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Bank more active in low-income countries — Abou-Sabaa

aly_abou_sabaa_4_12Vice President Sector Operations Aly Abou Sabaa has chalked up 21 years at the African Development Bank (AfDB), garnering vital experience in agriculture development through the ranks. The Egyptian civil irrigation engineer started as a site irrigation supervisor with private sector operators before climbing on to the international scene at the AfDB, moving through west, central and North Africa. Abou Sabaa speaks on the Bank’s work on Green Growth, where he is co-chair, overseeing operations and policy formation.

 How far would you say your Operations Complex has contributed and will continue to contribute this year to the attainment of the Bank’s strategic priorities and how would you assess the impact of AfDB’s Corporate Governance Reform on service delivery in recent years?

The Sector Operations II Complex (OSVP) derives its strategic priorities from those of the Bank Group. The Complex leads on the implementation of two of the AfDB’s core operational priorities, in the context of the Bank’s Strategy 2013-22: governance and skills and technology. In addition, agriculture and food security is our area of special focus, as earmarked within the Strategy.

 In the Complex’s core areas of business, the value of total approved operations, from January 1 to May 22, 2013, stands at about Euros 390 million of which 73% is for governance-related operations; 19% for interventions in agriculture and the remainder (i.e. 8%) for skills and technology operations. Needless to say, the OSVP Complex will continue to focus its lending and non-lending activities in 2013 towards the implementation of the Bank Group’s Strategy.

  With the objective of becoming ever more responsive, efficient and effective, OSVP will focus on innovative approaches in delivering on its governance agenda. In addition, the Complex will continue to support African initiatives for monitoring transparency and good governance; strengthen public financial management systems in client countries, notably at subnational level; empower non-state actors to engage in accountability mechanisms; and encourage client countries to accelerate domestic resource mobilization.

 OSVP’s 2013 agenda for skills and technology will be underpinned by the upcoming Human Capital Development Strategy. To implement this Strategy, OSVP will focus on enhanced collaboration with external partners. Key priority areas for 2013 include; assisting client countries in better matching the supply and demand for skilled workers to address youth unemployment; stepping up support for technical and vocational training to meet specific labour market needs and strengthening scientific research and innovation by African networks of excellence.

In terms of agriculture and food security, OSVP will assist countries in increasing their agricultural productivity and competitiveness, through sustained coordinated investment using an integrated value chain approach. The Complex will also strengthen partnerships with other donors and financing institutions through common agricultural initiatives.

With respect to the second part of your question, AfDB’s corporate governance reforms are having a positive impact on service delivery. In fact, according to the recent “Bank Clients’ Survey”, we enjoy a significant franchise value with our clients as an African institution.

 Decentralization has brought us closer to the beneficiaries we serve and enables us to better participate in country-led development processes. The AfDB is now present in 34 member countries – two Regional Resource Centres; 29 Field offices and three liaison offices. We intend to extend this field presence. Such presence on the ground is particularly important for our governance portfolio, where effective engagement in policy dialogue and budget processes is central to our ability to assist, as well as to promote better coordination with our other development partners. The percentage of OSVP staff located in the field currently stands at 40%, which has contributed to improvements in the management of the OSVP portfolio of projects. We will continue to develop the capacity of staff in field offices over the medium term.

 Our capacity has substantially increased in recent years, as demonstrated by our ability to mobilize budget support rapidly in response to events in Mali, Botswana, Tunisia and Côte d’Ivoire. These operations helped meet the urgent financial needs of our partner countries and provided a platform for advancing a longer-term reform agenda. Moreover, we have become a leading player in the field of program-based operations, in particular fragile states.

 To what extent do you think the Bank has leveraged its improved financial standing to deliver on its mandate in different country categories across the continent, particularly in the Fragile States?

We need to be watchful when talking about fragile states. As President Kaberuka has often recalled, fragility is not permanent but a transitional phase. In fact what we do at the AfDB is to support countries emerge from their state of fragility.

It is undeniable that the AfDB remains an institution with a strong financial standing, with a triple-A rating that speaks for itself. We have thus been able to leverage our position to tailor our interventions to respond to the specific needs of low and middle-income countries as well as to states in fragility.

 Indeed, one of the key findings of a recent independent review of our Non-Sovereign Operations portfolio highlights that we have a strong financing role in low-income countries, having been more active in this priority group of countries than investors, generally in the African region.

 We are also able to provide seed funding and positively leverage the contributions of other development partners. A recent example that comes to mind is the Horn of Africa (HoA) regional program.

 We also host the Congo Basin Forest Fund (CBFF), which is a development support fund established in June 2008 with the twin goals of alleviating poverty and addressing climate change issues  by reducing, slowing and,  if possible, by eventually reversing the rate of deforestation in the Congo Basin.  Besides the CBFF, there is the NEPAD-Infrastructure Project Preparation Facility (NEPAD-IPPF), the African Legal Support Facility (ASLF), the African Water Facility (AWF), and the Investment Climate Facility (ICF), among other initiatives. More importantly, these Annual Meetings here in Marrakech will discuss what could be a major breakthrough in financing Africa’s infrastructure deficit, namely the African Infrastructure Finance Facility that we are hoping to set up. It is intended to be a private public sector partnership initiative and so investors — public and private, domestic and international – are welcome to join in.

 Apart from growing calls for more commitment to human capacity building in Africa towards achieving sustainable socio-economic development, what other major challenges does the Bank Group face in its quest to deliver on its mandate in the continent?

We should not brush aside the calls for more commitment on human capacity building in Africa since this is an increasingly pressing challenge.  Youth participation in the African labour market remains low at 46% as compared to the world’s average of 51%.  The unemployment rate among youths in Africa is between 25 and 30 percent on average. Furthermore, in most countries, it is not so much the unemployment rate which causes concern, as the types of job that young people are able to command. Most jobs opportunities (around 90%) occur in the informal sector and are vulnerable. The incidence of informal sector employment and, as a result, vulnerable employment and working poverty, are extremely high in many African countries.

 We also need to address the mismatch between the education system and labour market needs. Africa presents the highest proportion of illiterate youth in the world, estimated at 25 per cent. Paradoxically and concomitantly, African countries are increasingly experiencing the phenomenon of the “educated unemployed” resulting from mass higher education. About five million educated youth are being produced yearly by African universities and colleges and enter national labour markets that display low employment capacities.

 Africa has all it takes to be self-sufficient in food production, yet the continent is lagging behind and remains a net food importer.  What is the Bank doing in this regard?

Africa can feed itself. The continent definitely has what it takes to be self-sufficient in food production. The obvious question is then, why are we still a net food importer? Currently, Africa’s agricultural sector has dramatically low levels of value addition. Rural areas in African countries also continue to have limited agro-processing activity and capacity; this often leads to post-harvest losses sometimes reaching an average of 50% for perishable vegetables and fruits. For many of the African countries, agriculture also continues to be smallholder-based and the smallholder farmers are not recognized as entrepreneurs, albeit small-scale.

 For Africa to be self-sufficient in food production, we need to transform our agriculture landscape by building resilience in the sector; providing long-term financing for the sector; and promoting continental agricultural trade. Agricultural products must be processed not only to improve their economic worth, but also to ensure availability of commodities all year around; and this is exactly what the Bank Group’s Strategy advocates.

 The AfDB has been responsive in supporting the continent to become self-sufficient in food production, notably in terms of projects for rural-and-agriculture related infrastructure (for example feeder roads), and processing infrastructure  as well as marketing infrastructure that link production to distribution and consumption.

 The Bank is also supporting the Comprehensive Africa Agricultural Development Program (CAADP) agenda as well as the work of the Consultative Group on International Agricultural Research (CGIAR). Over the past three years, the AfDB has been supporting several of its client countries in developing competitive proposals to leverage funding from the Global Agriculture and Food Security Program (GAFSP).

This brings me to the Bank’s approach to agriculture finance. We have two main ways of supporting the development of agribusiness on the continent: direct investment and through intermediaries. Our direct investment consists in large industrial projects with strong linkages with small farmers and local Small-and-Medium Enterprises (SMEs) throughout the value chain.

 Two main initiatives are the “African Agriculture Fund (AAF)” and “Agvance Africa”.

 What is the Bank’s commitment to health and nutrition matters like in line with the draft Human Capital Development Strategy?

The health sector is a productive industrial sector that has the potential of providing an estimated two to three million skilled jobs for young Africans. To achieve this, we need to be collectively ambitious and maximize the full potential of our continent’s health sector. Thus in the health sector, the AfDB intends to continue promoting investments that can foster economic growth and job creation by developing the pharmaceutical industry; creating regional hubs for medical tourism; developing the hospital industry; expanding food industries taking into account food fortification purposes and developing a sustainable health social business.

 As you may already be aware, the private health sector in Sub-Saharan Africa is surprisingly large and constitutes an important, diverse component of the region’s health care systems. It covers all elements along the health value chain, including provision, financing, manufacturing, distribution, and retail. Since there are many challenges to be addressed in the health sector, we need to focus on building solid partnerships between the public and domestic and foreign private sectors. In this context, the AfDB’s work with the private sector will include: building the pharmaceutical industry and improving regulation of and access to pharmaceuticals; as well as fostering public-private partnerships.

 Since the continent’s health sector still suffers from major infrastructure bottlenecks, the AfDB will also focus on building social infrastructures, including hospitals and social insurance. Such investments are critical to ensure sustainable and equitable progress in Africa.

 The AfDB has taken the lead in mobilizing partners toward the African value for money, accountability, and sustainability agenda. In July last year, the AfDB hosted a high-level dialogue among African ministers of finance and health on value for money, sustainability, and accountability in the health sector. I would like to reiterate the crux of President Kaberuka’s message during this conference, namely that “tomorrow’s health agenda will be domestic and therefore focus on more health for money rather than money for health”.  Ministers adopted the Tunis Declaration, which calls for the AfDB’s and other partners’ support for concrete measures to enhance value for money, sustainability, and accountability, the design of effective investments in the health sector using evidence-based strategies, and the prioritization of high-impact interventions.

 In nutrition, the AfDB intends to play a key role in supporting reforms as well as the development of national and international norms and standards, policies, and guidelines in the agriculture and food sectors that are designed to improve health. The Bank will also support countries committed to the “scaling-up for nutrition” approach, specifically interventions in the early childhood. The AfDB will support the development of agribusiness entrepreneurship which are improves nutrition security.

 Through agribusiness activities, the AfDB will ensure the alignment of profitability and good nutrition through value chain analysis, which will reveal possibilities for achieving social, environmental, and health goals. Furthermore, the AfDB will support partnership with the private sector through the development of food industries to tackle micronutrient deficiencies and food fortification.

 Nutrition Education for behaviour change will also be a key activity to be enhanced in food security programmes.  We need high impact interventions for instance by integrating food security, health and education programs targeting investments in nutrition within early childhood development programs.

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