Stating that the US is opening a "new chapter" in its relations with the continent, Secretary of State Madeleine Albright visited seven African countries in December to demonstrate US support for the positive economic and political changes "sweeping across" the continent. "Africa matters" to Washington and to Americans, she said in a major policy address at the UN Economic Commission for Africa in Addis Ababa, Ethiopia -- the first leg of a trip which also took her to Uganda, Rwanda, the Democratic Republic of the Congo, Angola, Zimbabwe and South Africa.
Ms. Albright's trip -- her first to the continent as Secretary of State -- was intended to lay the groundwork for a visit by President Bill Clinton scheduled for March. President Clinton will make a state visit to South Africa, and is also expected to travel to Ghana, Uganda, Senegal and Botswana.
Praising Africa's "best new leaders" for working to build democratic societies and for making progress in reforming their economies, Secretary Albright acknowledged that the US and the international community must "do better" to work with Africans as "true partners" and put behind the "paternalism of the past."
The centrepiece of the Clinton administration's new Africa policy is its Africa Growth and Opportunity Act -- trade legislation currently before Congress which will help countries that undertake economic reforms find capital to develop their industries and markets to sell their products, according to Ms. Albright. A $150 mn investment fund for sub-Saharan Africa has also been established by the Overseas Private Investment Corporation.
During her trip, the Secretary of State also announced a $30 mn Great Lakes Justice Initiative to develop "impartial, credible and effective" judicial systems in the Central African region and a $10 mn contribution to a World Bank trust fund to be set up for reconstruction projects that the Democratic Republic of the Congo considers priorities.
Indicative of the "new dialogue" the Secretary said she came to open with Africa, Ms. Albright expressed regret for the US's past support for corrupt dictators such as the late Mobutu Sese Seko of Zaire, as well as for American government inaction during major African crises such as the Rwandese genocide. "I came to listen and I have listened," said Ms. Albright at the end of the tour.
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Tanzania's Minister of Foreign Affairs Jakaya M. Kikwete (left), handed the Chairman's gavel, on 12 January in New York, to Indonesia's Minister of Foreign Affairs Ali Alatas. As Indonesia's Permanent Representative to the UN, Ambassador Makarim Wibisono will act as Chairman of the developing countries' Group in 1998.
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Upon his election as the new Director-General of the UN Industrial Development Organization (UNIDO), Mr. Carlos Alfredo Magariños declared in his inaugural address on 5 December that "Africa will remain UNIDO's number one priority." He told the delegates to the UNIDO General Conference in Vienna that he would listen very closely to African countries and their needs, with the aim of improving the organization's performance in the continent with increased services and programmes.
Industrial growth in Africa, measured as manufacturing value added (MVA), has spurted in recent years, according to UNIDO figures. From an actual decline in 1994, it grew by nearly 2 per cent in 1995 and 4.6 per cent in 1996. In North Africa, MVA increased by 2.4 per cent in 1994, nearly 4 per cent in 1995 and about 5 per cent in 1996. As a share of gross domestic product (GDP), however, manufacturing has remained stagnant, even declining slightly over the past quarter century, from 11 per cent of Africa's GDP in 1970 to under 10 per cent in 1995.
In a joint statement issued on African Industrialization Day, 20 November 1997, then UNIDO Director-General Mauricio de Maria y Campos, Organization of African Unity Secretary-General Salim Ahmed Salim and UN Economic Commission for Africa Executive Secretary K.Y. Amoako highlighted previous policy shortcomings, low management and labour skills, and inadequate physical infrastructure as major constraints on the growth of manufacturing enterprises in Africa. For the development of industry, they said, it is necessary to "redefine the role of the private sector as the main engine of growth," with a particular focus on assisting small- and medium-scale enterprises. Direct investment, they stressed, "is, and should be, the domain of nationals themselves."
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The World Bank's board has endorsed a paper which recommends integrating concerns about child labour into its lending programmes. According to the paper, Bank programmes would be closely monitored for their effects on child labour and such issues would be included in policy discussions with countries where harmful child labour is a serious problem. To ensure that Bank projects do not contribute to the practice, its loan agreements would include "appropriate safeguards," according to the paper's recommendations.
Although the internationally recommended minimum age for work is 15 years, the International Labour Organization estimated that more than 73 million children aged 10-14 were economically active in 1995, representing 13.2 per cent of all children in that age group worldwide. The greatest number were found in Asia, with 44.6 million, or 13 per cent in the region. Africa followed with 23.6 million, but its rate was by far the highest, at 26.3 per cent, while Latin America came in third, at 5.1 million and 9.8 per cent.
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African leaders should initiate a concerted drive to combat corruption in all spheres of government activity, business transactions and international procurement, concluded a 1-2 November meeting in Maputo, Mozambique, of the Global Coalition for Africa (GCA). The GCA, an informal forum for dialogue among African and donor officials, also urged the international community to criminalize bribery in international business transactions.
Several weeks later, on 17 December, the 34 member-states of the industrialized countries' Organization for Economic Cooperation and Development (OECD) signed a convention to make bribery of foreign public officials a criminal offence. A result of protracted negotiations within the OECD, the convention does not apply to payments to foreign political parties or private individuals, however. Subject to approval by national legislatures, the convention, which is binding, will take effect by the end of 1998.
The GCA meeting observed that while corruption is a worldwide phenomenon, its impact in Africa is particularly serious because the total amount of available resources in most countries is relatively small. Corruption and capital flight are closely connected, with embezzled funds often finding their way into secret accounts in developed countries, noted a statement of the GCA co-chairs, President Ketumile Masire of Botswana, President Alpha Oumar Konaré of Mali, Ethiopian Prime Minister Meles Zenawi, Speaker of the South African Parliament Frene Ginwala, and Dutch Development Cooperation Minister Jan Pronk. They suggested the need to alter the laws and regulations governing the international banking system, to make it easier to trace and recover embezzled funds.
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The Arusha-based Secretariat of the Commission for East African Cooperation has issued a strategy document laying out the necessary steps for establishing a single market and investment area for Uganda, Kenya and Tanzania. Executive Secretary Francis Muthaura describes the publication as "the guiding policy in the process of East African cooperation." According to the blueprint, the three countries would begin by harmonizing their investment codes and facilitating intra-regional trade and investment, move to the inauguration of an East African stock exchange, and, among other measures, ultimately establish a single regional currency.
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The Commonwealth Development Corporation (CDC), which provides assistance to commercial enterprises in some 54 developing countries around the world, is expected to announce a programme for its own privatization by the end of 1998 or early 1999. According to the CDC's country manager for Zimbabwe, Mr. Christopher Brain, consultants retained by the UK government and the CDC are currently working on such a programme, designed to expand its capital base and broaden its range of operations. Privatization would enable the CDC to borrow from capital markets.
According to Mr. Brain, the UK government would sell 60 per cent of the CDC to private investors, but retain a "golden share" of 40 per cent. This, he said, would help preserve the CDC's "unique character and development goals as an ethical and responsible investor."
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Burkina Faso is the second African country to get a debt reduction package under the Heavily Indebted Poor Countries Initiative (HIPC). The deal, finalized in early November 1997, will reduce its foreign debt by around $115 mn by April 2000. But policy conditionalities and disagreements over funding have slowed progress on Côte d'Ivoire and Mozambique.
Burkina's debt-to-exports ratio is set to fall to 205 per cent from the 250 per cent projected for 2000. Its nominal debt was over $1.2 bn at the end of 1996, and nominal debt relief will amount to some $200 mn. In net present value (NPV), Burkina's debt stood at $680 mn, while export earnings averaged $285 mn in 1994-96.
The government chose this IMF-recommended package over an alternative which offered an earlier date (September 1999) for actual debt reduction. But the latter -- backed by the World Bank -- set a higher target debt-to-export ratio of 210 per cent, translated into slightly less relief at $109 mn.
When the HIPC initiative was first unveiled in 1996, there were doubts that Burkina would qualify: the IMF's first tentative assessment of the 41 HIPC countries classified Burkina's debt as "sustainable." Burkina's projected 250 per cent ratio was on the cusp of the IMF/World Bank's parameters for "sustainability" -- then defined as an NPV debt-to-export ratio of 200-250 per cent or below, or a debt service ratio of 20-25 per cent or below. But Burkina eventually qualified due to its vulnerability to commodity price fluctuations and other external shocks. Once creditors accepted the case in principle, they debated what target debt-to-export ratio to set. Some favoured 225 per cent, but those for a ratio of 205-210 per cent won the day.
Meanwhile Côte d'Ivoire and Mozambique are expected to sign the next HIPC deals before April. At time of writing, Côte d'Ivoire was waiting to conclude an enhanced structural adjustment facility with the IMF -- a precondition for a HIPC deal -- before its debt agreement could be finalized.
Mozambique's deal has proved more complicated, mainly because the amount of debt reduction needed exceeds what some creditors were willing to pay. To achieve a sustainable debt ratio of 200 per cent in 1999, creditors would need to provide relief of $1,479 mn in NPV terms. Current burden-sharing arrangements -- each creditor acts according to how much it is owed -- would require $533 mn from multilateral creditors and $946 mn from bilaterals.
But this amount, bilateral creditors initially argued, would exceed the Paris Club's 80 per cent ceiling for reducing eligible bilateral debt. At the urging of the IMF and World Bank, however, the Paris Club on 21 January implicitly agreed to exceed that ceiling. It did so by promising the 80 per cent specified in the HIPC deal, plus $170 mn in foreign aid. This still leaves about $100 mn, which the Paris Club wants the multilaterals to pay.
