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World Bank Calls for Growth in Africa that Creates Jobs, Alleviates Poverty amidst Concerns of Rising Food Prices

January 31, 2011

ADDIS ABABA, January 31, 2011 -   As the African Union summit opens in Ethiopia, the World Bank urged African leaders to focus on achieving the kind of inclusive, shared growth that creates jobs, affords safety nets for the most vulnerable, diversifies and adds value to African products, and educates an African citizenry that is highly competitive in today’s knowledge-based global economy.

“We are quite optimistic about the state of the African economy, which has rebounded pretty fast from the global food, fuel and financial crises,” said Managing Director of the World Bank Ngozi Okonjo-Iweala in an interview with The Voice of America on the eve of the African Union summit. Okonjo-Iweala is heading the World Bank’s delegation to the gathering that will bring together African heads of state and government.

Recalling that Africa experienced two decades of stagnant or declining growth that saw poverty levels rise and per capita incomes fall, Okonjo-Iweala said Africa’s robust growth over the last 15 years has been impressive because it is shared across many countries and not just restricted to commodity exporting countries.

“We agree that growth is happening partly because commodity prices are high, but also because African countries are pursuing good policies,” said Okonjo-Iweala. She insisted on scoring African leaders well for achieving the most important thing: “putting in place policies that stimulate growth.”

“However,” she added, “the growth that is being experienced has to be turned into and focused on growth that can create jobs… is adding to jobs and directed towards sectors that create jobs.”

The growth Africa needs must help diversify economies and ensure that value is added to natural resources on the continent and that they are not just exported as raw material. “Growth should be of the kind that integrates processing and manufacturing, creating jobs all along the value chain, ” Okonjo-Iweala said.

Challenges of infrastructure, education and entrepreneurship

The World Bank admits that even the most richly endowed African economies led by the most enthusiastic reformers on the continent still face a number of daunting challenges. First and foremost is the challenge of creating adequate infrastructure. The lack of infrastructure is preventing many African countries from creating more and better jobs for young people.

Second, African countries need to educate its youth, giving them the skills they need in a knowledge-based global economy.

“We are not just talking of going to universities. We have in many countries a situation where education ends up giving people just a certificate, without taking into account what kind of jobs they are going to be going into in life. So we need to step back, think and ask when we are creating institutions if the teaching and skills development they offer needed and for what kinds of jobs?” said Okonjo-Iweala.

Third, African countries need to foster the creative genius of African entrepreneurs by developing the private sector as the true engine of growth, job and wealth creation. This should happen alongside the investments they make to have a healthy population free from HIV/AIDS, malaria, and tuberculosis that is able to devote their energies to nation building.

Threat of rising food prices

The World Bank’s bullish outlook on Africa is tempered by the danger that it sees lurking in food prices, which have recently crept up as fast as they rose in 2008 when they sparked violent street riots across several African countries. Riots in cities across North Africa are now a daily reminder of the urgency of action.

“High food prices is an emerging concern and we are worried by it, ” admitted Okonjo-Iweala. She will host a side event at the summit with President of the African Development Bank Donald Kaberuka, Director of the Food and Agriculture Organization Jacques Diouf, and officials from the World Food Program to focus attention on the importance of food security.

“We are working very hard on this at the World Bank to see how we can help African countries add value to agricultural products and market them in ways that jobs are created all along the value chain,” Okonjo-Iweala said. “Food security, obviously, is the number one priority. Farmers must first feed themselves. Once they can do that, we need to get their produce to the market, but if there are no farm-to-market roads, we would be leaving them locked in poverty.”

The World Bank recognizes that progress can be slow and painful for many countries, embracing tough reforms and making policy choices to dig out of years of negative growth and deepening poverty.

In the short term, though, Okonjo-Iweala said she encourages African governments to do two things: The first is to support farmers gain access to good seeds – and on time – as well as other inputs (fertilizer, credit, etc.) so that they can produce. “For the truth is simply that Africa can feed itself,” she said.

The second thing African governments should do is make sure that they have adequate safety nets in place to protect vulnerable populations including school children, who may need school feeding programs, and pregnant or breast-feeding mothers, among others.

In the long-term, Okonjo-Iweala said, African countries need to pay attention to boosting agricultural productivity: “Africa’s agricultural productivity is just one-third of that in South and East Asia. So there is scope for doing better. Countries need to view this as an opportunity especially given that more than 50 percent of the world’s unused arable farmland is in Africa. So, surely the opportunity is vast. ”

To seize that opportunity, Okonjo-Iweala said Africa needs to adopt the right technology, build the right infrastructure, leverage the private sector as the engine of growth and jobs, and educate its citizenry to confront the challenges of a globalized world, while ensuring that smallholder farmers – the vast majority of Africans – continue to get the right kind of support to climb up the income ladder, out of poverty.