Trade and investment in East Africa should receive a boost following
the scheduled signature in July of a treaty on East African cooperation
by Presidents Daniel arap Moi of Kenya, Benjamin Mkapa of Tanzania and Yoweri
Museveni of Uganda. The treaty will establish zero tariff rates for trade
between the three East African Cooperation (EAC) members states, although
certain products on an agreed list will be excluded, in order to protect
public revenue and infant industries. Traders will be able to levy a maximum
10 per cent surcharge on products deemed exempt from the zero tariff. All
non-tariff barriers between the three countries will be removed, however.
The treaty also provides for an 80 per cent preferential tariff reduction
for trade between EAC countries and their Common Market for Eastern and
Southern Africa (COMESA) partners.
Treaty advocates hope that cooperation among the East African countries will lead to the development of a single market and investment area, which would capitalize on the region's human and physical resources. With an eye on economic integration aims, EAC members have set ambitious macroeconomic targets, including the reduction of inflation rates to single-digit levels by 2000, budget deficits of less than 5 per cent of gross domestic product and the building of foreign exchange reserves to the level of six months of imports.
EAC membership is expected to expand with the January decision to open the way for Rwanda and Burundi to join. The two countries would add a total 13.8 mn people and a land area of 54,170 square km to the combined population of about 80 mn inhabiting an area of 1.8 mn square km that constitutes the current EAC. But some analysts predict that expanded membership will delay progress on economic integration.
East and Central African leaders suspended their economic sanctions against Burundi, following a 24 January summit in Arusha, Tanzania. Imposed days after Major Pierre Buyoya, a former military ruler of Burundi, took power on 25 July 1996, the sanctions aimed to restore constitutional order and force Mr. Buyoya into peace talks with Hutu rebels.
The sanctions are considered to have achieved some success: six weeks after their imposition, political parties and the national assembly were restored and peace talks between the government and the rebels began last summer. While the sanctions have done much to change the political face of Burundi, they have devastated the Burundi economy, said Mr. Denis Nshimirimana, Burundi's Minister for Public Works and a member of the mainly Hutu Frodebu party.
According to Mr. Astère Girukwigomba, Burundi's finance minister, the sanctions led to a 50 per cent loss in Burundi's export earnings in 1996 and a 25 per cent increase in import costs, while inflation rose from 26 per cent in 1996 to 31 per cent in 1997. Most importantly, the sanctions worsened conditions for the people of Burundi, he said.
Leaders at the Arusha meeting warned that the sanctions have not been unequivocally removed. While hopeful that peace is not too distant in Burundi's future, the leaders said they would carefully monitor progress in this area. A lack of sufficient progress on peace negotiations would mean a reconsideration of the sanctions. President Buyoya assured the leaders that the Burundi government would do everything possible to speed up the peace process.
Prospects for the resumption of international economic development activity in Burundi also have brightened recently, following a nearly three-year period of limited international assistance. At a conference held in New York at the United Nations on 11-12 January, donors agreed to provide $17.2 mn to finance community revitalization and income-earning projects in Burundi, according to the UN Development Programme (UNDP), a co-host of the conference.
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Only two of the top 10 recipients of European Union (EU) aid in 1996-97 were least developed countries and none of the top seven was a "low-income" country, according to a report by the international development committee of Britain's House of Commons. EU multilateral aid policy currently gives "more to the better off and less to the poor," while spending plans for the next seven years continue to neglect the needs of the world's poorest countries, says the report.
EU member Germany announced in November 1998 that it would cut back bilateral aid to sub-Saharan Africa from this year. A spokesperson for the Ministry of Economic Co-operation and Development in Bonn reportedly said that from 1999, Germany would shift more aid to eastern Europe, where it aims to boost development and stem the flow of job seekers to Germany.
In contrast, France is shifting its focus to the most needy countries in its bilateral aid allocations, though it has been channeling increasing amounts of aid through the EU. As part of an overhaul to make its bilateral aid more efficient and transparent, France recently announced plans to draw up a list of countries deemed priority aid recipients. Half of French aid now goes to sub-Saharan Africa and 15 per cent goes to North Africa. France spends nearly 0.45 per cent of its gross national product on aid -- the largest proportion of any member of the Group of Seven industrial nations.
The African Development Fund (ADF), the soft-loan window of the African Development Bank (ADB), will soon receive $3.38 bn in fresh resources. The Fund's 53 regional members and 23 non-regional members quickly reached agreement to replenish the Fund, for the eighth time since its 1973 inception, at a consultative meeting held in Bonn, Germany, on 13-15 January 1999.
The consultations leading up to the decision, which normally take 18-24 months, were concluded in seven months -- evidence of donors' renewed confidence in the Fund's impact on the fight against poverty in Africa, declared a press release by the ADB.
The ADF was established to provide special loans to promote the economic and social development of the ADB's 53 African members, favouring projects that focus on poverty reduction, agricultural development, rural rehabilitation, human resource development, good governance, economic integration and private sector development.
Meanwhile, representatives of 39 donor countries agreed last November on new funding for the World Bank's soft-loan window, the International Development Association (IDA). As a result, IDA will be able to provide concessional lending of $20.5 bn to poor countries between 1 July 1999 and 30 June 2002. Donor countries are providing $11.6 bn in new contributions, with the rest coming mainly from repayments of earlier IDA credits and from the World Bank itself.
With three-quarters of sub-Saharan Africa's export revenues coming from primary commodities, the region is expected to be hardest hit by the record low global commodity prices of the last two years, says the World Bank in the first report of its Global Commodity Markets series.
In some cases, prices have plunged to lows that are one-third of 1995 levels. But the price declines span the entire range of commodity sectors, with rubber prices down some 65 per cent from the 1995 level and nickel, copper and other base metal prices down 50 per cent. Lower oil prices will take a heavy toll on African oil producers such as Nigeria and Angola. Oil prices dipped to a 12-year low of less than $10 a barrel last year, from a high of about $22 some 20 months ago.
The falling prices were due more to technology advances and policy changes in commodity-producing countries than to changes in demand patterns, the report says.
Donors shirk commitment to slow world population growthMost donors, including the US, Japan, Germany and France, lag far behind in meeting commitments to fund programmes that improve reproductive health and reduce population growth in developing countries, according to Population Action International's new study, Paying their Fair Share?. Among donor countries, Norway and Denmark have come closest to bearing their share of the cost since the adoption of the Programme of Action by 180 countries at the International Conference on Population and Development (ICPD) held in Cairo in 1994. Covering the 20-year period through 2015, the ICPD Programme of Action aims to increase access to and information on contraception and prenatal care and to boost HIV/AIDS awareness in developing countries. The cost of basic reproductive health care in developing countries is projected to reach $17 bn per year by 2000 and nearly $22 bn by 2015, according to the ICPD. Each of the 180 countries is to pay its "fair share" based on gross national product (GNP), with donor countries responsible for one-third of the cost. But in 1996, donors contributed a total of $2 bn -- just over 35 per cent of the financial target for the year 2000, the study says. Meanwhile, the ICPD reports that inadequate reproductive health care is the cause of more than 3 million deaths each year, most of which occur in developing countries. |
Special Initiative on Africa