1. Introduction |
Mr. Chairman, Mr. President, distinguished Governors, ladies and gentlemen:
I am honored to address the 39th Annual Meeting of the African Development Bank and the 30th Annual Meeting of the African Development Fund. On behalf of the Government of Japan, I would like to express our gratitude to the Government of Uganda and the Bank’s staff for their efforts, and to the people of Kampala for their warm hospitality. |
2. 40th Anniversary of the Bank |
The ADB is celebrating its 40th anniversary this year. On this very special occasion, I would like to extend heartfelt congratulations to President Kabbaj, his predecessors, and all the staff who has worked for the institution.
For three decades since the establishment of the ADF, Japan has remained its number one donor, and has continued to support the ADB Group as an essential development partner in Africa.
I congratulate the ADB Group today on two accounts.
First, in July last year the Bank received ‘AAA’ credit ratings from all major rating agencies―proof that the Bank enjoys one of the best financial positions among multilateral development banks.
Second, despite a temporary relocation to Tunis, the ADB Group has been able to restore its operations to normality with little delay and achieve a level of loan approvals comparable to other years. This is further proof that the ADB Group is an organization that can appropriately cope with crises.
I would like to take this opportunity to express my heartfelt gratitude to President Kabbaj, who has led the operational and financial reforms at the ADB Group. |
3. African Economies and the Roles of the ADB |
In recent years, macroeconomic indicators of African economies have pointed to a recovery. GDP growth in sub-Saharan Africa, in particular, is expected to reach 5% this year. This is due to a number of factors, such as improved macroeconomic policies in each country, rising prices of non-oil products, the expected global recovery, and debt relief under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative.
They show a different picture, however, when we look at their progress toward attaining the Millennium Development Goals (MDGs)―particularly the poverty reduction goal. The poverty rates in sub-Saharan African countries are still in the range of 40 to 50%. As such, meeting these goals seems at risk.
It is essential for these developing countries to localize the MDGs according to the circumstances they face and then to formulate their own PRSPs, designed to achieve the localized goals. The ADB and other members of the donor community, on the other hand, must join hands to support such PRSPs.
We also remind ourselves that there are a number of the countries that have emerged from futile civil wars in this continent. In offering assistance to these countries, I believe it is essential to combine three perspectives in a comprehensive manner, namely, politics, security, and development. |
4. Challenges for the ADB Group |
With all this in mind, there are five challenges that need to be addressed by the ADB Group.
First, the ADB Group needs to be more results-oriented to make its operation even more effective.
Certainly it should be commended that the ADB Group is making steady progress towards results-based management. In its implementation process, however, it is essential to identify “results chains” by clarifying how a given ADB activity will translate into the development effectiveness in recipient countries; to establish its measurable indicators; and to make sure whether or not expected results have been delivered at each stage of aid―from planning and implementation, to monitoring and evaluation―for effective feedback.
This process needs to be implemented through important vehicles such as the PRSP at country level and the results-based Country Strategy Paper (CSP) at organization level. The ADB Group, in particular, must demonstrate progress in the CSP on the following accounts.
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| | － | To present a consistent, long-term strategy to serve as the basis for the 3-year CSP program. Specifically, instead of simply indicating specific sectors which lending program deals with, the ADB Group should put forward a comprehensive strategy detailing how it will combine the ADB Group’s projects, programs, and researches in order to support a recipient country’s own strategy, by taking part in the recipient country’s PRSP formulation process and sector policy dialogue. The ADB Group must then strengthen selectivity by allocating its human and financial resources to areas where it can apply greater leverage, while taking into account the Group’s comparative advantages. |
| | － | As for Japan, from the viewpoint of supplementing the ADB Group’s role to help recipient countries develop their own PRSPs, we used the fund we had established at the Group to support the ADB/Workshop on PRSP held in Senegal in January this year. |
| Second, the ADB Group needs to increase agility in responding to the needs of recipient countries.
Many shareholders argue that the ADB Group should enhance local policy dialogue with the governments in recipient countries; eliminate delays in project procurement and disbursement; and to promote decentralization of authority to field offices.
While I agree with the general direction of the argument that the ADB Group should promote decentralization, there are things that need to be done first. It is a must to develop experienced staff that can make adequate contributions to policy dialogue and coordination with donors. It is also imperative to delegate authority to the front-line staff in resident missions and clarify their responsibility so that they can make timely decisions.
To this end, the ADB Management has recently decided to expand internal mobility, to further advance the delegation of authority, and to increase operational staff. Under such initiatives, I hope the ADB will listen to recipient countries even more carefully and thus increase the efficiency of aid.
Third, the ADB Group needs to be more proactive in supporting post-conflict countries.
For that, arrears clearance should be at the top of the agenda. The principle of arrears clearance is to take a case-by-case approach, while making sure a good track record is being accumulated. Thus, we strongly hope that the ADB Group will enhance coordination with the World Bank/IMF.
Japan welcomes the Bank’s initiative to establish of the Post-Conflict Initiative and the Post-Conflict Countries Facility.
Further, it is equally essential that post-clearance reconstruction demand will be adequately met. In this respect, as the development bank representing this region, the ADB has the best insight into the circumstances of post-conflict countries in Africa. To secure its capacity to meet post-clearance reconstruction demand, I propose that starting next year greater allocation be made from the net income of the ADB to resources for ADF-X, while taking into account scarcity of the ADF resources.
Fourth, the ADB Group needs to strengthen its focus on debt sustainability in ongoing HIPCs exercise and post-HIPC era.
Of the 37 countries that seek to become HIPC beneficiaries, 32 are in Africa. Nine of them, mostly post-conflict countries, haven’t even reached a decision point yet, despite the fact that the application deadline for the Enhanced HIPC Initiative is only toward the end of this year. The ADB must help these countries pursue sound policy management and get HIPC debt relief at an early date, by strengthening support for post-conflict countries and promoting policy dialogue.
At the Development Committee last month, a framework for assessing debt sustainability in low-income countries was discussed. It is a significant framework designed to prevent the countries that have completed the HIPC process from being heavily indebted again. For international financial institutions to operationalize this framework, it needs to be examined from various angles. The ADB Group is expected to take an active part in this exercise.
Fifth, the ADB Group needs to revitalize operations it conducts through the ADB window focused on private sector support.
The Bank now enjoys one of the best financial positions among multilateral development banks (MDBs). Its equity/loan ratio is almost twice as large as the ratio for other MDBs. What underlies this is a combination of a number of factors―building up of reserves, progress in HIPC debt relief, and the declining outstanding loans―all in the last several years. In fact, the Bank’s current equity volume is a sufficient level comparing with the risk volume.
The ADB should begin to examine making good use of these strong financial bases to support the private sector. To this end, the ADB Group should promptly establish a comprehensive private sector development strategy that also covers the public sector. In doing so, serious analyses on why public-private partnerships have not produced the expected outcomes will be indispensable.
Also, for broad-based growth and poverty reduction in developing countries, it is essential to foster the private sector with particular emphasis on SMEs. In this regard, I expect the ADB Group to be more proactive in supporting the financial sector to ensure appropriate provision of funds to SMEs and in helping build the enabling environment for SMEs. |
5．Closing―a follow-up on TICAD III |
At the TICAD III held in September last year, Japan decided to convene the TICAD Asia-Africa Trade and Investment Conference in Tokyo in the autumn of 2004. Furthermore, an ADB business opportunity seminar for the business community in Japan is also due in June this year.
In closing, I look forward to seeing you again in Tokyo this autumn.
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| Thank you. |
