The outlines of a new partnership between Japan and the Continent of Africa are emerging, and if it is well managed over time, both sides can benefit significantly.  Here are some of the elements contributing to the sense of momentum:  n      Japan is moving to scale up its development support, just as Africa is poised to take advantage of new investments, particularly those targeting private-sector-led growth. n      After decades of European-dominated trade ties, African is increasing trade with Asia, which now accounts for 15% of the Continent’s total annual export earnings. n      As Africa constructs a vision for export-driven growth, with pockets of export success already in evidence, Japan stands out as a source of expertise on what factors contribute to a successful outward-looking strategy.  Much of the effort necessarily centers on infrastructure financing. For Africa, the time has come to close an infrastructure gap that has contributed to the Continent being a high-cost, high-risk place to do business.  In the 1980s, overseas development assistance devoted $4 billion a year to infrastructure, but this dropped sharply, coming in at $2.4 billion in 2003. Meanwhile, a hoped-for surge in private sector financing never materialized, and the private investments that did arrive were concentrated in the telecommunications sector and in South Africa. Governments, for their part, were often cutting back under adjustment processes, and many found it politically simpler to cut large capital projects than to reduce recurrent expenditure and public sector wage bills.  Closing Africa’s infrastructure gap is central to the World Bank’s strategy for the Continent, which centers on the goal of shared growth—that is, economic growth in which rural populations, women and the urban poor can find a way to participate. To both benefit from and contribute to economic expansion, Africans must have a well-developed network of roads and highways, a reliable source of electricity, as well as safe water and sanitation services. Infrastructure is about human well-being and economic opportunity.  My recent visit to Japan, and my discussions with government officials and leaders from the private sector, convince me that the Bank has an the opportunity to build a real partnership with Japan for Africa’s development. However, the critical partnership will be the one that links the Continent of Africa, with its diverse natural and human resources, to Japan.  To reach the Millennium Development Goals, Africa requires infrastructure financing of about $20 billion a year, about double recent historical levels. In addition, the cost of operating and maintaining Africa’s infrastructure approach $17 billion a year, compared to historical levels of $7 billion. Part of the solution is increasing cost recovery and improving governance in the infrastructure sectors. But part of the solution calls for increased commitment from Africa’s international partners.  The World Bank, for its part, is scaling up its investment in Africa’s infrastructure, from about $600 million in 2000 to a projected $2.4 billion in 2008. To succeed we will need creative partnerships and co-financing structures. And we will also want to focus on capacity-building programs to increase the impact of the investments.  Strengthening Africa’s infrastructure goes hand-in-hand with building a regionally integrated Africa.  There is a compelling logic to pushing regional power pooling arrangements and projects such as the West Africa Gas Pipeline which will take plentifully available natural gas from Nigeria and transport it by pipeline to power suppliers in Ghana, Togo and Benin. Africa’s small, fragmented economies must begin to function regionally if the Continent’s diverse producers are going to be able to compete in a global marketplace. In the current three-year funding cycle under the International Development Association, the Bank has about $2 billion for regional projects in transport, energy, water, telecoms, financial sector, human development, and agriculture.   The most compelling reason to invest in an agenda of shared growth is the Africa’s leadership is itself strongly committed to it. Through Nepad, the emerging leadership on the Continent is pushing the same goals of needed infrastructure development, empowerment of the population and private-sector growth. If Africa’s global partners—including Japan-- can respond by opening markets, investing in infrastructure, and promoting private-sector expansion, we will be able to see measurable gains in growth, improved living standards and stability. - |
RSS