The State of the Africa Region: Harnessing Natural Resources for a Sustainable Future
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The State of the Africa Region: Harnessing Natural Resources for a Sustainable Future
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A distinguished panel of African policy makers and World Bank’s Senior Management in the Africa region considered actions that governments can take to restore macroeconomic stability, promote growth, and reap higher rewards from their natural resources.
Global efforts to decarbonize economies are likely to create demand for 3 million tons of minerals and metals – many of which are found in Africa. Thus, the continent has an opportunity to harness natural resource wealth to accelerate energy access and a green transition, drive economic transformation and jobs, and generate more fiscal revenues. Speakers focused on this opportunity and the related challenges facing policy makers.
The event was moderated and streamed in partnership with CNBC Africa.
Good morning, everyone. My name is Esther Awoniyi, Business Anchor at CNBC Africa, and I will be your moderator and your host for today's event.
It is my pleasure to welcome you all to the State of the Africa Region. Now, this much anticipated event happens twice a year at the World Bank Group and International Monetary Fund Spring and Annual Meetings here in Washington, D.C. Our objective with our time today is to create a shared understanding of the challenges and opportunities in Africa today and in the future and, of course, to showcase regional opportunities to leverage the low-carbon transition that could help African countries to diversify their economies, create much needed jobs, and, of course, reduce poverty.
We’ll do first in a fireside chat with Mr. Andrew Dabalen here, Chief Economist for the Africa Region at the World Bank. Right after that, we will take the conversations further in a panel discussion. For participants not with us in the room today, you can join us, watch this event live, and participate using the hashtag #AfricaSOR. That is Africa, S-O-R. The World Bank welcomes your thoughts, and we have experts ready to answer your questions in English and French.
For those in the audience, there are translators on your seat so you can see them. For the channels, for English, that's channel one, channel two is French, and for Portuguese, it is channel seven. With that, I welcome you all. Thank you again, everyone, for being here today.
I would like us to get right into our conversation for today. I have Andrew Dabalen here, of course, Chief Economist for the Africa Region at the World Bank Group, he is going to be unpacking the Africa Pulse Report just to get an insight into the states of the African economy and, of course, provide key highlights from that report. Andrew, thank you so much. Good morning for being here.
I would like us to start with the numbers from the Pulse Report. What does Africa's Pulse tell us about the macroeconomic health of the region today? What are you seeing?
First of all, thank you, Esther. Let me join you in welcoming the participants, those who are online and those who are in this room. Turning to Pulse. Last October, we took the pulse of Africa's economies and we didn’t like what we saw. Fast forward six months later, here we are, and we still are facing a very difficult environment where the economic activity is sluggish. For the same kinds of reasons. Growth has declined from 3.6% in 2022 to 3.1%. If you factor in population growth, we are actually down to about 0.5%, which is not at all sufficient for a region that is, at the moment, really the epicenter of extreme global poverty. The same kinds of factors that were the basis for our diagnosis about six months ago are still lingering. Global demand remains weak. Investments across the board, public, private, FDI have basically declined a lot. Inflation remains high even though, in fact, one of the few things that have kind of been positive is that inflation has peaked. It is declining from about 9.7% to about 7.5%. That is the median. Half the countries have less, half the countries have above that. Then, interest rates remain high. In fact, they have increased even more. Finally, a lot of these countries are facing really high levels of debt vulnerabilities which have been increasing, not gotten better, so that is squeezing the fiscal space that they have for the broader development activities.
I am happy you mentioned the issue of debt because that has been one of the conversations at the Spring Meetings this year. Tell us, the lack of fiscal space is also a big issue, but we need that. That needs to happen. Countries need to have that fiscal space to reduce poverty. Could you speak about that point?
Yes. So primarily the lack of fiscal space means that there is going to be a lot of underinvestment in core development activities. Just to give you an example, African countries were spending perhaps something close to about 10 to 15% of their revenues in paying down debt. Now, they are spending something close to 30% or even in in some cases, even higher. That is the average. In some cases, a lot higher. So, when all that money gets diverted to paying debt, it is money you can’t spend on education, on health, social protection, food security, agricultural investments, infrastructure investments. It is for that reason that we think that lack of fiscal space is really detrimental to poverty reduction for a region that really needs a lot of investments to reduce poverty.
Yes, but African countries still need to borrow. We know that there is a lot to [do], of course, infrastructure financing and all of that. Where does the World Bank position itself on debt? Talk to us about that. Also, concessional loans. Do you think that this could make matters worse for countries who already saddled with debt because obviously they still need to borrow?
Indeed so. Obviously, given what I just said about fiscal space and debt, the levels of debt in Africa are worrisome. In the World Bank, we have been very clear that in fact, we support a very comprehensive solution to a comprehensive process for resolving a lot of debt of low-income countries, most of which are in Africa. There are frameworks that have been proposed. The most common one, the one that a lot of people have probably heard of is the G20 Common Framework. The World Bank has been clear that they support that but have also asked for the process to be faster, deliver real benefits to poor countries and in fact, in principle, expand it to include a lot more countries that are currently not eligible in the definition of common [framework]. In that sense, we are very clear.
You have asked this interesting question, are we actually making the situation worse with concessional lending? Let us put it this way, just because these countries have high levels of debt vulnerabilities does not mean that the work of development stops. Governments still have to provide security. They have to invest in infrastructure, expand access to energy, water and so on and so forth. In that sense, you are going to have to spend. Some of that money will come from domestic resources. But let us be realistic, there is still going to be a financing gap. Where do you fill that financing gap? You could go to the commercial markets and, at the moment, African countries have basically been shut off from commercial markets. The interest rate that they are being asked to pay is double what they were asked only a few years ago. That kind of market has been closed off. The question, then, becomes where? The thing about the concessional loans that the World Bank provides is that usually unlike commercial loans that are very high interest rates, short maturities, meaning you pay them over a very short period of time, the World Bank loans are ones where the interest rates are very low and you pay over decades, 30, 40 years. In some instances, if you really take those two things into consideration, much of that becomes basically grants. For very low-income, high debt countries we basically give outright grants. This time when we have very difficult financial conditions for African countries we need more concession, more and more concessional financing, not less.
But that still leaves the issue of how African countries, at the end of the day, after all that has been said and done, have to create jobs, have to boost economic growth. Yes, we have said that there is little fiscal space, they can still borrow. Of course, there is support of the World Bank, etcetera. What are those steps that they need to take to boost growth? I know it is a cocktail, but what perhaps quick wind or immediate steps?
Yes, the most reliable way to create jobs is to grow, and African countries need to grow and grow really fast and for a long in a sustained way. Not just growth, but growth that is simultaneously happening in every sector, not just one sector. So, in agriculture, agriculture is growing, services are growing, industry is growing, mining is growing. Right. So that is the kind of growth and the one that creates good jobs.
What we have kind of proposed in the report, for that to happen, two things must be in place. One is we must have macroeconomic stability. In some cases, let’s be honest, also political, and social stability is going to be the foundation for that. Now, when it comes to macroeconomic stability, what we usually mean is we need to bring inflation under control because it is just bad for everyone, but it is particularly deadly for poor people. It reduces consumption. It leads to actions that will lead to lower investment. It just depresses economic activity. We also mean bringing debt under control and stabilizing debt that could come from mobilizing more revenues domestically or rationalizing spending, or being very selective about where you spend, but also being efficient in how you spend. So, that is one way to create the foundations for growth. The second, given the environment we are in, public investments are going to be really under strain and probably will have to either be constrained or shrink. The most urgent thing will be to try and do things to attract private investments, remove tax schemes or regulatory schemes that favor certain companies, which makes the market non-competitive, but just in general, creating a business environment that Is conducive for private investments.
You could also do this by expanding markets. Integrating will be a very attractive way for businesses to try and take a chance.
Okay, bit of a gloomy picture, but I want to believe that somewhere in there are some bright spots. What do you think in terms of how Africa can grow even in this difficult global context? The report has said that inflation has peaked, but there are still risks. Where are these bright spots? Where can we look?
Well, one bright spot is that it is a hopeful thing. We are hoping that in fact, the economy will bottom, the economic downturn will bottom out this year. If there is a rebound globally, that will lift African economies as well. That is one bright spot. But actually, even now with this gloomy environment, one bright spot is this process that is underway for low-carbon transition. The way to think about this is, so far, everything we have lived through or are living through at the moment, whether that is gadgets in our homes or technologies in our factories or even in particular sectors like transport, they have all been running on one type of energy. That is the energy that comes from burning carbon. You can now see that the world is shifting to a transition where that energy is going to come from wind turbines, solar panels, lithium batteries, hydro, and so on and so forth. The idea is to leave behind burning carbon. We think about this as just an energy issue, but it is going to lead to massive technological transformations in the world. It is really important. This is an opportunity for Africa because a lot of these technologies require minerals that Africans have. Cobalt, manganese, copper, coltan. It is really important for African countries to maximize the benefits to get this through. First of all, they can just get a lot of revenues from it. That will stabilize their fiscal issues. They can use this to transform their economies, create value, create jobs. They can coordinate with each other. We see it coming. It is not something that African countries can just sit back and be on the side-lines. This is something they must participate in because it is really crucial.
But it will take the right kind of policies. [Crosstalk]
Exactly. First, they have to coordinate, they have to cooperate, they have to harmonize certain tax laws or trade agreements, and then, they really need to fix. In a real sense the governance issues that keep coming up again and again and again when it comes to this particular exploiting of these minerals.
All right, finally now, Andrew, what are you most optimistic about when you look across the African landscape? My mind just going to many of the conversations that have taken place at the Spring Meetings this year, and it is all against a global context of weaker growth, even in the long term. When you think about the African continent and you look across the landscape, what are you most hopeful or most optimistic about?
I think the thing that gives me hope is that African countries have now had this long run of good economic performance. We have hit a really rough patch, but they have had really a good run of good economic performance. Part of that is because of the reforms that have taken place, So, internal reforms are going to be crucial. They are always going to be superior to, say, what happens globally. Right now, I do not want to minimize what global shocks do, what we have seen in the effects of war in Ukraine and food and fuel and fertilizer prices, what we see with rising interest rates doing to currencies in Africa. I do not want to minimize that, but domestic reforms are going to be the key because it is domestic reforms that will make your agriculture transform. It is domestic reforms that will lead to better outcomes in education. It is domestic reforms that will make your economies more competitive, more productive, and therefore create more jobs.
If I could just comment on that point of reforms. Some of the conversations… What I have also heard at this year's meetings is that this time the reforms are going to be even more painful, and we require greater political will.
They will require greater political will.
Regardless, they have to be taken.
Yes, but short-term pain, but maybe long-term happiness.
Happiness. All right. Thank you so much, Andrew. Well, we have come to the end of that conversation. Thank you so much, Andrew. I have been speaking to Andrew Dabalen, Chief Economist for the Africa Region at the World Bank Group, sharing some takeaways and analysis from the Africa Pulse. For more on that report, they are some on the seats already, but you can go to worldbank.org/en/publication/africa-pulse.
Thank you again. Once more, Andrew.
At this point, I am moving things along quickly. We are going to switch gears now and go into the second part of our programming. I would like to invite speakers for our panel discussion to take their seats please when I call.
Hello everyone. Thank you for this part. Of course, we are recording this part, so I am going to have to start all over again, so just bear with me.
Hello everyone. Welcome once again. I am Esther Awoniyi, Business Anchor at CNBC Africa. It is my pleasure to welcome you all to this panel discussion with the theme The View from Africa. Just a little context, according to Africa's Pulse, economic growth in Sub-Saharan Africa will slow from 3.6% in 2022 to 3.1% this year. Now, this will not significantly reduce poverty levels, as we know, but also keep up with population growth.
We are just going to be looking at those opportunities today, those challenges, and of course looking at the low-carbon transition, those opportunities that African governments can take advantage of. If I could please call to this stage now, Victoria, I beg your pardon. Please join me on stage. The World Bank’s Vice President for Eastern and Southern Africa, Victoria Kwakwa. Thank you so much. Vice President for Western and Central Africa Mr. Ousmane Diagana, morning [audience applauses]. Minister for Economy and Finance for République de Côte d’Ivoire, Mr. Adama Coulibaly. Round of applause, please [audience applauses]. Minister of Finance for Mr. Finance for the Democratic Republic of Congo, Mr. Nicolas Kazadi [audience applauses]. Minister of Finance and National Planning, Republic of Zambia, Mr. Situmbeko Musokotwane [audience applauses], and last, and certainly not least, Mrs. Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General (UN SRSG) for Sustainable Energy for All [audience applauses]. Thank you all so much for being here.
I would like us to go right into our conversation, but I would like to start with our first topic and that is economic outlook and urgency for reforms. You heard my conversation with Andrew a few minutes ago. Reforms are of the essence right now and this is major urgency for the right kind of reforms to be taken. Victoria, Ousmane, I would like to start with you with my first question. Can you briefly tell us what is at the top of your mind after speaking to country delegations this week? Victoria let’s go with you. Thank you.
Good. Thank you very much. Good morning, everybody. Thank you so much for joining us for this very important conversation. I would also like to thank the ministers and a colleague who are here joining us on the panel. We have had very good conversations this past week with all of our countries. It is evidence of the strong partnerships that we have with countries in the region. Several issues have come up, but for me, a couple of things that I am really continuing to reflect on as we close these meetings. The first, of course, is the issues around macroeconomic stability. I know you have had just a quick chat with Andrew, I just really want to emphasize the importance of this issue just because it is so foundational for everything that happens on the continent. We heard about the high inflation rates, 14-year high, about 9.2% in 2022. As Andrew said, it seems to have peaked, and we expect that in 2023 it will be lower. We are also seeing the very high interest rates linked to efforts by central banks to rein in inflation. That in itself has impacted on growth which is already subdued. We had a setback from the post COVID-19 recovery with the war on Ukraine that is ongoing. So, that is of concern. On the macro front, again, talking about inflation, particularly food price inflation, which is really feeding into the food insecurity that we already have on the continent. As we know, this has major implications for the most vulnerable so that is of concern. We are seeing that the debt has been mentioned, so I will not go into a lot of detail, but the access to financing of almost all the economies is really constrained. Then, we have the external accounts where reserve cover is really challenged. We have macro instability and evidence of increased macro vulnerability of all these countries. That is on our mind. It is on our minds, and we are thinking more about what we should do in the World Bank to support these countries and to help them navigate this difficult macro context.
I think a second area at the top of my mind, and I have alluded to it briefly, is just the huge financing gaps that countries face. Partly because of the debt, partly because of the fact that they have been shut out of international markets, and also partly because the resources that we bring to the table, no matter the efforts that we have made to increase it, IDA largely, are still insufficient. What we are seeing in a three-year cycle of IDA is that a lot of the resources have had to be put to work this year. So, in the coming two years we really have a bit of a cliff so that is a challenge. In terms of that, even though you have this shortfall, you have a lot of needs, particularly on the infrastructure side. We know that in the last couple of years, countries have really been spending a lot for the short-term crises but now [they have to spend in] the growth agenda, driving growth, a huge infrastructure requirement.
At the top of our agenda really is how to really try and bring in private financing and how we use the scarce resources that were available on the public side to leverage the private side. We have been having conversations, including with regional banks, to think about innovative ways to work together to bring more volumes at scale to the financing challenge.
Another concern is, really, the fact that a lot of our countries are off track on key SDG goals. I will mention three of them. The first is really the SDG 7 on access to energy. We still have about 590 citizens on the continent who lack access to energy. That is a major concern. Energy is so fundamental for the economic activity, for the growth, for the jobs that need to be generated on the continent. We are seeing in our conversations, countries are really behind on the water and sanitation agenda, which is SDG 6. This is the only continent in which the gaps on access to water and access to sanitation are not closing, they are actually widening. We have about 37 million more people on the continent without access to clean water, about 247 million more people without good access to sanitation. So, that is also of concern. Then, the human capital crises where we are seeing that kids are not learning adequately in school. Those are three areas that are also of concern.
I think coming away from these meetings, we have also seen some sense of resiliency in the countries. We have seen that even in the context of the difficult macro context, you have countries that are really growing fast. We have the minister of DRC here, DRC is the fastest growing country in the region, about 8% plus so that is significant. We are also seeing lots of countries doing reforms, embarking on reforms that are needed, as you said in the earlier conversation, difficult reforms. There are positive stories out there. It is not all doom and gloom. In a difficult context, there are entry points and opportunities for us to continue to work together, to really make sure that the region continues to move forward.
Thank you so much, Victoria. Very well said. Mr. Ousmane, just very briefly, your thoughts? I beg your pardon. Your thoughts on top of mind for your conversations that you have had with other participants this year.
Thank you very much. I heard the same things as my colleague and friend Victoria Kwakwa. The context is the same. The reality is also the same. Obviously, because of that, I would totally subscribe to what my colleague Victoria has said. But before sharing with you my own takeaways, I would like once again to congratulate Andrew and his team for the great report and beyond, actually, taking stock of what is happening currently in the region. This report is about recommendation, policy recommendation, and therefore I would like really to invite all the policymakers who are in this room to take advantage of this report and to continue the conversation and also to use it, as you are considering embarking maybe on a new set of reform. Those points are being made. I always try, when I am in these types of meetings, to balance a little bit and to shift automatically to French. In my region, I think almost 75% of countries are Francophone speaking, and this will also give the opportunity to the ministers who are here to speak in French when they are invited to do so.
What we have heard during these Spring Meetings is not very different from what we heard during the Annual Meetings in October 2022, or even in previous years. We have heard a lot about crisis management. In 2021, it was the COVID-19 pandemic. That is all we talked about. Last year, it was the crisis and the war in Ukraine and its impact with the increase in prices that affected the purchasing power of households. Today, we have talked a lot in the region about the impact of the increase of interest rates on countries' ability to leverage the resources they need in order to implement the development program. When you are in a context of crisis management, unfortunately, you tend to be more reactive. In other words, whereas Africa is a dynamic country, it has huge potential, but when all you are doing is to cope with a crisis, you are in a status quo mode. That does not allow you to make the progress that you need, and therefore, what we have discussed, and my colleague Victoria has said so, is that it is extremely important in that situation to remain focused on reform, to learn the lessons from what has happened generally in the past.
To focus on reforms means to pursue reforms that have been initiated in the past because what we have found, and there are several examples in a number of countries, is that countries that in the past carried out most reforms were the most resilient countries in this crisis context. Second important point, international institutions have an extremely important role to play. Countries have asked us to step up and to play that role, of course, we need your financial resources, the resources of the World Bank. Every finance minister I have met said now is the time to increase your resources, to provide support, fiscal support, but also to invest further but what we need, essentially, is your policy advice. We need your knowledge, your know-how, we need your expertise, we need your analyses. Therefore, the fiscal support that we provide will, I hope, allow countries to come back to a situation where they can act because they are supported with significant structural reforms. That will allow countries to make the most of the huge potential that they have in the energy sector. For instance, that will allow countries to efficiently invest so that children can go to school, of course, but also so that children can learn when going to school with the skills that will allow them, of course, to raise the level of the public sector but that will also allow the private sector to play its role, which is so important in the development of countries.
Also see how Africa can make this qualitative jump. Victoria Kwakwa has identified a number of crucial sectors. The digital sector, of course, is important. Digitalization is, of course, by definition, a transformation. In this context, what we see in countries that have reformed their policies and their regulations, they have experienced extraordinary progress that has allowed them to create jobs, not only jobs to allow young people to keep busy, but jobs that have a driving effect on the economy that are significant. The second sector is the electricity sector, or the power/energy sector more broadly speaking. If you look at what Africa has in terms of resources that allows Africa to look forward to affordable green electricity access, there, there is a huge potential in Africa. In terms of the next steps, I would say that the efforts that we need to make together is to continue and pursue reforms and at the same time, leverage resources in order to significantly invest in those sectors. In order to create what Africa needs most, which are jobs for its young people who have a huge potential, but for whom opportunities have not always been there.
Moving on quickly. Mr. Coulibaly. Let us talk about Côte d’Ivoire's economy. We know that it continues to outperform other West African countries, last year registering a growth of 6.7%. Talk to us what is working for Côte d’Ivoire in a challenging global context? We have heard about, of course, very limited fiscal space, high inflation, high interest rates, and of course, that debt overhang. What is working for Côte d’Ivoire?
Merci beaucoup, thank you very much for your question. For Côte d’Ivoire last year we registered a growth rate of 6.7%. But it is also important to look back and to see that in the past we had far higher growth rates. I would like to just remind you that between 2012 and 2019 the average growth rate was 8%. With COVID-19, the pandemic in 2020, the growth rate of Côte d’Ivoire was only 2% in a context of global recession. Ousmane earlier talked about resilience, and I think that in 2020 the Côte d’Ivoire’s economy was resilient with a rate of 2%. In 2021, we saw economic recovery and we reached 7.4%, and then in 2022, 6.7%. I think all that goes to show that we have carried out reform policies, quite strong and ambitious reform policies that have allowed us to create robust fundamentals in terms of macroeconomic stability, in terms of macroeconomic aggregates that have been satisfactory over the past ten years. That has been possible simply because of the planning that has been put in place since accession of the President of the Republic in 2011. When the President came to power, he used planning as a tool in order to obtain speedy results. Therefore, as soon as 2012, we had a national development plan for 2012 to 2015, and then we had a second development plan for 2016 to 2020, and now we have a third development plan for 2021 to 2025. The reason I am going into that is because the private sector was a huge driver in that context. The role of the private sector in the national development plan represented 60% of the investments in the first national development plan. Today, at the third plan, the private sector plays or makes investments for 75% of that development plan. You can see that the state did what was expected and the private sector has taken over. The reason the private sector has been able to play that role is because we worked very much in doing business integration. We took important measures in order to reassure investors and make sure that investors were convinced that by investing in Côte d’Ivoire, their investments were safe and legally protected. Then, we put in place an investment code that was very attractive, a real incentive that compared why it was better to invest in Côte d’Ivoire rather than in a neighboring country. That was a strong incentive and then, we also had a single-entry point system. In Côte d’Ivoire, you can set up your company online. You don’t have to come to Côte d’Ivoire to set up your company, you can do that through a single-entry point. There is also a single-entry point for construction permits, which in fact makes it easier for companies that do want to invest in Côte d’Ivoire to be able to have access quite easily to their construction permits in order to be able to build their industries or their headquarters. We also have a single-entry point for external trade. So, you see this multiplication of initiatives to make sure that the trade context is a real incentive. That is why private investments today have been increased threefold between 2012 and now. That is for private investments. That shows that the private investors are drivers of growth.
In Côte d’Ivoire, we have also been working in order to improve our sovereign rating with the international credit rating agencies. Be it Fitch, Moody's or Standard and Poor’s, we have achieved a better financial rating. We went from B to a BB anchoring, and we are at the highest rating of the continent. If you compared to Botswana and Morocco, we have the best rating over the whole of the continent. This is also reassuring for our partners regarding the business climate, the governance, and the sound management of public finances.
I would also like to mention that through the COVID-19 pandemic, we implemented a mechanism that was extremely efficient. You might know that Côte d’Ivoire was affected by COVID-19 through the outside. We have a single international airport. When we knew that COVID-19 cases were coming to Côte d’Ivoire through this airport, we completely closed down the city of Abidjan and we set up isolation facilities and healthcare facilities. COVID-19 was contained in Abidjan, and when we had cases outside of Abidjan, people were brought to Abidjan to be taken care of. This avoided too widespread of a contamination and the state of emergency that was declared was raised. For the time being, we no longer have cases of COVID-19 since the month of January.
I am sorry, I got confused and said AIDS instead of COVID-19.
But we have eradicated 99% of COVID-19 today, so we have lifted the state of health emergency and we are almost back to normal. In other terms, we still do have to deal with the consequences because there are still challenges for the businesses that were affected, and that is why we are supporting them. This is also part of why Côte d’Ivoire is such a resilient country. I would like to conclude by adding that we follow very closely the well-being of our population. We have a strong social policy. I will finish with this. We are also doing a lot of work because everything goes hand in hand. If you want a strong growth, you also need to make sure that the benefits are shared equally and that is why we have strong social policy.
Let me come to you, Mr. Kazadi. Now, the DRC has also seen a very strong growth, especially last year, over eight, as a matter of fact, 8.6% in 2022. Now, I know that this growth was supported by higher commodity prices, and you also saw some capacity expansion in your mining sector. But I would like to know those specific measures that you are taking to have all of this translate into better economic fortunes for the people of the DRC.
Merci beaucoup. Yes, thank you for this question. Indeed, we were much more resilient than other countries. As Adama has already mentioned, in 2021, we had 1.7% of growth, and we were among two or three countries in the whole of the African continent to enjoy positive growth rates. There has been a major change in the DRC, which is that since 2019 we are seeing increased demand for our exported products. This is taking place in parallel with better governance in our country, governance that is more open to dialogue with both private and public partners, a better climate for doing business. Thanks to this opening up, we have sped up some investments in the mining sector which have boosted growth. And that is why in 2022, we achieved 8.5% growth. For 2023, we are expecting a growth at least as strong around 8%, and that should stay stable in the medium term. The main turning point in the DRC was domestic resource mobilization for a proper tax collection. In the past, we have had several years of good growth, but which did not translate into increased tax receipts. Between 2020 and 2022, we increased our tax receipts twofold, we went from 8% to 15% of the GDP. Now, that was enabled thanks to increased commodity prices, an increase the production, but also thanks to transparency in our tax collection policy. We have an increasingly transparent dialogue with the mining sectors. We have a new mining code which entered into force in 2019, which is fairer for our country, and we now have tax instruments that improve the actual tax collection through digitalization, through, and that is coming up in a few weeks, standardized billing, processes, through the implementation of special software for non-tax revenue. We are also diversifying our domestic resource mobilization through new sectors such as gambling or traffic tickets. We are working in many directions at the same time to increase the efficiency of our tax policy which has translated into higher tax revenue. On the expenditure side, we have increased our own investment threefold from 3% to 10% of the GDP. We have also increased external resource mobilization. If you look at our partnership with the World Bank, our main partner, we have increased a fourfold our portfolio with the World Bank from 2 billion to 8 billion today. All this time we also managed to decrease our debt rate. We are under 20% of the debt to a GDP ratio.
We also are increasing our work on the social policy side. We have made primary education free to all children, and in the past two to three years we have welcomed into schooling an extra two to three million children who were out of school in the past. With the World Bank as our partner, we achieved this extraordinary outcome. We are now trying to rise to the challenge of the quality of education, but this to us is already an extraordinary achievement.
We are also working on other social policy aspects such as health. We have increased our health expenditure and are looking to go even further.
We are also monitoring very closely the transparency of our public expenditure. We were rated as the highest African country in terms of fiscal expenditure transparency, the SDRs that we have received as many other countries, we still have not spent everything we have, but we have full traceability to the last cent of all of the money we have spent. The fiscal support is accounted for to the last cent in order to measure efficiency, effectiveness and performance. These are our wide-ranging efforts and thanks to all of this work, we also increased a fivefold our foreign exchange reserve, we had 700 million in 2020. We are over 4 billion today. We also managed to control inflation a little better than other countries. However, inflation was 13% in 2022. We were also strongly hit by the crisis in Ukraine. We did go through a difficult time with inflation, which can be explained by our strong dependency on many imported products, but we were more resilient than some of our neighboring countries. The new economic challenges that we are facing today is to achieve sustainable resilience to diversify our economy and get out of dependency on the mining sector and we are implementing the necessary steps to achieve that outcome.
That is very encouraging to hear. Mr. Musokotwane, let me come to you. Today, more than 60% of Africa's population is under the age of twenty-five. Now, these young Africans are said to be both an opportunity and a challenge for the continent. What is Zambia's strategy to harness this demographic dividend as you also strive to grow the economy?
Thank you very much for having us. The overall topic that we are discussing today is harnessing natural resources for a sustainable future. The question, then, is how that relates with the question that you have just raised on how to make the young people have hope, have a future. Indeed, in Zambia, like other countries, there has been growth. Last year, it was just under 4%. This year, we expect something close to 5%. But as other people have said, this growth rate is not enough. It needs to be higher and it needs to go on for years. As we have seen in East Asia, where growth rates of 6%, 7%, 8% had to go for 30 years for you to see a reasonable dent in levels of debt to levels of poverty going down. Today, I think most of Africa, including Zambia, we have a great opportunity to be able to do something for the young people that you are talking about, and that opportunity depends on where you are. For us in Zambia, just like my neighbor here, we are blessed with the presence of the materials that the world needs to be able to gravitate towards the green economy that we wish to see. That is what we are taking advantage of in Zambia. How do we produce more copper? How do we produce more cobalt? How do you produce more nickel, manganese? Because all these are materials that the world is looking for and if we can push ahead to produce more, then of course we are beginning to address the issues of the young people. Now, some people would say, but you have been producing copper, cobalt and so forth for years and years, what is the difference? The difference lies in two aspects. The first one is the realization that in fact, previous policies of thinking that if you are producing primary materials, you are not helping the economy, those notions are wrong. I think for us, we have realized that if you take the example between Chile and Zambia, and I am sure it is the same with my neighbor here. In the 1970s, we were producing more or less the same quantities of copper with Chile. Then, we got to the stage where our production was going down. I think for Zambia, we got to the stage where we only producing one third of the copper it used to produce. What did Chileans do? They ramped up their own production, so they picked up the markets. What I am trying to say here is that it is an important aspect of the economy for you to ramp up production of whatever you can manage to produce. Whether it is minerals, whether it is agriculture. We have seen other continents, we have seen Vietnam racing from behind to produce more coffee than Africa. We have seen palm oil, which used to be produced in Nigeria. The Malaysians rushing from behind to overtake us. We have to realize that these are mistakes. If it means producing raw materials, yes, let us produce them, because it adds to the economy. Now, taking into account that we have asked ourselves the question, why is it that we have been falling behind in terms of copper production and we have had research in terms of tax policies, because we are obviously taxing way ahead of everybody else. Investors were skirting around us the regulatory environment to make sure that licenses are being granted in a timely manner. We are doing that, ending corruption in the way in which mining taxes, mining license are granted. We are creating an environment that has all of a sudden raised interest in the mining sector in Zambia. But beyond that, as we ramp up production of these natural resources like copper, manganese and so forth, we are of course aware of the fact that it even brings more value if you add value to these materials. So, we are working on that, and we are working with our Congolese brothers here to make sure that we have a niche in the production of the batteries because batteries are going to be very important in the future as cars become less carbon oriented. That is what we are doing in the case of Zambia. I also want to add that the war in Ukraine, the climate change that has made food be less available, that is an opportunity for many of us sitting in this room because there are not many other places in this globe where there are two spaces available for us to ramp up production in grains and whatever food production. In Zambia, having a small population, more space, we are definitely attracting more investment in agriculture because the market is there. The market is there. We are ramping up investment in agriculture, attracting the best farmers that we can get. We are not scared of that. We are attracting the best farmers. If you are a good corporate or whatever farmer, speak to us, because we want to produce food so that as Ukraine fails to produce food, at least for the time being, we will be able to supply the food ourselves.
Let’s get out of the mode of Africa being the continent of tragedy and failure. Let’s take advantage of the natural resources that we have. Improve our systems, end corruption, improve efficiency. Our goal should not just be to grow 3% or 4%. Our goal should be for each one of us from Africa, we should transform like the way Vietnam did. We should transform like the way Thailand did. We should transform like the way Mauritius has already started. Let us not be satisfied with 3% or 4%. But when we look around, we see poverty. So, transformation, this is not rocket science, because these agents used to be poorer than us, remember that. They had no natural resources. What is there with all these natural resources that we have? Why can't we not transform ourselves so that we actually rest ahead of the Asians? It is up to us. We are raising Zambia to do that. Final point, human resources, very important. Again, to take the example of the Asians, they have no copper, they have no nickel, they have no minerals, what did they do? They invested a lot into the human capital, human beings, because they knew that with these human beings who are capable, that we are training, they can go and buy copper from Zambia, they can go and buy nickel from somewhere else. They manufacture, they sell back to the Africans. Why? The human beings, they invested into human beings. Our challenge also is to make sure that we invest in our people. As a point to support that, starting from last year, we have made sure that young Zambians are supported free all the way from primary school to secondary school. How are we doing that? We have actually decentralized money to the constituencies. Every constituency in Zambia gets something like 1.6 million dollars a year. We tell them, you are the ones who know who amongst yourselves can pay school fees. You are the ones who know amongst yourselves those children who cannot pay school fees. It is not people in the capital of Lusaka to decide who to give you a scholarship, it is you. Here is the money, go and choose. The results are remarkable. Children that used to be left behind are going to school. Of course, the classes, classrooms are now full. When they complain, say, the classrooms are full. We say, but we gave you 1.6 million dollars. You only use 10% to give scholarships to the children. The rest, you, the villagers, find bricklayers, find carpenters, go and build classrooms, go and make desks. That is also something that is putting money in the rural economy and helping the rural economy to pick up. Thank you.
Thank you so much, Mr. Musokotwane. Very excited to hear those reforms and the experience from Zambia.
Damilola, let me come to you quickly. [Applause] Now, you oversee global progress on providing Sustainable Energy for All. What does the slowdown in growth and investment mean for energy access in Africa?
Thank you very much. It is a bit daunting with all these finance experts, but I am going to bring the energy lens, and it is important for us to understand the context. Currently, we have about 752 million people without energy at all, of which Victoria mentioned, 590 million of those reside in Africa. What is also not mentioned is that 900 million people in Africa do not have access to clean cooking. This affects women and youth disproportionately, and what it means is it's actually our biggest issue when it comes to climate change, because we are chopping up our forest for something as basic as clean fuel, apart from the issue of how many women die from these fumes that we are inhaling all the time. That is why it is important for the role we play, especially at the United Nations, to understand that having access to energy is not a nice [commodity] to have. It is essential for a dignified life. The average African who does have access to energy barely has 404 kW⋅h. The average American has 13,000 kW⋅h. If you put that in context, in terms of just performance and growth, you are almost twenty times at a disadvantage being a black African.
It is important for us to understand those figures. When we come to these foreigners and do all the great things that everybody on this panel has spoken about in their country, it is at 20 times of a disadvantage because there is nothing you can really do without sustainable energy. One of the key things that we are doing as Sustainable Energy for All is saying that, “okay, fine, everybody is talking about climate change and transition, which is really important. But what does that mean for a low-carbon continent? What does it truly mean?” What it means is that energy access and development of industry is at the heart of the energy transition. It can’t be the other way around. There is a cost to this. It goes beyond I just want to provide energy to my power system. What happens to my transport sector? What happens to clean cooking? What happens to the way I build? What happens to the way youth train? We are asking countries to basically green their entire economy, but we are not giving them any more money. It is important that the first step of what we have to do is understand that data. We did it for my home country, Nigeria, because it was also a very large oil and gas nation as well. So, what happens to the oil and gas? What happens to the jobs? Once we did that analysis, we saw there was no way that Nigeria could have a full energy transition and uplift one hundred million people out of poverty before 2060. It was just not possible. This is assuming we have perfect political transitions, all the policies in place, which is what you get. What you also get is basically a price tag of 1.9 trillion dollars, of which at least, I know, our World Bank colleagues know, at least 410 billion of that money is above business as usual spending. I am saying these numbers and saying the statistics, because there is a notion that a lot of these countries don’t want to transition, or they don’t want to go clean or green. It is not the truth. It is the fact that people have to realize what is happening within those countries, and the priority of the country needs to come first in any of the plans that we are doing. I am including me as well because I am on this global platform. We also have to say that, yes, IDA has done great. I used to formally be in the Nigerian government, so I ran the largest energy access program with Ashish’s [Ashish Shrestha] team. But that is like 500 million. We have, maybe one or two that is effective. On the continent, we need like one hundred minimum to be able to cause this issue. Which leads me to the main challenge that we face, and it is the fact that globally, energy transition is not, sorry, energy access is not seen as a crisis. It has to be seen as a crisis unless we would not find a way to resolve it. So, on a more positive note, we have realized that working with government and providing them the right data actually has forced policy and reform. We have also recognized that employing young people to work alongside governments in presidency has forced the implementation growth. We talk about youth in jobs, but we hardly ever talk about youth in government. I was very fortunate to head an agency in my home country at the age of 28, otherwise I would not be here now. So, we need to encourage that shift of having young people in government helping you fix these problems, because they are the ones on the AI now, they are the ones that are going to come with these solutions. Finally, I would like to discuss the role of alternative types of finance. One is carbon markets, especially African carbon markets. There is an initiative, and most of the countries here are actually on it, called the African Carbon Market Initiative, where it is like, how do you scale up carbon markets in the African continent? How does Africa benefit globally for it? We know it is high integrity. If you are literally taking fuel wood from a woman's stove, you are not just helping the environment, you are literally saving a life. There are all these things that we are looking at, what is the formation? We already have about 250 million of advanced market commitments, we are hoping to have a billion by COP, and any countries that really want to come in is important. Lastly, I promise this is last, we also have to understand that there has been a lot of countries like the DRC and Gabon who have been preserving their forests. So, what is the price of that? What is the price of carbon sinks? It is not just okay if they were to chop off everything and replant it and then they get money, it is not right. So, how do we harness these things and look at Africa as what it is, as an opportunity instead of just an aid project? Thank you.
Thank you so much, Damilola, for that. Round of applause, please. Very insightful.
I like us to go deeper into the issue of Africa's natural resources for a sustainable future, just off the back of what Damilola has said. Victoria, let me bring you in here, in your own words, your own perspective. What would it take for countries to truly benefit from the global demand for green minerals? I like us this time to limit our responses to two minutes, please.
Yes. Thank you.
Well, I think we have started on that question already with what the Honorable Minister from Zambia has said, and he has spoken very much from the experience of Zambia. Let me add a little bit. I think that already we have experiences and lessons to draw on from the continent, both good and bad. We have what has worked. Botswana is a good example, and we have examples that have not worked and so we know what not to do and we know what helps as well. We should draw those lessons. I think what is really important this time around as we are really trying to use mineral wealth to promote growth and development, is that we are thinking it's not just mine and send away, it is add value, add value in country to create the jobs, to add to economic transformation in addition to providing the revenues. The first thing is to have that mindset and the Minister has spoken about that already, that as we are drawing on these minerals, we want to do it in a way that brings some of the beneficiation into the continent and adds the value and creates jobs and transforms that way.
The second is really around the regulatory environment and the policy environment. First to bring transparency so that actors can act in an efficient and competitive way and also to attract the private investment, both domestic and external that is needed to harness these resources.
Then, third, to also use regional approaches as it’s being used by DRC and Zambia because it is really important as we are adding value, to think about having the value chain, developing the value chain in continent. Usually, you cannot do that only in one country. You are thinking about the upstream, which is production of inputs, whether it is a machinery for the sector and then you are thinking about the mining itself and then you are thinking about processing of the mineral proceeds and all of that works better in small countries, small economy context, if you have a regional approach. Policies that encourage regional action, regional trade, we have the Continental Free Trade Area that should promote that. That is also something that we have to look at. Then, the Minister touched also on skills, building the skills that are important and needed not just to mine, but also to be able to do the forward linkages and the backward, why not production of machinery, why not producing the lithium batteries and so on.
So, these are a few areas that are really critical that have to be looked at to be able to draw the resources. A final point is managing the resource revenues in a way that it doesn’t cause macro distortions and lead to lack of competitiveness in other sectors of the economy. That happens very easily that we are so focused on that one particular mineral that we are not looking at how we are managing on the macro side and therefore creating problems and lack of competitiveness for other sectors. Resources or mechanisms to stabilize revenues and the use of revenues from the minerals is also going to be important. So just wanted to add the macro aspect as well. I see you are telling me to stop, so I will stop.
Thank you so much. I appreciate that. Mr. Diagana, I would like to bring you in here now. Obviously, no doubt the right policies will help a lot of African countries to tap into those resources and of course, make them benefit the economies. At the Meetings this year, we have also heard about, there has also been emphasis on learning from the past boom and bust cycles. We know that many African countries, Nigeria for example, we have seen the case with Nigeria. It can either be an opportunity or the very opposite of it. Thinking about those lessons that perhaps in your country you have learned, how are you thinking about them? How are you integrating them into your policies to ensure that it becomes just an opportunity and not the opposite?
Thank you. I would like once again to congratulate the ministers on the initiatives that they have taken that have allowed their countries to not only be resilient in times of crisis, but in certain cases, to actually embark on a path of growth at a time where the world was in recession. Here reforms are particularly important. Now, to reply to your question, firstly, we need to capitalize on success stories, and there are some in Africa. We have talked about important challenges that mean that Africa is lagging behind when it comes to the percentage of people who have access to electricity. Some years ago, the same issue arose in the context of access to water. African countries at the time carried out extremely important reforms in the water sector, including when it came to the management of water companies that are responsible for production and distribution of water. A lot of progress has been made in that respect. Good experiences are not necessarily outside Africa. Sometimes they exist within Africa. We should also refer to what is happening today in the digital sphere. It is true that we started quite low down and therefore, although there has been progress, we tend to have a pessimistic view rather than an optimistic one and see the glass half full, and we do not sufficiently highlight the important progress that has been achieved in that area.
Therefore, what I want to say is that through what has been done in certain sectors of Africa, in particular access to electricity, with very good management, very good governance, and the possibility for African countries to also use what they have as a potential. Be it in the hydro, in the wind sector, in the solar sector and all that, coupled with a trade climate that is tightened, that should, I think, allow us to foresee improvement in access to electricity so that SDG 7 can be met in Africa. I want to see the glass half full here. But for this to happen, it has to take place with good fiscal management and consolidation. When this happens, in a situation where there is huge population growth, trade-offs, decisions, strategies are essential. Targeting is essential. You have to see the difference between what is urgent and essential and what can come second, you have to focus on the right policies and fill gaps. Try and invest at that level so that you can make the expected progress. I cannot go into more into more detail because I only have ten minutes. Thank you very much.
Mr. Coulibaly, let me bring you in here. Côte d’Ivoire is part of the West Africa Power Pool, a successful example of regional integration. Now, what lessons do you draw from the prospects of regional value chains and trading, energy extractions and other sectors? I know a bit of that has been spoken about, but I would like to hear your experience.
Okay. Thank you very much for your question. I said earlier that Côte d’Ivoire experienced rapid growth and this is possible only through energy, abundant and cheaper energy. To give you the example of the West Africa Power Pool that exists, indeed exists. It is a regional integration project for electric networks of the ECOWAS countries. This project works very well. It was put in place for the right reasons because the energy production per country is costly and it places countries, it opposes them to independent producers and often they cannot individually discuss with the independent producers to try and lower the cost of energy. It was very important for us to actually pull together and to have this regional project, which is a powerful tool of regional integration, as well. In the context of developing value chains, we face two obstacles and barriers. Firstly, the lack of harmonization, strategic harmonization between the different countries and this failure to harmonize our strategies is a major constraint. If we overcome that, then we avoid countries working alone and weakening their position. Second constraint, the logistical capacities, capabilities. When you produce electricity, you do not need to just produce electricity, you have to store it, you have to transport it, and then you have to distribute it. That chain is not always very fluid. If countries have to do it alone and individually, it can be a constraint. I dream of a strategy that would allow countries to be specialized in certain parts of the value chain rather than to have each country having to build its own autonomous capacities. I think that would be the ideal solutions because we do not individually have the capacity. Energy is costly and most countries are committed to reforms of structural transformations of their economy through industrialization. How can you speak of industrialization if you do not have access to abundant, cheaper energy? We really need to work together and I think that this idea of the West Africa Power Pool can be a good example for the rest of the continent. Thank you. That is what we want.
Let me come to you, Mr. Kazadi. Now, we know that many natural resource projects are located in remote and rural communities and of course, that provides job opportunities in that respect. I also like to hear, perhaps you could speak to that point, and attracting private capital into the mix. Your thoughts?
Yes, thank you very much. The Republic of Congo is seen as a country that has many forests, and everybody wants to preserve those forests as there are. But there are also people and there are development ambitions, and you have to, of course, accommodate all that and see how to best manage the situation.
Currently, if you are speaking about energy, if we do not resolve all our energy needs, we will not be able to achieve a forest preservation. We have around one hundred million inhabitants in our country, and we need to make sure that we are not damaging the forest because we did not find any satisfactory solution to our energy needs. As I said to Victoria Kwakwa yesterday, history will judge us. Our own citizens and our partners will judge us. Our country has huge potential in energy production, yet we have one of the lowest energy production rates in the continent. That is why we need to change our mindset. Why am I saying this? Well, because usually we use excuses such as governance challenges or insufficient capacity, and then we don’t do anything but if we do not make progress here, this will be a loss not only for the DRC, but for the world as a whole. We need to overcome our capacity constraints. We need to have more aggressive public investment. We need this public investment to mobilize private investment, which is absolutely essential. When it comes to a private investment, we need to improve our business climate. We also improved our rating with Moody's and Standard and Poor’s, and it took us under twelve months. Last year, we jumped from C to B. We want to make the DRC an attractive destination for investments. When I speak of our energy needs, we need to find a solution, also for social reasons, as Victoria Kwakwa said, we need to increase local value added. We have ongoing projects to process our natural commodities. We have joint projects with Zambia. We are trying to manufacture batteries, cables, many different parts. We are making progress. It is very costly in terms of energy, energy that we should produce ourselves. Now, why is that essential? Because this is our contribution to global climate challenges, but we are also doing it because we have the potential to do it. It is three times as competitive to produce our own energy rather than import it from China, the US or Poland, or elsewhere. Producing our own energy in the DRC is also essential for another reason. Until now, even if our poverty figures are moving in the right direction, the absolute number of people under the poverty line is still increasing. The only way to get all of these individuals out of poverty is through industrialization. That is why we need to get things going right away.
It is vital for us if we want to get people out of poverty and give our contribution to global climate challenges, this is how we need to act. That is precisely what we are doing. We are setting up a free economic zone in the Katanga region. Another special economic zone is being setting up for coltan and gold near the Kivu region. We are the first coltan producer in the world. We do not have good figures for that yet because everything was done in a very opaque and non-transparent manner, but we are now transforming this mineral at the national level. We have implemented better transparency in the value chain and this is also good in terms of governance.
If I could just ask you now. Earlier on you spoke about ramping up production, talked about also value addition around minerals like copper and manganese. I would like to ask you, with all of that happening, and as you begin to or take further steps to harness your natural resources, what is the big picture for you in terms of how that is going to transform the Zambian economy? What can we look forward to 5-10 years down the line? What kind of shape could that give the economy?
Thank you very much indeed. Obviously, the ramp-up of the production of those materials creates jobs. The value addition that we are aspiring to do creates jobs. Also, this gives opportunities in other sectors of the economy to create jobs. The energy sector, for example, because with more mining you need to produce more electricity. That means that we can ramp up on the hydro, we can ramp up on the solar [energy]. We look forward to our neighbors in Congo doing something on the Inga Dam. I do not know when, but these are all opportunities that can also help to integrate our economies. With increased mining, there are opportunities because you can imagine, my neighbors are already producing two million tons of copper. We are racing ahead to catch up and even do more. You can imagine the logistic challenges that come with that. How to evacuate these minerals from Central Africa where we are, to the ports, whether it is Walvis Bay, whether it is Dar es Salaam or wherever, the opportunities are there to be created for employment in the railway sector are enormous. Of course, the railways were there, the colonial railways, which were allowed to go down because they had nothing to carry when the mineral production went down. I am happy that our Angolan neighbors, they are fixing the railway line. I am sure they will be sending some of their copper there we'll also do the same. It also creates opportunities for, again, our Angolan friends to do oil refinery. At the moment, all these refineries that we had were too small. They could not compete with the large refineries out there in the Gulf. As we get more money from the mineral production, it would make sense for them to upscale on the refinery. We also would be very happy to buy fuel not from the Gulf, but from our neighbors, which means jobs also being created in the neighborhood. So, the economies now begin to enforce each other, and we all become better off. Thank you.
That is so good to hear. Mr. Kazari, in 5 seconds, I want you to answer the question that Mr. Musokotwane asked you. When is that going to be? 5 seconds, please.
Yes, on Inga? On Inga, I wanted to say two things. There is Inga one and Inga two. The current capacities are only at half of total potential capacities. Then, there is this crazy dream of a large Inga project. What we need to do first is to reopen all of the turbines and fulfil existing capacities. That can be done under 12 or 24 months. Then, we need to revitalize the large Inga project. We now have a good political climate. We are ready to have projects at five or ten-years term. We need also to achieve consensus from our financial partners. We are hoping that the World Bank will fulfil its role and our expectations. Then, we also need to attract private operators. We need to speed things up to fully make this into a reality. Now, Inga won’t achieve results in five years. I mean, a large Inga project, we are banking on eight years, but we cannot wait eight years to electrify everyone in Congo, everyone in Africa. Things need to kick off now with micro dams, with solar power, with all the off-grid possibilities, because it is a question of emergency. The previous speaker said that it was a crisis of access to power. That is why every day, every month, every year counts. That is why we need quick win solutions at the local level. In the DRC context, we are hosted to half of unsalted water in the continent, and we have identified a dozen places where we can set up hydro dams. We can do that straight away to electrify villages and local communities, all the while working on the larger Inga project. Thank you very much.
I do beg your pardon, 15 seconds. Is there a credible path for more sustainable energy access in Africa?
Of course, there is. I mean, you can see by the wonderful work the country is already doing, but it cannot happen without financing. So, there needs to be a lot more financing and there is a role to play for making sure that it is not just the last mile, it is also transmission, distribution. The utilities have to be functioned and the power pools have to be functioned.
What would it take for us to move at a faster pace?
Money and policy, but money.
Money primarily. We have about three minutes left. Victoria.
I will actually help Quantum Money because we are talking to the World Bank here.
She is in good company sector.
Now, in the past four years, we have increased to fourfold our commitments in the energy sector. I am only speaking here of World Bank, not the World Bank group, I am not talking about what IDA and MIGA are doing. We have invested 14 billion dollars and our goal is to double the access capacity in the region by 2026. Now, these figures are also drivers to leverage other types of financing resources, but we need in counterpart our partners to commit to reforms. That is crucial. What is also necessary is that the absorption capacity be strengthened to make sure that the programs are carried out in a timely manner. There is a lot of delay, some projects are 10 years behind. This feeling of emergency, it is crucial because beyond the disbursements, we need to achieve actual results.
I am very encouraged, and we work very closely with World Bank, so it is not about the World Bank, but the fact is there is not enough money for a crisis, 14 billion is great, but that can be absorbed in one country. The reform is important, but what is happening is that a lot of policies are putting in place and there is no money following it. Let us just be honest when we are also in the global spectrum that it is not all countries that are not doing reforms, but we also have to match up, and I am talking from my organization, the United Nations as well, with the pace of governments because people are dying. It is not a nice [commodity] to have when you do not have electricity. And unfortunately, that is the view for a lot of the world. Thank you.
Thank you so much. Damilola, Victoria. We are closing now. Final thoughts from you, please.
Final thoughts. I think we have had a very good conversation and we started off with a difficult context, a picture of a difficult context on the continent today. What’s emerged from this conversation is a couple of opportunities which can really be transformational. We have an opportunity to really revamp agriculture, I would say an agriculture revolution. We have an opportunity to do the mineral revolution, we have an opportunity to do the trade revolution, as well. We have the Africa Continental Free Trade Area. If we pull all these together well, we really have a good shot at feeding our populations, creating jobs, transforming our economies, and building climate resilience, providing access to energy, which is fundamental, and generating wealth for our population. We really are in a position where we can transform the narrative around the continent to one of a rising Africa. It is really in our hands. It is in the hands of all the ministers. The burden is on them, the political leadership is on all of us, as your partners to really work this way. It is possible. I want to end on a positive note. Thank you.
You are absolutely right. African solutions to African problems. On that note, we have come to the end of this panel discussion.
I would like a round of applause to our panelists today and a round of applause to yourself.
Our audience have been a good and patient audience also.
If you would like to continue the conversation online, please post your comments using the hashtag #AfricaSOR. That is for our online audience who have been watching. Thank you so much to everyone and we will leave it there. Thank you for being here today. All right. Thank you.
Conversation with Andrew Dabalen Chief Economist, Africa, World Bank
02:01 Africa Pulse: Macroeconomic outlook
04:08 Fiscal space to reduce poverty
05:11 Debt and concessional loans
08:24 Creating jobs and boosting growth
11:12 Africa's growth in a difficult global context
14:03 Hope on the horizon
19:06 Conversations with country delegations
32:44 What's is working for Côte d’Ivoire?
40:38 Economic measures in the Democratic Republic of Congo
47:17 Zambia's strategy to harness the demographic dividend
58:08 Economic growth and energy access in Africa
1:04:19 Global demand for green minerals
1:08:31 Natural resources: Learning from the past boom and bust cycles
1:12:42 Regional value chains: Visions from Côte d’Ivoire
1:15:40 Natural resources projects, local communities, and private capital
1:20:29 The impact of harnessing natural resources for the economy
1:26:20 A credible path for more sustainable energy access in Africa
1:29:28 Closing remarks
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"We have opportunities that can be transformational: A revamp of agriculture, the mineral revolution, and a trade revolution. Putting these together gives us a good shot at leading populations, creating jobs, providing access to energy, and setting up for climate resilience. We can transform and change the narrative to a rising Africa."
— Victoria Kwakwa
"Countries that carried out reforms in the past were the most resilient in this time of crisis. We must pursue reforms but also leverage resources to create opportunities and jobs for people."
— Ousmane Diagana
"Investment in human capital is pivotal to our development. In Zambia, we're supporting the education of young citizens through annual monetary disbursements to their constituency."
— Situmbeko Musokotwane
"In the Cote d’Ivoire government, we used planning as a tool to get speedy results. The private sector's role in the national development plan was 60% in the first plan and 75% in the second."
— Adama Coulibaly
"Policy makers need to redouble efforts to curb inflation, boost domestic resource mobilization, and enact pro-growth reforms—while continuing to help the poorest households cope with the rising costs of living."
— Andrew Dabalen
"We talk about focusing on jobs and youth but we never talk about youth in government. We need to have young people in government to help find solutions, they are so important."
— Damilola Ogunbiyi
Read the Online Q&A with:
My name is Kimberly Bumgarner and joining me today is César Calderón, Lead Economist with the World Bank Africa Region. We will be answering your questions during this live event. We will begin soon!
In the meantime, please submit your questions and comments to us. You can also follow the discussion on Twitter, Facebook, and LinkedIn using #AfricaSOR.
Today’s discussion will center on Harnessing Natural Resources for a Sustainable Future
Our moderator today is Esther Awoniyi, Anchor for CNBC Africa (Former Executive Secretary, European Business Chamber Nigeria).
effectively, the AfCFTA would allow various countries to specialize in selected parts of the value chain and move them free of tariffs between participating countries, enabling the entire value chain to come together competitively within Africa.
In this context, the Africa’s Pulse report provide a series of policy recommendations that would help African nations to get the most from its mineral resources, such as: (a) tariff harmonization, (b) reduce nontariff barriers—particularly, those linked to mining, and (c) address policy impediments inhibiting regional mineral value addition.
Many African countries have skills shortages and limited capacity to produce or access key inputs when working at the national level. Regional content policies can reduce the burden of ongoing constraints by enabling countries to access a larger pool of skilled labor and requisite inputs. Firms operating in the region can implement training programs and capacity building for micro, small, and medium-size enterprises in parallel with regional sourcing.
As well, we have:
- Situmbeko Musokotwane, Minister of Finance, Zambia
- Nicolas Kazadi, Minister of Finance, Democratic Republic of Congo
- Adama Coulibaly, Minister of Economy and Finance, Cote d’Ivoire
- Damilola Ogunbiyi, Special Representative of the UN Secretary-General for Sustainable
The World Bank Group supports a number of projects in Africa that lower greenhouse gas emissions and earn carbon credits. Many of these projects and programs are located in least developed countries and have an important impact on poor communities, creating jobs and improving health and education through the use of carbon revenue for the benefits of communities. For instance, Ghana has become the second country in Africa after Mozambique to receive payments from a World Bank trust fund for reducing emissions from deforestation and forest degradation, commonly known as REDD+. The World Bank’s Forest Carbon Partnership Facility (FCPF) paid Ghana $4,862,280 for reducing 972,456 tons of carbon emissions for the first monitoring period under the program (June to December 2019).
Governments should seek to capture the full value of resource rents, subject to fiscal terms that attract investment and are robust to changing conditions. World Bank estimates put the value of these rents at 2.6 times the level of government revenues currently captured in resource-rich Africa. This implies not only that citizens are missing significant untapped revenues, consistent with the same levels of investment, but also that a significant subsidy is provided to production. This is bad for both countries and, in the case of subsidizing petroleum extraction, the climate. Capturing the full value of fossil fuel extraction will move closer toward imposing the true social cost of petroleum extraction, thus helping to reduce global emissions.
Better taxation of extractives offers a “double dividend,” for both people and the planet. Much more could therefore be done to invest in fiscal administration and capture a greater share of
resource rents. The international community could also play a supporting role to governments
in the region as part of their efforts to mitigate climate change as well as improve development
outcomes. However, this may require a new approach to partnering with countries to extract
maximum value from the petroleum sector. Short of pricing carbon at the wellhead, reducing
implicit production subsidies can be an important pillar of long-term mitigation strategies.
To have a currency that will dominate international transactions (both in trade and finance) will depend on the strength of its financial and monetary institutions, the stability of its currency, and the liquidity of its markets.
The initiative supports the sustainable extraction and processing of minerals and metals to secure supply for clean energy technologies by minimizing the social, environmental, and climate footprint throughout the value chain of those materials by scaling up technical assistance and investments in resource-rich developing countries. The World Bank wants to ensure that resource-rich developing countries also benefit from the new mineral demand by de-risking investments using sustainable and responsible resource development strategies.
critical to stimulate private sector investment. Expanding and upgrading the transportation
system (including roads, airports, and ports), and enhancing access to a reliable and affordable
supply of electricity are key to boost economic integration in the region. Improving institutions includes strengthening investment and export promotion agencies and modernizing customs and border control procedures. Maintaining competitive real exchange rates; implementing regulatory frameworks that foster transparency, competition, and innovation; and designing trade policies that reduce antiexport
bias can provide the right incentives to investors. Reforms to boost competitiveness can be complemented by strengthening institutions that enforce competition laws—including independent competition agencies and sound procurement systems.
For more information, see our recent report - Africa’s Pulse - containing our latest analysis of issues shaping Africa’s economic future www.worldbank.org/...
Spring Meetings 2023
Join us for a series of live events on today’s pressing development challenges.
Throughout the Spring Meetings, The Zone provides a round-up of all the week’s happenings.