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| Overcoming Africa’s Marginalization: Implementing the New
Partnership for Africa’s Development
Address to the African Economic Research Consortium by K. Y. Amoako, Dear Friends, It is a great pleasure to be with you again. I would like to thank my good friend Delphin Rwegasira, Executive Director of the African Economic Research Consortium (AERC), for inviting me to deliver this address. I am also delighted to be with so many old friends and again to have been invited by a network that helps stimulate good policies for Africa through its own work and by promoting synergies between good thinkers around this continent. As many of you know, the Economic Commission for Africa (ECA) has always sought to promote the best work of the African policy community. Not only does this strengthen the overall quality of our work, but in doing so, it also helps fulfil a key ECA mandate: bridging the gap between policymakers and policy analysts. In this endeavour, we continue to enjoy the excellent collaboration of AERC. Today, you have eminent speakers addressing you on a wide range of compelling subjects related to poverty and growth. With this breadth of coverage by quite distinguished people, I had to decide what value added I would bring with my presentation. The answer, of course, is absolutely clear to all of us: I come with lunch.
Let me start my conversation by recalling for a minute or two ECA’s 1999 Economic Report on Africa. In that report we projected what achieving the poverty reduction goals set for 2015 would mean for Africa’s economy. We projected that to meet the poverty goals would require a growth rate of some 7 percent per year, a bit more than double our current rate of growth. This would require a very significant increase in savings and investment. When I presented that report to Africa’s Ministers of Finance, I explicitly stated that the intent of our report was to help restore poverty reduction as the central aim of development in Africa. I characterized the late 1990s as a time when economic recovery, while not solid enough, had at least reached the point where policy discretion could be brought to bear on poverty in a way not so possible in the many previous years of decline and inflexibility. While I did not say so then, one of my concerns has been that good global progress towards meeting the international development targets could lull the international community into thinking that its work on development was successful and did not require additional effort. Lost in the averages, however, would be Africa’s continued inability to make serious inroads into reducing poverty. Our poverty lines and quality of life indicators show a depth of poverty infrequently reached elsewhere. So it is right that we continue to focus in Africa on sharply improving our poverty reduction record. Having said this, what does growth actually mean for the reduction of poverty in African countries? From your own work and that of many other researchers, what is clear is that economic growth does not necessarily lead to poverty reduction nor imply equitable distribution. Investment has to be channeled to selected sectors, such as health, education, housing, agriculture, informal sector, and all sectors where the poor are found, and where action will have the most impact. The aim is to achieve broad-based growth that assures equity, with a pro-poor overall development agenda. Because we, at ECA, feel the international development goals are vital for our continent, and because we want to get a better handle on our progress in development in general, in 1999 we put in place new indices aimed at measuring on a regular basis the quality of Africa’s development. We have been fine-tuning this work ever since, and the results are published in our annual Economic Report on Africa, which I mentioned earlier. Our Economic Sustainability Index has 21 indicators measuring the capacity to maintain long-term growth. These indicators help measure human capital development, structural diversification, external dependency, transaction costs and macroeconomic aspects of sustainability. The composite score can run from one for very low sustainability to ten for high sustainability based upon the average score for the three best performers. Of the 47 countries ranked, 24 scored below 3.5 and only five countries (Egypt, Mauritius, Seychelles, South Africa and Tunisia) scored above five. The ten worst performers were either in conflict, or recovering from recent conflict, a result that is consistent with the research done by many of you and your collaborators. There is a pretty high contrast between North Africa with a score near six and West Africa and East Africa, with scores near three. Looking at the evidence over time, since 1987 we believe 20 countries have improved their economic sustainability scores by over 10 percent while seven countries declined by more than 10 percent. In order words, there is a basis for saying that the sustainability of Africa’s development is improving, but, obviously, a lot more needs to be done. Thus the focus on sustainability is one we encourage from this policy community. A second index I want to review with you is our Economic Policy Stance Index. It measures the appropriateness of government fiscal, monetary and exchange rate policy. Among other things we look at budget balances, taxation, monetary growth and interest rates. Again we score from one to ten, based upon the continent’s best performers. Data allow for scoring 26 countries. Mozambique has the top score, bolstered by strong performance across the board. It is followed by Uganda, South Africa, Gabon and Namibia. The five countries at the bottom of the list are Sierra Leone, Angola, Central African Republic, Kenya and Sao Tomé and Principe. Interestingly, compared with the Sustainability Index, the leading subregion in the economic policy cluster is East Africa. This year we have added a new measure, the Expanded Economic Policy Stance Index. This combines qualitative aspects of policy such as policy targeting of women and the poor, the effectiveness of property rights and the independence of central banks. Information on these questions was obtained by surveying government employees and officials, members of the business community, resident employees of international organizations and NGOs, academics and independent professionals. Results of the surveys, which were conducted in 21 countries, show an average score of 4.3. Botswana scored the highest at 8, with Liberia and Sudan the lowest, tying with 1. Overall, officials and government employees are more bullish about development prospects than NGOs. There is general agreement by all those polled that countries are making more headway in the realm of monetary and macroeconomic policies than in addressing structural issues such as civil service reforms, property rights and the effectiveness of the legal system. Overall, only a small minority of Africans live in an economic environment considered minimally adequate to sustain growth and development. Only about a third of Africans live in countries with good economic policy stances, and relatively few live in countries which are perceived by the closest observers of performance to have the qualitative underpinnings of good development performance. The scores are improving, but the challenge is to sharply improve performance in the years ahead. I have started with the growth story, Chairperson, because at least half of the answer to poverty must be sustainable growth. It is hard to muster the resources and the political will for more interventionist policies to address poverty reduction if leaders do not have confidence in the quality and sustainability of their country’s growth. Indeed, political leadership at the highest level is a fundamental precondition for the realization of the objectives of NEPAD. The Initiative, approved by African leaders in July this year, constitutes an agenda for the renewal of the continent and a single framework for interaction between Africa and the rest of the world. Its economic goal is to have sustainable growth of 7 percent per annum over the next 15 years to ensure achievement of the International Development Goals in Africa. NEPAD is underpinned by the principle of African ownership of the development process, and shared objectives and mutual accountability towards agreed outcomes. It constitutes an important framework for meeting Africa’s development challenges. The Initiative’s priority areas of focus are peace and security, the consolidation of democracy, the promotion of the role of women in all aspects, sound economic management, the reduction of poverty, and improved governance. It also identifies a number of sectoral policy priorities, including human resource development, infrastructure, information and communication technologies, agriculture and the environment. In addition, the NEPAD recognizes the importance of the regional dimension and the pooling of national sectoral programmes towards a regional set of programmatic objectives. Perhaps as important is the effort to reinforce democracy and political governance. Indeed, strengthening democracy and government may very well be the core contribution of NEPAD. The NEPAD proposes that participating countries undertake specific commitments to create or consolidate basic governance processes and practices, and actively foster initiatives to strengthen good governance. A task force of Ministries of Finance and Central Banks will be commissioned to review economic and corporate governance practices with a special stress on public financial management. In my view, NEPAD’s long-term significance lies less in the listing of projects and programmes for donor funding. The value added of the Initiative is twofold: first, in the paradigm shift that it offers in putting the responsibility for Africa’s future first and foremost with African leaders and their people; and second, in envisaging a transformation of the continent’s development relations with its external partners. In other words, it provides a framework for Africa’s effective integration into the global economy and for overcoming Africa’s marginalization. In this context, my dear friends let me now take a few minutes to share with you some of ECA’s latest work and outline how our work is contributing to the implementation of the goals of NEPAD. One body of work is in the area of governance. As I have already mentioned, NEPAD stresses good governance as a precondition for development and poverty reduction. We in ECA see good governance as synonymous with the creation of the capable state, one based on accountable and transparent systems, political liberalization, the rule of law and respect for human rights. A capable state must also ensure good macroeconomic management and corporate governance and strengthen institutional capacity. As some of you may know, we have been preparing for some time to launch a major governance project. Drawing on our definition of a capable state, the project is clustered around three key components of governance: political representation, institutional capacity, and economic management and corporate governance. For each component, we ask a number of critical questions.
To answer these questions and many others more, we are employing three surveying instruments – an opinion-based focus group instrument which seeks to collect responses from experts knowledgeable on the issues under each of the three clusters; a national household survey that seeks the perception of the general adult population; and a statistical instrument administered by our collaborating research institutions to gather factual information and hard data. Our indicators have already been field tested in Benin and South Africa with fairly robust outcomes. We are now working closely with national research institutions to implement country level surveys in 14 countries. We will bring our findings to forums in which we can engage our member States and other stakeholders in dialogue, to promote buy-in and consensus. On the basis of this, we plan to publish next year the first ‘Africa Governance Report’, a flagship biennial publication. Our work in this area provides substantive technical input into the implementation of NEPAD. Indeed, the NEPAD Heads of State Implementation Committee has mandated ECA to lead the work on the NEPAD Economic and Corporate Governance Initiative. Another body of our work I want to share with you is our policy advocacy work on enhancing relations between Africa and its international development partners. In recent years, ECA has used its position as an interlocutor in promoting frank dialogue between African countries and their development partners as an essential component of a new enhanced partnership. One high-level forum for this dialogue is the ECA-sponsored ‘Big Table', which brings together a number of African Ministers of Finance, their OECD counterparts in Ministries of Development Cooperation, and senior officials of bilateral and multilateral aid agencies - for dialogue on topical development issues of importance to Africa and on transforming aid relations. The first ‘Big Table' meeting was held in November 2000 in Addis Ababa. We discussed several issues in the context of the PRSPs. Key among these were: the extent to which the International Development Goals (IDGs) were being systematically incorporated into national poverty reduction strategies; and how national processes and institutions could be strengthened to foster participation and ownership. The main conclusion was that the PRSP indeed offered a significant opportunity to enhance African ownership and deepen the poverty focus of development efforts in the continent. However, a number of areas of concern were also identified, including: the perceived lack of uniformity and complementarity between the PRSPs and national plans; the capacity inadequacy of governments to respond to the multi-channel demands of development partners; the contradiction between endorsement of PRSPs to satisfy external constituencies as opposed to real ownership of the process; and the tension between the urgent need for HIPC debt relief and the need for time to prepare high-quality PRSPs. Indeed, and as a result of the concerns raised during ‘Big Table I’, the idea was born for an African Learning Group on the PRSPs. We held the first Learning Group meeting in Addis Ababa last month. Its objectives were to identify best practices, flag policy, institutional and capacity constraints, recommend actions to remedy the constraints, and propose actions to be taken by Africans and donors in order to tap the full potential of the PRSP process in transforming the partnership between African countries and their donor partners. The second Big Table meeting, took place in Amsterdam from 14 to 16 October 2001. It was hosted by the Netherlands’ Minister of Development Cooperation, our dear friend Eveline Herfkens. A key discussion point in Amsterdam was how aid could be made more effective. We set out to ascertain the unique features of innovative approaches by donors, working with countries such as Tanzania, Uganda and Rwanda, to address the impediments to aid effectiveness, and to mainstream the principles of national ownership and mutual accountability. We reviewed the necessary policy and institutional prerequisites for replicating them in other countries in Africa. We also discussed and agreed upon steps to be taken to build and strengthen constituencies in donor countries for sustained levels and predictable flows of aid and to harmonize aid policies. Here, we must all be grateful to two AERC most outstanding colleagues, Gerry Helleiner and Benno Ndulu, for the pioneering work they are doing on aid effectiveness in Tanzania. Their work greatly informed our discussions in Amsterdam. You will also be interested in the discussions that ECA is leading with African policymakers and development partners on a peer review system for African countries. The intended objective of such a peer review process is to encourage mutual learning, monitor progress towards agreed goals, apply peer pressure on governments to adhere to agreed standards and benchmarks, and to disseminate good practices. In Amsterdam, these objectives were endorsed, and ECA was encouraged to continue its work in this area, drawing on the experience of the OECD/DAC. NEPAD has also endorsed the idea of an African peer review system. I am confident that our work in this area could form the basis of the NEPAD peer review process. Finally, and as I mentioned earlier, regional integration is one of the key areas of NEPAD. ECA’s preoccupation in this area has two dimensions. The first dimension is effectively assessing and monitoring progress. Our view is that while regional integration in Africa is agreed by all to be an important means of overcoming some of the structural deficiencies of African economies, there has been little or no effort to vigorously assess the status of integration in Africa. To fill this gap, we have embarked upon a major study. The preliminary findings of this study will be made available to participants at the Third African Development Forum (ADF III) in Addis Ababa in March 2002, which is the second dimension of our work related to regional integration. At ADF III, we will be looking at the implications of the African Union for regional integration, and in particular at three core issues - economic policies, peace and security architecture, and building effective institutions.
In all of these three areas – governance, peer review, regional integration – we see a key role for African organizations and research institutions. For instance, in governance, we expect the research institutions to conduct the field-testing of the country surveys. Similarly on the peer review, we expect the research institutions to undertake the analytical work that will underpin the monitoring of the performance of governments. Obviously, given the issues we plan to address at ADF on regional integration, AERC, as a leading network that brings researchers together to work on Africa, will be a key player. In closing, let me reiterate how we at ECA very much value our relations with AERC. You are indeed a key resource for this continent’s present and future. I look forward to further discussions with you on the issues I have outlined, and to continuing and deepening our partnership. Thank you.
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