Washington, DC — The official face being worn by African ministers, World Bank and IMF officials is optimistic as they once again say things are going to be different in Africa.
"I regard these meetings as a natural sequence of Monterrey, Johannesburg, and the follow-up from Doha," said Bank President James D. Wolfensohn Thursday, pledging that this weekend's meetings of the Bank and the International Monetary Fund will concentrate on how to implement a variety of promises made to developing nations over the past year.
"After Monterrey, I gave away 250 t-shirts to Ministers which had the word "Implement" on them, and if I need to, I'll give away another 200 t-shirts," he said. The "core" of this meeting is "a move from theory to practice," he said. "It is a move from general argument to action."
African officials in Washington for the meetings express appreciation for these words, but when they are asked just how much agreement can be expected on the design of implementation, the typical response is uncertainty. And nowhere is the uncertainty greater than on the issue of subsidies, a topic closely linked to politics in both the United States and Europe.
While the African Growth and Opportunities Act (Agoa) has opened U.S. markets to some African products, agricultural subsidies in the United States and Europe as well as other non-tariff trade barriers continue to block the export of African goods and services. "We want [Europe and the U.S.] opened up," says the Djibouti ambassador to the United States, Roble Olhaye, dean of the African diplomatic corps.
According to research published by the Fund and the Bank, world cotton prices would rise by 25 to 30 percent if American farm subsidies for cotton were eliminated" says the chief of the IMF's Division on International Trade, Hans Peter Lankes. "That would be equivalent to an increase in export revenues for West Africa of about US$250 million."
Agricultural subsidies "run around US$1 billion a day -- roughly six times aid," said World Bank chief economist Nicholas H. Stern, who along with Lankes, briefed reporters Friday. "The average Japanese cow receives around US$7 a day in agricultural subsidy," he said. Seventy-five percent of the people in Sub-Saharan Africa live on less than US$2 a day."
To address the issue, a "market access paper" was presented to the Development Committee on Friday as a joint IMF-World Bank paper. "We hope we can do something to push these discussions forward," said IMF Chief Economist, Dr. Kenneth Rogoff. "Over the next year, it's our intention to consider a review of our trade policy."
Another crucial issue impacting Africa's future is debt. The Bank and Fund are claiming some success with the Heavily Indebted Poor Countries Initiative, known as HIPC, which was launched in 1996. Under HIPC, debt relief is offered to cash-strapped nations if they implement poverty alleviation strategies prescribed by the two financial institutions. "The HIPC is delivering about US$800m a year to African countries in the form of budgetary expenditures which are not being spent on debt," said the Bank's chief economist for the Africa region, Alan Gelb. "Our analysis of the budgets shows that about 80 percent of that is being reflected in increases on spending that is pro poor."
But a leaked copy of an IMF and International Development Association (IDA) study, which was released earlier this month by the Jubilee USA Network, found that the HIPC initiative has failed in its goal to bring countries to a sustainable level of debt.
Seventeen African nations have reached the HIPC "decision point" - when debt relief is committed, And of the 19 countries originally expected to reach by the end of this year the "Completion Point" - when debt is actually reduced - at least 11 will not make it, according to the leaked report. Just five African countries -- Burkina Faso, Mauritania, Mozambique, Tanzania and Uganda -- have achieved that standing so far.
"The outlook for many HIPCs has deteriorated with the global economic downturn and the fall in commodity prices," acknowledges the Bank's Development Committee in a paper prepared for this weekend's meeting.
Sub-Saharan African nations paid out close to US$15bn to creditors last year and owe almost US$300bn. Some US$149bn is owed by the 34 African nations that are HIPC nations. "Debt is the single biggest obstacle to the continent's development," says Salih Booker, executive director of Africa Action, a U.S.-based lobby organization that is calling for debt cancellation. Discussion of mechanisms for implementing debt cancellation will not be on the table, say Bank and Fund officials.
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At this weekend's meeting, said Ambassador Olhaye, "less rhetoric, less conditionalities" would be an accomplishment. But debt relief "is not a panacea." Unless the American and European markets open up to African products, "we will go right back to more debt," he said.
Indeed, according to Paulo F. Gomes of Guinea Bissau, one of the Bank's directors for the African region, Mali is the most productive cotton grower in the world but can't sell to Europe "because of subsidies."
In brief remarks at the South African embassy in Washington, DC Thursday night, South African Finance Minister Trevor Manuel said: "We want to have more space on the development agenda." Manuel chairs the World Bank Development Committee and says that for Africa, the New Economic Program for Africa's Development (Nepad) and the African Union (AU) are to be the "framework" for steps the Bank and the Fund take toward implementing promises.
"The AU is the skeleton and Nepad is the vision," Manuel said.
