Donald Kaberuka, president of African Development Bank, admits that it is folly to expect rich countries to honour their financial commitments to Africa and that investment must be courted if the continent is to move forwards. Interview by James Eedes.
African Development Bank president Donald Kaberuka is fighting hard to keep Africa on the international agenda. Spoilt by the attention that the continent received in 2005, due mainly to the UK government’s determined efforts to put Africa centre-stage that year, 2006 started out promisingly but ended in a whimper as hopes for trade liberalisation petered out towards year-end.
Despite last-ditch efforts at a compromise, the five-year-long Doha round of trade negotiations was all but dead in mid-December, scuttling hopes for an agreement to cut subsidies to farmers in rich nations and open markets to developing countries.
“I’m scared of any suggestion that Doha has collapsed. That would be a disaster. I prefer to think discussions have stalled and need to be relaunched,” says Mr Kaberuka.
It is not misguided optimism that Mr Kaberuka displays; it is sheer bloody-minded insistence. He may have the calm exterior of a diplomat but Mr Kaberuka is spitting mad. Once again, he says, wealthy, industrialised nations have failed to honour their promises to Africa.
Ambitious plans
Trade is not even Mr Kaberuka’s primary concern. His chief priority is infrastructure, implementing an ambitious plan to plug the continent’s gaping infrastructure deficit. Under proposals first mooted by the Commission for Africa and agreed at the G8 Summit in Gleneagles in 2005, the African Development Bank (ADB) is now the lead agency responsible for co-ordinating infrastructure on the continent, especially regional projects identified under the New Partnership for Africa’s Development (Nepad).
“There is no shortage of infrastructure projects in Africa. I cannot imagine anything for which the project pipeline is so long, stretching decades ahead,” says Mr Kaberuka. “The problem is there are not nearly enough resources to deploy to these projects.”
There was unprecedented focus on Africa in 2005. First there was the report from the Commission for Africa, set up by UK prime minister Tony Blair in 2004 to examine fresh approaches to Africa’s development challenges. In July 2005, Mr Blair hosted the G8 Summit in Gleneagles, where Africa topped the agenda. At the summit, a package of measures was agreed, including commitments to double aid by 2010 and to provide 100% debt cancellation for Africa’s heavily indebted poor countries.
At the time, G8 leaders also committed themselves to achieving a successful outcome to the Doha Development Agenda trade negotiations, which were on deadline to be concluded by the end of 2006.
Meanwhile, Mr Kaberuka, the former finance minister of Rwanda, succeeded in winning a closely contested ballot to assume presidency of the ADB. He officially assumed the post on September 1, 2005, and quickly set about shaking up the institution with changes to senior management.
His honeymoon is long since over, however. The momentum that peaked in 2005, which became known as the “Year of Africa”, has slowed, and there is growing restlessness for the recommendations of the Commission for Africa and agreements struck in Gleneagles to be turned into real change in Africa.
Progress on debt relief
There was a good start to 2006, with implementation of the Multilateral Debt Relief Initiative, which ultimately resulted in the IMF, the International Development Association of the World Bank and the ADB providing 100% debt relief to 20 African countries.
“This is a good start but we still have to agree on this point of ‘additionality’,” says Mr Kaberuka. “Increased aid has to be over and above debt relief.” The 2010 target to double aid to Africa to $50bn is by no means assured; only the UK has confirmed the funding for its commitment.
Mr Kaberuka was given a period of grace to exert control over the ADB. Under his predecessor, Moroccan Omar Kabbaj, the bank had become isolated from Africa’s political locus, the African Union. Morocco had withdrawn from the Organisation for African Unity, the forerunner to the African Union, in 1984. With the highly respected Mr Kaberuka in place, the bank quickly reclaimed its status as lead development institution on the continent.
But if the ADB is responsible for infrastructure, why does it seem that ground is being broken on so few projects? Mr Kaberuka bristles at the implied criticism.
“The Commission for Africa recommended in 2005 that we set up the Infrastructure Consortium [a tripartite relationship between bilateral donors, multilateral agencies and African institutions] and it is now up and running. We have awarded tenders to study various infrastructure proposals under Nepad. And we have a short-term action plan that is very much under way, including road-building between Kenya and Ethiopia, and Mali and Senegal, as well as the west African natural gas pipeline between Nigeria and Cameroon.”
Infrastructure action plan
The bank’s short-term action plan outlines priority infrastructure projects up to the end of this year in the energy, transport, water supply and sanitation, and information and communications technology (ICT) sectors. The estimated total investment cost of the projects included in the action is $8bn, half of which is to be financed by the private sector. To date, the bank has approved 25 projects worth about $2.3bn.
“I have no doubt that with the right people we can successfully complete the biggest, most valuable projects. But a degree of realism is also critical. You cannot say you want a 1000 megawatt power plant and have it tomorrow. There has to be careful planning, phasing and control, not least to avoid corruption that seems to follow these bigger projects,” says Mr Kaberuka. “But, above all, we do not have the financial resources to do everything.”
If resources are the problem, how realistic is it to expect rich countries to foot the bill? Despite promises to double aid by 2010, is it likely that these commitments will be honoured?
Mr Kaberuka readily acknowledges the folly of waiting on these promises. He is pushing for far greater private sector participation in infrastructure development.
But to do this, he concedes Africa has to consolidate efforts to create a suitable investment climate, which means ending all conflicts, improving governance, cutting red tape and putting in place investment-friendly laws and policies. Specifically, Africa has to go further in its fight against corruption and improve transparency.
Internal market
No less important, Africa must push ahead with regional integration to harness the internal market in Africa. Individually, most African countries are too small and economically under-developed to attract substantial investment, but combined, the proposition is far more compelling.
“We talk a lot about international trade barriers but barriers within Africa are several times more damaging and that is something we can and must work on internally. It is partly about infrastructure but it has a lot to do with policies that make internal trade very complicated,” says Mr Kaberuka.
He is also adamant that Africa must take advantage of the new economic opportunities offered by the emergence of China, India and Brazil, and must do so on a win-win basis. The value of Africa’s trade with China has risen from $2.5bn to $40bn in just a few years and, with exports exceeding imports, Africa enjoys a modest but important $2bn trade surplus with China.
Global trade
Still, the ADB president insists that trade liberalisation beyond Africa is crucial to the continent’s future. “We can scale up aid and cancel debt but until we make trade opportunities meaningful and real, we will not succeed in reducing poverty,” he says, professing perplexity about why rich nations do not take the chance to solve two problems with one solution. “Recall the Commission for Africa’s conclusions: aid to Africa was to be doubled from $25bn per year to $50bn. But then it would start to scale that back from 2015 as trade and domestic resources start to pick up,” he notes.
The urgency is intensifying: “In 2005, we established that 45% of Africans were living on less than a dollar per day. Today, the numbers have not gone down, they have gone up: 47% of Africans now live in extreme poverty. The target for 2015 was to cut the number of people living in poverty by half, to 22% of the total population. At present, if commitments go unfulfilled, we will reduce numbers to just 40% by 2015, which in absolute numbers means 340 million people in Africa living below the poverty line. And that would mean 30 million more people living in poverty than in 2005.”
