AFRICAN DEVELOPMENT BANK (AfDB) - BANQUE AFRICAINE DE DEVELOPPEMENT - BANCO AFRICANO DE DESARROLLO

Mr. Omar Kabbaj, President, African Development Bank (AfDB)

It is a great honour for me to have the opportunity of addressing the World Food Summit which is deliberating on a matter that, in many respects, represents a development challenge of unsurpassed significance. It is appropriate to reiterate, on this occasion, our appreciation to FAO for forging a long and productive partnership with the African Development Bank (AfDB) in working on a variety of activities to promote agriculture and rural development in Africa. To Jacques Diouf, the distinguished Director-General of FAO, we tender our good wishes and laud his industry and dedication in leading the Organization in its truly historic mission of bringing about a world that is striving to surmount the afflictions of food insecurity.

In contributing to these deliberations, allow me to focus on issues of agricultural and rural development in Africa and the development policy concerns that guide the operations of the African Development Bank Group in financing projects and programmes in this important area.

In the past decade alone, per capita food production in Africa has declined at an average rate of 1.5 percent per year entailing a rising incidence of food insecurity, hunger and malnutrition that are threatening a growing part of the population, especially women and children. More than in other regions of the world, the future of economic and social progress in Africa hinges on advances in the rural economy where the agricultural sector constitutes the primary means of livelihood. Given the importance of agriculture, what should be done to get the sector moving? I believe it is possible to go a long way by pursuing appropriate policies and increasing investments in agriculture and rural development. Permit me to remark briefly on these issues and then relate them to the operations of the AfDB Group.

The value of good policies could be indicated by recalling the damages inflicted on African agriculture by inappropriate policies. One of the marks of these policies was the discriminatory treatment metered out to agriculture and exports. In the case of food production, the situation was exacerbated by apparently well-intentioned, but misguided, practices of aiming at cheap food prices for urban consumers through subsidies and control of domestic markets. Low administered food prices and their ensuing disincentive effect on farmers led, inevitably, to production declines, increased food imports and unsustainable fiscal deficits. As diminishing foreign exchange reserves and rising international food prices limited food imports, the shortfall had to be covered by mounting levels of food aid. In some, such policies contributed to the marginalization of the rural economy and to declines in the income and welfare of rural dwellers that constitute the great majority of the population in many countries.

Fortunately, such policies have now been reversed in many parts of the continent, with reforms in place to bring about macro-economic balances and to enhance growth prospects. While the agricultural sector continues to have difficulties, it is gratifying to note that a number of countries have been able to establish conditions necessary for stability and sustainable growth; and that those furthest in such efforts have experienced significant improvements in growth, trade and financial flows.

Rapid population growth and environmental deterioration are the other major impediments to agricultural developments in Africa. In regard to population growth, it is clear that current rates of increase at an annual average of some 3 percent for the continent, and as high at 3.8 percent in a number of countries have not matched those of food production and income. The situation is thus draining the capacity of economies to meet the means for improvement or even sustenance of populations; the health of modern children and society at large. And in respect of the environment, it is clear that rapid population growth has been a major factor leading to over-cultivation, over-grazing and destruction of forests that are fast eroding Africa's life support systems, croplands, grasslands, forests and water.

Appropriate policies, important as they are, will not on their own suffice to generate sustainable output growth. This is because positive supply responses may be impeded by structural weaknesses characterizing the African economy. For instance, the low level of human and physical capital stock would need to be improved through requisite medium and long term investments to bring about cost effective production growth. Likewise, there is a need for investment in research to adapt high-yielding varieties of seeds to local conditions and to disseminate the results to local farmers. Greater food security could be accomplished through investment to increase output, on-farm storage to cut post-harvest crop losses, and to improve the efficiency of marketing systems.

Investing in agriculture means, importantly, investing in the rural population to enhance the human capital foundations of development. Clearly, we now know from around the globe that better education, health, nutrition and family planning promote economic growth as effectively as capital investments in the physical plant and infrastructure. Healthier and better-educated farmers are more disposed to adopt improved technologies which raise agricultural productivity and farm incomes. Of special relevance in the African contexts, where women play a leading role in agriculture and household food security, are the multiple benefits accruing to women's education - it enhances the probability of child survival, family's health and nutrition and knowledge of family planning methods. Expanding the opportunities for women is, therefore, right not only on account of equity but also on grounds of strengthening the abiding social economic interests of society as a whole.

Permit me to supplement these remarks by relating them to the engagements of the AfDB. The Bank Group gives high recognition to the central role that should be accorded to poverty reduction in the quest for improving socio-economic conditions in the Continent. This is because the spread and deepening of poverty currently afflicting Africa must be arrested and reversed if development efforts are to be meaningful. That is why a substantial share of Bank Group interventions, as much as 65 percent in the case of concessional resources, is being directed to projects and programmes promoting agriculture and social development. In agriculture, support is directed to activities promoting food security, the integration of rural communities and sustainable use of natural resources such as land, irrigation and water resource development, fisheries, woodlands and plantations. In the social sector, we are moving in the direction of designing programmes that deliver health and education components in an integrated way. In education, the priorities are: basic education encompassing primary and non-formal education, and manpower development with emphasis on technical and vocational training. In the health sector, the focus is on primary health care encompassing elements such as communicable disease control, health manpower training, population and nutrition.

Furthermore, the Bank Group has supported direct poverty reduction projects and programmes in a number of member countries including the extension of micro-credit to poor and vulnerable groups who will be making further strides in this area with the finalisation of a new micro-enterprise policy which will set the framework for extending appropriate credit to the poorest groups, using financial intermediaries such as NGOs and other grassroots organizations. We have initially set aside some US$ 20 million for this type of support.

The goal of poverty reduction should of course be linked to the pursuit of broad-based economic growth. And of the factors accelerating growth in the African context, emphasis should be given to increasing the magnitude of investment as well to enhancing its productivity by promoting enabling policy environments and capacity-building. In many of the low-income countries, the investment rate is inadequate to meet replacement needs, let alone support new production capacity.

Let me conclude by reiterating that advancing towards abiding food security requires support for poverty reduction that is embedded in broad-based economic growth. And in Africa, this needs addressing issues relating to the development of agriculture and the rural economy. I do not underestimate the weight of urgency of the tasks entailed - as, for instance, those aiming at reversing environmental degradation and moderating the rate of population growth. But no worthy enterprise is attained without great endeavours. And, in many ways, Africa and its development partners are now better equipped to meet the challenges. Importantly, there is wider agreement on the policy and technical dispensations that should bring about more reassuring socio-economic conditions. In this regard, the silent revolution spreading in many countries has brought in its wake a goodly dose of political sense and public support for measures that aim to improve the human conditions in the continent. In spite of serious difficulties in some parts, Africa and the international community, working together, can bring about a more prosperous rural economy unencumbered by food insecurity that is a threat to life itself.