Statement by H.E. Ato Meles Zenawi,
Prime Minister of the Federal Democratic Republic of Ethiopia
on African Challenges and Visions for Development
at the First Meeting of the African Development Forum
organized by the Economic Commission for Africa (ECA)

24/10/99

Mr. Chairman,
Excellencies,
Invited Guests,
Ladies and Gentlemen.

I would like from the outset to thank Dr. Amoako and the Economic Commission for Africa for having taken the initiative to organize this Forum which I believe is very timely and extremely useful. There is no greater priority for us here in Africa at present than doings whatever we can to identify and address the challenges we face as we try to ensure sustained development in our Continent. I am therefore grateful to all those who have traveled long distances to join us at this Forum. I am pleased to welcome you all to Addis Ababa.

Mr. Chairman,

Over the past few years we have seen some encouraging developments in our continent in economic growth. We wish to believe that these represent indications --no matter; how small-- that there are indeed possibilities for reversing Africa's economic decline and the marginalization of the Continent in the global economy which is a great danger we all face -- a danger which has adverse implications not only for us Africans but, if looked at with the necessary wisdom and broadmindedness, even for others as well.

But seen against the backdrop of what is required to reduce the level of poverty in the Continent by half by the year 2015, what have been achieved in Africa over the paste four years remain not only unsatisfactory but they are far from being legitimate causes for hope. All the more so because one cannot say for sure that the conditions are available at present for Building on these modest achievements and for enhancing and accelerating them further.

Africa's conditions thus remain precarious and without fundamental rethinking of our development path it would seem unlikely for Africa to be able to manage bringing about meaningful change in the economic domain. Even if the other indispensable conditions for development such as peace have been realized, Africa would still have to try from a desperately weakened position to overcome the various challenges it is facing in the present globalizing world.

Mr. Chairman,

There is no doubt that the destinies of African countries -- not only in the economic area but also politically and in other spheres as well, including their very viability as organized and law-based societies - is going to be determined by the on-going process of globalization and by its various implications for African societies.

Talking about globalization, Mr. Chairman, the choice Africa has is not whether it should be part of the global economy or not. It is already part of it. It will wiily nilly be even more enmeshed in that process. This applies not only to Africa but no matter how remote or isolated they might be, to all parts of the world. We would be naive if we were to underestimate the reach of this process and its capacity to penetrate and embrace all aspects of the lives of societies, including the cultural sphere.

But being part of the global economy does not necessarily mean -- as indeed our conditions at present demonstrate in so vivid and palpable a manner -- that one has become a productive part of the process and in position to become a productive part of the process and in a position to draw benefits from it.

If present conditions remain unaltered and the trend we see were to continue, then being more enmeshed within the globalized economy would only mean that by force of circumstances, Africa would be made to stay on the margins of the global economy, not as an integral part of the process, but as a part which, having been excluded from benefiting from the process in a bona fide manner, would have to fall back on other options likely to be opened up by those engaged in extra-legal business activities, ranging from crime syndicates to drug traffickers. No doubt these are types of business whose activities continue to flourish with a mind boggling capacity in mobilizing resources. The fact that, according to UNDP's 1999 Human Development Report, illegal drug trade-represented in 1995 8% of world trade indicates the enormity of the challenge faced by the international community in this regard.

This no doubt must highlight that Africa's dilemma in development has adverse consequences, not only for Africa but also for others. Our challenges therefore must be viewed as also the challenges of members of the global village in general.

Mr. Chairman,

Under these circumstances, the vision that we have for Africa for the next century will remain miserably deficient if we fail to find ways and means of creating the necessary conditions for Africa to share the benefits of the global economy in an equitable and fair manner.

On the part of Africa, Mr. Chairman, there is little doubt that for it to be able to take whatever opportunities there are in the global economy, it has no option but to do whatever it takes to ensure having a vibrant private sector. By this I mean, first of all, a vibrant domestic private sector. The reason for emphasizing the role of domestic private sector is neither philosophical nor political. It is merely practical.

In the first instance, it appears obvious that unless the domestic private sector leads the way with enthusiasm and confidence, it is unlikely for foreign investment to take part in our economies with any degree of effectiveness. Moreover, it must be assumed from experience that for growth to be sustained and the momentum of economic activity to be maintained it is vital to have robust domestic private sector.

Thus the best option we have for taking advantage of available opportunities in the global economy is through encouraging, the creation of a dynamic domestic private sector which would spearhead, supported by foreign investors, the efforts aimed at economic growth and development.

Mr. Chairman,

There is also another element without which all our efforts at ensuring healthy and sustained growth are bound to fail. This relates to the role of the state. For a variety of reasons' the role of the state in economic development has come to be cast in recent years in negative terms, not however always without justification. But damage can and have been made by going overboard on this issue.

It can hardly be doubted that the role of the state is in - (act critical in many areas and in order to create the proper conditions for the private sector --both domestic and foreign -- to make their contribution for growth and development. Political stability and the rule of law cannot be made available and fostered without the critical role of the state. Weak states are hardly in a position to do that. These are in fact the minimum that the state is expected to do. Going a little further, on it falls the responsibility of creating a stable macro-economic situation. Moreover, the state can hardly be considered to be effective if it failed, wherever necessary in co-operation with the private sector, to put in place the necessary basic infrastructures and services for allowing meaningful economic activity to proceed.

There is yet other additional task that we should expect from the state. It should ----and effective states have historically carried out this responsibility----identify growth bottlenecks and having done so, initiate and carry out policy- or investment-intervention.

In short, it appears to me that it is not weak states, let alone failing states, which can be considered growth-friendly but rather robust states which can carry out their functions in all areas o f societal needs with effectiveness. This does not take away anything from the need for states to be legitimate and democratic. They can be both. It follows therefore that enhancing the capacity of the state must be considered in Africa one of the critical challenges we face in addressing the daunting tasks of economic development and in overcoming the diverse obstacles we Encounter in the global economy.

Mr. Chairman.

In light of all this, it appears to me and to many others that the path to development that has so :far been encouraged by international financial institutions and more or less accepted willingly by governments in Africa, has been far from being effective.

Their economic prescriptions have proved to be narrowly focused on liberalization and on macro-economic stability. The orthodoxy has thus been devoid of comprehensive vision, which is so essential for ensuring durable and sustained economic growth and development -goals which can be achieved only through structural- transformation. This economic model chosen as a panacea for Africa's economic predicament has failed to handle issues of liberalization and macro-economic stability within the context of structural transformation. These issues are normally taken as an end in themselves. The end result has in fact proved to be that we have neither meaningful growth and transformation nor sustained liberalization and macro--economic stability.

One of the basic features of this model is in effect the sidelining of the transformative role of the state. African countries are not assisted in finding ways of enhancing the capacity of the state and in addressing its weakness for carrying out its transformative function with some degree of effectiveness. Instead the policy prescriptions encouraged by international financial institutions has had the effect of weakening the state and of ensuring its emasculation. A radical change in policy prescriptions with respect to the state is thus a condition for any meaningful growth and development in our Continent.

But a change of attitude internationally in this regard can hardly be expected to evolve unless it is fully realized that Africa's growth and development is not only in the interest of Africa but also, as I have said earlier, in the interest of all those who presently exercise monopoly over the benefits of globalization.

This realization must lead to the conviction that inputs made towards Africa s development are not matters of philanthropy. The imperatives of interdependence must lead to the jettisoning of the view that sees affording Africa better opportunities for development as a gesture dictated by geopolitical considerations or by the need to maintain the status quo or to avoid total breakdown..

Africa, Mr. Chairman, is bound to remain linked to the global economy. The question is whether that linkage will-be based on productive or non-productive activities, on legal and on bona fide activities or on extra-legal ones. The danger is that out of desperation and in the absence of fairness and of equity the possibility may not be excluded that the options left for Africa might lead it along a path which is good neither for Africa nor for the international community at large.

Mr. Chairman,

The time has thus come for us to call for a radical change in Africa s development paradigm. The existing one is seen to be foiling in ensuring the integration of Africa in the global economy in any productive manner. In fact it cannot be relied on even for saving Africa's economy from total breakdown.

What we need to do under these circumstances, it seems to me is to review our development paradigm which of necessity would require an overhaul of the relations between the international financial institutions and the donor community on one hand and Africa on the other. Without this it is unlikely for Africa s future to be bright at all. This is our challenge as we prepare to enter the next century.

I would like to conclude by expressing the hope that all concerned will be working for the realization of this objective. One can in fact start to see some hope in this regard. It appears that at least at the level of the World Bank there are some refreshing ideas ---though fledgling at present---- which aspire to indicate towards new paradigm intended to address most if not all the issues that remain of concern to Africa and to those in similar situations. This is a trend that needs to be encouraged both in the interest of Africa and in the interest of others.

I have no doubt that at this Forum these and other related issues vital for Africa s development would be discussed at length. It is with keen interest that we will all follow your deliberation. I therefore wish you success in your effort and a pleasant stay in Addis Ababa.

I Thank you