Washington, DC — What Africa needs to grow economically is access to markets around the world. That is the view Ugandan President Yoweri Museveni emphasized during two days of discussions at last weeks meeting of the Global Coalition for Africa (GCA). Those countries who count themselves "friends of Africa" should show their friendship by allowing Africa to sell its agriculture products and manufactured goods, he said.
The GCA, an intergovernmental agency formed in 1990 to mobilize support for the continent and chaired by government officials and former officer-holders from Africa and Europe, held its first plenary in Africa, with the focus on the role of the private sector in African development.
"The private sector should get rid of the negative perceptions that it has about the African continent and see Africa as a place to do business," South Africas Deputy President Jacob Zuma told the delegates. Maria Minna, Canada's Minister for International Cooperation and a coalition co-chair, said that "major concerns" in the world now "must not divert us from the attention Africa needs to reduce poverty, combat disease and foster stability."
Participants included Presidents Festus Moga and Frederick Chiluba of Zambia; Prime Ministers Meles Zenawi of Ethiopia and Hage Geingob of Namibia; Frene Ginwala, speaker of South Africas parliament; Clare Short, the British Secretary of State for International Development; and former presidents Ketumile Masire of Botswana and Nicephore Soglo of Benin. Also taking part were a number of senior officials from governmental and non-governmental agencies in Africa and abroad.
The dialogue between government and private sector participants at times became heated. In closing remarks, Ginwala expressed concern that she had not heard enough about social responsibility obligations on the part of businesses. Non-governmental delegates stressed the need for governments to pursue reforms, combat corruption and adhere to transparency. In a paper prepared for the meeting, Dr. Mthuli Ncube, chief executive of the Barbican Group in Zimbabwe, argued that additional improvements in the regulatory environment are essential for "a stable and well-functioning financial system in Africa."
What was broadly agreed was the need to liberate the European Union from its agricultural subsidies as a way to serve the interests of both Africa and Europes consumer.
A major topic of discussion was the recently drafted rescue plan for Africa, formerly know as the New African Initiative, which was officially launched at a summit in Abuja, Nigeria two days before the Gaborone meeting as the "New Partnership for the Development of Africa" (NEPAD).
Mogae, acting as the host, set the agenda in his opening remarks, which are excerpted below:
It is now generally accepted that the private sector plays an indispensable role in economic growth, job-creation, business innovation and technological advancement.
It is one thing to make policy pronouncements about private sector development, and quite another, to effectively implement the policies and institutional arrangements that provide a conducive environment for the private sector. Moreover, the implementation of appropriate reforms and a business-friendly environment may not immediately translate into an upsurge in new private investment. As we have all the relevant actors here among us, including a large cross-section of the business community, we look forward to frank discussions on the constraints that need to be addressed, as well as the additional proactive measures and incentives that need to be provided to bring about vibrant private sector-led growth.
Private sector activity and investment are influenced not only by what individual countries do but also by developments within a particular region. Conflict or political instability in a neighbouring country has implications for investment, tourism and other business activities in the immediate vicinity and even beyond.
Similarly, macroeconomic policies including fiscal, monetary and exchange rate and interest rate policies pursued in countries with economic and trade relations with each other, impact significantly on one another. Hence, while individual country action is necessary, it is also important to address constraints in close coordination with relevant neighbouring countries. Regional organizations such as the Southern African Development Community (SADC) have an important role to play in the convergence of macroeconomic policies and harmonizing regulations and procedures.
As many of you may be aware, when we attained Independence in 1966, Botswana was a very poor country, with most of its people subsisting on rural arable and pastoral farming activities. A significant number of the adult male population was employed in South African mines. A large part of our national budget was financed by donors, principally the United Kingdom in the initial years. With the discovery and commercial exploitation of diamonds starting in 1969, the prospects for Botswana improved considerably. Real per capita income grew at an average annual rate of about 7% in the first 30 years of our independence. As a result, in 1991 we graduated from the category of "least developed countries" to a middle income economy. All this would not have been possible without the active partnership between Government and the private sector, both domestic and foreign.
Over the years, we have implemented fiscal and monetary policies aimed at both stability and growth promotion. As a small, land-locked country, Botswana had little choice other than to be an open economy. We have consistently maintained a market-based exchange rate system and a liberal trade regime. Remaining Exchange Controls were abolished in 1999. Our tax rates are quite low and compare favourably with rates in other developing countries. Although there is considerable room for improvement, our administrative and regulatory systems are relatively simple and investor-friendly.
The Privatization Policy Paper adopted by Parliament in June, 2000 sets out the broad parameters of privatization in Botswana. In addition, we have established institutional mechanisms for the promotion of entrepreneurial development and for the improvement of productivity.
In particular, we have programmes that are specifically targeted at encouraging and promoting small and medium-scale businesses as well as micro enterprises. This is because we believe that medium, small and micro enterprises are relatively easier to start and operate, and also offer significant opportunities for employment.
While formal sector employment has grown significantly over the years, we are the first to acknowledge, that our current level of unemployment is unacceptable and untenable. Hence job-creation and the associated goal of skills enhancement are important pre-occupations for the government. At the same time, the Botswana economy must be diversified to establish new non-traditional sources of growth. We have no doubt that the private sector, both foreign and domestic, holds the key to achieving these priority objectives of sustainable diversification and job-creation. The choice of the theme "The Private Sector: Key to African Development" for the GCA Plenary is thus most welcome for us in Botswana.
For the African continent to realise the full potential of the private sector, we need to confront all the constraints that it presently faces. If a selective approach is adopted, we shall get sub-optimal results. Therefore stable macroeconomic policies and regulatory environment; well developed and regulated financial and banking system; transparency; development of human resources; infrastructure provision as well as its efficient operation and maintenance; adequate legal framework, including enforcement of laws; as well as efficient delivery of public services, are among the issues, that should remain at the top of the development agenda.
I trust that our discussions will include a consideration of the regional and global economic environment, given its implications for our economies, particularly private sector development. Private sector led growth is not an easy, "all gain and no pain" option.
Neither is it a panacea for all of the continents development problems, but the private sector can make a meaningful contribution to economic development under conducive domestic and international conditions. Indeed, market changes in the international economy, such as the economic crisis of 1997-98 that started in Asia and spread elsewhere, or the current economic slowdown in the major industrial countries, have a direct impact on the exports of many African countries. WTO-initiated or bilaterally agreed tariff reductions and trade liberalizations by trading partners also impact on our revenue receipts as well as on the competitiveness of our products.
The volatility of international commodity prices as well as the risks of depressed demand are issues of major concern to the African continent. Diversification is the long-term means for addressing the challenges we face as well as for taking advantage of the opportunities available in the international market place.
And diversification can be achieved through partnership between domestic and foreign investors. Foreign direct investment provides benefits beyond access to capital, as it is also usually a channel for acquisition of technology, marketing and management know-how, as well as skills development. African Governments need to intensify their efforts to further improve the environment for business and prepare their citizens with the skills and knowledge, such as Information and Communications Technology, that are crucial for international competitiveness.
I cannot conclude without reiterating the immense threat Africa faces from HIV/AIDS. My own country Botswana has one of the highest HIV/AIDS prevalence rates in the world. It is true that we woke up to the enormity of the pandemic too late in the day.
However, we are on a virtual war footing in waging campaigns aimed at both prevention and care until we reverse the trend. The experience of countries such as Uganda gives us hope that with determined and well coordinated campaigns we may see the beginnings of a decline in the HIV/AIDS prevalence rate. Increased support by the international community in the war against HIV/AIDS is absolutely imperative given that Africa requires between US$ 3 and 4 billion annually to effectively fight the scourge.
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The United Nations Millennium Declaration adopted in September, 2000 included a commitment by the international community to enhance resource flows to Africa by improving aid, trade and debt relationships with the rest of the world as well as increasing private capital flows.
The GCA and other friends of Africa should lend their support to the New African Initiative as a concrete manifestation of realizing the objectives of the Declaration. This will provide the impetus to the economic growth that is necessary for sustainable poverty reduction and the achievement of other International Development Goals. In this regard, the question of access of African products in the markets of developed countries is paramount. Lowering and reducing tariffs and non-tariff barriers should be complemented by drastic reductions in some of the heavy subsidies extended to developed country products. Apart from the fact that these subsidies distort free trade, some of the products subsidised are also the ones in which African producers are internationally competitive, for example agricultural products.
Furthermore, Africa should also be relieved of the long standing yoke of external debt. And even more important, the often talked about "globalisation" should not be a whale that swallows economically weaker states, but rather a vehicle for broad based improvements in living standards in the interest of global peace, security and human dignity.
I also wish to deplore the vicious and tragic attacks on New York and Washington DC on 11th September and the human death toll and suffering inflicted. The reverberations of the attacks are being felt by economies across the world and it is the poorer economies which will bear the brunt of global economic slow down.
Resources that are being deployed in security improvements have a high opportunity cost and could exacerbate the already low levels of Official Development Assistance and Foreign Direct Investment flows to Africa. It is my earnest wish and hope that the current tensions do not escalate into a global conflagration. That having been said, let it be known that the Botswana Government supports the steps that are currently being taken by the US and the UK to bring the perpetrators of the crimes to justice.
