BY GIRMACHEW GASHAW
Victoria KwaKwa is regional vice president for Eastern and Southern Africa. She had her first official visit to Ethiopia since she took over the capacity as a World Bank, Regional Director for Eastern and Southern Africa in July 2022.
The Ethiopian Press Agency has discussed with her recently concerning her impression of Ethiopia’s economy vis-à-vis the partnership with the World Bank as well as future engagement of the bank with Ethiopia and Africa.
“The World Bank has had a long standing, partnership and relationship with Ethiopia, we want to deepen that partnership and relationship” she said.
Here is an excerpt from her answers. Have a nice read!
Could you briefly tell us about your discussion with the government of Ethiopia about World Banks engagement, especially at this time of challenges to the country’s economic development like climate change, conflict … etc?
Whether it’s the climate challenges that are evident in the droughts and floods, whether it’s around issues of conflict, and whether it’s about just the impact that the COVID had and the impact that it is having, there were several challenges, but also lots of opportunities. We welcome very much the cessation of hostilities agreement and the progress and implementation.
We recognize the huge potential of this country, whether it’s for agriculture, whether it’s for tourism, and even for entrepreneurship, and it’s potential to attract private investment, both from the domestic as well as the external context. And we also look at the growth that the country has had over the last several years, which has been quite strong. So, there are lots of opportunities alongside the challenges.
In terms of my discussions with government, I think it’s been a first visit. I didn’t come here seeking certain agreements; I think the most fundamental thing is that we all agree our partnership is important. It’s important, it can be deepened, and it can be
strengthened. There’s a lot to do in Ethiopia, to foster development. And I think that’s what we’ve agreed; we have agreed that we need to stand together. In this partnership, we’ve agreed that we need to work together on a range of fronts to support the reforms to support the peace and stability objective to support growth, and to support social development. So that is what I think is agreed. And we will continue to bring intellectual capacities, analytic work, policy advice, as well as financing to the table.
Ethiopia has been in conflict for the last couple of years. Is there any plan to work with the government of Ethiopia especially related to the recovery grant for the damages?
I’d like to say first of all, that we never stopped our engagement in Ethiopia; we have continued to be present throughout these last few years that you’ve mentioned. So it’s not really about re engaging. We have seen, as I said, the relationship and the partnership with Ethiopia as a super important. And we have in the conflict areas, as well as just to the droughts, I mentioned, the impact of the global economic conditions. So we have provided a lot of support in these areas.
Now, at least it is the beginning of peace in the north, we are looking at how we support some of the longer term development. challenges. We haven’t had a chance to do as much on, do a bit more on the infrastructure than we were able to do. And also, as I said, support the reform agenda. So yes, we do have our financial engagement, which is our commitment in three year cycles. So we call it the IDA 20 cycle. Those resources are what we bring to the table, we’re going to look at new operations that will help deliver a peace dividend that will continue to shore up growth and that will bring inclusive development in Ethiopia.
How do you see the context of doing business in Ethiopia, following the peace that prevailed in the country?
I think a conflict is not good for business; conflict brings instability, conflict brings uncertainty. And it’s not good for investment decisions and so on. So the fact as you said that there’s been the cessation of hostilities agreement is good and should all go well, for the business environment. Having said that, I think it’s still the case that the peace needs to be consolidated. And it’s not just about Tigray, it’s about other parts of the country that might also be in situations of conflict.
So all you have to look at it and make progress in these fronts as well. But what has happened with a cessation of hostilities in Tigray is a good step. And should, and as the government and other stakeholders, the other parties to the agreement, the TPLF, and so on, implement it, it will solidify and make the conditions even stronger for investment.
I think it’s really important to deliver a peace dividend to really make sure that the peace holds. I think beyond the impact of stability for investment, there’s a broader investment environment that can be strengthened and needs to be strengthened to promote private sector, so that the challenges to private sector operating in the country, better addressed, continue to be addressed and opens the door for the private sector to unleash its innovativeness, its creativity, and its financing in support of the country’s development.
The reconstruction of the war devastation in northern Ethiopia is going to require about 20 billion USD, how would WB assist that?
We stand ready to support the effort. We are looking even at the existing portfolio of operations that we have, and how they can be rolled out in a way that supports this effort. And of course, we understand that new resources need to come in. And so the resources that we have over the IDA 20 period, it’s really sitting down with government and seeing how those resources are used, and to what extent we put some in the direct reconstruction and recovery effort, and to what extent it goes to other things that might not directly be related to it. So yes, we will be supporting it. And we will be having discussions on what’s the best package of interventions to support that.
How do you see the economic development of the country, especially considering the global challenges like COVID 19 and large scale conflicts here and there?
You have made mention of several of the challenges that most countries are facing globally, whether it’s countries in Africa and beyond the COVID impacted several economies, including the Ethiopian economy. We are seeing the results. In Ethiopia, you’ve also had the drought, which has had implications also. And then you’ve had also situations of conflict, now all of them take away from the ability of the economy to be the best that they can be. So I think, yes, there are economic challenges. But this doesn’t mean that there’s no growth at all. In all countries, including
And so I think that is there, there are other things that need to be addressed. And that need to be taken care of, as we move forward to provide a strong foundation for stability, for competitiveness of the economy, and for growth rates that are much higher, even double digit, and that’s what I would aspire for Ethiopia, that Ethiopia is able to become a real lion, in terms of its growth, to grow fast, in an inclusive way, sustained over a long period of time to really transform the lives of people in Ethiopia and move Ethiopia really to high levels of development.
So yes, there are challenges. Now, it doesn’t mean that no growth at all, there is some growth, Ethiopia can grow even faster. And that’s what the objective should be to put the conditions in place. And hopefully, the global conditions also improve, to allow the foundations for even faster growth going forward.
Many African countries including Ethiopia are facing the challenges of skyrocketing price of commodities. How can the World Bank assist countries in stabilizing market?
As I said, we’ve already in the past two years, it’s been a period of crises for countries in Africa including Ethiopia, even countries outside of Africa, and we have really stepped up our support, not just to Ethiopia, but countries in Africa to help them deal with crises, whether it was a COVID, we supported the COVID response, in terms of helping strengthen health systems prior to helping countries have access to vaccines, and administer them, and so on.
And so we’ve put support like that out there, we’ve had some social protection, and social safety net programs that have also been targeted to the most vulnerable, the disadvantaged groups, and these programs are still running.
And then we have given policy advice and technical assistance support in terms of the policy frameworks for growth, we need to continue to be in to support areas of long term development, the infrastructure agenda, the real sectors, really helping to remove bottlenecks in agriculture and , real sectors of the economy, so you can really unleash growth.
What I say is that we’ve been doing this; it’s a continuum. It’s a continuation and a deepening of the work that we’re doing already. And so that’s how I would see it; we have a strong pipeline of potential operation. So we’re discussing with government that will in different ways, address the possibilities for growth as well as the social issues.
How do you think the African countries should manage their market?
I think for all economies, you want economies to function as efficiently as possible, so that the resources that the economy has to go to the best users. And that’s the essence of productivity, because every sources are going into sectors that where they’re not used the most efficiently. That means that your assets and your top factors of production won’t work as effectively to generate growth. So the fundamental advice is removing distortions that impede the ability of your assets to work to deliver growth so that you have competitive stability.
Africa is trying to implement the Africa free trade area. What is the plan of World Bank to support African countries in this regard?
As the World Bank, we welcome very much the AfCFTA. We think it’s really going to be beneficial for the continent. As a lot of the economies are small, they’re small economies. And so they don’t have the advantage of economies of scale. So integration, where each country has access to a larger market, which should work for the economy. So we’re fully supportive of this. We’re already working in this space on a couple of fronts.
First, is the physical connectivity that allows the integration, you’re not going to be able to trade if you’re not connected. And so we’re investing a lot on the physical connectivity, the trans-boundary, road networks on key corridors, we’re doing a lot on the regional physical connectivity agenda. And then we’re also helping with the trade facilitation because trade facilitation is important. So are the different border areas in facilitating trade. So trade and goods can go flow easily across.
So that’s one other area that we’re working on, we’re helping individual countries come up with their plans, each of the countries is supposed to come up with their plans, in terms of the FCT and we’ve helped countries like Rwanda come up with this, we will do more. And then we’re supporting the African Union itself and the Secretariat of the AfCFTA to build its capacity to be able to lead this agenda and to be successful.
So as I said, we’re excited about it. We think it’s the right strategic direction, the empirical evidence shows significant benefits to the continent, from this arrangement if it’s successful. And by the way, Africa, intra-regional trade is the lowest in Africa of all the regions globally. So there’s a lot of scope to improve that and to improve the livelihoods of Africans. And yeah, so we’re doing a lot in that space. And we’ll continue to work with different stakeholders.
Thank you for your time!
Thank you
THE ETHIOPIAN HERALD SATURDAY 22 APRIL 2023
