African Development and Japan ’ s Partnership

1. African Developmentand Japan’s Partnership Satoru Miyamura, Ambassador of Japan to Kenya JJ/WBGSP Scaling-Up Program Regional Conference Nairobi, Kenya, Nairobi Serena Hotel, May 11,2006

2. Fundamental Question: “How best can we assist in reducing poverty and promoting economic development in Africa? My career relating to African development 1978-1980 Assistantto Executive Director for Japan, WB (World Bank) 1989-1991 Director in charge of multilateral development banks including WB, MOF (Ministry of Finance) 1995-1998 Director of Tokyo Office, WB 1998-2000 Executive Director for Japan, WB 2004- Ambassador to Kenya, Eritrea, Seychelles, Rwanda, and Burundi 1

3. Trends in ODA Disbursements of DAC Countries to Asia and Sub-Saharan Africa US$million East Asia Sub-Saharan Africa Source: Geographical Distribution of Financial Flows 2005 (OECD) ODA : Official Development Assistance DAC : Development Assistance Committee 2

4. Trends in GDP per Capita in East Asia and Sub-Saharan Africa (US$) EastAsia Sub-SaharanAfrica (Calendar Year) Source: World Bank Development Indicators 2005 (World Bank) 3

5. Analysis by William EasterlyThe Exclusive Quest for Growth • None of the assistance efforts below has been effective in economic growth and poverty reduction . . . - Assistance in investment, education, and population control - Structural adjustment loans - Debt relief . . . Because the assistance has been provided without attention being paid to incentives 4

6. New Approach to Development by Easterly • Measures to enhance growth incentives for the private sector Promote : Democracy and the rule of law Independent central bank and finance ministry Sound macroeconomic policy Free and fair trade policy Good public service Importation of technology and knowledge • Measures to eliminate growth disincentives for the private sector Remove : High inflation Black foreign exchange market Negative real interest rate Big budget deficits Taxation on future income Trade barriers • Factors with negative effects on growth War and internal conflict, corruption, class struggle, ethnic rivalry 5

7. Points Emphasized by HattoriDonor Countries and Recipient Countries: For the Growth of Africa • Africans have a desire for a better life. • Africans act rationally and make self-help efforts to realize their desires. • Donors should think like Africans and work out development assistance policies that appeal to Africans’ desire for a better life and for profits. • Excessive charity is a vice. 6

8. Why does Japan give aid to Africa? Because “There will be no stability and prosperity in the world of the 21st century unless the problems of Africa are addressed and resolved.” (words of Japan’s former prime minister Mori) 7

9. What Is TICAD ?Tokyo International Conference on African Development • Co-organizers : Japan, the United Nations (OSAA & UNDP), the Global Coalition for Africa, and the World Bank • Participants : African countries, G8 countries, Asian countries, international agencies, private sector, NGOs, etc. • TICAD I (1993)Functioned as a way to bring the international community’s attention back to Africa • TICAD II (1998) Emphasized the importance of “African countries’ ownership and international communities’ partnership” • TICAD III (2003) Presented the three pillars of African development 8

10. Three Pillars of TICAD III • Consolidation of Peace Assurance of security; establishment of political governance framework, reconstructionand development • Poverty Reduction through Economic Growth Agricultural development, infrastructure development, promotion of trade and investment • Human-Centered Development Health, education, water, food assistance Approach Asia-Africa Cooperation (south-south cooperation) Human Security 9

11. Progress Since TICAD III • TICAD Asia-Africa Trade and Investment Conference (November 2004) • G8 Gleneagles Summit, Message from Prime Minister Koizumi (July 2005) ・Commitment to double Japan’s ODA to Africa in the next 3 years ・Promise to strengthen support for health, consolidation of peace, green revolution, and trade and investment ・Promotion of Asia-Africa cooperation • Development Initiative (December 2005) ・ Comprehensive approach to create an upward spiral of trade and development in developing countries • TICAD Conference on Consolidation of Peace (February 2006) 10

12. Trends in Japan’s Bilateral ODA Disbursements by Region (Calendar year) Asia Middle East Africa Latin America Oceania Europe Other Note: 1. ODA to the European region since 1990 includes aid to Eastern Europe. 2. If the repaid amount exceeds disbursements, the figure can be negative. 11

13. My Concerns About Recent Development Measures • Debt Reduction - May create moral hazard among HIPCs (Heavily Indebted Poor Countries) - May create a sense of unfairness among non-HIPCs • Budget Support - May reduce incentive to collect tax revenues - May lead to perpetuated dependency on foreign aid unless there is a proper exit strategy • Aid Coordination - Are there sufficient incentives among donors? 12

14. How Can Japan’s Assistance Be Made More Effectiveー My own thoughts ー • Except for emergency humanitarian aid, Japan should give aid only for the self-help efforts of the recipient country and its citizens. • Japan should use the lessons learned from its own experience in its modernization process, its dramatic economic recovery and growth after World War II and its development assistance to East Asian countries. • Japan’s development assistance should reflect the assets Japan possesses. 13

15. Examples of Lessons Learned from Japan’s Historical Experience ・Establish strategies and goals for the country through government leadership ・Promote national unity to achieve goals ・Import knowledge and technology from developed countries ・Strengthen the market economy system ・Maintain a sound macroeconomic policy ・Encourage savings to secure money for investment ・Develop necessary infrastructure ・Encourage exports ・Establish equal employment regulation ・Stress the importance of math and science education 14

16. Assets of Japan Possibly Useful for Africa • Good working spirit and professional ethics • Bottom-up approach and consensus in decision making • Endless endeavor for perfection • Good time management • Public morality to keep the street tidy and clean • Fondness for peace and harmony with others 15