Speech

Address by Eduardo Aninat at the Opening Ceremony of the West AFRITAC

May 29, 2003

Your Excellency Prime Minister Ag Hamani, Honorable Ministers, Honorable Governors, Distinguished Guests, Ladies and Gentlemen:

1. I am honored and delighted to be here at the inauguration ceremony of the West Africa Regional Technical Assistance Center (West AFRITAC). The generous offer of the Malian government to host the center makes it possible for us to open the second AFRITAC today. With this opening, much needed capacity-building assistance in the ten participating countries can now start without further delay. For this, on behalf of the IMF management, I wish to thank you personally, Your Excellency Prime Minister Ag Hamani, and through you, the government and the people of Mali.

2. The establishment of the West AFRITAC is the result of close collaboration among many partners. First of all, we are most grateful to all the other governments of the West AFRITAC participating countries: Côte d'Ivoire, which provided invaluable support during earlier preparations, and Benin, Burkina Faso, Guinea, Guinea-Bissau, Mauritania, Niger, Senegal, and Togo. The officials of these countries have worked very closely with IMF staff, donor partners, the African Capacity Building Foundation, the NEPAD, and the World Bank. I wish to mention especially the African Development Bank, whose staff have provided invaluable inputs to the design of the AFRITAC Initiative and are actively participating in its implementation. I would also like to particularly thank the BCEAO, which, under Governor Banny's leadership, has kindly agreed to provide excellent facilities for the West AFRITAC in Bamako. We should recall that each and all of the participating countries prepared their own needs assessment plans, and discussed and prioritized them with partners at meetings in Dakar and Paris in the summer of 2002. These meetings also decided on the main rules of the operations of the Steering Committee, the guiding body of the center. I would like to express my sincere appreciation for all that has been accomplished. Particularly to participating countries for having taken an active leadership role and ownership of this project, and to donor partners for having provided constructive advice and generous financial support.

3. On this important occasion, I would like to share with you my thoughts on three issues:

• First, what does the IMF offer under its Africa Capacity-Building Initiative?


• Second, what progress has been made so far under the new Initiative?


• Third, what, in our view, are the main emerging challenges that need to be addressed to make the AFRITAC centers truly successful?

What does the IMF offer under its Africa Capacity-Building Initiative?

4. It is now widely accepted that strong institutions are critical to economic development and growth. They are important because they are crucial in helping resist deviations by governments from the path of sound economic policies. In other words, they can serve as an effective restraint against decision making that may be inappropriately influenced by narrow short-term political objectives. Thus, strong institutions encourage predictability of economic policies, which will in turn promote the development, and smooth the functioning of markets. Here in Africa, strong domestic institutions are needed to enable countries to come up with their homegrown economic policies that will be implemented consistently.

5. This is why we at the IMF believe that capacity building is a key priority in Africa, and this is why we have responded promptly to the call of African leaders, including in the context of the NEPAD, urging us to step up our assistance to the region.

6. Our African Capacity-Building Initiative that was launched a year ago consists of two elements: first, we are providing increased support to, and deepening our coordination with, already existing activities in Africa; and second, we are setting up the regional AFRITACs. Let me first speak about our intensified collaboration with existing capacity-building efforts. We have joined the World Bank's Partnership for Capacity Building in Africa (PACT) and its Africa-led implementing agency, the African Capacity Building Foundation (ACBF). Our close collaboration with the ACBF, under the leadership of Dr. Sako, is already starting to show results. We have recently agreed on a detailed annual work program with the ACBF under which eight seminars and workshops will be carried out jointly by the ACBF and the AFRITACs. We are also extending our support for other African institutions, such as the Macroeconomic and Financial Management Institute for East-Southern Africa (MEFMI), and view our Initiative as fully consistent with the capacity-building and good economic governance program of NEPAD, which we fully support.

7. Second, with the opening of the West AFRITAC today, we will have two capacity-building centers in sub-Saharan Africa, serving 16 countries. The main objective is to help African governments address their capacity-building needs via an instrument that locates assistance closer to where the needs are, and that provides a more flexible and effective tool for providing such assistance. Resident experts, whose skills reflect the demands identified by the countries, are in a unique position to support the capacity-building component of the poverty reduction strategy paper (PRSP) process; to provide hands-on and rapidly deployable assistance; and to help monitor and coordinate more effectively ongoing technical assistance projects. These experts' work will be complemented and supported, by additional short-term experts — including qualified local experts — and teams from IMF headquarters.

8. I would like to stress that our philosophy is to provide capacity-building assistance to develop and add to the needed domestic stock of know-how, and not to replace local expertise. This is very important-we are breaking away from any older notions of "gap-filling" technical assistance, as the latter has not proven helpful in the longer term and can create the wrong incentives for both recipients and providers of assistance. We are convinced that there is a key role for the IMF to play in transferring the knowledge and experience that effectively builds local capacity in areas of our comparative advantage: the design of macroeconomic policies, and monetary and exchange rate policies, financial sector stability, fiscal revenue policy and administration, expenditure management, public debt management, and macroeconomic statistics.

9. AFRITACs will complement and strengthen already ongoing capacity-building efforts. To cite some important examples of this continuing work, in Mali, over the past few years, progress has been made in strengthening tax administration and public expenditure management. In particular, a new budget classification system was adopted in 2003, giving the government the tools to monitor poverty-reducing expenditures closely and ensuring that this spending is consistent with the priorities set in Mali's PRSP. Work is also under way to improve Mali's macroeconomic database. In Benin and Niger, efforts are being directed at building capacity in tax administration and public expenditure management. In Guinea, good progress has been made in improving the statistical database, strengthening liquidity management, and establishing a computerized budget monitoring system. The Mauritanian authorities have made effective use of assistance in the areas of tax reform and tax administration, and public expenditure management, and in the development of market-friendly monetary instruments. Senegal and Burkina Faso are examples of successful efforts to improve tax and customs administration, complemented by the training of staff and the modernization of administrative systems.

10. The above experiences can be usefully shared within the membership of the West AFRITAC through the use of local experts. This could be particularly valuable for Togo, for example, where major efforts are needed to rebuild institutional and administrative capacity, and for the post-conflict country Guinea-Bissau, where special challenges are present and where the West AFRITAC could play a facilitating role in helping coordinate and implement a comprehensive capacity-building plan. Finally, Côte d'Ivoire's domestic institutions have been seriously affected by the recent crisis, and we believe that, here too, the West AFRITAC will play a useful role in helping the Ivoirien authorities to restart and deepen their capacity-building process.

Progress to date

11. I know that many of you share my view that good progress has been made since the start of the AFRITAC Initiative. As I mentioned earlier, countries have prepared their own capacity-building needs assessments. In the East AFRITAC, such plans were incorporated in a detailed annual work program that was endorsed by the Steering Committee and is now being vigorously implemented with more than 20 specific projects. I have already mentioned that we have been working very productively with the staff of the ACBF. On the basis of these early experiences, we see the following encouraging trends:

• First, from the very start of the process, country leadership and ownership of the AFRITAC project have been strong. We see this as absolutely critical. Capacity-building efforts in the past sometimes did not yield the desired impact in part because of lack of country ownership. Some of our partners have even called the AFRITAC project "the new face of the IMF." The Dakar and Paris discussions, the follow-up work that ensued, and the early experiences of the East AFRITAC have clearly shown the importance of national ownership in these matters.


• Second, early experiences in the East AFRITAC indicate that participating countries are assuming increased responsibility for the outcomes of the assistance they receive, including through the peer review process embedded in the work of the Steering Committee. Through this process, participating countries will be able to monitor the implementation of all the projects, and decide on the future allocation of resources, taking account of their past performance.


• Third, the AFRITAC has provided a new forum for partnership and cooperation among countries and donors. This clearly helps achieve a key objective of the Initiative, namely, to enhance donor coordination and harmonization of practices.


• Fourth, we are pleased with the two-tier evaluation scheme introduced by the East AFRITAC countries. It provides for an appropriate system for monitoring and evaluating both individual projects and the work of the Center. In this respect, I trust that the West AFRITAC center's evaluation framework will begin to prove its worth, even at today's Steering Committee discussion.

Challenges ahead

12. Finally, I would like to turn to the main challenges facing the AFRITACs, as we see them:

• First and foremost, countries must sustain their dynamic involvement in, and leadership of, the Initiative. In my view, this will be achieved as the centers deliver tangible results, and capacity-building initiatives unfold.


• Second, we will need the continued active support of donor partners and other TA providers. The PRSP framework provides an appropriate context for this work. Within this framework, we all need to be guided by comparative advantage when it comes to the question of which donor should provide what type of assistance. There are areas where I believe the IMF is best placed to take the lead in providing assistance. But there are many things that other partners can do better than us, and we must leave those fields to those providers. I am confident that we have already made good progress in ensuring an efficient division of labor and it is important that this be sustained.


• Third, it is becoming increasingly clear that a center's resident experts need to have more than just excellent technical skills. They are expected to coordinate with numerous donors and country officials and to think strategically about how best to help countries achieve their objectives, given the center's resources. Therefore, in selecting the six resident experts for the West AFRITAC, we also looked for strong managerial and interpersonal skills in the candidates. The experts are with us here today, and I am sure that they will do an excellent job for you.

Conclusion

13. Your Excellency Prime Minister Ag Hamani, Honorable Ministers, Honorable Governors, Distinguished Guests, Ladies and Gentlemen, please allow me to conclude on a personal note. As you may know, in July I will step down as Deputy Managing Director of the IMF to take up new challenges in my home country, Chile. As you also know, the AFRITAC Initiative has been a key project for me, which I have overseen personally in the IMF. Thus, I am particularly pleased to finish my work at the IMF by completing the first stage of this project with the opening of the second AFRITAC center. To see today all the plans that we have envisioned from the beginning--in partnership with participating countries and donor partners--becoming now a reality gives me a great sense of personal and professional satisfaction. And if this excellent work continues, as I am sure that it will, additional centers could be established to cover all of Africa, with the continued support of the international community.

14. But ultimately, let me stress again that this specific center, my African friends, represents your vision, and it is yourselves who will determine its goals. It is under your guidance and it is your ultimate responsibility. Our role, together with the other donor partners, is to help and assist you achieve those goals. On behalf of the IMF, I am pledging here our continued commitment and support. I wish all of you perseverance, good work, and success in this endeavor.

Thank you.