Setting the scene for next week’s Spring Meetings, World Bank President Robert Zoellick said today the world has changed since the financial crisis, the third world is gone and we now live in a multipolar economy.
At Washington, D.C.’s Woodrow Wilson Center for International Scholars, Zoellick told an audience of diplomats, economists and international development specialists, “We are now in a new, fast-evolving, multipolar world economy, in which some developing countries are emerging as economic powers; others are moving towards becoming additional poles of growth, and some are struggling to attain their potential within this new system.”
“It is time we put old concepts of First and Third Worlds, leader and led, donor and supplicant behind us,” he said.
The speech drew several questions on the Bank’s response to the financial crisis and how it is helping developing countries adapt to the new global economy Zoellick described.
This was a lunchtime debate designed to induce a degree of indigestion!
Participants at an annual meetings session hosted by Africa Region VP Oby Ezekwisili faced the uncomfortable assertion that the majority of citizens in resource-rich African countries have seen little if any improvement as a result of decades of natural resource exploitation.
For some, oil or mineral wealth has proven a curse rather than a blessing, exposing them to economic instability, social conflict and lasting environmental damage.
To an audience including government ministers from DRC and Cameroon, Oby followed that up with a call for a campaign to generate a sense of ‘creative dissatisfaction’ – to provoke a demand for change in the way natural resources are exploited and the resultant benefits distributed.
Centre-piece of the debate was a new Natural Resource Charter, circulated in draft for consultation. Its intention is to aid governments and their citizens in resource-rich countries to use them to generate economic growth and promote the welfare of their population, without destroying their environment. It’s a blueprint for implementing the objectives of the Extractive Industries Transparency Initiative (EITI).
African countries lag behind their developing country counterparts on infrastructure, and the gaps are only widening over time. One of today’s keynote panels took a deep look at ways to close that gap.
Instead of defaulting to a call for more money, panelists talked about what’s impeding effective use of funds, both public and private, that are made available for infrastructure development on the continent.
To put the conversation into context, here are a few key stats:
- Africa needs $93 billion a year to catch up with its huge infrastructure backlog over the next decade—an amount that represents more than 35 percent of GDP for fragile states.
- Current spending on African infrastructure is higher than previously thought, at $45 billion.
- An estimated cost savings of $17 billion—the so-called “efficiency gap”—could be achieved if existing resources were used more efficiently.
Yesterday I caught up with the stately Archbishop Winston Njongonkulu Ndungane, who is attending the Civil Society Forum here in Istanbul. The Archbishop carved out some time to meet before heading off to head a CSO Townhall meeting featuring Bank President Zoellick and IMF Chief Strauss-Kahn.
Archbishop Ndungane is the founder and president of African Monitor, an independent pan-African nonprofit whose main objective is to monitor aid flows, what African governments do with the money, and what impact it has.
African Monitor holds poverty hearings through which they seek to magnify voices. “We pride ourselves in having the confidence of people on the ground—the voice of people—and taking those voices to the corridors of power,” the Archbishop told me.
Archbishop Ndungane talked about linking up the creative and innovative minds of CSOs with the World Bank on today’s key issues—hunger, climate change, financial crisis. He emphasized the need to develop mechanisms for translating ideas into action.
The buzz is building in Istanbul, our beautiful host city, as delegates, press and CSOs from around the world begin pouring in for the 2009 joint Annual Meetings of the World Bank and IMF.
The press room opened Monday, providing temporary work quarters for the more than 1,200 registered media who are covering the events over the next week for news outlets large and small.
They are joined by representatives from civil society organizations here to take part in a Civil Society Policy Forum being held from October 2-7. The event is jointly organized by the World Bank Group and IMF civil society teams. The forum will bring together Bank and Fund staff, CSO representatives, including from Oxfam, Civicus and Africa Monitor, to name a few, along with government officials, academics, and others to exchange views on a variety of topics ranging from the global economic crisis and climate change, to governance reform. Bank President Robert B. Zoellick and Fund Managing Director Dominique Strauss-Kahn will co-host a CSO townhall meeting Friday afternoon.
At a recent press conference, three African finance chiefs chastised international credit rating agencies for failing to forecast the global financial crisis and challenged international financial institutions to do a better job of monitoring the global economy and of holding rich and developing countries accountable in the same way.
The Ministers from Zambia, Cote d’Ivoire and Tanzania spoke about the crisis and its effect on Africa. Mustafa Mkulo, Tanzania’s Minister for Finance and Economic Affairs, said:
"This crisis has come when African governments have taken broad based measures to reform their economies, followed by significant achievements. It is now threatening to wipe out our gains of the past ten years and disrupt all our plans for further progress."
- Press Release: African Ministers Outline Impact of Crisis on their Countries
- Website: The Financial Crisis in Africa
- Blog: Africa Can End Poverty
“We are here to listen—tell us how we can better assist you. And please, be frank,” said Obiageli Ezekwesili, World Bank Africa Region Vice President.
Ezekwesili asked the ministers from Liberia, Rwanda and the Democratic Republic of Congo (DRC) to discuss capacity development efforts in their countries, and to identify what has and has not worked, and how donors can provide more effective support for human development, infrastructure, and public sector reforms.
Several common themes emerged from the ministers’ interventions, including:
- Donors prioritizing support for primary and secondary education, and not higher education
- Donors pressing a “one size fits all” approach on countries, trying to replicate programs that were successful elsewhere
- The failure by expatriate advisors in civil service posts to transfer their knowledge and skills to local counterparts
- Tension among returning members of the Diaspora and local populations that stayed behind, partly around incentive structures for civil service
- An urgent need to deliver skills-training and create job opportunities for young ex-combatants
Augustine Ngafaun, Minister of Finance for Liberia, outlined the enormity of the challenges facing his country, which has “75 percent of the educational facilities destroyed” combined with a “massive brain drain” as a result of professionals fleeing during Liberia’s recent conflict.
“We have very few doctors, teachers and hardly any engineers,” said Ngafaun, Liberia's Minister of Finance.
He also noted that, despite the importance of the mining sector for Liberia’s growth, there are not even five geologists in the entire country.
Rwanda’s Finance Minister James Musoni noted that even though the reconstruction challenges were daunting, his country has made significant progress since the 1994 genocide. He said it is crucial for the donor community to understand the context in which each country operates, as in some cases the political leadership may not be ready.
Ezekwesili stressed the need to build confidence in all sectors, pointing out that “development solutions work only to the extent that the capacities of the nation-state, the private sector, and civil society are strong.”
“The lack of capacity is magnified by the stress of the post conflict environment,” Ezekwesili said.
Experts on youth and employment from Ghana, Kenya, Mali, and Colombia met on Saturday as the Spring Meetings got underway to discuss the growing problem of youth unemployment in Africa. The high-level panel, chaired by Obiageli Ezekwesili, World Bank vice president for the Africa Region, agreed that there are no easy solutions to the problem.
“Youth in urban areas are looking for jobs alongside thousands of others from the same schools, while rural youth are flooding into the cities looking for work,” said Sanoussi Toure, the Minister of Finance of Mali. “This is a tragedy. Our policies favor investment in education and training, but this investment has not led to job creation.”
Key points that came out of the meeting included:
- There are no easy solutions to the problem of youth unemployment.
- Youth employment has to be part of the growth strategy of every African country.
- Employment policies need to favor investment in education and training.
The panel also included Mauricio Cárdenas, former Colombian Minister of Transport and Economic Planning. Cárdenas talked about the outcomes of two youth programs Colombia put in place during his country's economic crisis in the late 1990s, when external shocks drove unemployment from 10 to 20 percent, and youth unemployment to 30 percent.
It is clear that youth unemployment in Africa needs to be addressed from many entry points, Ezekwesili said in her concluding remarks.
“The profile of unemployed youth has to enter the way we think, just as gender has. Youth need to be effectively targeted in everything we do, so that they will have a stake in the future,” Ezekwesili said.
Flanked by the finance and development ministers of France and Germany, World Bank Group President Robert B. Zoellick launched two initiatives today that together are expected to mobilize more than $55 billion in financing for infrastructure projects over the next three years.
The multibillion dollar initiatives—the Infrastructure Recovery and Assets (INFRA) platform and Infrastructure Crisis Facility—were created to address the falloff in funding for the construction of roads, water systems, power generation and distribution, and other critical infrastructure.
There is no doubt infrastructure plays a huge role in economic growth and development, Zoellick said.
“In this crisis, we will need more and more to identify creative ways to mobilize additional financing. This facility sends an important market signal,” encouraging the private sector to continue infrastructure investment and development.
France and Germany became the first to sign on to the Infrastructure Crisis Facility with commitments of about $660 million through German development bank KfW and roughly $1.3 billion through French development bank Proparco.
INFRA is designed to help countries offset the negative effects of the financial crisis on their infrastructure services and investment programs, with up to $45 billion available over the next three years. Assistance will be global, but Africa is expected to see a large share of the funding.
The Infrastructure Crisis Facility, administered by IFC, a private sector branch of the Bank Group, is expected to attract more than $10 billion to help bridge the infrastructure financing gap.
At today’s signing, German Development Minister Heidemarie Wieczorek-Zeul appealed to industrialized countries to support the initiative and take into account the situation in developing countries. “They’re not responsible for the crisis. We have a special responsibility to be at their side.”
French Finance Minister Christine Lagarde added: This is a time “when we can put our money where our mouth is and commit to deliver…I think the World Bank has done an outstanding job dealing with issues that are difficult. This is a good illustration of how projects should be conducted. They should be focused where they can actually make a difference.”
On a related note, I caught up earlier today with the Bank’s director for energy, transport and water, Jamal Saghir, who said the Bank’s Board has approved $9 billion in infrastructure projects already this fiscal year. That puts the Bank 47 percent ahead of the amount of infrastructure funding approved this time last year.
Saghir gave a shout-out to staff, who he credited with working hard to speed up project implementation to respond to the crisis.
For more information
- Press release: World Bank Group Launches Multi-Billion Infrastructure Initiatives to Help Developing Countries Weather Crisis
- Website: Infrastructure Recovery and Assets Platform
- Website: Infrastructure Crisis Facility
- Feature story: Infrastructure Financing Gap Endangers Development Goals