On 15 November 2012, the Deputy Chief Executive Officer of AFD, Mr. Didier Mercier, and the President of the West African Development Bank (BOAD), Mr. Christian Adovelandé, signed three new cooperation agreements during their 5th annual meeting.
- A partnership agreement between AFD’s Center for Financial, Economic and Banking Studies (CEFEB) and BOAD to expand the scope of their partnership for training, capacity building and to develop the expertise of BOAD executives;
- A EUR 75 m credit line to refinance projects under the Regional Initiative for Sustainable Development (IRED) of the West African Economic and Monetary Union (WAEMU);
A EUR 0.5m grant to support contracting authorities in the energy sector.
Agreement marks nearly 40 years of cooperation
Both institutions are preparing to celebrate – in 2013 – 40 years of financial and technical partnerships for the development of the WAEMU zone. Since 1973, eleven concessional/non-concessional credit lines have been allocated to BOAD by AFD. They have been combined with capacity building support in several areas: asset/liability management, guarantee appraisal and management, the fight against money laundering and the financing of terrorism, CSR, agricultural expertise and energy expertise.
This cooperation has also made it possible to finance several development projects, including:
- in Senegal: drinking water supply in the cities of Kaolack, Fatick, Koungheul and Ziguinchor;
- in Mali: agricultural development of the paddy fields in northern Molodo at the Office du Niger;
- in Côte d’Ivoire: hydro-agricultural development of M’Bahiakro;
- in Niger: establishment of an integrated cement plant in Malbaza by the Société Nigérienne de Cimenterie (SNC) SA;
- in Benin: reinforcement and extension of the drinking water supply network of the City of Cotonou and its surrounding areas;
- in Togo: upgrading of infrastructure and facilities at the Autonomous Port of Lomé in the Togolese Republic;
- in Burkina Faso: hydro-agricultural development of Liptako Gourma (phase 3)
- in Guinea Bissau: infrastructure upgrading.
Training is also an important part of this partnership. CEFEB trains executives from BOAD every year.
BOAD is the common development finance institution of the WAEMU countries. Its purpose, as provided for in its Articles of Association, is to promote a balanced development of its member countries – Benin, Burkina-Faso, Côte d'Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo – and to achieve the economic integration of West Africa.
The Bank traditionally operates via short- and medium-term direct loans, allocates refinancing lines to local banks to assist small- and medium-sized enterprises, extends financing for project feasibility studies or engineering studies and guarantees bond issues. In order to meet market requirements and enhance its support for governments and the private sector in the Union, the Bank has explored other areas and has focused its strategy on the short term, assistance, financial advisory services, financing arrangements, carbon finance and financing for projects eligible under the Clean Development Mechanism (CDM).
BOAD finances its activity through a cooperation network made up of international donors, European and Asian countries, as well as an annual debt issuance program. Its share capital rose from FCFA 350bn in 2000 to FCFA 1,050bn in 2010 and its equity from FCFA 82bn to FCFA 176bn over the same period. Building on its experience of the regional financial market, BOAD will soon be given a rating in order to have additional access to international financial market resources. These different operations show BOAD’s commitment to adapt to its environment and to continue to work alongside the communities of the WAEMU zone in order to meet the many sub-regional development challenges.
The volume of loans approved since the implementation of the 2009-2013 Strategic Plan stood at FCFA 504,654m at the end of September 2012.
The Bank’s total loan approvals since 1976 stood at FCFA 2,227.1m FCFA at the end of September 2012, corresponding to 612 funded projects.
Where does Sub-Saharan Africa stand today in terms of education and vocational training? Does it have the capacity to help its future generations move toward employment? What strengths and tools does it have? Four experts from the Education Division provide us with insight.
In Africa, two-thirds of the population is under 24. This youth is the continent’s greatest hope, but also poses a huge challenge for Africa’s development as 20% of young people are unemployed.
Basic education, but also vocational training
To address these challenges, over the past ten years AFD has invested over €1bn in the education/training sector, 2/3 of which in Africa. Over the next three years, its financing for education is expected to exceed €500m, again mainly in Africa. (Summary of the interview with Virginie Bleitracht).
School enrollment has risen by 31% in ten years
Over the past ten years or so, huge strides have been made in terms of access to primary school. Sub-Saharan Africa has had the highest results over the past ten years: school enrollment has risen by 31% (i.e. 58 million additional pupils).Vocational training finally becoming a priority for public policies.
On average, only 5% of the National Education budget is allocated to vocational training, which is by no means enough. Vocational training is a rapidly developing sector in most Sub-Saharan African countries. Most African leaders have made vocational training and youth integration one of their priorities. That being said, we have come a very long way, as many countries have training systems that are undersized, with outdated facilities and trainers who have not benefited from continuous refresher training for a very long time.
Match supply and demand on the labor market
AFD is increasingly helping to build partnerships between training centers and companies (public-private partnerships) in order to better match training to business needs. (Summary of the interview with Christian Fusillier)
NICTs, a solution to improve access to education and training and its quality?
The OECD’s Programme for International Student Assessment (PISA) shows the strong link between the use of digital tools and student performance. Generally speaking, the problems identified are the need to improve both access to education and its quality. Digital tools are ideally suited to meet these challenges. Many obstacles have now been removed. The digital market is reaching maturity and mobile phone penetration rates have seen a substantial increase over the past ten years. In the early 2000s, the geographical coverage rate stood at 10% in Sub-Saharan Africa. Today, it has reached 80%. This also represents 30% of the population.
(Summary of the interview with Jean-Christophe Maurin)
Video interview: Paris, Ouagadougou, the same combat?
In this interview, which takes us through the streets of Paris, the urban planner Guillaume Josse uses some urban objects from our everyday lives to give us keys to understanding the challenges facing cities in both the “South” and “North” alike.
First and foremost conceive cities as networks
Each city, however modern it is, is like a grid, a layering of networks, most of which are visible in the urban landscape. Be it for electricity, gas, telecoms, wastewater or stormwater drainage networks: all these functions are directed towards the same goal: guarantee the safety and well-being of city dwellers and make their city a better place to live in.
The first feature of a city in the South: weak public management
The most common aspects of a city in the “North”, which we take for granted – as they have been part of the daily lives of its residents for a very long time – either still do not exist or are extremely rare in cities in the “South”. Ordinary urban objects come to mind, for example, street signs, drain covers, street lights, paved roads, which respectively contribute to addressing and identifying places and their residents, preserving hygiene and public health, and the movement of persons and consumer goods. These are all missions for which local authorities are responsible.
Southern cities generally stand out for the lack of such networks, which are developed and operate efficiently. At best, you can see some points in common, such as phone networks, roads, streets, but with no asphalt, no paving stones and they are flood-prone because the pipe systems are not functional or are saturated; neighborhoods and dwellings have no signs, there is a lack of street lighting, etc.
Land registers and signage: prerequisites for urban management
In Paris, we take the street signs for granted. However, they do not exist in most cities and capitals in developing countries. Yet without such signage, it is impossible to send mail or for tax statements to be sent, taxes to be collected properly, for which there is ultimately no system to make people pay. This situation is one of the symptoms of the lack of fully operational land registration systems in these countries, for example, to manage land units and the history of land plots.
In such conditions, it is difficult or even impossible to know exactly who is living in such and such a place, or how many households, children, elderly or disabled people live there. It is equally impossible to determine who is the owner or tenant of the place in question and therefore, for example, to be able to collect sales taxes.
Achieve an effective combination of policy, administration and technical aspects
While addressing is important, it is not enough to paint a number on a door, as we see in many African countries, hoping it will be sufficient to solve the problem. The process to organize the life of the city, its management and its development is much more complex and takes much longer to implement. The entire management in public administration needs to be organized and overhauled, as this is the instrument which allows the State to take stock, know what is happening in real time, and manage the city in the long term. Street signs are a sort of symbol of urban management, which covers most of the services that city dwellers benefit from in their daily lives.
The main challenge for these countries and development aid institutions, including AFD, is to know how to create all these essential urban networks, set them up, finance both the investment in this infrastructure and implement adequate services to maintain them.
For example, without sanitation networks, in Southern cities all the wastewater is discharged into the street, parks and natural waterways. The challenge may not be to achieve a result as close as possible to Paris, which is a very modern city, but at the minimum to have essential services to prevent waste and wastewater from staying in houses or polluting rivers, keep streets passable and allow city dwellers to have access to drinking water.
The Chalon neighborhood: an example of successful urbanization
The transformation of this Parisian neighborhood, which was for a long time left to its poverty, shows how there is no predefined technique or model able to create a modern, pleasant and well-managed city. You have to think simultaneously of the equipment, housing, the networks I mentioned before, the type of activities that you want to develop there (offices, a business center, or a green space for example) and, especially, connect all this up with the transport links. All these projects require comprehensive political thinking in the sense of “city management”, which must lead to public policies that need to be coherent and complementary within a given area. The other aspect is the way in which these operations are conducted, first by taking the duration into account: indeed, we are talking about projects for which the financing and works are spread over 20 or 25 years. In this respect, you need to ensure that you will stay the course thanks to institutions that are politically, technically and financially strong enough to lead major projects.
“The city finances the city”, as the operation is financed gradually by the gains made by the local authority when it sells the land that it bought cheaply in the poor neighborhoods after having developed them. These gains finance the equipment and, at the end of the day, urban operations are self-financed over a period of 20 years or more. This principle of development generally does not exist in the countries where AFD operates. This is a real shortcoming, which goes well beyond the financial constraint proper – because a small cash advance would be sufficient to buy land. What is even more fundamental is the issue of how local authorities operate and their ability to lead these projects and, from a technical perspective, to have sufficient human resources to design and implement a development policy like in the Chalon neighborhood.
How to proceed, following the “City finances the city” principle
What happens in practice? The public authority starts by taking possession of the rundown neighborhoods via expropriations, compulsory purchase or simply by acquisition. Once the public authority has taken ownership of the land, it can demolish, rebuild, develop and redevelop as it sees fit in order to create new neighborhoods, which will continue to develop in a more or less positive way depending on the choices that have been made.
Although cities everywhere are made up of the same things, they do not operate in the same way.
The reason partly relates to financing. The Mayor of Paris has €4,000 per year and per resident to maintain and invest. The Mayor of Ouagadougou (municipality with 1,300,000 residents) has €20 per year and per resident. By way of comparison, the budget of this city, the capital of Burkina Faso, is half the budget of the town of Rodez, which has 25,000 residents. The Mayor of Lomé will have €8 to €10 per year and per resident, the mayor of a small town in Benin will have half a euro per year and per resident…...
The challenge therefore obviously lies in increasing financing and the capacity for a local authority to have sufficient financing available to invest in the area under its jurisdiction and maintain it. There is a colossal gap today between cities in the North and cities in the South and our challenge is to manage to bridge it.