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Africa: Oxfam Statement on G7 Summit
Africa: Oxfam Statement 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;
Email: oxfamintdc@igc.org.
OXFAM BRIEFING FOR G7 DENVER SUMMIT
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.
END
This material is being reposted for wider distribution by the Africa
Policy Information Center (APIC), the educational affiliate of the Washington
Office on Africa. APIC's primary objective is to widen the policy debate
in the United States around African issues and the U.S. role in Africa,
by concentrating on providing accessible policy-relevant information and
analysis usable by a wide range of groups and individuals.
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