Speeches & Transcripts

Speech by World Bank Group President Robert B. Zoellick at the African Union Summit, Addis Ababa, Ethiopia

January 31, 2010

Robert B. Zoellick Addis Ababa, Ethiopia

As Prepared for Delivery

ADDIS ABABA, January 31, 2010—I appreciate the invitation to be with you again. I wish to thank AU Chairman Jean Ping for his strong leadership for Africa and for his partnership with the World Bank Group. I also want to thank Prime Minister Meles and the people of Ethiopia for hosting this summit. As always, they are gracious hosts.

I also would like to recognize the strong leadership of our African team at the Bank Group, led by Oby Ezekwesili at the Bank and Thierry Tanoh at IFC. Our Managing Director Ngozi Okonjo-Iweala has global responsibilities, but of course keeps a close eye on African needs.

All of you, as African leaders, know the perils of this economic crisis. But you also know about Africa’s opportunities and its potential to be another source of growth for the world economy.

I have always believed that the African Union will be a cornerstone of Africa’s development. It draws us together to recognize Africa’s interdependence, its gains from integration: whether for energy, transport, water, trade, movement of people, security, and of course ICT.

Subregional integration is also a driver of economic opportunity in Africa. Regional economic groups in Africa are expanding their roles in areas as diverse as security and trade liberalization. The COMESA, EAC, ECCAS, ECOWAS, IGAD and SADC are solid pillars on which stronger African economic integration can be built.

I hope we are now on a path to global recovery. But we still face considerable risks in 2010. And we have to repair the damage done by the crisis. It has a human face.

  • We estimate that 64 million more people worldwide will fall into extreme poverty because of the crisis; and
  • An additional 30,000 to 50,000 babies may die in Sub-Saharan Africa.

I want to report to you briefly how the World Bank Group responded to support those in greatest need. Since the fury of the crisis hit in the middle of 2008, all the units of the Bank Group have committed $88 billion to support our clients, breaking all our records. IDA, which provides grants and no interest loans, committed $7.8 billion to sub-Saharan African countries in the year ending last June, a 36% increase over the prior year.

We are boosting IBRD lending to Africa, too, with over $4 billion to Botswana, Mauritius, Seychelles, and South Africa in the works, up from $30 million in 2008.

With more capital, I’d like to further expand IBRD lending, in combination with knowledge services, to the region.

We have also sought to learn lessons from the past, in particular the need to help countries with targeted social safety nets. We know that many Africans suffered food and fuel price crises before the financial crisis.

We created a new Global Food Crisis Response Program (GFRP), which has already approved $710 million for 21 African countries. Our Financial Crisis Response Fast-Track Facility has sped up approval processes of $2 billion in IDA grants and no-interest loans.

The World Bank has tripled support for safety net programs such as school feeding, nutrition, conditional cash transfer projects, and cash-for-work. We partnered with strong UN programs in the field, such as those of the World Food Program (WFP), and with NGOs. Women and girls are a particular focus of these programs.
Let me give you some examples:

  • Here in Ethiopia we procured 510,000 tons of fertilizer with a value of $244 million for the 2009 production season.
  • In Sierra Leone, where I just visited, I saw how our GFRP provided $4 million to support over 360 cash-for- work projects, creating jobs for 16,000 vulnerable people, rehabilitating 475 km. of roads, and developing 656 acres of arable swamps and woodlands.
  • In the Central African Republic, $3.25 million from GFRP has allowed the World Bank to partner with the WFP on school feeding, providing 120,000 students in 374 primary schools and pre-schools with two daily meals.

Scaling up trade finance through IFC, the World Bank’s private sector arm, has been another key element of our response to the crisis. IFC’s Global Trade Finance Program (GTFP) currently covers 27 countries in Africa, with a total of $789 million in approved trade lines. Over 80 % of the trade finance supports SMEs.

For example, as a small bank in a small market, Malawi-based NBS Bank was at a disadvantage in providing trade finance for SMEs. The IFC's GTFP made a $7 million trade line available to NBS Bank and enabled it to access a network of international banks. In its first transaction with the program, NBS Bank financed a small company importing fertilizer.

IFC’s work in microfinance has helped post-conflict states. IFC is a founding shareholder of Access Bank Liberia, the first microfinance commercial bank in Liberia. After only one year of operations, Access Bank Liberia has over 10,000 clients, and a loan portfolio of $1.7 million.

In the Democratic Republic of Congo less than half a percent of the population has a formal bank account. IFC has invested in two microfinance banks, ProCredit and Advans, which provide a full menu of credit and savings products to micro and small entrepreneurs.

Even while dealing with the crisis, we need to be building for future productivity and growth.

Last year, the World Bank invested $3.6 billion in infrastructure in sub-Saharan Africa. These projects create jobs today while improving growth prospects for tomorrow.

Under the Joint IFI Action Plan for Africa, launched in May 2009, the World Bank joined an alliance of international financial institutions led by the African Development Bank in order to support development in Africa. Commitments to Africa will be increased by at least $15 billion over the next two to three years.

World Bank Group global lending for agriculture increased from an annual average of $4.1 billion in 2006-08 to $7.2 billion last year, of which $2 billion was by the IFC. The biggest share of Bank and IDA lending in agriculture was targeted at Africa, reaching $1.7 billion last year. For example, in Nigeria the World Bank is expanding its Fadama project to include 19 more states. It has already boosted the incomes of 2.3 million farm families in 12 states by an average of 60%.

We have also been supporting Africa's efforts to strengthen country-led agricultural investment programs through the Comprehensive Africa Agriculture Development Program (CAADP).

In Ghana, IFC is providing a guarantee to Stanbic Bank to finance intermediaries that purchase cocoa from family farms in the country. More than 100,000 farmers will benefit from this facility.

At the request of the G-20, the World Bank created the Global Agriculture and Food Security Program (GAFSP), a financial coordination mechanism that will operationalize the pledges to agriculture and food security made at L’Aquila last July. The GAFSP will be jointly run by donors and recipients. We look forward to partnering with the African Union to ensure that GAFSP can finance the priorities identified by African countries’ strategic agricultural plans.

We are also pioneering new ways to connect private investments to Africa. IFC recently created a new Asset Management Company (AMC) that will raise and manage private equity funds to co-invest with the IFC. Next month we are expecting a first close on a $500 million sub-Saharan Africa, Latin America, and Caribbean Fund that will take equity positions in companies in these regions, and a $200 million Africa Capitalization Fund that will invest in systemically important banks.

The World Bank has been working with China to help create the infrastructure for manufacturing and other investments that will create jobs and products. For example, Oriental China-Ethiopia Industrial Zone aims to promote the manufacturing and processing industry while functioning as a hub for trade, warehouse, and distribution. These partnerships could be a growing part of Africa’s future.

We also are working to make Climate Investment Funds more attractive to Africa. As developed countries consider low carbon investments and funds to support adaptation, the World Bank needs to use its global reach and experience to connect Africa to these opportunities.

With your help, and in partnership with the African Development Bank, we can emphasize flexibility to customize for specific needs in Africa; leverage of additional resources, public and private; and speedier action.

At the same time, we need to help Africa develop energy access. Sub-Saharan Africa uses only 8% of its hydro potential. And we need to connect new electricity supplies to transmission and distribution systems, preferably with regional integration, so every African has access to electricity.

ICT is a key enabler of productivity and creator of jobs. It can help farmers, small businesses, and those excluded from traditional banking services. It can extend and speed up government services. In Ghana, the introduction of IT systems and Business Re-engineering resulted in a drop in average customs clearance time from 2-3 weeks to 1-2 days and a 50% increase in revenue. In Kenya, ICT slashed the number of days it took to register a vehicle from 30 to 1, as well as cutting off avenues for greedy hands.

With supportive government policies encouraged by World Bank knowledge service, African entrepreneurs changed facts on the ground:

  • Over 400 million mobile phones are now in use -- over 65% of Africans have access to wireless voice networks;
  • And the private sector has been the key driver in ICT expansion, investing more than $60 billion in 1998-2008.

But with better policies and more incentives for private investment, Africans can do even more.

Here is how the World Bank Group is helping develop the ICT sector:

  • We are investing over $ 2 billion in connectivity infrastructure and e-government applications.
  • In Kenya, 8 million people are using their mobile phones and the m-pesa service to make payments for bills or micro-loans. Before the service was launched, only 2.3 million Kenyans had a Bank account.
  • In East and Southern Africa, we invested in projects to develop high-speed submarine cable connectivity, resulting in a drop of 80% for high-speed capacity prices.

We are also investing in innovative applications:

  • In Rwanda, the TRACNet system allows health workers in the field to track the medical supplies used by 252 HIV/AIDS clinics and 70,000 patients throughout the country in real time. Now the TRACNet system is expanding to help with diseases such as TB and malaria.

Across Africa we are helping develop policies to attract private business:

  • In 2008, MIGA issued a guarantee to Orange Participations S.A. of France for its equity investment in Orange Centrafrique S.A. The project involves the installation, operation, and maintenance of a telecommunications network operating on 100% digital GSM technology. In less than a year, Orange Centrafrique reached 127,000 subscribers in the Central African Republic.

Despite the crisis, many governments in Africa have remained true to policies to boost growth. ICT is an excellent example. But there are others. I want you to know that the World Bank will be by your side every step of the way.

We have been stretching our resources to help our clients -- all of you -- in this crisis. And we will keep doing so.

Our capital enables us to borrow about $5 for every dollar our shareholders invest. And we need more capital to keep leaning forward.

By April, our shareholders will decide on the capital increase for the World Bank Group. I need you to explain in Europe, North America, and Japan that the World Bank, like the African Development Bank, justifies their support. Developed countries’ budgets are stretched, too. So it will not be easy. Together we need to make the case for a capital increase for the World Bank Group. Together we can do it.

By the end of the year, we also need to replenish IDA – IDA-16. In 2007, I worked with you to generate $42 billion more for IDA, and thank God we did. More than half that money goes to you. Help me help you. Please tell the IDA story. Not just a tale of money, but of kids in school, vaccinations, and better nutrition.

And there is news of growth, and investment opportunities, that can help developed countries, too. Together we need to show IDA’s results – that IDA works.

Thank you.