Center for Global Development's Conference on "Enabling Africa's Next Growth Decade"
As Prepared for Delivery
This week Washington hosts the Spring Meetings of the World Bank and the IMF as well as the G-7 and G-20 ministers. While our discussions will focus on reducing risks to global economic growth and development, it's important to remember that the core ambition of our agenda is to improve the lives of people by strengthening the U.S. and global economic recovery, by creating jobs for our citizens, and by fostering opportunities for firms and families.
From the students in Egypt and Tunisia who seek quality jobs so they can start families to the rural farmer in Sierra Leone who can send her girls to school if she earns a little more from her crops, these are the results we seek to deliver. This is especially true for Africa, and particularly important for the twin challenges of infrastructure and food security that we are discussing today.
The Africa of today is an Africa that is open for business. It is a continent of opportunity despite lingering challenges. And it is a continent that is undergoing profound economic change. The United States recognizes the vitality of African economies, the surge of entrepreneurial spirit, and the opportunities that can be seized by Africans for Africans.
Yet we know that some critical challenges to further growth remain, and the United States, along with its partners in the G-20, have tools to help address these challenges.
Africa's infrastructure challenges are particularly great. The strong growth of the last decade has increased the demand for more and better infrastructure throughout Africa, particularly in the power and transport sectors. Addressing bottlenecks in infrastructure is critical for increasing growth and external competitiveness, and will result in more jobs for young people and continued declines in poverty.
Food security remains another distinct challenge. While Africa is growing and urbanizing, this growth has not always been equally shared. More than 67 percent of sub-Saharan Africa's population lives in rural areas and is dependent on agriculture for their livelihoods. Helping smallholder farmers grow and earn more through the use of better seeds and fertilizer, better transportation links to markets, and better irrigation systems is a critical component of sharing Africa's growth more broadly and helping millions climb out of poverty. The current run up in global food prices – the second increase in three years – underscores the urgency of meeting this challenge to increase the resilience to supply shocks.
Today, I'll address a few key areas of cooperation on these twin challenges between the United States, its multilateral partners, and African nations.
I'll start with infrastructure.
Given the vast infrastructure needs of African nations, the large scale of financing required to fund and implement projects, and the vital importance of ensuring strong safeguards and environmental standards into projects today, Africa's infrastructure needs must be meet through a combination of multilateral resources with bilateral support.
That is why the United States is working with the multilateral development banks, or the MDBs, to make certain that they scale up their assistance to meet demand. This focus is working. MDBs are currently the largest source of financing for infrastructure projects outside of African governments themselves, and in 2009 their financing reached $9.2 billion for the continent, up from $1.7 billion in 2003. Non-traditional donors, such as China, provide comparable levels of financing for African infrastructure, but do so without the procurement and environmental standards of the MDBs. And the United States finances very little infrastructure on a bilateral basis today except through MCC compacts.
Let's consider the impact of this lending. African Development Bank projects completed in the past five years have led to the development of nearly 5,000 miles of roads, 200 megawatts of power generation, and new electricity connections for 16 million people. The impact of these investments on people is transformational. It means farmers and manufacturers can get their products to ports and markets, it means that children can study in the evening and crime is reduced, and it means more hours of business operation. All of this leads to the type of economic growth, and reduced reliance on foreign assistance, that we seek as donors and supporters of Africa.
Building on this base of support, the Administration is seeking additional focus and investment from the development institutions and banks for African infrastructure. Africa has 15 landlocked countries – the highest of any region – and linking up these countries to their coastal neighbors and to the global economy will require sustained investment on a sub-regional basis in infrastructure. That is why we are working within the G-20 to ensure that the World Bank and the African Development Bank provide more early-stage financing to develop a pipeline of bankable projects, and that they help countries focus on developing the right institutional and financial environments to leverage more private investment over time.
Regional infrastructure is also a vital part of this equation. That is why, as part of the President's new development policy, we are focusing on the East African Community, which is a group of five countries that are making rapid progress on an integration agenda. The EAC, which formed a common market last year, has shown its commitment to regional integration and the United States is responding with an initiative that will involve collaboration among a range of U.S. agencies to support these countries in achieving their integration goals.
Agencies such as the U.S. Trade and Development Agency and the Overseas Private Investment Corporation will assist in the development and financing of bankable infrastructure, while Treasury will provide technical assistance to help the EAC develop legal and regulatory frameworks to support public‑private partnerships.
The MDBs are also well positioned to support this regional initiative. For example, in the most recent replenishment of the African Development Fund, we worked with President Kaberuka to secure a large increase in resources to support regional projects in Sub-Saharan Africa. Funding for regional projects will now comprise up to one-fifth of all ADF financing. This is an important and exciting initiative, and we look forward to implementing it with our African partners as another tool to help Africa strengthen its infrastructure.
Strengthening food security is also a fundamental focus of the Administration's development efforts in Africa, and around the world, today.
As part of President Obama's Feed the Future initiative, we are specifically focused on using multilateral tools, which bring immense bang for the buck and effectiveness, to the table.
Last spring, the United States led efforts to establish the Global Agriculture and Food Security Program, which is a multi-donor trust fund that provides long-term financing for country-owned agricultural development strategies. This fund is innovative, flexible, and nimble. And it reflects best practices of development: country ownership, involvement of civil society organizations, and investments based on comprehensive country-developed agricultural plans.
Countries such as South Korea, Canada, Spain, Australia, and the United States joined the Bill and Melinda Gates Foundation to launch the fund, and in less than one year made grants totaling $337 to eight of the world's poorest countries, including five in Africa. The fund leverages the technical capacity of the MDBs in implementing grants, and is already on the ground to support investments in irrigation infrastructure, feeder roads, seeds, and fertilizer that will help small holder farmers boost their productivity and earn more. In Rwanda, the fund's investments are at work as small holder farmers build hill-side terraces that are improving irrigation and minimizing the efforts of erosion to enhance agricultural productivity in the Lake Kivu region.
The United States continues to support the fund's efforts and impact, and will contribute an additional $100 million in the coming weeks. We are confident that this contribution will unlock new funds from other G-20 development partners so that the fund can extend additional grant awards to some of the 20 African countries that have submitted proposals.
Beyond the specific challenges of food security and infrastructure, it's important to note that American support and leadership in the multilateral institutions are vital to our efforts to effectively address the core development priorities facing the world today. Investments in the MDBs are some of our most effective investments today, and a recent CGD/Brookings study on the quality of official development assistance highlighted this fact. In the midst of intense debates in the United States about how to utilize scarce resources, we must recognize that these investments have proven to be some of the best made by our nation. We saw this two decades ago when requests for recapitalization and replenishments of the MDBs were also on the table, and Congress worked with the Reagan administration on a bipartisan basis to support the multilateral development banks. In 1988, that one-time capital increase of $420 million for the World Bank enabled it to provide $325 billion in development investments over the last two decades. That meant support for the countries of Eastern Europe as they transitioned to open market economies and democratic societies. And it meant support for the reconstruction and recovery in conflict-affected nations from Bosnia to Iraq, from Liberia to Afghanistan. Today, our investments can also underwrite economic support for democratic transitions in Egypt, Tunisia, and elsewhere around the world.
As President Obama said during his visit to Ghana, development in Africa is "also in our own interest – for if people are lifted out of poverty and wealth is created in Africa, new markets will open for our goods." By helping African countries to build roads and railways, generate electricity, feed their families, and improve their agricultural sustainability and productivity, we are also supporting sustainable and inclusive growth for our own nation and for the world. We will contribute to better education and protecting people from disease and famine. And through these actions, we'll build a stronger future for all of our families.
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