Information Technology to Drive Development

The government of Rwanda recognises the role information and communication technologies (ICTs) play in accelerating the socio-economic development. The Rwanda cabinet adopted the National Information and Communication Infrastructure (NICI) Policy and Plan in 2000. Moses Bayingana Director Private Sector, Education and Community Programmes said the policy is in line with the government's vision 2020. To facilitate the implementation of the national and sector ICT programmes outlined in the NICI Policy and Plan, the Rwanda Information Technology Authority (RITA) was established as a state agency.

The current thrust areas of NICI are human capacity development, infrastructure, e-government, ICT in education, community access and private sector facilitation. "Currently we are reviewing what has been achieved under NICI 2000 in order to prepare the NICI policy 2010. Along the preparation of NICI 2010, there is preparation of a resource mobilisation document, which is supposed to enable us mobilise funds to implement the policy. NICI 2005 was mainly to prepare a good environment to enable easy adoption of ICTs in different sectors," Bayingana said.

According to Bayingana, the NICI policy 2010 will start next year and among other activities will highlight mainly the e-government component. This component entails areas of government to citizens, government to government and government to business. Under government -citizens, emphasis is on enabling people have easy access to information and to enhance efficiency in government services as well as easier and faster access to services. The government-to-government component aims at improving productivity and efficiency within government. Government to business aims to enable business community access information easily. All this will be done using ICT as the enabling tool. Human resource management is one of the core areas where the nation's strategic goal is to develop and harness the nation's human resources to initiate, support and maintain Rwanda's socio-economic development towards an information and knowledge economy.

"Today, technology and ICT departments enrollment by public and private institutions of higher learning has risen from 1,318 in 2000-2001 to 3,768 in 2003-2004. Other initiatives such as the introduction of the training programme for technicians and the establishment of the regional ICT Training Centre at KIST have contributed to the human resource development core strategy. A total of 690 technicians and 190 secondary school teachers have been trained under the two programmes," Information at RITA states in part.

Under infrastructure, another area of thrust under NICI, the inalienable issue is that of universal access. As part of the strategy and commitment to increase access to telecommunications facilities, Rwanda is committed to liberalising the telecommunications and communications sector to encourage investment and competition in the sector. "Initiatives to liberalise both sectors are evident. Rwandatel has been liberaslised and the radio communications sector has also been liberalised. The liberalisation has brought a number of private radio stations in the sector," he explains. Radio is the most widely used method of communication in Rwanda. Some provinces have also inaugurated community radios to serve their populace. Telephones have increased eight times in the last six years both GSM and fixed lines. Under the rural telephony more than 250 VSATS have been deployed countrywide and over 1000 community phones have been installed. To ensure universal access, telecenters have been established across the country and plans are underway to establish more centres.

Absorption of ICTS: E-government - An e-government project document has been prepared outlining the short to medium and long-term scope of programmes envisioned. The former is confined to applications that enhance capabilities and information dissemination while the latter will consolidate government services by constructing systems that will eliminate duplicative processes, enhance interoperability, reduce redundancy, foster integrity and provide measurable improvement in performance. As part of efforts to modernise the civil and public services to facilitate administrative cost reduction and promotion of efficiency in government services delivery, there have been continued deployment and exploitation of ICTs to support the operations and activities of government services. The current status indicates that nearly all ministries have Internet access and local area networks. A number of ministries have websites and wide area networks. There is also considerable increment on equipment and applications usage.

Under the education sector, deployment and exploitation of ICTs in the educational system and establishment of ICT specialist institutions are key to the absorption of ICTs in the sector. The current computer/students ratios in the three public institutions of higher learning (National University of Rwanda, Kigali Institute of Science and Technology (KIST) and Kigali Institute of Education (KIE) are 1:12, 1:10 and 1:10 respectively. Efforts to absorb ICTs in the educational sector have been initiated by the ministry of Education through the following projects.

- The School Net project with a mandate to provide computers and Internet connection to 20 secondary schools and train teachers and students in basic computer literacy skills and to create Internet access for schools. - Distance learning project. Under this project, distance-learning centres have been established in all provinces. - Rwanda Development Gateway Group: The project has led to the establishment of the Regional ICT Training Centre hosted by KIST as an ICT specialist institution. The geographical information system and the Rwanda development gateway projects hosted by the National University of Rwanda are also part of the group.

Banking Sector - Within the financial systems, the banking system in Rwanda has witnessed considerable computerisation progress. Interconnection at branch levels is evident. Currently there is ongoing implementation of the electronic card payment system by Simtel.

Health - In order to improve care for people living with HIV/AIDS, TRACnet, a MINISANTE project enables their databases to be accessed by health workers in the field using a phone and web-based application. The successful operation, which was performed at King Faycal Hospital in collaboration with doctors in Belgium, is part of further efforts to absorb ICTs in this sector. Despite the achievements, several challenges remain. The recruitment and retention of top level ICT professionals in government is critical to the success of the NICI plan. The primary impetus for growth in ICT has to come from private enterprise and community.

Development of innovative public-private sector partnerships remains a challenge. Constraints faced include the current energy problem and lack of general awareness on the critical role of ICT as a strategic sector. Telecom is still the biggest sector in communications. The rollout rate is high, some operators have rolled out 70% of the country. "These are policies government is undertaking to bring about competition. With liberalisation the roll-out will hit 100%," Bayingana hopes.

From AllAfrica.com, Africa, by New Vision, Kampala - June 1, 2005

World Bank And IMF Support US$1.4 Billion In Debt Service Relief For Rwanda

Washington, DC - The International Monetary Fund (IMF) and the World Bank's International Development Association (IDA) have agreed that Rwanda has taken the necessary steps to the reach the completion point under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC). Rwanda is the 18th country to reach this point, joining Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Senegal, Tanzania, Uganda and Zambia.[1]

Total debt relief under the enhanced HIPC Initiative from all of Rwanda's creditors is estimated at US$1.4 billion in nominal terms.[2] This assistance is equivalent to a reduction in net present value (NPV) [3] terms of US$452.4 million agreed at the decision point, plus a topping-up of the assistance in an amount equivalent to US$243.1 million in NPV terms, approved at the completion point. In the first ten years after the Completion Point, Rwanda would save approximately US$48 million annually in debt service costs

The additional assistance under the topping-up framework has been approved by the Boards of the World Bank's IDA and the IMF, as Rwanda's debt prospects had deteriorated primarily due to exogenous factors that have led to fundamental changes in the country's economic circumstances, since the Decision Point. The largely unexpected decline in Rwanda's export prices and a fall in international interest rates were the factors that contributed most to the increase in the NPV of debt-to-exports ratio, which at end-2003 stood substantially above the 150 percent target set out under the enhanced HIPC framework.

Including topping-up of the HIPC Initiative assistance, multilateral creditors would provide debt relief of about US$1.1 billion in nominal terms and bilateral creditors another US$0.3 billion. The World Bank will provide a total of US$0.7 billion in debt service savings over time and the IMF will deliver debt relief equivalent to a reduction in NPV terms of US$43.8 million agreed at the Decision Point, plus a topping up of the assistance in an amount equivalent to US$19.6 million in NPV terms, approved at the Completion Point. Since the Decision Point, part of the assistance has already been provided.

"The HIPC completion point is an important achievement for Rwanda, and reflects major and sustained efforts to improve the delivery of social services and other reforms over several years," said Pedro Alba, the World Bank's Country Director for Rwanda. "The budget savings from this debt relief are an important contribution to further improvements in social indicators and more generally to reduce poverty in the years ahead."

"Rwanda has largely achieved macroeconomic stability and established a good track record of policy implementation in 2004," said Kristina Kostial, the IMF's mission chief for Rwanda. "Looking forward, the key challenge for Rwanda is to raise the economic growth rate while maintaining macroeconomic stability and debt sustainability. Reaching the completion point is thus an important milestone for Rwanda toward debt sustainability while providing more resources for poverty reduction and the attainment of the MDGs. "Resources made available by debt relief under the enhanced HIPC Initiative are being allocated to fund pro-poor expenditure programs, as outlined in Rwanda's Poverty Reduction Strategy Paper (PRSP). The PRSP, which was completed in June 2002 after extensive consultations with civil society, is based on six strategic pillars: (i) rural development and agricultural transformation, (ii) human development, (iii) economic infrastructure, (iv) good governance, (v) private sector development, and (vi) institutional capacity building.

Background - Rwanda is a small landlocked country with a population of 8.4 million and with a per capita income of US$220 in 2003 and widespread poverty. In the years since the devastating 1994 genocide, Rwanda's output has recovered and the country broadly succeeded in maintaining macroeconomic stability, as evidenced by price stability and a comfortable level of international reserves. Rwanda's domestic political situation has stabilized, and substantial progress has been made toward rebuilding the institutions of an effective state, including through the adoption of a new constitution in May 2003, followed by a presidential election and legislative polls in the same year. Looking forward, improving regional stability in the Great Lakes region will be a key factor for achieving the country's development potential.

Steps Taken to Reach the Completion Point Under the Enhanced HIPC Initiative - Upon reaching its decision point under the enhanced framework of the HIPC Initiative in December 2000, Rwanda committed to undertake reforms in several areas as preconditions for reaching its completion point under the Initiative and thus receive irrevocable debt relief under the enhanced framework: (i) substantial achievements in social indicators, related to education, health, gender equality, and the combat of HIV/AIDS, (ii) adoption of a full PRSP and its successful implementation for at least one year, (iii) satisfactory progress in implementing structural reforms in the tea sector, and (iv) satisfactory performance under IDA and IMF-supported reform programs.

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[1] The completion point under the enhanced HIPC Initiative is when creditors irrevocably provide debt relief under the enhanced HIPC Initiative. The decision point - when assistance is committed - precedes the completion point, and provision of debt relief in the interim period to the completion point is voluntary.
[2] Nominal terms means the actual dollar value of debt service forgiven over a period of time.
[3] The Net Present Value (NPV) of debt is the discounted sum of all future debt service obligations (interest and principal). It is a measure that takes into account the degree of concessionality of a country's debt stock. Whenever the interest rate on a loan is lower than the prevailing market rate, the resulting NPV of debt is smaller than its face value, with the difference reflecting the grant element.
Contact in Washington: Amy Stilwell (202) 458-4906, Astilwell@worldbank.org.

From World Bank Group, DC - June 13, 2005

Merit-based Pay for Civil Servant to Spur Work on Cambodia's Reforms

A merit-based pay deal for Cambodian civil servants working on priority reform programs was formally agreed by The Royal Government of Cambodia and the Governments of Australia, the UK, Sweden, and the World Bank today. Called the Priority Mission Group (PMG)/Merit Based Pay Initiative (MBPI), the initiative will support the Public Financial Management Reform Program (PFMRP), launched by the Prime Minister in December 2004.

As part of a national program to enhance performance, the Council for Administrative Reform (CAR) and the Ministry of Economy and Finance (MEF) have agreed to establish the PMG/MBPI to cover an initial 300 centrally located civil servants working on high priority PFM reform activities. The Royal Government and development partners have agreed to share the cost of the initiative from the start, with the Government committing to provide an annual contribution of increasing value and share of total costs of the PMG/MBPI with each stage of the reform program to ensure sustainability, but based on periodic assessments of progress by all parties. The PMG/MBPI constitutes a new paradigm in dealing with institutional capacity development by providing adequate and well coordinated incentives for government officials to work hard and learn new skills.

Senior Minister and Minister of Economy and Finance, Keat Chhon, pointed out that "the Public Finance Management reform represents a major step forward by the Royal Government of Cambodia and its development partners in shifting from the practices of previous technical assistance by adopting new approach, which will mobilize national capacity and knowledge, thereby igniting a positive chain reaction throughout the society. Such direct support for the Government's national human capacity building efforts will definitely drive toward better governance."

Secretary General of the CAR, Ngo Hongly, said the initiative would be jointly funded by the Royal Government of Cambodia and AusAID, DFID, Sida, and the World Bank, and should serve as a model for other development partners and government agencies. H.E. Ngo Hongly added: "Enhancing performance within the civil service is essential to serving people better. However, improving remuneration is not in itself sufficient. These measures should be part of a cohesive package that includes strengthening service delivery processes, improving employment, developing capacity and using information and communications technology wisely. With the PMG/MBPI, together with our partners, we are embarking on a most promising and innovative course."

Country Manager of the World Bank in Cambodia, Ms. Nisha Agrawal, characterized today's agreement as "a real breakthrough" that would lead to a phasing out of the widespread practice of uncoordinated salary top-ups by different donors which had only served to hinder much-needed reform to civil service remuneration. "All parties - CAR, MEF, and the donors - have come together and worked out a compromise that improves incentives for civil servants working on high priority reform programs," said Ms Agrawal. "This kind of initiative - higher pay with merit-based management - is critical for improving service delivery in Cambodia and we congratulate the Royal Government on taking these important steps."

From Harold Doan and Associates (press release), CA - June 3 2005

Australia: Consensus on Public Policy

At the irregular Council of Australian Governments meetings, what little excitement they produce is generated more often than not by carefully stage-managed demonstrations of party politicking than by any meaningful dialogue, as premiers and other participants jostle for a spot in the limelight. But this time - refreshingly - that wearisome pattern has been avoided.

At the 15th COAG meeting, held in Canberra yesterday, the premiers, Prime Minister Howard, ACT Chief Minister Jon Stanhope and Australian Local Government Association President Paul Bell reached sensible consensus on a number of critical public policy areas. Most notably, with skilled labour in short supply, the council agreed on the need for a national approach to apprentice training. The swift implementation of its plans is very much in the broad economic interest. At the same time, the council committed to a national approach to management of export-related infrastructure, to a review of the health system, to further development of the National Water Initiative and to continuing collaboration on national competition policy.

Predictably, the states were not prepared to refer their industrial relations powers to the Federal Government, but even that potentially divisive issue was insufficient to cause the usual melodramatic walkout or heated exchange. It would be mightily premature, of course, to hail yesterday's civilised and constructive COAG summit as the beginning a new era for state and federal relations. But it's a start. Now what's needed is for the detail of yesterday's broad agreements to be developed, and new policies implemented. We wait with hopeful anticipation.

No need to panic - The presence in NSW hospitals of potentially deadly strains of highly resistant bacteria is a situation not to be taken lightly. For doctors have long warned of the dangers of the so-called "superbugs" - commonly strains of enteric or staphylococcal bacteria which do not respond to currently available antibiotics. But neither is the detection of such pathogens in Sydney hospitals a cause for panic. Though such organisms have been detected in a number of patients at a number of hospitals there are, as yet, no confirmed cases of infection. And it should be understood; it is possible to carry the bacteria without being infected. Nevertheless, the level of public concern is both understandable and commendable, and yesterday Health Minister Morris Iemma responded.

A medical taskforce, headed by microbiologist and infectious diseases expert Professor Lyn Gilbert from Westmead Hospital, has been established to monitor the situation and to take whatever steps are necessary should the bacteria become a serious public health management issue. Professor Gilbert's team will have the responsibility of overseeing consistent infection control protocols and ensuring world's best practice standards are being followed in our hospitals. Minister Iemma's appointment of a taskforce to oversee those standards is prudent. And another thing ... Vast black shapes, the humpback whales are gliding sedately north this time of year at an easy pace. But sometimes, they cavort and play, pcartwheeling in spectacular aerial displays of what looks like sheer exuberance and joy. What a treat it is see them off our shores – and long may they enjoy our protection.

From Daily Telegraph, Australia - June 4, 2005

U-Korea Envisions Next Chapter in Digital Revolution

Electronic communication has played an integral part in developing Korea's economy over the past four decades. Now with the country becoming one of the most advanced info-tech markets in the world, policymakers and businesses are facing the challenge of keeping growth alive in the matured telecom sector. "The IT industry has emerged as a key driving force of the Korean economy. However, we cannot afford to be complacent with the past achievement of the Korean IT industry, since the cut-throat competition of today allows only few companies and countries with the world's best technologies to survive internationally," said Chin Dae-je, the minister of information and communication. "Korea must focus on adopting new information and communication technology services ahead of our competitors and successfully commercialize them to secure future growth," he said.

To sustain its level of high growth over the past years in a quickly maturing marketplace, the government since 2003 has been pushing a new national info-tech strategy, dubbed IT839, outlining ambitious goals for eight services, three infrastructure technologies and nine product categories. Under the IT839 initiative, the Ministry of Information and Communication will encourage private investment in the identified specific technologies by funding research and offering business incentives. The eight new services are portable Internet (WiBro), mobile television (DMB), home networking, vehicle-based information systems (telematics), radio-frequency identification (RFID) technology, W-CDMA mobile telephony, digital television broadcasting and voice-over Internet protocol (VoIP) services.

To provide the backbone network for the new services, the government and industry will develop three advanced infrastructures including the broadband convergence network (BcN), a massive Internet protocol providing connections speeds between 50 mbps to 100 mbps, sensor-based computing networks and the next-generation Internet platform Internet protocol version 6 (IPv6). By enhancing the aforementioned technologies and network infrastructure, the government hopes to foster production in nine industrial sectors comprising mobile handsets, digital televisions and broadcast devices, home network equipment, system-on-chip products, next-generation personal computers, embedded software, digital content and solutions, vehicle-based information equipment and intelligent robot products.

The IT839 strategy is an essential part of the government's road map plan to integrate information and communication technology infrastructure with urban development and build an environment where people can enjoy access to high-speed networks and advanced communication services anywhere and anytime through a ubiquitous computing network. Through the comprehensive rebuilding project, dubbed U-Korea, the government hopes to facilitate further economic growth and lay the foundation for the national initiative toward achieving $20,000 per capita income. "U-Korea is what I would call a 'national meta plan,' where the roles and realms of government, businesses and individuals expand in different ways and dimensions from what is now," said Ha Won-gyu, from the Electronics and Telecommunications Research Institute. "Strengthening the relationship between the public and private sector, as with academia and industry, and building a communication structure that could add efficiency in planning and management will be critical in achieving what we envision through U-Korea," he said.

Broadband convergence network - The deployment plan for the broadband convergence network is seen as the government's most notable attempt to create an enhanced info-tech environment to cope with the trends of media convergence, providing an environment where wired and wireless communication may combine seamlessly under computing networks. The broadband convergence network is conceived as a massive Internet protocol that provides connections at speeds of 50 mbps to 100 mbps, or about 50 times faster than conventional broadband services now offered. Designed to enable people to connect from a wide range of terminals from nearly anywhere, policymakers hope the system can provide the backbone for future technologies by overlapping voice, video and data on a single platform.

Industry watchers expect Internet protocol-based television, next-generation mobile telephony and portable Internet to be the killer applications for the new network. "The broadband convergence network is the core of our national info-tech strategy. By successfully integrating the broadband convergence network with advanced end-user applications, Korea will be at least five years ahead of other developed countries in information-based consumer services," said Seo Seok-jin, director of the Communication Ministry's broadband convergence network division.

In August last year, the government picked three consortia, respectively led by telecom operators KT Corp., SK Telecom Co. and Dacom Corp., to conduct the broadband convergence network trial operations that are scheduled to run in 1,350 households in the cities of Seoul, Busan, Daegu, Gwangju and Daejeon through the end of this year, while attracting around 2 million users. Commercial services are expected to go online in 2006. Nationwide coverage is expected by 2010. The government plans to generate 8 trillion won ($7.7 billion) in private sector investment for the pilot projects this year. About 5.5 trillion won of the investment will come from the country's major telecom operators - KT, SK Telecom, Hanarotelecom Inc. and Dacom. Land-based television stations and cable program operators, planning to have a part in the high-speed network project, are expected to provide investment as well.

U-City project - The U-City project is another integral part of the country's drive toward U-Korea. U-City is a national urban development project that focuses on strengthening the role of information and communication technologies in civic planning and management. The Ministry of Information and Communication recently established the Korea U-City Forum, joined by high-tech industry heavyweights such as KT, Samsung SDS Co. and public agencies such as the Korea Land Corp. The forum will focus on delivering industry standards for next-generation city projects and designing a supportive administrative framework. "We hope the forum can provide a floor for better communication and interaction between the government and companies. The idea is to take the separate U-City projects pushed by regional governments and private companies and fully integrate them with the national development policy," said Lee Geun-ho, a Soonchunhyang University professor and senior vice president of the Korea U-City Promotion Association.

The next-generation city project is aimed at building industry-wide partnerships between the high-tech and construction sectors to integrate advanced info-tech infrastructure to support the sustainable development of cities. The idea is to create environments in cities where residents can enjoy access to high-speed networks and enhanced information services at anytime regardless of location through a ubiquitous computing network. The government hopes the U-City project will strengthen Korea's status as an international technology powerhouse and establish itself as regional cluster and test-bed for world-class companies here and abroad. The project is also seen as critical to providing the infrastructure and generating a larger service market for next-generation communication technologies, such as sensor-based computing, radio-frequency identification applications and mobile Internet.

According to a report by KT, the market for U-City development projects will be worth between $15 billion to $22 billion by 2010. The company signed a memorandum of understanding with the city government of Busan earlier this year to head its U-City project. Regional governments have been laying out comprehensive plans to integrate advanced info-tech infrastructure in urban areas. Seoul has been pushing its Digital Media City project since 1998, which aims to develop the city's western district of Sangam-dong as a research and development hub for the high-tech industry. Providing an advanced networking environment is also a part of Incheon's intentions for New Songdo City, the next-generation city project scheduled for completion in 2014, while the island of Jeju has similar plans to develop itself as the country's next high-tech boomtown, focusing on developing vehicle-based information services and infrastructure.

Radio-frequency identification technology - Among the eight service sectors promoted under the IT839 strategy, many industry watchers expect radio-frequency identification technology, or RFID, to have the most significant long-term impact on the industry. RFID describes a method of identifying items using radio waves through an electronic reader communicating with a microchip embedded on objects that hold information. The technology is designed to improve efficiency in supply-chain management and inventory for companies in the manufacturing and retail sectors, while opening new market opportunities for electronic equipment and semiconductor industries.

Last year, the government announced plans to invest 162 billion won through 2010 to support the commercial deployment of RFID technologies in both the public and private sectors. The government expects the domestic market for RFID will grow to 4 trillion won by 2007 in equipment sales, while generating $760 million in exports. The Communication Ministry announced a plan that runs through 2010 to develop RFID networks at government agencies to support the technological development. Under the project, the National Veterinary Research and Quarantine Service plans to attach RFID tags to imported beef products during the first half of this year, strengthening the monitoring systems and guarding against emergency situations such as mad cow outbreaks.

The Korea Airports Corp., an affiliate of Korean Airlines Co., plans to invest 700 million to use RFID for freight control. The Defense Ministry said it is preparing to adopt RFID systems to manage its inventory of munitions and supplies starting this year. "It won't be long before RFID becomes a defining infrastructure of the country's manufacturing base. Interest in RFID is increasing here as companies continue to search for ways to improve productivity while reducing costs at the same time," said Kim Shin-bae, chief executive of Korea's largest mobile-phone carrier SK Telecom. Kim also heads the Korea Association of RFID/USN (ubiquitous sensor network) that is joined by government agencies and 105 companies involved with telecommunications, software and consumer electronics.

In a policy report to the President Roh Moo-hyun earlier this year, Communication Minister Chin Dae-je announced plans to push a 790 billion won ($784 million) project to build an industrial park for RFID technology in Songdo, west of Seoul, by 2010. Songdo, near the western coast city of Incheon, will host facilities for research and development, engineering and manufacturing of electronic tags and readers. Construction of major facilities will be completed by 2007 and production of active RFID tags and sensors will begin in 2008. The government will finance about 320 billion won of the budget, while the rest will be funded by the private sector. "The global equipment market for RFID will grow to about $90 billion in 2015, which is about the size of the current wireless handset market," said Chin, meeting with reporters shortly after the presidential briefing. "The deployment of RFID will be critical in the country's initiatives of developing into a Northeast Asian trade hub. With Incheon becoming the country's most critical trade and logistics center, it was a natural decision to locate the RFID hub in Songdo where the deployment process could be more efficient," he said.

Balanced regional development - The Songdo RFID complex will lead the government's plan to build high-tech industrial parks across the country to promote balanced regional development and lure more foreign technology investment. Aside from Songdo, the government is planning to complete a research and development base for software and digital content in Sangam-dong, Seoul, by 2007 under a 430 billion won project. Jeju is being promoted as a test-bed for vehicle-based information services, while Gangwon Province will be developed as the heart for the country's biotechnology industry.

Other plans include building an industrial complex for embedded software technology in North Gyeongsang Province, a research and development base in Chungcheong Province, a manufacturing base for optical fiber communications in South Jeolla Province and an industrial park for computer network-based logistics in South Gyeongsang Province. "The idea is to increase the role of information and communication technology to the existing industries that have grown separately in each region. This would help achieve further economic growth and balanced regional development as it would make companies here and abroad spread their technology investment that has been heavily concentrated in metropolitan areas," said Seok Ho-ik, director of the planning and management office.

From Korea Herald (subscription), South Korea - June 13, 2005

An Innovative Corporate Strategy

Poverty remains the major challenges for countries across the globe and continues to pose threat to humanity. Empowerment of societies has only been possible through economic development that improves access to opportunities for all. As a matter of fact, the global movement against poverty emphasizes on inclusive development. However, lessons learned from the past interventions in alleviating poverty has given rise to questions towards the approach in the first place, as billions of rupee poured in as aid has not helped in the cause. Meanwhile, private sector participation has received the highest level of acceptance than ever before in the poverty reduction endeavor, as the approach to deal with the menace has gradually shifted towards public private partnership (PPP). It is a paradigm shift that has a potential to extend resources for impact-oriented inclusive development. In essence, PPP is a tool to achieve entrepreneurial and socio-developmental benefits in a win-win situation.

Necessities change with time or, in that sense, follow the theory of 'hierarchy of needs' and this place ever-increasing demand for resource requirements. Single sector approach to meeting needs, especially by government interventions has proved insufficient. Government is often in deficit of resources and expertise to manage. While the private sector is known for its strength for better output through innovation, efficiency and effectiveness in delivery of services, the communities' access to services by private sector providers is limited due to the lack of state facilitation in improving their outreach. In addition, the rhetoric of civil society participation in the development tends to overlook the potential of meeting the demands through private sector involvement. However, PPP is gradually being debated with anticipation of utilizing the aid or taxed money productively.

While the debate continues on PPP approach and its application, it is usually spoken of generically. The government, private sector and the civil society represent the three pillars on which bases the inclusive public-private partnerships. Principally, through public private partnerships, the government can attract much-needed resources from the private sector. The private sector too can enhance businesses and the society can enjoy the opportunities to benefit from private services. Sadly, PPPs aren't moving fast enough as practical barriers in selling the concept and lack of trust among stakeholders continue to undermine the real development benefits. The government cannot and should not wait until private sector educates itself, but rather sell the projects without compromising transparency and accountability of using public funds. Naturally, the corporate sector would not hesitate to grab opportunities to maximize businesses only if the transaction costs do not exceed the benefits. On the other hand, external development partners should support initiatives by bridging the trust and resource gap between them.

In addition to the need of clarifying the roles of stakeholders in the PPP, defining its applications for various purposes such as 'service delivery', 'poverty alleviation' and 'infrastructure development' is another imminent challenge that faces PPP. It must be dealt with prudently to save PPP from becoming just another development fad. PPP will be lackluster if it uses one-size-fit-all approach in its application. Furthermore, the need to promote the concept by engaging the stakeholders has never been more urgent than it is today. While partnerships with small enterprises at local levels are happening sporadically, those need to be promoted through engaging larger corporations for improving coverage and capturing higher value. Business leaders around the world are emphasizing on meaningful partnership for success. Large companies that see competitive advantage in the long run have begun to venture in partnership as an innovative corporate strategy to reach the masses. However, their endeavors are either taken skeptically or linked to philanthropy. At present, long-running mindset to retain control over resources has been making the in the public sector hesitant to engage with sizeable corporate.

From Kathmandu Post, Nepal - June 12, 2005

Economy Minister Calls on Businesses to Boost Exports

Government has created favorable conditions for growth, he says - Economy and Finance Minister Giorgos Alogoskoufis yesterday called on business people to undertake initiatives to boost the country's meager exports and promised better coordination with state agencies. Alogoskoufis was speaking at the seventh meeting of the National Exports Council, a body of businesspeople and top civil servants. The minister outlined a number of measures initiated by the government, such as legislation on tax reform, investment incentives and the draft law on public-private partnerships and said these, along with efforts to cut through red tape and other counterincentives, provided a solid basis for a gradual rise in exports. Despite a slight improvement since 2003, Greece lags far behind other European Union countries in exports. The news that its exports, in absolute value terms, were less than Luxembourg's had made the headlines three years ago. The recent sharp decline of the euro has made it easier for Greece to export to non-EU countries, but marketing and product quality must also improve significantly, experts agree.

Alogoskoufis said Greece could no longer count on its traditional export products, such as farm produce and textiles, but must diversify its exports. He singled out oil products, pharmaceuticals, cosmetics and software as dynamic sectors that could play a more significant role. He said that the government is aware of the problems that are curbing Greek exports and added that this year will be marked by structural changes to boost their competitiveness. "We must confront the mistakes and weaknesses of the past that hurt export efforts... We are creating a better overall framework, based on fiscal discipline, a (favorable) tax regime, incentives for research and development and public-private partnerships," he said.

As part of its drive to strengthen the economy overall, the government will engage in a far-reaching dialogue with employers and employees on a range of issues, Alogoskoufis said. These include a more flexible labor market, ways for more effective absorption of EU funds through the upcoming Fourth Community Support Framework program and extending the use of information technology. Alogoskoufis promised state support for small and medium-sized enterprises, which often lack adequate means to market their products abroad.

Deputy Foreign Minister Evripidis Stylianidis assured businesspeople that the traditionally conservative diplomatic corps has accepted the need for an active promotion of Greek products abroad and that embassies were ready to provide advice and local contacts. Foreign economic relations, Stylianidis's brief, passed from the Economy Ministry to the Foreign Ministry in 2001. Stylianidis said the ministry had made special efforts to open up markets in Turkey, other Black Sea countries and the Eastern and Southern Mediterranean.

From International Herald Tribune, France, by Kathimerini Greece, June 3, 2005

European Union Summit Collapse is 'Historic Failure'

With France and Britain showing a complete unwillingness to compromise on the European Union's next budget, a major summit in Brussels collapsed on Friday. The EU is in a rut and it's not clear how it will get out. Jean-Claude Juncker wore a gloomy expression on his face, marked by the strain of a 15-hour marathon session of negotiations. The Luxembourg prime minister had to concede Friday night that the European Union had yet another fiasco on its hands with the failure to find an agreement on the union's next budget. "Europe finds itself in a deep crisis," he said at a press conference following the two-day summit in Brussels. The council had been "very close to a deal" and "differences were minimal, which is to say that some delegations did not have the political will to succeed." In other words: The European Union summit meeting had failed.

All day long, the leaders of the 25 member states of the crisis-ridden EU haggled non-stop over money. They attended working meetings, dinners, tete-a-tete meetings in pairs and small groups - all in an attempt to find a compromise deal on how to fill the EU's coffers in the future and then how deep each member state would then be able to dip its hands into the cookie jar. But those efforts were in vain. Britain remained steadfast in its unwillingness to accept any cuts to the annual rebate it has received on the EU budget since 1984 unless Brussels reduced its massive agricultural subsidies program. But the French were equally obstinate, categorically rejecting that request.

Then, the Dutch ventured their own gamble. They demanded their own rebate in the form of cuts to their EU budget payments to the tune of at least €1 billion. They were offered a compromise of €700 million, but The Hague brusquely rebuffed it. Then the Swedes demanded a massive reduction in their EU contribution. By that point, the summit had reached an impasse. Instead of sending out a signal that, even in times of crisis, Europe is capable of reaching agreement - as German Chancellor Gerhard Schroeder had hoped - this European event ended as a debacle. "I'm sad," Schroeder said. Luxembourg's Juncker, whose country currently holds the EU's rotating presidency, wanted to deliver proof to European citizens that "we provide answers and can negotiate." Instead, the opposite happened: The summit showed that the European community is deeply divided and is barely capable of acting.

Crisis brings opportunities - Nevertheless, it would be easy to exaggerate the situation. The fight over money isn't so bad that it will be impossible to resolve. There's still plenty of time to draw up a financial plan for the EU'S 2007-2013 budget period. Indeed, in the almost 50-year history of the European community, important decisions have almost always been made at the last minute. What is terrible, however, is the effect the fruitless summit is having in the media, which has deeply damaged Brussels's already disastrous image among the European populace. Planners intended for the summer summit in Brussels to mark a turn for the better - unfortunately, they instead got an historical failure.

The setbacks came early at this summit. Even before they were able to get to the budget, the most contentious issue on the agenda, the statesmen were forced to bury another European hope. Saying there would be an "intense period of reflection," Juncker announced a temporary suspension of the ratification process for the planned European constitution. The deal allows any country which has already begun its ratification process to bring it to completion. However, any country that doesn't want to provoke its citizens or its parliament with the symbolic European project right now, can also delay voting on the constitution as long as it wants. However, all sides ensured the other they would, at least in principal, stand behind the existing legal framework of the European Union. At the same time, one thing is clear to all participants three weeks after the failed referenda in France and the Netherlands: the foundation and superstructure of the European project chiselled out in the paragraphs of the constitution will never live to see the light of day. Not that it was democratic principals that led politicians like Danish Prime Minister Anders Fogh Rasmussen to call for a "period of reflection" - it was about the fear of a backlash among Europe's voters.

Voters in Denmark, the Czech Republic and Ireland are also threatening to reject constitutional referenda. And in Luxembourg, where Juncker had staked his own political future on a constitutional referendum, he was already at risk of being swept out of office on July 10. Now, just in time, the diminutive Grand Duchy's parliament can cancel what might have been a catastrophic referendum just in the nick of time. For their part, the British long ago brushed their planned vote aside. And as long as Jacques Chirac is still enthroned in the Elysee Palace -- a term that could last until May 2007 - there is no chance the French will return to their polling stations for a second vote. In Germany, President Horst Koehler has refused to sign the constitution until it is reviewed by the country's highest court despite the fact it has already been approved by both legislative chambers in Berlin - the Bundestag and the Bundesrat. This only serves to further overshadow the current dreary skies clouding the European landscape.

Where is Europe heading? Later this week, British Prime Minister Tony Blair will succeed Juncker as the EU's six-month rotating president. In that role, it will be his job to resurrect a stumbling Europe. It's something just about everybody dreads. The reason: Blair and the most of his compatriots have a completely different vision of what they want in a European community than do Paris and Berlin. Recently, one Blair advisor, speaking to others at 10 Downing Street put it this way: "You have to take this Europe, dismantle it and then put it together again." In some parts, there are fundamental differences in the contrasting visions. The social model favored by the Germans and the French, which is supposed to offer protection from the rigors of globalization, is considered antiquated by the British. Both the Scandinavians and the eastern European member states are following London's course. There are also differences of opinion in economic, defense and foreign policy.

Up till now, the European political actors have shirked any decisions on what direction the "European Train," as former German Chancellor Helmut Kohl called it, should be travelling in - should the next station be a large, liberalized market a la London or a political union to the taste of Berlin and Paris? The danger is that Europe's major powers, could block each other for years to come. In doing so, however, they risk maneovering the EU into a state of political and economic insignificance. Though the chances are small, the temporary suspension of the budget fight could actually provide the EU with an opportunity. EU leaders could use their time in the coming months to contemplate totally new budget plans. Even in the final financing proposal, 40 percent of the budget still would have gone to agricultural subsidies. Despite strenuous savings efforts, those subsidies would only have been reduced by 6 percent. Meanwhile, budgets for sectors like research and development and business development would have been trimmed by 40 percent. The EU promised its people that it would create rapid growth, modernize the economy and create new jobs. But that wouldn't have been possible with this budget.

Even the 10 new EU member states were anything but pleased with the budget compromise presented by Juncker. But in the 11th hour of the summit, even they sought to keep the summit from failing and turning into a debacle. In a dramatic plea, they offered to pay more into the budget out of their own national pockets in order to reduce the amount the British, Dutch and Swedish would have to pay. However, the proposal came too late to a ease the impasse. The haggling of the older EU member states, "to the last percentage," as Czech Prime Minister Jiri Paroubek said, was "ridiculous and disappointing for, and completely incomprehensible to us, new member states." Of all people, it was one of the summit's worst obstructionists, miserly French President Jacques Chirac who heartily agreed with the new member states. "We're in a pathetic situation."

From Spiegel Online, by Hans-Jürgen Schlamp and Frank Dohmen - June 20, 2005

No-deficit Policy Too Rigid, Economist Suggests

Ottawa — The federal government should stop fretting about balancing the books every year, an obsession that has contributed to a string of larger-than-expected surpluses, says a prominent Canadian economist appointed by Ottawa to investigate its poor fiscal forecasting record. Former Bank of Montreal chief economist Tim O'Neill says Ottawa's rigid, no-deficit policy is a central reason for a series of windfall surpluses totalling about $60-billion since 1997-1998 - and can be relaxed today. The policy made bureaucrats "overly cautious" in fiscal forecasting, he says. "A key conclusion of the analysis of forecast accuracy is that the government's commitment to never run a deficit under any circumstances has contributed significantly to the persistent upside surplus surprises," he concludes in a report released yesterday.

Finance Minister Ralph Goodale rejected the idea of abandoning the no-deficit policy, a defining feature of the Liberal government's record over the past decade, saying it has "served the country very well." Ottawa likes to boast that Canada is the only member of the Group of Seven industrialized countries consistently running surpluses. "Quite frankly, I would be very reluctant to do that," Mr. Goodale said. "That rule has taken Canada from being a fiscal basket case 12 or 15 years ago to being a leading country in the G7, G8 in terms of fiscal performance, discipline and prudence. "Frankly, it's not an approach that commends itself to me from a public policy point of view because once you deviate from the strict principle, then I believe you are very rapidly on a slippery slope." He said such an approach could lead to regular deficits.

Mr. O'Neill said the no-deficit rule is no longer necessary because Ottawa clearly understands the need to remain fiscally responsible. One of his central recommendations is that Ottawa discard its reluctance to run deficits and instead focus on running a surplus over time instead of balancing the books annually. The government should "shift from the no-deficit target to a fiscal rule of achieving a surplus, on average, over the economic cycle," he says, suggesting this average could be accomplished over five to seven years. "You don't have to abandon fiscal discipline, you just make an adjustment to it so that it's more flexible," Mr. O'Neill said. He said the recommended shift in policy would make fiscal forecasts more accurate by removing undue caution, and result in better forward planning on how to deploy government spending, whether it be to pay down debt or cut taxes. It might also mean that Ottawa slips into deficit in bad years. Conservative finance critic Monte Solberg said he thinks Canadian voters would punish any government that contemplated backing away from the no-deficit rule. "It's crazy talk," Mr. Solberg said.

"The last thing that federal politicians need is an excuse to go ahead and blow the budget." The belief that Ottawa should never run deficits has achieved widespread support among Canadian federal voters in the past decade, becoming the dominant orthodoxy. In fact, it's hard to find citizens in other countries as strongly anti-deficit as Canadians when it comes to their national government. "We have the zeal of converts," said Peter Donolo, who was communications director for prime minister Jean Chretien and now is executive vice-president of market research firm The Strategic Counsel in Toronto. "It's been the quiet revolution of the last 10 years in Canadian politics." He said that Mr. O'Neill's suggestion makes sense economically, but not politically.

The lesson of the 1990s - when Canada faced a dangerously high $42-billion deficit - has been seared on the national psyche, Mr. Donolo said. He said that Prime Minister Paul Martin, whose greatest achievement is still reversing the federal government's fiscal fortunes as finance minister, could never back away from the no-deficit rule, "particularly in view of his touch-and-go performance as prime minister." Mr. O'Neill made 14 recommendations. He said that if Ottawa isn't willing to discard its no-deficit policy, it should come up with a formal process for allocating windfall surpluses between tax reductions, spending and debt reduction. He also suggested that Ottawa offer more-frequent fiscal updates such as a quarterly report, and become more aggressive on paying down the federal debt. Mr. O'Neill was appointed to probe Ottawa's forecasting of its fiscal fortunes last fall, only weeks before Canadians learned that the federal government's budget surplus for the 2003-2004 year had unexpectedly ballooned to $9.1-billion from a projected $1.9-billion.

From Globe and Mail, Canada, by Steven Chase - June 21, 2005

Prime Minister Resigns after Civil Servant Strike, Oil Controversy

The prime minister of Sao Tome and Principe has submitted his resignation in the midst of a strike by civil servants and a row with the president over offshore oil, raising the prospect of early parliamentary elections in this small island state. Prime Minister Damiao Vaz de Almeida presented his resignation to President Fradique de Menezes on Thursday, saying his working relationship with the head of state had deteriorated to the point where the two men could no longer work together. He cited disagreements between Menezes and the government over how to deal with a civil service strike that began on Monday, as well as over the president's decision to bypass government in the controversial award of five offshore blocks to foreign oil companies in a joint development zone shared with Nigeria. If Menezes accepts the resignation of the prime minister, this former Portuguese colony of 140,000 people will face fresh parliamentary elections within three months. Legislative elections had previously been scheduled for 2006. They were due to take place alongside a presidential poll, in which Menezes was widely expected to seek a second five-year term.

Vaz de Almeida's MLSTP/PSD party, which lacks an absolute majority in the country's 55-seat parliament, could theoretically avoid early elections by forming a new coalition and presenting an alternative candidate as prime minister. But political analysts said that was unlikely, since the MLSTP/PSD has fallen out with its junior coalition partner, the Independent Democratic Alliance (ADI) of former oil minister Arlindo de Carvalho, who resigned last month. The MLSTP/PSD, which led Sao Tome to independence in 1975, issued a statement on Thursday calling for both presidential and parliamentary elections to be brought forward and held at the same time. MLSTP/PSD leader Guilherme Prosser da Costa is likely to be Menezes' main challenger at the next presidential election.

Carvalho, the former oil minister, quit the government last month over disagreements with President Menezes over how to proceed with the award of five new offshore blocks in the joint development zone shared with Nigeria. Several alleged irregularities had been revealed in the bidding process, which began in November last year. Critics said these irregularities had resulted in ERHC, a Nigerian-controlled oil company with no drilling experience, being granted a major stake in the most attractive of the five blocks on offer. President Menezes eventually over-ruled all the objections raised and signed a deal with Nigerian President Olusegun Obasanjo on Tuesday that awarded all five blocks to the consortia that had been selected.

ERHC, a US-registered company controlled by a millionaire supporter of President Obasanjo, duly received a controlling stake in the two most promising blocks where it bid in partnership with established US companies, and a minority stake in the other three blocks. Besides enjoying close ties with the Nigerian government, Texas-based ERHC also counts several former Sao Tome government officials among its shareholders. Nigeria and Sao Tome said in a joint statement that the award of this second batch of offshore blocks would trigger signature bonuses totalling US $283 million. Sao Tome, which is entitled to 40 percent of all revenues from the joint development zone, will receive $113.2 million of this windfall income. That comes on top of $49 million which Sao Tome is due to receive from a consortium led by ChevronTexaco and ExxonMobil in respect of an earlier exploration and production sharing agreement signed in February. Nigeria had earlier blocked Sao Tome from receiving any payment from the ChevronTexaco/Exxonmobil deal until it agreed to proceed with the award of the five blocks offered in the second licensing round. The twin-island state, which lies 300 km west of Gabon, now stands to receive more than $162 million in front-end payments before a single drop of oil has been discovered in its offshore waters. That is more than the tiny nation could hope to earn from 30 years of export income from cocoa, its traditional cash crop.

Anxious to receive an early share of this bonanza, the civil service unions began an indefinite strike on Monday to demand a more than three-fold increase in the minimum wage from $30 to $100 per month. Vaz de Almeida's government countered that it could only afford to raise the minimum wage to $40 per month, without falling foul of existing economic policy agreements with the International Monetary Fund and World Bank, and endangering negotiations to write off a substantial part of Sao Tome's $320 million foreign debt. The outgoing prime minister and the president have each blamed each other for failing to find a solution to the civil service pay dispute.

From Reuters AlertNet, UK, June 3, 2005

Alarm Bells Sound over Massive Loans Bankrolling Oil-rich, Graft-tainted Angola

UK's Standard Chartered bank criticised for its leading role in $2.35bn deal - Standard Chartered, one of the UK's leading banks in the developing world, is proud of its record in Africa. The winner of several awards for best foreign bank south of the Sahara, the bank has a $1m-a-year fund (£550,000) for community projects, taken from an operating profit across the continent of $200m. But you will search in vain to find a reference on its website to its activities in Angola. Which some see as curious, because Angola is the second-biggest oil producer in Africa, and that means potentially big money for international financiers. Standard Chartered, now chaired by the former BP executive Bryan Sanderson, is a leader in the field. "We were very excited," John Goodridge, director of the bank's trade finance arm, told a specialist magazine when he landed what it described as "the largest oil-backed transaction in the entire history of the structured-trade-finance [international finance] market." The deal last year, backed by a consortium of European banks including Barclays and Royal Bank of Scotland, was a loan of $2.35bn to Angola's state oil company, Sonangol. Repayments over five years are guaranteed from future oil production.

For Standard Chartered, as coordinating bank, the deal was a considerable commercial success and the pinnacle of its 16-year relationship with the country. With its liquid collateral, now being produced at a rate of more than 1m barrels a day, Sonangol had a good reputation for paying its debts. And the bank earned good fees and an interest rate at least 2.5% above the base London bank rate. For Angola, too, there appeared to be advantages as such a huge loan could never have been raised through the multinational institutions. At a stroke it was able to pay off $750m of debts to one of its largest creditors, its former colonial master, Portugal; and with oil prices rising steeply, Sonangol was confident it could offer prompt repayments.

Yet oil-backed commercial loans like this one go to the heart of concerns about Angola's ability to improve living conditions for its people. Those conditions are reflected in UN estimates that 70% of Angola's 11 million-strong population now live below the poverty line. In the UN's human development index the country comes 166 out of 177. Life expectancy at 36.6 is one of the lowest in the world, and infant mortality, at 191 for every 1,000 life births - is one of the highest. In short, the country desperately needs funds which are well directed. But commercial loans to Angola coordinated over the years by Standard Chartered and other lenders have been universally criticised by the World Bank, the IMF and leading NGOs, as expensive, lacking in transparency and fuelling a parallel economic system outside the budget which is wide open to corruption. The Economist Intelligence Unit put it succinctly in its country report for March 2005: "The high cost of such borrowing tends to be outweighed in the government's eyes by the absence of scrutiny, which has allowed the diversion of large financial flows."

In a valedictory interview in March, the British ambassador, John Thompson, called for more transparency from the Angolan government. Criticising the oil-backed loans, he said: "If Angola can negotiate with the IMF and develop a good working relationship, then that should free up concession finance [finance from institutions at favourable rates]. It could also lead to an agreement with the Paris Club [the main group of country lenders] in rescheduling official debt." A spokesman for the Department for International Development said: "We have concerns about the use of oil-backed loans in Angola. These loans reduce openness in public accounting." The scale of corruption in Angola has been documented by IMF reports, suppressed by the government, and by research carried