IMF Survey: What are your impressions from your first trip as Director of the African Department?
Bio-Tchané: My most marked impression was how passionate the Managing Director is about Africa’s development. He is an Afro-optimist! The trip was organized around four themes: strategies to fight poverty, progress in achieving the UN Millennium Development Goals, private sector development, and the role of the financial sector. In our workshops, we had participants from all walks of life: cabinet ministers, parliamentarians, bankers, businesspeople, and representatives of women’s groups, nongovernmental organizations, and trade unions. They all spoke frankly, and Köhler listened to what they had to say and gave clear messages. I am convinced the poverty reduction strategy paper (PRSP) process has taken hold, with all parties committed to fighting the scourge of poverty. I am also convinced there is a new momentum in Africa toward self-help and good governance, with a new generation of Africans ready to give the best of themselves.
IMF Survey: Do you plan to visit specific countries?
Bio-Tchané: Yes, indeed. This department covers 44 countries. I would like to learn firsthand what’s going on in each of them to better serve them all. I am going to the Annual Meetings of the African Development Bank in late May, which is attended by most finance ministers. Then, my first planned trip will be to some countries in west and east Africa.
IMF Survey: You met some of the newly elected African leaders, and they announced major campaigns for good governance, accountability, and a greater role for the private sector. How do you see the IMF’s role in reinforcing their work?
Bio-Tchané: The primary responsibility for good governance, accountability, and putting the private sector at the forefront of economic development rests with the country authorities. The IMF will continue to be involved, with policy and technical advice to help them with implementation. These leaders have mentioned that capacity constraints are one of the many hurdles they are facing. That is why the Managing Director decided to open two technical assistance centers in Africa (AFRITACs), which will help countries in east and west Africa build local capacity for economic and financial management.
IMF Survey: You also attended the inaugural meetings of the Investor’s Advisory Council in Ghana—a new initiative where private business executives and top government officials are trying to improve the business climate. What are your impressions?
Bio-Tchané: The inaugural session was a huge success. The Council consists of 20 senior executives selected by the Ghanaian authorities from local and international companies drawn from various sectors and regions. It identified a number of problem areas—including inadequate regulatory and legislative frameworks; weaknesses in the energy, financial, telecommunications, and information technology sectors; liberalization that was sometimes too rapid and effected without a thorough study of all the consequences; and the need for sensitivity on the part of the public administration to private sector concerns. Having witnessed the exchanges, I am convinced that a better dialogue between governments and companies will result in concrete steps to attract investment. But again, implementation is crucial.
IMF Survey: How will your experiences in negotiating with the IMF as a minister of finance influence the direction you would like to take the department?
Bio-Tchané: I cannot isolate the impact of that single element in my professional career, but based on that experience I would make four observations. First, I see the need for improved communication between the IMF and country authorities. Second, I see the need for IMF staff to engage more actively in discussions on policy issues with the authorities while providing information on the costs and benefits of the alternatives. Third, the country authorities should prepare for IMF missions more efficiently and supply the requested information in a timely manner. This will make room for an increased focus on policy discussions. Finally, I see a more prominent role for IMF resident representatives, particularly in terms of policy advice, which will help the authorities make informed decisions, and thus contribute to enhancing ownership.
IMF Survey: Benin is seen in many quarters as a success story in its implementation of its IMF-supported programs. What was the source of that success?
Bio-Tchané: Experience with program implementation in member countries teaches us to be careful about labeling a country a success story. Each country has unique characteristics that contribute to strengthening ownership to carry out needed reforms. Even within one country, some factors may play a role in bringing everybody together, or preventing those in charge from securing that support. This is an important issue today in all countries implementing IMF-supported programs, because putting in place reform measures necessarily creates winners and losers in the population.
In Benin’s case, one of the most important factors was the authorities’ determination to maintain the momentum of reforms. Although it was difficult at times because of the short-term political and social costs of the reforms, the consensus was secured because the majority of policymakers knew that this was the only way to ensure that the country wouldn’t return to the difficult times of the early 1980s, when the banking system collapsed, investment dried up, and the government was no longer able to meet its obligations on wages, domestic suppliers, or external debt. Moreover, the government developed a policy of communication with its people, as well as with the representatives of stakeholders, like trade unions. There was a clear understanding, however, that the government was responsible for the final decision.
IMF Survey: In recent years, it seems that many elements have been coming together—from Libreville to Group of 7 initiatives to the New Partnership for Africa’s Development (NEPAD)—that should give Africa a window of opportunity to reignite development. Do you see a half-full or a half-empty glass?
Bio-Tchané: I am optimistic by nature; therefore, I see the glass as half full. Even the most vocal “Afro-pessimists” will tell you that Africa has a lot of potential waiting to be realized. Although for most countries development is constrained by many economic and noneconomic factors, I look at the future with a lot of hope. One message that came out of recent meetings of heads of state with the Managing Director and the President of the World Bank is that most African leaders are more determined than ever to find sustainable solutions to their countries’ problems. They are also aware of the challenges, and NEPAD is an important initiative in this context.
Africa’s economic prospects depend on the implementation of sound macroeconomic policies and reforms that are needed to tackle not only short-term economic and financial difficulties, but also medium-and long-term development challenges. For these efforts to be effective, they have to be supported by Africa’s development partners, through technical and financial assistance, as well as through trade measures—including sharply curbing subsidies and increasing access to industrial countries’ markets. It is true that most of our countries need to diversify their economies further to fully benefit from greater market access. But, even now, we have seen how the U.S. African Growth and Opportunity Act and other initiatives in Europe can make a difference for countries like Mauritius in terms of higher exports and jobs. Africa’s growth prospects will also be influenced by its ability to integrate itself into the world economy in order to benefit from globalization.
IMF Survey: A few years ago, many friends of Africa were saying that it had an image problem—whether it was war, corruption, or disease. Has its image improved any? What can the IMF and others do to help, especially with regard to attracting investment?
Bio-Tchané: One must go beyond labels and problems and focus on solutions. Having said that, we have seen a lot of progress in economic performance in many countries over the past six years or so. Where real commitment to policy reform has existed, the results have been encouraging in terms of macroeconomic stabilization, better financial management, institutional reforms, and enhanced governance. Just look at Benin, Botswana, Burkina Faso, Cameroon, Ethiopia, The Gambia, Mauritius, Tanzania, and Uganda. It is clear today that Africa as a region was able to withstand somewhat the impact of the global economic slowdown in 2000–01 because of the benefits derived from these efforts.
As for attracting private investment, this requires a number of preconditions—including a stable macroeconomic and political environment, efficient and strong financial systems, good infrastructure and communications systems, well-functioning legal and judicial systems, an efficient civil service, and appropriate policies. As it happens, these are some of the elements of IMF-supported programs. Hence, through these programs, as well as through technical assistance and policy advice in the context of our Article IV consultations, the IMF has been helping countries create an investment-friendly environment.
IMF Survey: What role do you see the IMF playing in the battle against corruption?
Bio-Tchané: There is ample evidence that a lack of economic governance—such as nontransparent budgetary procedures, corruption, or rent-seeking—hurts investment and, thus, economic efficiency and growth. Similarly, a lack of noneconomic governance—such as a lack of the rule of law, efficient institutions, or accountable systems of governance—hampers countries’ economic performance. A lack of governance impinges on variables of relevance to the IMF’s mandate, so we do have a role to play. Don’t forget that in 1966, the IMF’s Interim Committee adopted the declaration of “Partnership for Sustainable Growth,” which specified that the promotion of good governance, including fighting corruption, was essential to the prosperity of our member countries.
IMF Survey: How can the IMF play a fruitful role in parts of Africa in conflict or just coming out of conflict?
Bio-Tchané: The two cases are not similar. When there is an open conflict, there is not much the IMF can do, given its mandate. But in postconflict cases, the IMF has been able to help countries financially through its emergency postconflict assistance and through technical assistance. In some cases, the post-conflict assistance was subsequently replaced by a staff-monitored program and later by our concessional loan facility, the Poverty Reduction and Growth Facility (PRGF), along with access to debt relief under the Heavily Indebted Poor Countries Initiative. There are other cases where failure to clear arrears to multilateral creditors, including the IMF, prevented postconflict countries from securing needed external assistance. The IMF is ready to help these countries as soon as possible, when the authorities have shown they are serious about implementing needed measures. The current example is the Democratic Republic of the Congo, where the authorities have established an impressive track record through a staff-monitored program that would lead to an arrangement under the PRGF.
IMF Survey: In the past two years, there has been a major initiative to help reduce poverty through the PRGF and PRSPs. How useful is the PRSP process?
Bio-Tchané: The PRSP process has been a major undertaking for all involved. The recent review of this process was quite telling in terms of lessons and areas to be strengthened. We have to remember that PRSP countries have limited resources and administrative capacities. When the IMF and the World Bank initiated the PRSP process in 1999, some countries already had poverty reduction strategies that were more or less elaborated. For others, it was totally new territory. So, not surprisingly, the road has been bumpy, which has translated into varying levels of quality in the early interim-PRSPs and PRSPs. Overall, there has been encouraging progress, and to me, the first lesson learned from the review is the consensus that the PRSP process is a good one and that it should continue. Most important, it develops or strengthens ownership, and it gives stakeholders a chance to contribute to the policy debate.
IMF Survey: How do you answer critics in Africa who claim the IMF imposes its policies on countries?
Bio-Tchané: I would tell them things are never as simple as they look. Negotiating a program is a complex process for countries and for IMF staff. It is true that the review of IMF conditionality revealed that it was intrusive at times and that streamlining was necessary, particularly in the area of structural reforms. It is also true that a greater involvement of country authorities in policy discussions, including on pros and cons of proposed courses of action, would be desirable. As the PRSP process takes hold, it will help dispel the impression that the IMF imposes policies on countries. It is also important for those critics to realize that financial and economic problems, as well as development challenges, have to be tackled in a comprehensive way, with or without IMF assistance. In addition, the IMF is listening more to a wide range of stakeholders, as part of recent efforts on openness and transparency.
IMF Survey: Does Africa have a strong enough voice in the IMF, at both the Executive Board and the staff and management levels?
Bio-Tchané: Distinctions should be made between these three levels. Management gives Africa’s concerns, like those of the rest of the IMF’s membership, the utmost attention. Moreover, the Managing Director is an excellent spokesperson for Africa. At the staff level, the IMF’s 2000 diversity report raised some issues that need to be analyzed. However, I have only recently become head of the African Department; it is a bit premature for me to tell you what I would like to see happen. As for the Executive Board, the issue is related to Africa’s quota. The Board held discussions in the context of the Twelfth General Review of Quotas, and many Executive Directors were willing to look into ways to improve Africa’s representation. If the next general review of quotas results in stronger African representation, this would be an encouraging sign for the continent and a further recognition of adjustment efforts carried out by many African countries in recent years.