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IMF Survey Vol.31, No.18 October 2002
Article

African finance ministers: Africa is shifting emphasis to homegrown solutions

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 2002
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The finance ministers concentrated on a few issues that seem sometimes to be inextricably linked: African development strategies, the effect of the Middle East situation on Africa, debt relief, and corruption. Overall, the participants struck a hopeful note, emphasizing Africa’s readiness to take its fate into its own hands. But they also noted that solving Africa’s problems required international cooperation and new partnerships.

Greater ownership of reforms

The perennial question of what is being done to raise the standard of living in Africa was among the first to arise. In response, Rigobert Andely emphasized that Africans are “beyond the stage of waiting, of putting out their hand for help.” This spirit is reflected in the New Partnership for Africa’s Development (NEPAD), the main vehicle for reducing poverty on the continent. Based on trade as partnership, NEPAD is a framework for homegrown development programs through which Africans can cooperate with the Bretton Woods institutions and donors so that everyone benefits. What makes it different from previous initiatives is that it calls for greater ownership of reforms by African leaders; greater commitment among countries organizing the issues; and the introduction of peer review, to be developed by Africans.

Ali Badjo Gamatie appealed for fairness on the trade issue. If the developed countries did not subsidize cotton, he noted, countries like Benin, Burkina Faso, and Malawi would earn $250 million more this year. He understood that an emotional dimension was attached to agricultural products in the United States and Europe, which subsidize their farmers because they can afford to do so. But, Gamatie said, things could be done differently—not on the price side, which should be left to the market, but on the revenue side. Unlike in the United States, European countries use their budgets to provide their farmers with revenue, which leaves prices alone and is less damaging to African commodity exporters.

But is Africa strong enough to compete against the rest of the world if all tariffs and subsidies, including those on the continent, are lifted? Julio Marcelino V. Bessa answered affirmatively. “African countries,” he said, “are prepared to face international competition and have been since their tariff barriers were lowered.” They have the capacity to produce raw materials, basic commodities. They are thus in a position to succeed, to a certain extent, in establishing democracies and reforming structural systems, but also in strengthening productive capacity.

Middle East impact

One questioner noted that U.S. President George W. Bush had met in early September with the leaders of African oil-producing countries. There is a concern, he said, that the United States is looking for another source of oil to lessen its dependence on the crisis-affected Middle East. If that happens, he suggested, Africa will face more competition for aid resources, and those countries that do not have oil will be marginalized in the development process.

Martin Ziguele responded that non-oil-producing African countries had also attended the meeting, whose purpose was less to discuss oil questions than how to bring about peace in central Africa. Central Africa, he said, is one of the continent’s richest regions but one that has, unfortunately, suffered from many crises. Andeley noted that another way that the Middle East crisis would affect Africa was through higher oil prices, given that most African countries are net oil importers. But Africa is producing oil, he said, and if people come to develop it, “we’ll get revenue, and that is good for development.”

Debt relief

Responding to a question about the shortfall in the financing of the Heavily Indebted Poor Countries (HIPC) Initiative, Gamatie observed that the HIPC Initiative is a two-pillar approach—a bargain between two sides. Poor countries, he said, do not simply say they are entitled to debt relief: they must meet certain conditions. Africa has done this and now expects the IMF and the World Bank to do their share. Luisa Dias Diogo denied that the HIPC Initiative was a failure. “We should divide HIPCs into two groups—those that have reached their decision points and are aiming for the completion point and those that have benefited from the initiative. For the first group, she said, the HIPC Initiative needs to be improved and strengthened—in particular, measures are needed to bring countries to the completion point faster. She also called for flexibility on conditions, in terms of countries’ eligibility for the completion point.

No monopoly on corruption

Participants had much to say about corruption, both in Africa and elsewhere. Timothy Thahane opened by saying that debt relief must be separated from corruption. “Debt relief is justified whether or not there is corruption in a country.” That said, he noted that Africans are “committed to eliminating corruption because it is in our development interests.” But this requires cooperation, he said. “What do you do with the international co-corrupters or co-conspirators? We can deal with one partner, but somebody has to deal with the other one. We expect the world to do its part.”

Ziguele acknowledged that Africa has bloody and corrupt regimes, as well as virtuous opposition to them. What happens in Africa, he said, “is that those who believe in democracy and the power of the people meet the periphery, those who believe that there can be shortcuts to power. This is a reality we must address. We must all ensure that African elites, leaders, accept the theory based on respect for the results of elections and for everyone to await their turn.” But, he stressed, “it is not simply African leaders who are corrupt. Proposals for corruption also come from elsewhere. Corruption is a form of gangrene, which is linked to poverty, low salaries, irregularities.”

Concurring with Ziguele, Gamatie said that “one speaks of corruption only in Africa, but Africa is not the only corrupt continent. It is an international phenomenon.” Nonetheless, he acknowledged that Africa needs laws and rules, and these are beginning to take shape.

A new wind blowing?

More than one finance minister noticed a major change in the policies of Western countries and in their attitudes toward Africa, including “a willingness to understand African problems and not see Africa as a single country.” On democracy, Bessa said that all Africans favor democracy but are opposed to being forced to work too quickly and face conflicts of interest. The NEPAD initiative, he concluded, could contribute to the solution of some of Africa’s problems. There is an enormous outpouring of good political will on the part of African countries, and, if NEPAD finds the necessary support among the Western powers, Africa will be able to enter into a period of greater stability.

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