Tony Blair's Commission for Africa
In anticipation of his upcoming simultaneous presidencies of the G-8 and the European Union, U.K. Prime Minister Tony Blair is determined to place African development near the top of the industrialized community's forward looking agenda. His vehicle for this scenario has been a yearlong dialogue known as the "Commission for Africa," featuring testimony, opinions, and exchanges among Africans and representatives of governments, non-governmental organizations, the business community and international financial institutions. The secretariat that organized the dialogue came from the U.K.'s Department of Overseas Development.
What was Blair's motivation in deciding to give Africa such a high profile during 2005? Cynics say that Blair needs to divert the attention of the British voter from Iraq as he approaches the May general election. In focusing attention on African development, Blair is emphasizing the traditional socialist emphasis on "soft power" as opposed to his unpopular decision to "ride shotgun" in U.S. President George W. Bush's Middle Eastern intervention.
While there is an element of truth in this analysis of Blair's need to soften his image in anticipation of a general election, it is more significant to note that the Labor Party has consistently assigned special emphasis to African development ever since it came to power over a decade ago. Blair created a full cabinet position for the overseas development function, and appointed strong ministers who exercised international leadership in African affairs. Indeed, the Department of Overseas Development effectively took Africa policy away from the Foreign and Commonwealth Office under Labor's administration. It is highly likely that Blair is taking this initiative because he really believes that Africa merits a higher policy priority than it has been getting lately. Finally, Blair's initiative in creating a high profile "commission" may be an additional way to tweak French President Jacques Chirac who has consistently presented himself as Africa's best friend in Europe.
The Commission Report
The Commission issued its report on March 11, 2005. The signatories claimed to be speaking as individuals, and not for their organizations. Their recommendations are long and detailed, reflecting thorough discussions with practitioners who work in Africa in a variety of functions, and who have practical ideas about what has to be done to help African states enter a path of permanent and sustainable growth.
There have been many high level commissions, committees, and summit meetings devoted to African development since 1985. The last five G-8 summit meetings have devoted at least a half-day each to exchanges with African leaders. How then, are the Blair Commission and its list of recommendations different from those that preceded it?
The Commission's report is a mixture of old and new ideas. Among the old ideas, the most important, according to the Commission, is the concept of good governance. First injected into the north-south dialogue by the Global Coalition for Africa in 1990, good governance is widely accepted by African leaders as a sine qua non for the launching of economic expansion. The essence of good governance is the management of state resources for the benefit of the country's population.
Unfortunately, the history of independent African states reflects more the management of state resources for the enhancement of the power and personal wealth of political elites. The Commission's report says that it is time for African governments to stop paying lip service and become serious about good governance. There must be transparency in budgetary accounts, in accounting for revenue from extractive industries, including oil, and in contracting for services. Foreign companies must reveal the amounts they are remitting to African governments for the commodities they export.
It is important to note that good governance can be implemented even before the achievement of full democracy, a process that is necessarily slow. Good governance and authoritarian regimes are not necessarily incompatible.
The Commission report also underscores the ongoing struggle over the question of debt relief for the poorest of the poor. It calls for total relief for African low-income countries that are in debt to the multilateral institutions: the World Bank, the International Monetary Fund and the African Development Bank. This is an idea being championed by British Finance Minister Gordon Brown. It builds on President Bush's proposal at Monterey, Mexico in 2002 calling for the World Bank to give grants to the poorest states instead of loans.
The total debt relief proposal runs into three strong opposition arguments. First, debt relief must be financed. When the World Bank no longer collects loan repayments it will have less money for development assistance. This deficit must be made up by increased contributions from the rich countries. Second, there is the issue of credit worthiness. African countries that receive total debt forgiveness will no longer be eligible for new credits, just like people and companies that take advantage of bankruptcy. Third, there is the issue of moral hazard. African states that receive total debt relief might be tempted to run up new debts and go into bankruptcy again ten years later. These objections notwithstanding, there is a growing consensus that the poorest African nations will be permanently mired in poverty if they have to continue to service debt.
Report Reveals Three Important Issues
Among the new ideas, three are especially significant.
First, there is the U.K. proposal to substantially increase international assistance to sub-Saharan Africa by an annual amount of US$50 billion. Now that a growing number of African governments are serious about adopting necessary policy reforms, the international community must reciprocate by providing the capital that will move African economies into the "takeoff" mode. The experience of the Asian Tigers indicates that economic development requires investments of 25 percent of G.N.P. for at least the first ten years. At the present time, even the best performing African nations are achieving a maximum of only 15 percent.
Secondly, we can finally see a growing consensus that true economic expansion requires a robust private sector. Governments need revenues from taxes and royalties in order to provide the services that underpin development. Foreign assistance can help, but at the end of the day cannot fulfill the requirement. Only private investors can produce the commodities and value-added goods that will finance development. Lifting tariff barriers to African manufactured exports, as the U.S. and E.U. have done, has little impact if the Africans are not producing goods for export.
The history of African government relations with the African private sector has been one of tension bordering on hostility. In East Asia, governments, for the most part, have considered the Asian private sector to be a partner in development. In Africa, governments have considered the African private sector to be a competitor for power. In addition to an attitudinal change, African governments need to do everything possible to facilitate private investment. In too many African countries, the cost of navigating complex bureaucratic obstacles is too high for local and foreign investors alike.
Third, the Commission report reflects a growing "back to basics" movement within the donor community. Infrastructures bequeathed by the colonial powers have not been maintained, improved or expanded. There will be no private investments without a return of decent transportation systems and reliable utilities. Governments have to divest their ownership of enterprises and activities that appropriately belong to the private sector, and concentrate instead on responsibilities only governments can fulfill.
Prospects for the Blair Commission's Recommendations
Between five and ten African governments are already somewhat advanced on the road to economic and governance policy reforms. There are the countries that merit special attention from donors to the extent that aid levels are increased significantly. The World Bank and the I.M.F. have been discriminating in favor of good performers in recent years, and the major donors are moving in the same direction. President Bush's "Millennium Challenge Account," while off to a slow start, is a promising program designed to reward those most likely to succeed.
The prospects for an additional US$50 billion per annum for Africa are not good in view of budgetary stringencies in the E.U., the U.S. and Japan. The prospects for total debt relief for the poorest African countries are somewhat brighter. In this area, donor treasuries are engaged in developing creative formulas, such as the proposal for the I.M.F. to sell some of its gold to finance multilateral debt relief.
In the final analysis, it is up to the Africans themselves to create the conditions that will be conducive to private investment, both indigenous and foreign, so that manufactured goods and value-added commodities will provide the revenues needed for the infrastructure and services that underpin growth. The Blair Commission recognizes this, but asks for a bigger effort by the donors to push the better performers over the top. Even the most serious African states have fallen too far behind in the globalization race to catch up without help.
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