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Remarks by Dr. Ngozi Okonjo-Iweala, Minister of Finance, Federal Republic of Nigeria
Launch of the 2005 Report
07 September 2005
Mr Chairman. Ladies and Gentlemen,
I am truly honoured to be here today with my friend and former colleague Kema1 Dervis, and the other distinguished panelists to launch the2005 Human Development report. The invitation from the UNDP is a wonderful acknowledgment of the efforts being made in my country Nigeria to turn a new leaf by implementing serious economic and social reforms that can underpin true advances in human development in the country. This is the15th Human Development Report and it makes for a weighty and formidable long to me but I found it one of the most interesting and informative reads among the recent profuse literature on human development, poverty and the Millennium Development goals. This is because of the clear and lucid manner in which it manages to link difficult policy issues of AID, TRADE AND CONFLICT to the essential human condition.
The Human Development Report has always been a favourite of mine from early days for two important reasons. First, using innovative approaches, and new ways of thinking about issues, the reports open up new frontiers in the way we consider Human Development. Second, the Human Development reports --and this one is an excellent example--are wonderfully politically incorrect!! They say in plain language what people in polite "aid " society or circles might consider rude, provocative or strident. They say it equally to developing and developed countries. The language is very clear in pointing out the responsibilities of all actors in the international community.
For example on the issue of agricultural subsidies, the report says straight forwardly on page 129 that the problem at the heart of the Doha Round negotiations can be summarized in three words "rich country subsidies - it goes on to say " I,ed by the World's farm subsidy superpowers,the European and the United States developed countries' support to agricultural production amounts to $350 bn in a year" These subsidies go not to poor farmers or vulnerable communities but to "large scale farmers,corporate agribusiness interests and landowners," 'making a second example on the issue of conflict and security, the report warns that "There are no blueprints for preventing or resolving violent conflict. However, without much more and much more effective international cooperation to tackle the threats posed by violent conflict, the international community cannot hope to protect basic human rights, advance collective security and achieve the MDGs (p181) let me thus commend the authors for plain speaking and for a lucid and well written report whose messages come through clearly.
The Human Development Report 2005 makes one thing very clear. It challenges World Leaders to break from a business as usual approach to development because the consequences for many parts of the world of continuing on the current path are stark in terms of their human development impact. But the report also offers hope and a vision for change anchored on international cooperation in three main areas---Aid, Trade and Conflict prevention and management.
There is no other part of the world where the challenges but also the hope for improved human development coincide so much as Africa.Whenever the Millennium Development goals are mentioned or the challenges of development are debated, one constant always seems to anchor the debate--that is that the challenges in Africa are so great that the continent is falling so far behind that it may not make it. This view of Africa's situation is often compounded by the sporadic outbreaks of famine, conflict or reversal of democratic rule in one country or the other on the continent. But what I want to tell you today is that though the challenges for Africa are enormous on all fronts-- corruption and poor governance, poverty, peace and security,education, health, lack of basic infrastructural services, there is a quiet underlying trend emerging in Africa's socio-economic development, that gives grounds for hope--grounds that the vision and strategies spelt out in the 2005 HD report can work and have a positive impact.
This trend has been acknowledged and commented on in the Commission for Africa Report, in Jeff Sach's seminal work on Poverty, in the Economic Commission for Africa's May 2005 Issues paper on Achieving the MDGs in Africa, in several African Union and NEPAD papers, and in various World Bank and IMP reports including the IMF's recent Regional Economic Outlook for Africa. What is this trend? Simply put, a new kind of African leadership has been emerging over the past decade--a leadership more willing to step up to the plate and take ownership of the continent's problems and proffer solutions.This new hand of leadership has been linked to democratic change. In the past five years, over two-thirds of Sub-Saharan African countries have held democratic elections--perfect or imperfect they have occurred, and more like minded leaders have been able to focus on Africa's social and economic development, they have been able to build institutions and mechanisms such as NEPAD and the African Union 's Peer review mechanism to which 24countries have now signed up for review of their socio-economic progress by their peers, and of which two country reviews have been completed. Slow and imperfect as they may seem, these African institutions have brought to the light, issues of corruption and good governance. No longer is it easy to run a corrupt regime and hide. No longer is it easy to ignore debilitating corruption and abuse of human rights and expect a good reception and business as usual from fellow leaders. The imperative for countries to act and provide good leadership in this area is evidenced by my own country Nigeria.With a committed leader President Obasanjo, and a strong economic team focused on improving governance, we have been able to combat corruption in government contracts saving over $1 bn in the past two years. We have enrolled in the Extractive Industries Transparency Initiative (EITI), to better open up our oil and gas sectors to public scrutiny, and we are auditing our oil accounts for the past five years and will make this publicly available when done this December. We are concessioning our ports and embarking on a reform of our Customs service using internationally acclaimed expertise. We publish revenues accruing to each tier of government and each administrative unit every month in the newspapers so that citizens can better hold their governments accountable. This has been one of the most popular reforms in the country.
Through a new Economic and Financial Crimes Commission (EFCC) headed by a fearless member of our economic team Nuhu Ribadu, we are also investigating, arresting, and putting behind bars, those responsible for corrupt acts and other economic crimes. President Obasanjo has dismissed two sitting ministers, two judges, suspended another judge, had the Inspector General of Police arrested and put on trial. He has caused the resignation as President of the Senate of the third citizen in the land. These acts have sent shock waves on the administration's seriousness in fighting corruption. 'They have been closely watched by other African countries.
On the economic front, African countries have also made some progress.Economic reforms and sound policies have helped to improve prospects for the continent. 'The average inflation rate is one-fifth of levels that prevailed a decade ago, economic growth has averaged 4% in sixteen countries in the past decade, while 14 countries have sustained a growth rate of 5% or higher since1999 according to a UNECA report. 'This is growth rate closer to the estimated 7% growth rate needed to achieve the h4DG goal of cutting poverty in half and eradicating extreme poverty and hunger. Economic reforms in my own country Nigeria have in the past year yielded a 6% growth rate with over 7% growth in the non-oil sector where we need to create jobs. Improved fiscal discipline in an era of high oil prices, more openness and transparency in budgeting, and improved policies in key growth sectors have contributed.
Even though it is acknowledged that Sub Saharan Africa in aggregate is off track to meet the MDGs, the UNECA report on Africa's progress towards achieving the MDGs points out that some African countries are on track toward achieving individual goals e.g South Africa, Botswana and Mauritius, while another 20 SSA countries are on track to meet one or other of the goals.North Africa has either met or is on track to achieve most of the MDGs.
I have spent some time spelling out progress in Africa to show that far from the doom and gloom that is often associated with the continent in peoples' minds, important aspects of Africa's performance are improving.This is what has given the G-8 and others courage to make increased commitments to Africa of recent. It is also what provides the optimism that there commendations of this HD report for strengthened cooperation in the areas of aid, trade and conflict d if implemented, yield positive results that can get many more African countries on the road to achieving the MDGs.
Leaders gathering next week to take stock of progress on the MDGs must seize the momentum to make progress. On AID, the key challenge is to build on the G-8 commitments to ensure pledges translate into real finance and the quality, quantity and predictability of the finance improves. The Paris declarations of Aid Harmonization must be made real. Donors must spend less time fighting over percentage increases, and the source and type of increase and more time ensuring that what is promised is actually delivered. They want to ensure that new and innovative mechanisms for delivering and possibly front loading aid are supported and implemented be they proposed international taxes and surcharges on travel or versions of the International finance facility.Africans on their side must focus on creating the right environment for increased effective use of aid. The focus on fighting corruption, increasing transparency and good governance must be maintained. In this regard, greater help is needed from partner countries to put greater moral and prosecutorial pressure on their companies or citizens who are implicated in corruption in African countries. W egr eat strides have been made on these issues in OECD countries, there is st111 a lot of denial and hypocrisy on the roles played in corruption in African countries by outside companies and citizens including those from other emerging market countries. Very often, when evidence is produced of connivance in corruption in African countries, it is not quickly acted upon by partner countries. Furthermore, cooperation to send corruptly acquired money back to original countries of ownership is not as vigorous as one might have wished. All these are important complementary actions that can ensure citizens of both developed and developing countries that increased flow and use of resources is warranted.
Debt relief is an important part of the increase in the flow of resources. It has both a practical and psychological pact. Recent moves to implement 100°/o debt forgiveness for several HIPC African countries are welcome, but do not go far enough as many countries are often left out. After a strong and tough battle, we are appreciative of the debt relief accorded my own country Nigeria. It will release about $1 billion of the incremental $4-5 billion needed to finance the MDG's. We are channeling the resources to focus on MDG areas where we are lagging such as maternal and child mortality, girls education,and provision of basic and infrastructural services. We have set up a Virtual Poverty Fund Mechanism to transparently monitor the use of MDG related resources. Of the relief given to African countries action has to be taken to make this operational by worrying out modalities to pay for the relief up front in a manner that foes not undermine the long term viability of key multilateral institutions involved in the relief effort. Finally, the debt and aid sides of the donor assistance must be brought together to a shared definition of debt sustainability that takes into account a country's ability to attain the MDGs.
But increased and improved aid is not sufficient for accelerated progress towards the MDGs. ?'here is a need for further private sector investment coupled with increased TRADE access for African countries. One gap in the HD 2005 analysis is that it does not say much about the power of private investment to complement aid and the fact that so little progress is being made in attracting such investment that could be so powerful for human development into Africa. On trade, we need to dig the Doha round out of the quicksand in which it has become mired. This means that rich countries truly have to tackle problems of agricultural subsidies and market access. More importantly, if it is to become a development round, rich countries ought to offer more and demand less. It is simply unacceptable for rich countries to spend $1 billion a year supporting agriculture in developing countries and $1billion a day financing farm subsidies in their countries that undermine developing country agriculture.
Unfortunately, this was an area in which very little progress was made by the G-8 at Gleneagles. Leaders gathering here next week have the unique opportunity to push the door a little further open on this trade issue in preparation for the December WTO meeting. African countries need a more careful analysis of the impact on their economies of a rules based trade system of the type being negotiated by the developed countries. African countries lack the capacity for a robust participation in the trade negotiations and may lose out from disappearing trade preferences, or from still high trade taxes and tariffs in the developed countries coupled with complex rules of origin that have the impact of closing down market opportunities.
One area in which more progress is needed under Trade in Services has to do with agreements on the temporary movement of labour. This is an issue on which developed countries have been slow to move and developing countries stand to make considerable gains that would have a substantial impact on Human Development. There are win-win scenarios that could be negotiated involving temporary labour movements to fill labour gaps evident in developed countries. Yet, progress on ths issue remains mired in ignorance,fear and immigration controls. African countries need to do more home work on this issue and make it a cardinal point for progress at the upcoming Hong Kong meetings. African countries themselves need to do more behind and across the border work, to open up trade among themselves. Infrastructural improvements are needed but more importantly still, cumbersome tariff and trade policies create unnecessary barriers to maximizing economic gains from inter-African trade.
Finally, on the issue of conflict, HD 2005 provides further evidence in support of the simple truth set out by the Secretary General that without peace there can be no lasting or sustainable human development and without human development there can be no peace. Furthermore, the report points out violent conflict, as one of the surest indicators for a low spot in the Human Development Index league table. Africa has been and is still the home for a substantial number of debilitating and long lasting violent conflicts.Nevertheless, the existence of Darfur and Somalia, African leaders have recently made considerable gains in setting conflicts on the continent. Liberia, Sierra Leone, 'Togo, Guinea Bisssau, and a few others were made tractable for the international community to deal with because of the active intervention of African leaders under the AU banner. The will is there for Africans to solve their own problems or at least be an important part of the solution. The necessary institutions and mechanisms in terms of an African peace keeping force (750000 strong) a peace and security council, and a conflict and post contact strategy, are being put in place. Africans have made known their need for training, capacity budding, logistical and equipment support in these areas and the G--8 have promised such support in a phased manner up to 2010.Again, this is an agreement that can be built on by the rest of the international community to ensure that remaining areas of long haul post conflict reconstruction, management of conflict resources, and support for quick and effective resolution of localized conflicts as well as preventative strategies are not forgotten.
Mr Chairman, Ladies and Gentlemen, let me end where I began. TheHD2005 report offers us pointed messages but it also offers us hope. There are doors of opportunity which the international community only has to push open wider and wider to admit those who are being left behind on the Human Development front. Africa has shown and is showing that it has the d and the potential to help push this door so it can deliver on its human development commitments. All that is needed Ladies and Gentlemen is to join hands with Africa to give that door a very powerful shove. Many thanks for listening and many thanks to UNDP for a wonderful and engaging HD report 2005.
