Paul Wolfowitz
World Bank President
June 7, 2006 P R O C E E D I N G S MODERATOR: I'm now honored to introduce our co‑chairs. As you know, over a year ago, a new President of the World Bank was sworn into office. Many ask, and many ask me, will Africa be a priority for him? While I have had the answer after one year, Paul Wolfowitz has not only made Africa a priority‑‑indeed, a top priority‑‑but even more important, the focus, his focus on Africa is really making a difference, and I see it when I'm in the region. Some of you may recall that less than an hour after his swearing in, Paul Wolfowitz walked to a meeting to listen to the concerns of African governments, NGOs and business leaders and their American advocates. His first meeting on his first day in office, he chose to listen and learn from Africans. His first overseas trip as President was to Africa, meeting and listening to real people in Nigeria, Burkina Faso, Rwanda, and South Africa. His first major public address outside of Washington was to the largest gathering of U.S. and African business leaders. He appointed the first African woman as Chief of Staff of the World Bank, and he has had a relentless focus on a key issue facing many African nations: The need for improved governance to fight corruption. This is a president who knows where to go and how to get there. He's passionate. He's focused. Under his leadership, much of Africa's debt to the World Bank was forgiven. The World Bank has invested, has just committed, over $4.5 billion to Africa. He understands that concrete progress is not possible without investment, and I think that's one of the reasons that he's here. And I will say that he will succeed in his mission because the World Bank is, under his leadership, the World Bank is not only on the side of Africa, but is part of the solution rather than the problem. And I want to just briefly introduce President Don Kaberuka, of the African Development Bank, then we will start with their remarks. I'm particularly honored that my dear friend Donald Kaberuka, President of the Africa Development Bank could also join us as a co‑chair. I have known him for nearly 15 years when he served in Abidjan at the Intra‑African Coffee Organization and I was at the American Embassy. He came to the Bank in 2005 with a demonstrated record of achievement and passion for the people. He is well‑known as the architect of Rwanda, when he served as the Finance Minister, of the nation's renowned Postwar Reconstruction and Economic Reform Program. He's brought that same results‑driven leadership to the Bank. I'm not going to go into the reforms of the Bank, but many of you know it. He's undertaken draconian reforms, and they're already getting results on the ground. He's appointed the first two women ever to serve as Vice Presidents of the Bank, and he's won accolades for his commitment. Thank you. Mr. President. PRESIDENT WOLFOWITZ: Thank you. This is like a homecoming for me. It was a year ago you kindly chaired that session not too far from the Bank, I forget which building you were in. And thinking back to that time, I thought it might be useful to say with respect to how I viewed Africa, coming into this job a year ago, two things that were not surprises and two things that were. And I would start with a sort of dismal fact which was not a surprise, and which is why I have said from the beginning that Africa has to be the first priority of the World Bank at this stage in history. And it's the sad fact that in a period of the last 20‑25 years, when we have seen throughout much of the developing world, remarkable strides at reducing poverty. By some measures, half a billion people have escaped poverty in the last two decades, the largest single number in China, of course, thanks to very strong growth in that country, but large numbers in India, large numbers in Latin America. And the one dark spot in that picture is Africa, where 20 years ago we had 150 million people in extreme poverty. Today, that number has doubled, and it's roughly 50 percent of the population of sub‑Saharan Africa. That has to be a concern of not just of African, but has to be a concern, I think, of all human beings. And if you can't take it from just a human and moral point of view, I think it's also from a matter of self‑interest. It's not a healthy world, when a major part of world is falling behind. I knew that, and I knew that's why it would be important. It's not a surprise to learn about poverty and disease and hunger in Africa. It was also not a surprise on my first visit to Africa in June to discover what I have seen elsewhere in the developing world, particularly in Indonesia where I served three years as American Ambassador, which is around the world, people, and I think especially poor people, given a chance, would build a better future and especially a better future for their children. I mean, the drive to take care of your children must be one of the most fundamental universal human drives. When poor people have that chance, they just work incredibly hard. In fact, they work harder than most of us who are comfortable, frankly, are used to working. And I saw that in Africa just as I had seen it in Indonesia and seen it elsewhere in Asia, and I had seen in Latin America. What they need is a chance for that energy and that drive and willingness to work hard to be successful. And again, this is where‑‑let me come to two of my surprises. One is a small personal one, but it's worth mentioning. I have in the course of last 12 months on six, seven occasions now been approached in this country by immigrants from Africa. One was an immigrant from Senegal working in a drug store in Cleveland Park. One was a student from Tanzania, I believe, working in a hardware store out in Maryland. The most surprising one, I was with my freshman daughter, visiting her at the University of North Carolina, she explained to me, "Dad, the purpose of parents' weekend is so that you could take me shopping," so we went to a mall in Durham, North Carolina, and while I was waiting for her to shop, a man from Kenya came up and started talking to me, and Rachel joined the conversation. After he left, she said, "You know, I doubt there were 10 people in the United States who would have picked you out in shopping mall as the President of the World Bank. It must be because the World Bank is so important to Kenya." I said, "Yeah, that's true," and in a way I hope some day it won't be true. But what was impressive to me was how successful these immigrants are, how much they pay attention to conditions in their own countries, how interested they are in the success of the countries they left. And one of the most dramatic examples for me is an employee of the World Bank‑‑sorry, former employee‑‑Antoinette Sayeh, she had a great job in Washington, comfortable position in the World Bank. She resigned it in March to become the first Finance Minister in her home country, the new Liberia. That is commitment. She's a single mother. Her son, who is about to go to college, said, "Mom, you'd better go, and I'm going to take care of me. If you don't do this, you will never forgive yourself." But I'm delighted as a son of immigrants and grandson of immigrants to see African immigrants doing well in the United States, but I want those same people to be able to do well in their own countries, and I think that's the second part of the surprise, is it's starting to happen. When I visited Nigeria, President Obasanjo said to me, "Africa is a continent on the move." I think in many respects. It is not uniform. You could still find many pockets of misery, but I don't think there is enough attention to the success stories. One of the great success stories was a small country with a really outstanding Finance Minister at least at the time I visited. He has gone on to become the President of the African Development Bank, so I don't know what his successor is like, but Rwanda is amazing. 950,000 people were slaughtered in the genocide a little over 10 years ago. In the intervening period, it's been growing by our statistics, 10 percent per year. Now, you could say that's from a low base, it's easy. I'm sorry, it's not easy. It's from a very difficult, tortured base. And one of the wonderful business people I met in Africa‑‑again, by the way, an immigrant who went back to start a flower farm, and she said to me, "I came back to grow beautiful flowers on the ashes of genocide." We are seeing it in improved performance in the governance area, in cases in Nigeria where the former Chief of Police is in jail for corruption; where the Deputy President of South Africa was dismissed not because he took a bribe, but because he was held accountable for one of his aides taking a bribe. By the way, the bribe came from a company in a rich country‑‑I won't say which rich country‑‑and as far as I know, the company hasn't been punished, although the Deputy President has been dismissed. I believe that the developed countries need to step up to their responsibility, too. But you're seeing a difference. You're seeing it in 15 African countries that have had median growth rates over the last 10 years of better than 5 percent. From Ghana at 4 percent to Mozambique at 8 percent and Rwanda at 10 percent. It still needs to be higher to make a real dent in the poverty that affects that part of the world. And most importantly, it has to be sustained. Ten years of that kind of progress unfortunately is not enough, but it's going to take 40, but it's happening. And we are seeing, I think, success increasingly in the business area, and that's sort of where I would like to come to now. And I don't want to filibuster here, but let me say clearly the key to success is creating jobs. Sort of interesting to me, in my institution we talk a lot about the Millennium Development Goals. They are extremely important. They're about health, education, and poverty reduction. There ought to be a Millennium Development Goal for job creation, but there isn't. Maybe that's because it's left to the private sector, and certainly the private sector is the answer to job creation. But this is still where Africans face an enormous number of obstacles. Some of them are perhaps unavoidable. Some of them are totally unnecessary. Many of them are manmade. They are the regulations that I guess were the inheritance of I don't know what somebody thought 30 years ago or 40 years ago made sense to have - 50 different licenses required to start a business in any number of small African countries. But the result is when you rank countries around the world in terms of the business climate and we do that every year in an excellent report the IFC puts out called the Doing Business Report. Out of 155 countries in the world, at the bottom 10, 7 of the 10 were African countries. Now, that's bad news on one hand. On the other hand, I think it's good news because it says there is a lot that African countries could do fairly quickly, fairly easily by clearing away some of that regulatory underbrush. Burkina Faso, which is one of those 15 good performers, was performing well in spite of the fact that it costs one‑and‑a‑half times per capita income just to open a business in Burkina Faso. Now, you could say per capita income in Burkina is $350, so that's $500; that's not much. Well, first of all, it's more than we pay to start a business in the United States, I believe. In any case, $500 for a poor person in Burkina to start a business is an impossible barrier. You add up all the other barriers, the result is that a country of 12 million people, their total of 50,000 that work in the formal legal sector. The rest of them work outside of government employment regulations. That means women and probably poor conditions. It's more difficult to export. But this is the kind of underbrush, I think, that can be cleared away and cleared away relatively‑‑I don't want underestimate the difficulty, but relatively easily. I was delighted when I met with the Finance Minister of Malawi some months back, and he told me, "There are so many African leaders telling me how we're a different country, we take responsibility for our own problems. Yes, we had a terrible colonial history. We have to stop talking about the past. We need to take responsibility for the future." I say Amen to that on both points, the past was terrible, but you won't make progress by doing it. Then he tells me, "My predecessor is in jail for corruption, and I have no intention of following his example," so I thought that's a good sign. So, then I trotted out the Doing Business Report. I told him how poorly Malawi does in the whole range of these business climates, and he said, "Shame on us." I said, "No, no, shame on you if you come back next year and nothing has changed, but you didn't know about this until I told you about this before. But now that you know about it, there are some things you could fix." There are some things harder to fix. Beatrice (inaudible), the woman who runs the flower farm in Rwanda loses five percent of her crop every year because her refrigeration goes out because the electricity is bad. Well, fixing that is going to take investment, and that is something the World Bank is trying to step up to our responsibilities. We kind of largely got out of infrastructure investment in the 1990s. We are coming back. We are coming back, I think, in a very determined way, and I think other development partners are doing the same. We have to look at that kind of infrastructure investment and not just country by country, but admittedly one of the disadvantages of Africa is it's broken up into so many different national boundaries. And to get from Rwanda to any export point of view, you have to go through at least one other African country, and maybe two or three. So, that infrastructure investment has to be regional, but also some of these barriers we talked about to creating businesses inside countries get even worse when we go across countries. And as important as it is, and I can't stress it enough, to open up trade between the developed countries and developing countries, particularly in Africa, one should not ignore the benefits that would come from opening up trade within African countries and giving them the opportunity to sell to a larger domestic market. After all, it's been a huge advantage of the United States when it was a developing country. It's been a huge advantage of China to developing countries to have a big market. African countries need that big market, as well. So, that's another area where there is real progress to be made. But let me stop here. I have six more pages of remarks, but I'm actually quite eager to hear from our private sector representatives, but let me just repeat what President Obasanjo said: I think Africa is a continent on the move. I will give you one more statistic that I find particularly encouraging, and I want to make sure that I have the number right, so I will look at my notes. Since the peak in 2002, this number has gone from 16 to six, and the number is the number of active wars in Africa. Now, six is still too many, and every one of those conflicts is a huge obstacle. It's a tragedy in itself, but it's also an obstacle to development, but it's gone down so much in the last five years, that it is a very hopeful sign. After all, Liberia two, three years ago- I wouldn't have given you a plum nickel for Liberia's chances, but today Liberia has an amazing degree of peace, thanks in no small measure to the contribution of Nigerian and other African countries contributing peace keepers, but also thanks to, permit me to interfere in their domestic policies to say, the wisdom of Liberian voters who had a choice between, I'm proud to say, another World Bank alumna, Ellen Johnson‑Sirleaf, a real reformer, now the first woman president in Africa, or a soccer star. And the people of Liberia said, "We have had enough of misgovernment, and we want this woman." And she has a chance. It's a difficult chance. It's about‑‑I can't imagine a tougher job than taking over the presidency of Liberia in this day, but it's a wonderful opportunity for all of us, and it's one more example of where change is possible. So, I would just like to say I came into this job saying Africa has to be my first priority because there is so much hopelessness, and I have spent a year discovering how much hope there is, and it's a nice discovery. MODERATOR: I would like President Wolfowitz to have the last word. You had a major focus on governance and justice issues. Perhaps you can comment on the question about the importance of the judiciary and judicial reform. PRESIDENT WOLFOWITZ: Yes, with enthusiasm. If you look at the Doing Business Report, you will see quite a few of the indicators by which we measure business climate are related to the legal system: The ease of enforcing contracts, the ease of dealing with bankruptcies, ease of paying taxes. You were saying predictability, but also how cumbersome and how many unofficial things you have to make along the way, and I'm sure that's what the problem is. So, I support that notion enthusiastically. I think institutions like mine are trying to do what we can, in the way of, the popular term is, "capacity building." I'm not sure building is the right metaphor. It's more like growing; it's got to have roots in the soil. But I remember being very struck when I was in China in October, talking to Chinese officials about how they felt‑‑what they felt the World Bank had contributed to China, and he said, "Well, early in my career in the 1980s, we were just starting our economic reforms, and your people demonstrated to us how important it was to have modern accounting standards." He said, "That was very helpful. Of course, we looked around and noticed we didn't have any accountants, so I got sent to Chicago and Cleveland to work in accounting firms and learned accounting." Of course, Americans know if you go to Chicago and Cleveland, they know you're serious; right? You need good laws and you need good systems, but also people who could execute them. And I would just like to finally endorse both what Donald just said just now and what he said earlier with that wonderful quote about China. When I was growing up, which was 50 years ago, not that long in historical terms, there was a term that you could find commonly. It was "oriental fatalist," and basically referred to the fact that in places like China, people expected life‑‑life, after all, had been miserable for 4,000 years --and they expected to be miserable for another 4,000 years, and I was stunned a few months ago by the foreign editor of a major American newspaper. He was about 15 years younger than I am, and he had never heard this term. So, all those oriental fatalists of 50 years ago are now, I guess, Alan Greenspan would call it, irrationally exuberant or at least say exuberant. I think hopefully the same thing will be true of what I call Afro‑pessimists, but not tomorrow. It's 40 years from now. Just think, I mean, 50 years is short historically, but it's very long in terms of our lifetimes, and if you expect results to come quickly, you're not going on get there. If you understand that 4 percent a year, 5 percent a year, year after year, after 10 years, 15 years, it would make a dramatic difference, but you‑‑if you are too impatient, Donald is absolutely right: You will lose it. So, persistence, determination, and stick with it. That's critical. |
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