T Manuel: African Development Bank 2006 annual meeting

17 May 2006

Chairperson of the Board of Governors, our most gracious host, the
Honourable Bouda Seydou
President of the ADB, Dr Donald Kaberuka
Distinguished governors
Respected delegates
Ladies and gentlemen

The key challenge facing us in Africa is to take bold steps to ensure that
we get back on track to meet the Millennium Development goals and alleviate
poverty. It is critical that we ensure that the current growth path of more
than five percent is sustained over the next few years, and that this growth
also be attained by non oil exporting countries. The key question that
confronts us is: what new policy and implementation measures do we need to
achieve this objective?

Three specific measures are essential:
* effective use of the fiscal space created by the Multilateral Debt Relief
Initiative (MDRI), through better budgeting, planning and execution of our
budgets
*to increase our infrastructure spending, particularly on economic
infrastructure
* to facilitate greater regional economic integration, starting with the
removal of high tariffs and other barriers to trade and investment between
African countries.

We have managed to create a real momentum over the last two years with the
recommendations of the Commission for Africa Report, the Paris Declaration on
Aid Effectiveness, the announcement of the Multilateral Debt Relief Initiative
and the Group of Eight (G8’s) pledge to double aid to Africa by 2010. The
challenge now confronting us is to ensure that such initiatives are fully
implemented.

The Bank has begun to do so, and we applaud its efforts in seeking to
finalise the MDRI. By mid-April 2006, indicative pledges on financing
commitments received from donors have exceeded their required levels.

Actual delivery of debt relief to the beneficiaries will begin as soon as
the effectiveness triggers are met through the deposit of Instruments of
Commitment by donors to match their indicative commitments.

South Africa is disappointed to note the International Development
Association’s (IDA) decision to roll back the cut-off date for MDRI debt relief
from December 2004 to December 2003, diminishing the impact of the MDRI. We are
grateful for the firm leadership shown by the President Kaberuka who stood his
ground on this matter. As a result, the cut-off date for African Development
Forum (ADF) remains December 2004, and we look forward to the Bank’s report on
the implementation modalities of the MDRI during these meetings. We encourage
all donors to stick to their commitments, and to ensure that all Official
Development Assistance (ODA) is truly additional, predictable and
sustainable.

To demonstrate our own commitment, South Africa has responded to the African
Development Bank (ADB) and World Bank’s appeal for binding commitments to the
financing of the MDRI. On 30 March 2006 South Africa made a single upfront
payment to ADF of its donor share to the MDRI for the full 40 year period, and
is similarly finalising its full upfront payment to IDA.

As Finance Ministers on the continent that is the furthest away from meeting
the MDGs, we must maintain our vigilance in ensuring that our global partners
discharge their commitments to us. We must also demonstrate the boldness of our
vision and the quality of our planning and our resolute determination to see
the effective use of these resources.

The second requirement for the continent to shift to a higher and more
labour-absorbing growth path is increased expenditure on infrastructure. We
explored this issue in some detail yesterday and I believe that we have
grappled with the key implementation issues. We must now proceed with
implementation and monitor the impact of higher expenditure on infrastructure.
I know that the ADB stands ready to deliver.

Another essential requirement to achieve a higher continental growth path is
that we make progress with regional integration. The poor and often
non-existent linkage between African countries poses a constraint to the
continent’s growth. It is worth repeating that the starting point to easing
this constraint is the removal of self-imposed barriers that prevent trade and
other economic linkages, which we have the power to remove.

We are not alone. We stand together here every year and benefit from sharing
our experiences. We take this home with us and try harder, inspired and
invigorated by our engagement.

The realisation of our shared vision of a continent that is developing
rapidly, sustainable and equitable is supported by the reforms currently being
implemented by the ADB’s new leadership. The commitment of the Bank’s new
President, Donald Kaberuka, to substantially enhance its operational
efficiency, will greatly enhance our ability to accelerate the continent’s
growth. If President Kaberuka is to effectively enhance the ADB’s ability to
support our developmental aspirations, he requires the support of all its
Governors. I want to assure him of South Africa’s continued and sustained
support for the hard work that lies ahead.

Colleagues, the developmental challenges confronting us as Finance Ministers
are formidable.

These challenges must be seen against the positive conditions that have been
created both on our continent and in the global economy to enhance growth and
alleviate poverty.

The conditions for lifting our development trajectory to a substantially
higher level have never been better.

I remain optimistic that we are equal to this challenge.

Issued by: Department of Finance
17 May 2006