Introduction

Your Excellency Chief Olusegun Obasanjo, President of the Federal Republic of Nigeria and Chairman of the African Union,

Your Excellency Colonel Muamar El-Kadhaf, Leader of the Al Fatah Revolution of the Great Socialist People's Libyan Arab Jamahiriya,

Your Excellencies Heads of States and Government of the African Union,

Your Excellency Mr. Alpha Oumar Konare, the Chairman of the Commission of the African Union

Honorable Ministers, Ladies and Gentlemen,

It is a great honor for me to have been given this opportunity to address this august assembly. I would first like to thank H.E. President Olusegun Obasanjo, the Chairman of the African Union, for this privilege to present to the assembled Heads of States today our assessment on the development challenges and opportunities facing our countries and the progress that the African Development Bank has made in supporting their development efforts. I would also like to thank H. E. Colonel Muamar El-Kadhafi and the people of Libya for the warm welcome extended to me and my delegation since our arrival in Libya.

Your Excellencies,

The 5 th Assembly of the African Union is being held at a time when our Continent is perhaps going through one of the most favorable periods in its recent history. Conflicts have abated over much of the Continent, the NEPAD initiative has gathered momentum -- with nearly half of the Continent's countries having now signed on to the African Peer Review Mechanism -- and the international community is mobilizing itself to scale up its support to African countries.

As important, an increasing number of our countries are beginning to register and sustain high economic growth rates and making headway in lifting their people out of grinding poverty. Indeed, the year 2004 was an exceptional year for Africa as its average GDP growth rate was the highest in eight years and its inflation the lowest in over two decades. While a more favorable external environment contributed to these outcomes, it is important, however, to acknowledge and give due credit to the improved macroeconomic management that we have witnessed in an increasing number of our countries.

Despite these positive developments, our countries, nonetheless, continue to face major development challenges. A large proportion of their population still lives in abject poverty, food security is far from assured, illiteracy is widespread, there is limited access to potable water and adequate sanitation, and the HN/AIDS pandemic and malaria have yet to brought under control. It is therefore essential that our countries and their development partners seize the historic opportunities created by recent developments to give a renewed impetus to our Continent's development efforts.

A central challenge that many of our countries face is deepening and sustaining their reform programs. In this regard, governance reforms - with high priority given to legal, judicial, and financial sector reforms as well as measures to fight corruption and provide more secure property rights - are critical for improving the environment for the private sector and for stimulating economic growth. Such reforms are also necessary if poverty is to be reduced and progress towards the MDGs is to be made.

Your Excellencies,

As our countries mobilize their human and financial resources to re-energize their development, they will of necessity, continue to require the sustained and increased support of their development partners. And in this regard, we are heartened by the recent actions that the donor community has taken to increase its support.

Official Development Assistance (ODA) to Africa has begun to rise in the last three years and pledges to increase it further have been made by a number of donor countries. The current and pledged levels of ODA, however, still fall considerably short of the resource requirements of African countries to achieve the MDGs. We therefore call on donors to increase their ODA to the levels required and to improve its quality, as well as consider the various innovative approaches that have been tabled to bring ODA forward.

With respect to external debt, the G8 Ministers of Finance have recently announced their agreement to extend 100 percent cancellation of the debt owed to the African Development Bank, the IMF, and the World Bank by countries that have reached their HIPC completion points. The African Development Bank welcomes the announcement, although the coverage of the initiative and the implementation modalities would need further clarification at the forthcoming G8 Summit. We also call on all donors to support the initiative, as well as ensure the additionality of debt relief resources, and safeguard the financial integrity of the international financial institutions (IFIs).

The third major area of donor support critical for African countries is in the area of trade. Although the 2004 WTO ‘July Framework' agreement had given fresh impetus to the Doha Round of WTO negotiations and, with it, the promise of dismantling trade barriers and removing the agricultural subsidies of the industrial countries, the successful conclusion of the Round by the end of the year is far from certain. We therefore call on all countries to redouble their efforts to assure a successful outcome.

Your Excellencies,

Permit me now to say a few words on the operations and activities of the Bank Group in support of the development efforts of its regional member countries. I am pleased to report to Your Excellencies that for the Bank 2004 was an exceptional year. Its approvals stood at nearly $4.4 billion, the highest level of lending, grants, and debt relief operations in the Bank's history. In addition, through its co-financing operations, it succeeded in mobilizing an additional $3 billion, raising the total amount of resources generated for its regional member countries to S7.4 billion­

The year 2004 also saw - the successful tenth replenishment of the African Development Fund at a level of $5.4 billion for the 2005-07 period -- the highest replenishment in the history of the Fund - and representing an increase of 4s percent over the previous replenishment. Significant new features of the new replenishment include a (doubling of resource, for multinational projects and a substantial increase in grant resources, with over half of the eligible countries now expected to receive ADF assistance solely in the form of grants.

In 2004, the Bank continued to respond to the emerging challenges facing its regional member countries by launching four major initiatives. The first is its Rural Water Supply and Sanitation Initiative, which has the goal of accelerating access to sustainable water supply and sanitation in rural Africa and increasing coverage to 80 percent by 2015. The second is the establishment of the Bank's Post-Conflict Countries Facility (PCCF) to assist countries that meet specific criteria to clear their arrears with the Bank Group. The third is the Bank's Operations in Middle-Income Countries that aims to establish a new development partnership with these countries, taking into account the new challenges that they face. And the fourth is the revised policy for promoting the private sector in our regional member countries with the goal of strengthening of the environment for private sector development, promoting indigenous entrepreneurship, and supporting public-private partnerships.

A major area of focus for the Bank in recent years has been its support to the NEPAD initiative. As Your Excellencies are aware, the Bank has assumed the leadership role in infrastructure and banking and financial standards. and it is working closely with the ECA in the area of economic and corporate governance. It has also provided grants to Regional Economic Communities to strengthen their capacity to deal with NEPAD issues. The Bank is, in addition providing financial technical assistance to support NEPAD's African Peer Review Mechanism. 1 am also pleased to report that during the recent visit of H.E. President Alpha Oumar Konare to the Bank. we have agreed to strengthen the relations between the African Union and the Bank with a particular focus on promoting regional cooperation and integration.

Your Excellencies,

Ladies and Gentlemen­,

Over the last decade. the African Development Bank has undergone a major transformation and it can now indeed claim to he the region's premier development finance institution. This has been made possible by the strong support of your Excellencies to the Bank and to me personally. I would therefore like to take this opportunity to express, to you my deep appreciation and gr atitude for this support.

My second term as President of the African Development Bank will soon come to an end and it has been my great privilege to have served Africa and the African Development Bank in this capacity. It has also been extremely gratifying that my tenure at the Bank has coincided with the remarkable turnaround in the fortunes of our Continent and I am honored to have had an opportunity to make a contribution, however modest. Few people have been given such a privilege and it is an honor and an experience that I will forever cherish.