Chapter

1 Opening Remarks

Author(s):
Laura Wallace
Published Date:
May 1997
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Author(s)
Hideichiro Hamanaka

Welcome to the Third African-Asian joint meeting on Policies for Growth in Africa, organized by the Government of Japan, the International Monetary Fund, and the World Bank. We are delighted to see many of you again and to welcome new participants from Africa, Asia, North America, and Europe.

Let me begin by trying to bring you up to date on our mission. At the Halifax Summit, the Group of Seven Ministers urged the Development Committee to establish a task force to debate the roles of multilateral development banks, such as the World Bank, the African Development Bank, and the Asian Development Bank. The task force met seven times—I attended five of these meetings—and in the end, we produced a report entitled Serving a Changing World, which was welcomed and endorsed by the Development Committee this past April. A number of points emerged when we finally concluded our report, including the following:

  • There is a need for good governance.
  • There is a need for more local responsibility, taking into account the institutional capabilities and the absorptive capacity of borrowing countries.
  • There is a need for a result-oriented culture, replacing the approval culture that has predominated for so long. Although it is clear that this point was made with respect to multilateral banks, I believe that development will surely come when recipient countries take result-oriented approaches.
  • There is a need for paying due attention to the diverse situation of countries, in terms of poverty, culture, history, and different development experiences—in other words, there is a need for country- and region-specific policies.
  • There is a need for encouraging investment flows and development of the private sector.

These conclusions could be compared with those of the World Bank’s 1993 report, The East Asian Miracle.1 This report was a milestone in economic theory and development policy, as it was the first to analyze the successful economic growth of East Asian countries. The report told us:

  • domestic savings are critical for development;
  • human resources, among others, are important when, or even before, development really takes place;
  • good governance and responsible administrators are necessary; and
  • it is vital to have a medium- and long-term growth strategy—or, in other words, consistency over time.

Yes, the world has changed. These two reports look alike and yet, upon closer observation, look different.

Let me turn now to Africa. During the 1980s, Africa suffered from a continual worsening in economic conditions, aggravated by a serious drought. We noticed real GNP fell; interest rates rose; and debt accumulated—with the ratio of debt to GNP skyrocketing from about 20 percent in 1980 to 80 percent in 1987.

But since then, progress has been made in many areas. Many countries have introduced the multiparty system, adopted democratic constitutions, and are now enjoying free and open elections. Economic reforms are being initiated and strengthened. Privatization of state-owned enterprises has started. Rigid regulations have been relaxed, and among other things, exchange rate policy has changed. Moreover, the IMF’s most recent World Economic Outlook says that growth performance in Africa is expected to continue to improve on the basis of the stronger macroeconomic and structural policies implemented by many countries in recent years.

Even so, although a number of countries are performing well—and some governments are really trying to strive for growth—there are a number that still remain in poverty, meaning we still have a long way to go.

Now, I need to comment on Asia. For over 30 years, Asia and the Pacific Rim have enjoyed a high rate of growth. Needless to say, Asians worked hard, from dawn to dusk. They worked for their large families, for their communities, and for their countries. Investment rates remained high; savings rates were higher; and financial structures reorganized. Today, Asia absorbs a huge amount of foreign direct investment. However, I have to tell you that everything is not fine in Asia.

In the Asia Pacific region, there are still 700 million people living on less than $1 a day. We observe rural poverty, especially in provinces remote from booming cities. For example, poverty exists in the southern India plateau, the Ganges River basin, the central and northwestern provinces of China, and the Pacific island economies. In addition, we note urban poverty. There are huge cities, megacities, in Asia, probably with populations of over ten million. These megacities have many poor people, sometimes living in slums, with no water supply, no electricity supply, and no sewers. As these countries grow, people will migrate from rural areas to cities. Urban development is a challenge, too.

What can be done to help lift the world’s poor out of poverty? One way, as you all know, is through the World Bank’s International Development Association (IDA). In late 1994, I joined the IDA-11 replenishment talks in Madrid as a chief negotiator representing the Government of Japan. The path from Madrid to the final meeting in Tokyo, which was this past March, took 18 months. In ordinary cases, five or six meetings would have been sufficient, but this time we needed nine or ten. The challenge was balancing the need for concessional funds with the reality of the fiscal difficulties that advanced countries face.

IDA will soon be reported on to the Governors, and the Governors will be asked to agree to the eleventh replenishment in the coming months. Roughly half of the IDA money will be utilized to establish infrastructures, educational facilities, and electricity supplies in Africa. I would like to mention that as Japan became the largest donor to IDA-11, it kept its 20 percent share of the replenishment, followed by the United States at about 13 or 14 percent, then France, Germany, and other European colleagues.

For our seminar here in Paris, we have brought distinguished speakers from Africa, Asia, Europe, and North America. During the first day, we will explore the progress and challenges of structural reform in Session I, how to accelerate reform in Session II, and how to enhance the effectiveness of external assistance in Session III. For the second day, we will have a panel discussion on the future role of governments and donors, during which I hope we will have a heated debate, with ample time for interventions and rebuttals. Out of the debate, I think we will probably find hints of innovative approaches to meet the challenges Africa now faces.

Distinguished guests, no single formula will work for all countries. Rather, we need to develop policies tailored for specific countries and regions. Nonetheless, we will try to focus on the experiences of countries in other parts of the world, as they have valuable lessons to offer.

We have a good climate to develop South-to-South cooperation, which is a new challenge. We need more Asians with development success to work in Africa. I believe and hope that by the end of the two days, Asian and African participants will have benefited from attending this meeting as friends, as the world is so small and our economies are so interdependent.

1World Bank, The East Asian Miracle: Economic Growth and Public Policy (Washington: World Bank, 1993).

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