President of the African Development Bank speaks about inclusive growth

President of the African Development Bank (AfDB) Donald Kaberuka presented a lecture on economic growth in Africa, titled "Inclusive Growth: Ensuring Prosperity Reaches Africa’s Bottom of the Pyramid," at The Fletcher School of Law and Diplomacy in Cabot ASEAN Auditorium on Oct. 30 sponsored by the Institute for Business in the Global Context (IBGC) and the Africana Club.

Bhaskar Chakravorti, senior associate dean of international business and finance and executive director of Fletcher's IBGC and Council on Emerging Market Enterprises, introduced Kaberuka.

Chakravorti explained that Kaberuka is in his second term as president of the AfDB, and started his role in 2005. A native of Rwanda, Kaberuka served as the country's minister of finance and economic planning and oversaw a number of economic reforms in the years after the Rwandan Civil War, including the assurance of the National Bank of Rwanda's independence, Chakravorti added.

Kaberuka's lecture focused on the issue of inclusion in the process of economic development across Africa so that all people benefit from economic growth on the continent -- one of two primary objectives outlined in the AfDB's 2013 10-year strategic plan,"At the Center of Africa's Transformation: Strategy for 2013-2022."

Kaberuka underscored that when talking about Africa, it is important to ask what specific part of Africa is being discussed, given that the continent is comprised of 54 distinct countries with wide variation among regions.

In light of questions he received on how Africa would cope in the new financial environment after the global financial crisis in 2008, Kaberuka explained that the typical supposition has been that the future of Africa is dependent on exports and that the slowdown of the global economy could bring an end to the continent's growth.

"In fact, the African countries are showing much resilience," Kaberuka noted.

Kaberuka explained that the outbreak of Ebola in West Africa has revealed the importance of being more prepared for epidemics in the future and how important stability is for containing a global medical crisis, noting the destabilizing effects of the civil wars in Liberia and Sierra Leone in the early 2000s. Another reason for the magnitude of the crisis, according to Kaberuka, was "complete international neglect."

"We could have dealt with it differently if we had mobilized everything we have to deal with the problem," he said.

Since then, however, Kaberuka said the international response has been much stronger.

"I am confident that we shall overcome this thing," he concluded.

Turning back to economic growth, he explained that in the later decades of the 20th century, African economies were beginning to stagnate, until growth started to pick up around 2000. After the financial crisis, however, Kaberuka explained that he was asked if African economies could survive.

"In fact, African countries did much better than many other parts of the world," he said.

Kaberuka also noted that after terrorist attacks in Kenya and Mali, as well as during the most recent Ebola outbreak, he has been asked the same questions about impending economic collapse.

"It's as if at every point there's an expectation that African countries will fail," he said.

Instead, there is now an expectation that the momentum that began in 2000 will be maintained, Kaberuka explained.

He then segued into a number of criteria that African countries need to meet in order to ensure that economic growth in the region is more inclusive.

The first of these criteria is the need for continued and shared economic growth.

"That economic growth must be sustained, not simply volatile," Kaberuka asserted.

Secondly, countries must ensure peace, stability and an absence of conflict as a fundamental precondition for inclusive growth, according to Kaberuka.

"The most excluded people are those who live in most conflict afflicted areas," he said.

Further, Kaberuka emphasized the importance of proper management of natural resources for countries that are rich in these commodities, noting that there has been much income inequality in the countries most rich in resources.

Kaberuka stated that another criteria is better management of diversity given the notable differences between religions, ethnicities, regions and more.

"Successful, inclusive societies always have effective safety nets ... that ensure social stability," Kaberuka stated.

Kaberuka explained that the development of policies to fulfill these needs to increase inclusive growth is not difficult, but the problem is in the implementation of such policies.

"The challenge is actually to get the political will, to get constituencies for those things to be done," he said.

The reason that strong economic growth has not contributed to inclusiveness is because the growth is not transformational -- it does not create jobs or enrich the lives of the majority of people.

Kaberuka underscored that each country in Africa is different and must be examined accordingly, but forces such as urbanization, climate change, youth unemployment and the discovery of natural resources may act together to require extremely skillful management both at the political and bureaucratic levels.

Kaberuka also discussed the growing possibility of a single market as well as the importance of more investment in infrastructure, such as the building of roads, to directly improve inclusion.

There is also a great need for further developing institutions that share characteristics such as fairness, accountability, clean governance, predictability, regulations and a good business-government relationship, but these institutions may not necessarily copy those in the Western world, according to Kaberuka.

He explained that a common problem in African countries is that "people have tried to copy Western institutions in a very short period of time," adding that not enough attention was paid to the fact that such institutions had much longer periods of time to develop with corresponding ideologies and legitimacy in many Western societies.

Kaberuka concluded his lecture by reiterating that an inclusive agenda must begin with strong, shared and steady economic growth that is transformational, peace and stability, sound management of diversities and resources and safety nets that can harness new technologies.