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Attracting Capital to Africa

Luncheon Remarks made to a Working Conference
of U.S. Private Sector Senior Executives and African Decision Makers
Sponsored by The Corporate Council on Africa

by
James D. Wolfensohn
President
The World Bank Group
Washington, D.C., April 21, 1997

Mr. President, deputy presidents, prime ministers, ministers, distinguished guests....I'm delighted to be here.

Let me say to you all that the message of the World Bank is really very clear and unequivocal so far as Africa's concerned. We believe in Africa. We are anxious to be part of its future. And it's more than just a financial commitment. It's a true belief.

I've had the opportunity, since I have been with the Bank, to visit Mali, Malawi, Cote d'Ivoire, Uganda, Senegal, Mozambique, Ghana, and South Africa, and I'm happy that many of my friends that I've made on those visits are with us today.

I've also had the opportunity to talk with many others in the leadership of Africa. And I must tell you that as someone who had an interest in Africa before I came to the Bank, seeing Africa through the eyes of the President of the World Bank is something that's quite different.

It's quite different because I've had the opportunity not just to visit the capitals, or to see ecological wonders; but to meet the people of Africa. And it's when you meet the people of Africa and the leadership of Africa, that you develop a passion for Africa and a belief in Africa.

This is a remarkable, diverse, wonderful continent, as all of you know; but it's a continent that can't be judged by our standards, and should not be judged by our standards, but should be judged by African standards. Because in each of the countries that I've visited, in each of the villages and each of the farms, even the slums that I visited in Africa, there's something quite remarkable. It's a sense of family; it's a sense of culture; it's a sense of tradition, and the people, when they talk about themselves and their future, talk about their children and their expectations, as anyone in the developed world would speak. With hope, with optimism, and with a belief in the future.

What is critical is that we need to come together to work with our African brothers and sisters, to make this dream come true. Because there are 580 million people in subSaharan Africa. It is hardly a continent that's free of problems.

We all know that 200 million people live in poverty, under a dollar a day. We all know that many people don't have water, many people don't have access to fuel, and we know that the amount of funds and the amount of investment which is going into the continent is unequally distributed.

And many of us here have run into stories of unfortunate examples of investment, as many have run into stories of remarkable examples of investment.

But what I have felt in my time in Africa is that there is a real change in the investment climate, and a real change in the potential of this remarkable area of the world. So far as the Bank is concerned, we are investing on top of $17 billion of investment which we have done, which we have currently ongoing, at the rate of $2.5 to $3 billion a year.

And we continue to invest, and we're anxious to find more projects. But our desire to do it is no longer within the context just of dealing with governments. For us, the future is the future of partnership. It's the future of partnership with the private sector, and that partnership surely has a long way to go. In the last nine years, globally, the private sector has demonstrated that it cares a lot about the developing world.

In fact, nine years ago, the private sector was investing at half the rate of the official sector, the official sector being the multilateral institutions and the regional banks.

All of us together, are putting in a total of $50 billion, and the private sector is investing, this year, over $240 billion in the developing world.

It's developing in that world, it's investing in that world not for moral and social reasons, although I'm sure some of the investments may have that flavor, but because it's good business, and the developing world represents 18 percent of the totality of the world's GDP. And it will reach 30 percent in another 30 years.

Africa has not shared adequately in that investment, and so what we need to do is to get in on the ground floor. We need to be there when there is a profound opportunity to help change a continent. It's not investors that change a continent. It's a partnership with government and with people. And what we can do at the Bank is to try and assist governments, in terms of meeting their objectives for better government, for better training of people in government, for better judicial systems, legal systems, health systems, infrastructure--to create an environment which is conducive to investment.

And in many countries in Africa, we have seen the results of this. We have seen the results because you know, as well as I do, that 30 countries had positive GDP growth in this last year. You know that some countries have achieved 10 percent growth.

You know that there is a turnaround from a continent in decline to a continent that is growing. You know that government leaders are reaching out. You know that there is a sense of openness. You know that there is a desire for equity. You know that there is a desire for partnership as is so well reflected in this room.

And there is a desire to get a climate for investment which appeals not only to international investors but also to domestic investors.

At this level the Bank can help, and we can also help through the International Finance Corporation, MIGA, our insurance affiliate, to try and get some of you over the hump in terms of investments, by providing you with assistance in terms of financing, by providing you with insurance against risk that you're not prepared to take. And we are open and anxious to work with you on any and every possibility that is before you.

And we're working with governments. I was just in South Africa and Mozambique. The drama of South Africa is a drama of bringing 47 percent of the subSaharan economy into the global economy. And it's a drama not just for South Africa. But it's a remarkable opportunity for the adjacent countries.

And we were looking at the Maputo Corridor and other projects that are not just government projects. They're projects that require, and, indeed, mandate partnership with the private sector. And not just with private sector, but also with civil society. Because in an ever-more democratic effort, we see signs of a strong and vibrant civil society which makes up the final member of the partnership between the government and the international institutions, the private sector, representing the people of those countries.

There is no doubt that Africa is on the move, and what we're looking to do in the Bank is to be that partner that you want, to be there to work with you in your investment opportunities.

But it's not just us. The governments themselves are taking a tremendous load in terms of developing that climate, whether it be in the judicial system or the corporate system of West Africa; whether it be in the French judicial system which is introducing new elements of bringing equity in terms of justice. What a bright idea to bring judges from one francophone African country to another, to sit on cases, so that they're manifestly independent in terms of their decisions, implementing a single francophone-origin judicial system.

And how much are the Africans also doing in building their own capacity? I had the great opportunity, a little more than a year ago, of meeting with a number of my African colleagues when they were, perhaps justifiably, criticizing the Bank in terms of capacity building.

They said, your institutions come in with technical assistance, say it's capacity-building, do a project and leave. And you and a lot of other bilateral institutions have been doing that for years, and what's that done for the building of real content in Africa, either at the government level or at the corporate level?

I said, ...why don't you come up with a plan? You study what you need for capacity building....Don't put the blame on me. You run Africa. I don't. And so they went away, and they have come back with what I think is the finest report I've seen on capacity building.

This is an African example. The World Bank didn't lead the study. We were there to help. But we were proud to be part of an exercise, along with my colleagues, and African executive directors of the Bank, some of whom I see here today, in generating an African solution to an African problem.

And that is the way that more and more is happening in Africa. As we look at issues of taking advantage of technology, I was happy to see on my last trip to Africa, institutes and universities which are themselves dedicated to taking technology and utilizing it in terms of education and technical training. And yes, we can be a part of it. But again, it's an African-led activity.

What all this has led me to believe is that we have an Africa that wants to succeed and an Africa that is being led by people who want to lead their countries to success.

There is a new mood. There is a feeling of optimism. But that optimism will be fulfilled only if there is a real partnership. If there's a partnership between the governments and the international institutions, and their advisers to create a climate led and managed by the governments, and a partnership which emerges with the private sector.

We at the Bank are very keen to play our part in assisting that flow of private sector funding. We're prepared to take risks, and we're prepared to work with each and every one of you that is considering investment, in terms of giving you the benefit of our advice, of our successes, of our failures, in a very open and frank way.

I come to Africa feeling that the test for my presidency and the test for our institution is in fact the success or failure of Africa. I believe, after nearly two years in the job, that the momentum is with us.

I believe that African leadership, in an ever more open partnership with investors from around the world, is central to that success, and it's for that reason that I was very proud and happy to be invited to join you today. You can count on the World Bank, and all of us together--Africans, non-Africans, international institutions that are represented. We need to come together to fulfill the dream of a continent which is peopled by remarkable people, with a rich and great culture, and with a future which we trust will be of peace and security for the world as with the people and children of that continent.

Thank you so much.





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