25 countries in Africa record Impressive Growth, says World Bank

World Bank - 25 Countries Record Impressive Growth

 

By Ayodele Aminu and Cosnatance Ikokwu

Washington, DC/ Lagos

23 October 2007

 

As the curtains were yesterday drawn on the 2007 Annual Meetings of the Boards of Governors of the World Bank and the International Monetary Fund (IMF), the bank's President, Robert Zoellick, said there was "good news" coming from Africa. He said 17 countries on the continent achieved average annual growth of 5.5 per cent between 1995 and 2005, while another eight achieved 7.5 per cent growth within the period under review. Given the progress report so far, Zoellick said African countries needed assistance to develop their infrastructure in order to attain higher growth level. "These countries want assistance to build infrastructure for higher growth - especially energy and physical facilities that can support regional integration. They also want us to help develop local financial markets, including microfinance, that can mobilise African savings for Africans," he said. Zoellick said the challenge however, remained good governance, strong anti-corruption measures and expanding local public sector capacity.

 

According to him, greater investments in technological research and dissemination, sustainable land management, agricultural supply chains, irrigation, rural micro-credit, and policies that strengthen market opportunities, and assistance with rural vulnerabilities and insecurities were areas that African countries needed to focus on. The World Bank President noted that the bank was concerned about the breakdown of states coming out of conflict. He pointed out that when the visionaries at Bretton Woods conceived the International Bank for Reconstruction and Development, IBRD (now World Bank) over 60 years ago, the 'R' stood for the reconstruction of Europe and Japan, adding that the 'R' pointed the institution toward the challenge of reconstruction in states harmed by conflicts.

 

He admitted that the bank's knowledge of handling conflicts was modest which required a new approach. "Frankly, our understanding of how to deal with these devastating cases is modest at best. I suspect we will need a more integrated approach involving security, political frameworks, rebuilding local capacity with quick support, reintegration of refugees, and more flexible development assistance". Zoellick harped on the need for globalisation to benefit the world's poor, most of whom come from developing countries, adding that that poor countries are more at risk from the impact of climate change. He said the bank would support increased "resilience" to climate even as he acknowledged the concern of developing countries that resources for fighting climate change would come at the expense of other development needs.Consequently, he asked developing countries to match rhetorics with resource contributions.The President also asked developed countries to redeem their pledge made at Gleanagles to enable African countries tackle poverty.

 

Zoellick stated that the bank hoped to advance ideas about international projects and agreements on trade, finance, health, poverty, education, and climate change so that they could benefit, especially the poor. On what it takes to achieve inclusive and sustained growth, he said: "This challenge requires humility and intellectual honesty. Many development schemes and dreams have failed. This is not a reason to quit trying. It is cause to focus continually and rigorously on results and on assessment for effectiveness." In another development, IMF Managing Director Rodrigo de Rato yesterday warned that global economic growth would continue at a slower pace than in recent years, and that downside risks are much higher than they were six months ago, due to the turbulence in credit markets.In his address at the opening of the 2007 Annual Meetings of the Boards of Governors of the World Bank Group and IMF, he noted that IMF remained vigilant and engaged.

 

While highlighting the significant progress in the reform agenda of the IMF, he called on the governors to remain committed to completing key parts of the reforms within the next year to further enable the Fund to deliver on its mandate to promote sustainable global growth. The IMF chief executive noted that the global economy is still built on a robust foundation, but cautioned that "the central question now is whether the global economy is at an inflection point". "So far, it seems that growth will continue, although at a slower pace than in the past two years. Over the past few months, we have lived through an earthquake in the credit markets . There is still a risk of aftershocks, and the full effects of the disruption we have already had will only be felt over time", de Rato affirmed. He urged the finance and economic policy makers attending the 2007 meetings to take action on already agreed policies to reduce global economic imbalances and to complete multilateral trade talks. He noted that potentially vulnerable emerging economies should prepare themselves for the risks associated with slower global growth.

 

The IMF boss underscored the importance of reflecting on the lessons from the financial crisis and cooperation in applying those lessons learned. "We already know that we should not try to regulate crises out of existence: that would be like trying to ban earthquakes. But the weaknesses in our infrastructure that have been exposed need to be addressed. We need to make sure that regulatory infrastructure is strong enough and simple enough to handle crisis in a globalized world," he said. Summarising the lessons from the Fund's financial crisis, he highlighted the need to look for low-cost ways to improve transparency in credit markets; the need for supervisors and rating agencies to pay more attention to off-balance sheet exposures in their assessments of banking soundness and capital as well as the need for regulators to factor in their assessments of liquidity requirements and the increased liquidity risk that banks face given their growing reliance on the securities' market for financing.

 

Other areas he emphasised were the need to improve consumer education and protection because "the main victims of the crisis so far have been those who were persuaded to buy houses they could not afford, and who are now losing their homes," While emphasising on the importance of multilateral cooperation on financial market issues and the role the IMF could play in this, he said: "The Fund has a global membership, which both provides a forum for multilateral discussions and gives authority to the outcome of those discussions." Reflecting on how the IMF is evolving to face these challenges and others that globalisation has brought about, he underlined the importance of the progress achieved on the reform of the Fund, particularly on governance, surveillance and the IMF's finances.

 

On IMF governance and progress on institutional reforms, he said that there was "increasing convergence among members on key elements of a new quota formula and especially on the need for GDP calculated using purchasing power parities to play a role in the reform." De Rato also underscored the progress in other fundamental elements of the governance reform, such as the consensus reached on the need for a shift in voting shares towards emerging and developing countries as a whole, and the agreement to increase total quotas by at least 10 per cent, as well as protect the position of low-income countries by at least doubling basic votes. "Of course, the reform process now needs to be completed, and we should not underestimate the challenge involved or the commitment required. But I believe that members will rise to the challenge. You showed your commitment to reform in Singapore; and you showed it at this weekend's IMFC meeting. You can show it again," de Rato told the Board of Governors. Turning to the progress on modernising the IMF's surveillance work, he pointed to the decision adopted last June, which constituted the first major revision in the surveillance framework in three decades.