Maputo — A draft memorandum addressed to the heads of the World Bank and the IMF, under discussion in Maputo at the meeting of the "African Caucus" of Finance Ministers that began on Monday, calls for an increase in the representation and voting power of Africa in the two Bretton Woods Institutions.
The memorandum warns that "the role and effectiveness of the IMF has been weakened by a continued erosion of voice of African countries in decision making in the Fund, lack of diversity in staffing at all levels and inadequate staff resources in the offices of Executive Directors representing Africa in the fund".
As for the World Bank, the African Caucus fears that "the voice of African countries has been shrinking over the decades, mainly due to diminishing importance of the basic votes in the voting power".
The voting system in the Bank is weighted in terms of wealth. The richer a country is, the more shares it has in the World Bank, and the more votes. There are two categories of vote.
One is linked to money, and the other, the "basic vote" is allocated as an entitlement of membership.
The complaints of the Caucus can only be understood in the knowledge that the "basic vote" has fallen from 10 per cent of total votes in 1970 to less than two per cent now. 98 per cent of votes at the Bank are determined by how rich a country is, as measured by how many shares it holds in the bank.
Each country has 250 basic votes. One of the briefest sections in the World Bank's articles of association is on the voting mechanism, which says simply "Each member shall have 250 votes plus one additional vote for each share of stock held".
The predictable result is that the developed countries can outvote everybody else. The 23 countries classified as developed have around 60 per cent of the vote. And the five richest countries - the USA, Japan, Britain, Germany and France - have almost 40 per cent. And the United States alone has 16.5 per cent of the votes.
The draft memorandum seeks to redress this by an increase in the basic votes. "The relative importance of the basic votes needs to be protected from shrinking by ensuring that any further re-alignment of quotas will be synchronised with commensurate increase in the basic votes", the draft memorandum says.
In other words, if rich countries obtain more shares in the World Bank, then the number of basic votes for everybody should also be increased.
"The ongoing two-stage process of quota and voice reform", the draft adds, "should lead to the establishment of a mechanism aimed at protecting the voting power of African countries from any erosion subsequent to future quota adjustment".
The memorandum also called on the IMF management "to discourage the spirit of maximising individual country benefits in adopting a new quota formula, and emphasise the give and take spirit which will be critical in reaching a consensus".
Other demands to improve Africa's position include increasing the number of African chairs on the Boards of the World Bank group. Currently it is financial power that determines who holds leading positions in the Bank - for example, the Bank has 12 executive directors, and five of them are appointed by the five largest shareholders (the US, Japan, France, Britain and Germany). All of Africa is represented by just two executive directors.
The memorandum wants to see more African faces in the Bank and the IMF, and thus urges the two institutions "to increase the number of African staff at all levels, including the highest managerial positions, and to carefully monitor African staff promotion".
The second issue weighing on the minds of the Finance Minister is the impending 15th replenishment of the World Bank's soft loans affiliate, the International Develoment Association (IDA).
More money is needed for the IDA, the memorandum says, to help African countries meet the Millennium Development Goals (MDGs), set by the UN Millennium Summit in 2000. At the current pace, it warned, 23 African countries would not meet any of the eight MDGs, 13 would meet one, and nine would meet no more than two.
Part of the blame for this is that funding promised by the G-8 group of most industrialised countries at their 2005 summit in the Scottish resort of Gleneagles had not materialised.
Instead, the memorandum notes, "Overseas Development Assistance, excluding debt relief and special purpose assistance, declined in real terms by about 2.1 per cent between 2004 and 2005. Worse still is the continuing downward trend expected in the near future".
Thus the African Caucus was urging the World Bank group to redouble efforts to assist Africa mobilise the funds needed to attain the MDGs - and key to this was guaranteeing a replenishment of the IDA's funds "that would exceed, in real terms, the level that had been achieved during the 14th replenishment".
The Memorandum also urged tha Bank and the Fund "to advocate augmentation of resources beyond the IDA context, and to innovatively leverage additional development financing from other development partners" - through such mechanisms as the Africa Infrastructure Fund.