the priorities identified by African countries’ strategic agricultural plans.

We are also pioneering new ways to connect private investments to Africa. IFC recently created a new asset management company that will raise and manage private equity funds to co-invest with the IFC. Next month, we are expecting a first close on a $500m sub-Saharan Africa, Latin America and Caribbean Fund that will take equity positions in companies in these regions, and a $200m Africa Capitalisation Fund that will invest in systemically important banks.
The World Bank has been working with China to create infrastructure for manufacturing and other investments that will create jobs and products. For example, Oriental China-Ethiopia Industrial Zone aims to promote the manufacturing and processing industry, while functioning as a hub for trade, warehouse and distribution.

These partnerships could be a growing part of Africa’s future. We also are working to make Climate Investment Funds more attractive to Africa. As developed countries consider low carbon investments and funds to support adaptation, the World Bank needs to use its global reach and experience to connect Africa to these opportunities.

With your help, and in partnership with the African Development Bank, we can emphasise flexibility to customise for specific needs in Africa; leverage of additional resources, public and private; and speedier action.

At the same time, we need to help Africa develop energy access. Sub-Saharan Africa uses only 8% of its hydro potential. And we need to connect new electricity supplies to transmission and distribution systems, preferably with regional integration, so every African has access to electricity.
ICT is a key enabler of productivity and creator of jobs. It can help farmers, small businesses and those excluded from traditional banking services. It can extend and speed up government services.

With supportive government policies, encouraged by World Bank knowledge service, African entrepreneurs changed facts on the ground. Over 400 million mobile phones are now in use — over 65% of Africans have access to wireless voice networks. And the private sector has been the key driver in ICT expansion, investing over $60b in 1998–2008. But with better policies and more incentives for private investment, Africans can do even more. Here is how the World Bank Group is helping develop the ICT sector. We are investing over $2b in connectivity infrastructure and e-government applications. In Kenya, eight million people are using their mobile phones and the m-pesa service to make payments for bills or micro-loans. Before the service was launched, only 2.3 million Kenyans had a bank account.
In East and Southern Africa, we invested in projects to develop high-speed submarine cable connectivity, resulting in a drop of 80% for high-speed capacity prices. We are also investing in innovative applications.

In Rwanda, the TRACNet system allows health workers to track the medical supplies used by 252 HIV/AIDS clinics and 70,000 patients throughout the country in real time. The system is expanding to help with diseases such as TB and malaria.
Despite the crisis, many governments in Africa have remained true to policies to boost growth. ICT is an excellent example. But there are others. The World Bank will be by your side every step of the way. We have been stretching our resources to help our clients in this crisis. And we will keep doing so.

Our capital enables us to borrow about $5 for every dollar our shareholders invest. And we need more capital to keep leaning forward. By April, our shareholders will decide on the capital increase for the World Bank Group. I need you to explain in Europe, North America, and Japan that the World Bank, like the African Development Bank, justifies their support.

Developed countries’ budgets are stretched, too. So it will not be easy. Together, we need to make the case for a capital increase for the World Bank Group. Together we can do it. By the end of the year, we also need to replenish IDA — IDA-16. In 2007, I worked with you to generate $42b more for IDA, and thank God we did. More than half that money goes to you. Help me help you. Please tell the IDA story. Not just a tale of money, but of kids in school, vaccinations, and better nutrition. And there is news of growth, and investment opportunities that can help developed countries, too. Together we need to show IDA’s results – that IDA works.

‘The World Bank is committed to helping Africa out of the economic crisis’

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