The ECA Conference of Ministers of Finance and Ministers Responsible for Economic Development and Planning
6^th May 1999, Addis Ababa

Mr. Chairman,
Honourable Ministers,
H.E. Dr. K.Y. Amoako,
UN Under-Secretary- General and
Executive Secretary of the ECA,
H.E. Acting Secretary General of the OAU,
Distinguished Delegates,
Invited Guests,
Ladies and Gentlemen:,

I am pleased to be here with Your Excellencies at the Opening Session of this important annual conference of African Ministers Responsible for Finance, Economic Development and Planning. I welcome you to Addis Ababa with the conviction that your meeting and your deliberation on the challenges we face in financing development in Africa, which is the theme of your conference, would result in concrete proposals and thoughts which would help us overcome and address this source of major impediment to the achievement of meaningful and sustainable development in our Continent.

Mr. Chairman,

We in Africa today are at a very critical juncture in our history. We have opportunities for social revitalization which we can ill afford to squander. The consequences of failure would be momentous and the implications of such a failure would affect not only our economic and social conditions, but our very being as sovereign entities and as proud people.

In the face of daunting challenges we face, particularly in financing our development, it might look hopeless to seek a way out. But we should and we must seek solutions, mostly relying on our own resources and on our resolve and determination, to the obstacles we face to our economic development.

In fact, prospects for development in Africa appear in many ways brighter today than they have been for sometime. There are concrete signs of rising economic growth rates, of increasingly strong commitment to economic reforms, of consolidation of democratic governance in many countries and of growing dynamism of the private sector. The two decade long decline in per capita income was reversed in 1995 and the upturn was maintained upto last year. Though the recovery has not been sufficiently robust to justify overly exaggerated optimism, the improved performance makes it abundantly clear that, with the proper mix of realistic economic policies, hard work and resolve and a sustainable development is not beyond reach.

Having said this, however, it must immediately be admitted that the challenges we face are complex and the task we face to ensure sustainable development, indeed Herculean.

It is precisely for this reason that the theme of this conference is so important and timely. Our prospects for development hinge on our ability to mobilize resources for that task, and our ability to make that mobilization sustainable.

Mr. Chairman,

It would be quite strange if reasonable people do not sometimes disagree and appropriate economic policy for countries in similar circumstances. But in all cases, despite the circumstances, there can be no better alternative and there can be no better option for countries to ensure wholesome development, than relying on their own resources, including in mobilizing resources for development. Current realities also make it abundantly clear that this approach is by far more realistic and appropriate. With the decline in external resources inflow in Africa, and little prospects for any major and immediate improvements in accessing external development assistance, particularly in the form of ODA, African countries have little option but to rely on our own domestic mobilization of resources for development.

The challenges we face here lie in our abil8ty to enhance domestic saving, in the management and judicious allocation of our resources and in making available for our private sector the appropriate legal and policy framework to encourage investment initiatives.

There is indeed an enormous amount of word that needs to be carried out by Governments to create the proper context for development, including the building of infrastructures, the development of human resources and skill base and other tasks relevant to encouraging domestic investment. In this context, it is only realistic and proper to draw the appropriate lessons from the experience of North East Asian countries on how to ensure reasonably sustainable development through the mobilization fo domestic resources.

There is also little doubt that our ability to encourage Foreign Direct Investment, which has now become the most dynamic form of external resources, depends on how well we do through our own efforts to create viable and sustainable economic conditions and to encourage the development of a vibrant domestic private sector.

It is a well known fact that our Continent as a whole has not been beneficiary of the dramatic increase in the global foreign direct investment flows. Foreign direct investment flows to Africa amounted to $4.6 billion in 1997, the same level as in 1996 and representing only 3 percent of the total foreign direct investment flows. Moreover, the flows are concentrated on a few countries and economic activities.

Our inability to attract a fair share of Foreign Direct Investment is obviously related to a number of factors most of which, one way or another, have to do with our low level of development. Whether it is perceived lack of investment opportunities or narrow markets or underdeveloped economic infrastructure that explain Africa's inability to be an attractive destination for Foreign Direct Investment, all these are the reflection of our economic conditions --- conditions that need to be rectified, first of all, by our own efforts and through utilizing our resources in a judicious, realistic and resolute manner.

In the meantime, there is little doubt that there is much that we need to do to enhance possibilities for us to ensure greater inflow of resources to Africa, including Direct Foreign Investment. It is indeed our confidence that the recent improvement in growth performance by African Countries, the ongoing efforts at economic reform and the favorable impression stemming from strong economic recovery and revival would convince some that Africa is not a basket case and that mutually advantageous partnership could be established with African countries. A change of attitude in this regard would no doubt assist Africa to address the constraints faced in resource mobilization for development.

Mr. Chairman,

It might be useful at this juncture for me to express a few thoughts on what is obviously regarded as a major impediment to Africa s ability to qualify as a reliable partner in business and to attract external resources. I am referring here to Africa's image as a Continent perennially wallowing in conflicts and irrevocably enmeshed in instability.

This, I submit, should not be left unanswered. True, Africa has had more than its share of conflicts and, more often than not, these are. in one way or another, related to the very socio-economic conditions of the Continent and the malaise and hopelessness engendered by that condition. Unless we succeed in establishing a more secure political environment, We cannot hope to have sustained mobilization of domestic or external resources for sustained development. As we Africans are the source of the problem, we should play a decisive role in addressing the rout causes of the problem and creating a more conducive political environment.

But, there have also been situations of conflict in Africa which are rooted in sheer lawlessness and in absolute contempt for international law regarding which many have preferred to leave Africa in the lurch. We all know that in comparable instances of flagrant breaches of principles of international law in other areas considered closer to home, such behavior of lawlessness would hardly be tolerated and concrete measures are taken without fail to restore civility and conditions consonant with civilized behavior among nations.

There is in this regard an amazing proclivity to double standards as if the contempt to the rule of law and to principles of international low is something that Africa has to leave with' regardless of the consequences. While it is the responsibility of all to ensure respect for international law, the co-operation that Africa has received in this regard when the need has arisen, has been limited to empty sermons, the shedding of crocodile tears and to vacuous lamentation over the African condition. We need a partnership for pence in Africa. But this partnership cannot be based on playing fast and loose with principles of international law and with norms of civilized conduct among nations.

All this goes to show how imperative it is for Africa to draw the proper conclusions with regard to how much it can rely on international co-operation even with respect to issues and concerns which are the collective responsibility of the international community. It is therefore only fair to take all this into account when reference is I made to the image of Africa and to its implications for Africa's ability to create confidence in its partners.

Mr. Chairman,

While I am on the subject of the kind and quality of international co-operation extended to Africa, I must raise another issue which has a critical bearing on the theme of this conference and on our ability to mobilize resources for development.

Here I am referring to the debt overhang whose resolution is vital for our ability to free resources for development. Many excellent declarations on the need to eliminate the debt overhang have been made by the creditor nations and institutions. A number of initiatives aimed at addressing the problem have also been launched. The latest of these initiatives, the so-called HIPIC initiative, is indeed a step forward towards addressing the problem. But practice has shown that the steps envisaged by the initiative are half-hearted and far from adequate. I believe this is now recognized even by the authors of the initiative.

What I find most objectionable about this initiative and most of the other debt reduction initiatives, is that they are being used as the whip to enforce unquestioning acceptance of the economic orthodoxy, the so-called Washington consensus, that is being promoted by some international financial institutions. The practice of the abysmal failure of this orthodoxy in Africa over the past decade and half. and the recent crisis in Asia clearly suggest that it can and must be questioned. Indeed, many thoughtful individuals in the citadels of the orthodoxy are questioning many of its prescriptions. The choice which we are left with under HIPIC is thus to either abandon all independent and rational thinking in economic policy making or wallow in the quagmire of unsustainable debt. It is a choice between the devil and the deep blue se?. To use the whip of the debt-overhang to enforce this orthodoxy in debt-ridden countries, is in some ways tantamount to blackmail and is therefore both unviable and immoral.

The challenge we face in this area is therefore much more complicated than is normally assumed and it is unlikely that we would be able to make substantial headway to address it in any meaningful way unless the underlying principles of the partnership with our partners is reviewed in a realistic and fair manner. We are hopeful that this would not be beyond reach. Obviously the debt burden of Africa which has now reached over $350 billion and representing a debt stock to export ratio of well over 300%, is by consensus beyond debt sustainability.

Mr. Chairman,

I would like to close with a few thoughts related to the theme of our relations with our partners that I have touched upon in the foregoing. The type and nature of the partnership we have been able to forge with our development partners, most particularly with the existing international financial institutions, need to be scrutinized carefully by all concerned with the view to ensuring smooth working relationship. This partnership is obviously critical for us during a period of transition when for obvious reasons we are not yet at that desirable stage whereby we could rely on Foreign Direct Investment, on export earnings and on domestic saving for resource mobilization ---- a situation worsened all the more so by the debt overhang.

In this context, there is indeed a great and critical need for a more transparent and a more predicable partnership between us and our development partners on the basis of a clearly understood rules of the game. Partnership requires confidence and trust to be effective. It requires predictability and transparency on the part of all those involved. That we still have to go a long way in this regard cannot be concealed and it is our hope that progress would be made in this regard as well.

With these few words, I wish you all fruitful deliberation and a pleasant stay in Addis Ababa.

I Thank You