Loading component...
Transcript of the African Finance Ministers Press Conference
April 11, 2013
MR. DIENG: Good morning, everybody, and welcome to the African Finance Ministers' Press Conference for the 2013 Spring Meetings. Joining us today, we have Minister Ali Soilihi, Vice President in charge of the Ministry of Finance, Economy, Budget, and Privatization for Comoros; Mr. Alamine Ousmane Mey, Minister of Finance for Cameroon; Ms. Ngozi Okonjo-Iweala, Minister of Finance of Nigeria who is not here but will be joining us in a minute; and Minister Kosti Manibe Ngai of South Sudan.
Each of our Ministers will have a few introductory remarks, and then we will open it up to questions. So, without further ado, I will hand over to Minister Soilihi.
MINISTER SOILIHI [INTERPRETED FROM FRENCH]: Ladies and gentlemen, Ministers, dear colleagues, Governors, members of the press, ladies and gentlemen.
I would like first of all to thank our colleagues who did me the honor of making me the spokesperson of this press conference to talk a bit about my country, the Union of Comoros.
My country has undergone a period of chronic instability marked by a separatist crisis on certain islands. And to return to a situation of unity in the Comoros, the path that we followed was a very long one and a complex one, but we did manage thanks to dialogue and with the help of the international community, which I would like to thank once again today.
Today our duty is to uphold and maintain the unity of our country and to avoid the demons of divisiveness. I would also like at this time to address my deep thanks to international institutions including the IMF as well as our bilateral partners for the unconditional support that they unceasingly gave us throughout this difficult period. This support ultimately led us to the completion of the HIPC Initiative for Comoros in December 2012.
In an international context that is characterized by deceleration of growth worldwide, economic activity in the Comoros has, on the contrary, picked up thanks to a sustained rise in activity levels--activity in the construction industry, a very good harvest, the resilience of remittances from expatriate Comoran workers abroad, and significant internal contributions and banking finance of the private sector.
The growth rate of the GDP was 3 percent in 2012 as against 2.6 percent the previous year. Moreover, that growth has been accompanied by dropping inflation. It had been 6.3 percent in yearly average terms in 2012 as against 6.8 percent in 2011 thanks to a relaxation of tensions concerning the prices of our main international import. In that promising context, the budgetary situation of the Comoros has improved in 2012 with in particular an increase of expenditure for social sectors as a general extension of the favorable trends observed in 2011.
The foreign debt charge is still heavy, but will become easier to support in coming years, we hope, thanks to more favorable terms of trade in 2011 when we arrived at the completion point of the HIPC program. In terms of foreign accounts, estimations of our balance of payments show a sharp decrease in the deficits that had been shown in current transactions, which represent 6.5 percent of the GDP in 2012 as against 9.8 percent of the GDP in 2011.
We have tried to stabilize economic situations to bring about more budgetary rigor and to have a prudent level of indebtedness as well as to improve transparency in economic management to have a reasonable and pragmatic program for the restructuring of public firms.
We are determined to persevere on that path. Nonetheless, the economic and financial situation remains fragile, and the measures undertaken still have to be consolidated.
Ladies and gentlemen, today the Union of Comoros is at a crossroads. On the one hand, it must pursue the consolidation of the different forms of progress made in the process of national reconciliation, and it must also face up to the numerous challenges of development, in particular to take new economic growth and put it on a firmer basis and win the battle against poverty.
My country has more than ever need of all the assistance of its development partners so as not to fall back into the situation of virtual standstill that led us to the brink of implosion. It is in that fragile context that macroeconomic projections for 2013 can be seen to be more favorable, with a growth rate for the real GDP of 3.5 percent thanks to investments in the construction sector, thanks to pickup in foreign direct investment, particularly in the services sector.
We will earmark resources coming from debt reduction to the HIV [unclear] programs, and we will do this in priority social fields along the lines of the poverty reduction strategy already defined in the Comoros specific document called the CRP [phonetic].
Finally, we will go on emphasizing prudent public indebtedness, giving emphasis to grants or highly concessional loans so as to finance essential projects for the socioeconomic development of our country.
Ladies and gentlemen, I cannot conclude without mentioning the challenges which our Region, Sub-Saharan Africa, must confront. These challenges must be overcome. There are many of them; I cannot list them all. I would simply like to remind you of a few salient features of the situation, be it the challenge of recurrent conflicts which have devastating consequences for social, economic, and other forms of development of our countries.
We are also dealing with the constant specter of drought which brings about food shortages and social unrest, which can overturn cohesion and peace.
A properly-adapted response to these challenges must be brought to bear on the situation to bring about food security in our country. Finally, we are also dealing with the challenge and the need to invest in the priority sector represented by infrastructure, education and health so as to improve the productivity and competitiveness of our economy.
These are the challenges that must be met. It is our duty to meet these challenges and master them at present but also in generations to come. I should like to conclude by saying that so as to confront these immense challenges, the support of the international community remains and will remain of very basic importance.
MR. DIENG: Thank you. Minister Alamine Ousmane Mey.
MR. MEY [INTERPRETED FROM FRENCH]: Good morning, ladies and gentlemen.
I am Minister of Finance of Cameroon, and I should like to tell you about the situation that we have in our different regional groupings to give you an idea of the performance that we have in our part of the world given the worldwide situation of crisis which continues with different uncertainties being brought to bear, what will allow us to find the way back to shared sustainable growth that will also be green growth. Obviously, the 15 countries which make up the CFA franc area have followed different growth paths, but today we can say that after Cote d'Ivoire arrived at completion point, we will find those countries in macroeconomic situations which are basically similar, environmentally speaking.
This brings up the fact that in spite of the fact that the economic crisis persists, we have in the last months had a 6 percent growth rate. Between 2011 and 2012, we went from about one percent to 6 percent, and in this [unclear], we have gone from 4.7 to over 6 percent in 2012. This is strongly in contrast to the situation that we find in developed countries and advanced economies, simply because the resiliency of our economies has allowed us through the diversification of our trade relations to get through this period of turbulence. But we still have to confront crucial structural problems in the area of employment, in the sense of the fight against unemployment and also under-employment.
Growth can only be sustainable if it includes young people who are trained through employment and if growth which is generated through a high growth rate is shared by the population. This is a very basic element of stability, and we are lucky enough to be able to benefit from that in our different countries, in our different economic groupings, from economic resources which allow us to have sustainable growth but which needs to be improved through the use of natural economic resources in countries which are more and more natural resource-providing countries. Why is that? Because the value added created by processing natural resources is much more to be found in developed countries than in our own countries, and that is why it is important that through advanced industrialization, through second-generation agriculture, through the constitution of a much more developed tertiary or service sector, that this value added be retained locally and be able to generate much more substantial amounts of employment.
We also have in our idea of linking economic production areas with road networks and also opening up to the rest of the world via the creation of ports worthy of that name which will allow us not simply to have low-cost imports but also low-cost exports. In our subregion through economic and national economic programs with strategic documents for growth and employment, we have measures which allow us to develop infrastructure in the energy area, which is a fundamental area which is necessary to move industry forward in our different countries.
Industry will allow us to solve two basic problems--employment and wealth creation. To get where we are going, we have these two basic pillars--the public sector, which obviously has the role to create a favorable environment by improving the business climate, and the private sector, which creates wealth via firms which create jobs and income.
Those are the basic ideas of the Cameroon Business Forum, which will allow both the private and the public sectors to meet with one another and to share the problems and difficulties which prevent the national economy from developing in a satisfactory fashion. The private sector can only develop if the financial sector has sufficiently elaborated in advance so as to allow long-term resources to be available but also to facilitate the economic transactions which are important for economies to make progress.
Our economies in our sub-region through a monetary and economic union participate in this process via the central bank, which is ahead of institutions in some other countries in terms of monetary policy and regulation to allow us, as members of that community, to have one joint policy and above all, to implement joint measures in our sub-region which will allow us to have stronger physical integration and also, of course, to benefit from progress being made in other countries in the same community. That has allowed us to face up to different problems which stem from the financial crisis, which became an economic crisis. And today I think we need to say clearly that the growth rates which are shown by our countries are sufficiently attractive to allow us to say today that sub-regional integration is a strong alternative in terms of facing up to the different problems that we see around us and to allow us to turn around the situation in terms of growth and economic progress.
All of this is made possible with the support of the World Bank and the IMF. Even if we are not the subject of a program, we have training, capacity building, and technical assistance. All of these are important challenges, but we have also gotten the firm conviction that Africa overall makes up the world's growth pole for the future, for one simple reason--natural wealth, the increase of the population, the middle class, purchasing power--all of these elements, which means there will be pillars of world economic growth in tomorrow's world.
Today we see that growth slowing down in Europe as serious problems prevail with sovereign debt, but we are also taking account of the development and emergence of the BRICS countries which allow us to have diversification of our trade and to rebalance a situation where growth in advanced countries, in Europe and the United States, has slowed down.
All of these factors mean that we think Africa today is the continent which will be best able to catch up with time lost in previous years in terms of economic growth.
In terms of its outlook, Africa has much more to offer investors, be they from Europe, Asia or Africa, so as to build the development of our continent and participate in the revitalization of world growth, which should allow populations in Europe, in Africa, in Asia and the Americas to have the best possible standard of living and to reduce poverty to the greatest extent possible, which is the priority of our head-of-state, President Paul Biaho [phonetic], who has made the fight against poverty his main national cause, and we also wish to participate in the construction of our subregion and of the African continent, obviously taking account--
[IN ENGLISH]: --that it is a big market for our country, and we do think that a relationship between Nigeria and Cameroon, which is a very good one--I have been told that yesterday or two days before, seven French people were released, and this is good news for our entire community--and we do believe that strengthening our cooperation will help us for the future to put, really, a very good framework for the development of our countries and to take advantage of these opportunities. This is what I would like to tell you. I know that it is not enough to tell you within five or ten minutes, but I am pretty sure that your questions will help us enlarge some points which have probably been forgotten.
MR. DIENG: Thank you. This is a good transition for Minister Ngozi.
[Applause.]
MS. OKONJO-IWEALA: Well, thank you very much. I won't say too much, because my colleagues have already put a lot of key points on the table, but I do want to make some points.
I think Africa is in a different place now. Just now at the IMFC, it was shown that low-income countries are the leading edge of growth, and Africa is leading among these low-income countries. We are growing at 5-plus percent. We have stabilized our macro. GDP growth is good. Inflation is in single digits. Reserves are at almost five months of import coverage and steady. We have now provided a platform within which we can look at the other challenges that we face within the continent. FDI is improving. The private sector has more interest.
Of course, we know there are challenges, but the point I am trying to make is that for the first time, we are able to contribute to global growth; we have a platform upon which we can now tackle some of the other challenges that are facing us. Let me just say a word about Nigeria being the second-largest economy. Within that context, we have just moved to low-middle-income status at about $1,500 per capita. Our macro outlook, our macro stability, is firm. We are projected to grow at about 6.5 percent in 2013 and beyond. We have inflation down to single digits for the first time in many months. Reserves are at almost $50 billion, which is something we think is strong to buffer our economy.
And I think, again, like the rest of Africa, we have provided a platform upon which we can grow. We need to look at this very carefully, because it is easy to forget the importance of macro stability and the fact that without it, you cannot really have the luxury of being able to focus on the other problems and challenges which face our country.
So I just wanted to buttress what has been said and put Africa at a different place where we are now looking and focused on trying to attract private sector investment and activity, both domestic and foreign, in order to confront some of the important challenges that we face.
Having said that, we know that the world is uncertain. With growth recovering in the U.S., with the euro zone crisis, with some emerging markets, the large ones, slowing down in terms of their own growth, Africa faces vulnerabilities because of the impact on the demand for our products and the impact on our trade. We face vulnerabilities from other sources which include the challenge of youth unemployment in many of our countries and the challenge of infrastructure development.
These are the things that I think we need to focus on as a continent to try to resolve--inclusive growth, growth that creates jobs so that the high GDP growth is seen by our populations as translating into meaningful improvements in livelihoods for them. So that is a very important factor.
We face the challenge of trying to integrate regional integration; it will be very important. And I hasten to say that this is, by our policy, our Presidents and Prime Ministers, regarded as extremely crucial to further sustainable growth for the Region. Already in the ECOWAS Region, we are now looking at t hose possible infrastructure investments that can help us hasten this integration, such as a highway from Lagos to Dakka, for instance, and how we can put this kind of infrastructure in place. This is why we think the Infrastructure Facility of the African Development Bank will be crucial for everyone to support and why the international institutions also need to develop instruments that better support regional integration in our projects.
So I think that all-in-all, we are in a good place, and we need to insist that we also ask our partners in other parts of the world to work harder and faster so that the global uncertainty that we confront now in the euro zone improves at an even better rate than what we see now, that Japan rebounds, and that China continues to grow at a strong pace, because all this is really important for the continued stability of the world and the continued positive impact on African growth and development.
MR. DIENG: Thank you very much. Minister Ngai.
MR. NGAI: Thank you, Moderator. My colleagues before me, the speakers before me, have already talked elaborately on the global and Africa-wide scene. As a "new baby," I will confine my remarks mostly to the local level in South Sudan. But of course, the global constraints and the European crisis have affected South Sudan just as much as other parts of Africa, and indeed, South Sudan has faced particularly unique challenges over the past year.
South Sudan gained independence, as you know, less than 20 months ago after decades of struggle and neglect. Development indicators as of now are still very, very low. Infrastructure is virtually nonexistent, and institutions have to be built from scratch. Very few countries face challenge of similar magnitude.
On top of that, South Sudan recently had to deal with severe shocks. We stood at the brink of conflict, armed conflict. We suffered severe food shortages and saw the arrival of over 200,000 of our countrymen from Sudan.
Our greatest challenge, however, was the loss of 98 percent of government revenues after problems in the production and flow of oil in [unclear], actually beginning from December of 2011.As a result of that, many people did not expect the young Nation of South Sudan to survive even for one year. However, with resolve, discipline and prudence, we did succeed. We pursued careful fiscal and monetary policies that stabilized the macro economy. We protected core government functions, and we actually catalyzed reforms as a result of those difficulties.
We cut monthly expenditures by over 50 percent compared to pre-[unclear] levels. We managed to increase non-oil revenues by 226 percent over the past year. We tightened fiscal controls and improved systems. We were also able to stabilize the exchange rate and contain inflation at fairly reasonable levels.
Now, moving forward, with the prospect of resuming oil revenues as we had agreed with Sudan, we will pursue an accelerated fiscal and economic strategy to ensure that our limited resources, including that of oil and whatever we get from aid, will be used in the most effective, most responsible and accountable manner in order to secure South Sudan's economic independence.
In the short run, we will strengthen the macroeconomic framework with support from the International Monetary Fund, and I will state here that we are working hard on that. As a sign of the growing confidence in public financial management that we have done over the years, over the past year, donors will for the first time provide budget support of around US$250 million next year, next fiscal year, which begins on July 1, to South Sudan.
In the medium term, we will push ahead with further reforms in public financial management. We will also push ahead with reforms in financial management, natural resources, in the security sector, as well as in governance and creating a conducive business environment.
As a cornerstone of our reform program, we are committed to increase funding for social services so we can improve the well-being of our people.
As a matter of priority, we will facilitate investment in agriculture, roads, petroleum, mining, as well as energy. This is the area that will unlock the vast economic potential of South Sudan.
Only five years ago, for example, we signed an OPIC agreement to support further U.S. investments in South Sudan. We will be doing this over the next few months and years with other key partners around the world.We are therefore pursuing a renewed stewardship with the international community in the spirit of a "New Deal" for engagement in fragile states, and we are a member of the G-7-Plus Group. We have indeed proposed a "New Deal Compact" with our international partners based on the commitments toward greater reform and increased aid effectiveness.
In sum total, therefore, South Sudan has gone through a tremendously challenging year and turned a severe fiscal crisis into an opportunity for change and for partnership. The crisis forced us to rethink, to re-prioritize, and to reform. As a result, we are now, we believe, in much better shape and ready to help boost African growth as part of our participation in this community.
MR. DIENG: Thank you very much. Now we will open it to questions from the floor. Please identify yourself and the organization you work for.
QUESTIONNER [INTERPRETED FROM FRENCH]: I am addressing my question to His Excellency Alamine, but other Ministers may also reply. I have two major concerns. Ministers, when speaking, you have referred to the recommendations of the 6th Conference of Finance Ministers just held in Abidjan on industrialization and the emerging processes in Africa. But I needed more at Abidjan, because you have said that Africa, with everything that we have seen by way of economic results, has to transform its raw materials to find the value added. What do you have in mind to prevent the west from continuing to do what it has always done, to take the minerals, for example, raw materials in Africa and to give them value added outside the continent? Even the Africa Union does not have sufficient means, so what do you have in mind?
My second concern is that by looking at the structure of the budgets of African countries, one has the impression that sustainable growth, which you have referred to, is not respected because most of the budget goes to policies for the operation of institutions. It seems to me that governments do not have much flexibility to create jobs. There are a billion individuals in Africa, most of them young people. We have 800 million young people looking for jobs in Africa. So what do you have in mind to do about this problem, because in the past, we have always heard the same thing, but we do not see real results and solutions.
QUESTIONNER: Good morning. I was wondering--we have heard from all of you how your growth rates are the envy of advanced economies, but I was also wondering how solid and how sustainable this growth is in Africa, whether it is just something that is coming from a short boom or something much more lasting.
Number two, as we know, these meetings are focused on concerns about monetary easing and advanced economies, and there is now talk of how these countries should exit, which means increased interest rates. Will that affect you at all? There is a lot of concern that some of these flows that have been rushing into Africa and other fast-growing economies can actually flow out. I was wondering what your concerns are with that monetary policy being reversed.
MR. DIENG: Thank you. I think we had four questions. Minister Mey can start with the questions on industrialization and inclusive growth, and Minister Ngozi can take the two other questions.
MR. MEY [INTERPRETED FROM FRENCH]: First of all, I would like to thank the journalist for his question. This is a question which was discussed at the meeting of Finance Ministers in Dakar, and with our multilateral partners, the World Bank among them, we discussed a sustainable solution. What can we do to find value added in our materials? An industrial unit in general requires two main things. It requires infrastructure, and it requires energy. And our main countries, the main countries which want to attract this investment, are at present undertaking efforts to build infrastructure and to make energy available.
In the case of DRC, you know that they are building Inga III to try to enhance energy supplies, to support infrastructure, and to be able to build industry to manufacture raw materials.
Also in the case of the Comoros, we have Lumpanga; we are building ports to improve our energy supplies to support industrialization. You mentioned this as a shield, but we are also improving the business climate as part of it, so those who want to come and invest in our countries will benefit from an environment which supports local financing, which facilitates addressing conflicts when they arise, and in that manner, we will be able to build the industries in question.
Now I go to your second concern, jobs for youth. To have jobs, you need companies, businesses, and it is by improving the business climate that we will be able to attract foreign investors. It is by improving the business climate that we can create jobs, jobs which can then be stable and sustainable.
The emphasis placed on agriculture is also meant to have part of our young population to move toward projects which will provide stability. And what is being required by way of food resources is food produced locally, but in our case in Cameroon, we have Nigeria, which has a high demand, and if we can facilitate production and manufacture in Cameroon, we can support not only to Nigeria but to all of our neighboring countries so as to find markets for our resources.
The tertiary sector is also a sector in which African youth can have a major role. This is the case in India and other countries that have been able to build local capacities to allow the young to fulfill their potential.
This is what I can say in response to your concerns which are relevant and which do form the major concerns of African leaders and of leaders of Africa. At least in Cameroon, our President is aware, and that is why we speak about a shared awareness. This is not only a slogan. The population must be able to live the growth, and it is then that we will be able to say that the work has been done for the benefit of the population.
MS. OKONJO-IWEALA: Let me try to touch on the other two excellent questions.
How solid and sustainable is growth in Africa? If you look at the numbers over the past decade, Africa has managed to sustain growth of better than 4 percent and even better than 5 percent, and I think it is on the back of very strong and solid reforms and strong and solid economic policies. But that being said, there is absolutely no doubt that we have vulnerabilities and that the global economic environment matters hugely. We are vulnerable to food crisis. As you saw in 2008-2009, the growth rate did come down substantially to just about one to two percent, so that shows you that what happens externally matters to us.
We recovered growth rather quickly, rebounded, because we had a strong, solid framework.
But we are concerned, and that is why we are expressing that if we continue to see slow growth in the euro zone, and the crisis is not resolved, which provides a large market for many African countries, and that is coupled with a slowdown in emerging market countries--because I think the demand for our products was compensated--the drop in demand from the euro zone and other developed countries was compensated by demand from emerging market countries. If their growth slows, then we will be more vulnerable.
So it is also very important for us that a strong global economic recovery take place, because that matters. And I think that if Africa is to sustain its growth, that is very important.
The third element I want to talk about is that internally within the continent, we ourselves need to work harder to create our own internal markets. As my colleague said, if you look at it, a market of 800 million to one billion consumers is substantial, a third of which, according to African Development Bank estimates, is middle-class. So, if we also work on our own internal demand and reduce the barriers that prevent trade among us--which, as I say, our policymakers and our leaders are recognizing and focusing on more and more--if we do that, we should also be able to stimulate our own internal demand and reduce the vulnerabilities that we have, and that is really what we should be focusing on.
On the issue of monetary easing in advanced economies, I think this is very important, particularly for some of the emerging market countries in Africa. The pace at which this is done is important. The signaling which should be given ahead so we can prepare economies for what the consequences might be is important, because we don't want to precipitate a situation in which money suddenly flows out of the countries.
But also, I think that for us, we should be looking at our own instruments that we can apply should we have problems with volatility that arises out of some of the portfolio flows that might have come in. So we are looking at that, some of us who have significant portfolio flows, what we can put in place in order to reduce the impact of any such volatility.
But advanced signaling on policies and on the extent and pace of this easing will be very important for us.
MR. DIENG: Thank you. We'll take one more here.
QUESTIONNER: Thank you. Ngozi, you mentioned regional integration. I would like to get your views on inter-labor mobility. Is that going to be possible. And then your view--Nigeria was going to issue a diaspora bond. What is the status of your planning? What is the view on tapping into the diaspora not only for the bonds but for the transfer of technology, the skills, the knowledge?
MR. DIENG: Thank you. Here, in the first row.
QUESTIONNER [INTERPRETED FROM FRENCH]: My question is addressed to the Minister from Cameroon. I would like to know whether in the framework of the discussions of the regional group, you spoke about Central Africa, and were there any proposals to renew dialogue with international partners.
QUESTIONNER: A lot of commendations have come the way of Africa with Ivory Coast and Mozambique at 8 percent GDP, and Nigeria at 7 percent. And yet, as we grow, we appear to also be growing in the area of low poverty. What are the African nations doing to bridge this gap to ensure that the growth in our economy will rub off on the level of poverty, reduce the poverty level in Africa?
Secondly, we are talking about intra-African trade, and ECOWAS I am sure and other nations are doing a lot to improve on that infrastructure. And yet this continues to be an impediment, because if you want to export goods by sea, you have to go through London; before you can sell from Nigeria, you have to move through London before you can get to places like Togo and Cote d'Ivoire. This is a lot of cost.
I know there is a project on Sea-Link. To what extent are the African nations buying into this?
QUESTIONNER: My question is going to His Excellency Kosti Manibe. It is known that infrastructure is one of the most important tools for development in the country. What priority have you put in a plan of action to improve growth so it will attract investors to the country? The second question is on the insecurity problems. The movement of [unclear], especially in Jongola [phonetic] State, has become anti-development in that particular State. How far have you thought about [unclear] of ending that movement in order for development to take place in Jongola [phonetic] State and other States in South Sudan?
MR. DIENG: Thank you very much. We will allow our Ministers to take the questions. I think we can start with South Sudan, then move to the issue of trade and poverty, and then to Central African Republic.
MR. NGAI: Thank you. Infrastructure is definitely important and critical if we are going to get sustained economic development in South Sudan; there is no doubt about that.
We are planning to make major investments in the field of infrastructure. I said earlier on that over the last year, we were in some severe financial crisis, so we didn't move at all in that direction. But now, we have plans, for example, building the road from Nadpar [phonetic] to Juba, which will connect South Sudan to Uganda. The process of getting this road constructed is at an advanced stage. Feasibility has already been done. The road designs are done.
Earlier this year, in February, we held a meeting in Nairobi under the auspices--rather, called by the World Bank--to mobilize resources for it, and many possible investors were called. As of now, substantial resources have been mobilized for this road, and soon, it will be contracted out for construction.
We also have other roads in our plans--the major roads running North-South in two directions east of the Nile, and the second one west of the Nile, to link up to the furthest northern part of South Sudan in Awil [phonetic].
Additionally, we are planning to quickly have roads built to production areas, particularly agricultural production areas, so as to substitute the food that we used to import from outside with what we can produce locally.
Other types of infrastructure are also being worked on. In terms of power, the power generation systems, whether hydro or thermal generation--a mix of them in the beginning--as well as the transmission and distribution lines are being worked on.
I could not agree more with you that infrastructure is vital. As far as insecurity is concerned, it is true that there is some insecurity, particularly in Jongola [phonetic]. Insecurity in most countries is really not unusual. Many countries have elements of insecurity, but it doesn't mean all the places in the country are insecure. Even where we are now, over the last days that we have been here, we have heard of a number of explosions, the most recent being in Boston. Even in the most developed country in the world, there is some element of insecurity. We will deal with the insecurity in two ways. One is through negotiations. We have never and we will not close the door to negotiate and to find out what the grievance of Yaweo [phonetic] is and try to meet this in a reasonable fashion, if it is reasonable.
But also alongside, we will of course have to ensure that we try as much as possible to provide security, and where insecurity is caused by violent military actions, we have to be able to also respond to that as a way of protecting citizens. So, two ways--one is to give the olive branch and negotiate. The second is be ready also to counter force with force.
MS. OKONJO-IWEALA: . With regard to the issue of labor movements, as you know, our borders in Africa are sometimes quite artificial, and people have families on both sides of borders of given countries. Labor movements occur in substantial amounts, formally and informally, between our countries.
I happen to think that if we are to have stronger and more sustainable growth for the continent in the future, we should really think of more open borders in the sense of freer flow of goods, services and labor, and therefore allow skilled labor to move where it is needed on the continent, and on skilled labor to move to areas where it can also find productive employment.
Of course, this is an idealistic situation, but in any case, it is happening in many guises within the continent, and we should think of labor-enhancing policies within the continent and not sort of frictional moves against labor.
With regard to the diaspora bond, we are making progress. We are preparing the first one to deal with our billion-dollar euro bond that we have started work on and we expect to have road shows on this in June. Following that, once we are done with the euro bond, we will work on the diaspora bond, and I hope that by the end of the year, we will be able to conclude that particular transaction.
As you know, it is very intensive in terms of work because of what it entails with engaging, but we see it as a way of engaging a very active, very large and productive diaspora in Nigeria. And of course, you know that Nigerians are also very well-known for returning to lend their capacity to get the country to develop, so we have very strong ties to our diaspora all the time. Whenever the President travels, he always takes out time to draw on their knowledge and expertise and to hear their views on what is happening within the country.
On the issue of growth, I think, Cliff, the question you asked is absolutely correct. I think your colleague earlier on also asked the same question--what use is growth if it is not being felt in terms of reducing poverty?
This is what, as policymakers, we worry about, and I think there is no finance minister or any of my colleagues around this table who will not say that this is a critical issue. So, what do we need to do?
First, as we said, it is important that once you have established macro stability, you now go beyond, below that, to see how inclusive this growth is, how is it creating jobs, and what you can do to facilitate that. We have identified sectors within our countries where we think we should focus our efforts. Agriculture is a very strong comparative advantage across African countries, but it cannot be agriculture as usual.
In Nigeria, we have taken the step that we want to see agriculture as a business, not as a project. This is the quote from our Agriculture Minister: "I do not want agriculture as a business." So how can we help the small farmer who is the bedrock of our agriculture transform the way that he or she does business so we can look at it in a value chain from research to the farm, improved seeds, fertilizer and other inputs, all the way to transforming the product at the market.
That is what we are doing now, and we are looking at it in a way as to create jobs. Rice, for instance--we have said that within the next few years--Nigeria is the second-largest importer of rice in the world--within the next few years, we are marching toward being able to reach self-sufficiency in rice. And in doing that, we are expecting to create 3.5 million jobs in agriculture by 2015.
So we have given ourselves targets. We have been very specific in identifying areas within agriculture.
We are also looking at housing. Housing is a nontradeable, but it is a very strong creator of jobs, and in many of our countries, this is not seen as an instrument. Yet, as you hear repeatedly in the U.S. housing starts are monitored almost religiously. Why is that? It is because it is a sector that creates jobs within the economy while at the same time fulfilling a social function of giving people a social contract with their country.
So we are looking at that. We are looking at that actively to create a mortgage refinance institution in Nigeria and to use this sector to create jobs.
I could go on and on, but within our countries, we can identify those sectors, and it is imperative to do it. We are doing it now, because in the next few years, we need to create millions of jobs for our young people.
That is how we will introduce inclusive growth in very specific terms and avoid widening inequality within the continent. We do not want growth that leads to more inequality. We want to focus on improving the inclusion of those at the bottom end of the ladder.
On Sea-Link and regional connectivity, I think we have already said a lot on that. Just to say that this is of strong interest to us on both the subcontinental level--you know we have the Nigeria-Cameroon Road that was just done. We are looking within--exactly--within the subregions. We are doing this Sea-Link project that you talked about so we can trade along the West African coast, and Nigeria is taking the lead with an Ex-Im Bank to work on this, and we hope the others will come on board.
There are several critical projects. Financing is not easy to come by. As you know, the continent will need $93 billion or so, upward of $100 billion a year, and even after you take account of all sources, we still need $50 billion to be able to meet our needs. So we have to be very selective in terms of the most critical projects, and this is the way we are going to be able to unlock the infrastructure bottlenecks.
It will take time. This is not something we can do overnight. But we have to be steady on it.
MR. MEY: Before touching on Central African Republic, I would like to add on what Ngozi has said two things. Diaspora for us an asset. Wherever diaspora is, I think all African countries know the importance of this diaspora, and they take advantage of this diaspora but in a different sense.
A second point on integration, regional integration. As she said also, infrastructure needs a lot of money, long-term resources, and this takes some time to put in place. But we have started. It is a reality in the field. You can talk about the Transit Facilitation Program from the World Bank in Cameroon, which is linking Chad, Cameroon, and Central African Republic. We have recently signed a Loan Agreement with the African Development Bank to link Nigeria with Cameroon, opening up markets and taking advantage of production areas where you have goods, where you can really develop agriculture and send these products in the subregion.
This is where the question of sustainability of our growth is coming back. We want to really create a substantial local, regional market that will compensate for what was the problem a few years back, when some of our traditional partners went through difficult periods.
So this is a reality which is taking place. This is a reality that will need a lot of financial resources, and this is where a debt limit funding source is on the table in terms of discussion to see what African countries can do, where they can source resources, funding, to really implement their projects which are important for their integration and opening up markets for their development.
This is what I wanted to add on what Minister Ngozi said. And at the end of the day, it is really all about a reducing poverty. If growth is there, it doesn't make sense if it does not contribute to reducing poverty at the end of the day. This is a commitment of all the different governements, different countries, because our populations need this growth, and they need to really be a part of this growth in terms of job creation and in terms of purchasing power development.
[INTERPRETED FROM FRENCH]: On the question concerning Central African Republic, as a member country of CEMAC, you will understand that whatever circumstances a country is going through, we will show solidarity with that country in terms of belonging to an economic and monetary community in Central Africa and also in terms of the concern to have countries go on respecting governance criteria.
That is why, following what happened in the Central African Republic, heads of state met in Ndjamena to decide on a way forward that could allow Central African Republic to come back into the concert of nations, and that is what happened with the creation of a National Council that appointed a President, which allows the government presently in place now to be recognized, and certainly, in coming days or weeks, that country will be able to come back into the concert of nations with bilateral and multilateral relations which are extremely important for economic and social development there.
Its budget is presently largely made up of forms of budget support, and we cannot accept that that situation go on with the brunt of that suffering being borne by the local population.
Let me just reiterate the commitment of heads of state within and without the subregion and the concern that is shared by many partners of Central African Republic who all wish to see a return to stability and pace, because without stability and peace, we cannot talk about development and growth, nor yet of improvement of the standard of living.
MR. DIENG: Thank you very much. I will take two more questions,
QUESTIONNER: I would like to ask the Ministers--we have seen that the growth rate in Africa is consolidated and now sustainable, and it seems it is going to be that for a while.
We have talked about the importance of cross-border growth, and my question is on cross-regional--North, West, now South, East areas. One of the problems I have seen in Africa is the lack of information on African countries in the Western players--who are the best players, who has done the best practices, project financing by banks, JP Morgan and Standard Chartered. They all want to come in. They claim they lack information on the local market. But many of these deals, like in West Africa, I gather you would like to diversify your investment Funds; South Africa should be in North Africa and West Africa. How do you see coming together--Nigeria is a large investor in the African Development Bank. So you already have all these investments and investment flows there, and of course, now, Western companies, if they are not in Africa, the question is why aren't you in Africa. So this is a very good moment, but on the private sector, there is a lot of inefficiency from the Western companies coming in because of lack of information. Do you see any solution for that in the coming years or now?
QUESTIONNER: My question refers to China. As we see, there is more investment and financial aid from China to Africa. How do you see this trend, and do you think it will affect the IMF or the World Bank's role in Africa? Secondly, we have talked a lot at this spring summit about the BRICS bank. Have you discussed it in your countries? We have seen in the G24 or the World Bank's statement that they welcome the BRICS development bank, so how do you see it?
MR. DIENG: Thank you very much. I will give the opportunity to Minister Soilihi from Comoros to respond maybe on Africa and China, and then Minister Ngozi can probably close.
MR. SOILIHI [INTERPRETED FROM FRENCH]: I wanted especially to add to what my colleagues have already said on one point in particular concerning financial flows. The question that was asked was whether you are not afraid to see these flows happening given the crisis that main donor countries are undergoing.
I think that was very well-answered by my colleagues, but there was one aspect that I wanted to add here--the fact that we have to fight so those flows don't happen in our countries' disfavor.
We in Africa have to fight in international bodies, particularly within the IMF. As you know, a battle is underway concerning the status of members of the IMF on the definition of indebtedness limits. Because we are submitted practically to sanctions, we cannot indebt ourselves with the needs for financing that we have, which are too great, and the funding that is made available by some institutions among our traditional partners is not sufficient, so sometimes, we run up against situations that are dramatic in nature and scope.
As one participant said earlier, we have talked about the BRICS; emerging countries that are ready to help some countries, like China or India, but as soon as we find ourselves getting loans from Ex-Im Bank China or Ex-Im Bank India, we have problems with concessionality conditions. We consider these conditions to be concessional, but the IMF does not. That is a big problem, and that is a source of funding that is available to us, but sometimes, financial institutions impose certain rules on us that play against us, and that is a fight we have to fight within the IMF so we can have the possibility of having indebtedness limits that do not run against our development and our possibility to invest.
That is what I wanted to add to what my colleagues have already said.
There is also a little something concerning young people and employment. Some countries--we haven't mentioned it here, but it is something that I am familiar with--my country, like others--we talked about the business climate, but when we talk about that, there is something new today--microfinance.
Why is that interesting? Because young people don't have the possibility to get loans from banks in the usual way, so microfinance, which is greatly developed in many countries, has allowed young fishers or farmers who are just beginning, who don't have guarantees in terms of land or real estate, to go and see microfinance people. It is a process which is developing greatly at present. I am familiar with this in my country. Microfinance now has more money than traditional banks do. Those were the two things that I wanted to say on questions that my colleagues had already answered and where I wanted to take the floor myself.
MR. DIENG: Minister Ngozi, if you could close because we are very short of time now.
MS. OKONJO-IWEALA: Okay, I'll try.
There was a gentleman who asked a question about information. It is a very important question. Obviously, there is a gap, and it is a gap that we need to fill as African countries. As we get increasing interest from outside, we need indeed to put out information about ourselves and what is available and what are the areas of interest for investment, so that players who want to come in, investors, can have easy access. This is something that we need to discuss among ourselves even as Ministers of Finance to see what can be done. So it is a very good point.
The same with our statistics. We need very strong effort on all of our statistics so that people can also have credible information with which to work. So we will take up this issue and see what we can do in order to improve, maybe collectively rather than country-by-country, this information.
On the issue of trade with China and whether this has an impact on our relationship with the Bank and the Fund, I don't think so, in the sense that we just talked--every, single one of us--about the need for incremental resources to be able to prosecute our development.
So I think the Bank, the Fund, the Chinese--all are welcome--investors from the West and from the East. We should be open.
The bottom line is that in getting into these agreements, we must have the expertise across the table which sometimes is lacking to negotiate the best agreements. Whether it is China, the U.S., the UK or Japan, it does not matter. We must be open to all who want to invest in us and to negotiate appropriate agreements that are beneficial to our people. That is what I would say. I don't think we should worry unduly. We do want China to continue to invest within the continent as opposed to loans and to invest also in adding value to our products so we can create jobs. There is a very good example of the shoe factory in Ethiopia which is playing to Ethiopia's strong comparative advantage and creating many jobs and lovely shoes in the process.
So those kinds of investments, we would very much value so we can keep jobs on the continent. On the issues of BRICS bank--I will just end with that--we support this. I don't think there is any colleague around the table who would not.
We just talked about additional sources of finance, and obviously, if the BRICS put this together--I think primarily for them to help each other, but if they give access to other developing countries--of course, this would be an additional source of finance that we would welcome.
MR. DIENG: Thank you, Minister Ngozi, and thank you all for attending this press conference.
| Public Affairs | Media Relations | |||
|---|---|---|---|---|
| E-mail: | publicaffairs@imf.org | E-mail: | media@imf.org | |
| Fax: | 202-623-6220 | Phone: | 202-623-7100 | |
