World Bank Vice President for Africa says slashing development aid now is a bad idea
The World Bank has warned rich countries against considering cuts to development assistance at a time of growing fears over a potential global recession. "The temptation is great when a crisis looms – as it does now – for rich countries to slash development assistance. This would be a grave mistake," World Bank Vice President for Africa, Obiageli (Oby) Ezekwesili told investors Thursday in London.
Speaking at the first-ever African Investment Summit organized by the London Stock Exchange (LSE) in partnership with the Financial Times, CNBC, Citigroup, Banco Espirito Santo, among others, Oby stressed that cutting aid would be a grave mistake "not because Africa is desperate for aid, but because the global economy is desperate to see a high-performing Africa.
An expansion in global prosperity and a resumption of global economic growth, she explained, really depends on Africa playing its role as a global growth pool and prospering as a robust market for global goods and services.
Oby spoke shortly after she performed the symbolic ringing of the bell (there is really no bell to ring at the LSE in this electronic age) to open trading on the LSE floor. (Click here to view LSE market opening: http://www.youtube.com/watch?v=ShkAIvd3yoA).
Upon arrival in London a day earlier, Oby had said she hoped fears over a potential global recession would ease, triggering investments in Africa and soothing financial markets roiled by the euro zone debt and American budget crises.
As she left the LSE at the close of business Thursday, the board was all lit in green. The market had rallied, closing 3.7 percent up, extending gains seen on Wall Street and in Asia the day before. The gains of the day prompted one senior LSE official to joke that Oby needs to return to open trading more often.
Speaking to a group of 125 investors estimated to have holdings of about $120 billion at the LSE and with growing portfolios in Africa already, Oby spoke of the sheer abundance of investment opportunities in Africa, urging investors still hesitating to take a bet on the continent to do so without further delay.
"Today is the day African business has made. Tomorrow may be too late," she said, citing the example of an unnamed European firm which turned down the offer to invest in Nigeria's telecommunications sector. The same Nigerian telecoms sector that seemed so unattractive to the European investor has within the decade exploded from a mere 500,000 phone lines to 80 million phone subscribers, while the continent's phone density rose from 10 million lines to over 400 million.
She said the "exciting, new Africa" she is inviting investors to take a bet on is "at a time of unprecedented opportunities for transformation... standing on the cusp of a revolution similar to the ones that transformed China and India".
"Africa is the now, no longer the future," Oby said, urging any CEO who has not yet presented an Africa strategy to their Board of Directors to do so. "Any global player that continues to ignore Africa does so at their peril," Oby said.
The UK Secretary of State for International Development, Andrew Mitchell, who spoke at the same summit on the challenges Africa still faces reiterated his government's support for Africa's development.
Investors, Oby pledged, will find in the different branches of the World Bank, the global knowledge they need to understand Africa; the political risk guarantees certain markets may impose; and the support all investors sometimes need in resolving international investment disputes.
While foreign partners like the World Bank and foreign investors can help, "the ultimate responsibility for delivering on Africa's development promise is that of the peoples of Africa and their governments," the World Bank Vice President told the summit.
She explained that the World Bank's Strategy for Africa commits to fostering partnerships "...working with Africa, not for Africa... partnering with and challenging African governments to embrace much-needed second generation reforms that boost private sector-led growth by improving the environment for doing business".
"We will continue to support efforts to build the foundation for good governance and grow public sector capacity across Africa. We will support programs that improve the continent's economic competitiveness; as well as its ability to embark on and sustain broad-based, inclusive, and job-generating growth. We will support efforts to build African economies that are resilient to shocks and are protective of the most vulnerable segments of the continent's population," Oby insisted on reassuring global capital markets from London on Thursday.