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Remarks by World Bank Group President Jim Yong Kim Announcing $2 Billion for Myanmar
Thank you very much for joining us today.First I'd like to thank the people of Myanmar for the warm welcome I've received today on my arrival.I am a doctor by professional training, so I was particula... Show More + rly pleased to have the opportunity to visit the township hospital in Hlaing Thar Yar with Minister of Health, Dr. Pe Thet Khin, and to learn more about Myanmar's challenges on its path to universal health coverage.I believe that everyone should have access to affordable, quality health services.With less than two years to go until the Millennium Development Goals deadline, we need to focus on expanding access to vital services, especially for poor women and children.No one should be forced into poverty, or be forced to remain in poverty, in order to pay for the health care they need.Today, I'm happy to announce that the World Bank Group plans to invest US$2 billion dollars to support key development priorities in Myanmar, including dramatically improving access to health care and energy for all.This includes funding of around US$200 million from the International Development Association, the Bank's fund for the poorest, to help Myanmar make progress towards MDGs 4, 5, and 6, on child mortality, maternal health, and diseases such as HIV/AIDS and malaria.It also includes US$1 billion in financial support to expand electricity generation, transmission and distribution, to help everyone in the country gain access to electricity by 2030 which will have broad development benefits, for health, education, and expand opportunities for business in urban as well as rural areas.The energy investment will also support development of a National Electrification Plan, enhance institutional capacity, and promote regulatory reforms that are needed to promote private sector participation, which is critical to meet Myanmar's vast development needs.I am greatly encouraged by the government's commitment to reforms.I also know that Myanmar and the World Bank Group share a common goal – to end poverty and build shared prosperity.I look forward during my visit to see how the international community is coming together to help Myanmar, and explore how the World Bank Group can help to make transformative changes to improve the lives of all the people of Myanmar. Show Less -
World Bank Group President Jim Yong Kim Remarks at Davos Press Conference
MR. KIM: [In progress]--in the recent disagreement.And we all have to remember, there's a number of organizations in the European Union have an extremely diverse set of views on this particular ... Show More + issue. So, his ability to bring the Union together, I think, is a very important signal for all of us.A year ago, I said at this meeting that we needed a plan for tackling climate change, a plan fit for the challenge that we face. A year later, we've seen great leadership on climate from countries and companies, but emissions are still rising and the poor are still suffering.We don't have a plan yet and the bits we do have are not equal to the size and challenge.The UN Secretary-General has called for a leadership summit and we all should be very grateful to him for having done so. This gives us the opportunity to organize our collective leadership.This is the year to take action on climate change. There are no more excuses. If we fail, our children and grandchildren will ask us why we didn't act when it was still possible to do so.We need leaders who are not thinking about short-term returns or election cycles. We need leaders who are thinking foremost about taking care of the most vulnerable in this generation and the generations ahead. The good news is that there is action we all can take to turn economies around so they're investing in what is clean and healthy and there are innovations that will bring future growth, jobs, and competitiveness.Through policy reforms, we can divest and tax that which we don't want, the carbon that threatens development gains over the last 20 years.First things first: Many have called for a price on carbon. Now, we must act. Governments must put a price on pollution. Putting a price on carbon through either taxes or market-based instruments are key. Can we be ready by September to set target dates for implementation? We should set performance standards for buildings, cars, appliances, transport systems, and drive efficiency to encourage investment away from high-carbon growth and towards innovation and cleaner, greener growth.We called for a phase-out of harmful fossil fuel subsidies. Act now. The $1.9 trillion in subsidies can be redirected to support investment in clean growth. This challenges the notion that responding to climate change is not affordable.Financial regulators need to lead, as well. Sooner rather than later, they must address the systemic risk associated with carbon-intensive activities in their economies, made clear, of course, by price signals. Start now by enforcing disclosure of climate risk and requiring companies and financial institutions to access their exposure to climate-related impacts.The so-called "long-term investors" must recognize their fiduciary responsibility to future pension holders who will be affected by decisions made today. Corporate leaders should not wait to act until market signals are right and national investment policies are in place. Be the first mover. Use smart due diligence. Rethink what fiduciary responsibility means in this changing world. It's simple self-interest. Every company, investor, and bank that screens new and existing investments for climate risk is simply being pragmatic.The release of the green bond principles this month is welcome, but we need to seize the opportunity, one that many financial leaders have been calling for. Let's use appetite for green bonds to expand the universe of investors who are investing in green assets. Let's create demand for those assets even faster.Can CEOs in energy, infrastructure, and agribusiness come to New York in September with their green bond issue in hand or underway? And institutional investors should commit to purchasing specific significant amounts of green bonds for their portfolios.So, as a first step, we should aim to double the green bond market and reach $20 billion by the September summit, and at least $50 billion by the time of the Paris meeting.In the face of the science and the risk associated with climate volatility and the social volatility of inequality, the question isn't why we should act but rather it's why aren't we acting? We have to help poor countries in this transition. We have to reduce the risk of low-carbon investment, especially in developing countries, but we can do it. Development finance institutions can leverage their capital and use the green climate fund to reduce their risk and catalyze new investments in resilience. Finally, to heads of state: Announcing your commitment to capitalize the green climate fund at the time of the Secretary-General's summit will build trust and important momentum. In 20 years, all of us will be asked a question: What did you do to fight climate change? The leaders here in Davos, both from the private sector and from government, have it in their power to act in substantial ways. Now is the time to act for future generations before it's too late.Thank you.QUESTION: Thank you, President Kim.Indeed, 2014 is a crucial year for engagement in climate change. What is different about today's climate change debate versus 2006/07?MR. KIM: [In progress]--three main things that are very different from [unclear 0:00:04].The fact that the Secretary-General has made battling climate change one of the very top priorities is extremely important, but we also see changes in the United States, a much stronger commitment to tackling climate change and reducing greenhouse gas emissions.China has one of the most ambitious plans to reducing greenhouse gas emissions, an ambition that they need, given that they're the largest emitter, and then, President Barroso; so the three top emitters, the European Union, China, and the U.S., are all in a very different place right now than they were even two or three years ago. So, that's the first thing, political leadership.Second thing is the private sector. I see a completely different view among private sector companies and CEOs of the largest firms in the world talking to us, talking to me particularly, about the possibilities of green bonds and how they can use their capital to facilitate the movement toward renewable energy.And finally, the technology is different, and it's changing all the time. Concentrated solar, for example, was a dream several years ago and now the possibilities are much better, and that's only going to accelerate over time. But to get the kind of investment in new technologies that we need, the market signals have to be very strong. And so, the combination of commitments from the government and from leaders like Secretary-General Ban Ki-moon, and the new and growing approach of the private sector--the private sector, I think, will lead to the new technologies and we can bring in the virtuous circle that we've all been waiting for. Show Less -
Climate Change Is a Challenge For Sustainable Development
Climate change is the most significant challenge to achieving sustainable development, and it threatens to drag millions of people into grinding poverty. At the same time, we have never had bette... Show More + r know-how and solutions available to avert the crisis and create opportunities for a better life for people all over the world.Climate change is not just a long-term issue. It is happening today, and it entails uncertainties for policy makers trying to shape the future.EFFECTS ON RUSSIAIn 2008, the Russian National Hydrometeorological Service (Roshydromet) found that winter temperatures had increased by 2 to 3 degrees Celsius in Siberia over the previous 120-150 years, while average global temperature rose about 0.7 degrees during the same period.Russia is projected to cross the 2°C threshold earlier than the world on average if significant and effective mitigation is not forthcoming. By 2100, the northern half of Asia, including Russia, is likely to experience a temperature increase of 6 to 16°C, compared to approximately 4°C global mean temperature increase.While warming might have some potential gains for Russia, the adverse effects include more floods, windstorms, heat waves, forest fires, and the melting of permafrost.Globally, permafrost is thought to hold about 1,700 gigatons of carbon – and near-shore seabeds in the Eastern Siberian Sea hold a similar amount in methane hydrates that could potentially be destabilized in a warmer world, as well. This is compared to 850 gigatons of carbon currently in the Earth's atmosphere. Of this, 190 gigatons are stored just in the upper 30 cm of permafrost, the layers that area most vulnerable to melting and the irreversible release of methane. The release of even a small portion into the atmosphere could dramatically compound the challenge already presented from anthropogenic sources, potentially wiping out any hard-won mitigation gains.Russia hosts perhaps 70 percent of methane in circumpolar permafrost, as well as the methane hydrates in the East Siberian Sea. Permafrost warming of up to 2°C in parts of the European Russia has already been observed.Russia will be front and center for any efforts to deal with thawing permafrost and Russian leadership is much needed to better understand its effects for the global climate as well as finding solutions for effective adaptation. There is no time to lose.In Yakutsk, collapsing ground caused by melting permafrost has damaged buildings, airport runways, and other infrastructure. In 2010, the Ministry of Emergency Situations estimated that a quarter of the housing stock in Russia's Far North would be destroyed by 2030.Analyses indicate that about 60 percent of infrastructure in the Usa Basin in Northeast European Russia is located in the "high risk" permafrost area, which is projected to thaw in the future. This region is an area of high industrial and urban development, like coal mines, hydrocarbon extraction sites, railways, and pipelines. Yet the timing of this thaw remains uncertain – potentially a few decades or as long off as a century away.DECISION MAKING UNDER UNCERTAINTYPolicy makers all over the world are facing similar challenges. While we certainly know that the climate will change, there is great uncertainty as to what the local or regional impacts will be and what will be the impacts on societies and economies. Coupled with this is often great disagreement among policy makers about underlying assumptions and priorities for action.Many decisions to be made today have long-term consequences and are sensitive to climate conditions – water, energy, agriculture, fisheries and forests, and disasters risk management. We simply can't afford to get it wrong.However, sound decision making is possible if we use a different approach. Rather than making decisions that are optimized to a prediction of the future, decision makers should seek to identify decisions that are sound no matter what the future brings. Such decisions are called "robust."For example, Metropolitan Lima already has major water challenges: shortages and a rapidly growing population with 2 million underserved urban poor. Climate models suggest that precipitation could decrease by as much as 15 percent, or increase by as much as 23 percent. The World Bank is partnering with Lima to apply tested, state-of-the-art methodologies like Robust Decision Making to help Lima identify no-regret, robust investments. These include, for example, multi-year water storage systems to manage droughts and better management of demand for water. This can help increase Lima's long-term water security, despite an increasingly unpredictable future.WORKING WHERE IT MATTERS MOSTEach country will need to find its own ways to deal with uncertainties and find its best options for low-carbon growth and emissions reduction. While they vary, every country has them. One example: Russia has made remarkable progress since 2005 in reducing the flaring of gas from oil production, but it is still the world's largest gas flarer. And it is situated in a region from where black carbon from the flares reaches the Arctic snow and ice cap, which diminishes the cap's reflective power (albedo). The World Bank Group is appreciative of the successful cooperation with Russia's Khanty-Mansiysk region in the Global Gas Flaring Reduction partnership (GGFR). With more Russian partners, in particular from Russian state oil companies, the impact could be even greater.Russia's forests provide the largest land-based carbon storage in the world. Better forest management and improving forest fire response – a long-standing field of cooperation between Russia and the World Bank Group – are another example to reconcile growth and emissions reductions.Options for countries all over the world include a mix of technology development that lowers air pollution; increasing investment in renewable energy and energy efficiency, expanding urban public transport; improving waste and water management; and better planning for when disasters strike.Each of these climate actions can be designed to bring short-term benefits and lower current and future emissions.To move forward on the global level at the required scale, we must drive mitigation action in top-emitting countries, get prices and incentives right, get finance flowing towards low-carbon green growth, and work where it matters most.Prices: Putting a price on carbon and removing harmful fossil fuel subsidies are necessary steps towards directing investment to low-carbon growth and avoiding a 4°C warmer world. We are working with others to help lay the groundwork for a robust price on carbon and supporting the removal of harmful fossil fuel subsidies. An ambitious global agreement could help establish stronger carbon prices and should include commitments to accelerate fossil fuel subsidy reform and other fiscal or tax policy measures in support of low carbon and climate resilient development.Finance flowing: Progress on the provision of climate finance is critical. Governments must deliver a clear strategy for mobilizing the promised $100 billion in climate finance. This $100 billion is doubly important in that it must be used to mobilize effectively private investment and other finance.Climate change increases the costs of development in the poorest countries by between 25 and 30 percent. For developing countries, the annual cost of infrastructure that is resilient to climate change is around $1.2 trillion to $1.5 trillion, resulting in a yearly $700 billion gap in financing. It will take combining efforts of development banks, financial institutions, export credit agencies, institutional investors, and public budgets to meet the climate and development challenge.All public finance should be used to leverage private capital and fill gaps in the market where private finance is not flowing. Also, it must be deployed in a way that the least amount leverages the maximum amount from public and/or private sources. We are not dealing with how to jump start something in which the private sector is not interested, but how we create the framework within which the now small but significant momentum is captured, disseminated, and accelerated and the speed-bumps are removed and setbacks avoided.At the World Bank Group we are committed to working where it matters most:By 2050 two-thirds of the world's population will be living in cities. Helping developing country cities access private financing and achieve low-carbon, climate-resilient growth and avoid locking in carbon intensive infrastructure is one of the smartest investments we can make. Every dollar invested in building creditworthiness of a developing country city will mobilize $100 dollars in private financing for low-carbon and climate-resilient infrastructure.To feed 9 billion people nutritiously by 2050 we need to make agriculture resilient, more productive in changing landscapes, and aggressively reduce food waste. Making agriculture work for the people and the environment is one of the most pressing tasks at hand. We need climate-smart agriculture that increases yields and incomes, builds resilience, and reduces emissions while potentially capturing carbon. The World Bank Group supports the Sustainable Energy for All goals of doubling both the rate of improvement of energy efficiency and the share of renewable energy in the global energy mix from 18 percent to 36 percent by 2030. Reaching these goals is key to low-carbon growth. Show Less -
Remarks by World Bank Group President Jim Yong Kim at Joint Press Conference at World Bank Group Songdo Office Opening
It's a pleasure to be here to open the new World Bank Group Korea Office in Songdo, which was made possible with the generous support of the Korean government, and our host, the city of Incheon.Korea ... Show More + is a true development success story and an inspiration for developing countries across the world.At the World Bank Group, we have set two important goals – to end extreme poverty by 2030 and build shared prosperity -- so that we can create opportunities for all. The next few years will be critical. Today, we also celebrate the opening of the Green Climate Fund secretariat in this city. This is one way that the international development community is coming together to address climate change – what I see as one of the greatest challenges of our life time. It will not be easy, but I am optimistic. After all, we have many examples in history of overcoming major challenges. One example is right here in Korea. It was only 60 years ago that the world called Korea a basket case. Just look at Korea now. Korea is playing an increasingly active role in global development, and I'm hopeful that the new office will help us expand our collaboration with the Korean government and Korean businesses. In Korea, we will be working as one World Bank Group, with IFC, our private sector arm, and MIGA.Promoting investments in emerging markets is another area we're focusing on, which we believe is a 'win-win' for Korea. During my visit, I hope to discuss with all our Korean partners how better we can work together to accelerate our work to end poverty and build shared prosperity. Thank you very much. Show Less -
Press Briefing with World Bank Group President Jim Yong Kim at the WBG Songdo Office Opening
Question on a World Bank infrastructure fund. DR. KIM: And I would just add that this is at the very early stages of the development of this fund. But I as I said during my remarks, it is very i... Show More + mportant to note that the Deputy Prime Minister has been involved in many discussions at the World Bank in precisely this issue.The issue is the access to long-term financing for infrastructure for emerging market economies. And this has been an issue for Korea for many years and this is a problem that Korea has solved in a very successful manner. So we feel very fortunate to have as our counterpart, as our Governor, the Deputy Prime Minister who understands these issues in all their complexities. Question on the state of Korean education today. DR. KIM: I think one of the things I will be talking about this afternoon is about the nature of the Korean education system. One of the things I think is extremely important about this government is that there is a tremendous emphasis on the creative drive, on making sure that innovators are nurtured. And that the future economic growth is assured. One of the questions that Korea has to ask is: At what price is the educational system, especially going to school from 8 in the morning to 11 at night, is that really the best way to assure the future?I have spoken with the Deputy Prime Minister and we all know this is not an optimal system; there are better ways of doing it. I think there are things that Korea has to ask itself about how to organize its education system, and how to assure that the incredible creativity of the Korean people is truly nurtured. Now having said that, Korea is No. 4 in the world in terms of patents and No. 5 in the world is Germany, and Korea has three times more patents than Germany, for a smaller country. If you look at the entering scores of students, entering thesis scores and entering achievement scores, entering the workforce, and compare them with the people who are leaving the workforce, the differential is so much higher; it is the highest in the world. So there are tremendous positives here in Korea. But I think that the conversation now has to be, how will Korea maintain the momentum in the future and how it will do so by nurturing the extraordinary creativity of its young people? This is a question that is very current right now for Korea. Show Less -
Speech by World Bank Group President Jim Yong Kim at the Green Climate Fund Secretariat Launch
This is an extremely important day, and the Green Climate Fund is a source of enormous optimism and hope, not only for us at the World Bank Group, but especially for people living in developing countr... Show More + ies. Many of the ambassadors here are representing those developing countries, and many people have been asking me, "Why is the World Bank so concerned with climate change?" First, I want everyone to know, as the first World Bank President who has any training in science, we have been looking carefully at the science around climate change. And the consensus that man-made climate change is real and is having a significant impact - an increasing impact - is overwhelming.You know, when the panel announced that 95 percent of climate scientists agree that climate change is real and a threat, as a scientist, I heard about this and I thought, "My goodness, there are very few things in my field of medicine where 95 percent of physicians agree." This is overwhelming and powerful and we simply have to face the science. If you have doubts about climate change, you are not doubting climate change. You are fundamentally putting into doubt science itself.Second, we know that climate change in our lifetime threatens to roll back so many of the gains that we have made over the years. We have all invested enormously in the economic development that we see - especially in the developing countries and the middle income countries - those will be rolled back. And we are convinced that there is no way that we will be able to end poverty in our lifetime - end poverty by 2030, which is our goal - without tackling climate change in the most serious manner.There are things that we can do …(break in recording)… to build clean liveable cities. We are working with the Chinese Government right now to put out a report on how to build cities that are using renewable energies and that are organized in a way that would dramatically decrease the carbon footprint. Cities are responsible for two thirds of the greenhouse gas emissions. We know we can build smarter and cleaner cities. We also know that every dollar invested in building the creditworthiness of developing country cities will mobilize $100 in private finance for low carbon and climate-resilient infrastructure. Also we know that we need to feed 9 billion people by 2050 and the only way that we can do that is to make agriculture more resilient, more productive, in the changing landscapes that we will see due to climate change. Making sure that agriculture is good for people and the environment is one of the most important and pressing tasks.One of the things we have to face is that the costs of tackling climate change are simply staggering. Our estimation at the World Bank Group is that climate change will increase the cost of development in the poorest countries by 25 to 30 percent. What if the Republic of Korea had only started developing now and was facing a 25 to 30 percent premium in addition on the cost of developing the economy? We know that is going to be the cost - and we simply must step up to the challenge and find funding, public finance, precious official development assistance dollars that are available. Every single dollar of IDA has to be used in order to leverage much higher amounts of private finance. We know that the path toward fighting climate change will depend upon the private sector seeing investment in climate smart agriculture, investments in cleaner cities, investments in sustainable and renewable sources of energy, as a smart business venture, we've got to get to that point.We have been working, of course, for years with the Climate Investment Funds that were established in 2008 - and we've learned some very important lessons that of course we will share fully with the Green Climate Fund. And we think that the Green Climate Fund can take some of these insights and practices to an even higher level.First of all we learned that investing in readiness of countries to absorb climate finance is critical. We cannot assume that all the countries are ready at this point to absorb the kind of finance we hope to get. We also learned that we have to focus on investing in transformational transport and energy projects. Hundreds of small pilot projects will not accomplish our purpose.We also believe now that we have got to build markets for renewable energy and advanced energy efficiency. And again, both the technology and the political will to do that, I think, is there. The prize, of course, is that we can leverage institutional investors, sovereign wealth funds, pension funds and climate capital markets and others.My only feeling is that as the severity of these extreme weather events increases and we begin to understand in a much more visible way, the impacts of climate change, the market will move in the direction of supporting our efforts around renewable energies, cleaner cities, and climate smart agriculture.At the World Bank, we are stepping up our mitigation and adaptation and disaster risk management work very, very aggressively. We need to get everybody on board. And of course, one of the most important things we have to focus on is getting prices right. We must find a way to set a stable price on carbon.Now we are of course extremely hopeful that in 2015 we can have a binding global agreement. But in the meantime as we prepare for 2015, we have got to find ways of moving foward, whether it be carbon taxes or carbon markets. Whatever form it actually takes, a stable price on carbon that reflects the actual cost of putting carbon in the air has to be found.I am very sorry that Christine Lagarde could not be here. We have been working together on this issue and I don't think you can underestimate the importance of the Managing Director of the IMF, getting up almost every day now, and saying, "We have to have a stable price on carbon and we have got to remove fossil fuel subsidies." These two are extremely issues and the fact that they are now on board and supporting these issues is very important for the world.You know, we are in the middle of raising funds for IDA, which is our fund for the poorest counties. We have pledged that for every single dollar of IDA, we are going to track the adaptation benefits and climate disaster risk benefits for all development spending, and also do upstream screening of development projects to ensure that they are disaster resilient and that they work for adaptation to the maximum ability.You know, one of the things that President Park said that I think is so powerful and important, is that climate change is not a problem for the future. Yesterday I had the opportunity to visit middle school students in Seoul. There is a Climate Change Club at this middle school and they presented to me their own insights, and what they are trying to do to tackle climate change.I have two sons, a 13 year old son and a 4 year old son, and as President of the World Bank Group, listening to the way my children already talk to me, my guess is that in 15 or 20 years, they will be saying "Dad, what the hell were you thinking? You were President of the World Bank and you didn't do enough to tackle climate change. You gave us this world, where Bangkok is underwater, where the coral reefs are gone, where heat spells that were 1 in 100 years, happen every summer. Where poverty has gotten worse and where all hope of development in some of the poorest hottest countries, has gone. Why didn't you do more, when you knew that this was going to happen?"We have an historic opportunity with the Green Climate Fund to be able to look our children and our grandchildren in the eye, in 10, 15, 20 years, and say, "No, no, no, we knew what was happening and we took action, because we cared about you."Thank you very much. Show Less -
Opening Remarks by World Bank Group President Jim Yong Kim at Japanese and Korean Media Roundtable
Thank you for coming.I wanted to invite a few reporters from Japan and Korea as I'll be heading to both countries in about a week's time. I thought you might be interested in what we're looking to acc... Show More + omplish on my visits.First, though, I'd like to report on a phone call that I had this morning with Philippine President Benigno Aquino. I expressed my sympathy to the government and people of the Philippines for the devastation caused by Typhoon Haiyan. I also offered to President Aquino an additional $480 million dollars in additional financial assistance to help communities lead the reconstruction effort. This follows a $500 million dollar emergency loan announced earlier this week, bringing our total package close to $1 billion dollars. We know that the relief, recovery, and reconstruction efforts will take time. The World Bank Group is committed to supporting the government's efforts to rebuild people's lives no matter how long it takes.I also told President Aquino that I very much appreciated his voice in speaking out for more global action against climate change. The science is clear: the numbers of extreme weather events around the world are increasing due to the change our climate caused by dangerous emissions. Now, let me talk about my upcoming trip to Korea and Japan. First, I'll be going to Korea to open a new World Bank Group office, after signing an agreement to establish the office with Deputy Prime Minister Hyun last month. This office will support a broad range of partnership opportunities, leveraging the entire World Bank Group's knowledge and convening power and Korea's expertise in areas such as development policy, information communications technology, infrastructure, and the financial sector.In addition to the World Bank's traditional lending arms, the new World Bank Group office will also host IFC and MIGA, our private sector affiliates. We're hoping to increase our partnership to help Korean firms invest in emerging markets around the world.The World Bank Group has had a long and extremely productive relationship with South Korea. As you all know, I was born in Korea, and in my youth, the country was referred to as hopeless – a "basket case." We know now, of course, that such a label was grossly wrong – and grossly unfair. Today, Korea is an exceptional example of an aid recipient turned donor, with GNI per capita growing from US$67 dollars in the early 1950s – lower than many countries in Africa – to over $20,000 dollars. As the world's 14th largest economy, Korea is a key development partner of the World Bank Group and an important contributor to the International Development Association, our fund for the poorest. When I first took up this position, I was very encouraged to find that many leaders in Africa and other developing countries wanted to know how Korea did it.At our Annual Meetings last month, the World Bank Group launched a new strategy to support the twin goals our shareholders endorsed in the spring: to end extreme poverty by 2030, and promote shared prosperity, which means making sure that incomes grow for the bottom 40 percent of the population in every country. To reach these goals, we're going to have to accelerate the pace of poverty reduction in Sub-Saharan Africa. More than one-third of countries in Sub-Saharan Africa had an extreme poverty rate of more than 50 percent in 2010. In 12 countries, it is above 60 percent; in 4 cases, it is above 80 percent.You can see why I'm placing a high priority on Africa –and I hope the new office will strengthen our collaboration, so we can leverage Korea's knowledge and its vibrant private sector. From Korea I'll be heading to Japan, where, among other things, I'll be participating in the Global Conference on Inclusive and Sustainable Growth through Universal Health Coverage. The conference is the culmination of a two-year partnership between the World Bank and Japan to respond to the growing demand from low- and middle-income countries for advice and support to advance universal health. As some of you probably know, Prime Minister Abe is supporting this initiative as a pillar of Japan's recently launched "Strategy on Global Health Diplomacy," which builds on Japan's own successful experience in achieving Universal Health Coverage. The Government of Japan and the World Bank undertook a joint study on disaster risk management to learn lessons from the Great East Japan Earthquake and Tsunami, which could be applied to developing countries vulnerable to adverse natural events. The recent devastating situation in the Philippines reconfirms how natural disasters could take heavy tolls socially as well as economically. Globally, almost $4 trillion dollars has been lost over the past 30 years because of natural disasters. We know these costs can be greatly reduced through effective planning and preparedness. We will be jointly launching the Tokyo Disaster Risk Management Hub to disseminate Japan's advanced knowledge on disaster risk management. This ranges from a culture of preparedness to effective legislation and regulation, including high-standard building codes, in order to build resilience in developing countries. The Tokyo hub will be a knowledge broker and spread Japan's know-how and technology to address specific needs of countries. Japan has been a member of the World Bank for over 60 years, and is our second largest shareholder. I look forward to discussing ways with Japanese leaders on how we can further deepen our partnership.I'll be happy to take your questions. Show Less -
Speech by Managing Director and Chief Operating Officer Sri Mulyani Indrawati at Third Afro Arab Summit
Your Highness, Sheikh Sabah Al-Ahmad Al-Jaber Al-SabahYour MajestiesDr. Nkosazana Dlamini Zuma, Chairperson of the African Union CommissionDr. Nabil El Araby, Secretary General of the Arab LeaguePresi... Show More + dents, Prime Ministers, Ministers,Ambassadors, Ladies and GentlemenAllow me first to express my sincere thanks to our host, His Highness Sheikh Sabah, as well as to the people of Kuwait for the gracious welcome we have received at this Third Afro Arab Summit. It is a pleasure to be here today. This event is a key step toward a collective vision of integration and collaboration. Africa and the Middle East and North Africa regions are forever bound together by history, geography, trade, and traditions. In both regions there is a deep belief that cooperation and integration will greatly strengthen both and bring benefits to all. This Summit today embodies this belief.These are times of historic changes. Many countries in the Middle East and North Africa are experiencing momentous social, political and economic transformations. Many of you face challenges I know too well from my own country, Indonesia, where the transition towards democracy and a united society took more than a decade. I urge you to stay focused on your goals for more inclusion and resilience.At the same time, in much of Africa, we still see very high rates of extreme poverty along vigorous growth rates. High commodity prices and improvements in governance and in macroeconomic management have turned Africa into a major destination for foreign direct investment. But the fight against poverty needs to continue.The World Bank Group recognizes your challenges but also your opportunities. We have set two ambitious goals: to end extreme poverty by 2030 and boost shared prosperity for the bottom 40% of the population. These twin goals have direct relevance to all of you. Nowhere is the goal of ending extreme poverty more relevant than in Africa, where 48% of the population live on 1.25$ or less a day. And the Arab Spring showed just how critical it is to share the benefits of growth and prosperity by creating opportunities for all. By sharing your collective vision of integration and collaboration, African and Arab countries can address their problems, whether this is low intra-regional trade, the enormous infrastructure deficit, the challenges of climate change and desertification, insecurity or organized crime. Today, intra-regional trade in your regions is lower than anywhere else. So it will not only require actions and investments within each country, but much greater integration within and between regions - and with the rest of the world. When I was Minister of Finance in Indonesia, I experienced how integrating trade, as we had done under ASEAN, can reap huge benefits to all members of society in these countries. There are real synergies in building regional infrastructure. For example: Africa has the largest hydropower potential in the world. Together with our other partners we are supporting the development of the Inga hydroelectric dam, which will eventually provide enough electricity to serve about half of southern Africa. We see the potential of similar projects, especially through power pools and transport corridors, elsewhere.In a globally interconnected world, information superhighways are critical. So initiatives - such as the Libya-Chad-Sudan fiber optic network – will link the Maghreb and Sahel while reducing costs and improving connectivity. However, reaping the benefits from physical infrastructure requires also investing in the "soft" infrastructure. Your leadership in reforming policies will strengthen the economy, enable you to deliver quality services, and further improve the investment climate. With sound institutions in place, private investors will stay and social inclusion will grow. Enhanced integration and collaboration require your common vision, strong leadership and relentless pursuit of win-win solutions. We at the World Bank Group are standing ready to work with you on getting there. We are committed to scaling up our engagement in African and Arab countries by providing finances. But we also bring the experience and knowledge of other regions to the table. Regions all over the world that have grappled with similar challenges and have found solutions. Our collaboration with Arab development partners is showing results. Through these efforts we have mobilized nearly $8 billion in support of Yemen's recovery, and are mobilizing much needed support to Lebanon and Jordan to help respond to the spillover from the Syria conflict.We have adopted regional approaches to development in the Great Lakes and the Sahel, and are preparing a regional initiative in the Horn of Africa. During President Kim's recent visit to the Sahel he announced over $1.5 billion in additional funding for regional projects focusing on energy, agriculture, health services and connectivity. They will support peace, security and development. The importance of the funds from the International Development Association, IDA, in supporting Africa and countries facing fragility cannot be overstated. It has contributed significantly in the ongoing fight against poverty. It is also a sound investment in fast growing economies that will contribute to a higher goal of shared prosperity. Malaysia and Brunei used to borrow from IDA, this year they have pledged to be first time donors of IDA.We are grateful that some of the countries you are representing are generously contributing to this effort, while I also encourage others who are not yet IDA members to join this collective to support the global effort to end poverty. I would also like to take the opportunity to thank many of the countries here who have offered kind support to the relief efforts in the Philippines. Such displays of global solidarity reveal to the world, the generosity, commitment, and leadership of the African and Arab community.Excellencies, distinguished guests, Poverty is not a destiny. Many countries have pulled themselves out of poverty and are shining examples of what is possible. I am convinced that with the collaboration exhibited here, with solid and meaningful reforms and policies, and with sound investments, ending poverty and sharing prosperity will be part of your shared future.I thank you. Show Less -
Transcript: Panel Discussion at Wall Street Journal CEO Council
MR. WESSEL: --and countries like the U.S. and Europe better get used to this because we are going to be less and less relevant in the future with emerging markets.And I would say tha... Show More + t, in the last six months, maybe there's been some rethinking about that. So, my question to you is, is the golden age of emerging markets behind us and what are the chances--what are the factors that the next decade won't be so pleasant for emerging markets as the last 20 or 30 years will be. There's certainly--DR. KIM: Well, you know, if you look back over the last five or six years, even Africa has over 5 percent growth rates. And you know, there's been a slowdown. If you look at some of the biggest countries, it looks like India is going to have a good third quarter. China came in at an annualized rate of 9.3 percent in the third quarter. And you know, there are all kinds of downside risks, you know, the biggest one being what's going to happen here in this country when February rolls around. But we think that, over the next year, growth in the emerging markets is going to be over 5 percent, and we think that's going to continue. And so, you're not going to see, I don't think, the 10-plus percent growth rate that you saw prior to 2008, but you know, a lot of the fundamentals in these countries are in much, much better shape than we even knew.You know, in 2008, we thought that Africa was going to go off the deep end with the financial crisis, but then kept a 5-plus percent growth rate all the way through. And you know, I traveled all the way to--I just came back from a long trip to the Sahel, and you know, the leaders--the leaders there, I was very impressed with their understanding of, one, the importance of their own sort of management of macroeconomics, managing their debt watching their current account deficits. And also, every single one of them, what they tell me every time I talk to them is, "We've got to figure out a way to attract more capital." So, something's happened over the last 10 or 15 years, and I think that emerging markets understand that they've got to be competitive and they've got to create business environments that will attract all of you, and one message that I wanted to bring for this group is, you know, think creatively about opportunities for all of you in the developing world. You know, we now are doing the--focusing a lot of our effort on trying to make deals. There's so much infrastructure needed--so much investment needed in these countries, and they all know that they're going to have to attract private capital. And so, the opportunities may be much greater than you think sitting from the outside, looking at places like the Sahel.MR. WESSEL: Stan Fischer, what do you think?MR. FISCHER: Well, I think the emerging markets have done very well for a decade. It was a decade of very easy money, of very easy access to finance.But if you look at the BRICS, Brazil, Russia, India, China, South Africa, the BRIC is China and the others have not yet built a framework that is going to be very stable.The Chinese, the [unclear 0:03:20] has actually produced a plan which nobody understood at the beginning and now, as time has gone by, it looks better and better, including radical changes in changing the one child family gradually.China grew for 40 years at 10 percent. It just outstripped Korea which, up to that point, was the fastest for the longest. Rule of 70 says, if you are growing at 10 percent, you double ever 7 years. So, that period increased GDP by "two to the fifth" plus something, which is unprecedented in history. And it looks like, from the [unclear 0:04:07] they got most of what they should do, including structural changes, in place. So, that's good news. Now, whether they'll be able to do it and whether, in the end, they'll be driven back to bank financing under orders from the government, we don't know. That probably could happen.For the others, they absolutely have to improve their policies. This is a sad story of life that if you have all the prerequisites in place but you pursue policies which get worse and worse, you get into trouble. There is this phrase, "The Fragile Five," which consists of India, South Africa, Turkey, and Russia and Brazil. It's interesting that--MR. WESSEL: I was afraid you were going to put the United States on that one.MR. FISCHER: The United States, more or less no.The fact is that every one of them was either a BRIC or, shortly after inventing the BRICS generally, invented something called the MIST. The MIST consisted of ten countries of whom the leaders were Mexico, doing well, Indonesia doing reasonably, South Korea doing well, and Turkey, not clear.And you can't stay on top if you don't keep adjusting your policies, and they haven't, and they're beginning to pay the price. Will they learn their lesson? At some point they will, the sooner the better, we don't know about that, and I just second what Jim Kim said about Africa. Africa has continued to grow at 5 percent. It's largely based on exploitation of natural resources, but there's more than that going on in quite a few countries, and it's well worth looking at.And lastly, Latin America is divided in two: countries doing the right things, countries not doing the right things. The ones not doing the right things don't look especially good right now, that's Venezuela, in particular.So, even there, we see the same fact that you better get your policies straightened out, and I hope they do it.MR. WESSEL: Okay. Glenn Hubbard, so, we have an optimist and I would say cautiously pessimistic Sam Fischer. Where are you on this?MR. HUBBARD: Well, I would say caution, as well.Certainly, the easy credit has been largely responsible for the emerging market boom, as has China's own development.I think that Stan is essentially right, that the policies are paramount. You know, there's so much attention now being paid to tapering in Fed policy in the U.S. will spill over to the emerging world. That's a bit like the torture of Jerry Baker's early morning music analogy--it's like blaming it on the bossa nova. You know, the Fed is not responsible for structural problems in emerging economies. And if you take China, for example, and agree that some of the recent economic developments have been good, but it is still a financial sector whose policies don't work. Structural reforms, likewise, are needed in India, as well.And so, I think around the world, rather than looking at big monetary or macro factors, these are individual policy factors. And I would agree with both the other panelists that Africa remains really an exciting bright spot, particularly for the climate in entrepreneurship. I know in my own school we've been on the ground in Africa now for a decade, training people who train entrepreneurs, really exciting.MR. WESSEL: Interesting.Let's talk about a couple of developed countries, start with Europe.I am always fond of writing about Europe because it makes me feel better about Washington.Stan, why don't you start. Do they have any reasonable chance of finding their way to a set of institutional arrangements and policies that allows them to grow and a rate that raises living standards?MR. FISCHER: They have a reasonable possibility of doing that, but it's going to take longer than is politically convenient, and we'll see whether they can maintain that balance. They're trying to create something which took the United States 100 years to create, which is a more or less unified center based on the European Monetary Union.And this banking union, for instance, is moving much faster than anybody thought they could. But take note, the United States fixed its banks by 2009, basically, and you've seen the difference between American banking and European banking. Now, the European Central Bank is about to undertake an [unclear 0:09:04] of the banks which are going to be [unclear] by it, which means they're not going to be fixed until 2014 or 2015 at the very earliest. They have the money to do it. The European stability mechanism can recapitalize banks, but that can be done, but they've got to get the work done. So, that means [unclear 0:09:26] because persuading 15 countries that they want they want to be in a banking union and hand the supervision to some other group rather than their own regulators is not easy, it's happened. And then they've got to move on at some point to the fiscal side. Now, everybody thinks you have to move immediately to American centralized government, which is larger and more important than the national governments. They don't have to do that to begin with. They just need to have a reasonable sum of money at the disposition of the central authority so it can move funds around among countries, and that's a different proposition. They'll be able to do that if the political will remains, and that's going to be a very tough issue. I would say that, just think about this two years ago: Everyone was sure the Euro wouldn't survive the year. Well, here it is. People aren't even talking about its disappearance. They have a habit of overcoming these difficulties despite everything. And so, I'm moderately optimistic it will happen, a long time from now.MR. WESSEL: Glen, what about Japan? They're kind of rolling the dice on policy. Do you think they have a good chance of success or not?MR. HUBBARD: Well, I think that, you look at the various arrows, I think you'll see a range of chances. The change in monetary policy under [unclear 0:10:48] has been very welcome. Japan has had persistent deflation that can be arrested. It's a monetary phenomenon. It is simply not the case central banks are powerless here. The government, I'm a little more skeptical. Certainly, the talk from the incoming administration was very promising in the beginning and continues to be, but the real issue inside Japan are structural reforms that have bedeviled the Japanese economy for decades, and I really don't see a whole lot of progress being made there. So, good discussion. If the progress could be made, an excellent outcome, and monetary policy welcome.MR. WESSEL: And Dr. Kim, what do you hear from people when you travel around the world about what they think about the United States in 2013? Are we seen as a place that--envy and admire because we all have all this entrepreneurial fervor, or are we seen as a laughingstock because we can't even figure out how to keep our government open?DR. KIM: Well, I think if you just look back at what happened in August of 2011, the last time we had a near miss, I mean, we followed the numbers very carefully, and stock markets in developing countries took a 15 percent hit. Borrowing costs went up 75 basis points. And so, whatever happens here has a very direct impact on what happens in the developing world. But I think there's still tremendous admiration for the ability of the U.S. to innovate. And let me tell you, every single country in the world is thinking about what they need to do to build an innovative sort of new generation coming up. So, my experiences, by running a university, it has come up with almost every leader I talk to, because they're saying, "What do we need to do to become more competitive? What do we need to do at the primary, secondary, and especially at the tertiary level?" And so, the admiration for that part of the United States still remains very strong. I mean, there are a lot of countries--you know, China is one, Korea may be another, who have done so well at process improvement, but their real, real innovation is still, I think, a bit out of reach, and those countries want that and they know that we have that here in the United States.MR. WESSEL: Stan and Glen, you both mentioned periods of easy money and central banks' behavior. I wondered if you could--there's beginning to be some criticism that the central banks have done too much, that they have taken too much of the responsibility for getting growth going, particularly in the U.S., maybe in Japan, and that there are risks now of financial instability or whatever. In the circumstances, Stan, do you think that the central banks, the Fed in particular, are doing too much, or is this what the doctor ordered?MR. FISCHER: Well, the--without the Fed, we would have a much deeper recession, without the extraordinary things that it's done the economy would be in much worse shape today and we need to remember that. Precisely how to get out of it, of what speed to get out of it is a much harder thing to measure and to calculate, and there's this problem of not quite understanding what's happened to the participation rate of the labor force. There's far fewer percentage of Americans working today.So, there are dangers and as a central bank Governor, we have to reduce our interest rates in Israel, because United States' rates were so low that if we had kept them where they should have been, 4 percent, say, we would have had an inflow of funds that would have just created a lot of damage. So, we cut the rate. Housing prices have taken off. You're beginning to see housing prices take off in the United States. But these are things which you can watch closely. Everybody knows now about asset prices and presumably they will take that into account and moderate policy accordingly. So, yes, it's dangerous, but it's much--but it was necessary.There's another line, which is you shouldn't help the government [unclear 0:15:04] face the dilemma that they should be facing. Leave the job to them.Well, as a central bank Governor, I saw that one very nice, but it really wasn't our job to try and figure out how to teach the government to behave better. We had certain tools at our disposal, this is what was going to happen, we used it. And that, I think, is the only way you can behave. The moment you start thinking you're disciplining governments when you're an unelected [unclear 0:15:37].MR. WESSEL: Glenn.MR. HUBBARD: I think there's no question that we're asking too much of the Federal Reserve and that the Federal Reserve is in dangerous territory.It did start out with extraordinary positive responses and the response to the crisis, Stan, I mean, has it right, without the Federal Reserve's aggressive response, we could well have had a depression.But it's worth noting that the Fed's early actions in things like mortgage-backed securities markets were in the structural issues of the financial system. Unless persuaded that some of the other measures, long-duration treasury, riding the quantitative easing measures, that had much of an effect on the real economy and run the risk of misallocating capital in the economy.If you go back, what we needed, it was closer to negative interest rates that we could not engineer. The textbook answer for that would have been big fiscal policy changes, massive investment incentives, things like that, that would mimic exactly that kind of industry, but the government sat on its hands. So, the problem really is not the Federal Reserve. The problem has been the government.I agree with Stan that it's not the Fed Chairman's place to give lectures to government officials, but nor should we believe that the Fed can engineer an unemployment rate of 6 percent or 6.5 percent simply by its own power.MR. WESSEL: I have another question for you, but I don't want to deny you the opportunity to second-guess the Fed.DR. KIM: Thankfully, that's not part of my job description.MR. WESSEL: I want to just--before we turn to questions in the audience, I want to ask you about climate change.To what extent do you think the global governments are doing enough to prepare for the risk that we're really going to have a problem?DR. KIM: Well, I think, first, let's start with the science. You know, this is something that I dug into deeply when I came on board. And there are a couple of things. First of all, I think the science is pretty clear that there is a phenomenon of manmade climate change. And the second question is, so what do you do about it? And what we were looking for is, are there things that governments, corporations, that everyone can do right now that pretty much people agree. So, one of them, 70 percent of all greenhouse gases come from cities. So, is it possible to build more livable, cleaner cities? Well, New York City--and Mayor Bloomberg has shown this--that you can make tremendous progress, and his goal of 30 percent reduction of the carbon footprint by 2030, they're going to get there by 2017. That's something that we can do and we're actually working on that with China. China has completely changed its approach to global warming and climate change because they've had to close down their cities due to pollution, and they're losing a million people a year. So, there are things we can do, cleaner cities--MR. WESSEL: So, you mentioned some good examples but are, in general, they doing enough or they're not--DR. KIM: Not yet, not yet. But here are the things we can do more on: So, cleaner cities, renewable energy, climate-smart agriculture, forms of agriculture that not only have better yields but actually put carbon back in the ground. We can do that and rather than arguing about--you know, rather than arguing about only political solutions, we have to try to reach a political solution globally but in the meantime there are so many things we can do that's good for people, good for business, and good for the environment.MR. WESSEL: Okay.John Passo [phonetic], are you here somewhere?If you have a question, raise your hand and someone will bring you a microphone, and wave your hand. Otherwise, I will keep talking, even though I can do that.There's one in the back. Just speak loudly. Tell us who you are.QUESTION: [Off microphone.]--the first one is China has been a hugely important consumer of [unclear 0:19:25]--and second part is the real question--we've experienced two decades of over-investment booms around the world, housing in the United States, technology, emerging markets. I'd like each of you to put odds on the probability that China is experiencing an over-investment boom [unclear]--MR. WESSEL: Let's take the second question first.MR. HUBBARD: 100 percent.MR. WESSEL: 100 percent to having--MR. HUBBARD: Between the odds--I mean, China has been massively over-investing. It has invested in large numbers of negative net present value projects. That's not because their leaders don't understand economics. It is a bet about generating employment. I think it's a bad bet, it's one that leads to financial problems down the road, but absolutely there's massive over-investment.DR. KIM: I mean, if you look at the numbers, if you go back 10, 15, 20 years, China was investing at about 28 percent of GDP, and then it's gone up over time. Now, it's 45 percent of GDP. We've actually never seen that level of investment in the world before. So, the Chinese know they have to unwind. They have said they are very serious about moving from an investment focus to a growth model to one more focused on consumption, and I think the sounds that you heard coming out of the plenum are very much in that vein.You know, I've met with him, I've talked with all of the leaders there, and they understand what they're doing. And this group of leaders has much more savvy around economics than previous groups of leaders, but it's going to be tough because that unwinding has to happen gradually, but they know they have to do it.MR. WESSEL: All right.Martin Starr [phonetic].QUESTION: [Off microphone]--next year, it looks like nominal GDP will be a little bit better than this year, though the underlying current might be a little stronger generally, but can you just--[Overlapping speakers.]QUESTION: BRICS and next 11, which are going to be the stars and which are the duds?MR. WESSEL: So, of the 15 emerging markets, who's going to be a star and who's going to be a dud? Don't all answer at once.MR. FISCHER: My guess is that China will turn out more positive than is expected; there will be about 8 percent growth.Remember that when China grows at 8 percent after 10 years of growth at 10 percent, it is adding for more to global GDP at 8 percent growth this year than it added when it was growing 10 percent 10 years ago, because the economy is two-and-a-half times larger than it was previously.Well, duds, there are a lot of candidates and I'm not sure I'm one to sort them out, but I think there is a chance that policy in India is a great disappointment. I don't know if you want to go as far as call it a dud, but India had it right and then politics is taking over and doing things things that do not make a whole lot of sense economically, and there's an election coming up. And wherever there's an election coming up, it's worth considering what they're going to do up to the election, and then how long it will take them to undo it.One last thing: We used to have this saying in the IMF, it takes ten years to build up a country and to build up its framework and it takes one election to destroy it, and it happens time and time again, and it's very sad.MR. WESSEL: You're a ringing endorsement of democracy here, Stan.MR. FISCHER: Huh?MR. WESSEL: A ringing endorsement of Democracy. [Unclear 0:23:05] about Brazil? Brazil more likely--Glenn, Brazil: more likely to be a dud or a star?MR. HUBBARD: Well, I think probably somewhere in the middle, back again to the policy mix question that we talked about in the panel discussion. I would add an easy to the dud, too, of Argentina, which continues its century-long obsession with terrible public policy [unclear 0:23:27] pile of duds.DR. KIM: Although they cleared their arrears with us.MR. WESSEL: So, you want to nominate a star and a dud? You have to nominate a dud if you nominate a star.DR. KIM: Let me tell you a couple of places where I'm hopeful, right?And again, let's go back to Africa. So, one of our--almost half our business now is private sector. And so, our jobs is to help to find ways of de-risking investments, if you will. And you know, just in Burkina Faso--you know, who's ever been to Burkina Faso, but they've got great leadership, the private sector has been growing, the leadership is totally committed to building a better business environment, and they pay $0.75 a kilowatt-hour for electricity, which is seven times what we pay here in Washington, D.C.If we can find ways of getting long-term capital for them to be able to invest in energy at a much lower rate, those countries are going to grow. I mean, they're educating their people much more, it's a totally different scene now. And I would just say, once again, that if anyone is interested, please talk to us, because our role is to find ways of making the--we think the innate attractiveness of investing in Africa apparent to people like yourself. And I think you'll be surprised of how much we know about individual economies their governments and the policy environment, and you may think differently about the possibilities. And another place that I hope grows quickly that we're doing everything we can is Myanmar. Myanmar has a huge potential upside. They've made some very courageous decisions and we, as a global community, have to show that there's a democracy dividend. So, we're running like crazy to build energy infrastructure there and, if we do, I think they're going to--they could be very strong.MR. WESSEL: What about Russia? Does anybody think Russia is doing...MR. FISCHER: Russia is not going to do well. With the current cuts of policy they're implementing. Incidentally, Martin, on Brazil, there is an election coming up and there's going to be one party that believes in what I think of as good policies, and one policy has implemented what I think of as not good policies. And so, that's a very uncertain outcome.MR. WESSEL: Anybody else?[Pause.]MR. WESSEL: Oh, come on.All right. Let me ask you this: Do you think that we have a chance, Dr. Kim, in eradicating global poverty, extreme poverty, which is, as you define it, people who live on $1.25 or less, in our generation? Are we close enough to doing that?DR. KIM: We can. You know, China lifted more than 600 million people out of poverty in the last 20 years. We have a chance to do it, but our research shows that about two-thirds of the poverty alleviation comes from growth and about a third comes from various policies, methods to support the poor directly.And so, the thing that gives me--is encouraging to me is I think there's not a single country that I have visited--and that's--[unclear 0:26:38] visited country--that doesn't understand the importance of private sector growth as a part of their overall economic strategy.Even in India, they have a $1 trillion infrastructure deficit over the next five years, and the government has said to all of us that more than half of that has got to come from the private sector, "So, we want to learn how to help the private sector do better." Now, they've got a ways to go, as Stan and others have said, but I have to tell you, they're committed to it. At least they clearly understand that private sector growth is going to be critical if they want to reach their aim.MR. WESSEL: Here, tell us who you are?QUESTION: [Unclear 0:27:17]. So, one of the issue of--I guess 5 percent growth, 8 percent growth is all interesting in some larger emerging markets, in BRICS actually, [unclear], in Brazil and in India, 20 percent for currency exchange just [unclear], all the growth--and so, what becomes of our 5, 8 percent when I lose 20 percent in foreign exchange? I think the risk of foreign exchange for investment today will be much higher than the growth of GDP. Any comments on how do you see foreign exchange develop, especially as it comes to Euro and dollar because most of reporting [unclear]. So, [unclear] that's the way you have to be measured.MR. HUBBARD: The most honest thing an economist can say is currencies fluctuate. I'm not sure if you [unclear] but I think the question you raise is really two things, one at a micro level about whatever hedging strategy is optimal for your business and different businesses have different strategies. The other is there are predictable movements based on policy differences that you can certainly look at, but hedging comes from other things.MR. WESSEL: [Unclear 0:28:28]--QUESTION: Kasper Wison [phonetic] from [unclear] in Europe.A question--Europe--in your mind, is there any reason why Europe is not going growing in the next two to three years.MR. FISCHER: Start growing, yes, but--[Overlapping speakers.] MR. FISCHER: --5 percent--[Overlapping speakers.]MR. FISCHER: The rationale is that [unclear] everybody says [unclear] periphery countries there is--there are changes in relevant prices that has been happening. The countries that are in programs, the PIGS have, except for Italy, significantly reduced their costs relative to others. So, they can start coming out of it.We've also got the ECB coming back to life, which will give a partial [unclear 0:29:16] for some time. And then we have--there's a dynamic that will take place in the global economy. There's a chance it will work out.I mean, everybody was--you have to realize how quickly views change. Britain was the sixth man of Europe until six months ago. All of a sudden, it's the start. It's grown for three quarters. And that sort of thing changes moods and changes investment rates a lot. Whether it will be growing at 3 percent, I doubt it. Will it have grown consistently for several quarters? Quite possible.MR. WESSEL: I know we have a couple more questions, but I'm told that it's time to move to the next panel. Show Less -
Rachel Kyte: Global Landscapes Forum Opening Address
I understand that some of the negotiators here, that they do not yet believe that there is a triple win. I understand that there is skepticism, but you in this room know differently, and it is our col... Show More + lective challenge to bring this evidence and this data to these negotiations and to see a change in the way that we talk about this issue. So I'm inspired by your work. I, like many of you, strongly believe that an integrated landscape approach can help us achieve our twin development and climate goals more effectively. If we continue to fund crop expansion on the one hand and forest protection on the other, we simply waste taxpayers' money. We are also wasting precious time as a result of a disjointed, discombobulated dance. The latest science shows we urgently need to turn down the heat. Prospects of a 2 to 3°C warmer world within our lifetimes are very real, and agriculture is particularly vulnerable, and everybody who depends on it even more so. Over the next 50 years, climate change could reduce food crop yields by 16 percent worldwide and up to 28 percent in Africa. Increasingly frequent and devastating floods and droughts, together with longer-term temperature changes, already take a heavy toll on the people who can least afford it. For us at the World Bank Group, we believe that if you don't tackle climate change, we cannot achieve our shared missions with those of our clients to end extreme poverty and boost shared prosperity. For that reason, we are stepping up mitigation, adaptation, and disaster risk management work, redoubling efforts to look at everything we do through a climate lens. We believe that our contribution is to focus on the solutions that make the biggest difference: helping put a price on carbon, supporting the removal of harmful subsidies, and we are deeply committed, therefore, to climate-smart agriculture and landscape management approaches. Climate-smart agriculture seeks to increase productivity, strengthen farmers' resilience to climate change, reduce emissions, and store more carbon in rural landscapes. It's not a luxury, it's an imperative. We need to reduce the vast emissions coming from agriculture and associated land use change if we are going to have productive and resilient landscape management, if we are going to feed 9 billion people by 2050. And we will also have to reduce staggering, staggering amounts of waste in our food supply system. But landscape management, climate-smart agriculture is also a huge opportunity. Because climate change and food security are coming to a dangerous head, the world's farmers therefore have captured our attention. Every crisis is an opportunity. Let's not waste this one, and let's help transform the way that we manage farms and forests together in the wider landscape. Whether it is high-tech farmers in industrialized countries or a farmer – usually a woman – struggling to produce food in precarious conditions in low-income countries, we have the opportunity to help them now. The question is, where to begin? Building and standing on your shoulders and everything that you're already doing. Positive change begins with a deeper appreciation for the synergies between human activities and the physical environment. It also takes imagination to move from a predatory situation, in which the land is progressively stripped of its natural resources, to a model in which human prosperity is built on preserving or enhancing natural wealth. We don't have that system built into our economic models today, but we at the World Bank Group are working on it, together with many of you, and I think that we can get there. One of the great parts of my job is I get to see first-hand, as I did in Kenya just nine days ago, how this can actually work at the micro level, and the question of how we can scale and speed up the scaling of these successes. One other success within our portfolio is in Ethiopia. It is a work-for-pay program – it's called the Productive Safety Nets Program – that has rehabilitated more than 600,000 hectares of degraded lands to date, increasing soil and water conservation through community projects. The immediate goal was to provide work and support to some 8 million rural citizens who are chronically food insecure. But the approach, based on a broad understanding of resilience, is recognized as having boosted Ethiopia's natural capital and capacity to adapt to climate change. What makes these kinds of solutions stick? Simply put, development and climate change interventions work when people on the ground reap tangible benefits. And, of course, when you're working on the ground, you don't call them climate change and development interventions. In Costa Rica, what we would call climate-smart techniques work very well for ranchers and farmers: by planting or preserving tree, farmers provide shade for cattle and coffee; by maintaining those trees along streambeds, they protect their natural water sources; by growing nitrogen-fixing grasses, and rotating the cows in their pastures, the ranchers are saving on cow feed and fertilizer. The trees that store carbon and provide wildlife habitats also earn them carbon credits. It's a wonderful system in which the farmers' self-interest reinforces behavior that benefits the broader collective. The farmers I met in Kenya were not practicing climate-smart agriculture to reduce greenhouse gases. Nor should they have to worry about emissions generated on other continents by big polluters. Their concerns were more immediate: how to feed their children, how to educate their children, how to manage when rain patterns are increasingly erratic, how to cultivate the land when soil and water are washed away into deep gullies. By switching from growing maize to intercropping vegetables and fruit trees, the farmers in the pilot program I visited were able to triple their income. In a part of the world where almost half the children under the age of 5 are malnourished, that is a powerful incentive. That is something that we can all agree about.If practiced on a large-enough scale (in combination with upstream interventions to better regulate water flows), tree planting, conservation agriculture, and contour farming could start to repair landscapes such as that ones that I've seen. Large-scale farmer-assisted restoration has happened elsewhere and resulted in impressive, long-term economic and environmental gains. So the question that we have to ask ourselves, here better than anywhere else, is what is stopping us? If simple techniques are known to increase farmers' productivity, save money, heal the environment, why are not climate-smart techniques conquering the land at scale today?In our contemporary high-tech society, it is tempting to think the secret of success is simply good design: climate-smart solutions will spread and gain momentum on their own because they are "smart." Yet we know from personal experience that there are plenty of healthy, rational choices that fall by the wayside unless there is a supportive and enabling environment.Yields are only one dimension in the decision-making process of farmers. We need to get a whole set of incentives right to support people in making sustainable livelihood choices. Although the benefits of climate-smart systems are impressive, the transition to sustainable productive systems can entail significant expenses – especially initially, when farmers forego income from old activities and before positive returns from the new systems materialize. You are seeking leaders in a community that are prepared to take a leap and try something new. Coordinating actions across landscapes also requires investments in time and social capital, which farmers may simply not have. We need to learn more about what drives the successful adoption of climate-smart practices, and be prepared to support the shift through public funding.The Terrafrica partnership has found that insecure land tenure, lack of capital and limited farm inputs are barriers to adoption of conservation agriculture in Sub-Saharan Africa. Studies suggest that when land rights are more secure, farmers will be more likely to take long-term risks and invest in their plots. As a result, productivity increases. Clearly, and I think we all know this, we need to make land tenure a central part of the landscape agenda if we are serious about addressing food security and climate change, and seeing irreversible progress. So, if we're going to talk about land tenure, then we have to talk about gender. Tackling gender inequality head on, full on, is our responsibility. This is not as a token issue. Because women farmers produce as much as 80 percent of most crops in many low-income countries, but have more limited assets than men, facilitating their access to land, their access to capital, will be a fundamental game changer. In Ethiopia, again, besides the work-for-cash program I mentioned, the key to reviving agriculture in the region may have been a land certification effort that reassured farmers their land would not be taken from them without compensation, and gave women for the first time a right to half the marital land. In the words of Tashequ Woretaw, a woman farmer with one hectare of land: "Before getting the certificate in my name, it was just socially understood that the land belonged to my husband. If anything happened to me, I was supposed to leave the home without having anything out of our common property. So I was not really interested in putting any long-term investment in the land." After receiving a land certificate, Tashequ planted trees and used part of the land to grow grass to fatten her livestock. For women farmers like Tashequ, confidence in property rights was a prerequisite to investing in change. It is also a pre-requisite to getting access to credit. You have to have something to collateralize if you are going to grow your assets. Gender not only changes the way we think of who and how we manage the land, it will change our research priorities too. At the country level, the best-laid plans for climate-smart and equitable growth can only go so far if land governance and law enforcement are too weak in the face of powerful interests. Working across sectors to improve watershed management, trying to rationalize land use in areas where forestry concessions, mining permits, nature reserves, and agricultural activities frequently clash and overlap, is extremely challenging in the absence of credible rules and public maps. Together with partners at the FAO and others, we at the World Bank see a strong link between the responsible governance of tenure of land, fisheries, and forests and sustainable development outcomes. If we have clear land tenure and commitment to transparent markets and the rule of law, we can consistently attract better quality long-term investors than countries with opaque rules. Companies, too, are starting to feel the rewards of aligning their corporate behavior with their objectives of return over the long run. All because supply chains do better with transparent market regulation, we can have better competition and price premiums attached to voluntary certification schemes. The threat of negative publicity, and resulting losses in market share, has done a lot to encourage better land stewardship and responsible business conduct. But the business driver for business corporates today is access to a secure, available, predictable supply chain, and this is driving corporate behavior the world over.I talked at the beginning about the skepticism of some of the negotiators that a triple-win exists, that we can increase yields, that we can increase incomes, and that we can mitigate climate change from better landscape management approaches from climate smart agriculture. In Durban, we managed to get agriculture on the negotiating agenda. In Doha, we took a glancing blow with a bit of a set-back. And I've just read the language that emerged from SUBSTA at 3 o'clock in the morning, and we've taken another blow. I think that this is a particular set-back for the continent of Africa, for whom an integrated approach to these issues is so important. So I understand the skepticism, but I would ask negotiators to pay attention. I would ask all of us to do whatever we can to take each one of those negotiators and the ministries to whom they report and sit down with them and explain to them what science is showing. Tell them about all of the examples where we can see that it's working today, and talk about the consequences of not incorporating this into the negotiating agenda. Punting climate-smart agriculture negotiations from SUBSTA 38 to SUBSTA 39 to SUBSTA 40 means that these negotiations run the risk of turning their backs on some of the most vulnerable and poorest people in this world and that will not build a climate negotiation that works. I don't just stand here and say this. In the World Bank Group, we're absolutely committed to everything we can do to support this agenda, and we offer our help and our support to every negotiating team if they wish to understand further how we think that this is something that can benefit all and make the climate negotiations stronger. And it won't just be us, it will be us and every one of our partners in this room. So this is an offer of help, it's not a castigation of what has happened. Let's just turn a page, here in Warsaw, and decide that over the next 12 months we're really going to deal with this seriously.Today, we have more tools than ever before to quantify and visualize the connections between human activities and the environment. From crowdsourcing to satellite imagery, from natural capital accounting to participatory mapping, we have more data, more resources, more images, more evidence. We also have great research from across the globe represented in this room and at this conference. We have large-scale examples of "triple wins".So what's missing? Do we need to hone our message? Are we spending too much time painting a picture of climate gloom and land use trade-offs? Is the price of carbon, or the lack of one, keeping us down? I hope this first-ever Global Landscapes Forum will generate the enthusiasm and steady exchange of ideas among farmers, investors, planners, researchers and the development community, men and women, to kick off climate-smart agriculture in a big way. Let's make the most of our moment in the limelight to make things right for farmers and the planet. Let's start here. Show Less -
Transcript: World Bank Group President Jim Yong Kim Media Roundtable
DR. KIM: Well, thanks, everyone, for coming by. I just finished a trip to the Sahel with the Secretary-General, which was our second trip. And I'll talk about that in a bit. Al... Show More + so, just back from meeting with the Pope, which we can also talk about if you'd like. And my first visit to Turkey.But I want to start off by just, first of all, expressing our deepest condolences to the people of the Philippines. We've been, of course, watching this very carefully. We've got many projects going with them. We're not part of the group of first responders. And so, we're not on the ground now, doing immediate humanitarian relief. That's not what we do. But we've made it clear to the authorities in the Philippines that we'd be prepared to be involved in any way that they find appropriate. We already have, for example, conditional cash transfer programs, where we're providing direct resources to poor people. And we could increase the speed and the volume, remove the conditions; there's all kinds of things we can do. And we're in the middle of a discussion with them right now.You know, we've had a tremendous amount of experience responding to disasters. For example, we were responsible for a good deal of the removal of the debris in Haiti. And so, it's one possibility in the future, if that's what they need.So, while not being first responders, we're very involved. But I think it's important for the world to reflect on what we're seeing. Now, the critical issue is that you cannot connect any single event to climate change. That's not the point. But if you look across the world, the Philippines, quite literally, lives in the eye of the storm. So many storms are passing through the Philippines. The directions of the storms coming at the Philippines are changing now. And so, you can't think about building resilience on just one part of a particular island. So, they're in a particularly difficult situation.I was in a meeting with President Aquino, and we were talking about climate change. And he stood up, and he said, "Look, if anyone doubts the reality of climate change, please just come to the Philippines." If you think of the number of storms that have hit over the past year, the severity of those storms, and then if you look back, and you think about--so, we had Sandy last year, then we had Phailin in India, another category 5, that hit landfall, and then, now, Haiyan, or Yolanda as they refer to it in the Philippines, the second major storm in a year. The point is to think back and say, "What are the trends in the world?" So, I just got back from the Sahel. And droughts that used to happen every five to ten years now are happening regularly, reliably, every two to three years. In the Horn of Africa, severe droughts that happened, before, once in every 20 years are now happening every five years.So, it's not so much that a single event is the issue. The real event is that the frequency of these events are increasing. And that's exactly what the climate change scientists have predicted. Now, can you assign any of the current damage--well, you know, there were 20-foot waves and, you know, 10 to 15-foot rise in water levels. And we know that water levels, from historic records, have gone up about seven and a half inches, so a small portion. But again, that's not the point. The point is it's happening over, and over, and over again.But an even more important point is that the world agrees a lot on the things that we need to do right now. Everyone agrees that at some point, if we can find a stable price on carbon, that that would be good for everybody. China right now is engaging in a very extensive carbon-trading scheme inside China. The experience of a price on carbon has not been the most positive experience, but still, I think leaders across the world know that moving toward some sort of stable price in carbon would be important. That's the hardest one. That's going to be the hardest one to get to. But there's so many other things we can do right now that will have huge impact that pretty much everybody agrees on.Now, one that the IMF and Christine Lagarde has really championed is the removal of fossil-fuel subsidies. Critically important, into the trillions of dollars, the amount that governments spend in fossil-fuel subsidies, they don't really help the poor, they pollute the environment, and the removal of fossil-fuel subsidies could then make available government funds to support many other, much more important priorities. But it's politically difficult. So, again, it's something that people agree on but politically difficult to enact in any country.*But then you go to the issue of sustainable energy. Everyone agrees that we have to move toward more renewable sources of energy. And nowhere is this more clear, and the possibilities greater in my view, than places like the Sahel, like in Sub-Saharan Africa. So, more investment in renewable energy, cleaner sources of energy, everyone agrees we can do that now.Cleaner, more livable cities, everyone agrees that the way that cities are being built right now can be improved in terms of reducing the carbon footprint and making the cities livable. We're doing a major project right now with China to really work with them to rethink in a fundamental way how they're building their cities. Now, 60 to 70 percent of all carbon emissions come from cities. So, if we can build cleaner, more livable cities, with greater concentration, with mass transit, with using cleaner sources of energy to provide the base load electricity. There's so much we can do.And then, the final issue, and again, it's just a no-brainer, is climate-smart agriculture. And climate-smart agriculture, very specifically, means the simplest kinds of interventions that have been shown to have tremendous impact. For example, in Costa Rica, if you look, the whole country is moving toward climate-smart agriculture. So, instead of cutting down trees to make fences, they're actually planting trees, and then stringing barbed wire between living trees to define their property. And what happens is that those trees not only keep their livestock within the bounds, but they actually fix nitrogen and put it back in the soil, increasing the yield. So, there are, right now, things that we can do. We had a huge project in Kenya, a climate-smart agriculture project, that we know we can take to scale all over the world. And it will both take more carbon and put it in the ground, it will preserve the river beds, it will increase the yield and increase profits for farmers.These are all things that we can do right now. And so, what I hope the tragedy in the Philippines helps us to do is to move away from having, what I think, a silly argument about, not really the science, but about science as a whole. Ninety-five percent of climate scientists agree that anthropogenic climate change is real and that we've got to do something about it, or the impacts are going to be severe. So, basically, if you argue with those findings, you're not really arguing against climate change, because there's just no science to support you. You're arguing against science. And I guess you can do that. And I guess you can argue that you don't trust science. But I do. And I think it's really important that we should respond to the evidence as we see it. Moreover, I just want to make the point that there's just so many things we can do right now. Let's stop the argument. Let's move forward. Let's get the agreement. Let's make the investments that we need.In the Sahel, you know, I'm just returning, and I have to say that it was different than what I expected, in the sense that the conditions, the living conditions, were just as difficult as I expected. But the things that had been accomplished there are really quite stunning, given the difficulty of the circumstances. Let me just give you an example. Burkina Faso has grown their economy; their growth rate is going to be over 6 percent this year. They've continued to grow. They've built a lot of infrastructure, especially in Ouagadougou. But they've done it paying 74 cents a kilowatt hour for electricity. So, they import all their electricity from Côte d'Ivoire, and 74 cents a kilowatt hour is about seven times the global average. Here, in DC, we pay probably nine to 10 cents. A very high rate would be 25 to 30 cents a kilowatt hour. Burkina Faso pays 74 cents. So, the fact that they were able to see the growth that they have seen while still paying such high prices for energy is really quite remarkable.The other thing I saw was that there is tremendous support for French intervention--and Jeremy, especially, I want to make this clear--tremendous support for the French intervention in the Sahel, and for interesting reasons. You know, when I visited with President Compaoré of Burkina Faso, he told me about the history that they have of cavalries, that they were able to build a cavalry before anyone else in the region was able to. And he thinks that that was critical in their ability, over centuries, to repel the intrusion of Islamic extremism. And they see this latest set of events as just part of a centuries-long quest to live in harmony with a diverse group of people, Christians, Muslims, we had Arab populations, Tuareg, I met with them all when I was in Timbuktu. And they quite literally said, "What's happening, this Islamic extremism, is not part of the culture of the Sahel." And so, you know, I think some people in France have been saying, "Is this going to be France's Afghanistan?" And I can tell you that, from what I saw, overwhelmingly the answer is no, because the population as a whole so strongly supports the effort to keep out Islamic extremism from that area.Now, you know, what they're going to have to do is reduce the trade barriers between the Sahelian countries and really act like an economic bloc. And they're committed to doing that. But, you know, again, in countries like that, all along the borders, they have all kinds of ways of slowing down trade that we're going to try to help them to fix. But I came away from this visit unexpectedly, extremely optimistic about what could be done. If we can lower the prices of energy, if we can get them to work as an economic zone, with very fluid trade barriers, if we can attract the kind of foreign direct investment that I think right now that they could make very good use of, then the prospects for growth and development in that region, I think, are very high. And I think the intervention of the French, to ensure that Islamic extremism was kept at bay, at least for now, was an important intervention, and it's going to help us make progress.So, let me just start with those two, right off the top of my head, those two issues, which is Africa and climate change related to what we're seeing in the Philippines, and then just open it up for any questions that you might have.REUTERS: Just as a quick follow-up, what do you make of current climate talks and kind of where we are in the dialogue today?DR. KIM: There's a session happening right now in Warsaw and we're getting, of course, updates on a regular basis and my understanding is that yesterday, at the opening, a lot of the focus was on what was happening in the Philippines and, I'm sure you know, the representative for the climate talks to the Philippines is now on a hunger strike until something happens. Now, what I hope happens is that rather than just focusing on what is legally binding and what is not, that we make a major commitment to doing the things that we know we can do right now. I mentioned it. Price on carbon, removing fuel subsidies, sustainable energy, cities and climate-smart agriculture, they're five things that we can all move on right now and it doesn't require any kind of major legally-binding agreements. So, we are certainly injecting that kind of sensibility into the discussions. The Secretary-General has very much embraced those five points in his own approach to climate change. We really hope we can reach legally-binding agreements in 2015 in Paris. This is going to be a very important moment. But we can't be in a situation where everyone is waiting for those agreements to happen and then declare our efforts at fighting climate change a failure if they don't. We've got to move right now to tackle those issues we can take--In the Philippines a huge part of what they need to do is to build up resilience. And it's so hard to do, because in the U.S., you've got a coastline but islands, the coastline surrounds them and they've got multiple islands and because the storms are now coming from different directions, how do you build up resilience? So we've begun to do some studies on just what it's going to cost to build up resilience to storms of this magnitude, and they are very, very significant costs. Now, what we do know, though, is that right now the cost of these major storms on coastlines is about $6 billion a year. But by 2050, if all the predictions come true about the increasing frequency of these storms and the severity of these storms, then the costs will be around, in inflation-adjusted dollars, about a trillion dollars a year. REUTERS: By 2050?DR. KIM: By 2050. And, of course, they're going to increase every year between now and 2050. But our own estimate is that if we spend about $50 billion a year on building resilience, that we could actually avoid the vast majority of those costs. By building in resilience. And we know how to do it. In New York City they're doing it right now, they're building various levees and barriers in using both the natural systems and built-up systems, you know, artificially built-up systems, to protect the city from another Sandy. It's going to be very expensive, but compared to what it will cost if we don't do it? We think it's a good investment. DPA: But what about the finance, what about the $100 billion target by 2020? DR. KIM: You know, the Green Climate Fund is about to open. I'm going to be in Korea on December 5th. We have our climate investment funds here. And there have been many, many pledges. Donor governments have been extremely generous in terms of their pledges. I think what everyone is waiting for are really clear actionable plans where the money can be invested, there's going to be direct action and we're going to see things happening. So, let me just give you an example. One of the things that we're focusing on here at the World Bank Group is to develop bankable projects for sustainable energy. And by that we mean, look, in Burkina Faso the opportunity is huge. If we can get a public-private partnership where the government makes certain guarantees that we can also provide things like political risk insurance, we can provide some of our own investment, but then if we bring the private sector in, the private sector can make money. The returns are going to be sort of steady long-term returns. But we could potentially have the impact of dramatically increasing Burkina Faso's electrical supply, so increasing access for the people of Burkina Faso, while at the same time making money for the private sector that invests in these projects and at the same time reducing the cost per kilowatt hour. So, there are projects like this everywhere and we're focusing--if we all wait for the donations to come through, I think we'll be wasting time. So, the pledges are important, we want people to commit to the Green Climate Fund, we want them to move quickly on it. In the meantime, we at the World Bank feel that there are ways of bringing private sector money in which can move much more quickly and, in the long term, we think is more sustainable. So, public-private partnership that reduces the risk of these investments and even places like the Sahel, that will reduce the cost, increase the access and make money for companies, I think the key for us right now is to find as many of those projects as we can and move on pushing those forward. AFP: Actually I have a question that really doesn't relate to the World Bank activity but it was that we bought things that the Obama administration [unclear] stop eavesdropping on the World Bank and the IMF headquarters? I was just wondering if you have any comment on that?MR. DONNELLY: No, we're not commenting on that.DR. KIM: No, no comment. No comment on that.QUESTION: Okay. Too bad.FINANCIAL TIMES: I just have a question, back to climate change. Last month the U.S. said that it wouldn't back new coal projects. Isn't there a case to--not do coal projects at all by the Bank and how is the Bank shifting its own priorities in response? DR. KIM: Our policy's very similar on that. That we will not do any coal projects unless there are absolutely no other options in poor countries. So, we're looking around right now, and let me just give you an example: Liberia. Liberia has a total of about 21-22 megawatts of installed capacity. So, if you think about one kilowatt of installed capacity per person, it has enough energy for about 1 percent of its population. And 20 megawatts of installed capacity will give you as much energy as Texas Stadium, the stadium of the Dallas Cowboys, uses in a single day. So, it's almost nothing. And you're looking around and in Liberia, the question is what's going to be possible in that country? Now we're going to look like crazy to be able to find low-carbon renewable sources of energy supply. But in a place where they really don't have any other options, we would consider coal. But for the most part we're going to avoid coal altogether. And I have been very surprised by how much the quality has improved, in terms of providing solar energy, and the cost has gone down. So we now have some projects that are able to deliver solar power through solar-based micro-grids, not huge grids but the small grids, for local communities at around 10 cents per kilowatt hour. So, just compare that to what we're doing in Burkina Faso at 75 cents a kilowatt hour. The possibilities of solar and, in some places, wind, geothermal, hydroelectric power, are enormous and we're going to do everything we can to invest in those kinds of resources. But, for us, it's conceivable that there may be certain places where if there are no other options, we would consider coal. REUTERS: Just as a follow-up, besides Kosovo, is there any other coal plants in the pipeline or...DR. KIM: Not that I know of, not that I know of.BlOOMBERG: A separate question. If you could give us an update on the infrastructure fund. It was sort of announced and now we don't know whether [unclear] people willing to contribute. And just a quick second question: A few months--weeks ago when--your speech at George Washington, you told us that you'd be ready to abandon small projects to focus on big ones. Have you done any of that? Have you abandoned some projects? Concretely, how does that [unclear]?DR. KIM: Yeah, so--what was the first question?MR. DONNELLY: Infrastructure.DR. KIM: Infrastructure, okay.So, we wanted to do a little bit of a test. We wanted to find out what the interest would be in an infrastructure fund. And essentially, it's a new kind of product. And the idea would be that developing countries--really, any government that would want to could put money into a facility. And then, we would go out and we would bring bankable projects to the table. And we would then invite the private sector to come in and participate in projects like, for example, energy in Burkina Faso, right, energy in Nigeria, energy in any number of places. And we brought representatives of the private industry, private sector, and also representatives of governments. The demand among governments is really high. The fundamental insight is that, even at times of very low interest rates when quantitative easing was making access to capital seemingly very easy, there was still a problem getting access to capital for infrastructure in emerging markets in developing countries.So, the BRICS countries talk about a $4.5 trillion infrastructure deficit over the next five years. And if you look at total ODA, which is about 125 billion, there's no way that ODA can even touch those kinds of needs and India says that they have a trillion over the next five years themselves, and they can only imagine about half of that being covered by public sector and aid. So, and how is that other 50 percent going to be brought on board?So, what we heard, especially from the private sector, is that there's a lot of capital sitting on the sidelines earning very low interest rates. They would very much like to get involved in these kinds of infrastructure projects, but they need us to help de-risk them. That's not the perfect word but, in other words, they need us to be able to go in and, based on our 60-plus years of experience doing projects in these countries, knowing the governments, and also knowing the private sector, to come in and be able to say, "Here's a project. Here are the risks. Here's how we are going to mitigate those risks. Here's the insurance through MIGA, the Multilateral Investment Guarantee Agency, that we can provide. And here are some examples of projects that we have done where we have done just that." And we've got a bunch of projects we'd be happy to share with you--you know, power projects in Kenya--where IFC made a direct investment, MIGA provided guarantees. The Bank, through IDA and IBRD have given guarantees in support of the government, and all the institutions together have made projects happen that actually make money for people.So, there's a huge demand for us to do it. Now, as in all sort of global facilities, the governance is tricky. So, we're trying to figure out right now exactly how it's going to be governed, but the thing that was most surprising to us was just how eager private sector investors, sovereign wealth fund managers, pension fund managers were, to make these kinds of investments. Because they're not really seeing other kinds of investments where over 10, 15, 20 years, they can make, you know, 5, 6, 7, 8, 10 percent return in a reliable way.We think a lot of these energy projects and also, for example, ports and airports and transportation projects could actually not only be critical for the development of these poor countries, but could make money for people.And at the end of the day, if we want to achieve our goals of ending poverty and boosting shared prosperity, there's just no way we're going to do it based on ODA alone. ODA is only $125 billion a year. It's a drop in the bucket. It's really important and, in fact, it becomes even more important because the demands are so huge now, but using official development assistance to bring in private money, bring in sovereign wealth fund pension fund money is going to be a key to development in the future. And so, the global infrastructure, certainly, we think is a critical part of that. Now, over time, over the next six months to a year, we'll have talked about governance, and I hope that we'll be ready to go because, boy, all the BRICS countries are very much ready to go, and to our great--what's the right word?--we were very pleased to hear of just how much the private sector is ready to go.And what was the second question, John?MR. DONNELLY: The abandoning of small projects to focus on big ones.DR. KIM: Yeah. So, if you look at the Sahel, we came to the table and we put on the table $1.5 billion extra dollars in regional projects, focused on things like hydroelectric power, on irrigation, on improving farming for the pastoralists, you know, literally bringing veterinary science for the first time to some of these pastoral communities. And so, what we did was we reprioritized. We actually moved money for Africa from smaller projects and--you know, these projects never saw the light of day, so I can't tell you what they were. But we actually moved the money around and instead of doing smaller projects in individual countries, we brought it all together and put on the table an additional $1.5 billion for major regional projects that we think will have an impact on the economy. It's precisely what we meant, and Africa's really leading the way and showing us how we're going to do that.WALL STREET JOURNAL: Just wondering, following up on infrastructure, you know, the needs of the BRIC countries are so large. You mentioned the trillion in India. I used to be based in Moscow, certainly they need a lot of infrastructure. And part of the concern there was always that, among bankers, if you put too much money in any one country, there's the "Russia" risk or the "eighty-year" risk. How does that affect you guys or how does that affect the investors who would--would they be willing to put enough money into one country to make a difference, considering the risks?DR. KIM: This is precisely why the private sector folks came to us. So (inaudible) of BlackRock, you know, the largest institutional investor--they came to us because what they're saying is, "We want you guys to do this precisely because you can hedge risk across--literally, 140 countries."So, we have something called the Asset Management Corporation where different funds can put money directly into this corporation and then, based on what they want to invest in, or if they just want to invest across multiple projects, we're able to do that because we're actively in so many places at once. And so, one of the beauties of the global investment facilities is that you can make general investments and, again, hedge across multiple countries and, by doing that, you know, we--our own record in terms of--through IFC of our equity investments over the last 15 years has been very, very good. We've been at about 20 percent a year across the board, even through the difficult time starting in 2008. And the reason we think we've been doing well, there's a lot of--one, we have the best AAA rating around. You know, our borrowing costs are something like LIBOR minus 25-30 basis points at any given time. We have a very strong AAA. Every project in the developing countries wants us to be one of the first investors, because if we're on board, then it makes it very easy for them to get other investors on board. And also, we've done so well because we've been able to hedge our investments across many, many different countries. And the hope is that all of that experience put together and the ability to hedge across different countries will make the private sector more willing to invest along with us or a facility like this where literally bets are hedged, as opposed to going into one country and making a direct investment into a single country.I think most investors would like to have the World Bank as an intermediary to help them to stave off those risks, and we think we can do it. WALL STREET JOURNAL: So, you wouldn't charge too much into on--into one country or group of countries, [unclear]--DR. KIM: Yeah. I mean, the whole point of it would be to work across many, many different countries at the same time so that, you know, a--the default or the problems of a single country wouldn't blow up this whole facility. The whole point of it is just provide stability across the board. But I think what you'd also get from us is you'll get our own team working very hard to identify exactly what the political risks are, what the health of the banking sector, what the demand is going to look like. We are pretty good at doing that and partly because we've been at it for so long, so much longer than most folks. I mean, we've been in emerging markets from the beginning, as opposed to many who are coming into it relatively knew.AP: If it's on infrastructure, go ahead. BLOOMBERG: [Unclear]--just to know who the Bank--be they as an intermediary purely or will you putting your own money--DR. KIM: Oh, we put our own money, too. That's been one of the ways that we actually have been able to make projects go, is that we've put some of our own money on the line. Go ahead.AP: You mentioned low inflation and quantitative easing. I wonder if we could go into your view on the state of the world economy. It seems like we're sort of stuck in a rut and nobody seems to be able to get that boost to growth and [unclear] everyone is talking about.DR. KIM: So, I think the first insight is that if you look back nine months, a year, we now have the U.S., Europe, and Japan, all three are growing. Now, think back to the last time we could actually say that. It's been a very long time since you could say that all three of those have been growing at the same time.Now, you know, are there concerns? Absolutely. And we were just in France at a meeting, the economically focused international financial institutions met with President Hollande, with myself, Christine Lagarde, Guy Ryder of ILO, Angel Gurría of OECD, and Roberto Azevedo of the World Trade Organization, we just sat and had a discussion on these issues. So, you know, are there problems in Europe? Yes, there still are. I mean, there's this huge task of the Banking Union that has to be implemented. Some of the countries seem to be bouncing back, the UK seems to be growing, both Greece and Portugal look like they're about to be able to complete their programs and pay back the funds that they received during the worst of the crises. So, there are some positive signs, but there is still a lot of work to be done. Consolidation seems to be slowing down. The hope, of course, is that there will be no other Cyprus-like disasters.But you know, I think that, from my own personal view, is that in Europe, the combination of the European Central Bank, the European Union, IMF, have done a great job. I mean, they've done a great job and they've been willing to tackle really difficult problems, and everyone wishes that they would have tackled--solved these problems even more quickly than they have, but you know, I came into this job in July of 2012, and people said to me with great confidence that Greece will be out of the euro very soon, that the euro's future is in doubt, that all this is going to blow apart, and here we are, you know, now 18 months, 16 months later in a much better position than anyone had predicted that we'd be in when I started this job. So, there are some positives, but there is a lot of tough work ahead. Now, you know, we follow the U.S. economy very closely, of course, but mostly because of its impact in developing world economies. Growth is higher than has been expected, 2.8 percent instead of 2.0. Not quite sure where that growth has been coming from, but our sense is that we avoided some really bad things happening. I mean, we got very close to default, but it's very important that we didn't go there. Now, we're all very hopeful that they can resolve this crisis in--you know, come to some sort of agreement in January and February. We watched carefully, because the last time we had a near miss in August of 2011, borrowing costs for developing countries went up about 75 basis points, so, you know, three-quarters of a percent, and stock markets were depressed, on average, about 15 percent in developing countries. And those effects lasted for more than six months. So, any kind of uncertainty here in the United States has this very strong impact in the developing world. And what I was saying through the crisis, and it happened right at our Annual Meetings was that these kinds of impacts in developing countries are not good for the U.S. The U.S. Chamber of Commerce has said that more than 50 percent of all exports go to developing countries. And so, these kinds of impacts in developing countries slowing down their economies has a direct impact on exports in the United States.So, it's very connected. You know, our own overall projections for growth--you'll hear different ones form different sources, and our own, just to give you a sense of the comparison--so, our own sense is that the U.S. economy will grow about, overall, 2 percent this year, 2.8 percent in 2014, and 3 percent. We're a little higher than the IMF for 2014, a little lower than the IMF for 2015, but the good news is that we think the growth will continue. We had a very good jobs report just this past week. Other--the economy seems to be, here, in good shape.Now, in terms of developing country economies, there was a lot of concern that there was a slowdown, especially in the first half of the year in China, but those numbers seem to have rebounded and China did better in Q3, and they're just finishing up their Party Congress. And I--the language coming out of the Party Congress, I think is extremely positive. They're saying that they're going to get much more--rely much more heavily on the private sector and that the distribution of resources is going to be determined much more by market forces. I think what you're seeing in China is that what they're trying to do in Shanghai--the Shanghai Free Trade Zone--is a model for what I think they're going to continue to do. And they stated all along that, even with lower growth rates, they're going to commit to making the transition from being mostly investment and export-oriented to consumption and service-oriented. And I think, for us, it's very encouraging that, despite lower growth numbers, they're continuing down the path of reforms. Their commitment to reforms of the business environment and the role of the private sector, you know, focusing on consumption more, that commitment to reform seems very, very solid. And we expect them to perhaps grow at a slower rate, but the quality of growth we think will be better. The other countries that have been affected by the announcement of the potential tapering of QE, especially countries like Thailand, Malaysia, and Indonesia, what we saw there was perhaps a quicker out flow of capital based on real weaknesses in those economies: Current account deficits, fiscal deficits were relatively higher. And the announcement of the curtailing of the tapering of QE really had an impact on those economies. We think we've seen about a third of the overall increase in interest rates, responding to that first announcement. But what that means is when QE tapering actually happens, interest rates will continue to go up, and that could cause problems for the emerging market economies, which is why this Global Infrastructure Facility is so important, because as U.S. interest rates go up, what we're going to see is that it will be even more difficult to get access to the kinds of capital for infrastructure investments that developing economies need. And so, we think the pressure for us or some other group or some coalition of groups to put some kind of infrastructure facility together will be even higher. MR. DONNELLY: Just a few more minutes. REUTERS: As a quick follow-up, you visited Turkey recently, and Turkey--does it, I mean, borrow money from the World Bank, as well, to help support it? If you could give us some more details about that. DR. KIM: You know, Turkey is our second largest borrower over the years. So, Turkey has done some things just incredibly well. I mean, their ability to develop infrastructure in Turkey has been really quite stunning. Roads, electricity, they've done incredibly well over the past 11 years. And some of the data coming out of there were stunning to me. I couldn't even believe it when I first heard it, that not only has their economy grown over the last 11 years since they took over, but you have to remember that when they took over--when that government--when President [Prime Minister] Erdogan's government took over, their borrowing costs were 66 percent. I mean, they were in huge trouble, 12 percent budget deficits. And so, they were in a situation of almost having to default, and that discussion was on the table, and where they are now is really quite impressive. And as a physician, the most impressive thing was that they actually built a health care system that focused more on prevention and primary care than on hospital care which almost every other middle-income country is doing, right? I mean, every other middle-income country I see is succumbing to the temptation to build fancy, shiny hospitals, which of course are driving up their health care costs. The Turks said to me, "Our health care reform made patients very happy and doctors very mad." And as a medical doctor, I can tell you that's exactly what you want to hear when you hear talk about health system reform. So, they actually decreased their infant mortality rate by two-thirds. They decreased their maternal mortality rate. They increased their life expectancy. They did things that you never would expect to see in such a short period of time by quite literally taking the advice of us and many others and doing the right things in terms of their infrastructure investment. So, Turkey continues to work with us. They don't need our money so much anymore, but the reason they continue to work with us is because they really feel that they've benefitted from our knowledge, and the quality of our knowledge is what we're really focusing on, here. You know, it's my view that the future of the World Bank is going to depend on how well we capture, curate, organize knowledge and provide it to countries so they can actually implement it in their own situations. And so, we did that very well for Turkey, and all of the changes that we're going through right now inside the organization are focused on improving the quality of our knowledge so that we can do the right thing. And now that Turkey has actually done this and shown unbelievable changes in just these basic vital statistics, who's living and who's dying, the Turkish example is one that we're going to now take to many other countries in the world. All of the BRICS need to really look hard at the Turkish health care system example, because it's both saving them money and dramatically improving their outcomes. NEW YORK TIMES: [Unclear] obviously are quite broad-based. The benefits of your major infrastructure investments are quite narrow. Can they really offset the losses [unclear]?DR. KIM: Well, the--I'm not--say it again.NEW YORK TIMES: You had said one reason your infrastructure fund is important is it will offset some of the damage that is likely to be done as QE is pulled back and as interest rates rise. The benefits of low interest rates stretch out to small businesses and individual borrowers, they're very broad based. DR. KIM: Right.NEW YORK TIMES: The benefits of investment in a new power plant are quite narrowly focused, [unclear], and long term. DR. KIM: Right.NEW YORK TIMES: I don't entirely understand how it will offset those losses.DR. KIM: What we would say is, no matter what, the high interest rates are going to affect everybody. They're going to have an impact, whatever we do. The impact of the higher interest rates will be there. The question is, will you have higher interest rates and also very high energy prices, or will you have high interest rates and lower energy prices because we've been able to make the kinds of investments we need to make in much lower cost energy for places like Nigeria, Burkina Faso, places that are playing huge sums of money for electricity.Just to give you a very specific example, I was in Senegal and we were involved with the French Government--excuse me, the French company Eiffage, they're called, in building the very first toll road in Sub-Saharan Africa outside of South Africa.Now, when we started, the evidence was all very clear that this could have an impact, but there were all kinds of objections that they can't do it. "A toll road in Senegal? Are you crazy?" So, we built it. And it has decreased the commuting time by two-thirds, and it cost $3.00 to go from one end of the toll road to the other, which seems like a high amount, but they've got exactly the number of cars that they thought were going to be on-road are on that road. And the impact of having that toll road has decreased traffic on the traditional roads so that even on those roads the transit time has decreased by two-thirds. So, the company is making money, the government provided guarantees and made--and land, et cetera. We made an investment, the company made an investment, and the impact on the development of Senegal, I think, is going to be dramatic. Already, they're saying, if you can decrease your commuting time by two-thirds, then people can actually live further away from the city center and you don't have the kind of congestion that you normally would in that city. So, the interest rates are going to have an impact anyway. Going into a high interest rate environment with better infrastructure is a much better idea than going into it without access to good infrastructure.MR. DONNELLY: We have to wrap it up, I'm sorry. Thanks, everyone, for coming. Again, we hope to do this more frequently. Show Less -
Global Economic Outlook: Implications for Thailand
Thailand Economic OutlookThailand has made an impressive transition from a low income country in the 1980s to an upper-middle income country by 2011. How can Thailand grow even faster and become a hig... Show More + h income country?Countries that have made that jump into the high-income-country league in the last few decades, such as South Korea or Taiwan, China, sustained growth averaging above 5% per year for 20 or more years. Can Thailand follow suit? That's the million dollar question. In fact, it's the first of three questions I would like to pose today.The second key question is: how can Thailand's growth continue becoming more inclusive? Poverty in Thailand has fallen. In 2000, 20% of Thais spent less on their basic daily needs than the national poverty line. In 2010 only 10% of Thais lived below the poverty line. And inequality has fallen too. More and more Thais are benefiting from economic growth. The Gini measure of consumption inequality in Thailand fell over the last 20 years, from 42 percent in 1994 to 39 percent in 2010. This is good news.The challenge is that inequality remains high, almost 40 percent consumption inequality is high by international standards. And Thailand's income inequality has fallen as well, but at 52 percent in 2010 remained the highest among East Asian countries.How can Thailand reduce inequality further so that all Thais benefit from economic growth? I believe that improving education and skills will be essential for higher and more inclusive growth in the long run. Let's look at the PISA scores. These scores measure the reading, math, and science skills of 15 year old students and they are a key measure of education outcomes of countries around the world. Thailand's PISA scores are below the scores of OECD countries, and that they have stayed low over the last 10 years.But the scores in Bangkok are comparable to those in the US. The key challenge is improving education outcomes outside Bangkok. In other words, it's about education opportunities for all Thai students, especially those outside Bangkok. Over time, with improved, strong education outcomes, Thailand will be able to grow more rapidly.I will conclude with the third key long-term challenge we see for Thailand, and indeed for East Asia and the world – that of climate change and environmental sustainability. In Thailand, one key issue is the energy intensity of the economy, and especially Thailand's transport sector. Thailand's transport energy intensity is currently one of the highest in the world among non-oil producing countries. It is more than twice that of China and more than 3 times that of South Korea and Japan.One for the high energy intensity of Thailand's transport sector is the heavy reliance on road transport. More than 85% of freight transport is by road while only 2% is by rail. Envisaged transport infrastructure investments such as in the dual track rail and mass transit for transportation in Bangkok could help reduce energy intensity. These investments are a major opportunity for Thailand.In closing, I would like to highlight that I see many opportunities for Thailand in this thriving region. Opportunities for faster growth, more inclusive growth with improved education and opportunities for all Thais, and environmentally sustainable growth.The World Bank is committed to being Thailand's development partner as we have been for more than 50 years. We will be happy to work with Thailand and its people in the many years to come. Thank you very much. Kob khun krub. Show Less -
World Bank Group President Jim Yong Kim's Remarks at a Press Conference in Burkina Faso
DR. KIM: Thank you very much. This is my first trip to the Sahel and my trip is ending today.When you hear about the Sahel Region from the outside world, often all you hear is about drough... Show More + t and about malnutrition and, more recently, about extremism and conflict. I am departing the Sahel on my first trip full of hope and optimism. We can, by working together, and especially the group that's here on this table--we can achieve much here with the leadership that we met on this trip. I was extremely impressed by the leaders here in Burkina Faso -- the Prime Minister and President Compaoré, who has been a leader in settling disputes. But what was most impressive to me was the extremely high aspirations and the effectiveness in actually delivering for the people of Burkina Faso.Burkina Faso pays the highest rates in the world for energy, and despite the fact that these prices are so high, roads have been built, industries have been started, and basic services have been brought to people. We pledged $1.5 billion in addition to our normal giving … for this Region, but that's just a start. We have to go back and think again about a much larger scale of interventions so that the Sahel can be precisely what the people have told me they want, a place that is renowned for its culture, that's renowned for its resilience, that offers health, education, social protection to everyone, and that has a growing economy with jobs for everyone. This is possible. I am more convinced of it than I ever have been, and I take from this trip the sense of urgency that we need to move now to accomplish the things that the people of the Sahel so desperately want and, without question, deserve. Thank you. Show Less -
World Bank Group President Jim Yong Kim's Remarks During Press Conference in Bamako, Mali
DR. KIM: Thank you very much.First, I'd like to express my sadness over the tragic deaths of the two French Radio RFI reporters just a few days ago in northern Mali. My condolences go out ... Show More + to the families and the colleagues of the reporters, Claude Verlon and Ghislaine Dupont.Their deaths, unfortunately, underscore the need to further improve the security for all in this Region. It is my hope that that day will come soon. Those of us sitting here today came for one purpose: to link peace and security with economic development, and to do that with urgency and purpose.I'm grateful to the UN Secretary-General Ban Ki-moon for his leadership in bringing us here today, and I'm also grateful to the leaders of the African Union Commission and the European Union here with us today for their commitment to linking peace with development.This week, the World Bank Group announced a new package of funding for the Region, $1.5 billion additional on top of what we've already committed over the next two years for the Region. This funding will support major regional development priorities such as social safety nets to help families weather the worst effects of economic diversity and natural disasters, improved infrastructure, and create opportunities in rural areas.It will also create more hydropower and other sources of energy to greatly expand irrigation and transform agriculture, protect and expand pastoralism for more than 80 million people living in the Sahel who rely on it as a major source of food and livelihood, expend health services for women and girls, and improve regional communications and connectivity between countries.And it includes $300 million from the IFC, the World Bank Group's private sector arm, which will support economic development in several countries in the Sahel. The inclusion of funding for private sector projects is aimed at attracting additional billions of dollars which will be necessary in order to create good jobs and help bring civility to a Region that has been rocked by conflict in the last two years.The people in the Sahel Region desperately need security, peace, jobs, education, and good health care. For too long, the people of the Sahel, especially the women, have struggled with the devastating impact of too little economic growth and opportunity, a harsh climate, hunger, high fertility rates, and far too many women dying in childbirth, and far too many children dying before their fifth birthday. This cycle of harm inflicted on good people must stop.Today, we had the wonderful opportunity to visit Timbuktu. As we went into a meeting with the community, the local griot started shouting, which surprised me, but his words reflected the feel and the mood of the event. He shouted out, "Welcome, Secretary-General Ban Ki-Moon! Welcome! You are the president of the entire world. You are a man of peace. You are a man of dialogue. We need you here in Timbuktu."And then, members of the community, one after another, proceeded to tell us of their wishes and aspirations for themselves and for their children.The Grand Imam of the Great Mosque of Timbuktu spoke, then a representative of the Christian community, then a representative of the local government, then a representative of young people, and a representative of the women, and they all said the same thing. They said, "We are peace-loving people. We have lived together in this diverse community for years. We want peace, but we also want development." The young people wanted a good education. They wanted to be able to play soccer on a soccer field. They wanted a chance to have a job. Peace. Development. Jobs. Hope for a better future. This is what the people of Timbuktu wanted. And for me, having the opportunity to visit them doubles and triples my own resolve at delivering just those things for the people of Mali and the people of the Sahel who deserve them and who've been waiting far too long to get them.Thank you.[Applause.]JEUNE AFRIQUE: …. How can you promote development when there isn't security? DR. KIM: You know, I'll let the Secretary-General talk more specifically about security. Our traditional work is not security, but the entire premise of this trip and this trip to the Great Lakes is that the root cause of insecurity is poverty, lack of hope, lack of jobs, lack of education.And so, it's very significant that we come here when there are active problems happening. The same thing happened when we visited the Great Lakes Region. There was active fighting in Goma when we arrived, and then the fighting stopped when we visited.Now, we deeply believe together, the Secretary-General and I, all of us on this panel, that there is an intricate link between security and hope. And hope means that there is development, there is water, there is health care, there's education, there's jobs.And so, the strategy that we're taking now is that, instead of waiting for peace before we come in with our development projects, while there is still insecurity, we're making even a larger commitment to development, hoping that the message we send is that there is hope. We are committed to you as a people, we're committed to young people, we're committed to job creation, we're committed to education, and our hope is that that will contribute somehow to security. Show Less -
World Bank Group President Jim Yong Kim's Statement on His Upcoming Visit with UN Secretary General Ban Ki-Moon to Africa's Sahel Region
Thank you, Mr. Secretary General,I couldn't agree more with the Secretary General. We need to work together so that the people of the Sahel can have both peace and development. The partners he mention... Show More + ed that are on this trip--and the many unsung heroes helping people on the ground--must coordinate closely to stop the destructive cycle of poverty and conflict.Following our historic visit to Africa's Great Lakes region in May, we are even more committed to this approach. We are committed because the stakes are so high. The people of the Sahel have lived for decades with threats to their survival. They have been battered by conflicts, political instability and a harsh and unpredictable environment.Now is the time to help them build more stable lives. They need better access to quality health care and education, as well as good jobs, especially for women and young people.The Secretary General and I will hear first-hand from Sahelian leaders next week. We know their nations suffer from many interrelated problems. Many of these countries have chronically low economic growth which lags behinds the urgent need for job creation. The severe impacts from climate change threaten hard-won gains in poverty reduction. As the Secretary-General mentioned, volatility in the price and supply of food now leaves millions at risk of hunger. Tragically high infant and maternal mortality rates not only afflict families but also burden countries with high economic costs. And tenuous government control over several large areas makes public services scarce or non-existent for the citizens who need them most.Not surprisingly, the Sahel is highly vulnerable to a long-term "fragility trap" of fading economic prospects, high poverty and insecurity. That is why we must act now--to give the people of the Sahel a chance for a brighter future.The World Bank Group will mobilize behind a new approach to the Sahel. We will do this while working side by side with countries from the Sahel, the Secretary General and other development leaders from the UN, the European Commission, the African Development Bank, and the African Union.As we will announce on the trip next week during our visit to Mali, our regional action plan will promote greater stability, resilience and sustainable development in the five core countries of the region: Burkina Faso, Chad, Mali, Mauritania and Niger.Our aim is to address the root causes of poverty, conflict and hopelessness.As a part of this new approach, the World Bank Group will mobilize substantial public and private resources and support: We will help strengthen social safety nets for people, lower the cost of energy, and expand support for irrigation and pastoralism.We'll also work to transform the state of agriculture across the Sahel, and move even closer to the elimination of river blindness and other neglected tropical diseases.Finally, we'll help create and support small- and medium-sized businesses through increased finance, trade incentives, better infrastructure and an improved investment climate.I'm pleased to support this historic new vision for change in the Sahel. We see this as an essential component of the World Bank Group's global strategy to end extreme poverty and build shared prosperity.Working closely with these nations and partners, we can empower families to achieve more prosperous, hopeful, and peaceful lives. Thank you very much. Show Less -
FT-IFC Investing in Climate Business Forum
Good evening Ladies and Gentlemen. I am pleased to be at this remarkable event today and have the opportunity to hear the perspectives of the participants representing so many different countries from... Show More + Europe, Central Asia, the Middle East and North Africa. As the Vice President for Europe and Central Asia, I would like to focus my remarks on this part of the EMENA region.We all know that climate change is a threat to sustainable economic development. We also know that without bold action now the warming planet will put prosperity out of the reach of millions of people. This forum is intended to inspire all of us to take bold action now.The Potsdam Institute of Germany has recently prepared a report called Turn Down the Heat, which gives a snapshot of the latest climate science. The report warns that we are on a path to a much warmer world by the end of this century – warmer by an average of 4 degrees Celsius, if current levels of greenhouse gas emissions continue. The report gives a clear picture of the devastating effects on agriculture, water resources, ecosystems, and human health. Throughout the world, those least able to adapt, the poor and vulnerable will be hit the hardest.We have also seen that climate change already threatens the prosperity of the Europe and Central Asia region. In 2010, a heat wave caused over 50,000 deaths in Russia. In 2012, droughts destroyed more than half of all crops in Kazakhstan, a quarter in Russia, and a fifth in Ukraine. The Danube floods of June 2013 forced thousands of people to flee their homes and caused damage worth billions of dollars in several countries in Central Europe. Such weather events linked to climate change are expected to occur more frequently in the future. With its long coastline, Turkey is also vulnerable to another impact of climate change -- coastal erosion due rising sea levels.Climate action is a big challenge for Europe and Central Asia, which remains the most energy-intensive region in the world. Over the past two decades, the region has reduced its energy intensity by a third. Still the economies of Europe and Central Asia use 50 percent more energy per unit of output than the global average; and fossil fuels account for 88% of the region's energy supply. Coal remains the leading fuel for power generation in several EU countries. Turkey has a lower carbon footprint compared to other emerging middle-income economies in the region, but its emissions are rising fast.The World Bank believes that a 4-degree warmer world can and must be avoided. To do this, we need urgent global action to slow down the growth of greenhouse gas emissions. At the same time, countries will need to adapt to changes that are already underway and prepare themselves for a 2-degree warmer world.For this reason the World Bank Group has made climate action a top priority and we have stepped up our work on mitigation, adaptation, and disaster risk management. President Kim has called for a global response equal to the scale of the climate challenge and for bold ideas that will make the biggest difference.We see three priority areas for action at the global level:The first is to build low carbon, climate-resilient cities. We need to focus on fast-growing cities to avoid locking in carbon-intensive infrastructure. This is especially important in fast-urbanizing countries like Turkey.The second is to accelerate improvements in energy efficiency, which is a win-win, and invest in clean renewables and other modern energy technologies.The third is to develop climate-smart agriculture which can bring a triple win: improving crop resilience to climate shocks, increasing yields, and sequestering carbon in the soil – thereby reducing emissions.In the ECA region, improving energy efficiency and developing renewable energy sources will be key. If ECA economies brought their energy intensity to OECD levels, they would cut energy consumption by 42%. For Turkey, energy efficiency and diversification of energy sources away from fossil fuel imports are also important objectives from the point of view of energy security.A study of energy efficiency success stories, which was produced by the World Bank's ECA region, finds that the quickest wins are in manufacturing. Empirical evidence shows that well-designed environmental regulations and incentives can stimulate innovation by firms. By adopting new technologies, the manufacturing industry in the ECA region could cut energy consumption by half. Turkey's iron and steel industry is a good example; thanks to technological modernization, the industry is now cleaner than in other emerging markets.Turkey has achieved impressive results in improving energy security through successful privatizations. It has introduced cost-based pricing, increased private investment in electricity generation, transmission, and distribution. As a result, Turkey has increased its power transmission and peak capacity by almost 80% in the past ten years. Turkey has also made a strong start in developing its renewable energy assets. In the past decade, electricity produced from renewable sources has nearly doubled.For its part, the World Bank supports client countries' efforts at climate action with flexible financing instruments, and comprehensive policy advice based on global experience. We are currently working with the Government of Turkey to support its goal of approximating the EU environmental acquis, for example in waste and waste water management, where Turkey has made much progress.As Dimitris has noted, the private sector has a huge role to play in climate action and the transition to green growth. Our work with the Turkish private sector already includes many good projects that support climate action. I will mention just a few examples of how we can work together.The World Bank Group has provided credit lines through Turkish banks to finance investments in privately owned energy generation from renewable sources; and also investments in energy efficiency by SMEs.We are also working with Turkey's Ministry of Energy and Natural Resources and the General Directory for Renewable Energy (with EU support) to share technical knowledge on energy efficiency and renewables with firms, including energy companies and commercial banks. Our technical assistance for the private sector includes industrial benchmarking and energy audits. Our recent report on Green Growth in Turkey also offers specific recommendations for each of the major sectors of Turkish industry.Climate action is a challenge that we can successfully face only if the public and private sectors work together. In the World Bank Group we firmly believe that climate action is not only an essential condition for sustainable growth, but also a driver of economic growth in its own right. Investing in energy efficiency, renewable energy, and climate-smart agriculture is more than a moral imperative to preserve a livable planet for future generations; it is also smart economics and smart business. More efficient use of natural resources will be key to ECA countries' efforts to become globally competitive economies and reach shared prosperity for their populations for decades to come.Thank you for your attention. Show Less -
Vice President Sanjay Pradhan: A Solutions Partnership to End Poverty
Collaborative Knowledge, Learning and Innovation as Key AcceleratorsIt is an honor to be here, and to follow the steps of Jim Yong Kim, World Bank Group President, who spoke at this Forum last year.I ... Show More + want to talk to you about ending poverty -- more specifically, since this is the World Knowledge Forum, I want to talk about how a collaborative approach to Knowledge, Learning and Innovation can become a powerful accelerator in our collective drive to end poverty.The Ganga ProblemBut first, I want to start with a story from my home country, India. The story is about the river Ganges.The Ganges is a sacred river, worshipped by Hindus as the Mother Ganga. The Ganga's waters are considered to be so pure and sacred that, when you bathe in them, it cleanses you of all your sins. The Ganga River provides 25% of India's water resources. More than 2500 kilometers long, it is the most heavily populated river basin in the world. For 400 million people, mostly very poor people, life and survival depend on Mother Ganga every day.But sadly, today, the Ganges is dying. Poorly planned rapid urbanization and industrialization have turned the Ganga into the most polluted river in the world. Every day, more than 250 million liters of untreated sewage goes right into the Ganga. The reality is that today, bathing in the Ganga, does not cleanse you. It makes you sick. Health costs in the Ganga basin alone are about $4 billion per year.The Ganga problem is not just a problem of immense magnitude. It is also a problem of immense complexity. It is not simply about cleaning a river. It is about how governments regulate, how companies make their profits, how people live their lives. The Ganga problem cuts across many different sectors – agriculture, urban management, environment, to name just a few. It also cuts across many stakeholders in society and most importantly, millions of poor people depend on the river for their lives and livelihoods. Other countries too increasingly face challenges that are complex, multi-dimensional, and crucial to improving the lives of the poor: for instance, creating jobs in the townships of South-Africa; or, providing access to water in Yemen. Those are problems that have no specific technical fixes – building roads and bridges alone won't do. They require humility, the ability to collaborate and learn from the experiences of others, and the ability to innovate and take innovations to scale.The challenge before us is how we can join forces and solve transformational problems of the magnitude, complexity and impact of the polluted Ganga? That question is at the very heart of the new World Bank Group (WBG) strategy.The WBG Goals and New Strategy – The Imperative for a Solutions PartnershipLast April, the shareholders of the World Bank Group, its 188 member countries, endorsed two goals: to end, by 2030, extreme poverty – as measured by those living under $1.25 per day -- and to promote shared prosperity – as measured by income gains of the bottom 40% of the population. Four days ago, at our Annual Meetings, they took the next step by endorsing a new WBG Strategy to focus relentlessly on achieving those goals in a sustainable manner. Achieving the goals requires that we achieve a deeper and faster impact in the lives of 1.2 billion people worldwide who live in extreme poverty, on less than $1.25 a day, and another 2.7 billion who remain poor and vulnerable, living on $1.25 - $4 a day. The challenge is massive. Achieving the goals means that it cannot be business as usual. We need to accelerate. We need to unite our efforts to support countries in solving their problems. And this is why we need a Solutions Partnership to end poverty and boost shared prosperity.The Ganga will become clean when the country's stakeholders from different sectors, disciplines and social groups work, learn and innovate together to implement and iterate solutions to that complex challenge, drawing on global evidence of "what works" and the practical experience of other countries. This will require repeated iteration and collaborative problem solving, with the support of a range of partners with different strengths and comparative advantage. This collaboration to tackle such difficult challenges through a solutions cycle, underpinned by global and local knowledge, mutual learning and innovative solutions constitutes the accelerator in the fight to end poverty and build shared prosperity. This is the essence of the Solutions WBG that President Kim talked about at this Forum last year. In the spirit of global solidarity which President Kim spoke about, we invite you to join us in a global partnership for solutions to end poverty and boost shared prosperity.An Approach to Development SolutionsDevelopment solutions have a cycle, which starts by understanding the true nature of the problem – the diagnosis. How often have development organizations, including my own, approached countries with technical fixes without truly understanding the problem? As part of our new strategy, we will invest systematically in shared diagnosis. Using all available evidence and analysis, we want to invest in a systematic country diagnostic to help countries identify, within the context of their national plans, what their biggest challenges are, and what the greatest opportunities are to reduce poverty and boost shared prosperity. While being analytically rigorous, this will also be a tool for collaborative learning among the full range of stakeholders -- governments, the private sector and civil society – to agree on the key problems and understand the political, social and cultural realities that drive the incentives and behaviors that helped create these problems in the first place. Only when there is a shared understanding of the key problems with clear indicators of success, can we mobilize an enhanced bundle of financing, knowledge and convening services from across the WBG and with other partners to help country stakeholders solve these problems. The resulting Solutions Partnership operating at the country and global levels underpins our collective drive to end poverty.In this bundle of solutions, obviously finance remains crucially important. The estimated sums needed for infrastructure alone in developing countries are staggering: up to $1.5 trillion per year. But the WBG needs to approach finance differently, especially when official development assistance is less than one percent of total capital flows to developing countries and our own financial footprint is a fraction of that. The private sector today accounts for the bulk of capital investment and job creation. We need to develop innovative ways to use official development assistance to leverage much larger amounts of finance from the private sector. We need collaborative public-private approaches for tackling transformational challenges. Under the new WBG strategy, we will marshal the combined resources of the World Bankwhich supports government, with the IFC and MIGA that support the private sector. But money alone is not the answer. How to use the money – that is the question. The Ganga will not become clean with just more money. That money already exists. The Ganga will become clean when the country's stakeholders work and learn collaboratively, and persist through to sustainable results.There is no better place than Korea to demonstrate the power of relentlessly and iteratively tackling the most difficult challenges to successfully traverse the journey from a country stricken by abject poverty only 60 years ago to the status of a developed nation. Take the Saemul Movement of Korea in the seventies, which had unprecedented success in tackling the very complex problem of rural poverty. The Saemul Movement built on a deep understanding of the prevailing socio-economic context of rural poverty in Korea, and then turned that into a method, which was refined and successfully scaled up over time, to support traditional community norms of diligence, self-help and collaboration. Today, the Saemul Movement solution itself might not be replicable "as is." However, the approach to understanding, and methodically tackling, the problem of rural poverty in all its cultural, political and economic complexity, provides the international community invaluable lessons.The WBG Knowledge, Learning and Innovation AgendaWhat then can the WBG do to support a Solutions Partnership? In addition to mobilizing enhanced public-private financing, we are making five fundamental shifts to help country stakeholders collaborate and iteratively tackle key developmental challenges through development solutions:First, we seek to make a radical departure from a lending projects approval mentality to a development solutions culture, so that we are more focused on results; more programmatic in mobilizing the bundle of finance, knowledge and convening services to achieve results; more flexible, adaptive and learning-oriented, including through real-time feedback from citizen-beneficiaries; more deliberate in creating safe spaces to incubate innovative solutions; and more focused on implementation and delivery of results. The continuous interplay of designing interventions using evidence; implementing them in an iterative way; and, learning deliberately throughout the process – that is a key aspect of what President Kim referred to in his speech last year as the Science of Delivery. To operationalize this, we will support teams, from within our organization and beyond, to develop the tools and the methods to embark on a solution cycle rather than a project cycle. We will help them to collect the evidence to frame the problems; help them bring together the stakeholders to develop consensus; help them course correct during implementation; and help them to effectively measure results.Second, throughout this solutions cycle, we need to more systematically mobilize global knowledge and innovation of "what works", informed by local context. This requires the best evidence-based solutions for our country clients from our global leadership in development research, combined with systematic partnerships – including with think tanks, academia, CSOs and the private sector -- both globally and nationally. Beyond research, our world today is also enriched with multiple but dispersed sources of practitioner knowledge. As a unique global development organization, the WBG has a key role in mobilizing these multiple sources of development knowledge to help clients solve their challenges. For instance, South-South knowledge sharing among developing country practitioners offers unprecedented opportunities to share lessons from success and failure, as well as deep implementation knowledge. Today developing country practitioners want to learn from each other, for instance how China lifted 500 million people out of poverty in three decades, or how Mexico's Opportunidades program improved schooling and nutrition for millions of children. There is an enormous interest to learn from Korea's success – a tremendous opportunity for Korea to serve as a knowledge hub for the delivery of development solutions. We have an important role in mobilizing and scaling such knowledge sharing through our operations. And we need to deploy new platforms, such as competitions and challenges, o crowd-source global and local solutions to complex challenges that can then be incubated and scaled up. Transformational platforms -- such as Alibaba in China that markets local products at scale from the base of the pyramid, or mobile phone apps that help the poor provide feedback on service delivery -- boost our fight to end poverty. We need to infuse and scale up such innovative approaches to entrepreneurs and citizens worldwide using our operations, convening power and partnerships. Third, alongside mobilizing global knowledge and innovation, we need to more systematically capture, mobilize and deploy our internal operational knowledge and innovation across the institution and our client base. On any given day, the World Bank Group is engaged in thousands of operational interactions in well over 100 countries. But sharing this operational knowledge is hampered by weak incentives, including our institutional fragmentation into regional silos with very limited flow of expertise and knowledge among them. To this end, we are launching far-reaching organizational reforms, by creating unified pools of technical experts under global practices to flow talent and knowledge across the Bank Group. We will provide incentives and supporting systems to systematically codify what we learn through our operational engagements and external partners on a global platform of what works under different circumstances, and make it widely available. We will also continue to make our data accessible. And we will redouble our efforts to create a culture of innovation and smart risk-taking, to create safe spaces for staff to co-create innovative solutions with partners through disciplined, data-driven experimentation.Fourth, we need to systematically translate this global-local knowledge into effective learning programs for country clients and our staff to enhance their capacity to achieve results. We will bring our clients and our staff together in an Open Learning Campus, so that they can learn from each other and jointly develop the skills that are needed to solve the complex challenges of our time. We will seize opportunities to dramatically scale up learning, for example through massive open online courses or MOOCs.Fifth, to achieve accelerated results, we need to not only strengthen technical skills but importantly leadership and coalition building skills to manage political economy obstacles and make change happen. Through our learning programs, we need to strengthen the collaborative leadership skills of change agents from government, the private sector and civil society so they can forge a shared vision and coalition for action, prioritize and monitor delivery, persist through inevitable obstacles, and achieve visible results. Helping to build a new cadre of leadership, in developing countries and inside our organization, will be a top priority for us to power the change agents as engines to end poverty. We have already started by building a Network of Delivery Leaders (Heads of States from six new governments), and we intend to cascade this within and across countries.To help implement this agenda, for the first time in the history of the World Bank Group, a Vice Presidency dedicated to Knowledge, Learning and Innovation has been created by President Kim. This complements our Senior Vice Presidency that leads our development research and intellectual leadership on development issues. Our goal is to enable the entire World Bank Group to mainstream and scale up global knowledge, learning and innovation in every country, through every engagement. We seek to build a physical and virtual platform for joint client-staff leadership and learning, knowledge sharing and innovation to enhance our collective capacity to accelerate the end of poverty. We seek to accomplish this in open partnership with others – governments, international organizations, the private sector, donor partners, academia, and civil society.A Global Solutions Partnership Going forward, the challenge I want to leave you with today is how we, as partners, can accelerate the end of poverty and build a world of shared prosperity by collaborating to tackle the most important challenges as partners. Let us come together, as individuals, as organizations, and as countries, from all disciplines and all corners of society, each with our strengths and skills, to form such a "Solutions Partnership" by working together to support multi-stakeholder collective action on the ground, and make systematic use of knowledge, learning and innovation to help solve the biggest development challenges.That is my invitation to you today.A Tale of the Second RiverI started with a story from my home country India - the story of the ailing river Ganga. To end, let me come full circle with the tale of another river – a story from this country, in fact from this very city, Seoul. A story of the once ailing, yet now very healthy, Cheonggyecheon.Cheonggyecheon is a six kilometer stream that starts in the heart of downtown Seoul and courses through neighborhoods before emptying into the Hangang river. In the 1950s, Seoul was growing at a rapid pace. Migration generated slums along the stream in shabby makeshift houses. The lack of proper sewage systems and pollution from light industry generated trash and waste, which ended up in the stream, and which became a dirty and polluted eyesore. In 1958, the stream was covered up with concrete which was seen to be a solution then - a 5.6 kilometer long and 16 meter wide elevated highway. But upon construction, this became a dark, noisy and seedy corridor.Ten years ago, a visionary Mayor exercised bold leadership to adopt an unlikely idea to demolish the highway and restore the stream. It was expensive, controversial and unpopular. He forged unlikely coalitions among very diverse stakeholders to foster a common vision and push through bold action. And look at Cheonggyecheon today – today, this beautiful landmark unites this city. Ten years ago, it divided the city.Cheonggyecheon once was Seoul's intractable problem, like Mother Ganga in my country. Today, it stands as a proud, international symbol of sustainable urban renewal.How can we help practitioners worldwide get inspired and learn from this and the myriad other examples of transformational action to change the world for the better, to lift 4 billion people out of poverty and vulnerability? This is our challenge, our imperative and our moral responsibility going forward. Thank you. Show Less -
World Bank Group President Jim Yong Kim's Remarks at the Annual Meetings 2013 Closing Press Conference
Thank you for coming to the closing press conference of the 2013 World Bank Group/IMF Annual Meetings.First, a big thank you to the hard-working staff at the World Bank Group, who have spent long hour... Show More + s in preparing for these meetings, which drew 13,000 people from 185 countries.Second, far from Washington, I'd like to express our concern about reports in eastern India where Cyclone Phailin has made landfall. It is forecast to hit an area populated with 4.5 million people. Our thoughts go out to all those living in the cyclone's path.Now, back to the Annual Meetings. I am very grateful for the support of the governors in unanimously endorsing our World Bank Group Strategy. For the first time in the history of our organization, we have a strategy that leverages the strengths of our entire organization – the Bank, the IFC, our private sector arm, and MIGA, which provides risk guarantees – and aligns all our work for a common purpose.That common purpose is our two goals, endorsed six months ago by our Governors -- to end extreme poverty by 2030 and to boost shared prosperity of the bottom 40 percent of the population in all developing countries. Now, our strategy will drive all our activities and resources to meet these two goals.This will produce concrete results and maximize our development impact. Across our institution, we will make decisions that allow us to be more selective and to choose more transformative projects that help countries and regions reach their priorities. Those priorities in low- and middle-income countries closely track ours – namely, to make strong progress in the coming years toward ending extreme poverty and boosting shared prosperity for those who have been left behind for far too long.I'd like to highlight one major shift that comes from our strategy. We will become more of a game-changing catalyst that draws billions of dollars of private sector capital into poor countries – countries that have had a difficult time attracting the kind of investment that creates good jobs. In particular, we will leverage our fund for the poorest – IDA – to bring in other sources of capital for things like new sources of electricity and schools, especially for fragile and conflict-affected states. We need a strong IDA 17 replenishment in order to fulfill these bold plans that will open up a world of opportunity for the poor and vulnerable.Our strategy calls for more investment in fragile states, and it also calls for working on a variety of fronts to combat climate change; and to improve health and education systems, especially for the benefit of girls and women. We now are strongly positioned to draw upon the World Bank Group's comparative advantages. In the coming months and years, the world will see a renewed and revitalized World Bank Group, one that rigorously works to end extreme poverty and boost shared prosperity.Let me make one other comment on the continuing fiscal impasse here in Washington.We are now five days away from a very dangerous moment. I urge US policymakers to quickly come to a resolution before they reach the debt ceiling deadline. The closer we get to the deadline, the greater the impact will be for the developing world. Inaction could result in interest rates rising, confidence falling, and growth slowing. If this comes to pass, it could be a disastrous event for the developing world, and that in turn will greatly hurt the developed economies as well. I urge US policymakers to avert this potential crisis.Thank you very much. Show Less -
Strengthening Agriculture Public Expenditure in Sub Saharan Africa, by World Bank Vice President for Africa Makhtar Diop
Dear Ambassador Abebe, Honorable Ministers, Executive Directors and Advisors, Colleagues and Friends, I would like to welcome you around this table for what I hope will be a very interestin... Show More + g and unique sharing of knowledge on good practices in public spending in agriculture.It is also a pleasure to have the presence of other invited guests from partner institutions with a strong commitment to agriculture on the sub-continent. I would like to acknowledge in particular the contributions of the Bill and Melinda Gates Foundation, represented today by Mr. Alan Rennison, to numerous initiatives improving evidence on what works for public expenditure in the sector, and also the International Food Policy Research Institute, represented by Mr. Ousmane Badiane, Director for Africa. IFPRI is a key partner in our agricultural work in Africa.Our focus today is on a topic very close to my heart – agriculture in Africa. In my view, agriculture is one of the very key sectors for triggering the economic transformation that could make Africa an economic dynamo in the global economy. The paper we are discussing today analyzes agricultural public expenditures in five African countries -- Burkina Faso, Côte d'Ivoire, Ghana, Liberia and Togo.In Africa, even more so than in other regions in the world, agricultural growth is hugely important to any effort to reduce poverty and promote shared prosperity, given its prominence in the economies of the region. Economic activity in agriculture typically accounts for 30- 40 percent of GDP and 65-70 percent of labor force – and there is global evidence that productivity improvements in this sector have a poverty impact close to 3 times that of other sectors. Between 2010 and 2050, Sub-Saharan Africa will add 150 million more people in rural areas (a 30 percent increase), creating a real "youth dividend." Urban job markets cannot absorb this increase, and agriculture will continue to be dominant sector of employment for years to come. We need a vibrant agricultural sector to create and safeguard these jobs.We have recent diagnostic work carried out by the World Bank and IFPRI that provides evidence that a healthy agricultural sector can provide many paths to employment for these youth.Some will remain on family holdings, in some cases combining work off-farm: 89 percent of rural youth currently work for their families or are self-employed, but these youths are typically poorly educated and unable to tap into their potential.Some would leave their family farms and establish new farms of their own: but to do so they need land, capital, technologies, and advice.Some will start businesses providing services (transport, plant protection, veterinary services, mechanized services, etc.) for new high-value agriculture. But to do this, they need technical and business skills, and capital.And some will be employed as wage earners on commercial farms or in ancillary services. But to earn a good living in this, they need training to become skilled workers.To take advantage of this youth dividend, we need policies and investments to create more fluid land markets, including rental markets; enhance education opportunities; help develop credit markets; and improve extension services. Each of these diverse pathways suggests priorities for public expenditures in agriculture.In recognition that agriculture needs to become a driver for growth in Africa, you all have set a target in the Maputo Declaration to devote 10 percent of your public expenditures to agriculture, and considerable progress has been made towards reaching this goal. To date, Burkina Faso, Ethiopia, Ghana, Guinea, Malawi, Mali, Niger, and Senegal have exceeded this target.On the other hand, I am aware that you, as finance ministers, worry whether you are getting good return from these increased budgets. Too often, the lion's share of agricultural budgets have gone to programs that do not yield high returns, but are politically popular, such as indiscriminate input subsidies.But there is firm evidence that there are good public investments in agriculture, which can pave the way for medium- and long-term returns and promote agricultural growth.The Comprehensive African Agricultural Development Program (CAADP) of the African Union has made a commitment to focus on improving the quality of agricultural public investment programs. We know from global studies that for example investments in research to develop and disseminate technological innovations in agriculture yield very high rates of return. For Sub-Saharan Africa, on average each $100 invested (a one-time expenditure) in agricultural research produces future benefits each year estimated at around $35. That is a huge rate of return. We know that in their periods of high growth, economies such as Brazil, India, and China, invested heavily in agricultural research.To illustrate this potential in another way, a recent study found that increasing the spending on national research in African countries by 7 percent per year until it is double the 2005 level would have a bigger impact on total factor productivity growth than would doubling the irrigation area. From the Bank's side, we are strongly committed to agriculture in Africa. Our Region has met the targets of the Bank's Agricultural Action Plan by almost doubling our agricultural lending since the food crisis in 2008, from $700 million to $1.36 billion this past fiscal year. This is close to 40 percent of the Bank's total lending to agriculture.And we will continue our support to you on agriculture, including helping you meet your goals for improving the quality of your agricultural public expenditures.Together with the Gates Foundation, we have supported CAADP by undertaking Agricultural Public Expenditure Reviews in a number of countries. By mid-2014, we will have assisted 18 African countries to complete such analyses. Our partner IFPRI is supporting you to put in place systems to monitor programs for results, which will then feed back into spending policies.Through this forum today, we hope that you will share with us your experiences on public expenditure review processes, and what is needed to improve the quality and effectiveness of public expenditures in agriculture.Thank you and I look forward to a stimulating discussion. Show Less -
Getting Africa's Infrastructure Built, by World Bank Vice President for Africa Makhtar Diop
It is a pleasure to be with you all again and report back on progress we have made in pursuing the PPP agenda in Africa. This series of events with which we have partnered with Africa Investor provide... Show More + s an important opportunity for us to "check in" on our efforts to support the strong desire you have expressed to me to develop PPPs in your countries.Focus on Transformational InvestmentThe big question for us is how do we mobilize private finance to support Africa's infrastructure needs?For me this is particularly important in the emphasis I am giving in pushing the transformational agenda in Africa. Public capital is insufficient to finance and execute the transformative projects in power, water and transport that Africa needs. This shortfall has been estimated as much as $50 billion per annum. Not only are the top line numbers large – transformational deals such as Inga 3 will cost more than $10 billion. This is beyond any one single institution's capacity.Where we are coming fromIn our Spring Meetings we got together and heard from the public sector side. We heard we still need to address the basics in terms of the institutional settings for PPPs. We heard about your challenges in getting deals to the market, financing the early stages of PPP deals and the challenges of finding good quality private partners. We heard from the private sector side. In particular the financial sector noted that they did not have the right instruments in place to manage risks and liquidity. They can't attract the international and local capital they know is out there. We also heard that they were not seeing the necessary quality of deals.We have spent some time reflecting on why we are not making as much progress as we would like, although we can pat ourselves a little bit on the back as we are making some progress. It's nice to report an uptick in PPPs in Africa in 2012. In 2012 in Sub Saharan Africa we doubled our best performance ever from any previous year in the energy sector with 22 PPPs, one which in value terms is just under $5 billion. The energy challenge as we all know is a real priority for Africa.Telecom is still the biggest in value terms but the transport and water sectors continue to disappoint.How can we make more progress?While there are many technical reasons there is no question that political economy reasons lie at the heart of driving the PPP agenda. When we look at the entire PPP value chain – the enabling environment in terms of the rules of the game, capacity to prepare and develop transactions, the financial sector, the construction sector and operational capabilities, we find weaknesses. We find that African involvement in the value chain is weak. This makes it very hard to push PPPs through the political system when benefits are perceived as largely flowing to foreigners. When we look at the sponsors of PPP projects in Africa we estimate well over 90% of them are not of African origin. This is not the pattern in other regions where there is much higher local involvement. We need to rebalance this equation if PPPs are to progress in Africa. Not only is this important to "unlock" PPPs but also to develop Africa's capital and financial markets as well as its private sector in terms of construction companies, building material suppliers and facilities managers.What are we doing about it?These messages from you as well as our own analysis provide us with a solid agenda to work on and we have begun to make some progress. Given the importance of transformational projects and their nature—they are often regional in nature—we have maintained our efforts in working with the regional organizations. In early September in partnership with UEMOA, France and PPIAF we met with the eight UEMOA countries on a possible "Feuille de Route" or road map forward on developing common approaches and capabilities that will not only help with regional projects but bolster the individual countries PPP capabilities. The pillars we are emphasizing are developing the legal framework, building capacity, incentives to encourage the pipeline and supporting project development. We plan on launching a similar effort with CEMAC in December. In the East there has been a long-standing engagement with EAC and we stand ready to work with SADEC and ECOWAS if requested. This work will help get the basics in place or what we call the enablers.We continue to support PPPs with our national programs in Ghana, Kenya and Nigeria which albeit slowly are now showing some positive signs. Our sector colleagues are also developing project-specific PPPs. Also within the wider Bank Group our colleagues in IFC and MIGA continue to make progress. Our IFC Advisory colleagues currently have 17 PPP advisory mandates in Sub Saharan Africa.Our examination of the PPP value chain suggests this is an area in which we have not focused sufficient attention. Given that much of Africa's growth is driven out of the natural resource sector and in turn this channels directly into infrastructure – logistics costs are often this sector's largest cost— or indirectly into infrastructure, there is an important opportunity to build the African capabilities in all aspects of construction, the supply of building materials and the operation of facilities. Just as we have done with other important sectors – agribusiness, light manufacturing and tourism -- we would like to spend some time really understanding the whole PPP value chain.We have some concrete ideas we are advancing with Africa investor to increase private sector participation in infrastructure investment in Africa. At the same time the whole financing project development nexus is an area we have been working on not only at the Africa level but Bank-wide. The Bank as a whole is actively investigating the establishment of a PPP infrastructure development facility and financing fund. It is clear to us in Africa that we need mechanisms to manage risk and liquidity as well as developing projects. Given the weaknesses of capital markets in Africa there is very little local capacity to manage risk through guarantee mechanisms and liquidity through bond issuances. While the Bank and other development partners can step in as we often do – we only have so much capacity. So it is clear we need to do something with these accelerators. If we don't, the large pension funds, insurance companies, sovereign wealth funds and infrastructure funds that keep telling us they want to invest but struggle will continue to stand on the sidelines. The numbers are huge – Nigeria's pension funds have $20 billion.Closing remarksIn closing we cannot do it all ourselves, we need to work in partnership with you the public sector, the private sector, the financial sector and the other development partners to get PPPs contributing fully to Africa's infrastructure development.This Strategic Dialogue platform and process with Africa investor is designed to create a free flowing constructive dialogue on actions to achieve this aim and we look forward to today's discussion and reporting back again at the 2014 Spring Meetings here in April. Show Less -