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Speeches & Transcripts September 11, 2018

Welcoming Remarks by Axel van Trotsenburg at the 2018 Development Finance Forum in the East African Community Countries

President Kagame, Ministers, distinguished guests, ladies and gentlemen—good morning. On behalf of the World Bank Group, it is an honor to be here to welcome you to the 2018 Development Finance Forum – the DFF.

Let me start by saying thank you to President Kagame and the Rwandan government for their warm welcome and hospitality. We are delighted to hold this year’s Forum in East Africa, and we are particularly excited that it is in Kigali - Rwanda’s vibrant and business-friendly capital.  Let me also welcome government participants from here and elsewhere, who have made the trip here to Kigali for this important event.

There are three important trends in Africa -- and globally – that, if well addressed, could become important drivers of economic growth and prosperity.  These trends are creating both unprecedented opportunity and risk. I am confident that with the diversity of development experts, private sector and investors gathered here, concrete ideas and actions will emerge with lasting development impact.

The first trend is urbanization. Africa is experiencing extremely rapid urbanization— the expectation is that by 2040 there will be over 450 million new urban dwellers, with half of Africa’s population living in urban areas - mostly young people looking for jobs.  Over the next few decades, African cities will double in population and many new cities will be arising.

This trend will have a huge impact on the continent’s housing needs, which will require new approaches to affordable housing.  There will also be a high demand for urban planning strategies to ensure cities are inclusive and are engines for economic growth and expanded job opportunities for a increasing number of young people in Africa.

Governments need to join hands with the private sector to increase investment in affordable housing, to expand access to and improve the quality of existing stocks – all this while making it easier for people to access finance to buy land and housing. It’s also for this reason that housing is an important topic for this conference.

The second trend is technology. The good news is that tech hubs across Africa are nurturing a new wave of African start-ups and are helping connect them with investors. We really like the Rwandan initiative to establish an innovation city here in Kigali.  We see other similar initiatives elsewhere in Africa and are optimistic that this will proliferate in years to come and are strongly supportive of this trend.  Digital innovation in Africa is being helped by the increased use of mobile phones, enabling African consumers to leapfrog existing business models and technologies.

Fintech presents unmatched opportunities for opening smaller and emerging sectors, such as tourism, to larger markets.  By making tourist destinations more accessible and enabling access to new clients, investors, and service providers fintech solutions can turn the tourism sector into a mainstream industry. Tourism can be a powerful vehicle for economic growth and job creation, while ensuring natural eco-systems are preserved and sustained.    

Fintech can also contribute to productivity gains in the agribusiness sector through digitization of production, distribution, and logistics. It can help deliver innovative solutions to stakeholders throughout the supply chain, such as new agriculture risk insurance products.   

And finally, the third trend is integration. African countries’ commitment to integrating their economies has been strong, but implementation progress has at times been mixed and challenges remain. Greater regional economic integration and cooperation among African countries support innovation, competitiveness and investor confidence.  For example, the Tripartite Free Trade Area and the Continental Free Trade Area (CFTA) are major milestones in Africa’s trade integration that demonstrate the continent’s commitment and progress.

Moreover, the East African Community has been leading the way in regional integration, particularly through its achievements in trade and the free movement of people.

Africa, as a single market of 1.2 billion people has over 3 trillion dollars in continental GDP, and a growing middle class.  It has all of the ingredients needed to become a favored investment destination – not least in the three focus sectors in this year’s forum -- agribusiness, affordable housing, and tourism.

The World Bank Group is very optimistic about the investment opportunities in Africa.  We are encouraged that more and more investors are sharing this sentiment and Rwanda is a prime example for successful investment opportunities.

If investor supply can be matched with investment demand in East Africa, we can create productivity gains and shared economic dividends for the countries and the region.  

The key question is, of course: how can the interest of potential investors be converted into actual and sustained investments in East Africa?

Well, Risk – both actual and perceived – is one of the main determinants of investment decisions.

Let me be clear, every investment bears a level of risk.  The challenge is how best to de-risk.  In this context the World Bank has addressed this issue head on in IDA18.  in this context, the World Bank has addressed this issue head on in IDA 18. One important initiative is within our current IDA program in which we have allocated $2.5 billion to a Private Sector Window to explicitly de-risk and mobilize private sector capital.  It is flexible, helps to address credit as well as exchange rate risks, and extends the horizon of financing in key economic areas.  We are currently actively exploring opportunities for PSW investment in Rwanda.

Much of East Africa’s recent growth has been generated through government investments.  While government investments are critical, lasting economic growth, jobs and transformation that increase long term productivity, employment, and shared prosperity require private investment enabled through well-functioning capital markets.  It also requires other enablers of private investment such as appropriate government policies, sound institutions and predictability.

To achieve a virtuous cycle of investment that benefits everyone in East Africa, it will require public and private partnerships. This forum is a unique opportunity to strengthen these – to align interest, co-deliver and coordinate win-win solutions.

Let me conclude by saying a couple of words about the WBG support for Africa. We are strongly committed to expand our engagement massively in Africa. An important step was the 50% increase of the IDA resources for low income countries and particularly Africa in IDA18. This means over 3 years we will commit $45 billion in concessional resources for Africa and we are off to a good start. Over the past fiscal year, $21 billion was disbursed globally with over $15 billion going to Africa.  The recent capital increase of IBRD and IFC explicitly focuses on how to expand its engagement in IDA countries.  IFC for example intends to expand its engagement in IDA countries mainly in Africa from about 25% to 40% of its business by 2030. So we believe that with private sector expansion supported by the multilateral organizations like the WBG we can support the Africa private sector as well as governments in their complementary investments. We hope that with this forum we can further strengthen the partnership, especially with the African private sector, and this will lead to new opportunities and investments. We are optimistic that with this partnership we can contribute to boost growth and prosperity in this region.

Ladies and Gentlemen, with no further ado, please join me in welcoming His Excellency Paul Kagame, President of the Republic of Rwanda to share his thoughts and officially open this forum as our distinguished host for the next two days.