Addis Ababa, 08 May 1999 (ECA) — African Ministers of Finance and Economic Development and Planning have ended a three-day conference with concrete proposals on what Africa and its partners need to do to address some of the continent's key development challenges.
In a Ministerial Statement issued today at the end of the conference - convened under the theme "The Challenges of Financing African Development" - the Ministers called for wide-ranging measures to address the continent's debt burden, dwindling overseas development assistance (ODA), the need for foreign direct investment (FDI), and the scourge of capital flight.
On Africa's external debt, the Statement noted that there was a "consensus both on the defects of current arrangements to cope with the debt crises as well as on the need to substantially revise and augment" current measures.
Among other things, it called for:
- The restructuring of the Heavily Indebted Poor Countries (HIPC) initiative to "provide deep, broad and fast relief, with greatly relaxed eligibility criteria, greatly shortened period required to benefit under the initiative, and substantially greater resources";
- G-7 countries to completely cancel debts arising from bilateral aid for the poorest countries;
- Moves by the G-7 countries to improve on the current threshold of 80 per cent to cancellation of at least 90 per cent of all other bilateral debt of the poorest countries;
- Agreement by leading IMF and World Bank countries to refinance HIPC through gold sales "without hurting the interests of Africa's gold exporting countries...";
- Measures to ensure that debt relief for the poorest countries should not be provided at the expense of ODA funding for development programmes and projects;
- Exceptional debt relief - with the possibility of full cancellation of debts -- for post-conflict countries, as well as countries affected by natural disasters and spillover effects of conflict situations in neighbouring countries;
On ODA, the Ministers stressed that despite internal donor community pressures to reduce aid, and in view of its importance in achieving fundamental development objectives at a time when Africa was undergoing recovery, aid should be expanded, not contracted. To address the problem of aid dependency, Ministers stressed the importance of "improved African ownership and commitment to aid-funded projects and programmes, the need for strengthening institutional aid delivery mechanisms, the importance of a strategic vision of aid-funded activities, and the importance of reforming the current consultative fora".
On FDI, it was noted that despite commendable efforts made by many African countries to implement economic and financial reforms, FDI flows to most of them remained marginal. As such, the Ministers affirmed the need to accelerate trade and investment, and stressed that trade, development investment and its financing - including ODA, debt relief and private domestic and foreign financial flows - are intertwined.
A key aspect of the Conference follow-up strategy is that these and other positions on the international dimension of financing Africa's development will be conveyed by the Economic Commission for Africa (ECA) - which organized the conference - to the Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD) as well as to the upcoming G-7 meeting in Cologne, Germany in June.
At a press conference after the close of the Conference, ECA Executive Secretary Mr. K.Y. Amoako told journalists that a meeting would be convened in Addis Ababa in late July this year to flesh out the technical modalities of the proposals made at this week's Conference. The meeting would form a part of the HIPC review process.
The Ministers recognized the dramatic negative impact of capital flight on development, and resolved to "take the necessary steps to stem and reverse capital flight, including preventing macroeconomic policy lapses or policy inconsistencies, which are likely to trigger, or contribute to, capital flight." They also resolved to strengthen anti-corruption measures "using political, administrative, diplomatic, legal and economic policy instruments targeting the bribing agents, who are resident overseas in partner States, and the recipients of corruptly obtained funds in Africa".
In addition, the Statement took note of the need to draw lessons from the Asian crisis.
While integration into the global financial system remained a fundamental objective, it was stressed that "a globalized financial economy carries risks, which must be managed both domestically and internationally".
Five hundred participants from the public, inter-governmental and bilateral partner sectors - including some 30 ministers and several governors of African central banks -- participated in the three-day conference, which combined two major biannual ECA gatherings.
The Conference also commended ECA's 1999 Economic Report on Africa (ERA 99), which this year evaluates performance (outcomes) and policy efforts in terms of progress towards a well-defined long-term goal of reducing poverty by half by the year 2015, and further the sustainability of observed outcomes. The main finding of ERA 99 is that despite the recent economic growth and progress in economic policy reforms, most African countries lack the fundamentals for sustained future growth at rates required to realize globally-agreed poverty reduction targets.
