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

1 Fundamental Question: “ How best can we assist in reducing poverty and promoting economic development in Africa? My career relating to African development My career relating to African development Assistant to Executive Director for Japan, WB (World Bank) Assistant to Executive Director for Japan, WB (World Bank) Director in charge of multilateral development banks including WB, MOF (Ministry of Finance) Director in charge of multilateral development banks including WB, MOF (Ministry of Finance) Director of Tokyo Office, WB Director of Tokyo Office, WB Executive Director for Japan, WB Executive Director for Japan, WB Ambassador to Kenya, Eritrea, Seychelles, Rwanda, Ambassador to Kenya, Eritrea, Seychelles, Rwanda, and Burundi and Burundi

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

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

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

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

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

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

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

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

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

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

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

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

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

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