Good morning your excellencies. It’s great to be here with you at the Second Investing in Africa Forum. I would like to express my gratitude to Vice Premier Ma Kai and the Government of China for developing this partnership among China, Africa, and the World Bank Group. This collaboration has gained in both strength and substance over the last two years. A big thank you, also, to Mr. Hu Chunhua, the Secretary of the CPC's Guangdong Committee, Mr. Zhu Xiaodan, the Governor of Guangdong Province, and Mr. Hu Huaibang the Chairman of China Development Bank, for co-organizing this event to promote investment activities in Africa. I would also like to thank President Talon of Benin and President Zuma of South Africa for joining this important Forum.
When our teams met a year ago at the first Investing in Africa forum in Addis Ababa, we talked about ways to accelerate development in Africa -- to encourage investment and industry, and to create opportunities for Africa’s youthful workforce. China’s Ministry of Finance, the China Development Bank and the World Bank Group agreed then to establish an Investing in Africa Think Tank Alliance to bring together the intellectual capabilities of think tanks and the capital strengths of development finance institutions. I’m pleased that today we will formally launch this partnership and work together to promote development, investment, and multilateral cooperation in Africa. China Development Bank’s Research Academy and the World Bank’s Africa region will take the lead in co-sponsoring the Alliance and organizing its activities.
We’re here because we believe in the promise of Africa – one of the fastest growing regions of the world over the last 20 years. Regional GDP growth averaged 4.7 percent a year between 1995 and 2014 - and one fifth of the region's countries had annual growth rates of 7 percent or more. Much of this growth was underpinned by prudent macroeconomic management, a better investment climate, improved social policies, and the strengthening of institutions.
Today, low commodity prices and a slower global economy have had an impact on some economies in Africa, but others continue to expand. Seven of the world’s top 20 fastest-growing economies in 2015 were in Africa. Africa’s middle class is also growing and technology is spreading – about 70 percent of Africans have access to a mobile phone today, up from just 1 percent in 2000.
China has been an important partner in this progress as Africa’s single biggest trading partner. Africa represents a growing market for China’s imports. Investment and financial links between China and Africa are deepening.
And knowledge- and experience-sharing are becoming increasingly important dimensions of the China-Africa partnership. China’s economic progress – and its remarkable poverty reduction -- offers lessons and insights for Africa.
We believe there are ample opportunities to accelerate growth, productivity, and Africa’s economic transformation, but four key things need to happen.
First, Africa needs to close a large gap in infrastructure -- in roads, energy, water, sanitation, broadband, and transport. These infrastructure gaps are a drag on productivity, industrialization, and growth. Only one-third of households have access to electricity, and in rural areas, that figure is substantially lower -- only 15 percent.
The good news is Africa has huge untapped renewable energy resources—in solar, wind, hydro, and geothermal – that would increase energy access and address climate change at the same time. Just this past May, our Scaling Solar program helped unlock investment in Zambia’s first large-scale solar plants. Seven of the world’s leading renewables developers competed for the opportunity, with the winning bids coming in as low as 4.7 cents per kilowatt hour, among the lowest prices in the world.
How can we move forward? Energy sector reform is essential to achieving productivity gains and developing local business capacity. Private investment is vital – both foreign and domestic – to finance African infrastructure and bring affordable, reliable energy to more Africans.
Later this morning, Administrator Nur Bekri of China National Energy Administration, Vice Minister Shi Yaobin of Chinese Ministry of Finance and I will sign a memorandum of understanding to strengthen energy cooperation between the World Bank Group and China’s National Energy Administration.
Second, agriculture must become more productive: Africa has yet to see its Green Revolution. Over the last 25 years, agricultural growth has been largely driven by the cultivation of more land rather than by productivity gains. Improving agricultural productivity in Africa is critical to reduce poverty, boost inclusive growth, and spur structural transformation of the region’s economies.
The right conditions are in place to boost productivity. Demand is growing for food and so are the agricultural and agribusiness markets – these markets are forecast to reach a trillion dollars by 2030. Public expenditures are also increasingly aimed at crowding in private investment, rather than replacing it, as was too often the case in the past.
So, the opportunities for private investment in both small and large scale agriculture are increasing – as are the opportunities to produce higher value agricultural products such as cut flowers in Kenya, chocolate in Madagascar, and beverages in Rwanda.
Third, improve the fundamentals needed to accelerate industrialization. Africa’s pattern of growth has largely bypassed manufacturing, and the growth of labor-intensive manufacturing is lagging. China has supported growth in African manufacturing through investment and know-how, for example in garments in Ethiopia. Efforts by African governments to improve fundamentals—such as a better business climate, lower transport costs, improved trade logistics, cheaper and more reliable power, and a more educated labor force—will enhance the competitiveness of manufacturing and modern services and help attract investment in these sectors. Africa can position itself to benefit from China’s transition toward an economy based more on services and household consumption.
And fourth, investing in people – in health and education – is increasingly vital in the digital age. For sustained development, Africa needs a healthy and skilled population and governments need to invest in the high-return areas of human capital. About 35 percent of children under five are stunted in Africa. Evidence shows that stunting translates into higher of school drop-out rates and lower wages. Cognitive delays affect future earning potential. Addressing nutritional needs will yield high returns.
All over the world, each additional year of schooling pays off in terms of better jobs and higher wages – but the return on investment is highest in Africa. The region has a lot to gain by stepping up investment in early childhood development as well as STEM skills – science, technology, engineering, and mathematics. China’s experience in fostering a highly skilled labor force can inform policies to build high levels of human capital in Africa.
China has a lot to offer Africa in terms of trade, investment, finance, experience, know-how, and building capacity. Over the past two decades, China has become an important partner in Africa’s growth and development. We believe that will continue, and this relationship will help millions of people lift themselves out of poverty and realize their opportunities for a better life.