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Supporting Africa’s Growth and Poverty Reduction. All Africa Conference of Churches General Assembly World Council of Churches December 10, 2008 Susan Hume, Country Program Manager World Bank, Mozambique. Outline of Presentation. Africa is Growing!

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Supporting africa s growth and poverty reduction l.jpg

Supporting Africa’s Growth and Poverty Reduction

All Africa Conference of Churches General Assembly

World Council of Churches

December 10, 2008

Susan Hume, Country Program Manager

World Bank, Mozambique


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Outline of Presentation

  • Africa is Growing!

  • Despite Positive Signs, Africa is Not Growing Fast Enough

  • How the World Bank is Supporting Africa’s Development

  • The World Bank in Mozambique: Supporting an Emerging Success


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Africa Fast Facts

Number of countries:48

Total population: 800 million

Population growth per year: 2.4%

Life expectancy at birth: 50 yrs

Infant mortality per 1,000 births: 94

Female youth literacy: 64%

2006 GNI per capita: $ 952

Number of people with HIV/AIDS:22.5 million


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Other Factoids on Africa

  • Since mid-1990s oil-exporting countries have grown more than three times faster than non-oil exporting countries

  • The GDP of Sub-Saharan Africa was $744 billion, which was equivalent of 28% of China’s GDP, 69% of Brazil’s, 74% of Russia’s, and 80% of India’s

  • In 2000–2006 the per capita KWh power consumption of South Africa was 4,847; Ethiopia’s was 34.4

  • In Sierra Leone 2,000 women die for every 100,000 live births; in Mauritius 15 die per 100,000 live births (MDG 5).

  • Liberia has the lowest primary student-teacher ratio of 19; in Mozambique the ratio is 67

  • In 2003 in Mozambique, 58% of females in the age range of 15–24 had already given birth at least once

  • One African in five lives in countries severely disrupted by conflict


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I. Africa is Growing!


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Income and Poverty Reduction

  • 65% of Africa’s population lives in countries that would be categorized as high-growth (greater than 5% per year)

  • Poverty is being rolled back, albeit slowly: 45% in 1990; expected to be 35% by 2015

  • African policies and institutions have improved, particularly in macroeconomic management and trade policy


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Human Development Outcomes

They have improved as result of solid growth

  • Gross primary school enrollment rates in the region rose from 72% in 1991 to 96% in 2004

  • Health outcomes more varied, but are also improving and progress in malaria and HIV/AIDS

  • Conflicts have diminished across the continent


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For First Time in 20 Years, Africa’s Growth is High and Accelerating


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But Africa’s Progress on Poverty and Social Outcomes is Uneven


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Despite Positive Signs, Africa is Not Growing Fast Enough

  • Despite Positive Signs, Africa is Not Growing Fast Enough


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Africa Needs to Grow Faster to Substantially Reduce Poverty

  • To meet the first MDG of halving poverty by 2015, Africa will need to achieve an average annual growth of Africa to 7%

  • Growth Commission Study sought to better understand the policies and strategies that underlie rapid and sustained economic growth and poverty reduction

    • Audience: leaders of developing countries

    • 21 commissioners - led by Nobel laureate - consulted with leading academics, business leaders, policymakers, and NGOs

    • Report was commissioned by World Bank; released in May 2008

    • Preparation took over two years


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Growth Report: Key Findings

  • Since 1950, a diverse group of 13 economies has grown at an average rate of 7% per year or more for 25 years or longer

  • Report emphasized that there is no single growth model or doctrine, but identified common elements:

    • Committed, credible, and capable governments

    • Full exploitation of the world economy

    • Macroeconomic stability

    • High rates of saving and investment

    • Market allocation of resources


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Growth Report: Key Findings

Key lesson: No country has grown for 25 years or more without taking advantage of the global economy

  • They imported ideas, technology, and know-how from the rest of the world to increase their productive potential

  • They exploited global demand, which provided a deep, elastic market for their goods


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  • How the World Bank is Supporting Africa’s Development

III. How the World Bank Group is Supporting Africa’s Development


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The World Bank Group

  • IBRD – International Bank for Reconstruction and Development promotes sustainable development through loans, guarantees, risk management products, and analytical and advisory services. Lending to middle-income countries at market based rates.

  • IDA – International Development Association is the part of the World Bank that helps the world’s poorest countries. Provides interest-free credits over a a 35-40 year repayment period (10 yr grace).

  • IFC – International Finance Corporation provides loans, equity, structured finance and risk management products, and advisory services to the private sector.

  • MIGA – Multilateral Investment Guarantee Agency (established in 1988) provides political risk of currency transfer, expropriation, and war and civil disturbances.

  • ICSID – International Center for Settlement of Investment Disputes between states and nationals of other states.


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World Bank Strategy for Africa

The World Bank is well positioned to mobilize private and public development finance to help Africa achieve sustained and broad-based growth

  • World Bank’s Strategy for Africa is based on:

  • Accelerating shared growth

  • Building capable states

  • Sharpening the focus on results

  • Strengthening the development partnership


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1. Accelerating Shared Growth

  • Raise agricultural productivity

  • Diversify exports and encourage integrated regional cooperation

  • Improve quality of, and access to infrastructure:

    • Improve access to and reliability of clean energy

    • Expand and upgrade road networks and transit corridors

    • Increase access to safe water and sanitation

  • Build skills for global competitiveness

    • Improve elementary school enrollments - especially for girls

    • Also commit resources to secondary and tertiary education

  • Strengthen the private sector

    • Improve the business environment

    • Give all citizens channels for saving and credit

  • Strengthen national health systems and combat malaria and HIV/AIDS

  • Increase the economic empowerment of women

  • Ensure commodity profits are used to greatest effect; adopt Extractive Industries Transparency Initiative (EITI) and EITI ++ to promote good governance and transparency in resource-rich countries


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2. Building Capable States

  • Support improvements in governance; this is the basic requirement for faster development

    • State often fails to represent the interests of the poor; even in democracies education and health services fail to reach the poor. Yet politicians get elected and re-elected. 

    • Because of these “political market failures” that we need active citizens who will advocate for the poor, mobilize them, and ensure that politicians will be accountable to them. [conclusions of 2004 World Development Report, Making Services Work for Poor People, World Bank]

  • Help countries modernize their public administration to make government more responsive to the needs of all economic agents

    • Fight corruption, crime, and violence; strengthen the judiciary; improve public accountability and transparency


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3. Sharpening the Focus on Results

World Bank financed projects have…

  • Reached 15,000 beneficiaries in programs for micro, small, and medium enterprises in three countries and trained 4,000 managers

  • Provided 1.7 million people with access to safe water

  • Built systems to irrigate 15,524 hectares of land

  • Built 28,000 kms or roads

  • Prevented mother-to-child transmission of HIV for 1.5 million women

  • Reached 173 million people with HIV prevention messages

  • Trained 86,116 teachers

  • Built or rehabilitated 46,058 classrooms


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4. Strengthening Development Partnerships

  • Work closely with other bilateral and international agencies to collaborate and harmonize programs and improve aid effectiveness, consistent with the Paris Declaration and Accra Agenda for Action

  • Foster public-private partnerships to leverage resources and promote innovation and efficiency

  • Reach out to non-sovereign partners, such as religious organizations and international foundations

  • Help Africa to proactively seize trade and investment opportunities with emerging economies (China & India)


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The World Bank in Africa

Lending activities

  • Largest provider of development assistance to the continent

  • $5.7 billion in commitments in FY2008; 91 projects (compares to total WB lending of $20.5 billion and 259 projects)

    Non-lending activities

  • Hundreds of analytic and advisory services

  • Multilateral Debt Relief Initiative for 16 countries, with more countries in the pipeline to receive support


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The World Bank in Africa Lending in 2008 by Theme


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The World Bank in Africa

Regional projects:

  • Help close infrastructure gap

    • West Africa gas pipeline and the Eastern Africa Submarine Cable System both are public-private partnerships; demonstration on how regional approaches help relieve infrastructure bottlenecks

  • Tackle challenges that transcend borders

    • Multi-Country AIDS Project for Africa in 31 African countries, reaching 173 million people with prevention messages; has helped prevent mother-to-child transmission of HIV/AIDS among 1.5 million women


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The World Bank in Africa

Global advocate for:

  • Increase aid flows to Africa

  • Improve world market access for African goods

  • Promote global public goods like mitigating effects of climate change


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IV. The World Bank in Mozambique: Supporting an Emerging Success


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Impressive Gains

  • Mozambique has enjoyed high growth and poverty reduction record since 1992

  • Average real GDP growth rate soared from 0% (1981-92) to 7.8% (1993-2006)

  • Poverty headcount fell from 69% (1996) to 54% (2002)

  • Sources of growth:

    • Reconstruction following over a decade of civil war

    • Accumulation of capital

    • Improvement in labor productivity

    • Mega-projects (aluminum smelter, natural gas pipeline) had positive impact on Mozambique’s reputation


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Poised for Further Growth

  • Strategically located

  • Vast, diversified export potential

    • agribusiness, forestry, and fishing

    • mining

    • energy

    • tourism

    • light manufacturing

    • services


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The World Bank’s Commitment

  • Support During a Conflict Period 1984-1991

    • For ex and support for rehabilitation/ adjustment

  • Support for Post-Conflict Reconstruction 1991-1994

    • Laid out directions for portfolio evolution

    • Donors consultation and NGO input limited

  • WB-Mozambique Partnership 1995-1999

    • Portfolio expanded from 9 projects (1994) to 18 projects (1998)

  • World Bank Support 1999-2007

    • Poverty Reduction Strategy Credits; condition for debt reduction (HIPC)

    • Millennium Development Goals

    • Country Assistance Strategies more results based

  • IDA lending (no-interest loans): 66 since 1985; $3.6 billiondisbursed


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Partnership Strategy:Promoting Broad-Based Growth

Governance

  • Increased citizen voice and demand for accountability

    Access to key services

  • Efficiency and transparency of service delivery

    Growth

  • Rural development

  • Infrastructure development

  • Regional integration

  • Developing relevant skills for the labor market (higher education, science and technology)

    Cross-cutting

  • HIV/AIDS

  • Private sector development

  • Capacity building


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Lending Activities

  • 18 ongoing projects

    • 16 investment projects, 1 regional projects, 1 budget support

    • Net commitment of $ 998 million, of which 51% has been disbursed

    • Average age of project is 3.9 years

  • Project samples

    • $15 m to support provision of water supply systems outside of Maputo (with the US Millennium Challenge Corporation)

    • $15 m for higher education project

    • $35 m for health service delivery project in poorest provinces

    • $45 m for electricity interconnection between Mozambique and Malawi

    • $50 m to help building irrigation systems for farmers

    • $90 m for general budget support

  • 30 trust funds with commitment value of $290 million


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Non-Lending Activities

  • Technical assistance and studies, prepared in collaboration with the Government, development partners and other stakeholders

  • Studies during 2005-08:

    • Poverty, Social and Gender Assessment

    • Labor Law Reform

    • Education Fee Reform Impact Analysis

    • National Water Resource Strategy

    • Country Procurement Assessment Review

    • Investment Climate Assessment

    • Financial Sector Assessment

    • Medium-Term Expenditure Framework for Health

    • Public Expenditure Reviews for Agriculture and Water

  • World Bank Institute, a knowledge service of the Group,

    engages in training and distance-learning


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Collaboration with Partners

With bilateral and international donor agencies:

  • Principles of Paris Declaration are intensely pursued to improve aid effectiveness:

    • Harmonize and align requirements to minimize transaction costs

    • Ensure that aid matches the country’s development needs

    • Encourage countries to take ownership of their aid policies and coordination

      With NGOs and other stakeholders:

  • To tap unique grass-roots knowledge and community-based development approaches

  • To foster greater demand for voice and accountability


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IFC and MIGA in Mozambique

  • IFC current portfolio in Mozambique

    • $109 m

    • 8 projects in finance, agribusiness, primary metals production (Mozal), oil and gas, and general manufacturing, including four operations in the small- and medium-sized enterprise (SME)

  • MIGA Operations in Mozambique

    • $237 m in gross exposure

    • 7 guarantees in agribusiness, infrastructure, manufacturing, mining, oil and gas, services and tourism  


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Key Take-Away Messages

  • Africa needs to grow faster to substantially reduce poverty

  • The World Bank Group and its partners are deeply committed to provide the needed support

  • We believe this to be the most effective way of interpreting and responding to the challenges of human dignity (reflecting WCC’s own mission statement)


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The World Bank - Mozambique Avenue Kenneth Kaunda, 1224Tel. +258-1- 482-300 / Fax.: +258-1- 492-893www.worldbank.org/mozambique


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