Feature - Little optimism at economic and financial parleys

The mood at a series of meetings on African development held over the past few days in Addis Ababa appeared to be one of gloomy realism. There was less "cautious optimism" than usual, fewer references to "achieveable goals". Instead, finance ministers and economists warned that Africa was failing to make a dent in its enormous poverty or to boost trade, and was buckling under the strain of the catastrophic AIDS pandemic.

As the continent reaches the halfway point of the 2015 Millennium Development Goals – drawn up in 1990 - the number crunchers are beginning to fear the worst. Economic growth rates across the continent slipped from 4.3 percent to 3.2 percent in the last year - nowhere near the seven percent required to meet the anti-poverty goals.

In fact, analysts now estimate that by 2015 a staggering 345 million people in Africa will live in extreme poverty – US$1 a day or less – up from 100 million when the goals were first set.

The year 2015 may prove to be a date when the number of poor on the continent reaches record levels instead of being halved as was originally planned. Scepticism has also greeted the World Trade Organisation's Doha Development round, aimed - among other things - at tackling stifling farm subsidies: many African countries say the round has achieved little.

Crippling western trade subsidies of US$1 billion a day – particularly in Europe, which is Africa’s biggest market – mean the continent’s farmers cannot compete. Countries are questioning the effectiveness of the Highly Indebted Poor Countries (HPIC) initiative which, African economic and financial experts meeting in the Ethiopian capital on 29-30 May said in a report, "has largely failed to ensure long-term debt sustainability". [The report is available at www.uneca.org ]

Development is constrained by debts that eat up US$40 million a day – more than is spent on education and health. “Debt relief is still too slow and not adequate,” according to the report, compiled for African ministers of finance, planning and economic development, who ended a three-day meeting in Addis Ababa on 1 June.

[Both meetings were organised by the UN Economic Commission for Africa (ECA).]

Overseas Development Assistance has been falling in the last decade. A global downturn, poor investment from abroad, tumbling commodity prices and drought have all taken a toll on economic progress. Africa's exports have dropped from 10 percent of the world’s market 50 years ago to just 2.7 percent today.

HIV/AIDS "poses a threat of unequalled magnitude” to the lives of Africans, the finance ministers said in a statement issued at the end of their meeting. [The statement is available at www.uneca.org]. However some political leaders still remain reluctant to openly speak out about the crisis even though 6,500 Africans die each day from HIV/AIDS-related illnesses. Many are from the most productive age group and, in fact, economic growth rates could be reduced by as much as 1.4 percent as a result of HIV/AIDS.

War has also blighted the faltering economic growth rates, which now average a little over three percent a year, marginally above population growth rates. New struggles - Cote d'Ivoire and Madagascar – have replaced old hostilities like the Ethiopia-Eritrea border conflict and the civil war in Angola.

The ECA has faced calls for a “thorough review” of the continent’s development strategies. “The review should determine whether poor outcomes are the result of bad policies, or a lack of implementation or exogenous shocks,” said the experts' report.

But even for the most hard-nosed cynic there is reason for optimism.

One possible springboard to achieving the anti-poverty targets is a UK initiative – the newly formulated International Finance Facility. The scheme, the brainchild of British Chancellor Gordon Brown, aims to tap international money markets and, it is hoped, raise US$50 billion a year in additional resources. The initiative was welcomed by African finance ministers.

And, as Omar Kabbaj, president of the African Development Bank (ADB), pointed out at a symposium on poverty reduction, social development and the millenium development goals, there are pockets of hope with a “cluster” of countries making progress. Cape Verde, Mauritius, Mozambique and Uganda have all enjoyed growth rates of around seven percent in the last decade, Kabbaj said at the symposium, held jointly on 2 June in Addis Ababa by the ECA and ADB.

The New Partnership for Africa’s Development (NEPAD) has prompted the G8 Africa Action Plan, under which US$6 billion has been earmarked for the continent by 2006. And the innovative African Peer Review Mechanism – within the NEPAD framework - has attracted much interest: it has been interpreted as meaning that the solutions to Africa’s problems are no longer imposed – that governments uphold the standards and norms of democratic governance.

But the G8 funding is still only a quarter of the US $20-25 billion in extra aid that Africa needs each year if it is to attain the MDGs. The UN estimates that U$10.5 billion a year is needed for the entire fight against AIDS. Kabbaj believes that Africa has put the right policies in place and is now waiting for the donors, the leaders of the G8, to play their part in helping to alleviate the crisis.

The finance ministers also believe that the continent has made progress in recent years. They point to sound macroeconomic policies. Many African countries have managed to hold down inflation. Some are beginning, albeit slowly, to open up their markets to other African countries by reducing tariffs and to dismantle “cumbersome” border procedures.

Economists also believe – weather and oil prices permitting – that growth could rise to 4.2 percent in 2003. But it is still not enough.

Ethiopian Premier Meles Zenawi captured the prevailing mood in his address to the symposium: “We are going nowhere,” he declared, receiving a long round of applause. Take radical steps to ensure that the continent can meet its anti-poverty goals, he urged African leaders and the international community.