 Good afternoon all. Thank you for inviting me. Thank you minister For those inspiring words absolutely appropriate about what's happening in Africa right now And I thank the Institute for inviting me for Irish aid for having me I give this talk this afternoon The title of my talk is about Africa so pathways to inclusive sustainable development of which the private sector plays a part Let me start off this way. You know, we we have a view of Africa because that's our mandate, but also we have a view of the world because we believe the world is impacting on Africa So what we see? globally, so what I see is the convergence of Three crisis what I call a perfect storm. So what you have is a initially we had a banking crisis That's one And now we've got a sovereign debt crisis. It's become more evident and and did we have a crisis of low growth and no jobs? So three three things coming together is what we call a perfect storm And so we watch and we've seen the what is what took place in Europe this week The whole deal at which the Greeks have decided to do a referendum on interesting I don't think that's that's probably will be helpful in the short term But we hope that thing things tend to turn out. Okay, and what we see basically is is is Europe? Focusing more on Stabilization which it should stabilize the situation and less on growth and structural reforms I guess that that would be the second phase and that's what is is required all of that is impacting on Africa But I must say that Africa is looking okay, and in my talk, I'll have three sections Which is what Africa looks like now what will it look like going forward? We go 50 years and so forth and what are the challenges and what was the different roles as a bank for us? Well, what should we be doing and what should our partners be doing now? If you take a look at this chart, you'll see that Africa has been the third fastest growing region In the world after Asia really in the Middle East So it's done very well in the last ten years and in fact coming out of the financial crisis Africa was growing something like six point two percent and it deep to about two point Six percent in two or nine and then it came back up And last year we recorded four point nine percent and this year expect something like five point seven percent and next year An average rate of orders of the order of more six six point one percent above six again So quite robust resilient growth in the last ten years And I think that there's got to do with the some of the partners. We've done a good job in helping Africa I must say that African the African economy is still small by the way by global standards It's size is about one point seven trillion. I'm going to use American dollars That's what we use and which is the same size as the Hall of Brazil or Russia But the population is there is a billion people at least so population Economic size you can see that the the income the capital can only be smaller But by definition so and and what's been missing in this strong growth in Africa is really what I call Inclusion inclusive growth, which is really explains the Arab Spring and it's including inclusion in many dimensions I'll come to this in a moment. So it's good growth strong growth, but not inclusive enough Wait a way where is African growth coming from? It's partly a commodity story. We've got a lot of countries in Africa with oil and gas various minerals and so forth With the commodity boom the commodity supercycle. That's been driving a lot of the growth in Africa However, the commodity story does not explain 30% of the growth in Africa what explains it is the domestic markets is the domestic markets You have had a you have got a a Bayesian in Middle class in Africa coming through I'll show you a slide later We've just done a paper which has become very popular We estimate that the middle of class in Africa is about 300 million people, which is 30% However, I hasten to say only half of that is stable mid-middle class The other half is unstable those people could fall back into poverty very quickly due to any shock bead political You know sharks governance issues Loss of a job a death in the family But that that 300 million people is responsible for the domestic demand that that that is growing in Africa Suddenly if you speak to a lot of the companies in the consumer sector, they'll tell you that their biggest margins Probably in Africa and nowhere else because you know of this class of people Um, but also a lot of African countries have done very well in terms of managing their economies I think the one thing that's often missed in my view When we when we analyze the structural adjustment that took place in Africa in the 80s where everyone concluded that it didn't work There was no growth What we forgot is that the it takes time it takes time and I think the fruits of structural adjustment is only showing now And it's it's it's it's likely about the quality of people that it produced who are running central banks Who are running ministers of finance good economic managers is what really come out of the structural reforms in Africa Um, also agriculture in some some parts of Africa is doing well The more needs to be done here I think without I think that with Africa if if you don't deal with the issue of Lentai cruel some kind of ownership rights the way vietnam did Will never make progress on agriculture and this is where 65 of Africans live they live in on on agriculture We'll never make progress, but again, it's a very difficult space in my view. It's very political Sometimes it's strongly cultural the chiefs have something to say in it in terms of real land ownership It's very complex but not easy But if we don't deal with it, we'll never get Africans quickly enough out out out out of poverty Now this is my this is the revolution slide A if just an example of of inclusive growth that's been missing in Africa If you take if you take the the green bars from 1984 to 2010 they show you the rate of unemployment in tunisia averaging 14 percent And this is what a lot of people were tracking or stable. Well, it's 14 might go down at some point But what what people were not focusing on including ourselves is the is the yellowish Light yellowish bar where it shows the unemployment of university graduates Which is rising from 2.3 to 84 To to 20 percent if not higher now now we think it's not more like 30 percent And that's your revolution taking place educated people smart people Who you know who don't have jobs? This is a problem. So so our our growth has not been been inclusive at all Now now I've already said inclusion is an issue the other issue around this growth in Africa is the political You know backdrop to it The the the voice and accountability is a problem in Africa That was the issue with banali in egypt in libya and everywhere else And the issue whole issue of the youth bulge Is an issue so while africa is growing there are risks and and the risks around inclusive growth in these components Just some of the growth figures For a few african countries we estimate that this year the fastest growing country is going to be gana Growing at least a 12 percent people turn the 12 percent is conservative So gana they've discovered oil as well so that that helps and then Ethiopia growing at 10 percent Doesn't anyone know how many people there are in Ethiopia? This is amazing. This is the first time the question has been answered. No hesitation If I ask the same question in africa in africa people say 10 million but in ireland 80 million it's actually 85 million 85 million the the point I'm making is that the the the the earlier point I was making about This the middle of the pyramid this 30 percent of the african population is partly responsible For Ethiopia's 10 percent rate of growth if you've been to a desert about flight and you're watching the The the buildings that are mushroomed all over the place is partially domestic investors But a lot of the european diaspora itself. So it's an investment driven growth Some people say without the figure and so forth But but if you go to Ethiopia you will see that it's really growing strongly Some of the countries that are growing strongly you see the drc. That's a resource effect Is in babu. That's a pure economic recovery effect and then south africa showing a more You know mutant growth at 3.6 percent quite low In you know, Nigeria 6.9 percent And then ivory coast because of the of the standard political standard of growing at a negative 7 percent And then up up north where we live in tunisia 1.1 libya minus 19 percent in egypt 1.6 percent So so this is almost like a twin trek africa north africa growing with negative rate of growth This is revolution and then sub-saharan africa growing much strongly with average of about 5.5 percent rate of growth so overall Okay Into africa trade is still weak It's still about 12 percent of you know of of trade with with globally. It's quite weak There are many reasons why africans don't trade with each other. It's about infrastructure. It's about weak manufacturing sectors. There are a lot of sectors Effectors, but clearly this is not a strong point original integration is is quite weak Now this slide you can't see what i've shown is if if you get the hard copy slides just to show you Progress has been made in africa in different areas In poverty reduction, suddenly poverty reduction. The progress has been made There are fewer poorer africans than they were you know 20 years ago progress on infrastructure development, suddenly there's been an improvement Progress in the private sector in the business climate. There has been an improvement if you look at the business climate If compared to where africa was 10 years ago, a lot has changed. There's still there's still a lot to do There's still a lot to do. It's not easy infrastructure Improvement, original integration very very little Agriculture and food security Small improvement others wouldn't be having this problem in the Horn of Africa It's quite clear that the Horn of Africa issue is not so much about Drought but rather more about governance because a shortage of food does not have to be a famine It becomes a famine if there's a governance failure. Somalia is the elephant in the room I did another report about a few months ago on the issue of piracy In the CNN did a something on it last week on the paper Which is highly costly and this explains what's going on in the Horn of Africa Gender and human development Progress it could be better frankly or governance and transparency. I'll show you a slide later africa has made Progress in a lot of the governance areas with the exception of voice and accountability That's that's still a gap and then in terms of political fragility Number of fragile states again. There's been been improvement overall. So so it's all looking positive, but you know things could be could be faster I think I'm going to skip skip these slides Now the one area that I want to spend a few minutes on is on infrastructure development This is a big gap in Africa the the we estimate that the africa needs something like 93 billion dollars a year worth of infrastructure investments from all the partners Currently only half of that is being funded. So easily 45 billion Pay goes unfunded and that is very costly to africans costing africa something like 3 percentage points in GDP growth So if you're just to close the infrastructure Gap you just add another 3 percent to grow Huge huge gap and that gap is right across the road and board It's in it's in you know length of the paved roads road density It's still in telephony Although a lot has been achieved in terms of mobile telephony It's in generation capacity In fact, we know that africa loses something like 30 percent in private productivity due to power outages Just power outages 30 percent of productivity gone You know, it's in water and sanitation Right across the board. This is a big issue and as a bank Almost 70 percent of our resources Invested in infrastructure of one from one another because we believe this is where change is going to come from Absolutely Then then just some some some wonderful maps that we've done. These are the missing the red are the missing power lines in africa You know green is what is in place Red is the missing power lines Right right across, you know So Yeah, that's missing power and then we have Missing roads as well. We also map these. We know which roads need to be put in place all the corridors and so forth So there's a lot that needs to be done Even in terms of the ict the the missing cables. I think they're going on to auto the the missing cables for both undersea and On the land we should be put in place and have not been put in place But and some of these projects have already been sculpted and they've been mapped out. We have a whole database of which projects are ready for investment But the investment just isn't there to to finance these projects, but we have all the information at the bank Um, I mentioned earlier about agriculture. I'm going to skip that. This is a useful picture on governance You can see if you just focus on the on the green line Uh, there's no pointer. You can see that the biggest gap really is on is on voice a voice and accountability. This is where Africa is not Doing doing well and perhaps if you are thinking of intervening or In the whole political space Just making sure that civil society Governments are more accountable. This is where a lot of work needs needs needs to be done in our view But there's improvement in other areas Even issues it has like corruption and and so forth government effectiveness political stability you know But but but this is the big one The other issue where there's a gap in my view is whole area of science and technology Higher education science and technology if you look at the enrollments Because no country can develop without investing in hard research Or at least in in some kind of vocational training in the in the hard Skills you can see south from Africa in Africa lower than m ocd east asia south korea costa rica is as an example of the country Again, we're working in these needs to be done here Now now I referred earlier to the to the domestic economy the domestic demand in africa growing This isn't an estimate our estimate of the the middle of the pyramid in africa or the middle class Is been growing you can see from 1980 something like, you know, 28% about 33% end of last year And it's about 300 million people They're responsible for for quite a large part of consumption In the on assets and we've tried to measure these middle class from different angles in terms of what they consume What are they on and what they save? We're coming up with the same figure 300 million of which half is stable 150 stable the other 150 is unstable So so it's something to Not to be scoffed not to be scoffed us. I also want to mention something that has been assisting Growth in africa is the africans Abroad africans not living outside their countries We estimate that 64% Of africans do not live in their countries. So they live and 64% live in africa And then the the remainder then live in other countries outside other regions outside africa And so and and these africans the african draspora send home something like 40 billion dollars a year 40 billion dollars a year and that's the same as the amount of oda that africa receives In fact, if in foreign direct investment in africa is usually the order of 50 billion. So if you add the diaspora Remittances that's the foreign direct investment. That's more than Oda But then what happens with the with the the diaspora remittances because they're never pulled together You send money to your family like I still send my money my my my families are money Is is directed is for education or is for supporting an elderly person is very very directed very private But it's not pulled. So it's impact Therefore is not what can I say it's not as as you can leverage it. You can't leverage like you would do with Fdi or with oda you you can't leverage it But but it's it's not to be scoffed at is it's a big chunk and I think more effort should be made to see how This could be harnessed and pulled together. So it becomes an effective partner to oda flows and fdi flows I know that in kenya in their recent born issue For financing infrastructure. They've tapped tapped into the the diaspora remittances, so so that that that that's encouraging Just the figures to show you what I was talking about The remittances for this oda fdi Private debt and portfolio equity. This is a 208 figure. So a little bit outdated But the ballpark is what it is for the first three that that's really the ballpark Where do we think africa is headed If you look at the current gdp of africa is something like 1.7 trillion dollars In 50 years time, we estimated to be about about 15 trillion 15 trillion and we've plotted it every year all the way up to 50 years time That's where we think it is headed under the current growth conditions Now if if you look at the per capita gdp currently at below $2,000 per person in 50 years time We think it'll be sitting at about just over 6,000 and it is still below south korea's gdp current south korea's gdp per capita South korea is currently about what 17,000 or something. So africa will only get to 6,000 You know in 50 years time Unless we're able to to to push here and there to make sure that it accelerates Population, I think we've all been reading the the un population report You can see currently africa has just over a billion people And we think that in 50 years time the population will be more like 2.6 billion people Basically the the the extra people that will be added to the world between now and the next 50 years half of those will come from africa So you can see that the potential population pressure that's going to come through My team has just shown me a draft report which I was reading as I was coming Which I'm still cleaning up about the problem of the aging population africa We never reflect on the aging issue in africa We estimate right now that 3.6 percent of the african population is over 65 So that that's that's already in that retirement age And that's in over time is going to grow to as much as 10 percent over 50 years 10 percent Which is your typical, you know Percentage for the what you call the public the retirees in any society. I don't know what it is in Ireland Is it as much as 10 percent? Maybe that's too high So it's going to change a lot the dynamics of dependency going forward now By region the the the regions which will have the largest population are going to be east africa and west africa East africa and west africa very easy Well, you know, that's where the the back of the people are southern africa In central africa might might much lower That's where the those are the big population areas in africa now our urban population Currently the urban population is about 40 percent In africa in about 50 years We think it's going to rise to closer to 80 percent it'll be more like what you see in Ireland Of that order. So think of the pressure that's going to build on these africans That the minister was referring to On infrastructure on schools on health So a lot needs to be done to plan this african city is better If it doesn't happen, this is what is more likely to happen over time Now child mortality rates those those will improve. Absolutely AIDS death rates again. We see we see an improvement over time. It's already showing Absolutely life expectancy life expectancy Our kind estimates that Currently we know that the average life expectancy in africa is something like 55 years In about 50 years time is going to move to 70 So again, you can see the issue of the aging population the whole dependency ratio It is major implications in terms of investing in In in in contractual savings your life companies and so forth A lot of the african countries don't have an organized pension fund industry The whole construction contractual serving space needs to be to be dealt with and dealt with quickly Now literacy is going to improve a lot. It's going to move much closer to 90 percent over time So this is the africa that we see Going forward and we've all but by the way we produced a whole report on it Which was reviewed in the wall street journal Two weeks ago You know, it says africa in 50 years time the road towards inclusive growth is a lot. It's a very interesting paper If I think I did send it, I hope it's to be circulated to whoever wants to see it. It's free We're not going to charge you for it Right, but now i'm just going to double back in my third part of the presentation Looking at the development challenges and i'm going to be repeating here, but i'll try to move faster It's infrastructure. That's a big challenge for africa as a bank will focus on it Another issue is it really has to do with how africa manages what we call these new emerging partners china, russia, india, brazil tech, south korea and so forth There's certainly sources of of dynamism of energy Some of of exports a trading activity and so forth But africa does need a strategy to manage these these relationships more effectively for maximum benefit Certainly regional integration is a challenge that africa again must, you know, focus on on regional integration. I think that perhaps Rather focusing on the trading of goods and services. There's an issue about People movement a lot needs to be done about that movement of people and then the others about movement of capital Making sure that those two can move freely that will do a lot to purchase the regional integration pillar Improving the investment climate is something that that that needs still needs to be done a lot has been achieved More needs to be done and then promoting what I call direct domestic investment I think it's one thing to be focused on foreign direct investment and then governments forget about Developing the local entrepreneurs who become, you know, credible partners for the foreign investors For jv's and so forth again a lot needs to be done in in domestic direct investment And sm sms we have estimated In some study we've done that they're about A 65 million small to medium scale enterprises in africa And if you were to put a market value on them, their value would be something like 450 billion dollars Which is about a quarter of africa's cross domestic product And that makes a lot of sense because we know that at least 25 percent of economic activity in africa Comes from the informal sector from this sms sector. It's a sector that needs a lot of support The bulk of african people survive and and live on it Certainly another issue is economic transformation, especially for countries that are resource rich Botswana, Nigeria DRC a lot needs to be done to develop other sectors other than the natural resources That that are driving the the the economy Again, I've talked earlier about the issue of the population growth How to how should africa balance this demographic dividend, which is creating a Stable middle class overall over time With poverty rejection challenges because even higher population growth You have poverty coming through very quickly if growth is not coming through To support the population The issue of whole inclusive growth and youth unemployment High education vocational skills is something that in nature looked at Financial inclusion were very encouraged by what we see in kanya with the development of the mpesa You know technology Where people are able to move money Using mobile telephony and so forth to me. That's something that should be promoted But we know that it's not easy to manage the risks It's a new way of banking so naturally presents us with regulatory challenges But if those can be overcome is one way to really bring people Into the financial sector. I've talked earlier about agriculture that Here I really feel that if we as long as we don't deal with some kind of Some kind of property rights entitlements, which is very difficult to deal with We can't make much progress on in the architectural sector. All you can do is support here and there, but I'm not certain We can make a make a lot of progress On domestic resource mobilization African countries lose a lot from companies that invade taxes individuals that invade taxes mining companies and so forth But but also we know that afric african countries can do more to deepen their capital markets because these are also source of a source of domestic resources As I say, I'm very encouraged by what I see in kenya in terms of deepening capital markets getting the bone market going You know launching infrastructure bonds for targeted infrastructure all that is welcome suddenly as a bank This is something that that would like to support and and think about it, you know for for every dollar that Africa receives in ODA Africa itself raises ten dollars So there is something there to to work with something to work with there's a big potential It's after getting something like 40 billion in ODA itself is raising something like 400 billion And more and more could be done The second point is about is about natural resources. I think that african countries must Put in place or develop sovereign world funds if they've got natural resources Botswana has done an excellent job in that that that's already a model to follow I kind of like gabong Nigeria now you've got Uganda coming through they should all Develop or put in place sovereign world funds So these the revenues of natural resources are managed transparently And then you can do a three-way asset allocation, which is support the current expenditure, you know from from the revenues number two Invest in infrastructure number three lock away a portion for future generations, which is tucked away somewhere You know, so so so that is my I feel very strong about this point about You know how natural resources are managed in Africa Uh, it can't be that you know natural having natural resources is a cast always a cast it can't be surely It's an opportunity dealing with illicit financial flows. I've already referred to piracy as a big issue Just to give you an example The direct and indirect costs of piracy in in the uh, seychelles is something like four percent of gdp Everything with tourism fisheries Cost of insurance and all of that it is huge. It's a big issue. I should be down to Leveraging or da for private sector support I think I think it's time to reflect on how the african private sector or whoever is investing the private sector in africa Can work with Oda to to leverage to get more for for for for for for development It may even be worth from time to time considering Oda and some kind of insurance. It only comes in when a specific event Okay, what is called an insurance approach? So these are the issues that we think Should be done in africa given the scenario of where africa is right now Where it is most likely to be in 50 years time and what we think needs needs to be done To get there let me stop here for now and i'm happy to take questions