News Archive November 2016
tralac’s Daily News Selection
The selection: Tuesday, 29 November 2016
Diarise: World Economic Forum on Africa (3-5 May 2017, Durban)
UNCTAD’s Mukhisa Kituyi: “To me the Abuja Declaration was important. It was a starting point towards where we are but even if there had not been an Abuja and a Lagos Plan of Action, the reasons for creating a Pan African free trade are important even from today’s challenges so we have enough reasons from today apart from our inherited responsibility from Abuja”
ATPC’s David Luke: “These include Africa’s trade relations with Asia, Europe, the United States and emerging markets; how trade can support gender equality and empowerment; perspectives from the regional economic communities and the CFTA negotiations and related flanking measures”
African Union Commissioner Fatima Haram Acyl: Africa needs to bring the cost of doing business down,[which] would significantly boost trade performance with trade facilitation, which looks at procedures and controls governing the movement of goods across borders, enabling Africa to do that.
From 26-27 November, civil society organisations from Africa met under the umbrella of the Africa Trade Network in Addis Ababa, in advance of the Africa Trade Week and the seminar of the CFTA to discuss the challenges of Africa’s economic transformation and integration and role of the CFTA. We have come to the following conclusions and make the following demands: [Download the French version, pdf]
SA at Africa Trade Week: Minister Rob Davies will also attend the African Union’s Ministers of Trade meeting where ministers will consider the progress of the CFTA negotiations. On the side-lines of the Africa Trade Week 2016 meeting, Minister Davies will meet the Ministers of Trade of Kenya, Egypt, and Nigeria to discuss the enhancement of cooperation and advancing regional economic integration in Africa.
Tanzania: Major blow for government as mega-factory shuts down (IPPmedia)
The fifth phase government’s industrialisation drive has been dealt a heavy blow by the unexpected closure of the country’s currently biggest cement plant run by Dangote Industries (Tanzania) Limited due to rising production costs and a ‘technical glitch’at the $500 million (1.1 trillion/-) factory. The abrupt suspension of the relatively new plant’s operations is reported to have caught the government by surprise, at the same time reigniting a row over the quality of the country’s coal reserves amid reports that the factory managers were preferring to import coal from South Africa instead of using local supplies. The Ministry of Energy and Minerals recently announced a ban on coal imports from South Africa, insisting that the Dangote cement plant must use coal mined in Tanzania because it meets quality requirements. But now the factory management has responded by shutting down operations indefinitely.
Some of Tanzania’s biggest foreign investors say they could scale back their operations or expansion plans because of tougher demands placed on companies, including higher tax bills, as part of the president’s drive to overhaul the economy. At least six companies are rethinking their business and investment plans, according to Reuters interviews with senior executives at a dozen of the biggest foreign firms operating in Tanzania, or their local arms, in sectors including mining, telecoms and shipping. Three said they could scale back operations in the East African nation, two said they planned to expand in other countries on the continent instead, while one said it was in the process of withdrawing from Tanzania altogether.
A five-day workshop on Post Clearance Audit, which is an effective measure for trade facilitation as well as compliance verification, kicked off yesterday at the Mauritius Revenue Authority Regional Training Centre, Mer Rouge. Some 30 delegates from 19 countries of the East and Southern Africa region are participating in this workshop with the aim to assist the Customs administrations to implement or reinforce PCA.
ASEA conference: Africa’s exchanges urged to be innovative and integrate to attract more investment (New Times)
Rwanda’s equity market capitalisation to GDP ratio stood at 32.93% in 2015 compared to 48% in Kenya. In monetary value, the country’s stock exchange has kept a steady performance in the last five years, registering a market capitalisation of almost $4.2bn of 2015. The Rwanda Stock Exchange market capitalisation was at Rwf2.751 trillion at the close of yesterday’s trading session compared to Rwf2.820 trillion on 4 January 2016. Five years since the bourse was launched in Rwanda, there are seven companies and 13 government and corporate bonds listed on the exchange and eight trading members as well as two licensed custodians. However, Dr James Ndahiro, the RSE chairman, said there is still need to deal with challenges facing the industry, including the lack of innovative products.
Last month, we launched the project’s second phase, ACE II, in Nairobi – a far-reaching initiative that seeks to strengthen 24 competitively selected centres in Eastern and Southern Africa to deliver top quality and relevant post-graduate education in regional development priority sectors that need it the most. The ACE II’s expected impact will be unprecedented once achieved. In five years, its selected 24 centers are expected to enroll more than 3,500 graduate students in their specialized areas, with at least 700 students pursuing PhDs, and more than 1,000 would be women. The project also aims to have more than 300 research collaborations with the private sector and academic institutions, and generate about $30 million in external revenue to make the centers sustainable.
Germany to support three new UNIDO projects: including Africa’s pharmaceutical industry project (UNIDO)
The first project on “Devising practical approaches for mobilizing investment capital and transfer of technology for Africa’s pharmaceutical industry” capitalizes on UNIDO’s previous work in Africa’s pharma industry, and seeks to further mobilize public and private partners through the newly incepted ITPO Bonn, which was formalized last week by Gerd Müller, Federal Minister of BMZ and Director General LI Yong on the occasion of the Organization’s 50th Anniversary celebrations. “This is a very important initiative”, said Li. “Together with the heads of State and Government of the African Union as well as with our development partners, including Bill Gates, we agreed that a lot of attention needs to be paid to this specific sector as it pertains both to the health of people and the manufacturing of generic drugs. We are thankful to Germany for its continued support”.
José Antonio Ocampo, Edmund Fitzgerald: Doing Business should stop promoting tax competition (Project Syndicate): The World Bank Group has just released Doing Business 2017: Equal Opportunity for All, the latest version of its flagship report. According to the Bank, the annual report is one of the world’s most influential policy publications, as it encourages countries to reduce the regulatory burden on the private sector. But there is a serious flaw in the report’s formula: the way it treats corporate taxation. A race to the bottom in corporate taxation will only hurt poor people and poor countries. If Doing Business is to live up to its own slogan, “equal opportunity for all,” it should abandon the tax indicator altogether.
Cecile Fruman: Why gender equality in doing business makes good economic sense (World Bank): For the first time since it was launched in 2002, the World Bank Group’s annual Doing Business report this year added a gender dimension to its measures, including to the annual ranking on each country’s ease of doing business. Looking at gender differences when it comes to starting a business, registering property or enforcing contracts, Doing Business shows that 23 countries impose more procedures for women than men to start a business. Sixteen countries limit women’s ability to own, use and transfer property. And in 17 economies, the civil courts do not value a woman’s testimony the same way as a man’s. This pattern might give the impression that such legal differences are really only an issue in a selected group of countries. But Doing Business’ sister publication – Women, Business and the Law (pdf) – tells us otherwise.
6th Africa Regional Platform on Disaster Risk Reduction: statement of the East African Community
What are our future plans? The East African Community commits to implement its Disaster Risk Reduction Law as soon as it is assented to and in line with the Sendai Framework on Disaster Risk Reduction. In this regard, the EAC priorities will be the following: [SADC Ministers adopt Regional Disaster Preparedness and Response Strategy]
Rwanda: Why hotels and supermarkets continue to import fresh food (New Times)
According to the Ministry of Trade, Industry and EAC Affairs, Rwanda designed the Domestic Market Recapture Strategy 2015 (pdf) geared at helping the country reduce the growing trade deficit, by promoting production and consumption of locally-made products. The ministry also identified priority sectors that can quickly contribute to Rwanda’s domestic market recapturing, including floriculture and horticulture production. The ministry says the domestic market recapturing strategy study could enable the country to save almost $450m per year or 17.8% reduction on the current import bill. Agro-processing, light manufacturing and the construction materials are the key priority sectors identified by government in its push to reduce the country’s widening import bill. Under the Domestic Market Recapture Strategy 2015, implemented by the Ministry of Trade, Industry and EAC Affairs, it is hoped Rwanda can save up to $450m annually. [Rwanda: Enhanced communication key to increased tax compliance – survey]
Supply chain risk in sub-Saharan Africa tops the chart (Bizcommunity)
Supply chain risk in Sub-Saharan Africa remains the highest in the world and continued to increase during the third quarter of the year as South Africa and Nigeria’s economies struggled. Supply chain risk in sub-Saharan Africa worsened from 5.544 to 5.558 during the third quarter of 2016, as measured by the Chartered Institute of Procurement and Supply Risk Index (pdf), powered by Dun & Bradstreet. The Index tracks the impact of economic and political developments on the stability of global supply chains.
President John Magufuli and the visiting Zambian leader Edgar Lungu yesterday pledged to take decisive action to revive the perennially cash-strapped Tanzania-Zambia Railways Authority (TAZARA) and a joint crude oil pipeline project owned by the two neighbouring countries. President Magufuli expressed dismay at a drastic decline of cargo volumes carried by TAZARA from around 5 million tonnes a year at its peak in 1976 to just 128,000 tonnes a year presently. He said the performance of the Tanzania-Zambia oil pipeline project (TAZAMA) has also dropped from handling 1.1 million tonnes of crude oil per year to just 600,000 tonnes. Magufuli said he has agreed with his Zambian counterpart to review and amend the TAZARA Act of 1995 so as to scale-up the company’s efficiency.
Malawi: Nacala Rail and Port Value Addition Project GPN (pdf, AfDB)
The main goal of the technical assistance project is to improve on the efficiency and competitiveness of local businesses in the Nacala Corridor to enable them to take advantage of the newly constructed transport infrastructure, and to achieve accelerated economic and social growth in Malawi. The specific objectives are as follows:
Mozambique: IMF to initiate discussions on a new programme
Outgoing AUC commissioner for infrastructure and energy, Elham Ibrahim: ‘PIDA was my major milestone’
First ever Africa Trade Week opens in Addis Ababa
The first ever Africa Trade Week opened in Addis Ababa on Monday with the Economic Commission for Africa’s David Luke, urging participants to come up with solutions to unanswered questions about the Continental Free Trade Area.
Speaking on behalf of Abdalla Hamdok, ECA Acting Executive Secretary Mr. Luke said the CFTA is a bold initiative aiming to bring together 54 African countries with a combined population of more than one billion people and a combined gross domestic product of more than US$3.4 trillion.
African leaders, with the CFTA, aim to, create a single continental market for goods and services, free movement of business persons and investments and expand intra-African trade, among other things. The CFTA is also expected to enhance competitiveness at the industry and enterprise levels on the continent.
He said, the questions include; how the continent can involve civil society and the African citizenry so that the CFTA has legitimacy among the people of Africa, what level of liberalization should the continent aim for at the beginning given adjustment costs, what safeguards are needed to protect the most vulnerable and those that may be driven out of business by the CFTA. For individual countries, which sectors should they liberalize, how does Africa get the details as rules of origin, technical barriers to trade sanitary and dispute settlement, among others.
Mr. Luke also urged participants to discuss how Africa can ensure the CFTA gets effectively implemented, adding the full range of key African trade policy issues should be looked at this week.
“These include Africa’s trade relations with Asia, Europe, the United States and emerging markets; how trade can support gender equality and empowerment; perspectives from the regional economic communities and the CFTA negotiations and related flanking measures,” he stressed.
He noted that relations with Asia, Europe and the United States account for massive shares of our trade currently and it is important for us to get these right.
He said that the discussions would allow actors “to examine our trading relationships with these partners and how to recalibrate them to ensure coherence with the CFTA initiative and its objectives as well as trade and gender issues and the importance of trade policy being gender sensitive.”
He said the CFTA presents Africa with a critical opportunity for development, adding research by the ECA has shown that the CFTA could add up to 2.5 percent to Africa’s annual economic output which is around $65 billion based on data for 2014, adding:
“Unlike much of the commodity-driven growth that we have recently experienced, the CFTA is likely to make growth in the African economy more sustainable and inclusive.”
“As such, the CFTA presents us with an opportunity that we simply have to seize. But how do we do so? There are many questions that remain to be answered on how exactly to pursue this most important initiative.”
Also speaking during the opening ceremony, African Union Commissioner Fatima Haram Acyl of Trade and Industry said Africa needs to bring the cost of doing business down, adding this would significantly boost trade performance with trade facilitation, which looks at procedures and controls governing the movement of goods across borders, enabling Africa to do that.
“The Africa Trade Week is a historic event and the whole purpose of this week is to encourage fruitful and stimulating dialogue among all stakeholders,” said Ms. Acyl, adding the African Trade Facilitation Forum, that begins Thursday, will explore ways to overcome the obstacles to trade and imports across Africa such as non-tariff barriers including quotas, embargoes, sanctions and levies.
Mukhisa Kituyi Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) gave the keynote address. He said Africa should forget about the Abuja Declaration and focus on getting investors.
“To me the Abuja Declaration was important. It was a starting point towards where we are but even if there had not been an Abuja and a Lagos Plan of Action, the reasons for creating a Pan African free trade are important even from today’s challenges so we have enough reasons from today apart from our inherited responsibility from Abuja,” said Mr. Kituyi.
“These include Africa’s ability to expand trade, inclusive trade has the best possibilities, the most flexible opportunities are within Africa itself,” he said.
“Second, as the world goes towards much more refined global value chains our ability to create regional value chains, trade linkages is the first building block towards being competent in order to find a scaled-up possibility on the global value chains and third, Africa’s unemployed youth needs trade related opportunities and these opportunities have to be dealt with through best practices in Africa and cross boarder engagements – infrastructure that goes beyond countries, possibilities of e-trade for example that go beyond country boundaries and this is the ecosystem that can only be created under a Pan African free trade area.”
One of the issues that participants will discuss is the relationship between Africa and the United States following the recent election of business magnate Donald Trump as President-elect of the US, the changing architecture of global trade, AGOA implementation, trade partnerships, the CFTA, trade facilitation and related issues.
The ATW is bringing together a broad range of participants, including senior governmental officials, representatives from RECs, civil society, CEOs and executives from the private sector, development banks, academia, international development agencies and the media, among others.
South Africa: Agribusiness outlook for 2017
As predicted, 2016 has been an extremely challenging and tumultuous year for the agribusiness environment and farmers alike, Agbiz CEO, Dr John Purchase, said Friday, 25 November 2016, at a media briefing in Pretoria.
Not only did the prevailing drought of the previous years continue its devastation over much of the country, but a declining economy and resultant constrained consumers led to dampened demand and declining output.
Tinashe Kapuya, head of international trade and investment intelligence at Agbiz adds: “In real terms, South Africa’s overall agricultural trade balance, despite remaining positive, fell sharply by as much as 22% and 11% in the first and second quarter of 2016, respectively.”
Dr Purchase says that given additional policy uncertainty and the country’s deteriorating political economy, agricultural Gross Domestic Product (GDP) and agribusiness confidence were in significantly negative territory for the most part of the year.
In addition to domestic uncertainty were unexpected international events, such as Brexit and the election outcome in the United States, both of which will likely carry longer term implications for South Africa’s key agricultural export markets.
However, Dr Purchase says in the last quarter of 2016 there was evidence of some recovery in the Agbiz/IDC Agribusiness Confidence Index, and with good rains falling in key production areas, this has indicated a potential turnaround situation. The situation around the country’s broader political economy, however, remains a major concern.
Given deep and fundamental political divisions in government and the governing party, threats of rating agency downgrades to sub-investment grade, as well as given an especially uncertain global political and economic environment, these ‘green shoots’ could prove to be but an empty promise. Thus, the agro-food food system and consequently also the country’s food security remains at risk.
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, says political and policy uncertainty are likely to remain key concerns in the agricultural sector over the foreseeable future.
Sihlobo says: “Prospects emanating from the Agbiz/IDC Agribusiness Confidence Index suggest that confidence in the sector may remain in positive territory for the first six months of 2017, largely driven by expected improvement in agricultural conditions and production.
“Moreover, this Index serves as a leading indicator for the contribution of the agricultural sector to the Gross Domestic Product (GDP), therefore positive improvements suggest that the agricultural sector could finally escape the current mediocre growth path in the fourth quarter of this year to 2017.
“More importantly, the agricultural sector constitutes roughly 6% of South Africa’s total employment. Therefore, expected growth in the sector could possibly have positive spill-overs on the agricultural labour market. This would be a welcomed recovery, following significant job losses in the earlier part of 2016, as farmers and agribusiness were constrained by the effects of the 2015/16 El Niño induced drought.”
In his forecast for 2017, Dr Purcahse says the agribusiness environment will be faced with various challenges in terms of engagement with key land reform legislation.
These challenges include:
Revision of the Expropriation Bill in Parliament, following the Bill’s return to Parliament;
The possible introduction of the Regulation of Land Holdings Bill, which proposes land ceilings and the prohibition of agricultural land ownership by foreigners, into the legislative process; and
Revision of the Restitution of Land Rights Amendment Bill by Parliament, after having been suspended by the Constitutional Court.
Finalisation of the Extension of Security of Tenure Amendment Bill currently in Parliament.
Other critical pieces of legislation that will feature in the legislative process and impact on the agribusiness environment will be:
The Carbon Tax Bill;
The National Skills Development and Sector Education and Training Authorities (SETA) policy revision;
The Liquor Amendment Bill;
New legislation governing the water environment and giving effect to the cabinet-adopted National Water Resource Strategy Version 2 (Water Amendment Bill and Revision of the Pricing Strategy for Water Use Charges in terms of the National Water Act, 1998);
The implementation of the new and more onerous AgriBEE Sector Code, once finalised and that will replace the 2012 Sector Code; and
Implementation of the recently announced national minimum wage.
“Additional and critical policy and legislation impacting on the agro-food industry will no doubt surface in 2017 and will be addressed by Agbiz. A positive aspect is that the so-called CEO Process, initiated by Minister Pravin Gordhan, can assist in creating an environment for strong and inclusive growth in the broader agro-food sector,” Purchase says.
Trade negotiations and relations
Kapuya is of the opinion that 2016 will go down as one of the most fruitful in South Africa’s trade policy, with several milestones attained.
In March 2016, South Africa avoided suspension in the Africa Growth Opportunity Act (AGOA) preference programme, ensuring that duty-free quota-free market access is retained for a number of agricultural products such as oranges, mandarins, macadamia nuts, and wine.
In April 2016, the SACU-MERCOSUR Preferential Trade Agreement was concluded, and came into force later on in the year, in October 2016. This has paved the way for preferential market access into South America while offering prospects of much-needed relief for feed manufacturers who will be able to import soybean cake at a preference margin.
In June 2016, the Economic Partnership Agreement (EPA) was officially signed off, opening up new market access for a range of agricultural products such as wine, sugar, ethanol and fresh fruit, effective 1 November 2016.
“Looking ahead to 2017, a rebound in domestic production will expectedly boost agricultural exports going forward, with increased growth prospects to be expected in the EU. As the Brexit debate takes shape in early to mid-2017, deliberations on that front are not expected to have any impact on South Africa’s exports. However, we expect the diversification of exports to continue, particularly for fresh fruit into Asia and the Middle East.
“There is no expectation that AGOA will be repealed in the USA, and a Trump Administration will likely not change the current SACU-SA relations in a fundamental way. However, uncertainty remains in the manner and extent to which the new Administration will push for reciprocity going forward. The expectation is that SA will retain its market access in the medium to long term, notwithstanding the possibility of out-of-cycle reviews.
“The African market will remain the centerpiece of South Africa’s agricultural export growth in 2017, especially against the backdrop of a recovery in domestic production. The Tripartite Free Trade Agreement (T-FTA) negotiations will resume in February 2017, with the expectation that progress towards its conclusion will pick up speed in the new year.
“However, the T-FTA will not likely be concluded in 2017. Meanwhile, the Continental FTA discussions will expectedly gain momentum as modalities are laid out towards its negotiation,” Kapuya says.
Mariana Purnell, general manager at Agbiz Grain, says role players in the grain industry collectively decided to come together and discuss action plans to revive the South African wheat industry. The Wheat Forum and its Steering Committee supported these efforts and have been working with industry role players in this regard since the beginning of 2014.
“The whole industry is in dire straits, not just farmers. The survival of the local wheat industry is important for the whole value chain, from the producer to the processor. Several changes have been made during 2016 to help farmers produce wheat more sustainably and to also address other issues of concern along the value chain,” she says.
The Agbiz Grain desk will host a Wheat Indaba in February 2017. The main focus of the Indaba is to communicate all the changes aimed at reviving the wheat industry, as well as indicate new regulatory requirements that impact the industry. One event will be held in Pretoria and one in Stellenbosch. The Agbiz Grain Wheat Indaba 2017 in Pretoria will take place on Friday, 17 February, and in Elsenburg on Tuesday, 21 February 2017.
Home stretch for ADF-14: “Africa deserves more, not less”
On November 28 and 29, 2016, the third and final replenishment meeting for the 14th replenishment of the African Development Fund (ADF-14) is taking place in Luxembourg, following two previous meetings held in Abidjan in March and June 2016.
This is the opportunity for donors to the Fund to mobilize the resources that will support development projects financed by the ADF from 2017 to 2019, as part of the African Development Bank Group’s Ten Year Strategy. Several of the Fund’s recipient countries will also be present along with observers from peer institutions.
Many flagship projects have been made possible through the ADF: projects to support food security in Madagascar and Senegal (video), New Rice for Africa (NERICA) (video), the Ketta-Djoum-Brazzaville road in the Congo (video), the Mozambique drinking water project (video) and the Menengai Geothermal Power Station in Kenya (video), among other examples. Other, more recently launched projects include: the development of agricultural value chains in The Gambia and a project to create employment and improvement of livelihoods in Mozambique.
Each of these projects has very tangible impacts on the ground, changing the lives of millions of Africans. Behind the figures, there are lives, communities and countries that are seeing new prospects open out before them. The purpose of the ADF is to change the lives of the most vulnerable African populations.
For 2017 to 2019, the AFD-14 goals are clear, with a focus on the African Development Bank Group’s High 5 development prorities.
Light up and power Africa: US $2.9 billion will be invested in energy to install up to 4,600 MW of capacity and to connect 23.6 million Africans to the power network.
Feed Africa: US $2.1 billion will be allocated to the agriculture sector to grow farm incomes and reduce poverty in rural areas.
Industrialize Africa: US $1.7 billion will be reserved for industrialization projects. The priority will be on funding the private sector through a range of risk mitigation instruments, guarantee products and mixed funding mechanisms to attract other funds to fill the funding gap.
Integrate Africa: US $2.7 billion will be mobilized in support of regional integration projects to address the lack of integration that is costing the continent between 1 and 1.5 per cent in annual GDP.
Improve the quality of life for the people of Africa: US $1.9 billion will be invested to create 17.5 million jobs in ADF countries and strengthen the economic and employment skills of 50 million young Africans by 2050.
The crucial importance of the ADF is long established: between 2008 and 2013, ADF-funded projects and programmes meant that over 13 million Africans gained access to safe drinking water and sanitation services; 42.2 million benefited from new transport infrastructure; and 64 million were able to access education. Over the same period, more than 3 million Africans were connected to the electricity grid for the first time; 46.1 million saw their agriculture skills improved; and 10.2 million benefited from microfinance initiatives.
In nearly 40 years of existence, the ADF has awarded more than US $40 billion in funding, making it one of the main sources of concessional funding in Africa with 38 recipient countries* and 29 donor countries to date. It is one of the three separate entities that make up the African Development Bank Group, with the AfDB itself and the Nigeria Trust Fund (NTF).
This last meeting of ADF-14, held behind closed doors in Luxembourg, will establish the amount of resources allocated to the Fund to enable it to finance its operations between 2017 and 2019 and, thus, contribute to unlocking the potential of Africa and improving the lives of millions of Africans on the continent.
* Eligibility for ADF is determined by a country’s gross national income per capita (GNI per capita) and its solvency.
“Africa deserves more, not less”
Speech delivered by AfDB President Akinwumi Adesina at the Final Pledging Session for the ADF-14 Replenishment, 28 November 2016, Luxembourg
Honorable Minister Pierre Gramegna, Minister of Finance of Luxembourg; Honorable Ministers of Finance from Africa and Governors of the African Development Bank; ADF Deputies; Executive Directors, Senior Management and staff of the African Development Bank; colleagues from other development organizations; distinguished ladies and gentlemen – friends of Africa – good morning!
It is my great pleasure to welcome you to the third and final replenishment meeting for the fourteenth replenishment of the African Development Fund (ADF). I wish to thank our partner, the European Investment Bank (EIB), for your generosity in hosting us in your beautiful building facilities for this meeting. I also wish to thank Vice-President Ambroise Fayolle of EIB, who is here with us today. Just last week, I was with President Hoyer in Abidjan and today we are at your headquarters. That is real partnership at work!
Honorable Minister Pierre Gramegna, I wish to immensely thank you and the people of Luxembourg for hosting this final pledging session for the ADF-14 replenishment. As a first-time participant in the replenishment of the ADF, you are sending a very clear positive signal of your strong support for Africa’s development – and for that we are most appreciative. I thank the delegation from Ireland for attending. We look forward to welcoming you to the ADF family!
We are honored and delighted to have with us the Honorable Ministers from Chad, Lesotho, Tanzania and Senegal, who are collectively representing the voice of ADF beneficiary countries. I also wish to thank our friend, Richard Manning, for the outstanding job he has done in coordinating the entire replenishment process. He has been with us through the ups and helped us during the downs as well.
I wish to specially thank you, the ADF Deputies. You are our partners and best advocates to ensure the success of the replenishment process. Supporters and friends like you are rare. Thank you for your continued support to see this replenishment through to a successful conclusion.
This final meeting is a culmination of our coordinated effort to support some of the poorest countries on the African continent through the African Development Fund – an instrument of hope going back to 1974.
As you know, this particular replenishment is taking place at a time when many ADF countries have been hit by several shocks – the sharp decline in commodity prices, tighter financing conditions, and a severe drought in southern and eastern Africa. This comes after an extended period of strong economic growth in most of these countries.
Growth fell in 2015 to its lowest level in some 15 years and is expected to slow further in 2016. However, we should not conclude that Africa is all gloom. The picture is in fact more positive; some of the fastest-growing economies in the world are in Africa. The growth performance differs significantly across countries, with most oil importers faring reasonably well. Medium-term prospects remain favorable, but many countries need to reset their policies urgently to reinvigorate growth and realize their potential. To this end, the Fund will support countries as they adjust fiscal, monetary and other policies targeted at diversification and financial sector development so as to strengthen resilience and boost growth.
I appreciate that times are difficult all over these days. So, having an ADF replenishment in the midst of one a global environment with sticky slow growth is challenging. I know you all face challenges in your fiscal environment at home. Other unexpected shocks have happened, including Brexit, which has significant implications for multilateral finance institutions. The migration crisis in much of Europe is displacing development financing to solve national issues. A move away from multilateralism in some places could also impact global development.
Nonetheless, I believe that Africa deserves significant support, even in the midst of these challenges. We must not forget that the reason several thousands of Africans have been migrating to Europe, is because of lack of jobs and shrinking economic opportunities back at home. Our resolve must not be to reduce support, but to increase support to help Africa, to build greater resilience, boost its economies, address its structural challenges, such as closing its huge infrastructure gap, strengthening intra-regional trade and creating jobs for its teeming youths.
Investing in Africa is investing in your homeland security as well.
I make a plea, not for the African Development Bank. I make a plea for Africa. The African Development Bank is the institution to deliver. The African Development Fund is the instrument to deliver. But Africa is the beneficiary.
As an institution, we have shown our capacity to deliver for Africa. As shown by the independent evaluation, the Bank met all its obligations under ADF-13. I must note that the Bank is the first of the Multilateral Development Banks to have undergone such a comprehensive independent evaluation.
The Bank is much stronger today than ever before. So much has happened since we last met in Abidjan in March of this year. We have moved aggressively to reform ourselves to improve institutional efficiencies, effectiveness and delivery for impact. The Transformation Management Team and the Development and Process Efficiency Committee have taken off and the results are encouraging.
Four of the five High Five strategies of the Bank were developed and approved by the Board within a period of six months. It normally takes up to two years sometimes to get one strategy approved. Our Board has been impressive and worked so hard. We are tackling the challenge of low disbursements compared to approvals, which has been raised over the years. Since I signed the Presidential Directive on this in November 2015, the lapse of time between approvals and declaration of effectiveness for first disbursement has declined by over 40%. Projected disbursements this year are $6.6 billion (UA 4.4 billion) – the highest in the history of the Bank. You will hear more from my colleagues.
As you know, the Bank Group is implementing its new Development and Business Delivery Model (DBDM) – a program of transformation to move closer to our clients, streamline business processes, and improve financial performance. All of this will be rooted in a culture of results and accountability.
All the senior management of the Bank have been hired. Following a very transparent, competitive and rigorous global recruitment process, the Senior Vice-President and all the Vice-Presidents have been recruited – and they are highly qualified individuals with global experience who have proven themselves in different parts of the world. Our new Vice-President for Power, Energy, Climate and Green Growth, Amadou Hott, is right here with us today.
Just last week, I appointed – again through a very transparent international recruitment process – and well ahead of schedule – all the five Director Generals for the regional development and business delivery hubs. I also appointed five country managers who will support them, and the Director of the Nigeria country office.
And we are making good on my pledge to increase the number of women in senior management levels: 60% of the above appointments are women – a record in the history of appointments at the Bank. The newly recruited Director of the Bank for rural development is also a woman, from Japan.
We are making very good progress on the rollout of the Affirmative Finance Action for Women – an innovative partnership platform to leverage $3 billion for women-owned enterprises in Africa. To fully mainstream gender into all of our operations, a new Department of Women, Gender and Civil Society has been created and we are currently recruiting for the Director, who will take over from the excellent foundation laid by Geraldine Fraser-Moleketi, the Special Envoy on Gender, as she transitions from the Bank.
A new performance culture is being ingrained in the Bank. All staff of the Bank are now signing performance contracts with clearly defined key performance indicators, linked to delivery. The process, which was started with the Senior Vice-President and Vice-Presidents, is now being cascaded down the whole organization. Our goal is to deliver more and better for our member countries.
I want to assure you that your investment in the African Development Fund will generate greater leveraging effect through our focus on partnerships, co-financing and syndication efforts. Let me explain with some few examples:
The Africa Renewable Energy Initiative, which has the goal of delivering 300 GW of renewable energy in 2030 and 10 GW by 2020, is now based within the Bank. Its delivery unit is now established. The G7 have promised $10 billion to support this initiative, which came out of COP21 and was approved by the African Union. France has already paid in €6 million for the delivery unit and Germany expects to soon pay €2 million. The Bank is working closely with the European Union on energy, with European Commission commitment to provide €3 billion for the initiative.
The Bank is clearly leading on renewable energy. We will help Africa to unlock its full energy potential, while developing a balanced energy mix to support its industrialization. Effective partnerships are being implemented with the UK Government’s Energy Africa Initiative (and UK is the largest contributor to the ADF over the years), the US Power Africa, the Sustainable Energy for All, Millennium Challenge Corporation (MCC), USAID and OPIC, among several others.
The Bank is fully committed in its Climate Action Plan, which will soon be going to our Board. Our commitment is to ensure 100% climate screening for all Bank financed projects. We will also support countries to translate their Independent Nationally Determined Contributions (INDCs) in actions. The Bank has been on the forefront of Africa’s efforts on climate finance – including at COP22 in Marrakech, Morocco, where the Bank’s franchise value as the leading development finance institution for Africa was widely recognized.
In partnership with the World Bank, we are moving ahead to plan joint operations in the Middle East and North Africa region, around agriculture, energy and youth employment. With the International Finance Corporation (IFC) we are working to launch joint projects on investment in women enterprises under the Affirmative Finance Action for Women. And with the European Investment Bank we jointly held Africa Day in Abidjan last week, and co-launched a €253-million Boost Africa Initiative for business incubation support facilities for young entrepreneurs.
Our partnership on the Multilateral Development Banks risk exposure exchange with the World Bank and the Inter-American Development Bank has allowed the Bank to diversify its risks and free up $10 billion headroom for new lending. Even in the case of policy-based operations, we have worked closely with the World Bank and the IMF, from Nigeria, Egypt, Algeria, Gabon and others. Facts are facts.
The Bank is the leading partner of choice in Africa. We worked closely with the US Government for the success of the US-Africa Business Forum, along with several US agencies. The Africa Growing Together Fund with China, for $2 billion, has allowed us to expand work on infrastructure development. The Bank played a major role in TICAD 6 this year, where Japan announced $10 billion for support of infrastructure in Africa and the African Development Bank was singled out to be a key partner to help deliver on this. The successful launch of the Enhanced Private Support Assistance (EPSA) 3 for co-financing of $3.3 billion between Japan and the Bank will allow the Bank to do more on private sector and infrastructure, including energy. Korea, during the KOAFEC ministerial conference, co-hosted with the Bank, announced $10 billion in support for Africa – and, most importantly, this will all be fully aligned with the Bank’s High Five priorities in Africa.
This year, the Bank arranged a $965-million syndicated A/B loan for ESKOM in South Africa, with nine other Banks, the largest ever in Africa. We plan to do more, as we put in place the new syndications team, recently approved by the Board within our new business delivery model. Across Nordic countries, we are partnering on climate, gender diversity, and fragility and natural resource management issues.
We are your partners to deliver more and better for Africa’s low-income countries. Even in the midst of very difficult and fragile situations, we stay there. During my recent visit to Madagascar, the President of Madagascar singled out the African Development Bank as the most “trusted, reliable and consistent” partner, which was there even through the most difficult periods. The same applies in Egypt, where we stayed through turbulent times, and in Liberia, Sierra Leone, Guinea and Mali, where our highly dedicated staff put their lives at risk, for the benefit of the populations we serve.
Your support for the ADF-14 cycle will help us to deliver very concrete developmental impacts, across each of the High Five areas of selectivity for interventions. Your ADF-14 support will install 46,600 MW of electricity for 24 million households with improved electricity connections. That will light up their homes, allow their kids to study at night without candles and mothers will face less pollution from fuel wood, charcoal and kerosene use. It will save lives and no price can be put on that.
Your ADF-14 support will contribute to the transformation of agriculture, provide an additional 280,000 ha of newly irrigated lands, and provide access to new agricultural technologies to 40 million people. Food security will expand and malnutrition will be reduced, and rural areas will be transformed from “zones of misery” to “zones of prosperity”.
Your ADF-14 support will provide access to finance to 1.4 million micro and small enterprises and support industrial development to benefit about 18 million people, creating jobs, securing lives and livelihoods. Your ADF-14 investment in infrastructure, especially improved transport, will enable 73 million people to benefit from improved access to transport and train 16 million persons in road maintenance and safety.
Your ADF-14 support will help to create a better future for Africa’s youth and women, and provide about 7 million direct and indirect jobs, equip 4 million people with job-specific skills and support better education for 1 million people, with 50% of the beneficiaries being women. Quality of life will be improved, with access to water and sanitation for 8 million people.
You can see: your investments will make a big difference.
As President of the African Development Bank Group, I will like to assure you that the Bank will meet all its commitments. We may not be as big as some, but you can be sure that we deliver better results per unit of invested funds in Africa. We leverage our knowledge products and our franchise value as Africa’s own Bank – a trusted partner for Africa’s development. We leverage on the franchise value of the African Development Fund, as Africa’s leading fund specifically devoted to the needs of low-income countries, especially fragile states.
Our vision is to help Africa’s low-income countries build economic and social resilience. As an institution, we are focused sharply on greater efficiency, effectiveness, delivery, and accountability for results, while promoting knowledge. We will innovate, while putting in place systems for better project designs, supervision and learning from evaluations and our new results’ measurement framework.
But we also know that money alone is not enough: we need knowledge and policy products to support countries in their efforts to better manage and grow their economies. That is why we have restructured our economics work to sharply focus on economic governance and knowledge management. Our new Chief Economist and Vice-President for Economic Governance and Knowledge Management, Célestin Monga, is with us here today. He and his team will accelerate support for better macroeconomic and fiscal policy management and greater domestic resource mobilization for countries; while ensuring better management of natural resources, reducing illicit capital flows and ensuring sustainable debt management.
Now it is time for decisions. Over the next two days, you will meet and close on the pledges for the ADF-14 replenishment. I have not missed a single meeting throughout this replenishment process. That tells you my high level of commitment to the Fund and to your work and efforts as Deputies. I hope we have convinced you that Africa deserves more, not less; that ADF-14 should do more, not less; and that the Bank will use your resources well, leveraging more through partnerships, syndications and co-financing. We will deliver greater value for money for your ADF-14 contributions.
In closing, let me say that I am delighted we are doing this replenishment in Luxembourg. I developed a personal attachment to Luxembourg six years ago, when I worked with partners in the Ministry of Cooperation of Luxembourg to develop innovative financing tools to support agricultural development in Africa. Out of that discussion came the largest and most successful efforts to leverage banks across Africa to lend to agriculture. The seeds of hope were sown right here in Luxembourg.
As we face Africa’s challenges, especially for low income and fragile states, I am happy that the seeds of hope will again be sown right here in Luxembourg, in the final pledging session for ADF-14.
Let’s make this pledging session a successful one for Africa. Let us send a strong message of support for Africa. The choice of the financing scenario for support is key for the success of this replenishment. Let’s not set our ambitions low. Let us dig deep and go for the “High Scenario” of support for Africa. That is what Africa deserves, and that is what Africa needs. And I know you can do it for Africa!
Thank you very much. Merci beaucoup! Gracias!