May 17, 2006
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Statement by Ahmed Saeed
Deputy Assistant Secretary and Temporary Alternate Governor
Treasury Department, United States of America
Annual Meeting of the African Development Bank Group
May 17-18, 2006
President Kaberuka, ladies and gentlemen, it is an honor to be with you at this important occasion. I would like to express my appreciation to our Burkinabe hosts, and congratulate President Kaberuka on what we hope will be the first of many successful annual meetings under your able stewardship.
The United States and Africa
President Bush is determined to build significantly on our country's traditionally strong commitment to Africa. A number of the President's most important initiatives – $15 billon for the President's initiative on HIV/AIDS and $5.5 billion for the Millennium Challenge Account, to take two examples – are in significant part dedicated to Africa. We are also working closely with African governments and other donor countries on issues critical to Africa, as we did last year to achieve agreement on the President's G8 initiative to provide $50 billion in multilateral debt relief, largely for Africa, and a broader move from debt to grant financing for the poorest and most debt vulnerable.
As important as we believe these efforts to be, ultimately they will pale in comparison to the potential of the private sector to stimulate growth and lift hundreds of millions of Africans out of poverty. For example, increasing Africa's share of world trade by one percentage point would stimulate $70 billion annually in additional economic activity in Africa – more than all annual aid flows combined. And while there is reason for guarded optimism in recent trends, the bulk of the task remains ahead of us.
Sub-Saharan Africa is riding one of its strongest periods of growth and low inflation in recent history. Greater political and economic stability, a benign global environment, high commodity prices and significant debt relief are the proximate reasons for this success. Yet the region accounts for fully half of the countries ranked in the bottom third of the World Bank's Ease of Doing Business Indicators. The cost of doing business in Africa is 20-40 percent above that for other developing regions. It is clear that African governments – with targeted and results-oriented assistance from donors – need to do much more to remove the internal and external barriers to private sector investment, business formation and growth.
The African Development Bank Under New Leadership
A number of recent actions by the President Kaberuka and the Bank already deserve our recognition. Completion of the Multilateral Debt Relief Initiative now awaits shareholder approval, the Bank has welcomed its role as secretariat of the Africa Infrastructure Consortium, and President Kaberuka has put in place a new senior management team. The stage is now set for the Bank to articulate and to implement a new strategic vision that seeks to deploy its considerable, but limited, resources most effectively.
The African Development Bank has relatively limited share capital, currently represents only 4 percent of assistance to the continent, operates from an indefinite temporary location and has some 200 professional vacancies. These obstacles can be overcome. President Kaberuka's advent is a promising opportunity to redefine the Bank's mission to focus its resources in a manner that will make it highly relevant – even indispensable – to the continent's future prosperity.
First, we must accept that the Bank simply cannot be all things to all people, although we shareholders cannot escape blame for overextending its mission over the years. There is nothing wrong with recognizing that there are many players and partners in African development – both multilateral and bilateral – and that collectively we can achieve more by focussing efforts on our respective comparative advantages rather than wasting precious limited resources through duplication and overlap. It seems to us that the most urgent task for us is to identify the particular role we believe the African Development Bank can and should play. Yes, this will mean narrowing the scope of the Bank's activities but we are convinced that this is both necessary and desirable for the Bank to maximize its impact.
I do not stand before you today with the definitive answer, other than that it must relate directly the economic truth laid eternally bare by the tide of history in the late 20th century – that real economic growth and poverty reduction can only come from unlocking human potential through free enterprise. We can all think immediately of a number of sectoral growth deficits in Africa; infrastructure, agriculture, small businesses and trade are among those most frequently mentioned. What we need now is a comprehensive look at which sector represents the most promising prospects for the Bank to develop and deploy a comparative advantage.
I call on Bank management to develop a proposal for such a laser-like focus in the months ahead, in time for shareholders to study and discuss it for a decision no later than next year's annual meeting. An ambitious objective, perhaps, but we have no time to lose – the region's needs cannot wait.
The Role of Shareholders
It may seem obvious, but we shareholders must recognize and fulfill our duty to lead and make decisions that enable the Bank's management to work as effectively and efficiently as possible. I've already mentioned the MDRI, and I urge shareholders to provide their Instruments of Commitment immediately in order to provide the benefits of debt relief without delay to the poorest citizens of the continent. And I've put forward a new vision for the Bank's mission on which I encourage and request all shareholders to participate actively in shaping in the months ahead.
Another matter requiring shareholder leadership and attention is the issue of a permanent location for the Bank. A "permanently temporary location" simply will not do, and our failure as shareholders to resolve this issue will have consequences for this institution. We have made clear in the past our belief that a return to Sub-Saharan Africa is essential to the
Bank's future effectiveness, but my point today is simpler – to make good on the promise to begin the process of deciding. I therefore urge the GCC to meet later this year and to launch a comprehensive review of this situation, and to make specific proposals on this issue to
Governors at next year's Annual Meeting. We have already delayed this process too long,
and it is past time to live up to our clear shareholder responsibilities in this critical regard.
We in the United States remain firmly committed to supporting the Bank as it develops a plan for its future role. This will take hard work and critical decisions on the part of management and shareholders. I pledge our full energy and dedication to this endeavor.