Interview by Charles Cobb Jr.
AllAfricaMay 19, 2003
If, in the past, African nations relied on hand-outs and talked about the rich world's 'obligations' to the continent, they are sounding a different note these days - seeking access by African nations to markets in industrial nations and investment the African economy. We don't want to be perpetual welfare clients of the G8 nations, is the consensus.
Furthermore, responding to criticism from wealthy industrial nations, African nations have opened their own markets. Recently-developed economic schemes like Nepad - the New Economic Plan for African Development - promise greater transparency and political reform, and they encourage private enterprise. Many individual African nations have loosened currency restrictions and, with great difficulty, have attempted to accommodate the demands for tough structural adjustments made by institutions like the World Bank and International Monetary Fund.
But despite some encouraging signs - African leaders most often cite the African Growth and Opportunities Act (Agoa) - there has been disappointment with the response of industrial nations. Investment in sectors other than oil and minerals remains miniscule. Trade barriers that block the export of African products continue to remain a handicapping hurdle. Government subsidies that protect European and American agricultural products at the expense of African agriculture continue to be a damaging fact of life. Industrial nations haven't fulfilled their part of the bargain, many African leaders say.
Some argue that a stronger presence on the World Bank and IMF executive boards could help. "When you understand how much power the industrial countries hold in the governance of the Bretton Woods Institutions, you realize why the trade agenda supported by these institutions tends to be aligned with the negotiating interests of those same countries within the WTO," said Aldo Caliari from the Washington DC-based Center of Concern in a statement charging that the World Bank and International Monetary Fund "close ranks around flawed economic policies."
Foreign aid in greater amounts will still be needed for a while too, although some of Africa's most thoughtful economists and planners acknowledge that the continent's capacity to manage "assistance" depends in part on improved trade arrangements
AllAfrica.com's Charles Cobb Jr. spoke recently with Ghana's former minister for economic planning and regional integration, Dr. Paa Kwesi Nduom who is now Minister of Energy, Ghana Central Bank Governor Dr.Paul Acquah and Ghana Minister of Finance, Dr.Yaw Osafo-Maafo about these and other issues of economic development. Excerpts:
Expanding the voice of African nations, particularly on governing boards seems to be an increasingly important piece of the discussion about development needs at the World Bank and IMF. At the Bank, sub-Saharan Africa is divided two regions, one with 22 countries in it, another with 20. That gives Africa just two representatives on the executive board; power is weighted in favor of the industrial nations. At least part of the argument is that African issues can't be adequately addressed with this sort of imbalance. Would you agree with that? Do you think there is a need for an expanded African voice?
Yaw Osafo-Maafo: I think it is obvious that with 53 countries in Africa the need for a third voice on the board is there. I think the overall thinking within the Bank and the Fund is that this must be done. I am reliably informed that one [seat on the board] should come out of Europe to be given to Africa. And I think there is a general consensus on increasing the African voice by one, bearing in mind that we are about 800 million people.
They have reached some decisions on this. There will be some increase of African staff on the executive board although it is not clear what those staff positions will be. How far do you think this expansion needs to go?
Paul Acquah: The executive board, or executive directors, have supporting staff members who are responsible for reviewing a lot of the policy papers and especially the country program papers and on the basis of which they provide advice to the executive director for his contribution to the board discussion. Obviously if an executive director is in charge of 22 countries he is really burdened with a lot of work. So he will require a much bigger staff so that he can rise to the challenges associated with that position. I think that it has been agreed that the number of staff members servicing an executive director representing an African group must be expanded so that it can be efficient and effective. I think it is well overdue.
The Bank reports that Africa lags behind every other region in the world in terms of achieving Millennium Development Goals. Given the amount of money that seems to be earmarked for both Iraq and Afghanistan, do you see yourselves, either as a country or a continent, getting anywhere near the kind of resources that seem to be necessary for achieving something like the Millennium Development Goals, or even Nepad which I think needs something like US$64bn?
Kwesi Ndoum:But that is assuming that all of the needs of Africa have to be met from outside of Africa, particularly when you look at Nepad. Nepad was not designed to rely exclusively, or even to rely on external support. We are looking from within Africa for funding as well. Of course, we cannot fund our development by ourselves and so we need external assistance. But I just want to clarify the point that we are not looking to the outside world for all of our assistance.
Let me give you an example. We talk about trade between Africa and countries outside of Africa. But through Nepad, what we are discussing is intra-African trade which today constitutes less than 10 percent of all of Africa's trade. So if we were able to engage in more intra-Africa trade we think some of the needs that we are looking for could be met from within.
Fair enough, but in terms of the money that you're looking for from without, do you think that it is possible to get anywhere near the amount necessary given the priorities that have emerged this year in terms of Iraq and Afghanistan? And it seems to me that over the years there has always been some priority other than Africa.
Kwesi Ndoum: Maybe because of Iraq you might want to ask the question, "what next"? After Afghanistan, after Iraq, perhaps something more positive could be done with Africa. We should be making the case ourselves, positively, that after all of those other missions perhaps there is a 'mission Africa' that should be next.
But is there any reason to expect that?
Yaw Osafo-Maafo: The resources allocated to Africa today by the World Bank and IMF are heavily underutilized; at the end of the year we have used only about 60 percent. So, I think we should also talk about the capacity of Africa to utilize these resources. Because if they give you a hundred and you use only sixty and you turn around and talk about tripling the hundred, your justification for that position is weak.
After saying that, I would say that somehow, a lot of efforts are being made. The British have come out with this International Financing Facility of fifty to a hundred billion [proposed by UK Chancellor Gordon Brown late last year as a means to double annual development aid] in additional resources for Africa. Gordon Brown is very committed to it and is working to raise these funds and to leverage it for more resources for Africa. So yes, I would say we need more resources for Africa but we cannot say that efforts are not being made on our behalf.
We can do with more, but what is equally important is the capacity of Africa to utilize these resources. The records available indicate clearly that to date, we are not able to consume what is being made available to us. I feel very strongly about this point.
I think that one thing we should be talking more about is not so much aid, as trade. We have to call a spade a spade. If we talk more about trade, making trade such that Africa can earn its own money... I always use the cocoa industry as the example; if we export the bean to Europe from Ghana, there is no duty on the bean to Europe. But when you export chocolate, cocoa liquor, we pay 20, or 25 percent. That is the problem! And therefore, anybody wanting to fight for Africa should fight for us to get good trading systems, to get good trading arrangements.
The last WTO (World Trade Organization) talks stalemated around these questions: tariff and non-tariff trade barriers, agricultural subsidies. It looks like the WTO is going nowhere on these issues.
Yaw Osafo-Maafo:Your own [U.S.] subsidy to agriculture is about five times what comes to us. So, why do you talk about aid? Why don't you emphasize trade? That's why I am very much keen about Agoa (African Growth and Opportunities Act). I think things like that are what you should design to assist us to make our own money. The aid, of course, we can't do without immediately - for the next maybe ten years it has to be both. But we should aim for better trading arrangements with the West, with America, with Europe.
Do you have any degree of optimism that these barriers will come down anytime soon?
Yaw Osafo-Maafo: I think you have a lot of internal pressures among yourselves to bring it down. As to how soon, indeed, I cannot say. But we must be lobbying, we must be speaking to you one-on-one.
Industrial countries have been telling Africa in general: 'Well, before we do anything you have to become more transparent. You have to knock down your own barriers,' and so forth. As I observe it, Africa seems to have taken some significant steps in this direction but they have not been matched by the countries that asked you to take those steps, certainly implying that your needs in terms of trade and development assistance would be seriously addressed.
Yaw Osafo-Maafo: That is true.
I really began thinking about this during the last G-8 meetings in Canada where it seems that Africa walked away with little more than a pat on the back and promise for the future. Then there's the WTO stalemate, And Paris recently where US$400 million for education in seven countries was sought and they got only US$200 million. Why should anybody think that whether we talk about assistance or whether we talk about trade, Africa, or African nations, will get anything near the resources that they need?
Kwesi Ndoum: Perhaps we have not stated our case as solidly or as clearly as it needs to be. I'm just reminded today that the U.S. is looking to get a quarter of its energy needs met from Africa. If that is solid, then we have a case to make for attention. We have a case to make for the kind of relationship that we are looking for. But we haven't thought about that; we haven't talked about that. We haven't looked at the linkages that we should be making to try and get the kind of relationship that we need to be able to assist us. So, I am also saying that some of that responsibility lies with us - to be able to use the information that is already there, the facts that are already there, to our advantage.
But let's not forget, on the internal side, some of the issues that we have also had as Africans. So I am sometimes a bit reluctant to just talk about what someone else will give to us. We must also talk about what we need to do to prepare the way to be able to utilize what comes and to be able to make a better case for what we are looking for.
Yaw Osafo-Maafo: And there are questions for the media here. Are you giving Africa the right picture? Are you making Africa attractive to the West? Are you providing enough justification for the West to change and support Africa? Because if you are always going to make Africa look that dark, that bad, that corrupt... I dare say that corruption is almost universal but it has been emphasized in Africa to a level that the impression is created that there is no honest government in Africa. And why would people want to put their money there so that a few people could squander the money. Anytime I come here I spend all the night watching the television, listening to the radio and I get saddened because a lot of good things are happening in Africa and you wouldn't get one [mentioned]. So, how do we make our case? Five stock exchanges in Africa pay far ahead of your own and those in Europe. Why couldn't one talk about that? What you say is what people believe and is what people use to make decisions.
Paul Acquah: If you look at the trade regime in Ghana, it is a very open trading system. We think our trading regime is as open as any trading system. If anything, people think the trading system is too liberal.
This seems a good point to shift gears a bit. A lot of this discussion on trade, aid and investment has centered on what Africa will or won't get from the West. We don't get a chance to see very much what kind of progress has been made by particular countries. Will you talk some about where Ghana is now, at this stage of its economic development? What's the critical need? And has there been any important breakthrough?
Yaw Osafo-Maafo: A new democratically-elected government came to power on the 7th of January, 2001. To me that was significant because that was the first government that came constitutionally. We came and we decided first of all that we wanted to improve governance. Now what does that mean? It means that we shall have the rule of law. So we must strengthen the legal system in our land. On this, so many steps have been taken, including accelerating cases in court.
We talked about transparency, that we wanted to run a transparent government. And one of the first things that happened was that a minister of state was put into prison for - according to the Court - misusing about fifteen thousand dollars of state funds. He went to jail for four years - that's [President John Agyekum] Kufuor's government.
Then we handled the microeconomic environment. We brought inflation reasonably low. We stabilized the currency. We also went ahead to create an environment of good neighborliness. In the first month our president visited all of our neighbors. We did not have good terms with these countries, Cote d'Ivoire, Togo. We now on very good terms with our neighbors.
Ecowas as a regional group is now working - we discuss with each other; we consult with each other. And the efforts Ghana made to support Cote d'Ivoire when the trouble started and to keep Cote d'Ivoire together is something that people should talk about more than what the rebels did, because Nepad's peer review mechanism was given the chance to work; the peer review mechanism is working, at least within Ecowas. We want to succeed as a beacon for the rest of Africa to follow.
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