Earlier this year, a joint initiative by IMF Managing Director Horst Köhler and World Bank President James Wolfensohn came to fruition with the inauguration of Investment Advisory Councils (IACs) in Ghana and Tanzania. These councils are intended to promote dialogue between the government and senior executives of local and international companies on ways to improve the investment climate.
Ghana’s IAC was launched in May 2002 under the chairmanship of President John Kufuor, who was joined by Köhler and senior Ghanaian and foreign business executives. At its inaugural meeting, the council identified a number of priority areas for government action, including regulatory reforms related to land ownership and mining and labor laws; safety and security; infrastructure, especially for energy, telecommunications, and information technology; financial services infrastructure; public sector sensitivity to the private sector; restoration of competitiveness to the mining sector; the economy’s dependence on aid and commodity exports; and the need for a partnership among government, private sector industries, and labor. The council will convene again in November to assess progress and update its recommendations.
The Monterrey Consensus
The UN International Conference on Financing for Development marked an important milestone for the partnership on global development. Held March 18–22, 2002, in Monterrey, Mexico, the conference brought together more than 50 heads of state, 300 ministers, and representatives of international organizations, civil society, and businesses to agree on a common vision of what is required to overcome world poverty.
The conference was widely seen as a success, and the participants adopted the Monterrey Consensus, a plan for sustainable development that defines development priorities and how to achieve them. Although broad development objectives—such as halving poverty by 2015 and achieving universal primary education—had been defined at the Millennium summit, a UN-sponsored conference held two years ago, the Monterrey Consensus focuses on how best to finance the measures taken toward these goals.
The consensus calls for a partnership between developing and developed countries, based on a mutually accountable commitment to promoting growth and reducing poverty. The developing countries must take the initiative to improve governance, pursue appropriate policies, strengthen domestic financial systems, invest in economic and social infrastructure, and provide a transparent, stable environment for potential investors. The developed countries, for their part, must match these efforts by boosting aid; reducing barriers to free trade; pursuing debt-relief measures, such as the full implementation of the enhanced Heavily Indebted Poor Countries Initiative; and helping developing countries build capacity, in terms of both institutions and human capital.
The IMF and other international financial institutions have a coordinating and regulating role to play in the partnership. They can also encourage the more efficient use of development aid and provide the technical assistance that is vital to capacity building.
The next step is to build support for the Monterrey Consensus within the countries that have adopted it, in order to turn its abstract vision into concrete action. Poverty reduction strategy papers will serve as important tools in this process (see page 7), helping countries articulate nationally owned policies consistent with reform objectives. But while the Monterrey Consensus lays the groundwork for future action, details remain to be worked out. One is the question of how to monitor progress toward achieving the development goals—or even how to define progress. In light of these questions, the dialogue continues.
The Tanzania Investors’ Round Table, chaired by President Benjamin Mkapa, held its opening meeting in July 2002 in the presence of Wolfensohn. Preparations for creating the Investment Advisory Council in Senegal before the end of the year are well under way, and several other African countries have expressed interest in launching their own IACs.
These councils are intended to promote dialogue between the government and senior executives of local and international companies.
IMF and World Bank staff plan to attend future IAC meetings as observers and offer assistance and support where needed. The two institutions’ resident offices stand ready to cooperate with IAC working groups and provide information. The IMF and the Bank will also consider any technical assistance requests related to the councils’ work, especially for follow-up implementation needs and capacity building in their respective areas of expertise.