Chapter

12 Summing Up: Taking Stock and Future Steps

Author(s):
Saleh Nsouli
Published Date:
September 2004
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Author(s)
Evangelos A. Calamitsis

This has been a fine seminar on the New Partnership for Africa’s Development (NEPAD). Since it was adopted in 2001, NEPAD has attracted worldwide interest and enthusiasm because of its new vision for Africa and its focus on a new partnership between Africa and the international community. NEPAD has been the subject of several high-level meetings and conferences and, based on the work of its steering committee and designated regional institutions, key aspects of the initiative have been further developed in recent declarations by African heads of state and government. This seminar in Dakar, organized by the IMF Institute in the context of its activities with the Joint Africa Institute, has provided an excellent occasion to deepen our understanding of NEPAD, exchange views on its opportunities and challenges, and discuss how the international community can best contribute to success.

In reviewing the background to this initiative, other seminar participants have noted that Africa’s overall economic performance has continued to lag behind that of other developing regions of the world despite the progress made by an increasing number of countries. Over the past two decades, sub-Saharan Africa’s economic growth in particular has been disappointing, and hence its income gap relative to the advanced economies has widened. There has been an erosion of the region’s share of world trade, even for its traditional commodity exports; and there has been a steady decline in its share of global foreign direct investment (FDI). Reflecting inadequate growth, extreme poverty has spread—with almost half of the region’s population now living on less than a $1 a day. Moreover, although education and health services have improved in some countries, most of the region’s social indicators are still among the poorest in the world. Much more worrisome, HIV/AIDS has assumed alarming proportions in many African countries, shattering lives and seriously constraining growth and development. While most African countries have suffered from factors beyond their control, indications are that macroeconomic policy weaknesses, structural policy failures, and poor governance, as well as political instability and conflicts, have been mainly responsible for Africa’s plight.

Against this setting, African leaders resolved to undertake NEPAD, a new vision and strategic framework for Africa’s renewal. In contrast to previous plans and initiatives, NEPAD centers on African ownership and leadership of the development agenda. African states are assuming primary responsibility for addressing the existing development problems and challenges. At the same time, NEPAD calls for a new partnership between Africa and the international community, a partnership based on mutual obligations and accountability.

NEPAD has three long-term objectives—to eradicate poverty; to place African countries, both individually and collectively, on a path of sustainable growth and development; and to ensure Africa’s full integration and active participation in the world economy. Accordingly, it aims at achieving the United Nations Millennium Development Goals (MDGs) for 2015—notably reducing the proportion of people living in extreme poverty (or on less than $1 a day) by half between 1990 and 2015. In line with these goals, a major objective is to realize and sustain an average real GDP growth of some 7 percent a year for the next 15 years, roughly twice the rate recorded in the second half of the 1990s. While supporting these objectives, other participants have noted that if recent external shocks were not quickly overcome and if elasticities of income of the poor with respect to overall income were lower than envisaged, growth may need to be even higher than targeted to achieve the desired goal of poverty reduction by 2015. This would pose even greater challenges for African leaders and policymakers. Some reports have suggested that on present trends only a few African countries are likely to meet most of the MDGs. Therefore, all African countries and regional institutions urgently need to redouble their efforts, not only to accelerate growth but to promote the millennium goals of poverty reduction, better health and education, gender equality, and environmental sustainability.

To attain these goals, which underscore the multi-faceted nature of poverty, NEPAD’s strategic framework is based on three key elements—first, establishing the political and economic conditions for sustainable development; second, identifying priority sectors to boost growth and fight poverty; and third, mobilizing resources to carry out the requisite programs and projects. In this context, we had a broad exchange of views on NEPAD’s major initiatives.

As regards the conditions for sustainable development, NEPAD places major emphasis on the critical role of peace, security, democracy, human rights, and sound political governance in providing an enabling framework for growth and poverty reduction. While welcoming the progress made in these areas, many participants stressed that political instability and conflicts threaten a number of African countries. Thus, it is imperative for African states, within the framework of the African Union, to enhance their capacity to prevent, manage, and resolve conflicts; ensure peace enforcement; and promote reconciliation and reconstruction. But even more important is the need to establish an enduring foundation for democracy and the rule of law—including free and fair elections; wide public participation in decision-making processes; parliamentary oversight of government activities and accountability; independence and effective judiciary; administrative structures and the civil service; and effective measures to combat corruption.

As an integral part of its overall strategy, NEPAD also underscores the key role of good economic and corporate governance in enhancing growth, reducing poverty, and promoting Africa’s full integration into the global economy. In this regard, there was an intensive discussion of various aspects of NEPAD’s policy framework, as well as of a number of other policies and reforms that are considered essential to achieve Africa’s goals. Although it was recognized that policy options and priorities would necessarily differ across countries, there was a broad consensus on the following elements.

Consolidating sound macroeconomic conditions and strengthening competitiveness. This requires appropriate fiscal, monetary, and exchange rate policies. In this respect, participants considered that fiscal policy would have a particularly important role to play not only in ensuring financial stability and low inflation but also in promoting higher growth and reducing poverty. Therefore, in many cases, it will be essential to enhance tax efficiency and revenue collection through more effective tax policies and administration. It will also be essential to promote appropriate public expenditure management systems that would allocate adequate resources for pro-poor spending, while safeguarding overall fiscal discipline. These objectives would best be attained in the context of medium-term expenditure frameworks or similar mechanisms that can help improve budgetary processes and outcomes.

Promoting trade and regional economic integration. Although significant progress has been made in trade liberalization over the past decade, participants emphasized that African countries could derive greater economic benefits by opening up their economies more rapidly to the rest of the world, particularly by further simplifying and reducing their import tariff structures. But African countries also need greater access to industrial country markets. At the same time, it is important to continue to promote African integration by accelerating ongoing reform and convergence efforts in the context of the existing regional economic communities (RECs), including the Central African Economic and Monetary Community, the West African Economic and Monetary Union, and the Southern African Development Community. By ensuring larger and more efficient economic areas with wider and deeper markets, the RECs would help boost investment, trade, and growth.

Fostering private investment. To overcome existing constraints on private investment, particularly the high risks of doing business in Africa, participants stressed the importance of creating and fostering enabling environments for private initiative. This means one that provides political stability and security; engenders confidence in the sustainability of sound macroeconomic policies and market-friendly reforms; ensures that the infrastructure such as roads, telecommunications, power facilities; and necessary labor are available; and promotes a legal system that safeguards property rights, adequately enforces contracts, and protects healthy competition. Such an environment would help encourage local investors, as well as attract FDI that can bring added benefits through transfers of technology and increased access to international markets. But as mentioned by several speakers, an increase in Africa’s share of global FDI will require not only an absolute improvement in the local investment environment but also a relative improvement relative to competing countries. Thus, while noting the policies and measures already implemented by several countries, participants were of the view that a relatively faster pace of reforms is needed. Moreover, further specific measures would be helpful, including increasing the number of sectors open to FDI, encouraging foreign participation in the privatization of public enterprises, and promoting efficient public/private sector partnerships for the development of priority sectors.

Building capacity and enhancing institutional reforms. These were seen as fundamental prerequisites for the achievement of Africa’s goals, as they affected virtually all programs of action. Therefore, participants agreed that strong efforts are needed to support capacity building in the priority areas envisaged under NEPAD and, in this regard, to make appropriate use of technical assistance from both within and outside the continent. It will also be important to strengthen the credibility of existing institutions, notably those entrusted with ensuring democratic political processes and those responsible for macroeconomic policies and resource management (such as central banks, bank supervision bodies, tax and customs administrations, and audit agencies).

Accelerating sectoral reforms to promote human resource development, bridge the infrastructure gap as well as the digital divide, boost agricultural production and rural development, and protect the environment. In this respect, participants emphasized the need to boost the implementation of basic education programs to achieve universal primary education and to eliminate gender disparities in both primary and secondary education, consistent with the MDGs. They also urged vigorous campaigns to address the HIV/AIDS pandemic through comprehensive programs of prevention, care, and treatment. Furthermore, they stressed the importance of key infrastructure development not only for growth but also for regional and continental integration.

On this basis, there was a wide-ranging discussion of implementation issues and challenges. Participants noted that, to a very large extent the implementation of NEPAD’s strategic framework will depend on the resolve and the steps to be taken by individual countries. Every African country will have to design its own development blueprint, consistent with NEPAD’s goals. In light of individual country circumstances, this will involve setting more specific quantitative objectives, improving governance, pursuing the requisite macroeconomic policies and structural reforms, strengthening institutional capacity for effective program implementation and integration into the world economy, and transforming partnerships with donors through mutual commitments and accountability. At the same time, the regional economic communities and designated institutions, notably the African Development Bank, are expected to play a leading role in implementing regional programs and projects and, more generally, promoting African integration initiatives.

Work on national development blueprints has already progressed substantially. In recent years, many African countries have prepared interim or full-fledged Poverty Reduction Strategy Papers (PRSPs), which are focused on enhancing growth and reducing poverty. As the PRSP approach is country-driven, participatory in nature, comprehensive, result-oriented, and based on a long-term perspective for poverty reduction, it shares many of NEPAD’s fundamental principles. Thus, participants considered that PRSPs or other nationally owned development strategies should serve as the main instrument for incorporating continent-wide priorities into national poverty reduction programs.

Participants considered that NEPAD provided unique opportunities for African countries to succeed by taking full control of the development agenda, working more closely together, and cooperating more effectively with the international community. Strict adherence to NEPAD’s core political and economic principles, codes, and standards, coupled with the implementation of sound policies and reforms, would help attain the desired goals. In this respect, a particularly important ingredient of NEPAD is the African Peer Review Mechanism (APRM), which is intended to ensure that the policies and practices of participating countries conform with the agreed values and standards. As mentioned by several speakers, 12 countries have already acceded to this mechanism, and many more are expected to join. To be effective and credible, the APRM should be free of political interference, it should be conducted on the basis of objective criteria using high standards, and countries should be prepared to carry out the measures recommended by the peer reviews.

Participants also highlighted a number of challenges that NEPAD and individual country programs will have to address, notably the need to ensure wide public support as well as effective implementation and accountability. In this regard, they emphasized the following needs:

  • Broaden and deepen the dialogue with all stakeholders to garner the necessary consensus and support of the desired goals and actions.

  • Make sure that action plans are based on alternative policy choices and a thorough analysis of the social impact of these choices.

  • Provide a comprehensive macroeconomic framework that fully integrates budgetary decisions and available and prospective means of financing.

  • Strengthen the monitoring of program implementation by establishing clear indicators of progress and detailed timetables.

  • Incorporate contingency plans to deal with possible external shocks and shortfalls in financing.

  • Clarify the responsibilities of individual countries, regional economic communities, and designated institutions, with a view to ensuring a coherent and sustained implementation of programs and projects.

The discussions underscored the basic message that African countries and institutions will have primary responsibility for tackling poverty and realizing NEPAD’s common vision for Africa’s renewal. As one African leader recently noted, “There cannot be any doubt that we Africans are the central element of the problem and we cannot but be the central element of the solution.” However, Africa’s development efforts alone cannot ensure the desired acceleration of growth and the achievement of the MDGs. As indicated in NEPAD, to attain these goals Africa will need to fill an annual resource gap equivalent to some 12 percent of GDP. Although this will require increasing domestic savings, the bulk of the needed resources will have to be obtained from abroad. For this reason, African leaders have called for a much stronger, faster, and more comprehensive international support of Africa’s own efforts, including new partnerships with foreign private enterprises.

The international community has welcomed NEPAD and made commitments to support strong African reform programs. Under the Africa Action Plan of the Group of Eight, the leading industrial countries have pledged substantial assistance to promote peace and security in Africa, strengthen institutions and governance, and improve health and education. Moreover, they have made commitments to give greater market access for African products, help implement debt relief packages under the enhanced Heavily Indebted Poor Countries Initiative (HIPC) initiative, and provide increased and more effective official development assistance.

The IMF and the World Bank have also expressed their wholehearted support of the NEPAD initiative. Apart from its financial assistance to African countries, notably under the concessional Poverty Reduction and Growth Facility, IMF has responded to the requirements of NEPAD by intensifying its support of capacity building efforts, particularly by establishing the first of five African Regional Technical Assistance Centers and by enhancing the training activities of the IMF Institute. It is also helping African countries through its work on internationally accepted standards and codes of good practice and the related Reports on the Observance of Standards and Codes, which could in due course serve as important inputs for the APRM. The World Bank is also strengthening its assistance programs in Africa with a view to reducing poverty and promoting sustainable development. And jointly, the World Bank and the IMF as well as the African Development Bank are actively implementing the enhanced HIPC initiative, providing substantial debt relief to African countries and thereby releasing more resources for economic and social development purposes.

While welcoming these initiatives, participants called for further broadening and strengthening of international support for Africa’s development. In particular, most speakers emphasized the need for actions along the following lines:

  • Increasing substantially official development assistance (ODA) to reforming African countries. According to the Global Poverty Report for 2002, prepared by a team led by the African Development Bank, ODA to these countries will need to be raised from the current annual level of about $13 billion to $33–38 billion. In addition, such assistance should be made more predictable; and its effectiveness should be improved by harmonizing lending instruments, streamlining procedures, and better coordination of capacity building efforts.

  • Opening up more widely industrial country markets to Africa’s exports, especially by phasing out trade-distorting agricultural and other subsidies, as well as escalating tariffs and non-tariff barriers.

  • Accelerating the implementation of the enhanced HIPC initiative and ensuring that the debt relief provided is consistent with a sustainable debt position.

  • Actively supporting the production and supply of public goods needed to address the problems of communicable diseases, low levels of agricultural productivity, and environmental degradation.

In conclusion, participants stressed the critical importance of substantial international support to help African countries achieve, or come as close as possible to achieving, the MDGs. But we all recognize that such support will not be forthcoming, or will be much less than needed, if African countries do not deliver on the major commitments embodied in NEPAD’s strategic framework. Clearly, there is urgent need not only for strong mutual commitments, but even more so, for strong actions and accountability to achieve a better future for all of Africa’s people.

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