Esteemed Presidents of ECOWAS and UEMOA, Distinguished Commissioners and Directors, fellow colleagues of the World Bank Group (WBG) and partner institutions, ladies and gentlemen.
On behalf of the WBG, I would like to thank you for this opportunity to share some reflections on four topics: (a) progress since our first tripartite in Abidjan in June 2013 and lessons for our future collaboration; (b) the changing global and regional contexts to which we must respond; (c) possible priority areas in the next phase of our partnership; and (d) proposed next steps.
Since we met in June 2013, we have made considerable progress in implementing our ambitious joint action plan in the six areas that we prioritized--Agriculture, Education, Trade and Trade Facilitation, Transport, Regional Investment Climate and Sahel.
Quite rightly, agriculture was number one on our list because 60 percent of the population of West Africa and 80 percent of West Africa’s poor still depends on the sector for their livelihood. The main goal of our efforts has been to increase productivity by raising the quality and improving the availability of agricultural inputs. Raising agricultural productivity would help to improve the growth elasticity of poverty reduction which is only -0.7 for Africa compared to -2.0 for developing countries as a whole. So we focused on policies for seeds, pesticides and fertilizers. As a result all the ECOWAS countries, with one exception, published regulations to improve quality and availability of seeds. We put in place electronic platforms with information on certified seeds and technologies, and began supporting ECOWAS in implementing a road MAP to transform the centers of specialization into regional centers of Excellence for Agriculture. We finalized the review of one study—on a Warehouse Receipt System and Commodity Exchange—and will shortly send to you two other studies on (a) Opening up the Markets for Input Trade in West Africa; and (b) Regional Food Staples. In addition, we provided technical assistance on Meat and Livestock Trade Facilitation which culminated in a conference in Ndjamena in December 2014.
The acquisition of higher education is associated with higher earnings at the national level, for example, of 30 percent in Cameroon and Ghana, and 15 percent in Nigeria. This is the type of evidence we presented to the Board of the WBG when it approved the ambitious $150-million Africa Higher-Education Centers of Excellence (ACE) project in April 2014. The project will fund 19 university-based centers for advanced education in Benin, Burkina Faso, Cameroon, Ghana, The Gambia, Nigeria, Senegal, and Togo; support regional specialization among participating universities in mathematics, science, engineering and ICT; and strengthen their capacities to deliver quality training and applied research. In coming months we plan to add Cote d’Ivoire to the list of beneficiary countries, and are adapting and transferring the ACE approach to other parts of Africa.
In trade and trade facilitation, we completed all agreed actions with UEMOA by December 2014, including developing modern Customs Union instruments and supporting implementation of the Bali Agreement. We are pleased with the joint work done to prepare to implement ECOWAS’s Common External Tariff (CET) which became effective on January 1, 2015, and with the technical support provided for negotiating the Economic Partnership Agreement (EPA) with the European Union (EU).
In transport, we continued to prioritize the Abidjan-Lagos corridor which handles more than 2/3 of the trade, transport and transit activities in West Africa and records traffic of about 47 million people every year. Our assistance targeted basic regional access and mobility of goods, through four main components—trade facilitation, improvement of road corridor’s infrastructure, project management and coordination, HIV/AIDS programs and `corridor performance monitoring. We are pleased that by December 2014 the number of kilometers of roads rehabilitated had increased to 65km and port dwell times came down from around 18/21 days to 12/13 days.
On investment climate, five African countries were among the top ten improvers globally in the 2015 Doing Business Rankings for 2013/14. Four of them—Benin, Togo, Côte d’Ivoire and Senegal—were from West Africa. Overall, Africa accounted for the largest number of doing business regulatory reforms—75 of the 230 worldwide. And reforms are continuing. In November 2014, Presidents Ouedraogo and Soumare launched a new EU-funded project to: (i) remove regional barriers to cross-border investments; (ii) promote more transparent and sustainable investment incentives regimes; and (iii) reduce investor uncertainty by addressing unpredictable transfer pricing rules.
The historic trip in November 2013 by leaders of the United Nations, WBG, African Union Commission, African Development Bank and EU was a significant milestone in fulfilling our commitment to the Sahel. The visit renewed attention to the peace and security needed to boost economic growth and lift people out of devastating poverty. During the visit, WBG President pledged $1.5 billion in new regional investments over the next two years, nearly four times our commitment during previous periods. This amount was additional and complementary to our funding through country programs. By December 2014, our Board had approved close to $800 million of priority projects in areas such as cross-border energy, social safety nets, and health services and economic opportunities for women and girls. MIGA provided $585 million in political risk guarantees in May 2014 for the Banda Gas to Power Project while the EU pledged additional support of about $7 billion over seven years.
This commendable progress, on multiple fronts, is a tribute to all of you—Presidents, Commissioners, Directors, Managers, and Technical Specialists. Without your drive, commitment and willingness to collaborate, none of this would have been possible! I would also like to acknowledge the effectiveness of the Coordinating Country Director-model in this sub-region, where one Country Director steers the agenda and other Country Directors lead in particular sectors.
Notwithstanding these many positive developments, our journey together is only just beginning, and there is much to learn from our successes as well as our shortcomings. These shortcomings include: (a) the absence of significant strides in air transport; (b) substantial increases in the dwell time at one major port and in the number of road blocks in some areas; and (c) an almost doubling of the time to cross a few borders along the Abidjan-Lagos corridor. This is compelling evidence and a sobering reminder that modernizing transport in West Africa, as in other parts of the world, requires coordinated policy and regulatory reforms and enforcement, and not just investments in bricks and mortar.
Energy remains a top priority but we must pursue areas where our partnership can add value, perhaps in the push on policies, regulation and interconnections that facilitate energy trade. The renewed interest in railways across the continent is one that we share but this agenda requires significantly more technical analysis, financial resources, and demonstrated political will to make difficult choices. As such, we have to be pragmatic, prioritize what is feasible and remain open to other possibilities as and when conditions for progress are in place.
With regard to the Sahel, we must embrace the leadership of the Group of Five frontier states and stand ready to support their development priorities.
We did not anticipate the Ebola crisis and the response at all levels was slower than it should have been, including by the WBG and the rest of the international community. The crisis also unmasked serious weaknesses in regional infectious disease prevention and surveillance systems. We are strongly committed to working with you and the rest of the development community to prevent and more effectively attack any such future threat. In that regard, we are currently helping the Nigerian Government to contain the recent resurgence of the Avian Influenza.
Since we met in June 2013, the world and the sub-region have continued to change and we should use our discussion today to decide how the priorities of our collaboration should change in response.
For several years, buoyant commodity prices (and abundant capital inflows) generated powerful tailwinds that helped support growth in the sub-region and across Africa. Those tailwinds have now transformed into headwinds: Oil prices have fallen by over 50% in the last four months, reflecting both supply and demand factors. The prices for many metals and minerals have been falling at a more moderate pace, but also for a longer period.
The Ebola Virus Disease epidemic that began in a forest area of Guinea in December 2013 quickly spread to Liberia and Sierra Leone. Since then, more than 22,000 probable, suspected or confirmed cases, and over 8,800 deaths, have been reported across the three countries. In addition to the huge costs in terms of lives, human suffering and anxiety, the latest estimates suggest that the three countries may lose as much as US$ 1.6 billion - or 12% of their combined GDP - in forgone output growth in 2015.
Across Africa, conventional and large-scale conflict events and civil wars have been receding in scale and intensity. However, in some parts like Central-West Africa, a new generation of threats is emerging—drug trafficking, maritime piracy, and armed insurgents like Boko Haram in Nigeria and the Tuareg and Arab uprisings in Mali. Driven by exclusion, ideology and extremism, some of these threats don’t only terrorize communities, villages, women and girls, but they also challenge the authority and existence of nation states as we know them. Meanwhile, instability has increased in Libya and reportedly, this has exacerbated the supply of illegal weapons, compounded the plight of returnees and given further impetus to migration of vulnerable groups across borders. In essence, the region is facing a number of endogenous and exogenous security shocks. Given what is at stake, defeat is not an option.
We must also be mindful of the reality that in 2015, the citizens of at least a dozen African countries, including four in West Africa, will go to the polls to elect their national political leaders. Some of the polls are expected to be hotly contested and turbulent, while others are predicted to bring little change. We hope, of course, that none is marred by violence on any scale.
These developments aren’t all of equal importance but together, they represent serious additional risks to the sub region. ECOWAS and UEMOA have important roles to play in helping to mitigate and in some cases, eliminate these risks. At the same time, there are some opportunities, particularly for oil importing countries, which we hope ECOWAS and UEMOA will help them to seize.
While broad sectoral reforms must continue and build on the progress already made, we should explore a few priorities that could significantly diversify and transform the sub-region, and reduce major threats. To introduce the discussions, we would like to propose the following five priorities: (i) Deepening our joint efforts in agriculture, (ii) Supporting the implementation of the CET; (iii) Assisting in establishing an effective Abidjan-Lagos Transport Authority and making the air transport market more efficient; (iv) Sustaining the Region’s efforts to fully eradicate the EBOLA virus and prevent the spread of other infectious diseases; and (v) Creating cross-border conditions for communities to create mutually beneficial economic opportunities and prevent conflict. This would not mean stopping other activities completely but rather focusing our joint efforts on fewer main themes over the next year.
A key priority should be to accelerate reforms that simulate more diversified, inclusive and sustainable economic growth by unleashing the potential for private investments. There are some low hanging fruit from already adopted policy reforms but now the emphasis must shift to rigorous implementation. This applies particularly to policy reforms for seeds, pesticides and fertilizers. Access to adequate fertilizers and modern seeds could easily increase the yields of food staples by two or three fold in the region. ECOWAS and UEMOA should continue to work with member states on other measures like eliminating de jure and de facto barriers to intra-regional trade. This should be combined with a push to help countries develop national social safety nets that reduce the pressures for export bans and other inefficient measures aimed at improving food security. Since all countries may not be ready to move forward at the same time and pace, ECOWAS and UEMOA should also consider advancing reforms based on the principle of variable geometry.
We will provide technical support for the implementation of the CET and EPA—arguably the most significant developments in trade policy in over a decade. There is, as yet, no consensus on key issues such as: (i) the revenue loss arising from the EPA and whether such losses have been adequately reflected in the compensatory package accompanying the EPA; and (ii) the impact of both the CET and EPA on domestic industries, jobs, consumers and poverty.
The World Bank Group analysis for Nigeria and initial results for Ghana and Senegal showed that the EPA would benefit most manufacturing firms through lower costs for inputs and capital equipment. Most firms for which a negative impact might materialize are currently making above average profits, and the effect of the EPA would be to reduce them by a small amount. However, initial findings on the CET reform also seem to indicate that impacts from the added protection of the CET (on what are essentially core consumption products) will affect the poorest more than other segments of the population. Impacts also vary significantly by country. Ministers have requested that as implementation of the CET and EPA proceeds, the WBG should provide continued assistance in the form of country-specific and regional analysis and dialogue. We will do so.
Improving the performance of the transportation system within the sub-region would boost competitiveness and productivity, and help maximize the benefits of the CET and EPA. We welcome the formal decision last March at the 44th Summit of ECOWAS Heads of State and Government in Yamoussoukro to establish the ECOWAS Abidjan-Lagos corridor authority to construct and manage the six-lane highway, and establish a corridor management authority with supra-national status. We also welcome the commitment of the signatories to contribute $50m for preparatory activities under the project. There is considerable global experience in effectively structuring and managing corridor authorities, and we strongly believe that such an effective body can significantly transform West Africa. We stand ready to share international experience, mobilize financial resources, and support complementary institutional, policy and regulatory reforms to help realize this transformational impact.
We are encouraged by the decision by Heads of State at the African Union Summit two weeks ago to establish a Single African Air Transport Market for African airlines by January 1, 2017. We welcome the decision by Egypt, Ethiopia, Kenya, Nigeria and South Africa to open their respective air transport markets immediately and without conditions. These are steps in the right direction but more will have to be done. West Africa’s 24 million passengers/year aviation market is unbalanced and characterized by low intra-regional volumes. More than 60 percent of West Africa’s 24 million passenger traffic takes place in Nigeria; only three other countries have total demand in excess of 1 million pax/year (Ghana, Cape Verde and Senegal). Domestic traffic flows represents nearly half of total demand with 88% of them generated in Nigeria. Traffic rights with West African countries are still managed and governed by Bilateral Service Agreements which are often too constraining and protective of national carriers. As a result, air transport in West Africa is substantially more expensive than in other parts of the world, less reliable and imposes high burden on passengers and the economy as a whole.
Liberalization of the air space will help, and a low hanging fruit would be the multilateral application of the Yamoussoukro Decision. There is also a need for regional agreement on the maximum level of taxes and on air transport infrastructure charges to foster higher demand and financial solvency for airlines. We call on ECOWAS and UEMOA to seize the opportunity to lead the sub-region in an initiative that would develop air transportation services that are at least comparable to those in Eastern and Southern Africa. We stand ready to assist you in preparing A Policy Paper on West Africa Air Transport and in providing technical support for: (i) benchmarking the system; (ii) consulting stakeholders in the industry; and (iii) reviewing aviation charges; with a view to presenting a concrete proposal to the Heads of State and Government at their next Summit.
A more connected sub-region also needs to have better capacity to deal with infectious diseases, while supporting post-Ebola recovery in the three directly affected countries. I commend and encourage the efforts by ECOWAS and its member states to share experiences and in particular, learn from those countries that quickly contained the disease. Up to now, the World Bank Group has mobilized nearly US$1 billion in financing for the countries hardest hit by the Ebola crisis. This amount is comprised of US$518 million from the International Development Association (IDA) for the epidemic response, and at least US$450 million from the International Finance Corporation to enable trade, investment, and employment in Guinea, Liberia, and Sierra Leone. IDA also created the multi-donor fund for Ebola recovery last fall, called the Ebola Recovery and Reconstruction Trust Fund (ERRTF). The ERRTF complements other Bank financial instruments in getting children back to school; establishing more secure and accurate payment systems for health workers; helping farmers acquire seeds for planting; and providing resources to upgrade rural roads, for example. We are now prepared to invest up to $300 million in building up regional health systems, including strengthening networks of laboratories for early diagnosis and facilities for treatment.
Finally, a more connected sub-region needs to be a more secure sub-region to fully benefit from regional integration. We should use effective diplomacy to build strong coalitions across the political, security and development communities to help shift the current dynamic in the sub region toward more peace, stability and shared prosperity. At the recent AU Summit, African leaders agreed to send 7,500 troops to help fight the Boko Haram insurgency in north-east Nigeria, with support from the international community including the United Nations. Since May 2013, the World Bank Group has combined efforts with the United Nations and other partners in bold development diplomacy to address the regional drivers of some of the most intractable conflicts in Africa, and the poverty, extremism and local and global threats they generate. The Sahel initiative mentioned earlier was the second of the three undertaken so far. We are prepared to explore the scope for a fourth such regional initiative around Central-West Africa if there is political commitment at the regional and national levels to do so.
We look forward to a fruitful discussion today that will identify a few transformational priorities, work programs, timelines and division of responsibilities. In doing so, we want to build on the model that has worked since June 2013 with minor tweaks that reflect lessons from our shared experience.
We hope to discuss the highlights of our deliberations with President Mahama, the Chairman of ECOWAS, and propose to him some items for consideration at the next ECOWAS Heads of State Meeting.
Our Directors, Managers and technical experts are ready to share responsibility with their counterparts to work on deliverables within agreed timelines.
We would like to propose that during our Spring Meetings (the week of April, 12, 2015), we meet with Mr. Diop, Regional Vice President, to take stock of progress and further build momentum. We also hope that Mr. Diop, would be invited to participate in the next ECOWAS Heads of State Summit to help advance our agreed agenda.
Colin Bruce is a Regional Integration Director in the World Bank’s Africa Region