I would like to thank the organizers and the Government of Japan for holding this follow-up meeting to the seminar in Tokyo last year. I think a great many useful things were said there, and they are more relevant today than ever.
I said at the time of the TICAD [Tokyo International Conference on African Development—October 1993] meeting in Tokyo—and I continue to be persuaded—that there is a lot that Africa can learn from the East Asian economies. Their success in achieving high rates of growth has generated much interest in Africa.
Some argue that Africa’s history, culture, and linkages with foreign powers do not provide fertile ground for the implantation of Asian models of growth. At the Tokyo seminar last March, I argued that while such objections contain a measure of truth, they are beside the point. It is possible to take the general lessons of East Asia and apply them in ways that make sense in an African context. Who can argue, for example, that sound macroeconomic policy, a positive role for the private sector, high rates of national savings, investment in universal education, and development of high caliber professionalism in the civil service are inappropriate for Africa?
Events in Africa continue to unfold; and I am convinced that a number of African countries are moving in the right direction. What I would like to do today is focus attention on the key challenges that remain, and ask what is being done in response. I want to say at the outset that I believe Africa needs to continue to receive international resources. The question is how they can be used to the greatest effect.
Looking around the African continent, there are things we can begin to be happy about. There are 21 African countries with positive per capita growth, and about half are growing at 4-5 percent a year. Africa has also experienced a wave of political liberalization that is ending years of rule in many countries by non-accountable and personalized leadership.
Still, too much of Africa has been typified by:
Inadequate macroeconomic policy and management. There is no question any longer about the destructive effects of exchange rate overvaluation, rampant inflation, trade protectionism, and over-taxation of agricultural producers. These have all been major factors in Africa’s decline.
Spreading and deepening poverty. Poverty’s amplitude can be seen in the statistics: Africa has the lowest average rates of GDP growth in the world; five out of ten Africans live below the line of the most dire poverty. But its real toll can only be comprehended through witnessing the impact of continuing human misery, continued high population growth rates, poor health and undernutrition of children, fear, and ignorance. I would like to ask: Do we really understand the dimensions and the sources of continuing poverty? What are we doing about it? And are our efforts to fight poverty in Africa really having an effect?
There is also low diversification and flexibility of economies. Most African economies continue to be focused on one or two main commodities, meaning that they are highly vulnerable to downswings in international prices. Why have African countries not been able to diversify? Are donor country policies helping or hurting the effort? With the record of African governments constantly in mind, what is the appropriate role of the African state in the transfer process?
African countries also suffer from an inability to generate investable resources on their own, or to attract them from private foreign sources. Low domestic resource mobilization and national savings, coupled with low private capital inflows, add up to a continued dependence on official aid and debt. And too many of these resources are simply consumed rather than invested. Is anything really effective being done in this area—either by donors or by African countries? Can internal resource generation and debt relief be linked, and can we expect countries to exit the debt rescheduling process?
Environmental degradation is another major problem across Africa. The resource base on which Africa’s economic future will depend is literally being eroded away. Donors have responded with a great deal of rhetoric and energy, but have their efforts done much yet by way of stemming environmental damage?
Lack of regional integration and economic cooperation is yet another problem. The potential gains from regional integration are enormous, but most attempts at achieving it in Africa have been colossal failures, leaving only large—and often overlapping—institutions in their wake. What are the real impediments to economic integration, and are they being addressed head-on?
I am hoping that we will hear some real answers to these questions. We cannot afford to sidestep the hard issues, or sugarcoat our answers in euphemisms and worn-out nostrums. We have to be realistic, hard-headed, and honest with ourselves.
The Changing International Environment
The world is changing rapidly. The Cold War is over, international markets are becoming more interdependent, and the mood within donor countries is increasingly skeptical of the value of development assistance.
There can be no doubt that Africa needs more resources. But there can also be no doubt that future assistance will be based on evidence of performance. Donor country legislatures and the public have arrived at a point where they see no reason to pump good money after bad, where past assistance has been squandered on consumption, on meaningless projects, on meeting the payroll of inert bureaucracies, or on corruption.
The key question thus becomes: How do we—international donors—focus resources in our efforts to assist African countries to develop the capacity and ownership that will allow them to enter the twenty-first century in command of their own destiny, and far less dependent upon international sources of support?
Toward the Future: The World Bank’s Guiding Principles
We have given considerable thought to this question. Our own response is embodied in the six Guiding Principles that the Bank has set forth as the framework for future lending: Selectivity, results orientation, client orientation, cost-effectiveness, financial integrity, and partnership.
Selectivity means that in the future we will be targeting resources on the performers. We can simply no longer afford to subsidize inefficiency or waste. This means that we will be insisting on evidence of performance, or we simply will not lend.
We will also be focusing a lot of attention on getting results on the ground, through improving the efficiency of quick-disbursing lending, broader, integrated sectoral operations, and improving our in-house policies and procedures.
Client orientation is a particularly important principle. This means that we will be listening more—and more systematically—to our African partners. We want, and need, to develop channels of two-way communication and ownership.
Cost-effectiveness and financial integrity mean that we will be closely planning for and monitoring the way in which we use funds, and the way in which they are used.
Partnership means that we will be looking hard for ways to build upon and enhance our relations with other donors, in ways that will provide for more effective collaboration in the interest of African development. We have started doing so in our sectoral approach to our African programs, and are looking for even more ways.
The most important point I would like to make is that our policies will concentrate on building African ownership of the development process. We will not be the ones who formulate the policy-based solutions to solve the underlying causes of economic stagnation; instead, Africans themselves must do so. This means that more than ever before, we will be pushing to meet the challenge of building Africa’s human and institutional capacity—and then making sure that it is actually utilized.
The destiny of Africa lies in the hands of Africans. But Africa will still need considerable support in order to make that destiny a prosperous one. That is not at issue; what is at issue is how to employ donor resources in ways that help the process, and how Africans utilize this support.