POPC UNITED REPUBLIC OF TANZANIA PRESIDENT’S OFFICE, PLANNING COMMISSION REFLECTIONS ON POSSIBLE WAYS FORWARD FOR INTERNATIONAL PARTNERSHIPS AND INITIATIVES TO BETTER SUPPORT AFRICAN DEVELOPMENT OBJECTIVES AND STRATEGIES By Philip Mpango (Ph.D.), ExecutiveSecretary – President’s Office Planning Commission, Standing in for Hon. Bernard Membe (M.P.) Minister for ForeignAffairs and International Cooperation Roundtable Discussion Hyatt Regency, The KilimanjaroHotel 29 May, 2012 1
TECTONIC PLATES ARE SHIFTING POPC 2 • I presume most people in this room are familiar with a speech by Robert Zoellick, former President of the World Bank Group titled “Beyond Aid” delivered in the run-up to the World Bank/IMF Annual Meetings in September 2011. • In that extra-ordinary speech, Zoellick pointed out that, “Today, history’s warning lights are flashing again” as they did in 1944 when the architects of the Bretton Woods institutions convened to play and win the game of the impossible, namely to answer the question: Why economies of 1919 failed terribly in the 1920s and 1930s? and devise a new multilateral international economic order.
TECTONIC PLATES ARE SHIFTING POPC 3 • Today’s warning lights, include: • In the 1990s, developing countries accounted for a little more than 20% of global investment. Today they attract about 45%; • Over the past ten years, developing countries have grown nearly 4X faster than developed, and that trajectory is expected to continue; • In In the 1990s, developing countries imported 15% of their merchandise from other developing countries. Today, it’s 3X that amount. • Today, China is consuming over 50% of the world’s cement; almost 50% of the world’s iron ore, steel, and pigs; 1/3 of the world’s eggs. Today, China is the world’s biggest consumer of minerals such as copper, aluminum, and nickel. Today, net FDI inflows into China are around $180 billion, up from some $40 billion just ten years ago.
TECTONIC PLATES ARE SHIFTING POPC 4 Warning lights (cont.): • In 2008, South-South FDI accounted for 1/3 of the total FDI going to developing countries – and that share is growing: today, it’s likely nearer to 40%. • In the infrastructure sector alone, the UN has estimated that between 1996 and 2006, developing economies provided over 39% of foreign investment in Africa, almost 43% in Asia, and almost 16% in Latin America. • And developing countries are no longer just recipients of aid – they are also providers. In 2008, new emerging donors contributed between $12 and $15 billion in development aid – that’s equivalent to 10 to 15 percent of the amount provided by traditional, developed country donors – and that is likely a conservative estimate. • Clearly, tectonic plates have shifted and brought new opportunities to fast-track Africa’s development; and Africa is thirsty for devt!
DEVELOPED COUNTRIES WILL CONTINUE TO PLAY A VITAL ROLE POPC 5 However, as a matter of fact: • Americans, Europeans, Japanese, and other developed world countries play vital roles in innovation, investment, technology, security, and, yes, development. Moreover, their contributions still provide the underpinnings of the current international system. Note: GDP USA = $15 trillion, Europe = 17.5 trillion, China = $7 trillion, BRICS = $10 trillion). Moreover: • For millions of people around the world, devt Assistance remains important: Saving lives in the drought stricken Horn of Africa; It remains a valuable boost to growth; made real contributions to providing access to education and basic health care; supporting private sector growth, etc. Therefore, Africa should not ignore old friends.
DEVELOPED COUNTRIES WILL CONTINUE TO PLAY A VITAL ROLE POPC 6 The key lessons: • The key lesson is that developed and developing countries must all change old ways of doing things: (i) Developed countries should not abandon their multilateral commitments & humanitarian assistance. However, more importantly, they should refocus to investing more in Africa to unleash growth. They need to revisit their trading relationship with Africa.
DEVELOPED COUNTRIES WILL CONTINUE TO PLAY A VITAL ROLE POPC 7 (ii) W.r.t the new partners: Africa needs (a) the experience, open markets, and investments to create jobs & develop skills; (b) investment to up-lift infrastructure; (c) Support to develop new financial instruments to insure smallholder farmers against drought, and leverage new equity investments; and (c) Support to develop local institutional capacities; skills, innovation & scientific breakthroughs (e.g. to develop drought-resistant, and better yielding crops). Fortunately, Africa has a lot to offer in return. (iii) Developing countries on their part must come of age and responsibly begin to walk on their own but do so in partnership with both old and new partners in a mutually beneficial way. In so doing, it is critical to have good foresight; borrow sensibly; Use natural resources (renewable & non-renewable) wisely to avoid falling into a resource curse; and grow the economy in a manner that it is inclusive (beneficial to the majority of its citizens). I believe, Africa has space for everybody. It is already accommodating everybody. We only need to polish the evolving partnerships in the light of the caveats I have just sketched.
AFRICA’S CHALLENGES: TANZANIA CASE POPC 8 • Unacceptably high level of poverty (head count at 34%), more so in rural areas; • High (youth) unemployment (12%) • Adverse impacts of climate change; • Rapid population growth (3%) & urbanization without industrialization; • Clogged administrative machinery; and • Global shocks • Lack of a developmental mindset ---------------------------------------------------------------- • Large infrastructure gap (energy, transport); • Low productivity in agriculture; • Low level of industrialization & competitiveness; • Huge skills gaps across board. • Ltd Access to financial services ------------------------------------------------------------ These are the priority areas where TZ needs to partner with both old and newly found friends so as to transit to a middle income country by 2025.
AFRICA’S FORTUNES: TANZANIA CASE POPC 9 • TZ blessed with “everything to make it happy”: • 43 m people; 956,000sq.km (31st largest country); 44m ha suitable for agriculture; 35.5m ha of forests; 62,000sq.km. covered by water; Livestock- 19.2m cattle, 13.7m goats, 13.7m sheep; • Wide range of energy sources – hydro, natural gas, coal, uranium, solar, thermal, wind, biomass • Abundant minerals – gold, diamonds, tanzanite, phosphates, 15 TCF natural gas, ruby, nickel, tin, iron ore, soda ash, phosphates; • Unique geographical advantage with a long coastline & 6 landlocked neighbors; • Tourist paradise -game reserves/parks, Mt. Kilimanjaro, Zanzibar, etc. [Growth potentials] • Political stability, peace & harmony since independence;
POPC CONCLUDING REMARKS • Besides mutually beneficial partnerships, successful transformation of Africa requires visionary leadership; organized concerted effort; and the will, determination, confidence and discipline to shape its own destiny. ------------------------------------------------------------ Philip IsdorMpango (Ph.D.) Executive Secretary President’s Office, Planning Commission 29/05/2012 10
POPC THANK YOU. 11