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Progress report on African development

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 1984
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The Bank has issued a Progress Report on its Accelerated Development in Sub-Saharan Africa: An Agenda for Action which was published in 1981 (and is generally known as the Africa Report). Two conclusions are highlighted: first, many countries have initiated the policy reforms that are critical for sustained improvement; second, their eventual success depends on higher levels of foreign assistance than have been forthcoming.

The Africa Report was prepared in response to a request from the African Governors at the Bank’s Annual Meeting in 1979. It was one of a number of other official reviews of Africa’s development needs, and became a major focus of debate on African development problems and policies in governmental and international circles, the academic community, the private sector, and in the media, both in Africa and elsewhere.

The Africa Report addressed the immediate cause of the economic crisis in Africa—falling production rates. It had concluded that if the declining trend of per capita incomes in Africa was to be reversed, major domestic policy reform and institutional change were required to increase the efficiency with which scarce resources were used. Within these reforms, measures that would bring about a marked switch in the incentive structure and in the allocation of government resources toward the agricultural sector were critical, as were the efficiency with which agricultural outputs and inputs were marketed, more appropriate exchange rate policies, and much more attention to research on basic foodcrops. To meet the need for foreign exchange for essential imports and other payments and to support the rapid growth of industry, the Africa Report recommended that existing opportunities for exporting agricultural products be more fully exploited. It also emphasized that for sustained reform to be possible, more external assistance was needed.

The poor economic performance of African countries had not originally been attributed to any major extent to the international trade and financial environment that they had faced. Although during 1979–80, when the Africa Report was being prepared, a major deterioration had already occurred in the global economy, a longer-term review of the 1960s and 1970s had concluded that the problems of development in Africa could not be attributed principally to these factors.

The Progress Report, however, notes that developments since 1980 warrant greater concern with the external economic circumstances confronting African countries; in almost all of them, the externally determined foreign exchange situation has become a major constraint.

Falling export prices, aggravated in some instances by restrictions on market access, have undermined attempts by governments to improve their balance of payments, and this deterioration in their international trading environment is unlikely to be reversed during the 1980s. Even under relatively optimistic assumptions about the speed and magnitude of the economic recovery in the OECD area, the prices of relatively few of the export commodities of African countries are expected to show increases in real terms. All major economic indicators—GNP growth rates, agricultural growth rates, and the level of exports and food inputs, among others—remain matters of extreme concern.

There is now evidence that on a wide set of policy issues many African governments are demonstrating considerably more awareness of policy and institutional weaknesses in the conception and implementation of their development programs. Measures have been taken to improve agricultural prices and the efficiency with which input and output markets operate. Government expenditure programs have reflected both the general shortage of resources and the need to increase the efficiency with which public resources are used.

However, these changes represent only a modest beginning; neither the number of countries in which these changes are taking place nor the extent and the speed with which revised programs are being implemented give any cause for complacency.

The Africa Report had emphasized that policy reform was unlikely to be implemented, could not be sustained, and would have limited impact on growth rates in the absence of increasing flows of concessionary aid. Given the difficult global external situation that continues to confront African countries, and which seems likely to continue for several years, these conclusions have become of critical importance. If the programs of policy reform already begun in some African countries are to be maintained, and if the number of countries embarking on such programs is to be increased significantly, major increases in financial support through concessionary assistance from the donor community are urgently required.

According to the Progress Report, in order to provide additional support for policy reform by African governments, the Bank has already increased its country and sector work and has adapted it to be of greater assistance to governments. Moreover the pattern of Bank operations has been modified in major respects to include structural adjustment and other forms of nonproject lending to provide increased support for policy and institutional reform. IDA lending to Africa has also risen—from $954 million in fiscal year 1981 to $1,230 million in fiscal year 1983, the share of sub-Saharan Africa increasing from 27 percent to 37 percent of IDA’s worldwide total. However, the extent of the additional financial support is constrained—by the availability of IDA funds and the needs of other recipients—and there also are limits to which IBRD funds can be prudently lent to African countries.

In addition, although individual country experiences have varied, for sub-Saharan Africa as a whole total nominal ODA commitments fell in 1981. Within this total, commitments by DAC members decreased even more sharply. Yet both the need for a markedly higher level of external assistance and the justification in terms of support for programs of major policy reform have increased since 1981 and are rising.

Copies of the Progress Report are available from the Publications Unit of the World Bank. To order see page 48.

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