Opening Remarks by Angel Gurría, OECD Secretary-General at the 8th International Forum on African Perspectives organised by OECD/African Development Bank
Paris, 27 June 2008
Ministers, President Kaberuka, Ambassadors, ladies and gentlemen,
It is my great pleasure to welcome you to the Eighth International Forum on African Perspectives. I am especially glad to welcome Dr. Kaberuka, President of the African Development Bank, and co-host of this event.
This is my third appearance at this Forum since I became Secretary General of the OECD. The event has become hugely popular - and I see it as a sign that the interest for measuring the pulse of African economies is greater than ever!
One of the OECD’s priorities is to build broader co-operation with non-member countries. Africa is a good example. Our work on Africa is growing, and covers issues like investment and financial markets, taxation, governance, education and the environment, trade and agriculture. We have been increasing both our in-house capacity and reached out to work closely with the African Development Bank, NEPAD, the African Union, the UN Economic Commission for Africa, several national think tanks and other institutions, to share our experiences and promote governance and effective economic policy.
It is in this spirit of deepening collaboration that we are here today.
II. ECONOMIC OUTLOOK, INVESTMENT
Earlier this month, under the able chairmanship of the French Finance Minister, Christine Lagarde, the OECD Ministerial Meeting discussed the major challenges facing the world today. Ministers instructed the OECD to continue to put the highest priority on the economics of climate change, tackling pressure on scarce resources, inequality and global poverty. Those are the issues we were told to follow up. In this regard, it is a source of particular concern that progress towards the Millennium Development Goals (MDGs) in Africa is slower than needed to achieve them by 2015.
And yet, the picture is more complex.
In many respects, this is a time of opportunities in Africa, and for, Africa. On average, the economies of the continent grew by an estimated 5.7% in 2007. The outlook for much of the continent remains favourable, with overall growth expectations at 5.9% for 2008 and 2009, although some countries continue to face serious humanitarian, political and economic problems, exacerbated by the ongoing food crisis.
But the overall business climate has hugely improved. The commodity price boom, together with widespread debt relief, has fuelled strong economic growth. The rising incomes of burgeoning middle classes have stimulated consumption. That means growth is coming from within. Strong domestic savings potential and the significant overseas wealth of diasporas are waiting to be tapped. Finally, major new investors from emerging economies – China, India, Malaysia, and South Korea – are engaging with Africa.
It is difficult to overstate the importance of successful and profitable investment in the region. But this should only be the beginning. Mobilising private investment, both domestic and foreign, will be critical to sustaining the growth rates Africa needs to generate jobs in both urban and rural sectors, to work towards the Millennium Development Goals, and to build the inclusive society which is a requirement for political stability.
South Africa, as the continent’s leading economy, has enormous potential as a financial and developmental ‘hub’ for the region. We hope to work actively with South-Africa - as one of our Enhanced Engagement partners - in order to develop further collaboration.
Reducing inequalities is another challenge we need to focus on to achieve sustained growth regionally and nationally. In this connection, it is important to note that the impact of investment and growth on poverty reduction varies considerably. In Mozambique, for example, although growth has been strong over recent years, poverty has remained stubbornly high, because investment has been driven by a small number of huge extractive projects.
Clearly investment is only part of the story, and here infrastructure has a very important role to play - in connecting poor people to growth processes. Simply put, this happens by increasing access to the factor and product markets which poor people need for their livelihoods. Last year, in this Forum, we talked about access to Water and Sanitation; the year before it was Transport Infrastructure; this year, we are turning to the “Human Infrastructure”: skills, how people access the job market; how they seize or how they create economic opportunities for themselves.
III. SKILLS DEVELOPMENT
The 2008 African Economic Outlook notes that some 133 million young people are illiterate. That’s half of Africa’s young people. Many of them actually have few or no skills. In sub-Saharan Africa, at least 20 % are unemployed and a majority suffer from under employment. And yet, most African economies face a shortage of skills. For example, last year South Africa needed 300.000 artisans, when only 7.000 graduated from training schools.
African economies need higher technical skills to enhance competitiveness, but also to foster social inclusion, produce better employment and reduce poverty. Here lies a major challenge. According to the 2008 African Economic Outlook’s review of 35 countries, technical and vocational systems on the continent are too often poorly funded and poorly managed: they are short of qualified staff, have obsolete equipment, ill-adapted programmes and weak links with the job market.
How do we, at the OECD, help governments meet this challenge? We don’t tell them what to do; instead we tell them what works or what has worked in other parts. In our joint report with the African Development Bank, you will find many examples of African countries that are making progress in reforming their training systems. The most successful share common traits.
their training strategies are fully integrated into poverty-reduction plans and they are focused on sectors with promising employment prospects, like in South Africa;
they have partnerships with enterprises, trade unions, and NGOs, and provide fiscal incentives for enterprises to promote on the job training, as Morocco does;
when reforming technical and vocational training systems they include and give value to the traditional apprenticeships found in the informal sector, as has been the case with master craftspeople in Mali and in Senegal.
The African Development Bank itself has a number of innovative employment-oriented schemes that support and complement governmental training schemes.
IV. TO CONCLUDE
So that is our menu for today: how do we best invest in Africa’s businesses? And how do we best invest in Africa’s youth?
To tackle these questions, we are extremely fortunate that government representatives at the highest level have agreed to share their own perspectives in this informal setting: the Ministers of Finance of Egypt, Morocco and Nigeria are with us this morning; the Ministers of Education of Senegal and South Africa, and the Minister of Labour of Mali will be our guest speakers this afternoon.
Also, at a time when investment and business in this region is on the rise, firms working with Africa should play a prominent role in this international dialogue. I am thus very pleased that several senior representatives of major private investors in –and more importantly from— Africa have accepted our invitation.
I wish you a very stimulating exchange.
President Kaberuka, I now have great pleasure in leaving you the floor.
Once again, welcome to Paris.