---------- Forwarded message ----------
Date: Thu, 16 Nov 2000 18:22:12 -0500
From: APIC <[log in to unmask]>
To: [log in to unmask]
Subject: Africa: Claiming the 21st Century?

Africa: Claiming the 21st Century?
Date distributed (ymd): 001116
Document reposted by APIC

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Region: Continent-Wide
Issue Areas: +economy/development+
Summary Contents:
This posting contains a slightly condensed version of an article
from the October 2000 issue of Africa Recovery
(http://www.un.org/ecosocdev/geninfo/afrec). The article reviews a
report by five international organizations earlier this year
claiming "a fragile consensus" on the way ahead for African
development. The published report - Can Africa Claim the 21st
Century? -  can be obtained from the World Bank
(http://www.worldbank.org/publications).As the article indicates,
sceptics may wonder whether the new jointly authored document
reflects a real consensus or a compromise product reflecting a
variety of different perspectives.

+++++++++++++++++end profile++++++++++++++++++++++++++++++

'Can Africa claim the 21st century?'

Only by investing in its people, and if the donors change their
ways, says a new report

Africa Recovery, October 2000

By Ernest Harsch

Africa will be able to achieve sustained economic growth only if it
invests heavily in its people, both to reduce poverty and enhance
the continent's ability to compete globally, argues a major new
report published by the World Bank and co-signed by four other
institutions working extensively on Africa. In an unusually candid
and self-critical assessment, the report, Can Africa Claim the 21st
Century?, lays a share of the blame for Africa's limited progress
so far on the interventions and policies of the donor institutions
themselves, which have left Africans "cash poor and project rich."

Few of the arguments in the study are particularly new. Some have
previously been raised by the World Bank itself, or by the other
contributors to the report -- the African Development Bank, UN
Economic Commission for Africa, Global Coalition for Africa and
African Economic Research Consortium. What is notable is the extent
to which some of the criticisms of structural adjustment in Africa
now are being acknowledged by such institutions as the World Bank,
which has played a central role in pushing the continent toward
sweeping economic liberalization and reduced government activity
over the past two decades. Without completely accepting those
criticisms, the report recognizes the "limits of narrow
[market-driven] approaches," and points to the need for a "strong
and capable state."

Can Africa Claim the 21st Century? states that the Bretton Woods
institutions -- the World Bank and the International Monetary Fund
(IMF) -- have undergone a "watershed change" in their thinking on
aid policies. It is an assertion that both World Bank President
James Wolfensohn and IMF Managing Director Horst Kohler also have
been making. Such declarations have met with some scepticism, as
Mr. Kohler discovered during a visit to Senegal in July (see "Open
letter to IMF managing director: 'Africa needs to forge a new
dream'"**).

The study maintains that a "fragile consensus" has emerged between
Africa and its donors since the late 1990s. This entails greater
African acceptance of the need for macroeconomic stability, market
and private-sector promotion, and increased global competitiveness,
with the donors in turn agreeing to focus more on social and state
institutions, poverty reduction and enhancement of African skills
and capacities.

Yet significant differences remain. Many Africans continue to chafe
at the conditions the financial institutions impose on their
governments in order to receive debt relief or development
assistance. Recent work on adjustment policies by more than two
dozen African economists urges much more attention to promoting
industrialization, so that Africa can begin to export a broader
range of processed goods and move beyond its current dependence on
primary commodities.

'Sound policies' pay off, sometimes

Africa must continue on the path of economic and institutional
reform, the report states, since without reform its economies will
not grow rapidly and without growth poverty will worsen. The
reforms undertaken so far "contributed to the resurgence of growth
in the second half of the 1990s," asserts the report, while the
creation of wider space for private initiative is gradually
transforming Africa into "a viable business address" for both
external and domestic entrepreneurs.

However, the report's claim that policy reform directly spurs
higher growth rates is more qualified and nuanced than in the World
Bank's 1994 study Adjustment in Africa, which maintained that
"adjustment is working." In less categorical terms, Can Africa
Claim the 21st Century? says that "some recent studies indicate
that adherence to sound policies pays off in the medium term."

The report does not explain how an export strategy based mainly on
primary commodities will bring any long-term improvements in
Africa's basic earning capacity, nor does it explore the
environmental consequences of such an approach.

Yet even where economic growth is high, there is no evidence that
income inequalities have been reduced, the report acknowledges. And
if pervasive inequalities are not addressed, "growth will not be
sustainable and will not reduce poverty." In contrast to earlier
adjustment approaches that emphasized rigourous austerity, the
World Bank and its partners now argue that economic reforms should
permit a rapid increase in Africans' consumption.

In particularly damning terms, the report also says that so far
"short-term reforms have failed to address some difficult
underlying institutional problems -- and in some cases may have
worsened them." Some countries, including Ghana, Kenya, Malawi,
Tanzania and Zimbabwe, have built up high domestic debts, in part
because financial markets were hastily liberalized before fiscal
deficits were brought under control. Meanwhile, tight fiscal
restraints, including on public sector salaries, have demoralized
public employees.

In agriculture, the study notes, policy reforms have opened up
domestic and external marketing arrangements, yielding some
increases in producer prices to small-scale farmers. However,
without improved infrastructure, services and rural institutions,
price incentives have had a limited impact, especially at a time of
declining world market prices for many of Africa's agricultural
exports. Moreover, reductions in government subsidies have doubled
or tripled farmers' costs, especially for inputs like fertilizers
and pesticides.

Role for public sector

African countries should do what they can to mobilize private
capital, the report repeatedly emphasizes. Yet it also insists that
governments and their institutions remain essential players in the
continent's security and development, reflecting the donors' shift
away from the extreme anti-statist stance that some of them
previously urged in Africa.

At the most basic level, African states must be able to maintain
peace and security. The report notes that one-fifth of all Africans
live in countries affected by conflicts, which makes significant
improvements in development virtually impossible. ...

Since the early 1990s, the study notes, 42 of 48 sub-Saharan
countries have held multiparty elections. Yet more needs to be done
to make government institutions more representative of their
countries' ethnic diversity, decentralize power more effectively to
people in local areas, strengthen the rule of law, combat
corruption, and boost the morale of civil servants.

Beyond providing clear legal norms and regulatory systems to help
private sectors develop, African states also need to play direct
and active roles in areas essential to development. Infrastructure
projects -- railways, roads, electricity, telecommunications, and
so on -- can be enormously expensive and often are not immediately
profitable. So in such cases, the report acknowledges, there may be
a need for the public sector to take a lead. One obstacle to
agricultural growth, the study notes, has been the relatively low
level of public investments. By providing essential public goods,
such as rural roads, African governments can make it easier for
private businesses to enter neglected markets.

Better health and education also are vital public goods that
governments must guarantee if their economies are to become more
productive and competitive. [The report] devotes two chapters to
"investing in people" and combating poverty, including through
"distributional" measures. It asserts that while there may be some
opportunities for enlisting private funding for education and
health, these sectors require significantly greater public funding.

The report does not address the common criticism that early
structural adjustment programmes contributed to cuts in government
funding for social sectors, a point that the UN Children's Fund,
among others, began raising sharply in the late 1980s. It does
acknowledge that attempts to shift the costs to local communities
have been harmful. "Though the poor are willing to pay for human
development investments, their resources are limited," it says.
"User fees have deterred primary school enrolment and health centre
use." ...

Exporting more primary commodities

As in most adjustment programmes, Can Africa Claim the 21st
Century? argues strongly that African economies must open up more
fully to international trade and that governments should implement
policies designed explicitly to promote exports. It claims that in
most African countries an "anti-export bias is still considerable,"
compared with other developing regions. It also states that if the
continent had maintained the same share of world trade it held in
the late 1960s, Africa today would be earning an additional $70 bn
a year.

Yet world market prices have not provided Africa with much
incentive, the report acknowledges. Between 1970 and 1997, the
cumulative losses in terms of trade (the purchasing power of export
earnings) were equivalent to a staggering 120 per cent of GDP for
non-oil exporting African countries. This was because most African
countries depend overwhelmingly on the export of just one or two
primary commodities, many of which have seen their world prices
plummet.

The solution, the study argues, is for African countries to
diversify their economies and the range of goods they export. It
goes so far as to chastise Africa for its "failure to diversify
exports," even though many African governments have for years
pushed for just such export diversification, often in face of
closed Northern markets and donor indifference or outright
hostility.

A few African countries so far have succeeded in building up modest
manufacturing sectors: C"te d'Ivoire, Ghana, Kenya and Zimbabwe.
South Africa has a strong manufacturing base, created through the
apartheid regime's interventionist industrialization policies. But
for the bulk of Africa, diversification into manufactured exports
will be extremely difficult, the report emphasizes, citing the very
high transport, electricity and other infrastructure costs in
Africa, compared with other regions.

Therefore, the World Bank and its partner institutions maintain,
for most African countries the possibility of diversifying beyond
primary commodities will be very limited and their best prospect
lies in expanding the number of different primary commodities they
export. ... In global trade, Africa's "comparative advantage" will
continue to rest in primary commodities, especially since "Africa
is richer in natural resources -- but poorer in human capital --
than any other region."

Since most African economies currently depend on just one or two
key exports, thereby leaving them extremely vulnerable to volatile
world market fluctuations, increasing the range of primary
commodity exports should help spread the risks. But otherwise, the
report does not explain how an export strategy based mainly on
primary commodities will bring any long-term improvements in
Africa's basic earning capacity, nor does it explore the
environmental consequences of such an approach.

The report does conclude with a strong plea for the industrialized
countries to fully open up their own markets to goods from Africa
and other developing regions. So far, however, African countries'
demands for greater market access in the North have yielded few
results. Making the trade picture even more gloomy, the study
reports that for some African least developed countries,
"implementing World Trade Organization obligations would cost as
much as an entire year's development budget."

Lessening aid dependence

Given the limited prospects for higher African export earnings or
foreign investment flows, the study acknowledges that most
countries will need significant aid if poverty is to be
substantially reduced. Paradoxically, aid transfers have been
falling in recent years. This trend will need to be reversed to
help spur more rapid economic growth, while at the same time
permitting consumption to increase sufficiently in order to lessen
poverty. Debt relief, by saving budgetary resources, ultimately has
a financial impact similar to that of aid inflows, and also should
be stepped up, Can Africa Claim the 21st Century? says.

Absolute levels of aid and debt relief are not the only important
elements, the report continues. So is better targeting. Donor
policies have shifted in recent years to give greater priority to
education, health and other aspects of human development, while the
Heavily Indebted Poor Countries initiative seeks to ensure that
resources saved through debt relief are channelled toward
poverty-reduction programmes. But major gaps remain, for instance
in funding agriculture.

The report is scathing in its criticisms of current donor
practices. Much aid remains "tied," that is, it has to be spent on
goods and services from the donor countries themselves. Poor
coordination among donors sustains "a parallel, multidonor,
multiproject economy, obscure to host governments and where donors
are sometimes reluctant to share information." This often makes
integrated budget management impossible.

African officials spend much of their time preparing documentation
and reports for the different donor agencies. The tight deadlines
involved often mean "consultation and ownership may suffer."
Meanwhile, African officials frequently have no access to studies
and data produced by the multilateral institutions. World Bank
country lending assessments remain confidential, for example. "If
partnerships and transparency are to be institutionalized in the
aid relationship," the report recommends, "the Bank's assessments
will need to become more open to public scrutiny."

Despite much donor talk about strengthening the capacity of African
governments and institutions to develop and manage their own
policies, current aid policies seem to point in a different
direction. Some 100,000 foreign "technical experts" are employed in
Africa, tending to displace local experts. The study concludes that
"aid programmes have probably weakened capacity in Africa," in part
by making "recipient governments less accountable to their people."

Changes in the approach of donors could do much to mitigate such
outcomes. The report recommends in particular that donors put their
funds, on an unrestricted basis, into common pools to complement
African countries' own resources. This, it says, would help put an
end to "intrusive conditionality," a great source of resentment and
irritation for many African policymakers. So far, however, there is
no evidence that the major donor countries are actually open to
such an idea. Conditions, in fact, appear to be proliferating in
both aid and debt relief programmes.

As African critics of donor policies often point out, such
conditionality undermines any notion of genuine partnership between
Africa and its external funders. For real partnership to become
possible, the UN Economic Commission for Africa noted in a 1999
study of aid policies, it will be essential "to return spending
authority, control and accountability to the country in question."

----------------------------------------------------------------

** Open letter to IMF managing director: 'Africa needs to forge a
new dream'

Africans are striving for democracy, but their hopes may be dashed
by increasing poverty and a "much greater marginalization of Africa
in the process of economic globalization," warn Ms. Marie Angelique
Savan, and Mr. Hakim Ben Hammouda, representing the Council for the
Development of Social Science Research in Africa (CODESRIA), one of
the continent's foremost academic bodies. To avoid further misery
and democracy's derailment, the International Monetary Fund (IMF)
and other multilateral financial institutions must be more open to
African aspirations, they declare in an open letter to IMF Managing
Director Horst K"hler, released during his early July visit to
Dakar, Senegal, where CODESRIA is headquartered.

Africans have "followed to the letter the prescriptions that the
Messiahs of your institution have forcefully recommended," Ms.
Savan, and Mr. Hammouda say. "Economies have been liberalized, our
states' involvement in economic regulation has been reduced, public
enterprises have been privatized, the dynamics of growth have been
reoriented toward the international market. Our governments have
progressively ceded their economic sovereignty to donors, with your
institution and the World Bank in the front ranks."

The open letter urged Mr. Kohler during his visit to Senegal to
walk through the streets and visit schools, health clinics and
villages. "Our failures should lead you to reevaluate the policies
and development strategies your institution has recommended to our
countries, in the sad vocabulary of structural adjustment." The
authors warn that such widespread misery is leading many to
question the value of democracy, and to engage in desperate and
destructive violence.

"Africa needs to forge a new dream and new plans capable of
restoring hope to our populations," they conclude. The IMF can help
by cancelling the continent's foreign debt, supporting the work of
African experts, and permitting African governments "the capacity
to master their own destinies."

************************************************************
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC provides
accessible information and analysis in order to promote U.S.
and international policies toward Africa that advance economic,
political and social justice and the full spectrum of human rights.

Documents previously distributed, as well as a wide range of
additional information, are also available on the Web at:
http://www.africapolicy.org

To be added to or dropped from the distribution list write to
[log in to unmask] For more information about reposted material,
please contact directly the source mentioned in the posting.

Africa Policy Information Center,
110 Maryland Ave. NE, #509, Washington, DC 20002.
Phone: 202-546-7961. Fax: 202-546-1545.
E-mail: [log in to unmask]
************************************************************

----------------------------------------------------------------------------

To unsubscribe/subscribe or view archives of postings, go to the Gambia-L
Web interface at: http://maelstrom.stjohns.edu/archives/gambia-l.html
You may also send subscription requests to [log in to unmask]
if you have problems accessing the web interface and remember to write your full name and e-mail address.
----------------------------------------------------------------------------