Africa News | July 11, 2003
Developed economies must reduce trade-distorting subsidies and improve market access for developing countries, International Monetary Fund (IMF) managing director Horst Kohler has said.
And Kohler has urged developed economies to match rhetoric with action. Addressing the second African Union (AU) heads of state meeting in Maputo yesterday, Kohler said it was critically important to reverse the declining trend of sub-Saharan Africa's share in world trade which he said had fallen to below one per cent when South African and Nigeria are excluded.
But Kohler said it was encouraging that leaders of the world's most advanced economies, the G8, had made a pledge to make the World Trade Organisation (WTO) Doha Trade Round a success. The Doha Trade Round was adopted during the last WTO meeting in Doha, Qatar, to make world trade more fair and equitable. He said developed economies would have an opportunity during the upcoming WTO Ministerial Meeting in Cancun, Mexico in September to implement the pledges they make.
"It is also the occasion for Africa to seize the initiative and articulate a common position, united with a well prepared negotiating strategy," he said. Kohler noted that growth in Africa had been relatively resilient to the global economic slowdown.
He said since the mid-1990s, economic growth in sub-Saharan Africa had averaged well above three per cent per year, as compared to some one per cent in the first half of the 1990s. But Kohler acknowledged that the gains remained fragile.
"And the sober reality is that even this relatively good performance will not suffice to halve poverty by 2015, as envisaged in the Millennium Declaration," he said. Kohler said Africa had the potential of achieving economic growth through the New Partnership for Africa's Development (NEPAD).
But he stressed that for the seven per cent growth per year envisaged under NEPAD to be a reality, a lot needed to be fulfilled. Kohler said it would be vital for Africa to create domestic conditions for growth through sound national policies and ensure that the international environment is supportive of the continent's integration into the global economy.
He said NEPAD was promising because it reflected the broad international consensus reached last year. Kohler said partnership and peer review under NEPAD would foster a critical element of the development process and the ability to learn from each other. He said there were countries like Botswana which could offer lessons on implementation of proven good practices in national policy agendas as well as in regional and international co-operation.
"And most importantly, the people of Africa, not just its leaders, must understand, accept and be involved in NEPAD's implementation,' Kohler said. Citing Benin, Botswana, Burkina Faso, Cameroun, The Gambia, Mali, Mozambique among other countries, Kohler said the countries were ample evidence that countries with prudent macroeconomic policies attain higher growth rates. Kohler said in most of these cases, the strong performance has been within the context of IMF supported programmes.
He said good economic performance had also sustained substantial progress on debt relief under the Highly Indebted Poor Countries (HIPC) initiative. Kohler said in the 23 countries that have reached their decision points, debt service had halved from about 30 per cent of government revenue in 1998 to 15 per cent in 2002 while social spending now amounts to four times as much as debt service outlays. He noted, however that in some parts of Africa such as the Great Lakes region, Liberia, Cote d'Ivoire, continued civil strife had placed a heavy toll on development.
Kohler said the armed conflict in Cote d'Ivoire had caused heavy human sacrifice while its economic impact had stretched well beyond the countries immediately affected. "No effort from the international financial institutions can compensate for these economic, social and humanitarian setbacks," Kohler said.
He said sustained economic growth and poverty alleviation in Africa required all development partners to work together to meet their commitments. Kohler said he had seen much progress in recent years in the efforts to strengthen governance, build sound institutions and to fight corruption.
He said IMF research shows that growth of sub-Saharan African countries would be around two per cent per year if the quality of their institutions would be improved to the average of other regions. Kohler said Africa needs investment and a climate in which the private sector could develop and prosper. He said there were considerable unexploited opportunities in Africa to promote growth through regional co-operation.
Kohler said as the second pillar of development partnership, the international community must also live up fully to its commitments. He said total aid commitments were still below what was needed to reach the Millennium Development Goals.
Kohler said he would continue to urge developed countries to live up to their pledges and their long-standing target of 0.7 per cent of gross national products (GNP) for development assistance. He said this assistance should most of the time be given on grant terms.
Kohler said current aid flows were not only little, but also unpredictable and often un-co-ordinated among donors. He said the IMF remains fully engaged in Africa and was committed to helping African members raise their growth.
Kohler said the country driven Poverty Reduction Strategy Papers (PRSPs) approach had become widely accepted as the operational framework at the country level. But Kohler said there was a need to better define the prioritisation of policy measures proposed in PRSPs.
He said over the long term, the IMF would further tailor its assistance to the evolving challenges facing African countries. Kohler said in overall terms, the IMF had given its African members significant attention in recent years in its policies and decisions.
He said the vision of the AU of economic integration must inspire everyone. "I am optimistic that with persistence, the challenges facing Africa, great as they are, can be overcome," Kohler said.
"And you may rest assured that on your road, the IMF will be a reliable partner."Africa News:
