Tunis, 26 January 2005 – African Development Bank (ADB) Group President Omar Kabbaj today told Ambassadors and representatives of the institution’s 77 member countries based in Tunis that 2004 had been a remarkable year for both the Bank and its regional member countries.
The President told the diplomats that macroeconomic indicators for the continent – growth in gross domestic product (GDP), inflation, fiscal balance, and the current accounts – are some of the best we have seen in over two decades. “Some 22 countries achieved GDP growth rates of above 5 percent and 17 others recorded growth rates of between 3 and 5 percent... only two countries witnessed negative growth rates,” he said.
The regional GDP growth rate reached an average 4.5 percent in 2004 – the highest recorded for the continent since 1996. Mr. Kabbaj pointed out that Africa’s leading reformers – countries such as Burkina Faso, Ghana, Mali, Mozambique, Tanzania, Uganda, Tunisia, and Morocco – continued to perform well while Central and East Africa witnessed the most robust growth performance, with sub-regional GDP growth rates of 8.7 and 6.5 percent, respectively. The strong economic growth in Central Africa was, he noted, driven by post-conflict dividends and higher oil prices while the performance in East Africa was boosted by the bumper harvest of 2004.
The Bank President referred to progress in the implementation of sound macroeconomic policies, and said that “significant strides in creating a better environment for private sector participation and for attracting foreign direct investment had been made, with many countries adopting policies to promote small and medium enterprises.”
Mr. Kabbaj stressed the fact that the continent continued to face some daunting challenges, including persistent conflict in some regions, the high incidence of poverty and the relentless surge of the HIV/AIDS pandemic.
He said support from the international community remained critical, especially with respect to official development assistance, debt reduction, and market access for Africa’s exports. He welcomed the proposal by the United Kingdom to launch a Marshall Plan for Africa and to place the continent’s development at the top of the G8 agenda.
Taking a retrospective look at the institution he leads, Mr. Kabbaj said that 2004 had been, in many respects, an exceptional year for the Bank:
* The Bank Group registered the highest level of lending, grants, and debt relief operations in its history.
* Its disbursement levels were also the highest ever;
* The net income of the Group was a record;
* The African Development Fund (ADF) [1] had the highest replenishment since its establishment in 1972;
* The Bank recruited the largest number of new staff in a single year; and
* The number of government officials who participated in the training programs offered by the Joint Africa Institute also reached record levels.
He informed the Ambassadors that the Bank’s lending, grant and debt relief activities reached US$ 4.4 billion, with US$ 2 billion going to the poorest countries in concessional loans and grants. The Bank, Mr. Kabbaj noted, had also mobilized additional resources for development which stood at US$ 3.1 billion.
The Bank Group’s operations in Africa’s middle-income countries, he told his audience, support key reform programs, and provide financing to strengthen private sectors, upgrade infrastructure, and generate employment opportunities. In the low-income countries, the focus is on poverty reduction and the promotion of sustainable economic growth, with priority given to agriculture and rural development, education and health.
Another major area of intervention for the Bank Group, the President said, is regional cooperation and integration, with some US$183 million in support of regional infrastructure, capacity building for regional economic communities, and the creation of an enabling regional environment for the private sector. In this regard, the Bank had established a NEPAD [2] Support Unit and a Regional Integration Unit, and drawn up a five-year NEPAD Infrastructure Short-Term Action Plan which outlines priority investment projects and programs for the period up to 2007.
In 2004, the Bank launched two major initiatives, Mr. Kabbaj said. The first, the Rural Water Supply and Sanitation Initiative seeks to accelerate and increase by 80 percent over the next decade access to sustainable water supply and sanitation for rural populations in Africa. The second, the Bank’s Post-Conflict Countries Facility (PCCF) will assist, on a case-by-case basis, countries coming out of conflict.
In closing, the President said he was pleased to report that the Bank Group continued to develop, refine, and implement financial policies designed to ensure that its financial assets and liabilities are deployed in an optimal manner. It has, as a result, continued to generate a healthy level of earnings, thereby further solidifying the financial base for its development assistance activities – a trend that has been sustained over the past decade.
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Fund operations under ADF-10 incorporate a number of significant new features.
- First, the level of grant resources has more than doubled from 21 percent under AFD-IX to about 44 percent, with 26 countries or two-thirds of the eligible countries now receiving assistance solely in the form of grants.
-Second, the special allocation for multinational projects has been increased from 10 to 15 percent of total ADF resources to allow the Fund to provide additional financing for such projects, particularly in the context of the NEPAD initiative;
-Third, the increased envelop of resources will allow our countries to allocate more resources to water supply and sanitation, in line with the Bank’s Rural Water Supply and Sanitation Initiative; and
-Fourth, as I noted earlier, an initial allocation UA100 million (approximately US$ 150. million) has been made to support the Bank’s Post-Conflict Country Facility, with a commitment to increase this amount if required