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Speech

Hilary Benn, Secretary of State for International Development, Microsoft Government Leaders Forum, Cape Town

10th July 2006

“Accelerating Africa’s Global Competitiveness – the role of ICT”

Hello. I’m sorry I can’t be with you today, but I’m grateful for the opportunity to say a few words about growth in Africa and the role of Information and Communication Technology.

I think that economic growth is the single most important way of pulling people out of poverty.

And we must not forget the poor people are the private sector - they are the farmers, the entrepreneurs, the shopkeepers - and they are also the people we are trying to help.

Earlier this year I visited Arba Minch in Ethiopia. As I drove up the mountain side to visit a safety net project where we are helping people to look after themselves and their families coming down the mountain side was the private sector people carrying bamboo poles and woven mats and things they had grown - taking them to market to sell. They are the private sector because 9 out of 10 jobs in the developing world are in the private sector.

And if you ask poor people where their best prospect of escaping poverty lies, they'll tell you it is through self-employment or business, in other words a good job, a way of earning a living.

And if you have a job you can get an income, people can save, they can invest, they can look after their families, protect themselves when times are hard. They can get their children into school.

And as economies grow, governments can raise the money they need for public services - for education for healthcare and clean water.

And when people are paying that money to government they can then ask the question, “…what have you done with it?” and “…can we see some benefit in the community where we live?” So if we are going to make poverty history, we need to do more to help African countries, governance and their people create those jobs, those livelihoods.

Now this task as we know is going to get more difficult because of three big challenges we all face. The first is Climate change - least caused by the countries that will be worst affected by it. The second is going to be the increase in the world’s population in the next two generations - we will be sharing this small and fragile planet with a population which is 50% greater than it is today, and thirdly the great movement from rural areas to towns and cities. By 2030 most people in Africa will be living in urban areas. How are we going to provide the water, the schooling, the healthcare?

So what do we need to do?

Well first of all peace and security is fundamental, there isn’t going to be any economic growth, people aren’t going to come and invest their money if there is conflict going on, so ensuring peace and security is the first responsibility, our first shared challenge. Secondly it’s about helping African countries to grow faster, particularly those lagging behind or those with large numbers of poor people.
Now it’s very good to see that the IMF’s latest figures show growth across sub-Saharan Africa is projected to be about 6 per cent this year - that’s the highest in 30 years - but we know we need to get to 7% a year to halve poverty by 2015.

Then there is the question of governance, where we have seen some progress. In Kenya for example, three ministers have resigned because of allegations of corruption. In Nigeria investigations have led to the imprisonment of the former Inspector General of Police, and the prosecution of Ministers and of a State Governor.

Now if you want people to come and invest your money in your country then it is a good idea to fight corruption.

Reducing barriers to business is also going to help. The African Union and NEPAD launched the Investment Climate Facility in Cape Town a few months ago with $100 million. The United Kingdom has put in $30 million of those dollars over the first three years, and we hope the facility will do a great deal to help improve Africa’s image as a place to do business, including for example looking at the legal and regulatory environment for Information Communication Technologies and to see how it can be improved across Africa.

We are also going to need innovation. And this has to come from the private sector. The explosion of mobile phones and other products shows us this can work.
Africa has seen the world’s most rapid growth in mobile phone use. There are now 8 subscribers per 100 people across sub-Saharan Africa, up from 3 just 5 years ago in 2001. And research from the London Business School estimates that an increase of 10 mobile phones per 100 people can raise economic growth by 0.6% a year.

The ways in which these phones are being used is endless. In Mozambique for example the fishermen use mobile phones whilst they are out at sea to find out which towns or ports are selling fish at the highest prices, that tells them where to put in so they can sell their catch for the best return.

I learnt recently about Grace - she works in Nairobi. She often sends her father money. In the UK we’d use a cheque, but like many poor people, he doesn’t have a bank account. The only other option is to send cash and that can often get lost.

Now, when she wants to send money home, she doesn’t use cash but pays him in mobile phone airtime. She purchases prepaid “pay as you go” airtime at her local shop, and sends a code via text message to her father, so he can make use of it. Sometimes he will put the airtime on his phone so he can talk to Grace or other relatives and friends and find out how they are getting on, but often he sells it on to local merchants and gets money in return.

Now, mobile phones really do have the potential to help poor countries leapfrog over needing rural bank branches, or indeed even cheque books.

The Commission for Africa recommended an African Enterprise Challenge Fund to stimulate this kind of innovation and I hope we can work with some of you to make this happen.

Now the third thing that we need it to pay attention to equity to fairness making sure poor people can benefit from growth, by having better access to economic opportunities.
Poor people are often denied these, and there is a major role for public investment and aid in helping to create them, in educating the workforce in Africa, keeping them healthy stopping them dying of diseases we have the medical knowledge to treat. In social security, such as the scheme in Ethiopia that I went to see, that was helping people to better provide for their families, to build roads. In rural infrastructure, and in supporting financial services and property rights that meet the needs of poor people.

Fourthly, there is going to be a huge task in managing migration to promote growth. I mentioned a moment ago the great process of urbanisation taking place in Africa. Internal and international migration is an important part of this growth - Nairobi for example has 5% of the population of Kenya, but contributes 20% of its national income. Almost two fifths of the national income of Lesotho is from remittances.
And the same technology that helped Grace can help workers in rich countries transfer remittances back to African countries – it’s maybe $5 billion a year at the moment, with twice that going back by informal channels. Now the average cost in doing that is 12 cents for every dollar sent home. Now that is a high price to pay, particularly if you are poor and that is where new ICT technologies, including the mobile phone, come in because Telephone companies say that the technology for what are called “Stored Value Accounts” and transfers of money is not difficult, and could be implemented immediately, costing a third of what people currently have to pay to send money home.

Fifth, we have got to ensure that this growth that Africa needs to lift its citizens out of poverty is based on the sustainable use of natural resources, giving rising consumption and the threat of climate change. We have to act to stop climate change - it is and will be over the next few years, the single biggest test of global governance.
And finally - by agreeing a fairer international trading system. We can help Africa to build its capacity to trade, if we don’t do that it will be increasingly undermined by unfair rules and protectionism. Earlier this month we again saw a failure to make progress on the Doha Round and above all what is now needed is political leadership to make the progress that we require because if we don’t do that, we would have passed up for the time being the single most important step we could take to help Africa earn and trade its way out of poverty.

Now, this is what I think needs to happen if growth in Africa is going to occur, it got to be led by Africa, its got to work with the private sector - both national and international, playing their part.

And of course it is backed up by the promises the world made last year at Gleneagles - to double aid by $50 billion a year by 2010, with half of that going to Africa. $50 billion in debt relief which is beginning to be delivered to some of the poorest countries and of course Africa’s biggest debt deal ever achieved for Nigeria last year.

Now last week the Prime Minister launched the Africa Progress Panel which will be chaired by Kofi Annan, with Bob Geldof, President Obasanjo, Peter Eigan of Transparency International, and funded by Bill Gates - which will help to hold the G8 and the nations of Africa to account over the years ahead.

And I think It’s this partnership, all of us working together that will in the end help to make poverty history in Africa, your conference is an important part of this process. I wish you all the best with it, there is in truth no greater responsibility we face than helping Africa to help itself to the better future its people desperately want and also desperately deserve. Thank you very much indeed.