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African finance ministers press conference: Rich countries urged to provide more aid, trade, and debt relief and less hypocrisy

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
May 2004
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On April 24, four African finance ministers briefed the press in Washington, D.C., on some of the main development challenges facing Africa and raised concerns that insufficient progress had been made in increasing Africa’s voice at the Bretton Woods institutions. During their discussion, Bohoun Bouabre (Minister of Finance for Cote d’Ivoire), Elzubier Ahmed Elhassan (Minister of Finance and National Economy for Sudan), Andre Philippe Futa (Minister of Finance for the Democratic Republic of Congo), and David Mwiraria (Minister of Finance for Kenya) emphasized the obstacles rich countries’ policies pose to Africa’s ability to meet the UN Millennium Development Goals (MDGs).

All four participating ministers cited shortfalls in development aid as the main reason African countries are not making sufficient progress toward the MDGs. Elhassan said that “African countries are committed to stay the course of adjustment and reform, but they need the full support and the commitments made in the Monterrey Consensus to increase concessional aid and debt relief and to foster technology transfer.” Futa added a request that the Bretton Woods institutions, together with the Group of Eight and Group of 15, reconsider the amounts of aid that need to be disbursed in order to “start development with multiplier effects.”

Expanded trade was also cited as a critical priority for Africa to diversify its economies, increase growth, and make progress toward achieving the MDGs. Mwiraria and Futa echoed Elhassan’s lament that rich countries’ highly discriminatory trade barriers pose a continuing impediment to development. Notably, the systematic escalation of tariffs on higher-value imports from developing countries impedes private sector development and export diversification in low-income countries. Mwiraria singled out agriculture as a sector in which African countries are competitive yet nevertheless face severe constraints that make it difficult for them to compete fairly in world markets.

Incoherence and hypocrisy

The finance ministers also raised a concern about the lack of coherence in developed country policies. All too often, contradictions in policies mean that support for development provided in one area is defeated by actions in another, noted Elhassan, citing the example of the $58 billion in aid pledged by Organization for Economic Cooperation and Development (OECD) countries that is undermined by five times as much protection provided to these countries’ domestic agricultural producers. These subsidies by developed countries lack any economic rationale, Futa argued, and a dialogue “based on true partnership” would require that developed countries stop this “hypocrisy.”

“Many African countries are implementing reforms to strengthen their macroeconomic frameworks and ensure that economic decisions are structured and based on policies that are truly adapted to today’s world,” remarked Futa, responding to a journalist questioning whether foreign investors are deterred by conflict on the continent and a poor business environment. But instability in the Middle East and the reconstruction of Iraq are negatively affecting Africa directly and indirectly, explained Elhassan, sidelining Africa’s development priorities and slowing both aid and foreign direct investment flows.

And while foreign direct investment is essential for poverty alleviation and job creation, progress will not be made unless the debt problem is dealt with, Elhassan noted. In underscoring the additional assistance required for African countries to meet the MDGs, the four ministers drew attention to the need for further action to decrease the debt burdens of African countries, including those not eligible to participate in the Heavily Indebted Poor Countries (HIPC) Initiative. A second key area in which African countries are looking for support from the World Bank and the IMF is in developing the means of financing their economies, taking into account that “the traditional financing tools do not always work in Africa,” Bouabre said.

Strengthen Africa’s voice

Calling for a more effective and representative voice for Africans “at the table where decisions are being made,” African finance ministers urged the setting of a clear timetable to speed completion of work toward enhancing their countries’ voting power and participation at the IMF and the World Bank. This would also significantly facilitate the search for solutions to the region’s problems, emphasized Elhassan, who expressed disappointment at the lack of visible progress so far.

Elhassan was joined by Bouabre and Futa in calling for an increase in African countries’ basic votes in the IMF and the World Bank to at least their original level in the early 1960s, as well as additional representation on the Boards of Executive Directors. Because the quality and availability of economic data can be poor in some African countries, Futa noted, it may be difficult to get a true gauge of Africa’s position within the Bretton Woods institutions. Futa argued that other criteria should be taken into consideration, such as Africa’s population—both current and projected—in determining the region’s voice within the international financial institutions. The participating finance ministers also urged the IMF to create an additional position of Deputy Managing Director with a portfolio focus on Africa and to increase recruitment of qualified African professional staff at the IMF and the World Bank, especially at senior levels.

These recommendations to increase the voice of African countries in the IMF were reiterated by African finance ministers during a meeting held the following day with Rodrigo Rato, Spain’s former finance minister and a candidate for the post of IMF Managing Director. While stating that he and the other finance ministers from sub-Saharan African countries welcomed the nomination of Rato to the post, Elhassan expressed hope that the IMF’s new Managing Director would make frequent visits to the region and hold meetings with the African constituencies to better understand the enormous problems they face.

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