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Statement at the Annual Meetings of 38th AfDB / 29th AfDF (Addis Ababa, Ethiopia / Jun. 3, 2003)

Japanese

Statement by Mr. KiyoshiKodera,
Temporary Governor for Japan,
Ministry of Finance,
At the Annual Meetings of the African Development Bank
and the African Development Fund

Addis Ababa, Ethiopia
3 June 2003



1. Introduction

     Mr. Chairman, Mr. President,distinguished Governors, ladies and gentlemen:

     In addressing the 38th Annual Meeting of the AfricanDevelopment Bank and the 29th Annual Meeting of the African Development Fund, Iwould first like to express our gratitude to the Government of Ethiopia and thepeople of Addis Ababa, for their warm hospitality and excellent organization ofthe meetings with such a short lead-time.


2. Challenges for the African economy

     In 2001 and 2002, the region's economy demonstratedan average growth rate of over 3 percent. A number of African countries havealso made progress in their macroeconomic management. Thus, in 2002, the averagefiscal deficit was contained below 3 percent of GDP and the average inflationrate declined to below 10 percent.
     Despite such positive signs, the African economy stillfaces a challenge: It must establish the conditions needed to achievesustainable economic growth in the context of the Millennium Development Goals (MDGs).
     Of these conditions, improving the investment climateshould be of particular significance. For this goal, it is essential to buildeconomic infrastructure, improve governance, and increase public administrativecapacity.

     In selecting the policies and actions needed toachieve the MDGs, each country must adopt a country-specific approach that isbuilt around its development strategies, such as the Poverty Reduction StrategyPaper (PRSP) to be developed and implemented with strong ownership. In otherwords, it is essential for each country to localize the MDGs, and then to selectand implement the policies and actions needed to achieve localized goals.


3. Challenges for the ADB Group

     This past year has been an extremely difficult yearfor the Bank Group. While there has been some positive progress, such as theconclusion of the ADF-IX replenishment negotiations and its effectuation, theBank Group's activities on the whole have stagnated due to the disturbances inthe headquarter country. In such an adverse environment, however, pursuant tothe two GCC recommendations the Bank Group has made a temporary relocation fromAbidjan to Tunis without interrupting its core business, such as borrowing anddisbursement, and succeeded in restoring its functions almost fully by the endof May. So, I would like to express our high appreciation to the President andStaff for their efforts to meet this unprecedented logistical challenge.

     We are most encouraged by the fact that the BankGroup has continued to promote its financial and business reforms throughoutthis period to bring positive results, such as the strengthened financial baseand brighter medium-term prospects.
     I believe the Bank Group is expected to take a moreproactive stance to utilize its strengthened financial resources moreeffectively. In this regard, I would like to commend that the Bank Group clearlydefined its role in its Strategic Plan for 2003-2007 for the first time sinceits reorganization.

     The past year has seen progress in two other areas,and this should also be commended. First, an improvement in thePerformance-based Allocation Framework in the ADF-IX. Second, a decision topublish robust and measurable indicators of development effectiveness in allproject documents of the Bank.
     Having said that, however, I would like to point outtwo challenges that the Bank Group must address immediately.
     First, the delegation of authority and clarifiedresponsibility. In order for the Bank to respond in a timely manner to countryspecific situations, it is essential to improve its time-consumingdecision-making method to delegate more authority to the front-line staff andclarify their responsibility.
     Second, human resources. Currently at the BankGroup, over 100 posts are vacant. We are particularly concerned with theshortage of staff in such priority areas as the private sector development andgovernance. I believe the recruiting process should be expedited.


4. TICAD III/NEPAD and Japan's Initiative for cooperationin Africa

     The relationship between Japan and Africa wasdistant both geographically and historically. Yet, for the last several years,Japan has been high up on the list of ODA to Africa. Our bilateral ODA to thisregion remains in the neighborhood of 800 million US dollars a year.

     Also, later this year, inviting heads of state andcabinet-level officials from Africa and other countries, Japan will host theTICAD III with United Nations organizations, the GCA, and the World Bank -- fromSeptember 29 to October 1. This conference will mark the 10thanniversary of the TICAD process.
     The TICAD III is a manifestation of Japan's strongcommitment to African development. As this conference ispositioned to supportNEPAD, we are thinking of expanding the partnership even further with Asiancountries that show increasing interest in Africa.

     Throughout the TICAD process, Japan has insistedthat two points are essential to Africa's sustainable growth. One is theownership by African countries of their development process. The other is thepartnership of the international community. We find it encouraging that suchthinking is reflected in the basic philosophy of NEPAD. However, there are someconcerns: the level of participation in NEPAD varies by country, and tangibleresults from NEPAD are yet to be seen.
     I strongly hope that all stakeholders -- not only thoseat government level but also the civil society and the private sector in Africa-- will share the philosophy of NEPAD and those tangible results, such assubregional cooperation and governance review, will be realized soon.

     Two weeks ago, our Prime Minister Junichiro Koizumiannounced Japan's initiative for cooperation in Africa. The initiative focuseson poverty reduction through sustainable economic growth, in addition to"human-centered development" and "consolidation of peace".

     For sustainable economic growth, increasedagricultural productivity and reduced dependency on food imports should be highon the agenda. Japan will attach importance to agricultural aid. In line withthis policy, we will continue to help develop and disseminate the "New Ricefor Africa (NERICA)".
     Infrastructure building and investment will also beessential. Japan will strengthen supports in infrastructure building, and as thefirst step we will implement our commitments amounting to 1.06 billion USdollars. In order to promote investments by the Japanese private sector, theJapan Bank for International Cooperation (JBIC) plans to provide investmentcredits with a target figure of approximately 300 million US dollars over thenext five years.
     Access to safe water is another key issue in Africa. Atthe World Water Forum held in Kyoto in March this year, Japan set aside about130 million US dollars in FY2003 for the Grant Aid in Water Resources.
     Further, in April this year, to expand market accessJapan added 198 agricultural and fishery products to grant with duty-free andquota-free treatment to LDCs. As a result, 93% of imports from LDCs will beduty-free and quota-free in value terms.

     With regard to debt relief under the HIPCInitiative, Japan has already made the biggest contribution among the donorcountries; and we are prepared to provide the heavily indebted poor countries inAfrica with debt relief amounting to approximately 3 billion US dollars.
     Japan has changed its method of debt relief -- fromproviding grant aid for debt relief, to simply writing-off relevant ODA debtsowed to the Japan Bank for International Cooperation.
     Furthermore, Japan decided last fall to earmark anadditional fund of 100 million US dollars at the HIPC Trust Fund for the AfricanDevelopment Bank Group.
     However, for the African countries of operations tofully enjoy the benefits, it is essential for them to make further efforts formacroeconomic stability and good governance, and to reach their completionpoints at an early time.

     In closing, the international communityis looking at how African development and poverty reduction will be implementedin an extended partnership.
     I look forward to seeing you again in Tokyo inSeptember to further our discussion on these challenges.

     Thank you.