"Meeting the Development Challenges in Africa"

Opening Address to the Joint Conference of African Ministers of Finance and Ministers of Economic Development and Planning by K. Y. Amoako Executive Secretary of ECA
Addis Ababa, 6 May 1999

Mr. Chairman,

Excellency, the Prime Minister of Ethiopia, Mr. Meles Zenawi,

Excellency Mr. Vijay Makhan, Assistant Secretary-General of the Organization of African Unity, representing Dr. Salim Ahmed Salim,

Your Excellencies, Ministers of Finance and Ministers of Economic Development and Planning,

Honourable Heads of Delegations,

Dear Colleagues from other nations and organizations,

Distinguished Guests,

Ladies and Gentlemen,

I would like to express warm greetings to all of you on the occasion of ECA’s first joint meeting of Ministers of Finance and Ministers of Economic Development and Planning. Combining these two eminent groups of Ministers seems a natural development given the necessary interaction between them and the key areas of responsibility they share.

Many common opportunities and challenges face these vitally important ministries in each of our countries. In this same vein, I welcome the Governors of Central Banks. Our deliberations will be enhanced by your participation.

Because of a last minute schedule conflict, His Excellency, Mr. Alpha Konaré, President of the Republic of Mali is not able to join us. He sent his regrets and wished us well at this meeting.

As on previous occasions, we are delighted and honoured that His Excellency, Mr. Meles Zenawi, Prime Minister of the Federal Democratic Republic of Ethiopia, has been able to join us today, and particularly pleased that he gave such an eloquent and insightful statement covering many of the key issues underlining the themes of this Conference.

Mr. Prime Minister,

May I again thank you for your continuing support for the work of the Commission.

There are many other eminent people in this audience. Permit me to extend a special greeting to Mr. Rubens Ricupero, the distinguished Secretary-General of UNCTAD, and to thank him for the outstanding work UNCTAD is doing under his leadership in focusing special attention on some of the most critical issues affecting Africa.

I would also like to say how pleased I am that her Excellency, Ms. Eveline Herfkens, Minister of Development Cooperation of the Netherlands will be joining us this afternoon. Minister Herfkens is making very special efforts to join us and will be giving us her perspectives on aid effectiveness. I welcome as well, the other panelists and special experts who are here with us, and, who also will enrich our deliberations.

Mr. Chairman,

In addressing you today, I have a traditional obligation to assess the recent past in Africa’s economic performance and to give you a picture of where we are today. I do so now with special regard, recognizing that this Conference of Ministers is the last to take place before the Millennium. What better time to take stock of the past and present while thinking about the future?

In sharing my assessment with you, I am drawing upon ECA’s recently released Economic Report on Africa, which introduces many new ways of measuring our continent’s economic performance. These additional measurements include rankings of overall economic performance by African countries and indices of policies and economic sustainability as they relate to prospects for reducing poverty.

Our review of the recent past indicates that African countries have made significant progress towards economic and political liberalization. This, in turn, has resulted in very encouraging growth performance during the past decade, particularly over the past four years. We have seen an increasing focus on governance and public sector accountability; an increasing role for the private sector; the development of civil society organizations; and a clear growth in the number of elected governments. These accomplishments are still fragile, but they are largely in place.

But despite this positive story, economic growth remains far below the level required to make any meaningful dent in poverty. Four out of ten Africans live on less than $ 40 per month, and many others have insecure lives just above this poverty line. Thus, in ECA’s view, poverty reduction must remain the long-term overarching development challenge for Africa.

Our Report concludes that Africa’s macroeconomic performance over the past four years, averaging 4.5 percent GDP growth per annum, has laid a good foundation for further growth. But while commendable, we cannot afford to be complacent because the continent’s growth slipped to 3.3 percent last year. The margin of safety in our growth is still too thin.

Our economic growth rate needs to be increased substantially and made sustainable in order to meet real poverty reduction targets.

To reduce poverty in Africa by half by the year 2015, a goal ratified at the World Summit for Social Development in 1995, will require a 4 percent reduction in the number of people living in poverty each year.

The minimum requirements to achieve this goal include:- broad-based economic growth; a reduction in gross inequalities; and, an average growth rate of at least 7 percent per year.

I will turn to the financial implications of a broad-based attack on poverty in awhile, but let me first turn to some key dimensions of reducing poverty. I believe that there are eight factors that deserve particular attention:

First, integration of population, environment, and science and technology policies into national development strategies. Too often these factors are tangential to core policies and programmes rather than integral to better assure sustainable development and food security.

Second, promotion of investments in the social sectors that target and reach the poor. These investments include education, health and employment-generating programmes. They ensure social development and a chance to improve the quality of life for Africa’s peoples.

Third, the HIV/AIDS epidemic has now become a fundamental survival factor. That is why in this Conference you will hear a special presentation from the UNAIDS Executive Director, Dr. Peter Piot. He will discuss the economic and social impact of AIDS and the actions African authorities and our international partners should take to assure that the epidemic does not overwhelm our hopes and prospects.

Fourth, there is a need for concerted action to address the very pronounced gender dimension of poverty in Africa. We must ensure that gender equality forms an integral part of Africa’s response to today’s and tomorrow’s development planning.

Fifth, every effort must be made to tap into the global system of information and knowledge. We must build the capacity to use information technology to help us meet our development challenges.

Sixth, regional integration is essential to international competitiveness. Our policies must put intra-regional integration on a parallel track with active participation in the global economy. As I stated in an address last year to your colleagues at the OAU Council of Ministers: "Whether or not to integrate into the world economy is a false choice… We must integrate.

But we will reap far greater rewards from integration into the world economy if our own house is integrated first. Therefore, we should choose actions that accelerate African integration, with the political will and selectivity of actions required."

Seventh, we Africans must bear the responsibility for acting on our own behalf. We can learn from governance experiences elsewhere. But, Africa has its own experiences, its own best cases, and its own storehouse of culture and governance to draw on.

and,

Eighth, conflict is the enemy of development. There are serious post-conflict development crises that require solidarity. But we would also be wise to invest a lot more in conflict prevention to stop the destruction of societies.

One of these factors, HIV/AIDS, threatens to wipe out all the gains of development and then some. The other factors are neither new nor startling. All these factors are essential but are often been driven out by the urgent.

What is different at this time is that there is now sufficient growth in many countries to permit policy makers to integrate and imbed these eight fundamental factors in core national planning. Nations, which act on these factors, will insure the sustainability of their growth, and probably their political stability as well.

This brings me to the theme of this Conference: the challenge of financing development in Africa.

Even if the right policy balance and priorities are attained, we still face significant financing challenges requiring sophisticated responses.

I approach our Conference theme mindful of another one of our key findings. To reduce poverty by half by the year 2015:

    • An average growth rate of 7 percent per year is required;
    • That growth rate requires an investment rate equal to 33 percent of GDP;
    • Towards that level of investment, we have domestic savings of 15 percent and ODA of 9 percent;
    • This leaves an investment gap equal to 9 percent of GDP.

Thus, a special dimension of our analysis is to better understand the options that governments have in meeting the shortfall.

In meeting this challenge, Africa and its development partners must view all our resource flows -- aid, debt, investment and trade -- in a far more holistic manner than we usually do.

We will pay considerable attention, at this conference, to the actions that policy-makers can take to promote domestic resource mobilization, reverse capital flight and attract foreign direct investment.

Since our internal resource mobilization, efforts while critical, can only go so far, we must pay special attention to the external sector.

Uppermost these days, is Africa’s unpayable debt. I will discuss this issue in a few minutes.

Another element in this holistic approach is aid. While there is a need to reduce dependency on aid, aid itself should not be reduced. In fact, aid levels should be increased because of the improving policy environment across Africa.

Over time, aid should constitute a smaller proportion of total financing requirements. To ensure sustained aid flows, we need better strategic cooperation between donors and Africa. We must strive for greater aid effectiveness, to give confidence to donor governments and their parliaments that we are more worthy of development support; and that aid agencies themselves are worthy of support.

I am delighted that we have distinguished experts to lead off our panel discussions on the key finance topics.

Mr. Chairman,

Ladies and Gentlemen,

We have crafted this Conference to yield a number of outcomes:

    • Together, we will examine policies for improving aid effectiveness and donor-Africa relationships that derive from an Africa-driven agenda;
    • We will discuss ways of raising domestic savings and curtailing capital flights.
    • We will discuss relief initiatives now on the table including several from recent G-7 countries and the ideas being discussed within the UN and the Bretton Woods Institutions. I must comment that of all the finance issues before us, debt is the one most likely to move soon. I believe a the increasingly realistic partner community will be more receptive to a clear position from Africa.

Therefore, I urge us to seize this time together to work towards the best possible position on resolving Africa’s debt crisis. Finally,
    • We plan to consolidate your recommendations and views into proposed common positions to feed into upcoming G-7 Summit and the next Joint Annual Meeting of the World Bank and the IMF.

This is an ambitious set of goals for this conference. But, these are important topics and worthy of our collective efforts.

In the final part of my remarks, I would like to turn, briefly, to the work of ECA, which is also part of your agenda.

In the course of the past week, your intergovernmental group of experts, the Technical Preparatory Committee of the Whole, known as TEPCOW, has undertaken an in-depth examination of all the issues on your agenda. I pay tribute to their very impressive work.

In addition, TEPCOW has reviewed the accomplishments of the Commission over the 1996-98 period, the proposed work programme for the 2000-2001 biennium, and the coordination of the UN work in Africa including, the role of ECA. You will consider their recommendations tomorrow, and I hope you do not mind if I say that I look forward to your approval of their recommendations.

The TEPCOW experts recognized that over the last three years, we in ECA have made significant efforts to sharpen our policy focus, improve our in-house capacities, and both broaden and deepen our partnership with African stakeholders and external partners. As a result, we feel that we are positioned today to serve Africa better and to contribute to the realization of Africa’s considerable development potential.

The work we have accomplished so far in our renewal gives us confidence about the programme of service to Africa we are planning and carrying out. We believe that our programmes have responded to the advice we have received from you in recent years.

I will not review a list of our new programme initiatves, but I do want to mention one.

We are launching the African Development Forum with the support of our sister organizations, the OAU and ADB. This innovative activity will foster heightened leadership of the continent’s development agenda by Africans, facilitate consensus building among the key stakeholders of Africa’s development, and foster partnerships which respond to a vision of development shared by Africa’s stakeholders.

The first meeting of the Forum will be next October on the topic of "The Challenge to Africa of Globalization in the Information Age." The Forum will be more than discussion. It is also meant for action. Countries will come with national action plans to accelerate their information and communications infrastructures. The plans will be presented at the Forum and implemented in the year 2000 with assistance from ECA and its partners.

In concluding my remarks today, I want to emphasize that we must have ambitious goals as we enter the 21st century. Part of leadership is to inspire people, by setting goals for worthy ends; and by working towards those goals in ways that demonstrates progress.

We can quibble about when individual countries will have achieved the desired reductions in poverty, but in this setting we can at least better understand what it will take to make major progress towards those goals.

I realize that in endorsing the poverty reduction goals of the Social Summit, we buy into goals which the World Bank has just said will be difficult to achieve even for South-east Asia.

But as we say: "A hungry man never says that the coconut shell is too hard."

Mr. Chairman,

I thank you and all the participants at this Conference for joining us for bold thinking and honest consultation on a fundamentally important theme. We have a lot to do in this Conference and I look forward our discussions.

Thank you.