Transcript of a Press Briefing of African Finance Ministers

Washington DC, April 14, 2007

View a Webcast of the press briefing

Participants:

Rama Krishna Sithanen, Deputy Prime Minister and Minister of Finance and Economic Development of Mauritius
N'Gandu Peter Magande, Minister of Finance and NATIONAL Planning of Zambia
Antoinette Sayeh, Minister of Finance of Liberia
Athanase Matenda Kyelu, Minister of Finance of the Democratic Republic of the Congo
Moderator: Lucie Mboto Fouda, EXR

Ms. Fouda - Good morning, everyone and thank you for coming to this press conference of African Governors. I'm Lucie Mboto Fouda, Senior Press Officer with the IMF press team.

We have here today four ministers. To my immediate right is Ms. Antoinette Sayeh, Minister of Finance of Liberia; Mr. N'Gandu Magande, Finance Minister of Zambia. To his right is the deputy prime minister and minister of finance and economic development of Mauritius, Mr. Rama Krishna Sithanen. And to the extreme right, we have Mr. Anthanase Matenda Kyelu, who is minister of finance of the Democratic Republic of the Congo.

Each minister will have the opportunity to offer a few opening remarks, three to four minutes, as agreed earlier today, and we will then take questions in the room. We will start with Minister Sayeh.

Minister Sayeh - Thank you very much. It is a pleasure to be back here. A year ago at this time we also joined this press conference very early in the tenure of the new Liberian government led by our president, Ellen Johnson Sirleaf. We have been since then working very hard with the international community, including with the IMF, in getting Liberia back on track, in restoring our credibility with the international community, and in making progress toward our dealing with our massive debt problem that we inherited. And I can say today that, a year and two months later, we have made significant progress in the context of a program, staff-monitored program with the IMF. That program is now considered to be of upper credit tranche conditionality, notwithstanding the fact that it is not a Fund-supported program in the standard way. Because of the absence, so far, of financing assurances to clear Liberia's arrears to the IMF and give us access to debt relief. But based on the discussions we have had with partners in the context of the February donors' meeting on Liberia and the progress that has been made since, including the acknowledgment in the G-7 ministers' communiqué last night that progress needs to continue toward the clearance of Liberia's arrears, we think we are in good shape to do so. Clearly, all of this is important to give Liberia the breathing space we need to tackle our monumental reconstruction challenges, to do with having to restore education, infrastructure, health, and other basic services to a population deprived of those services for some 20 years. We in that context have benefited from substantial support so far from the international community. We want to urge that support be delivered in a much quicker way. We are grateful for the level of support, but getting that delivered quickly is clearly critical to consolidate the peace that is still very fragile in Liberia.

Among the issues facing the International Monetary Fund at the policy level is, of course, how to better engage with so-called fragile states, such as Liberia. We want to commend the management of the Fund for the effort they made over the past year in making sure that all of the attention at the highest policy level in the Fund is there for Liberia, and is there to make the case to all of our partners, the case for supporting us through this important transition.

Let me stop there, and just say that we are very pleased to join this group and look forward to engaging with the press on the issues before us.

Minister Magande - Thank you very much. Ladies and gentlemen, it is an honor for me to be back here. For the last few years I have had the privilege of leading my country through some restructuring, in particular with financial management, and I have been coming to brief you from Dubai last year and this year.

I want to say that we have had a very positive arrangements with the IMF. We had the PRSP, the PRGF, the HIPC Initiative e right now we are at the end of our PRGF. I think over the years that we have had this relationship, things have been moving in the right direction. We believe the fundamentals are in place now. As you are aware, Zambia has been privileged to be one of the most peaceful countries in Africa, and like my good friend Antoinette here, who had to deal with political problems, Zambia is an oasis of stability in Africa. What we needed now is basically to get our economy going, and that means we have to work out how the people can participate in creating work for themselves.

After the programs with both the World Bank, the IMF and international community, we have sat down and recently, in February, we launched the fifth national development plan which is basically our master plan for our intentions of developing the country in the next five years. We have a vision in 2030, I know people at my age getting to 60 talking of 2030 is a bit too far, but I think we have to be visionaries, that it is not for us to be complacent, and leave it the way we found it. We have to leave it in a better form.

The problem we have now is that after the HIPC Initiative, and we are under the MDRI, our debt has come down to 600 million dollars from 7.2 billion. So, we have created a very big fiscal space. What we do with this fiscal space? I'm hearing issues of free riding coming in, I'm hearing issues of the newcomers into the credit or the financial sector, trying to hijack the space. For us, in Zambia, we want to use this fiscal space to get enough resources to move on and put infrastructure for development. So as much as we are aware of debt sustainability I think what we want do now is look at growth and development, and the attainment of the MDG and that means we need more resources. It is not available with the customary friends who go to anybody who is able to come. In particular, we want the private sector to be aware that we have taken very stringent financial reforms, capital reforms at home, and because of the debt now in the current balances, you are in a position where you can come to Zambia and invest and you will be able to externalize your money. Obviously, we want part of that money to remain in Zambia so we can build schools for more people that are going to help you in your operations. Perhaps at this moment I will stop now.

Minister Matenda - Thank you for extending me this opportunity on behalf of the Peoples Democratic Republic of Congo. I must say contemporary to the situation in Zambia, the Congo is undergoing a difficult situation. We have had several wars, but thanks to the support of the international community, we have had an election which received support, technical and other support from the international community, more than 45 million dollars were invested by the community. And today, we now have completely stable country. Now, there are some last minute incidents that have occurred, but they're minor, so I think I can assure you that today, Congo, to use the language of my colleague from Zambia, is an oasis of peace.

As to the economic and financial situation in our country, we had difficulty in completing our program with the international financial institutions, as said here, we started with reference program that is aid for consolidation, and today we find ourselves with the IMF, laying the groundwork for a negotiation of a new PRGF. And, by June and July, we believe we will have completed that negotiation.

In the meantime, a new government has come into power through the election. And, new national assembly has been elected, a senate elected and provincial assemblies and governors all elected. So after this electoral process, today, the country is working to cooperate at the national and bilateral, multilateral level. As I said earlier, we are negotiating with the World Bank. We benefit from an emergency program of 180 million dollars. That allows us to proceed from the present situation to the new economic plan, with the African Development Bank. We are also negotiating with the EU through the European development fund. So basically we are a country that is about to take off on a basis of new policies, and we are here to answer your concerns. I must say that today we hope all of these organizations will help us to be able to transform our potential into wealth for the benefit of the population that wishes to see its poverty reduced. Thank you very much. Ready to answer any question.

Deputy Prime Minister Sithanen - For those of you who follow the economy of Mauritius, we are an economy in transition, in transition from dependence on trade preferences, to one that is going to be driven by global competitiveness. We were able to suffer three external shocks, sugar is no more sweet for Mauritius as you are aware. The price of sugar is coming down by 36 percent, with the agreement we need to complete with textile and clothing, with countries like China, India, and other low cost countries. As if these two cyclones were not enough, there has been an adverse impact on the balance of trade and the balance of payments as a result of soaring energy costs. So, in response to these challenges, what we call the shocks, we have embarked on very courageous and bold reform. Unfortunately we have to do this reform at the same time we were able to stabilize the economy, because the budget deficit is high, over 6 percent, the debt-to-GDP ratio is quite high at 70 percent, and we have a massive deficit in the external balance, so during macroeconomic stabilization, and reforming the economy at the same time, is quite painful. And, we have decided to have a four prolonged strategy, one is fiscal consolidation; two is to change the business climate in order to attract more investment from outside Mauritius; three, basically to restructure the economy, to diversify the economy, so we build more resilience to external shocks; and four we are implementing an empowerment program to cushion the adverse impact of globalization on the low income group.

We want to integrate Mauritius within the region, first, and obviously within the global economy, and this is where Mauritius has been at the forefront of pushing the agenda for aid for trade. Obviously, Africa will still require for a long time overseas development assistance in order to fight poverty, and to attain the MDG. We need support from the EU in terms of EDF, but we are busy also negotiating the economic partnership agreement, but as an agenda for regional integration, and for having free trade areas in this part of the world. And we think, and this is one of the suggestions we are making to the World Bank and the IMF, that both institutions should be more engaged in pushing the aid for trade agenda. And what we mean by aid for trade is not only the narrow scope of aid for trade, basically for countries to be familiar with the trade rules, or these countries that are going to be engaged in trade development. We think that opening markets is necessary, but it is also important to address the supply side constraint. Of what use is making the market available to countries in Africa if they have got huge supply constraints? That is why we think that, if my friend from Zambia cannot export fruits and vegetables to Mauritius or to Kenya, it might be more difficult for them to export it to Washington or Paris. So we need to push this aid for trade agenda by investing in trade related infrastructure, whether it is for efficient airport, whether it is more productive port, whether it is roads, whether it is ICT. And at the same time we need also to support these countries who have bold economic programs, that have taken bold decision, but have to meet the costs of social adjustment. For instance, my country, we have taken the decision to integrate in the world economy, we are bringing down the tariff, so besides the fiscal revenue loss we have, there is also painful social costs of adjustment. In one sector, 30 percent of people have lost their job and 85 percent of those who have lost jobs are women, so we have a problem of gender. The same thing has happened in the sugar sector, many people have lost jobs, so we are asking the international community that additional and predictable resources should be maybe available in order to push the agenda of aid for trade so that we can further the agenda of trade, free trade area and regional cooperation. I will stop here and if there are questions, obviously, we will reply to them.

QUESTION: This is a question for Mr. Magande. How much difficulty for the Zambian economy has the situation in Zimbabwe been, and what do you think needs to be done to stabilize Zimbabwe.

Minister Magande - Zimbabwe happens to be our neighbor and clearly when your neighbor either has a party, you hear the noise, when they have a funeral you hear the wailing. We know what Zimbabwe is going through. But economically, I want to say that apart from the demand on the Zambian economy to provide what Zimbabwean economy has failed to, it has not been very interruptive. If anything, we have gained.

One of the issues that arose in Zimbabwe is the land issue, and quite a lot of Zimbabwean farmers, in particular, like skilled farmers, decided to relocate. Instead of going to the new lands in Australia, many of them were actually Zambians who ran away from Zambia independently because they didn't want to be under black rule, now they find that even the black rule in Zimbabwe is not good enough, so some of them wanted to come back and reestablish themselves on their old lands. We accommodated them because we believe in Zambia that peace is important, if you find people fighting, there is no use leaving them on the ground where they are fighting. If you separate them obviously the fighting gets less. Accomodating them caused us some political problem with our black brothers that we are accommodating people running away from them. So we reconciled them. So we actually benefited out of the skills that these people have brought.

As you know, we share one of the most important wonders of the world, Victoria Falls, on the border with Zimbabwe. You can see it from both sides. And because of that, a lot of people perhaps who were going to Victoria Falls to see on the Zimbabwean side are now preparing to come to the Zambian side, so this has resulted in a boom in tourism at the border, on the Zambian side, and obviously to us, that is a benefit. But we don't really want to ride on the misfortunes on our neighbor. So politically, Zambai is one of those people who have engaged the President Mugabe to find a lasting solution to the political impasse and some ten days ago there was a meeting of the SADC heads of state in Dar Es Salaam, we believe the discussions there were very frank and of course, you don't know what heads of states discuss in their internal room, but your president said, he made it very clear, that the resolution of the Zimbabwe issue is going to be a win-win situation for the whole region.

QUESTION: As you know, the Executive Board of the World Bank is evaluating the leadership of the current president, and presumably taking into account various pluses and minuses on policies. In light of the fact that President Wolfowitz has visited Africa four times in two years, and committed the Bank to increasing funding for Africa and was involved in the debt relief issue and also directed a lot of the corruption issues toward African countries, can you please assess what factor these policies should be in evaluation of his leadership?

Minister Sayeh - I am happy to start weighing in on that. Of course, what any manager does in the way of leading their institution should weigh very heavily in any assessment of their performance, and any assessments, evaluation of their prospects. For the future. So, I would say that Wolfowitz's performance over the last several years and his leadership on African issues should certainly feature prominently in the discussions ongoing discussions about his future. And his leadership of the Bank.

Clearly, in our case, and in the Liberian case and the case of many forgotten post conflict fragile countries, he has been a visionary. He has been absolutely supportive, responsive, there for us. Making advocacy that is absolutely essential to getting the international community to do the right thing by these countries. We're very, very grateful to his leadership in getting Liberia to where we are today, a year and two months later, acknowledged as an important country, with a lot of attention by the international community.

The Bank has taken many risks in Liberia, continues to do so, has made resources in the way of arrears clearance of sizable amounts available to Liberia. In the absence of clearing our arrears, has a full pledged and functioning country office engaging on a day-to-day basis with technical assistance and all of the other things that are needed to help us find our way out of our circumstances. So, we have seen visionary leadership, steadfast progress under Wolfowitz in terms of what the Bank does in countries like ours. And we can only say that we look forward to that continuing. We think that he has done a lot to bring Africa in general not just the post conflict and fragile states in Africa, but Africa generally into the lime light and has certainly championed our cause over the last two years of his leadership, and we look forward to it continuing.

Deputy Prime Minister Sithanen - He has been supportive of reforms in our country. I had the chance to meet him last year at the conference in Singapore. We explained to him the difficult situation in which Mauritius is. And I must say the World Bank is very much present in Mauritius through technical assistance, with advisory capacity, in terms of policy advice, but also lending money to our country. We think that he has done a good job. More specifically, he has apologized for what has happened. There is a process that is in place, and we trust that the Board of Governors as stated in the statement yesterday, will take action, if any, which is commensurate with what they believe has happened.

QUESTION: I just want to follow-up on both the questions, first to Minister Magande and Minister Sayeh on SADC.

We were told that the secretariat in Botswana is very frustrated about the situation in Zimbabwe. Tourism has virtually stopped the integration of SADC. Is that a concern for you?

And the second question, of course, to all of you, the World Bank has been tough on Africa, and one would have expected that African ministers would want to get tough on its boss, but it does look like typically Africans, you suggest that the rules should change when coming to how the Bank should deal with the president.

Minister Magande - It is true the World Bank has been tough on Africa in order to help the rule of law and Zambia as you know has been very, very tough on corruption, but we believe that rules and procedures must be followed. If I were to be rough and tough this time, next time I am no more in government, somebody who will just lock me up. So we believe that once the rules are there, you just must be seen to be taken, and whatever, whoever is accused must be given the opportunity to be listened to. That is why we believe that in this particular case, I would have been surprised if I arrived here and suddenly I just saw the president on the telephone resigning, even without being heard by the Board. That is not a rule of law. We don't want to go back to old days in our jungles, we want to make sure that issues are dealt with correctly so that perhaps in the future, those who have to avoid falling into the Zimbabwe pitfalls know how not to get there. It is not that we are being soft, we didn't come here to make a judgment on this issue. We came here to enter basically exchange of views, happy to hear from my good friend Minister Sayeh say that things are getting better in Liberia and one of the ministers there in Liberia is working with me in Zambia in UNDP, this is the information we want to exchange.

QUESTION: I also take it from Minister Sayeh she has made a ruling, we look forward to working with him, it looks to her, let the show go on. Why do you mess with the white person?

Minister Magande - I don't think she said to work with him even if he is found guilty. If somebody is found guilty and taken to jail, you don't continue to associate with them until they are served their sentence. I don't think that is what she meant. All she said was, from what we have seen in the last few days, we were happy that the Bank was attending and in particular the leader of the Bank was trying to position himself on issues that were of concern to everybody. If there is an issue now that is going to disrupt and the Board makes a decision, we abide by the Board's decision and we are apart of that decision-making process.

In Zimbabwe, you say that because of Zimbabwe everything has stopped, and unfortunately that is not correct. Like you said, there is a political problem in Zimbabwe; yes, it is affecting the economic aspirations of the region, as SADC, but the institutional setup that we put meant that even if there is a problem of politics in Zimbabwe, those who attend our meetings to know what is happening, when we have capacity-building workshops, they still come there. We want to give them the opportunity that once they come out of the political impasse, they still have the capability to move faster because of the loss of time during what has been happening.

So it is not correct that basically everything has been disrupted.

Deputy Prime Minister Sithanen - I think the World Bank, even the European Union, and other institutions place a lot of emphasis on governance, transparency and accountability. It is good for Africa, and it is good for all countries in the world. I think we have a duty to make sure that the money is well utilized, that we fight corruption. Of course, I agree with my colleague from Zambia that we expect the same standards to apply to the World Bank, to the IMF, and to all other institutions. I think I have stated in my earlier remark there is a process that is under way and let's wait for the process to be completed. And let the Board who has got all the facts take the decision, and we will wait for that decision.

With respect to your second question, obviously, a country like Mauritius would like to see a speeding up of the process of regional integration. Whether it is with COMESA, whether it is within SADC, or whether it is between SADC and COMESA, because we have to sort out this problem of multiple belonging to trade organizations in that part of the world.

We have an agenda for a free trade area, we have an agenda for a customs union. Probably in some areas we are not moving as fast as possible. And that is why we in Mauritius have taken the initiative to make proposals to the donor community on how to remove obstacles that is preventing regional integration, regional cooperation. We think that it is easier to make these countries integrate before they can have a free trade area within this part of Africa and the EU and this part of Africa, and the U.S. And this is where we think that the aid for trade should be linked to the economic agreement that is being discussed between this part of Africa and the EU. So we need to overcome the obstacles, obviously there are particular problems, but I think they are economic problems. There are economic obstacles and these obstacles must be surmounted; that is why we need to invest in infrastructure, we need to invest in trade-related infrastructure, we need to make sure that we create a climate that is conducive for private sector investment. All these issues must be addressed and that is why Mauritius has taken the initiative. We are going to make proposals at the AfDB meeting on how to move this process forward. There is an agreement of the international community on the concept of aid for frayed, why it is important to have additional and predictable resources to encourage regional integration.

Now we need to reach agreement on what the are modalities, what are the mechanics, what are the criteria, and how this aid for trade is going to be disbursed. The EU has agreed to provide 2 billion euros, 1 billion from the commission and 1 billion from member states. And we are discussing with the EU and also with the international community how to operationalize the aid for trade so we can remove the obstacles that is slowing down the process of integration in this part of the world.

Minister Matenda - Thank you very much. Yes, I would like to echo what my colleagues have said with respect to the management of the situation of the Bank president. But I would like to focus in particular what has to do with the Democratic Republic of the Congo, the DRC. Rather than having a subordinate situation and partnership with these entities, so whenever there is a problem, it is the partners that have to focus on this file, and case, and in this case, I must admit we are amongst the first who are advocating some flexibility, when, for instance, considering the situation of countries in a post-conflict situation. When we welcomed president Wolfowitz in Kinshasa we pointed this out. There is no complacency here, but there is a partnership based on mutual respect. I would like to point out that in aside other matters in the DRC, we are very pleased with the cooperation with the World Bank. It is noteworthy to see that we have a cooperation with multilateral and bilateral agencies and this has been ongoing for some ten years, but after suspension in 2001 we once again started these partnerships and we are now receiving funds from the agencies, so there is cooperation. For instance, and I want to stop at this point, but the procedures of contracting, we have been amongst those who sought some lightning up and flexibility. So I want to point out that this matter should remain within the internal Bank structures and should not be mixed up and confused with the cooperation that exists between different countries and the Bank.

QUESTION: You are talking about the Executive Board of the Bank as if they were an independent group of people. Are you saying they will be allowed to make a decision without input from their finance ministers and ultimate bosses?

Minister Magande - Thank you very much. I happen to be, as a governor, a shareholder in quite a number of organizations, including the World Bank and the IMF. Normally we give the running of the organization to the Board of Directors, as shareholder comes later. That is how I would view this particular situation. Most likely, if we are not consulted, the Board makes a decision either way, we are going to take that. I think once the shareholders start losing faith in the Board and therefore in the management, then it is interference and that could cause difficulties and that is how I would perhaps comment on that particular issue. Thank you.

QUESTION: I had two questions for you. One in regards to Zambia. Could you quantify what, how much of an economic boon you are experiencing in tourism as a result of the violence going on in Zimbabwe? How much growth are you getting out of it?

Second question in regards to the Board and the concerns about the leadership of the Bank as you mentioned, Africa has a huge priority for president Wolfowitz, IDA fund raising going on, certainly speaks about Africa all the time. How much of a concern is a weakened President Wolfowitz or if Wolfowitz were to leave, that Africa would not have would not be the same priority that it has been in wanting to get the same attention that it might deserve?

Minister Magande - In terms of the economic benefits because of the conflict in Zimbabwe, after the liberation wars, we tried to find out how much we lost, because of supporting liberation wars, and the amount actually the study was done with international support, it came to somewhere around 10 billion dollars. We have been keeping that study, we have tried to sell it to the United Nations, to recompense us, and nothing has happened. So we have realized that it is not of use to find out from each tourist who is in Zambia to say, were you intending to going to Zimbabwe to see the Victoria Falls, so it is of no benefit to our country. So I don't have that information, unfortunately.

On the issue of the president of the Bank, I was privileged to be in Brussels when the EU commissioner was made to resign some years back and everybody cried because we mourned, because I had known the EU commissioner who was dealing with the Africa as a personal friend. And, in fact, to an extent that we decided to going to football matches together. As he was leaving, he said, you are going to end up with difficulties, because I didn't know who was going to replace him, I had become a bit sorrowful. I have discovered that the new EU commissioner for Africa even feels so comfortable with me because of the relationship I had made with the previous commissioner, so one wouldn't be able to say because there will be something negative to happen to the current president therefore Africa is going to be forgotten. I think that is basically getting into a situation in which perhaps we shouldn't. We should keep positive that whatever happens to the president, if, for example, he was to leave, I think whoever comes, we insist that he continues where we have been left, in particular, on this issue of anticorruption. That is a cancer that has seen quite a lot of our countries lose development and has seen the poverty continuing in our countries. And therefore, we all still insist whatever has happened, those high standards must be maintained and we want to live up to what he made us believe to believe, that even ourselves, it is important for ourselves to keep those high standards.

Ms. Fouda - I believe the ministers have stated all they had to say on the World Bank leadership issue. I was wondering if we could take non-World Bank leadership questions from the room.

QUESTION: I wanted to ask about the role of China in Africa. Earlier in January this year the president of China made a very high profile visit throughout Africa, tour of Africa, and pledged to make huge amounts of investment. The upcoming meeting of the ADB is going to be held in Shanghai, which I believe is only the second time it has not been held in Africa itself. So, I wanted to ask about the commitments so far from China, first of all in terms of what specific investment projects are your individual countries cooperating with China on, and are they solely in energy and infrastructure, or are they in other sectors as well? Also, I wanted to ask the minister of Zambia, in particular about the copper industry in Zambia, and Chinese participation in that. Is there a danger of a backlash preventing further investment in the copper industry from Chinese investors? Some of the mines have become a major flash point of whether China's investment in Africa is positive or negative.

Minister Sayeh - Thank you for that question. I think a lot has been made of China's interest in Africa in recent times. And, a lot of that has focused on financial issues and investment issues, but clearly, for us, in Africa, and I speak in particular of Liberia, we have a lot to learn from China, beyond its financial capacity to assist. China has made the most progress over the past several decades in reducing poverty. And, that experience is of great interest to us, struggling in a post conflict context to learn, also, what types of policies we might be able to adapt from that experience, to promote poverty reduction in our circumstances. So, our interest in China is more than financial. Clearly, it is also financial, and in our context, the Chinese have been so far very helpful in assisting on a number of things, not infrastructure, so much, there is a potential in infrastructure, but so far, it has been a lot of short-term assistance in things like the university of Liberia, for example, trying to get it rehabilitated in collaboration, I should say, with the U.S. government, they're working together, we are seeing the U.S. and China work together in Liberia on a number of things. And, we welcome that collaboration. For us, the sort of resources that China has to make available currently in the way of concessional loans, Liberia is not in a position to take on at this point, because in the context of trying to resolve our debt issues we have committed to not borrowing for the time being, and so even concessional resources are too expensive for us at this point in time, so the potential financing in large scale infrastructure that we know the Chinese are interested in potentially helping us, we have, for the time being, told them that we will need to reconsider that down the road. But, having said all of that, the Chinese are involved in a number of things, in agriculture in Liberia, in supporting a whole gamut of things and bringing their experience to us. And we have welcomed that new partnership.

Deputy Prime Minister Sithanen - I participated in the conference about two weeks ago in Cape Town on this acronym, CIBA, China, India, Brazil and Africa, and I think we need to situate your question in historical perspective. Historically, it has come from the move to our part of the world. And, increasingly enough, other countries in the South, also, the technical capability, they have got the financial services in order to invest in other countries in the South. India is doing it, China is doing it, Brazil will do it. And for me, Russia will also do it. We in Mauritius, and I'm sure my colleagues from Africa will share my view on that, we see the South-Suth cooperation basically as a complement to the North-South cooperation. And I don't think there needs to be either/or. We need both.

Let me give you a specific example of Mauritius. Historically, the pattern of trade is classic basically North-South. We export most of our sugar, most of our textiles to the North, and most of our resources come from the North. But, increasingly, we think that the East-West connection could be an excellent complement to basically the North-South access of development. Of course, it is investment in oil and resources, investment in infrastructure, but it is also, we just concluded a deal with the China, that they are going to invest in a huge project in trade, in setting up a trade and development center in Mauritius. And, it is going to be a small replica of what they do in other countries and going to use that on an export basis to countries in Africa. Obviously, because of the proximity of Mauritius to the African markets, the costs of transportation will come down, and if they can manufacture at more or less at the same costs as in China, this will give them a competitive edge in the African market.

We also have access to concessional finance from the Chinese, so we personally believe in Mauritius that it makes sense to develop the South-South cooperation. Very often it is the right technology. Very often you have come very recently to the same phase of development that many of our countries in Africa should, and it should be seen as a complement to the North-South trade and development pattern that we have.

Minister Magande - Zambia's copper industry. Unfortunately, Minister Sayeh may not be the best person to talk about China and what is happening now. The first project we had from China was in 1967. We then at that moment, because of the regimes in Rhodesia and southern Africa, we were cut off from our export markets, and import routes. We did a feasibility study to see if we could do, construct a new railroad line or road to the seas, it was done by a Canadian company. When we came to the west, they refused. We had to fly in even our oil or fuel requirement from Dar Es Salaam. The only country that came to our aid to implement that report, the feasibility study, was China. So, in fact, Zambia has had investment from China as early as 1967. They put up and helped us with 3,000 kilometer railroad line, and is how Zambia survived to help the rest of southern Africa to fight for their democratic regimes. So for us, really, this is an old friend, and we think they're an all-weather old friend, in need they have come to our aid. But we feel, for example, that the railroad line now is a very important economic route, because while the mines were run by Anglo-American which was basically American and English, the copper was being transported out of the Zambia through a Chinese-built railway. So there was cooperation as early as 1968 between the west and China. So there is nothing new that is happening now to us, except, I think, as minister Sayeh says, there is no way anybody can fail to recognize the phenomenal development of the Chinese economy. At the moment, anywhere you go, even outside here, once we go to look for gifts, I'm sure 90 percent of the shops will be stocked with Chinese goods, so if I am able to go to Beijing and buy these goods instead of coming to Washington, why shouldn't I take a direct route, and that is what is happening at the moment. So, really, we have no problems, luckily enough, by the way, the Chinese require commodities in Zambia, they have come, they need our minerals. They need copper. They have come not to buy, they have come to invest and go under ground to mine the copper. And they are shipping that copper for their industries in China. You know what used to happen before? The people who were coming, they were actually mining, and then they set up a stock exchange in London, where there were no copper mines, to actually decide the prices of our copper. The Chinese are not doing that. Only in February, when the president came to Zambia, he actually said, he wants to set up like in Mauritius an economic development zone, in the areas of the copper belt, they want to process copper by making cables there. The cables will not be only for sale to China, they will be for sale to the rest of the world. So, obviously, if they're using the latest technology, which I'm sure they are, because now technology can be done on the Internet, they will produce the cables that even the American industry will find suitable in their industries in America. But, then, they will be very additional in Zambia, employment, technology transfer. Which will be in Zambia for the Zambians to keep as we continue to exploit the other minerals. So, really, for us, in Zambia, we feel that, I think, we have an old friend who suddenly has discovered their capability and they're exploiting that, to exchange and improve the rest of Africa. So, it is not a military issue, it is not a political issue, I think it is a developmental issue. And like the deputy prime minister says, we have already got concessional loans from China, the railroad was built from a loan given in 1968, we never paid anything, until, when the president arrived in February this year. What he did was to cancel the loan. And then gave us some more loans. So, what else can we do? That is an opportunity for us, but we want to make sure that this time around, our mineral resources are being used for developing the Zambians. And 1906, that is when we started mining, Zambians were poorer 100 years down the line. This time we were saying, we don't want to take six days to be poorer, while our minerals are going out, and I think we see the willingness of the Chinese. By the way, we have more than ten companies that are now involved in our mining industry, and they come from something like six or seven countries, most of them from the South, and Asia.

Ms. Fouda - At this point, we will take one last question from the lady in the middle here and we will conclude this press conference.

QUESTION: My question is, yesterday OXFAM released a report that said a percentage of multinational and bilateral aid should go directly for investment in the general health care and education sectors of countries, and that limits on the amount of aid that can be spent on wages should be eliminated. I wonder if you can comment on that, what do you think about that idea?

Deputy Prime Minister Sithanen - We have seen in the past that when development assistance is given to some specific technical sectors, that a disproportionate share, probably, of that aid goes into administration. And not enough goes down for the people for which the aid is discontinued in the first place. If this is the question you are asking, obviously, I think, all of us will agree with what has been suggested, and we see also when aid is given to our countries in our part of the world, you need to ploy consultants from these countries, and a significant share of that aid goes to this current account, as opposed to fulfilling the objectives met in the first place when the aid was provided. So I think if this is the line that you were taking, we could not more agree with you, with OXFAM.

Having said that, I think we need to invest massively in education, and in health, in Africa.

To give you the example of my own country, because we are in a situation of transition, we need people who are more skilled, own order to integrate the labor market, where we will have to develop the financial services sector, the services sector. So, obviously, investment in education, investment in training, investment in reskilling is extremely important. The more you invest in this kind of education, as opposed to investing in administrative costs, the better it is for all our countries.

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