Africa: Oxfam on G7 Summit, 6/17/97

Africa: Oxfam on G7 Summit, 6/17/97

Africa: Oxfam on G7 Summit

Date distributed (ymd): 970617

Document reposted by APIC

Oxfam International Advocacy Office

1511 "K" Street, Suite 1044, Washington DC 20005, USA

Tel: 1 202 393 5332; Fax: 1 202 783 8739;



Partnership for Economic Growth and Opportunity in Africa: an Oxfam response to the US initiative

I. The US government has drawn up proposals for a new initiative, the Partnership for Economic Growth and Opportunity in Africa, aimed at addressing the development crisis in sub-Saharan Africa. Recognizing the opportunities created by economic and social reform programs in many countries, the initiative, which enjoys bi-partisan support in Congress, aims to provide trade, aid and debt relief incentives for governments seeking to accelerate economic growth. The Clinton Administration has indicated that it will be seeking international support for the initiative at the G7 Denver summit (June 20-22).

II. US recognition of the need to address aid, trade and debt problems within an overall strategy is particularly welcome. So, too, is the proposed use of investment guarantees to mobilize private foreign investment for Africa, which currently accounts for less than one percent of global private capital flows. More broadly, the US initiative is rooted in a recognition that the risks posed by Africa's marginalisation are exceptionally high, with deepening poverty and economic decline intensifying national and ethnic rivalries, contributing to environmental problems, and undermining the capacity of governments to provide basic social services. The Partnership proposals reflect a long-overdue acknowledgment of the fact that the rest of the world will not be immune to the consequences of Africa's condition. They also provide an opportunity for the G7 countries to develop a coherent response to the opportunities for peace and development which have emerged in countries such as Mozambique, Ethiopia, Eritrea and Uganda, where governments are committed to developing greater self-reliance.

III. International action to reverse Africa's marginalization and deepening poverty is vital. Over the past two decades growth has declined by one percent per year in per capita terms, with the result that average living standards in the region are fallingfurther behind other developing regions. Failure to sustain economic growth has resulted in human welfare indicators which are the lowest in the world - and the gap is widening. Today, a citizen born in Africa will live ten years less than a counterpart born in America, and one in five children die before the age of five.

IV. The silent crisis' in Africa's education gives rise to particularly serious concern. Over 44 million children are not in primary school and the numbers will rise to 50 million by the end of the decade. Today, Africa is the only developing region in which school attendance rates are declining from already low levels. At the same time, the quality of education is being eroded by the collapse of public investment. Both trends have terrifying consequences for future growth, employment creation and poverty reduction. Getting Africa's children into school and improving the quality of their education is vital if the region's crisis is to be reversed and the opportunities created by economic reforms are to be grasped.

V. Encouraging as the US initiative may be, it is flawed in a number of crucial areas. It will provide support to a small cluster of countries regarded by the US as success stories, threatening to undermine region-wide initiatives - such as the UN's Special Initiative on Africa - which offer a greater hope of success. Moreover, the US proposals offer relatively minor concessions on trade, mainly in the form of enhanced preferences, allied to insignificant additional aid flows. An additional problem is that pledges of US support for more effective debt relief rest uneasily with the Administration's efforts to delay implementation of the IMF-World Bank's Highly Indebted Poor Country (HIPC) initiative even for Uganda - a country with a long track record in economic reform. Failure to address these problems reflects a deeper failure in the US initiative. The term Partnership implies dialogue and joint action to achieve shared goals. Unfortunately, African governments and UN agencies have been conspicuous by their absence from the process of dialogue behind the US initiative.

VI. The trade incentives envisaged under the Partnership focus on improvements to the US's Generalized System of Preferences, with a commitment to reducing tariffs and enlarging product coverage to include sensitive items such as textiles. As one element in an integrated trade and development strategy, enhanced preferences could yield important benefits. However, experience under the GSP confirms that African countries have been unable to seize existing opportunities because of supply side constraints, including high transport costs and poor infrastructure. Implementation of the Uruguay Round agreement, under which general liberalization and the phasing out of the Multifibre Agreement will erode preferences, will have the effect of eroding the already limited advantages of preferences. Failure to address the deeper structural problems associated with Africa's dependence on primary commodities is another source of concern in the US proposal.

VII. So, too, is the failure to address the question of coherence between aid, trade and debt policies. Subsidized agricultural production and export dumping by the US and other industrialized countries continues to undermine market opportunities for African producers. The same practices result in African smallholder producers seeing their markets ruined and household incomes decline as a result of cheap imports. Even with the rise in agricultural prices in 1996, the OECD countries spent the equivalent of $166 billion on agricultural subsidies, with the US spending over $7 billion in subsidies for cereal producers. Similarly, efforts to promote private investment are unlikely to succeed in the absence of an early resolution of Africa's debt crisis. Yet the US continues to use its influence to delay implementation of debt reduction under the IMF-World Bank framework for Highly Indebted Poor Countries. Investment opportunities in Africa are further eroded by the continued use of tariff and non-tariff barriers to restrict market entry in areas such as textiles, leather and agriculture. As a group, the G7 countries need to look beyond aid to an integrated and coherent strategy for bringing their trade policies into line with the objectives set for development cooperation.

VIII. The development assistance provisions in the US proposals are similarly disappointing. In the past three years the US aid budget has been slashed, with spending on development declining from 0.15 per cent to 0.10 per cent of GNP. Today, the US is at the bottom of the OECD aid list, yet the new initiative offers no new aid, even for areas such as health and education identified as priorities. Aid quality issues are also not addressed. This is not an approach to development co-operation which will underpin a successful international initiative. Aid is no substitute for good policies - but it can help to underpin economic reforms and distribute the benefits more widely. In particular, carefully targeted aid in areas such as micro-finance and rural infrastructure can help poor people to participate in markets on more equitable terms. Similarly, investment in health and education can help to create an enabling environment, in which vulnerable communities are given opportunities. Improving aid quality and increasing aid quantity should therefore be a major concern for the G7 countries.

IX. Eligibility for support under the US proposals is conditional upon countries implementing economic reform measures deemed acceptable to the US President. The specific policy reforms cited include rapid trade liberalization, the withdrawal of trade barriers which protect local agriculture, and incentives for investment. In practice, these correspond to the economic reforms promoted under structural adjustment programs, compliance with which is likely to serve as a litmus test for good practice. The problem is that compliance with these programmes is associated with slow growth, a poor record on investment and, in many cases, failure to protect social investment. More flexible approaches are needed which take into account the need to reward good practice in improving human welfare indicators and which encourage market reforms geared towards employment creation and long-term growth.

X. Looking beyond aid, trade and debt, any international initiative for Africa must address the challenge of conflict prevention. At the international level, action is needed in the form of an international arms code to register arms transfers and restrict sales to governments which fail to respect human rights, and which prioritize military spending over basic investments in health, education, water and sanitation. Aid transfers should be used as an incentive for good practice, providing rewards for governments which allocate less than an indicative target of 3 per cent of GDP to military spending. More broadly, the G7 governments should undertake a commitment to carrying out conflict impact assessments aimed at reviewing the implications of economic reforms and stabilization programs for social and political stability. The OECD's Multi-Donor Review of the genocide in Rwanda identified IMF-World Bank programmes as a contributor factor to the deterioration in ethnic relations which preceded the tragedy. Such mistakes should not be repeated. XI. The Denver summit provides a crucial opportunity for the G7 countries to take the first steps towards the design of a coherent strategy for supporting African recovery. The architecture for such as strategy could be provided by communiqu, commitments to concrete action in nine areas, namely:

- accelerated implementation of the HIPC debt initiative, with the eligibility period reduced from six years to three years

- incentives for governments, including earlier and deeper debt relief, willing to transfer savings from debt into priority social spending

- international efforts to address Africa's commodity trade problems, including initiatives aimed at controlling supply and stabilizing prices

- more effective action under the World Trade Organization's Plan of Action for Least Developed countries, including: (i) reduction to zero of preferential tariffs and the removal of ceilings and quantitative restrictions and imports from Africa (ii) increased investment in infrastructure and diversification efforts aimed at addressing supply-side constraints

- a phased increase in development assistance, allied to measures aimed at improving the quality of aid with a view to achieving tangible human welfare gains

- a review of the coherence of development cooperation policies with trade policies, especially in the areas of agricultural and non-tariff barriers on manufactured goods

- the adoption of an international arms code to restrict the supply of arms to governments responsible for human rights abuse and/or excessive military spending

- increasing to at least 20 percent the share of bilateral assistance directed towards education

- increasing to at least 50 percent the share of education assistance directed to the primary sector

XII. Progress towards these and other aid quality targets should be reviewed at the 1998 summit. So, too, should progress towards concrete human welfare outcomes. The OECD's Global Partnership for Development has identified a range of objectives, including a reduction by one half in the proportion of people living in extreme poverty by 2015 and universal education in all countries by 2015. As one element of a coherent strategy, improved aid quality could contribute to the realization of these objectives. Establishing criteria for measuring the human welfare benefits of aid to Africa would serve the dual purpose of identifying and developing good practice, and contribute to the restoration of public confidence in aid.

XIII. More broadly, it is vital that any commitments undertaken at Denver are acted upon. Too often, vague commitments are made and subsequently forgotten, especially in matters concerning Africa. Against this background, heads of government should commit themselves to reporting back to the 1998 Birmingham summit on progress.



From: Message-Id: <> Date: Tue, 17 Jun 1997 07:45:16 -0500 Subject: Africa: Oxfam on G7 Summit

Editor: Ali B. Ali-Dinar

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