*VP GANTSHO DISCUSSES BANK ROLE IN A FUTURISTIC UNITED AFRICA*
**
*22-AUG-07*

Editorial Note

The following interview presents an African Development Bank's view on the
development impact of a Unitary Government in Africa. The Vice President in
charge of Infrastructure, Water and Sanitation, Private Sector development,
and regional integration and trade, Dr. Mandla S.V. GANTSHO who has just
completed his first year in this position, discusses the idea of the Unitary
Government for Africa and what he anticipates for the Bank in its regional
integration activities as the Unitary Government idea gains momentum and
eventually materializes.

*Q.* African leaders met recently in Accra for a 3-day summit where they
promoted the idea of a *"Unitary Government for Africa".* You brought up the
subject in your welcome speech during last month's workshop of the Regional
Integration and Trade Department of the AfDB, attended by representatives
from NEPAD, World Bank, RECs, etc. In your view, what does the coinage
represent?

 *A.* The concept of a Unitary Government for Africa represents a vision of
total unity for the people of Africa, living together in lasting peace,
security and prosperity. African leaders have long been unanimous on the
need for continental unity and they've also been in broad agreement that the
ultimate objective, or the destination of the African Union, is the United
States of Africa with a union government. We now have the African Union (the
AU) as it is currently constituted, and we're saying, *"Let's move to our
final destination, which is, the United States of Africa".* Perceptibly, to
attain the US of Africa, there has to be a union government for Africa.
Thus, the debate is not about the destination, but rather, how to get there
with dispatch.   Essentially, we're considering a number of road maps to
guide us to the destination of total unity on the African continent.

*Q. *You are saying that African leaders have basically agreed on three
issues: the destination, the need to move to a Union Government for Africa,
and to do so with dispatch. The debate is now on the process—how to achieve
a union government. The President of the AfDB, Dr. Donald Kaberuka addressed
the issue in a communication to the Board of Directors of AfDB, and  pointed
out several possibilities: a federation of 53 African States, a Union of
independent states, a United States of Africa (per the US model), or a
European Union model. Whatever the final decision, the African Development
Bank should consider this a period of remarkable transition for Africa. In
your view, how should the Bank, as a catalytic development finance
institution, manage this transition?

 *A.* You've placed the emphasis on the right words*—"catalytic development
institution".* We're a development institution that is predominantly owned
by the African member countries. So, what African Member Countries expect
from us is a catalytic role…one that will be enabled by the knowledge base
that this organization possesses and continues to acquire, for fostering
sustainable development. We want the African Development Bank to be the
voice for Africa regarding development issues. At the micro level, we are
expected to both opine on and facilitate the setting up of the right
structure of sub regional institutions on the continent. Here, I'm talking
about specific specialized institutions such as power pools in the energy
sector or river basin authorities in the water sector. Given our knowledge
base, we play a role in making sure that these institutions are sustainable
going forward.  At the macro level, the role is no different. We see
ourselves getting involved right across the value chain of the development
of the union government of Africa.

You've mentioned a number of available options. As I said earlier, the real
debate is about how to reach the dream of a united peoples of Africa.
There're two distinct schools of thought, among others, that I'd like to
highlight:

   - First, the immediate formation of a continental government.
   Proponents of this school of thought argue, as did its first proponent, the
   late Ghanaian President (Dr.) Kwame Nkrumah of blessed memory, that
   political unity is a prerequisite for economic development. Hence, the need
   to establish a big continental government at once.
   - The second school of thought argues that the process should be built
   from the bottom up. That is, we must acknowledge that we are disadvantaged
   in the global economy if we remain as small, landlocked and fragmented
   countries with relatively weak Regional Economic Communities (RECs) that are
   dependent on aid. As you are aware, these are weak pillars, and we cannot
   integrate our continent on the basis of weak pillars. This school of
   thought, therefore, believes in the need to strengthen these institutions
   first, strengthen the RECs and countries that make up the RECs. Doing so
   would strengthen the foundations of the (continental government) we're
   trying to build.  However, the immediate establishment of a continental
   government would be tantamount to trying to place a roof on walls of straw
   or on walls that are built on foundations of soft sand.

In a nutshell, the question is Do you start by building a roof instead of
building a foundation and making sure that the foundations are strong
enough? This is where I believe we (the African Development Bank) need to
play a role….to use our knowledge base to inform the process. You may be
aware that the Heads of State and Government agreed to set up a ministerial
committee that would look into the definition of the relationship between
the union government and the Regional Economic Communities and finally, and
elaborate on the road map together with the time frames for establishing a
union government. We have a role to play. We have to give technical
assistance and technical support--advisory services--to a ministerial
committee before they report to the heads of state government in January
2008 in Addis Ababa. That is the role I believe the African Development Bank
(AfDB) should play--providing knowledge and technical assistance.

*Q. *At a number of Bank-sponsored meetings, the RECs, the ECA and other
external partners emphasize the need to strengthen regional integration by
promoting intra-regional and international trade and physical integration,
strengthening national capacities for policy making in regional integration
and enhancing the capacity of the RECs to undertake more Bankable projects.
In your purview as African Development Bank Vice President in charge of
Infrastructure, Private Sector development, Regional Integration and Trade
in what ways would a Union government strengthen the capacity of the RECs to
deliver to other markets?

*A.* This is a critical question. We're talking about the AfDB working with
the RECs. I have already said most of them are weak and therefore their
institutional and technical capacities need to be strengthened and, the
AfDB can play a role in terms of providing human and financial support and
sharing experiences between African RECs and economic groupings in other
parts of the world.

I am a proponent of the school of thought that sees regional economic unions
as the basis for the Union Government, where the constituent countries yield
some sovereign powers to the RECs.  This would fast track sub regional
political and socio-economic integration through investment in regional
economic infrastructure.  This would also engender a more effective and
efficient provision of regional public goods that are needed to catalyze
both the integration as well as the development process across the entire
continent.  This way,

   - the RECs would be empowered with sovereign authority that allows
   them, for example, to borrow and implement regional infrastructure programs;

   - bigger markets would emerge;
   - economies of scale and scope would make large infrastructure
   investments viable;
   - Private sector investment would be attracted.

The AfDB would play its advisory, catalytic financier and partnership
mobilizer roles in these developments.

On the issue of access to markets, I believe an important step towards
enhancing Africa's competitiveness on the global market is to work with
African countries to optimize the potential gains from intra-regional
trade.  To this end, the Bank intends to enhance its advisory and technical
assistance support to the regional economic communities via capacity
building, harmonization of regulatory and legal policies and ratification of
protocols of agreements that have already been signed by the African
countries.

*Q. *Does the process for establishing a unitary government call for any
changes in the Bank's approach to its mandate?

 *A. *Certainly.  A more integrated Africa is the core of the Bank's
mission.  Achieving such a goal would mean the RECs would effectively become
regional governments or organizations with sovereign authority. A situation
like that would ensure the ultimate government at the continental level is
rested on strong regional pillars. The Bank would thus deal with fewer and
bigger entities/governments, five or so regional governments, as compared to
the fifty three individual countries. So, we'd be more preoccupied with
regional policies instead of national policies and we'd also be spared the
difficulty of working with countries that sometimes are regarded as
non-performing within the RECs. We'd be looking at regions instead of
individual countries, and relying on countries within regional blocks to put
peer pressure on one another. We haven't lent to Zimbabwe, for example,
because the country is in arrears on its loan repayment obligations to the
AfDB. But if we were looking at Zimbabwe as a part of a viable region we'd
find a way of delivering development to the people of that country by
working with the regional government and then relying on member countries of
that sub-region to deal with their weakest link through peer pressure.
They'd turn to the country concerned and say, 'Listen, you're actually
slowing down the pace of development in our sub-region …You are making it
difficult for us to get assistance for our regional development programs
from the African Development Bank. So, please, let's address your problem
head-on'. Consequently, this would empower member countries of a sub-region
to deal with one of their own, and, therefore, make the work of the AfDB and
other development partners much easier. Of course, in this framework,
instead of the current country-based allocation system, we would have to
contend with the issue of the regional performance-based assessment and
resource allocation system. In other words, we would need to tilt the
balance from individual country ownership and commitment to joint ownership
and commitment, because we would be dealing with regional states instead of
individual countries and, this will allow us to lend to regional entities.

Although this would lead to a more optimal development process, the regional
entities generally find it difficult to borrow from us because they don't
have balance sheets, or borrowing powers due to the lack of sovereign
authority. Thus, if we were to work towards this vision from a regional
perspective, empower the RECs to be sovereign bodies, our lending for
regional projects and programs would be facilitated. The private sector
would also benefit from a much bigger market space. We would have bigger
markets that the (regional) infrastructure would serve; regional governments
would engender a harmonization of policies and this would eliminate or at
least minimize the possibility of cross-border and regional conflicts; etc.
Therefore, there are benefits but the pace for realizing such benefits
depends on which model will be followed.

 *Q. *The African Development Bank, as we know, has proven expertise in
infrastructure development.  But Africa needs to invest massively in this
area to ensure free movement of goods and services across national borders
and to create economies of scale through the integration of national
economies—an issue you've also discussed well.  This would, in turn, create
an enabling, results-based business environment that would attract
investments, generate rapid economic growth and culminate in poverty
reduction, which is of course a key Bank goal. How do you articulate the
role of the Bank's Infrastructure operations function you're currently
managing in the context of those indicators?

*A.* I wish to refer to what I have alluded to earlier, that is, efforts to
remove constraints imposed by poor and inadequate infrastructure in Africa.
Let me reiterate that harmonized economic, monetary and regulatory systems
with large open markets are essential for effective intra-regional and
international trade, and thus, economic growth.  However, they are not a
sufficient condition.  Sustained and robust economic growth also requires
the development and maintenance of modern and efficient regional transport,
communications and energy infrastructure.  Without these, there will be
limited opportunities for harnessing complementarities and synergies between
African economies, enhancing industrialization and creating employment. The
Bank's efforts to remove these barriers include:

   - Investments in physical infrastructure and services at both country
   and regional levels which are pre-requisites for sustainable socio economic
   development of the continent. With sustained efforts in this direction I am
   convinced that this can be achieved within the 21st century.
   - Enhanced efforts to mobilize additional resources for infrastructure
   development.  These efforts are being made at the domestic and external
   levels.  At the domestic level, many African countries have increased their
   investments in physical infrastructure. At the continental level, the
   AU/NEPAD programs have put emphasis on infrastructure resource mobilization.
   Our preliminary estimate of the infrastructure gap is in the order of US$24
   billion.  We are working closely through the Infrastructure Consortium for
   Africa which has its Secretariat at the Bank, to coordinate international
   efforts to mobilize additional resources to bridge this gap for
   infrastructure development and maintenance.
   - The Bank is also making efforts to enhance institutional capacity
   for infrastructure development and maintenance in Africa.
   These efforts need a concerted effort from all development partners
   and funding sources including the private sector. We are moving aggressively
   to encourage Public Private Partnerships.

Your question also entails discussing the rationale for the composition of
the complex.  The departments of this complex were not put together by
accident. I believe that the main objective of putting the complex together
was to pursue the goal of Regional Integration.  Take infrastructure…

How do you make infrastructure viable? You need bigger markets that are
engendered and made viable through regional integration. With bigger markets
you can now lay out the infrastructure on the basis of sustainability.

The financing requirements for regional infrastructure are enormous and
cannot be met by the public sector alone.  The private sector and the
attendant investment must, therefore, be mobilized to complement the public
sector effort.

The Water and Sanitation (department) which is part of my responsibility
addresses the particular issue of access to water and sanitation services,
which together with infrastructure services, are critical to the achievement
of MDG targets. Let me explain…

Although urban poverty is becoming a problem in Africa, poverty is still
predominantly a rural phenomenon because the vast majority of Africa's poor
live in rural areas. This means that the achievement of the MDGs is
inextricably linked to rural poverty reduction, which makes the provision of
rural infrastructure a key imperative for attainment of the MDGs.

Access to water and sanitation is essential for health and education
programs. Thus, the health and education MDGs cannot be achieved without
adequate water infrastructure and water for consumption.

The lack of adequate transportation to move farm commodities and
agricultural inputs to and from markets stifles the development and
integration of product and factor markets, mutes the potential gains from
market liberalization, raises marketing costs, and reduces the
competitiveness of agricultural commodities in domestic and international
markets.

Rural electrification helps to raise agricultural productivity by
facilitating the adoption of simple power-based technology, which can
stimulate agro-processing and small-scale rural industries, including
tourism. It has the indirect effect of improving the environment by reducing
the use of wood for fuel. It reduces domestic hardship of women in offering
more efficient alternatives for food processing at the household and village
levels. It helps to improve health and food security through refrigeration
of medicines and perishable farm produce after harvest. Finally, rural
electrification improves educational performance of the rural poor by
extending the study hours.

Thus, in a nutshell, the operations complex I have been asked to lead has a
central role to play in reducing poverty, promoting economic growth, and
meeting MDGs generally.

 *Q. *How does the Bank intend to help determine outcomes in the area of
infrastructure and private sector development in the RECs as globalization
and the concept of a unitary government become permanent fixtures on the
regional economic and political landscape?

 *A.* I think the outcomes will speak for themselves. The results will be
there for Africa to see.  In essence, a unitary government will lower
transaction costs for the Bank and other economic agents of the continent;
and there'll be fewer delays at ports and at border posts and there'll be
synergistic benefits that will accrue because you'll have bigger markets and
with this you'll be able to compete as regions and as a continent. Regional
peer pressure will help avert conflicts and governance generally will
improve.  It will make investment in infrastructure much more viable and
sustainable, as I said earlier. There'll be free movement of people, goods
and services between countries – thus intra regional trade will be boosted.
All we have to do as a development finance institution is to continue
playing the role we are given by African countries, which is operating as a
development knowledge resource for them, a financier for their development
programs, and a broker for additional development partnerships.

 *Q. *You mentioned that there'll be fewer delays at the airports. In
addition to port activities that cause unnecessary delays some African
countries have very stringent visa policies all of which slow access to
transboundary business transaction. These are major roadblocks to
facilitating Regional Integration.

 *A.* Yes, indeed. Let me first tackle the airport delays.  There are
general delays engendered by poor planning and/or technical problems.  But
there are more serious delays that derive from a sub-optimal use of landing
rights across the continent.  To redress the latter, we need to revisit the
Yamoussoukro Accord and get it fully operational.

Now, let me address the other bottlenecks to regional integration. According
to reports from the 9th Africa Rail Summit held in June 2006, bottlenecks at
southern African border posts cost the region $48bn a year, mainly due to
cumbersome inspection regimes by customs officials on goods transported
across borders, The costly delays have a domino effect on turnaround times
of transport and logistics service providers, with trains and trucks
delaying ships, which then fail to deliver goods on time.  Transport
providers are forced to pay huge penalties for failing to meet their service
obligations to their clients.  This is why transportation costs in Africa
are the highest compared to other regions of the world.  These constraints
would be resolved in an integrated Africa.

 *Q. *You have stated that "the Bank is committed to its three roles as
financier, advisor and strategic partner at the service of our clients, the
Regional Member Countries." How well would these roles fit into the praxis
of a united African continent?

 *A.* In a United African continent, the Bank's triple roles of a financier,
advisor and partner would be even more enhanced and optimal, because they
would be cast within the framework of a much larger market coupled with a
much greater open space, with respect to land, air and sea, for the
development business.   Let me elaborate briefly on these triple roles.

First, they are roles that institutions like ours need to play. We should
not only be finance providers, but should be able to marry finance with
knowledge and development expertise. We use a strong balance sheet to
intermediate finance from the international capital markets for the benefit
of the poor. Yes, the money can also be mobilized by the private sector; but
what makes us different is our ability to add knowledge value to that money
and place it, as a solution package, at the disposal of our RECs. If we're
to deal with the RMCs as subcomponents of regional governments, that will be
better because we would have a wider reach at a much lower transaction cost.
Some countries are not performing in terms of our definition. If we were to
avoid dealing with individual countries and rather deal with regional
governments, we would make our technical assistance and advisory services
available for all of those countries. We would mobilize our partners who
currently don't want to deal with countries that are not performing, and
mobilize bilateral donors such as JBIC, KfW, and AFD  as our strategic
partners.

The regional concept, for me is a viable one. Even the regions themselves
would have certain boundaries between them, and that's where you'll need a
unitary government of the continent to deal with the differences, and
facilitate the harmonization of policies and practices, between the regions
themselves. But at least half the battle will be won if we are able to
eliminate many differences between countries.

*Q. *So would a closer union in Africa enhance the Bank's role in delivering
services?

*A.* It would definitely enhance the AfDB's role in delivering services and
reduce transaction costs for us, reduce conflicts between countries. You'll
have  groupings of countries with a closer relationship because they belong
to a so-called single regional government. There'll be fewer countries under
sanctions, fewer countries in arrears. With countries belonging to a
regional government, we would able to use the influence of individual member
countries and bring it to bear on countries that don't perform.

*Q. *While the road map is not clear on a Union Government in Africa with
these different arguments, there is growing interest among firms on
exploring investment potentials. Africa is fast-forwarding its business
partnerships with other regions, as noticed at this year's Annual Meetings
and key business meetings between African leaders and the European Union.
And there is ample space in African countries to broaden trade and
investment relationships. The Bank's Chief Economist sees a lot of
opportunities for joint-ventures and he is encouraging African businesses to
engage more aggressively with Asian companies in the supply of processed
materials and in tourism related investments. As Vice President for
Operations--Infrastructure, Private Sector & Regional Integration--what
advice do you have for foreign investors who are following up on the process
for a unitary government in Africa and who intend to invest in the RECs?

*A.* Your question is about the private sector and their ability to take
advantage of the massive emerging opportunities. Let me make this clear to
the private sector. I want to tell them that Africa has turned the corner.
It is showing sustained economic growth. There're opportunities to promote
further growth, one being investment in infrastructure and supporting
Private sector development itself. We've spoken about regional integration
which is key in resolving the challenge of small markets and landlocked
countries, and fostering trade. In such an environment, strengthening the
role of the private sector is a key imperative both in terms of foreign
direct investment, smart partnerships as well as African entrepreneurship
itself. In summary, here's the advice I would give in terms of opportunities
and for promoting regional integration. First, the business environment is
improving; foreign investors should take advantage of the harmonization
processes…of rules and policies. They should take advantage of bigger
markets; invest in infrastructure envigored by the economic space and
economies of scale that would then follow as a result of a bigger economic
space. That would also mean access to a bigger pool of technology, skills
and resources. . The private sector would, therefore, have better markets
they can operate in, bigger markets for their products and human capital in
countries, where regions have been able to integrate.

*Q. *You have just completed one year at the ADB. How do you assess this
time in Africa's premier Development Finance Institution?

*A.* It is correct to describe the AfDB Group as the premier development
institution for Africa. It is an institution whose mission is to help
African countries fight poverty and generate economic growth.  To work for
an organization that plays such a critical role is always a privilege. I
have enjoyed my time here. In the Private Sector Operations area alone, we
have committed more investment funds in the last 12 months than the sum
total of business done in the last 10 years. We've come up with innovative
and entrepreneurial transactions in the public and private sector. We've
been able to accelerate the activities of the rural water supply sanitation
initiative, to raise awareness among the donor community of the huge
infrastructural challenges that face the continent and, by so doing, we've
been able to garner more support for infrastructure development on the
continent. That support will translate into a bigger scale of commitments in
future rounds of the ADF replenishment. We've not seen them deliver in
concrete financial commitment terms of that commitment but we're much
confident that the awareness has been created. The lending programme is on
track, and the President, in his closing remarks at the Board meeting (July
24) commended our efforts under the ADB-private and ADF-grant windows, where
execution rates for the year to date (six months) for OIVP are at 160% and
76%, respectively.  We've proven those skeptics who regard Africa as a risky
market for business wrong by being able to increase and double certain
milestones and breaking records of previous years in our lending
activities.  Those are achievements I'd like to highlight. Of course,
there've been some disappointments as well. The Bank is an established
bureaucratic institution and this can be frustrating sometimes, although
there're pros and cons to this bureaucracy in a multi lateral institution
like this. But coming from a significantly less bureaucratic background, I
get frustrated more often. I think we can relax a bit on the bureaucracy.
I've been quite impressed with the level of professionalism that people
working for this organization display. It's been a pleasure to work with
them. So overall, my experience has been positive and I look forward to
continuing my collaborations with colleagues from across the entire Bank, in
delivering the mission of the AfDB.

 Contact: Emmanuel K. Ngwainmbi, NEPAD, Regional Integration & Trade
Department, Email: [log in to unmask], Tel: +216 71 10 26 27

¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
To unsubscribe/subscribe or view archives of postings, go to the Gambia-L Web interface
at: http://listserv.icors.org/archives/gambia-l.html

To Search in the Gambia-L archives, go to: http://listserv.icors.org/SCRIPTS/WA-ICORS.EXE?S1=gambia-l
To contact the List Management, please send an e-mail to:
[log in to unmask]
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤