News Column

Donald Kaberuka - Economic Transformation, Antidote to Poverty

August 4, 2014

Funke Olaode

Between July 24-26, women from across the African continent gathered in Lusaka, Zambia for the 3rd African Women's Economic Summit organised by New Faces New Voices and co-sponsored by the African Development Bank. The summit held at Mulungushi International Conference Centre believed African women can realise the continent's economic potential if given the right financial opportunity like their male counterparts. In this interview with Funke Olaode, President, African Development Bank, Dr. Donald Kaberuka, spoke about his institution's giant strides in infrastructural development across Africa, how economic integration can help the continent and how financial institutions can restructure their services to help women realise their economic potential

What is your view on the New Faces New Voices, a Pan African Advocacy group for women empowerment?

The founder, Mrs. Graca Machel, is a respected figure all over Africa who has been a woman of integrity, dignity and resilience whose main purpose is to serve humanity, which the late legend, Dr. Nelson 'Madiba' Mandela, is known for. A lot of businesses operating by women have suffered a lot. And this is not a trivial issue and this is the reason I support this idea. We need financial institutions that will support women and in the process they will realise their economy potential.

What are the challenges of women entrepreneurs in Africa? I think the challenges facing women entrepreneurs in Africa cuts across. It has to do with access to funding. To alleviate these problems, every country has to put into practice and ensure that good policies on gender issues are put in place. Often times, we talk about women in finance or micro finance. And to go further and to ensure that half of Africa which is women have access to financial products such as insurance, banking, non-banking which men also have access to, we have to remove the barriers that hinder women so they too can grow like their male counterparts.

Collateral has always been an issue that denies women access to funds. And there is a clichÉ that says don't give money to people who cannot pay. What policies are there at the ADB to ensure more women participate in generating economic wealth on the continent and also to have access to fund?

We are trying at ADB with what we call a quantitative target that in everything we do, either in infrastructure, education, agriculture and so on, at the middle, 30 per cent of it will go to companies under women. And for that reason, our procurement regulations have some kind of indices bias for companies under women. Looking at the collateral issue, it is a common knowledge that banks don't own money, they own our money (you and I) as customers or stakeholders. Before banks lend out money, they need collaterals or guarantee and if they ask for it, it is because they want to protect your money. I think we should encourage them to continue to lend wisely. The best way to ensure that women can have access to fund is to develop products which ensure that those who don't have collateral can have access to funds. Then banks need to build a risk management system to ensure that lending money becomes less risky. And that is why I am a big advocate in New Faces New Voices that while giving out money; you also take equity in the business by providing technical services.

Are there specific financing programmes tailored for women in ADB?

There are some commercial banks rendering services for women in this regard in Zambia. As you know, commercial banks don't do micro finance but real finance. Going forward, we want to develop products which combine debt equity and some kind of technical assistance. The issue is not simple access to finance it is also ensuring that you don't burden people with debt. In other words, you have to give them equity as well. For women to be fully involved we need to open the window, we need to restructure our financial institutions to respond to the needs of women. That would be the next step.

What specific roles do you think women should play in realising the African economic potential? Let's go back to the basics. We often talk about inclusive development. You don't talk about inclusive development leaving Africans behind. The whole thing is about men and women, boys and girls having the same opportunities whether it is in finance or education. Also, to have the same opportunity to develop their continents.

In the course of your speech at the opening ceremony, you talked about Africa is rising. And yearly, several African countries are recording remarkable growth in their economies. These trends are described as hollow without any impact on the lives of African citizens. How can this issue best be addressed?

Yes. We have been talking about Africa is rising. In my own view, it must rise for all Africans and not for a few Africans. Everything is not about measuring the GDP (which shows how much economy has done), but how well people are doing. Yes Africa is rising but you don't have money in your pocket. Economy is doing well but people still remain poor. So everybody must feel that we are in the same boat. In my own opinion, the best is for all to do well in the continent. In 1997, the former Tanzanian President said each time he was invited to Europe, they would ask 'him how is Rwanda, Uganda, and so on doing?', not how is Tanzania doing but how the whole of Africans were doing because they see us as one. I think we have wasted so much time on where we come from. This is part of the struggle we have to win. Above all, every country must have a policy that ensures that every person has the same opportunity.

Still talking about poverty in Africa, as a banker of repute, how do you think these perennial problems can be tackled?

First of all, we Africans must all address the business of 'talking down on our continent.' When you are talking about poor people, the highest numbers are in India and China, which happen to be the fastest growing countries in terms of economy in the world. The number of poor people in Brazil, China and India is more than what we have in Africa. But those countries are growing very fast. Poverty is a challenge everywhere. In Africa, especially in the 70s and 80s, population was increasing at the rate of three per cent and economy was not growing. So, per capital growth was negative and the countries were getting poorer. Now, we have population growth of 2.6 per cent and the economy growth is between six and seven per cent growth, which indicates that we are moving up. But because the population is increasing, we still have a large number of people living in abject poverty. It will take some time for us to beat poverty. Again, five to six per cent of economy growth is not enough. We will need up to 10 per cent minimum which can take more than 15 years to achieve. If you have an economy which relies on small sectors to oil and gas, mining, that won't give us the transformation we need. Again, we should not confuse economic growth with economic transformation. What beats poverty? It is the economic growth and economic transformation.

Nigeria recently re-based her economy which lifted it to become the largest economy in Africa. How can this country leverage successfully on this vantage position?

First of all, I welcome the re-basing of the economy and I want the statistics to continue. But I want it to go beyond the size of the economy to the structure of the economy. Nigeria has made a lot of progress. And contrary to what people think, the dependence on oil is over-exaggerated. Agriculture, film industry and others are growing tremendously. The economy is getting bigger, which to me, is a welcome development but they need to work on the structure.

Your bank is one of the advocates for improved transport infrastructure in Africa. In what ways are you working to make this goal a reality?

We are the biggest funder of infrastructure on the continent of Africa. In every country, we have done airports, highways, dams the list is endless but we alone cannot do everything. I am proud of what African Development Bank has done in the field of infrastructure which is 60 per cent of everything we do every year which amount to $80 billion.

In your speech at the opening ceremony, you talked about how African countries can work together for the good of the continent. In what ways do you think these boundary barriers can be tackled so that together they can achieve their full economy boost and cooperation?

If you get to London today, they first see you as an African before considering you as a Nigerian. For me, economic integration is possible but we have to remove the physical barriers to movement of people and improve infrastructure in the continent. Though this isn't enough, we also have to remove the bureaucracy in terms of visa procedures. I am an advocate of abolition of visas for Africans travel within Africa. As a Nigerian, you can come for tourism or one business or the other in Zambia without going through visa stress. So we need to make this practical. In Europe, they have something called Siegen Visa that enables you to move across European countries unhindered. I am a Rwandan, if I want to come to Nigeria, I will need a visa, if I want to go to Benin Republic, Togo or Ghana, I will have to procure visas to enter these countries. Time has come to put an end to this for us to realise economic boost among African countries.

West Africa is working towards a common currency for the region to boost economic integration and better trade relations among member countries. What is your view on this?

It is a good proposal, at the same time it is important that conditions are in place for economic currency. And those conditions have to be a very high degree of macro economic policies such as fiscal policies, investment policies, common financial policies, common bank system policies etc. This is important in order not to run into problems when it is implemented. If Africa wants to move to a common currency, it is very important to ensure that the foundations are very strong such as policies on borrowing, inflation, investment, domestic debt and all that. I am happy the way things are going but I am not an advocate of rushing to common currency until conditions are in place.

And your advice for women who participated in the just concluded 3rd African Women's Economic Summit, in order to make Africa a better place economically and more positively-disposed to women empowerment?

I have said it all; we need an equitable society where our sons and daughters, boys and girls are given the same opportunity in life. It cannot centre on gender issues alone. It is about creating a fair society, social mobility, social justice and opportunity for everyone.

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Source: AllAfrica

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