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Statement at the Annual Meetings of 41st AfDB / 32nd AfDF (Ouagadougou, Burkina Faso / May 17, 2006)

Japanese

Statement by Mr. Koichi Hasegawa,
Director of the Development Institutions Division, International Bureau,
Ministry of Finance of Japan, and Temporary Governor for Japan,
At the Forty-first Annual Meeting of the African Development Bank and
the Thirty-second Annual Meeting of the African Development Fund

Ouagadougou, Burkina Faso

17 May 2006
 


1. Introduction
     
    Mr. Chairman, Mr. President, distinguished Governors, ladies and gentlemen:
 
   It is a great honour to address the 41st Annual Meeting of the African Development Bank and the 32nd Annual Meeting of the African Development Fund. On behalf of the Government of Japan, I would like to express our sincere gratitude to the Government of Burkina Faso and the people of Ouagadougou for their warm hospitality. May I also welcome President Kaberuka for his first attendance to the Annual Meetings.
 
2. Present situation in Africa
 
    In recent years, the African economy has shown steady growth, driven by a brisk world economy, higher commodity prices, and a decrease in regional conflicts. It is particularly encouraging that this region has maintained a strong growth rate of more than 5% for three consecutive years and it has also registered 3 % growth of GDP per capita for two straight years.
 
    Although the macro economy has been stable, Sub-Saharan Africa, in particular, remains way off track to meet the many goals under the MDGs. The ratio of those who live in poverty is not much different from the 1990s. The child mortality and maternal health indexes have even deteriorated in some countries. In addition, around 70% of people infected with HIV/AIDS live in the Sub-Saharan region.
 
3. Challenges for the African Development Bank
 
    In addressing these challenges in Africa, the African Development Bank Group has a significant role to play. With the partnerships it has established with other development partners, the Bank Group needs to focus particularly on the following four areas.
 
    First, the Bank needs to strengthen its organization and human resource management, as these are the foundation for steady implementation of its operation. Regarding human resource management, it is essential to secure capable as well as dedicated staff and post them in appropriate positions in a transparent manner. On the organizational front, the current institutional reform must be implemented smoothly and efficiently with a stronger country focus. Shifting to new operating-units should not have a bad effect on the Bank’s day-to-day operation.
 
    Furthermore, the Bank needs to strengthen its focus on the improvement of governance, including the fight against corruption arising from Bank-related projects as well as enhancing transparency of the organizational management.
 
    Second, the Bank needs to accelerate its operation and improve its portfolio performance. Although the 2006 ADF financing target was set at UA 1.5 billion, only 10 projects, amounting to UA 125 million, were approved by the Board to date―from January to these Ouagadougou meetings. In addition, only two AfDB projects, amounting to UA 65 million, have been approved to date. Furthermore, the ratio of project at risk has remained high and the disbursement ratio has been slightly above a mere 10 % level. The Bank should focus on the quality of projects, and at the same time it should also promote the formulation of new projects, while the Bank should eliminate its so-called “approval culture”. To achieve all this, in addition to the institutional reform I’ve just mentioned, the Bank must implement the planned decentralization, while at the same time strengthening supervision functions by the headquarters to the procedures such as procurement of the regional offices.
 
    Third, the Bank must strengthen support of infrastructure development and private sector growth― the key areas President Kaberuka focuses on.
 
    Last year, Japan proposed the Enhanced Private Sector Assistance for Africa (EPSA), based on our beliefs that it is more important for countries to get hold of a fishing rod than to be given fish. Not only will it back up the Bank’s support of infrastructure development and private sector growth, EPSA will also contribute to the capacity building of recipient countries and its private sectors. Japan has already committed to provide highly concessional loans up to US$1 billion as well as US$20 million of grants. I would like to call for the active participation by other donors in this initiative.
 
    Last December, the Board approved a road project between Senegal & Mali―the first case of sovereign co-financing under the EPSA initiative. I look forward to seeing steady implementation of the entire initiative. This will include the conclusion of exchange of note and loan arrangement to expand the Bank’s non-sovereign operation, further formulation of the projects for sovereign co-financing, and for technical assistance.
 
    Fourth, the Bank needs to effectively implement the Multilateral Debt Relief Initiative (MDRI), proposed at the Gleneagles Summit. To begin with, I strongly hope that member countries will conclude promptly voting on the Resolution and depositing the Instrument of Commitment. The Bank, for its part, must improve public expenditure management, in collaboration with other international financial institutions, so that the recipient countries will assuredly utilize freed-up resources to achieve development agendas such as enhancing economic growth and addressing the MDGs goals.
 
4. Closing
 
    In closing, Africa is a continent of huge potential of resources―both natural and human. I hope that the year 2006 will be a year of rapid progress for both Africa and the African Development Bank in realizing those potentialities.
 
    Thank you.