May 15, 2008
HP-994
Statement by Deputy Assistant Secretary Kenneth Peel
At the 2008 African Development Bank Annual Meetings
Maputo, Mozambique - I am honored to represent the United States at this 43rd Annual Meeting of the African Development Bank. On behalf of Secretary Paulson, I convey greetings to fellow Governors and would like to extend our gratitude to our gracious Mozambiquan hosts for their warm hospitality and to President Kaberuka and Bank staff for their hard work preparing for our meetings.
As we come to Maputo, I cannot help but be encouraged by Africa's continued robust economic performance. Although the global economic slowdown and higher food and fuel prices pose significant challenges to growth and inflation outlooks, Africa is better prepared to meet these challenges than at any time in its recent history. Africa's ability to meet these challenges is partly a result of exogenous factors. High commodity prices and expansive debt relief are widely acknowledged factors in Africa's current economic upswing. But I believe that even more important factors are the stronger political and economic leadership across the continent and the improved policies that have accompanied that leadership.
That leadership is transforming Africa from a continent shunned by investors into a land of new opportunities. Better macroeconomic policies, increasing transparency, and more open investment climates have begun to create an environment in which the private sector can grow. One indicator of this transformation is that private capital flows to Africa now exceed official development assistance flows.
Nonetheless, the obstacles to sustained economic growth and poverty reduction in the continent's poorest countries are formidable. A weak infrastructure base, shallow and underdeveloped financial sectors, and further reforms of the business climate must all be addressed if the private sector is to truly take hold and help drive the levels of sustainable economic growth needed to significantly reduce poverty in Africa. The Bank can play a critical supporting role in this work.
As we meet here today, much of the region and the world are suffering from large increases in food prices. The crisis requires a coordinated international response consisting of both immediate and medium-term actions and reflecting the respective missions of the many organizations involved. Like many countries, the United States has provided immediate additional assistance to the World Food Program and is in process of providing additional emergency assistance to those in need. We applaud the African Development Bank's intention to take actions consistent with its comparative advantage and strategic vision. We believe the most meaningful manner in which the Bank can contribute over the medium term is by strengthening agricultural productivity through building rural infrastructure and otherwise improving physical access to markets for rural farmers.
Under President Kaberuka's leadership over the last few years, the African Development Bank and Fund have taken important steps to improve their institutional capacity to help African countries meet the core development challenges they face. The region needs and deserves an institution that is focused on its comparative advantages, dedicated to achieving concrete results and organized and staffed to deliver assistance efficiently and responsively. We commend the Bank for the genuine progress it has made toward these broad goals in recent years and urge management to continue to implement the key institutional initiatives necessary to fulfill the Bank's mission.
Development impact – measuring the results of its assistance - is the primary criterion by which we judge the Bank's quality and effectiveness. We are pleased that the Bank has committed to becoming a truly results-based institution, as evidenced most clearly by the overarching results measurement framework agreed in the African Development Fund replenishment negotiations late last year. The challenge now of course is to fully implement it. This means collecting, measuring and reporting data that demonstrate the effectiveness of the Bank's work. But it also means making the difficult but necessary cultural change to an institution whose staff incentives, corporate philosophy and ground operations are anchored in the fundamental principle that quality matters more than quantity and that, at the end of the day, demonstrable results are the only true measure of success. We applaud the steps the Bank has taken and encourage the continuing process to institutionalize this framework and carry through on institutional reforms to make the irrevocable transition to a genuine results culture.
Two years ago in Ouagadougou we and other shareholders called on President Kaberuka to focus the Bank's activities on a limited number of priorities in which it has, or can develop, a comparative advantage. We believed it was essential that the Bank not try to be all things to all people, but instead focus on having a real impact on a manageable number of the region's core development needs. The Bank's response has been impressive. We are pleased to see Management's commitment in the Medium Term Strategy to focus its energies on the private sector, governance, regional integration and infrastructure (specifically water, energy and transportation.) By focusing its efforts in these areas, the Bank can leverage its limited resources and help African countries reach the higher levels of private sector-led economic growth needed to achieve development results. The ongoing challenge is to resist the understandable temptation to respond to needs and requests beyond the strategic comparative advantages the Bank has identified for itself. We urge management to be resolute and offer our strong support to maintain its focus.
The Bank's commitment to governance and fighting corruption was demonstrated by the recent adoption of the new governance strategy. Good governance is essential for sustainable growth throughout Africa. Expansion of private sector operations, while adhering to fundamental principles of additionality, is welcome and essential. Effectively engaging the private sector through catalytic transactions and improvements to the investment climate is the most powerful path to sustained growth and poverty reduction. We have been particularly pleased with some of the Bank's private sector operations in AfDF countries. We also welcome the Bank's work toward greater analysis of development impact ratings at the design stage of private sector operations.
As we look ahead, we see much to encourage us about the direction the Bank is taking to improve its operations and fulfill its promise as a vital institution for Africa's development. But I think we can all agree that the job is not yet done and we pledge our continued cooperation with President Kaberuka, Bank staff and other shareholders to help realize our shared vision for the Bank and for Africa. Thank you very much.
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