Global Policy Forum

Africa and the Global Development Challenge

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By Lawrence Summers

Treasury News LS-681
June 6, 2000

Good morning. We come together today to discuss an integral part of the global development effort - the empowerment of women - at a time when that effort is in the spotlight in a way that it has not been for a long time. The Beijing plus 5 initiative has made a crucial contribution to this greater awareness. You are truly to be applauded for what you have all achieved.

I am going to sub-Saharan Africa next week to talk with officials and others in the region about the development challenges that they face - because it is the region where the challenges are at once the most profound and the most urgent. There may be issues with greater potential global financial impact today than the successful economic development of Africa. But there is none with greater potential human impact.

When G7 finance ministers meet in Japan next month in the lead-up to the Summit in Okinawa, questions of development will be on the top of the agenda, with the continuation of the Heavily Indebted Poor Countries (HIPC) debt relief initiative; with the much strengthened emphasis on reducing global poverty that has been part of that initiative; and with the increasingly universal belief that the dawn of the 21st century must be a time of more global hope and opportunity.

For all these reasons, let me focus my remarks today on sub-Saharan Africa: the enormous obstacles that it faces; and the pressing need for a stronger and more effective international development effort to help its countries begin to overcome them.

I. Sub-Saharan Africa Today

For all the problems that still exist, in most parts of the world the global development effort has had enormous successes in the past few decades. More people have been lifted out of poverty, especially in China and other parts of Asia, than at any time in world history. Average life expectancy in the developing countries has risen by seven years since 1980, from 52 to 59. That is considerably more than the increase we would see here in the US by eliminating all cancer. And infant mortality has been reduced from 116 per 1,000 to 82, a decline of nearly 30 percent.

At the same time, while there are certainly exceptions, sub-Saharan Africa today stands out as a region that still lags far behind.

  • On average, output per capita in sub-Saharan Africa was lower, in real terms last year than it was in 1960. In some countries it has fallen by more than 50 percent. And the average individual income in a region of 600 million people is now only 65 cents a day.

  • The region's share in global trade has fallen from 3 percent in the 1950s to less than 2 percent in the mid-1990s - a decline that is estimated to have reduced national incomes by nearly $70 billion each year, or just over 20 percent of regional GDP.

  • Across large parts of the continent, 200 of every 1,000 children die before the age of five, and young girls have only a 1 in 4 chance of being enrolled in primary school. Indeed, in many countries, children are more likely to die before reaching five than to learn to read.

    Africa's problems have no single explanation and differ considerably from country to country. But most observers attribute the downwards divergence of the region in the past few decades to a number of factors, including: poor national economic policies; the prevalence of kleptocratic and corrupt governments; frequent civil and regional conflicts; and, not least, the challenges posed by its natural environment, which leaves Africa particularly vulnerable to infectious disease, and makes it more difficult to produce adequate food or trade with the global economy.

    All of these problems are being exacerbated by the HIV/AIDS pandemic. The facts are known to many of you here but they are worth repeating. And they certainly caught the attention of many of the world' finance ministers when World Bank President Jim Wolfensohn so valuably highlighted them at the Development Committee meeting in Washington this spring.

  • Of the 16 million deaths from AIDS to date, 14 million have been African. Last year, the combined wars in Africa killed 200,000 people. AIDS killed ten times that number, overtaking malaria to become the Continent's greatest single killer. Yet it is estimated that 90 percent of the illness and death that HIV/AIDS will bring to Africa are still to come.

  • As you know, women are increasingly bearing the brunt of HIV/AIDS, both as the primary care providers and, among the young, as those who are often most vulnerable to the disease. In many places, HIV/AIDS infection among young women is 3 to 5 times higher than among boys. And in parts of South Africa, where I will be visiting next week, nearly one-third of pregnant women are testing HIV positive, compared to just 1 percent in 1990. On a continent where women perform an inordinate share of the physical labor and contribute in critical ways to the household economy, the debilitation wrought by AIDS is especially cruel.

  • Today, 23 million Africans are infected, and 11,000 are added to the list every day. In the countries worst hit, more than 1 in 4 of the adult population may now be HIV positive - and more than 10 percent of the population are AIDS orphans. Yet the total per capita health budget in many countries is often less than $5 a year.

  • AIDS is wiping out several generations of improvement in life expectancy and mortality rates. In southern Africa, life expectancy is expected to drop from a high of 59 in the early 1990s to 45 within the next 5-10 years, a level not seen since the 1950s. In the countries where the virus is spreading fastest, it has been suggested that life expectancy could soon fall back to the 35 years characteristic of biblical times.

    Confronting these problems is a global moral imperative. But in a shrinking world, it also has direct implications for the interests of people around the world: their interest in a strong global economy; in avoiding conflicts into which they may be drawn and the threats posed rogue states; and their interest in preventing the spread of diseases that are no respecters of national boundaries.

    II. A Platform for Further Action

    For all the problems, it is encouraging that both within sub-Saharan Africa and across the international community there is a growing recognition of the seriousness of the situation and the need to act. This is reflected in the activities that many of you here have been involved in since Beijing to make the Platform for Action a reality. We also see it:

  • In the pockets of real progress in Africa: including Nigeria, where the first civilian elected President in 20 years has put better governance at the top of his agenda; Uganda and Tanzania and their successful efforts to support growth and poverty reduction in the 1990s; and Mozambique, where democracy and rapid growth have replaced two decades of devastating civil war. Mozambique has been one of the fastest growing economies in the world in recent years. And even as it deals with major flooding and a looming malaria epidemic, the government is working to keep its growth strategy on track.

  • In the recognition, at both the national and the global level, of the scale of the threat posed by HIV/AIDS, including the crucial efforts of UNAIDS and other agencies and the Vice-President's pledge of much strengthened efforts to combat AIDS at the first-ever UN Security Council meeting on a health issue last January.

  • And in the global community's embrace of the strengthened HIPC initiative in Cologne last year, which focuses on ensuring that countries that are committed to reform can spend more of their precious resources on their people - and less on paying off official debts.

    These positive trends are a platform on which we must seek to build in the future as we work to help African countries forge a more hopeful path.

    III. The Agenda for the Future

    If we are to move forward with this effort we have to move beyond the debates of the past.

  • There are people who argue that international assistance without conditions and without governments that are committed to doing the right things is worse than useless. And they are right.

  • There are people who argue that even with the best policies - and the best governments - in the world, if you are one small country of many in a tropical, geographically isolated part of the world and 20 percent of your population is affected by HIV/AIDS it is going to be extraordinarily difficult to make good things happen. And they too are right.

    Nations shape their own destiny. In recent years we have learned and re-learned the lesson that the international community cannot want economic reform and development more than a country's own government or its people do.

    But at the same time, it is equally a mistake to overlook what might be called the tyranny of geography: to suggest that the economic failures of isolated, tropical nations with poor soil, an erratic climate and vulnerability to infectious disease can be traced simply to the failure of governments to put in place the right enabling environment.

    The challenges are colossal. The record of past economic reform and assistance efforts is worse than mixed. And certainly, none of us has all the answers. But it is important to remember that there are high return investments in growth and poverty reduction that are not being pursued in Africa today - at tremendous human and economic cost - because of a lack of official resources.

    There are four crucial lessons from the past few decades that must inform a more effective international approach.

    First, the need for selectivity

    Recent World Bank research has shown that targeted to the right policies and governments, official assistance can be highly effective. In such environments, one percent of GDP in official assistance translates roughly one-for-one into reduced poverty and lower rates of infant mortality, and helps generate nearly twice that amount in inflows of new private investment. Yet a large portion of global bilateral aid has flowed to countries with poor policies and approaches, where assistance has been shown to do little good. While countries with good policies have tended to face declining official support, just when their reform efforts are bearing fruit and outside support can do most good.

    Going forward, we must work to target scarce official resources more effectively on countries and programs with a proven capacity to deliver results.

  • That means that we must more often decline to provide assistance to corrupt or uncommitted governments - in Africa or anywhere else - that lack the desire or the capacity to invest those resources for the good of all of their people.

  • And it means that where countries are committed to effective policies, we must stick with them, and resist the common tendency to declare victory too soon. What Africa needs most today are success stories. When countries are using official assistance well they should be able to attract more of it.

    Second, the importance of economic integration

    Economic integration is the transforming global dynamic of our time. No developing country, much less a small and under-developed tropical country, has achieved rapid economic growth in the past fifty years without joining the global market and achieving rapid growth in exports. Those that have deployed their comparative advantage effectively - most notably in East Asia - have moved from subsistence to skyscrapers in barely a generation.

    It is easy to be cynical about the capacity for information technology to speed the global development effort at a time when half of the world's population has yet to use a telephone - and 40 percent of African adults cannot read. At the same time, we cannot ignore the possibility that in Africa especially, the "death of distance" might open of a new range of opportunities for core and periphery to compete on more equal terms, and so converge. This was brought home to me on my last trip to Africa, three years ago, when I encountered an Internet provider from Mozambique. His main concern was the advent of new competition.

  • That is one reason why HIPC, in Mozambique and elsewhere, is so important. It will help free governments to realize the opportunities that global markets afford - by removing the drag on growth and investor confidence that an unsustainable foreign debt creates.

  • And that is why the African Growth and Opportunity Act, which President Clinton signed into law last month, is so important. This will open up important new opportunities for many African economies by significantly expanding their access to the US market, especially in apparels.

    As part of this effort, the official donor community will perhaps also need to be more accepting of the need for governments to chart their own course. Africa has learned the hard way that selective protection of industry and national champions are not reliable strategies for growth. But history also suggests that it is much more difficult to achieve change in a country when governments lack a clear vision of what that change might achieve. In this context, I would hope and expect that along with an increase in focus on human development indicators, future official assistance programs will put more emphasis on manufacturing exports, which have played such a crucial role in every major development success story of our time.

    Third, the crucial role of education

    In a former capacity I undertook research that convinced me that girls' education represented the single highest return investment that any developing country in the world could make. Nothing that has occurred since then has led me to change my view.

  • The World Bank has recently estimated that if the Sub-Saharan Africa had seen just the East Asian rate of improvement in the gender gap in education since 1970, GDP and living standards would be 15-25 percent higher in those countries today.

  • And if the ratio of female-to-male years of schooling were near parity today, Africa's rate of infant mortality would be 25 percent lower.

    Education always pays off. What is especially attractive about educating girls is the additional benefit that accrues to empowering the member of the household with the greatest capacity to alter the life prospects of the generations to come.

    Letting girls go to school, learn to read, and experience more of the world beyond their homes makes them better off immediately and enriches their families. The result, in country after country, is smaller, healthier families enjoying longer, happier lives. The cost of keeping girls in school just one more year more than pay for themselves in the social and economic benefits in the form of higher incomes, and smaller numbers of infant and maternal deaths.

    It bears emphasis today that educating girls holds the further benefit of helping to prevent the spread of HIV/AIDS. Studies in Zaire, Zimbabwe and elsewhere all suggest strongly that higher rates of female secondary school enrollment have been associated with a much slower rate of transmission of HIV. And across the developing world, DHS data confirm that levels of education are now highly correlated with the probability that women will practice safe sex.

  • That is why the new approach to official lending that is part of the HIPC initiative puts core investments in female education, along with other core social investments, at center stage. Uganda saved $45 million in debt service under the original HIPC. This relief has helped the country to double enrollment in primary education in just two years. Under the enhanced HIPC, Uganda is expected to receive an additional $650 million in debt relief in net present value terms to invest in universal primary education and other basic human priorities.

  • And that is why we are asking the international community to consider concrete, multi-year targets for substantial increases in World Bank lending for education - particularly for basic education and to narrow the gap between girls and boys. And we are working to build support for a major focus on basic education and health at the upcoming G7 meeting in Okinawa next month.

    Fourth, the importance of core investments in health

    I believe strongly in the power of markets, economic growth and strong policies. But anyone who studies the statistics on HIV/AIDS and other infectious diseases in sub-Saharan Africa today has to conclude that without a more effective approach to these problems, no national economic policy, however well devised and implemented, is going to yield significant positive results. They have also to conclude that African countries themselves will not be able to mount such an approach on their own.

    None of this is to absolve national governments for the waste of national resources that has taken place in recent decades, and the failure of many to take the initiative in responding to the threat of AIDS. But the rest of the world has to be doing more, not simply as a moral imperative but as an economic one.

  • We must ensure that HIPC and other assistance to the poorest countries in the future deliver concrete improvements in basic health - and more effective programs for preventing and treating disease. Efforts to improve the efficiency of all health expenditures will be especially crucial, when it is estimated that patients in public health facilities in Africa may receive benefits worth only $12 for every $100 of public spending on drugs - and the poorest fifth of the population on average receives only around 12 percent of subsidies in public health.

  • We must upgrade our national and international efforts to help countries address the challenge of HIV/AIDS. USAID has been part of important success stories in this area - notably in Uganda, where the prevalence of HIV among 15-24 year-olds in urban areas has been cut by one third, and nationally by a third. The additional $100 million that the President has requested for AIDS programs in next year's budget would significantly expand our capacity to build on these examples in the future.

  • And we must work to mobilize global resources and expertise for the development and dissemination of vaccines for the infectious diseases that afflict the developing world, as the President has highlighted in his Millennial Vaccines Initiative:

  • By providing more resources for countries to purchase the vaccines that already exist.

  • By shifting existing international resources - notably multilateral development bank lending - toward support for local infrastructure in the poorest countries to deliver vaccines and medicines and provide essential basic health services.

  • By intensifying the search for more effective ways of treating and preventing the major killer diseases in the poorest countries, especially HIV/AIDS, malaria and tuberculosis: for example, through greater public support for such research under the auspices of the National Institute of Health.

  • And by strengthening private sector incentives to develop new vaccines for these diseases. In the era of Viagra, it cannot be right that of the 1233 new medicines patented between 1975 and 1997, only 13, or 1 percent, were for tropical diseases that afflict 90 percent of the world's population - and that of those 13 new products, only 4 came from research efforts that were aimed at curing humans. As a small step forward, the President is proposing a new tax credit for sales of vaccines for any infectious disease that causes over one million deaths annually worldwide. We are calling on other governments to make similar commitments, to help guarantee a future market for these urgently needed vaccines.

    Concluding Remarks: the Need to Expand Global Assistance Capacity

    By applying these four core lessons: the importance of selectivity, support for integration, and substantial increased investments in education and in basic health, we can substantially improve the quality of the resources that the international community brings to bear on the challenges that sub-Saharan Africa faces today.

    This is crucially important. With the lessons of experience now clearly understood, there can be excuse in the future for letting aid fill the pockets of elites who put their palaces before their people; or for letting optimism or geopolitical considerations triumph over a hardheaded assessment of the facts. We have learned the hard way that money given to corrupt governments harms no one as much as the people who live in those countries themselves.

    And yet, we must also face up to the fact that when the average per capita health budget in sub-Saharan Africa will barely cover the cost of a tse tse fly trap, the very best governments in the region today face problems that they will not come close to addressing without major outside support. And we must face up to the fact that with the devastation that is coming from HIV/AIDS, and the enormous progress being made in other parts of the world - the path the world is now on is a path by which Africa will fall even further behind in the generation to come.

    This is not something that any of us should be prepared to accept. It has been an important part of your agenda for some time. And it must be an important part of the global financial agenda in the years ahead. Thank you.

    1Remarks by Treasury Secretary Lawrence H. Summers United Nations Conference on Women and Development in New York.

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