Africa Progress Panel (Geneva)
Ngaire Woods
27 March 2009
opinion
The global financial crisis has opened up an important opportunity for African Ministers of Finance and Central Bank Governors to push for more responsive and supportive multilateral institutions.
The wind of change is already blowing. The G8 has been swept aside in the debate on a new global financial architecture and replaced by a G20 which has shown self to be action-oriented. Alongside demands for industrialised countries to live up to their current aid commitments and keep their trade markets open, this crisis presents an opportunity for African officials to press for substantive reforms at the International Monetary Fund (IMF) and the World Bank.
Africa needs at least four things from the IMF and World Bank at present: they should receive unconditional assistance to deal with emergencies related to food security or political and security crises (This would require a more rapid and flexible World Bank capacity to react).
As the downturn spills over to affect countries' liquidity, emergency IMF lending should also be more easily available, meaning a better-resourced IMF which works with governments to put in place fewer but better corrective measures: more financing and less adjustment.
A stronger African Development Bank which is supported by, rather than dominated by the World Bank is essential to counter-balance lower levels of assistance from bilateral donors and the drying up (over-correction) in capital markets. Practical advice on short- term and long-term strategies treasuries and Central Banks can use in managing the immediate crisis and setting longer-term strategies would also be useful.
Looking to the future, African Finance Ministers and Central Bank Governors should consider pushing for a number of key changes in the way key international financial institutions are run. There should certainly be more African staff at the IMF and World Bank.
The current levels are shockingly low yet greater numbers of staff would boost the cause of capacity-building for African countries while also increasing the capacity of the IMF and World Bank to understand the political and social constraints and possibilities within countries in which they work.
African officials should additionally agitate for a World Bank Governing Board which can take risks.
The existing Board structure is one which places a premium on minimising risks to the institution. The costs of this approach are borne mostly by borrowers (who face slower and more costly loans) and by the world's most at-risk and vulnerable populations whose hopes of assistance in a crisis or conflict are postponed. This is not to argue that the rules should be ripped up and the Bank encouraged to plough into risk-taking.
Rather, all would benefit from a process of decision-making which better distributes risks.
An example of how the governments sitting on the Board can deliver public goods by giving the institution political cover to permit the Bank to act rapidly in uncharted terrain can be found in the role of the G7 Finance Deputies in the IMF. In their heyday, the G7 Finance Ministers (and Deputies) group acted as a strategic directorate for the IMF, communicating regularly, coordinating policies among key governments and taking information from the IMF.
The World Bank has never had an effective directorate. Its Board of Governors and Development Committee have highly formalised annual meetings. At the other end of the spectrum, its Executive Board operates at a bureaucratic level, sitting full-time in Washington DC, overwhelmed with information and documentation, attempting to oversee all of the Bank's policies, operations, evaluations, quality controls, and audits.
The Bank now needs a board which is small enough to be a directorate, yet representative enough to be effective.
There is also a case for enhancing the power of African countries on the IMF Board. The structure of the Board of each organisation is crucial because it determines who sets the priorities of the IMF and World Bank.
At present African countries have insufficient voting power to give them appropriate incentives to engage meaningfully in deliberations and decisions to give others an incentive to listen to them when they do.
The proposed reforms to enhance the voice and capacity of developing countries in the institution are inadequate.
A slate of changes that would offer incentive for powerful countries to consult African members and for African members to use their voice to push for change would include increases in voting power combined with a double-majority voting system which requires a majority of countries as well as a majority of voting power for any decision to be made. This would create a clear incentive for powerful countries to consult smaller but more numerous African countries.
Finally, African countries should press for a constituency structure in the emerging G20 to ensure that this body is informed and responsive to countries on the continent.
Ngaire Woods is a professor of international political economy at the University of Oxford, England.
Read comments. Write your own.
Copyright © 2009 Africa Progress Panel. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
This post was deleted because it contravenes AllAfrica's commenting guidelines.
This post was deleted because it contravenes AllAfrica's commenting guidelines.
This post was deleted because it contravenes AllAfrica's commenting guidelines.
This post was deleted because it contravenes AllAfrica's commenting guidelines.
Perhaps Mr. Annan could learn from a non-African - President Lula of Brazil who spoke more candidly on behalf of all the poorer people of our world, standing next to Gordon Brown this morning. Enough of this cap-in-hand pleading for more aid instead of fairer trade. Is that too much to ask for? For Mr. Lula’s comment, see: http://news.bbc.co.uk/2/hi/uk_news/politics/7964910.stm.
For the ordinary african in 'subsaharan Africa, live has never been easy even before the economic recession from the 'north' does he have a good road, good health care for his family, water and nutrition, free and quality education for his kids, good shelter instead of live in slums and secure future, who is thinking about him, what are the goals of leaders in sub-saharan africa anyway, where are they when countries like, Indonesia, Malasia, etc, where developing. He has not known any better so the recession means nothing to him, excepts the leaders who's windwall from the north will dry up as a result.
See all comments (10).
Active Discussions: Global Crisis Hits Africa Twice