3 questions to

What can you tell us about the current situation in Mali?
YB: First of all, it should be clarified that Mali’s economy did not collapse as a result of the events. Its military collapse and political decline have certainly been rapid, but the economy has weathered relatively well.
Mali therefore does not have to be rebuilt on an economic level. Very few production assets have been destroyed. Indeed, Northern Mali, a conflict zone, contributes little in terms of economic activity. Experts are even expecting a sharp upturn in growth in 2013.
However, Mali continues to be the fifth poorest country in the world and has immense needs.

Did AFD continue to work in Mali during the period of the events (from the coup to the Serval military intervention)?
Yves Boudot: The “civil and military cooperation” had indeed been suspended in March 2012 and our expatriates had been repatriated, but the agency continued to work.
The presence of three Malian project officers and the management by headquarters allowed projects started prior to the crisis to make progress. That being said, it was not possible to appraise any new projects, except for NGO projects.

What are the major difficulties you currently come up against in completing all the project financing? Security problems?

Bruno Deprince: The most difficult thing today does not concern security issues, which have been well integrated, it is more about the succession of transition governments: three since April 2012. Our correspondents change, the administration is still “being built”, if I may say so, and is not equipped to meet the needs of the population, on the one hand, and the increasing requirements of donors on the other hand.

YB: This situation already posed a major problem for a country like Mali prior to the events: a poor country with an administration sorely lacking in resources and skills to effectively manage a country with a whole host of needs…

BD: This instability is set to continue with the election period the country is moving into: the presidential election will begin on 28 July and will be followed by legislative elections. The return to a “normal” democratic life should, if all goes well, fall into place during the second half of 2013 and bring about the political stabilization of the country.
 

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What does the French army’s presence in Mali change for AFD?
BD: We should first remember that the French intervention was highly appreciated by the Malians: a French military presence has never been so favorably received in an African country.
As far as AFD is concerned, we have a very good collaboration with the forces of operation Serval. This makes the work of a developer somewhat unusual. We are in permanent contact! They provide us with logistical support when we travel to high-risk areas in the north of the country. They take us by plane, for example, or ensure the safety of AFD officers (both expatriates and Malians) during field visits.
But our collaboration is not just about logistics. We are also in contact to support Malian administrations and financial institutions that need to be rebuilt and establish themselves in northern cities once again.
Furthermore, the members of Serval call us to ask for our opinion when it comes to operations to repair infrastructure destroyed by the Jihadist forces.

What did the “Friends of Mali” conference in Brussels on 15 May achieve?
BD: Donors pledged a lot of money: over EUR 3.2bn for two years. We didn’t expect such a success: initial estimations put the figure at roughly two billion.

YB: Yes, such a sign of solidarity on the part of donors is a wonderful surprise for Malians. However, these donors have stressed their requirements in terms of the allocation of funds and Malians are aware that a number of these pledges are subject to the holding of elections to stabilize the country. A successful political agenda is therefore required to which a timetable for the release of funds by donors will be added. Donors also have high expectations in terms of improving governance in order to improve the business climate and thus promote private sector development.

BD: Malians are aware of the real challenge posed by these amounts; there is a window of opportunity to benefit from this financing from foreign partners, but there is also a question: How to absorb these funds with an administration that is being rebuilt? This is a difficult question to answer while there is no stable government in power.

Can France, and more particularly AFD, support Mali in this challenge?
YB: France’s pledges – EUR 280m – account for roughly 8% of total pledges. Consequently, while we are long-standing partners of Mali, we need to remain modest over the role played by France, despite the fact that we are the leader for certain projects, such as drinking water in Bamako. The main partners of the sustainable recovery plan for Mali are the European Union, African Development Bank and World Bank. In terms of development, France cannot achieve alone what it has achieved at the military level. In addition, we should remember that very few French companies are established in Mali; the level of France’s foreign direct investment (FDI) in the country is relatively low.

BD: We are today in a phase of relaunching all our activities. Our team is gradually getting bigger, but we have to adapt to these human resources constraints. And Malians very much appreciate both our civil and military action to support them. 

Has what the country just experienced – the coup, the partial invasion by Islamic and separatist armed groups, the military intervention to restore the country’s territorial integrity – been like an “electric shock” in terms of the country’s development or, on the contrary, does it challenge the efforts that have been made until now?
YB: We could say that the electric shock in terms of the political and military situation strengthens the need for territorial development, particularly in the north of the country. The time is right to reactivate dormant infrastructure and road projects in the North, so that this remote area can be reached.

BD: The Brussels conference does, nevertheless, send a real message on the part of donors, which has done Malians good. They have understood that they must seize this opportunity and the fact that AFD intends, at its modest level, to participate in Mali’s renewal is highly appreciated.

What are the country’s priorities, on the one hand, and what today are the priorities of donors like AFD on the other hand?
BD: We believe that the real engine of Mali’s development over the long term will be the private sector. Indeed, the country’s business climate does not benefit from good indicators from the international community. But this will take time.
More generally speaking, everything needs to be rebuilt in Mali.
AFD has three areas of operation in the country: agriculture and territorial development to support decentralization, the need for which has been highlighted with the events; human development, which includes education, vocational training and health; and finally infrastructure, which is essential, particularly in urban areas as the development of cities must be more harmonious and meet the needs of all.
However, at the same time as these areas, we operate in a number of other sectors, such as the private sector, and we are providing extensive support to NGOs. The sector where we intend to scale up support in Mali is the energy sector. The country needs clean and cheap energy for the development of its economic activities. To achieve this, the energy sector needs to be restructured and energy imports facilitated at the regional level.

YB: Energy problems are a constant in the entire Sahel region and this has been the case for decades. The events in Mali have exacerbated a situation that had already deteriorated in a landlocked country, without any oil resources having been discovered to date.

How can we help the private sector to develop and boost the country’s growth?

BD: At the same time as improving infrastructure, access to energy and increasing the qualification level of human resources through education, we are seeking to give Mali’s small and large companies greater access to financing.
In the microfinance sector, the Minister of Finance has asked us to support the restructuring process he wishes to launch in this sector, which is in bad shape. We accepted his request by launching a study that will facilitate decision-making, some of which will be difficult, and also the support for the development of sound entities. We support the development of larger companies by offering Malian banks “risk-sharing” to allow them to borrow and invest. This guarantee system, called ARIZ, is effective and highly appreciated by Malians.
In addition, Proparco, AFD Group’s subsidiary that specifically targets private enterprises, resumed its activities in Mali back in March. This proactive position sends a signal of confidence to the business world in Mali, which has really needed this lately.

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)

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.

Yves Boudot spent 27 years of his career in about ten African countries. He was appointed Director of AFD’s Sub-Saharan Africa Department a few weeks ago.

Is it right to say that Africa is the priority continent for AFD?

Africa is the main priority for France’s cooperation policy.* AFD is in charge of implementing this vision. This priority given to financing development in Sub-Saharan Africa aims to provide solutions to the major issues and challenges posed by the emergence of the continent. This priority is also the result of the very history of France’s official development assistance and of our Institution. It is in Sub-Saharan Africa that AFD’s operational, financial and emotional roots are implanted. This is what makes AFD stand out in the landscape of donors and also constitutes its main area of expertise and its core value. Sub-Saharan Africa concentrates nearly 40% of AFD’s total activity and 60% of the State budgetary effort.

How should we view the situation in Africa today?

We should try to avoid the tendency we have to generalize as soon as we talk about this continent. For far too long now, generalities about the situation in Africa and its future have made us vacillate unequivocally between a pessimistic or fatalistic vision and a blind optimism. Sub-Saharan Africa is diverse and complex with widely varying situations. However, one thing that is sure today is that Sub-Saharan Africa is at the forefront of the global issues and challenges both today and for the coming decades. This is perhaps how the situation actually stands in Africa today. The unprecedented population dynamics, the strong and resilient economic growth in recent years, the natural resources potential that we are constantly talking about, but which has so far been developed very little, and the continued progress towards peace and democracy have definitely made us change the way we look at the continent. South Africa is a striking example. Who could have foreseen, back in 1990 when Nelson Mandela came out of prison, that twenty years later this country would be the economic power that it is on the way to becoming?

What are the main challenges that Sub-Saharan African countries need to face?

There are major challenges. Africa will need to feed almost a billion more people by 2050. Its population growth rate is estimated at some 15 million more people a year. Its agriculture will need to feed cities that will continue to grow at a fast pace and also to provide rural areas with a livelihood. By 2050, two billion Africans will need access to water, energy, education or health, whereas today’s production and distribution capacities cannot meet demand. Finally, economic growth in Africa, which is well above the current growth of our economies, will first and foremost need to be synonymous with large-scale job creation for the continent’s youth and with tax resources for States. The emergence of a formal private sector is one of the major challenges for Sub-Saharan Africa.

What are AFD’s main strategic directions in Sub-Saharan Africa?

Once again, they depend on the economic and social situation of the countries we support. They consequently first depend on the demand and needs of the beneficiaries of our financing, but also on States’ capacity to borrow in order to finance their investments. AFD’s activity in Sub-Saharan Africa is today guided by three main areas defined by the French Government: financing major infrastructure, developing more productive agriculture and supporting more inclusive growth. The first therefore involves supporting the development of major infrastructure and providing communities in cities and rural areas with access to essential services. They concern access to energy, transport, water, irrigation, education and health. A recent World Bank study highlighted the lack of this infrastructure, the high cost of access to it and the substantial additional amounts required to remedy the current situation over the next ten years. Energy and transport are objectively speaking the two main priorities. These two sectors require heavy investments. They must be implemented by coordinating the efforts of donors, private partners and States. For example, there is considerable hydropower potential and projects, which are necessarily regional, are implemented over the long term. We must now focus our efforts on this sector. Since the end of the 1970s, rail transport has been abandoned for roads and yet on the main trade corridors and to transport raw materials from the mining industry it is the means of transport that best meets needs. The second priority area for the coming years is to develop subsistence farming and agri-food industries. The sector accounts for 13% of GDP in Sub-Saharan Africa and concerns almost 70% of the working population. It helps create value, stabilize communities in rural areas and combat desertification. Africa’s agriculture needs to be more productive in order to guarantee food security for cities and rural areas and create export surplus. These challenges are core to the way movements take place between Africa’s growing cities and rural areas. Finally, everyone is aware that for nearly ten years now, the continent’s economic growth rates have been well above those of our own economies. This steady growth is largely driven by the upward trend for commodity prices, notably mining and oil products. It is, moreover, often unequal from one country to another. It is essential to promote the development of more inclusive growth led by a formal private sector in high employment generating sectors. AFD is consequently pursuing its efforts to promote the development of a banking and financial system oriented towards the development of this private sector.

Do we have geographical priorities?

In terms of the distribution of the French State’s budgetary effort, the 14 priority countries for French cooperation** are a strong focus for AFD’s activity. However, AFD now works in all Sub-Saharan African countries where it adapts its action and tailors its tools to the needs expressed and to our ability to meet them. The real priority would be to come up with a different geographical approach to Sub-Saharan Africa. We must first look at things from a regional perspective, particularly for major infrastructure projects, while pursuing national actions in other sectors. The scale of the challenges that we have just mentioned and the critical size of the economic blocs are such that a regional approach is inevitably essential. This is true when it comes to financing major energy or transport infrastructure projects, but also for the development of coherent and integrated economic areas that create dynamism and emulation, in synergy with the regional Unions that are gradually emerging.

* This priority is set out in the French Ministry of Foreign and European Affairs’ Framework Document for Cooperation for 2011.

** The 14 priority countries in Sub-Saharan Africa: Benin, Burkina Faso, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Ghana, Guinea Conakry, Madagascar, Mali, Mauritania, Niger, Senegal and Togo.