Africa/OECD Ministerial Consultation Big Table II

Amsterdam, Netherlands
14 - 16 October 2001

Summary Report

Background:

The second meeting of the Big Table, an initiative of the Economic Commission for Africa (ECA), took place in Amsterdam from 14 -16 October 2001. The meeting brought together Ministers of Finance and Development Planning of thirteen African countries and their counterparts from development cooperation ministries and senior officials of aid agencies from nine OECD countries. Minister Eveline Herfkens, of the Development Co-operation Ministry of the Netherlands, hosted the meeting, which was co-chaired jointly by her and ECA Executive Secretary K.Y. Amoako. The meeting was also attended by high-level representatives from seven regional and international institutions including the ADB, EU, IMF, OECD-DAC, World Bank, and UNDP. The agenda for the meeting and full list of participants is attached.

Building upon the consensus reached at Big Table I, held in Addis Ababa from 19 to 20 November 2000, on the Poverty Reduction Strategy Papers (PRSPs), the meeting sought to advance the dialogue on African ownership of plans and strategies for effective poverty reduction and mutual accountability of African governments and their partners for effective international partnerships. The dialogue took place within the context of Africa's success in integrating the two prevailing development frameworks -- the Millennium Partnership for the Africa Recovery Program (MAP) and the Omega Plan -- into one overarching development agenda, the New African Initiative (NAI), underpinned by its technical component, the ECA Compact for Africa Recovery.

The discussions focused on three main topics: Governance, Making Aid More Effective and the Africa Peer Review Process.

Highlights of the Discussion:

1. Governance

  • The meeting agreed that Governance, defined in the broadest context, seeks to create capable and effective states, as well as an enabling environment in which the public and private sectors play their respective roles in a mutually effective manner towards poverty reduction, sustainable growth and development.

  • The meeting noted that, Governance is a changing process, requiring continuing adjustments in approaches to respond to changing global dynamics. It can be seen as a spectrum, encompassing a wide range of components based and sequenced in accordance with country conditions. These include peace and security, capacity and social development, accountability and transparency, participation, and rights protection.

  • It was noted that, good Governance, is a necessary but insufficient condition for sustainable development. Several participants stressed the fact that African ownership of the process of good Governance was also crucial.

  • It was noted that Governance should not be seen just as a requirement for foreign aid as African people want to be governed well. It was noted that several Big Table institutional participants have formulated policies and programs aimed at supporting good Governance under a new development agenda of empowerment at the grassroots level, while taking into account the different perspective in the meaning of Governance as perceived by governments and the private sector.

  • While good Governance is an essential for improving the investment climate and creating the conditions for confidence, a more robust investment response by the private sector is required to achieve Africa's development goals. In this respect, ODA, provided under innovative partnership arrangements, should be used as a catalyst to attract private capital and support.

  • It was agreed that peace and security represent the top priority of a good Governance agenda, as this is the only basis upon which the development process can proceed. It was noted that insecurity and conflict anywhere on the continent diverts investment away from the entire continent. The strong correlation between Mozambique's post-war reconciliation process and subsequent high rates of post war economic growth rates was cited as a clear example of the importance of peace to development.

  • The meeting re-iterated the critical importance of capacity in advancing good governance. It highlighted the urgency of strengthening judicial capacity in post conflict conditions, especially due to the need to address the demands of victimized elements of society and the potential tension between justice and reconciliation (between the need for a Tribunal as opposed to a Truth and Reconciliation Commission). It was also noted that funds spent on "building peace" in post conflict situations yield rich returns.

  • The link between the independence of the judiciary and development was also addressed. It was noted that the slow judicial process in some countries when dealing with commercial cases was acting as a constraint to development. The meeting also noted that enhancement in the role and performance of the judiciary has lagged behind other efforts in Governance. This has undermined the chances for improvement in the integrity and independence of the judiciary and, as a result, has hampered efforts to create an environment to attract private investment and capital.

  • It was noted that the same could be said for national assemblies and parliaments, where representatives of the people have been short-changed in support when compared with civil society organizations. It was suggested that donors should give more support to African efforts to build judicial capacity and increase the effective participation of citizens in the democratic process.

  • New and bold resources will be required to enhance the processes of participation and political transition. Civil society and individuals will need to take risks in challenging poor government procedures as exemplified by the experience of Ghana. Good models of governance need to be recognized and dividends established for good performers. The financing of political parties through local budgetary mechanisms or otherwise would add value of the participation process and enhance the institutionalization of politics.

  • The regional dimension of good Governance was also highlighted. Participants called for more support to strengthen regional and sub-regional bodies to enable them to play an even more effective role in conflict prevention and resolution at the national level. As capacity is one of the most critical and inhibiting factors of economic reform and good Governance at both national and local levels, the meeting noted that more effort is required in designing programs aimed at capacity retention and capacity repatriation. Given the immense difficulty faced by many countries in meeting this capacity challenge alone at the national level, it was noted that the Governance should be treated as a regional public good and funds to build capacity in Governance therefore shared at the regional level. The SADCC example of Reserve Banks working together in the area of insurance and on other economic areas was cited as a good example of collaboration in the field of economic Governance.

  • The meeting strongly endorsed the ECA project on establishing and measuring Governance indicators as a tool for monitoring progress in Governance in Africa. The project includes three sets of indicators -- aimed at assessing political representation, institutional effectiveness, and economic management. The indicators are intended to provide the benchmarks for country and regional self-measurement over time of adherence to the standards of good governance. The meeting noted that data reliability and consistency is key in this regard, requiring more attention to the Paris 21 initiative, which aims at improvements in Africa statistical systems.

  • The discussion noted that Africa has made significant progress in asserting its ownership over the development process, adopting sometimes-painful economic reform measures, and in improving the climate for the empowerment of its citizenry. However, much more remains to be done in preventing and managing conflicts, in curbing corruption, and in improving participation and choice though effective electoral systems. The enhanced relationship between Africa and its development partners, based more upon equality and mutuality in interests, has added significantly to the change of climate for openness, democracy and good governance. In terms of country effort, the meeting noted that more is required to enhance the mutuality of interest between governments and their own people.

  • The dialogue concluded its discussion on Governance by endorsing the ECA project as a good analytic basis for information sharing and experience exchange on Governance in Africa, identifying capacity gaps, recommending corrective measures, and for maintaining the dialogue on Governance in Africa. Through the measurement indicators and code of conduct, the base is set for rationalizing the process of information sharing and experience exchange in Governance. One participant suggested that future Big Tables could consider the promotion of Centers of Excellence as places for lodging and sharing experiences in the progress towards good Governance. It was noted that equal consideration should be given to a review, perhaps by ECA, of the range of initiatives being undertaken in governance by African countries are their partners.

2. Aid Effectiveness

  • The meeting noted that real progress has been made in aid effectiveness informed by knowledge from empirical research and country experience. Donor/recipient relationship has undergone a transformation - - from " aid proliferation" in the 1980s, to "dialogue and confidence building" in the 1990s, to the current "mutuality of commitment in interests" as set forth in the PRSPs. The aid relationship has thus changed with a shift in paradigm from doing good through a multiplicity of projects, to providing support for structural change through human resource and institutional development, to making aid more effective, responsive, and closer to the poor and its target beneficiary group.

  • Two conditions fundamental to effectiveness in aid delivery were noted: a) Performance results to improve development impact of aid and to build a constituency for aid; and b) Adequate funding to good performers to underpin the sustainability of economic and political reforms in Africa. Other enhancement measures include predictability in aid delivery, consistency in conditionalities and improvement in capacities.

  • The meeting agreed that many African countries have made great strides in public expenditure prioritization, enhanced utilization of public resources, expenditure management and reporting, although severe capacity gaps in statistical reporting systems remain. It was also noted that the public expenditure review process undertaken in partnership with development partners has added value to these efforts.

  • It was noted that differences in agendas between African countries and their partners have constrained the process of aid effectiveness. The meeting also addressed the efforts that have been made to rationalize and harmonize these objectives using rationalized and reformed fora such as the Consultative Groups (CGs) and Roundtables (RTs). A brief case study of the Tanzanian CG, which has involved a transfer of the consultative mechanism to Africa, was presented. Convening of CGs in recipient countries has provided opportunities for better country understanding and consensus building at the national level.

  • The meeting noted the ongoing work by the DAC task force on harmonization of donor procedures, and welcomed the task force's arrangement for seeking recipient input to its discussions. ECA sponsored fora such as the Big Table and the African Learning Group on the PRSP were recognized as important for strengthening the African voice in this area.

  • One participant suggested that the aid effort needs to be expanded to attract non-traditional stakeholders such as the private sector and foundations, towards the formation of a "grand alliance". African institutions would also need to be put at the center of the knowledge sharing process on aid effectiveness

  • In this context it was noted that demonstrating the transparency in aid utilization, perhaps through the engagement of the media, would expand and strengthen the constituency for aid in donor capitals.

  • A number of questions were raised about the effect of the PRSP: Has the PRSP increased the absorptive capacity of donor funds? How can the PRSP process help the move away from aid dependence?; What kind of trade policy is being pursued in the PRSP? It was agreed that the PRSP could potentially make significant contributions to improved effectiveness. It was noted that a second-generation PRSP effort should consider giving more resources to the good performers and should go beyond current parameters by identifying the sources of growth including trade, which has been neglected for too long.

  • The meeting concluded that the NAI represents a strong reference point for enhancing aid effectiveness through a transformed development partnership between Africa and her international partners and for deepening the policy reform and strengthening poverty reduction as currently pursued under the PRSPs.

3. Peer Review Process

  • The meeting agreed that the new development partnership that we are striving for requires a fundamental shift in the way we look at conditionalities. What we want to see is a shift from externally driven conditionalities to self-monitoring and peer review of progress towards mutually agreed outcomes. This shift should underpin ownership and not undermine it. The Review must, at the end of the day, focus on the primary objective of development - the people and the quality of their lives.

  • Against the background of the NAI's reference to the need to establish a mechanism for peer review, the meeting welcomed ideas put to the Big Table by ECA on how An African Peer Review process might work. The meeting agreed with the intended objective of such a peer review process; namely, to encourage mutual learning, monitor progress towards agreed goals, apply peer pressure on governments to adhere to agreed standards and benchmarks (as might be determined by the NAI task force of Ministers of Finance and Central Bank governors), disseminate good practices, identify capacity gaps and recommend approaches for addressing these gaps.

  • The African partners participating in Big Table II gave a decided YES to the adoption of a Peer Review Process. They felt that taking into account the various review processes underway, (such as the IMF's Article IV consultations, the World Bank's Country Policy and Institutional Assessment (CPIA,) the niche for an African Peer Review Process might be for it to focus on the key features of the capable state; namely the capacity of the state to safeguard peace and security for its citizens, secure an enabling environment for sustained growth and poverty reduction, and facilitate the role of the private sector in development.

  • The meeting agreed that the ECA Governance project could constitute a solid basis for generating the data required for the African Peer Review system. It was suggested that African experts, drawn from the ECA, ADB, and other regional and sub-regional institutions be set up to carry out the Peer Review Process.

  • It was also agreed that the review should be initiated within the context of an assessment of progress in achieving regional goals as detailed in the NAI. The meeting noted that the scope of the Peer Review should include the attributes of capable states, as defined in the ECA project on monitoring Governance in Africa.

  • The meeting urged the African Peer review to draw experiences from lessons learned from OECD, DAC, and the recent initiative of a group of Asian countries. It was noted that the DAC experience in Peer Review goes back to the Marshall Plan, which required regular assessment of the progress of the countries assisted in the process of reconstruction.