ORGANIZATION OF AFRICAN UNITY

NEW INTERNATIONAL COOPERATION FOR SUSTAINABLE DEVELOPMENT IN THE LEAST DEVELOPED COUNTRIES

STATEMENT BY AMBASADOR LAWRENCE O.C. AGUBUZU, ASSISTANT SECRETARY GENERAL

Brussels, 16 MAY 2001

I. Introduction

Mr. Chairman, it is with great pleasure to state that the Organization of African Unity (OAU) welcomes your election and leadership of this important Conference with satisfaction. The OAU acknowledges your vast experience and we see this as an invaluable asset to the management of the Conference and the arrival of conclusions that would be beneficial to Least Developed Countries. Allow me on behalf of the Secretary General of the OAU, H.E. Dr. Salim Ahmed Salim, who could not be present here today to express that the OAU attaches considerable importance to this Conference. This Conference is important to~the OAU, as it is yet another effort by the international community to address the development problems of the Least Developed Countries most of which are in Africa.

I will at this point like to recall that the attention of the international community was first drawn to the case of the Least Developed Countries in 1964 at the first session of UNCTAD. At that session the LDCs were referred to as the "less developed" among developing countries. Thereafter, concerted efforts of the international community to address their special concern materialized in the First United Nations Conference on the Least Developed Countries in 1981, in Paris, and subsequently in the Second United Nations Conference on the Least Developed Countries in 1990 also in Paris.

Admittedly, the lack of tangible results for the Least Developed Countries from the first Conference led to the second Conference. The outcome of the Second Conference was greatly influenced by the experiences and lessons learnt from the first Conference. The outcome of the Second Conference was embodied in the Paris Declaration and the Program of Action for the Least Developed Countries for the 1990s. In these documents, as we all know, the international community committed itself to urgent and effective action, based on the principle of shared responsibility and strengthened partnership, to arrest and reverse the deterioration in the socio-economic situation in the Least Developed Countries and to revitalize their growth and development. In the area of national actions, emphasis was placed on the need for development to be human-centered and broad based. Other areas of focus at the national level would also include the improvement and expansion of institutional capabilities and efficiency, democratization and transparency at all levels of decision-making.

Our gathering here today is a manifestation of the fact that the set objectives have not been accomplished, and the job not well executed. We are confronted once more with what went wrong and what we must do in order to find a lasting solution to the development problems of the Least Developed Countries. The sense of urgency in this matter has become more magnified because the number of the Least Developed Countries had not only increased but because poverty had increased in many countries.

The lack-luster performance in the implementation of the outcome of the Second United Nations Conference on the Least Developed Countries have been noted in its mid-term review in 1995 and the Report of the High-level Panel for the Review of Progress in the Implementation of the Programme of Action for the Least Developed Countries for the 1990s (A/CONF.191/IPC/16, 20 December 2000). Also, studies elsewhere, including those by UNCTAD, have drawn attention to the flaws in the nature of national policies, and weak responses of the international community and international cooperation.

II. National Implementation

Mr. Chairman, as far as the Least Developed Countries in Africa are concerned, most countries have continued to implement structural adjustment programs and strong macroeconomic policies that they began in the early 1980s. These countries have implemented varying forms of trade liberalization and privatization. They have released the foreign exchange sector to the forces of market mechanism and embarked on relevant monetary and fiscal measures. In addition, the Least Developed Countries in the continent have embarked on the building of democracy and the creation of adequate national regulations and institutions to address the questions of accountability, human rights and corruption. But questions have emerged on the extent to which there have been adequate complementary institutional and social infrastructures to enable successful delivery of the objectives of structural adjustment programs and macroeconomic policies. What is more, the absence of favorable external economic environment was, in the 1990s, a major setback to the Least Developed Countries as they undertook policies to strengthen national capacities for economic growth and development.

III. Responses at the regional level

Mr. Chairman, allow me to stress at this point that the OAU has been in the forefront of the implementation of the Program at the regional level. The continuation in the deterioration of the economic situation in the continent, especially those of the Least Developed Countries in the second half of the 1980s prompted action to sharpen the focus of political leaders on the development requirements of the continent.

Thus, the OAU on 3 June 1991, through the Treaty of Abuja, established the African Economic Community (AEC) to lead to the creation of large continental market that would enhance the process of economic growth and development in the continent. Integration is progressing gradually in the Community. Integration would be deepened as from 26 May 2001 when the process of transformation of OAU/AEC would begin. This arrangement would prove highly beneficial especially, to the Least Developed Countries in Africa with small national markets that cannot support rapid industrialization. Within the AEC Treaty, Article 79 provides for a special provision for the promotion of the development of the LDCs, landlocked and island countries.

In another dimension, on 26 June 1995, the Thirty-first Ordinary Session of the Assembly of the Heads of State and Government of the OAU adopted the resolution on The Relaunching of Africa's Economic and Social Development: The Cairo Agenda for Action (AHG/RES.236. XXXI). The propositions for development in this resolution robustly reinforced the development requirements contained in the Paris Declaration and the Program of Action for the Least Developed countries.

Furthermore the Declaration of the Heads of the State and Government in July 2000, in Lome, Togo, (AHG/Decl.l XXXVI), welcomes the third UNTACD Conference on the Least Developed Countries. The Declaration, among other things, stressed that development is primarily the responsibility of the LDCs themselves. It called for increased cooperation of the international Community, for the diversification of their economies, the inflow of resources and market access for the product of the LDCs.

IV. International economic cooperation

Mr. Chairman, international economic cooperation towards the implementation of the Paris Declaration and Program of Action for the Least Developed Countries has not been particularly strong and reinforcing. On the one hand, subsequent United Nations global Conferences such as Population and Development 1994, World Summit for Social Development 1995, Women and Development, 1995 have paid special attention to the unique development requirements of the Least Developed Countries.

On the other hand, however, the basic assumptions behind international systemic cooperation have not. The current thinking in international economic cooperation,. ;among other things, indicates that (a) the relatively weak economic response to policy reforms in developing countries was due to poor implementation rather than inadequate policy design or under-funding, (b) foreign aid will work if the national policy environment is right, (c) that external debt is a problem, particularly for highly indebted poor countries and that debt relief provided through the Heavily Indebted Poor Countries (HIPC) Initiative is realistic solution, and (d) that economic growth and favorable political and economic environment are preconditions for the inflow of foreign direct investment.

While these assumptions prevailed, the implementation of the Paris Declaration and Plan of Action had inevitably suffered. The Least Developed Countries were denied of external financial inflows necessary for growth and development and as a result the aggravation of poverty to intolerable level. The rate of economic growth had plummeted in many Least Developed Countries. And if the current low rate of economic growth of 3 to 4 % is sustained, it is doubtful if they would succeed in reducing poverty by half in the year 2015 as envisaged in the commitment of the World Summit on Social Development.

Mr. Chairman, the Intergovernmental Preparatory Committee sessions for this Conference had without doubt worked extremely hard towards the preparation of the Draft Program of Action for the Least Developed Countries for the Decade 20012010. However, as we attempt to dot the "Is" and cross the "Ts", I will like to take this opportunity to appeal to all that our negotiations should not be "business as usual". We must, without reservation, summon the political will to effectively address those outstanding issues, especially financing for development and mechanism for implementation. These are critical matters that would enable the Least Developed Countries make a difference in their development during the next decade.

The ongoing process of globalization is pushing the Least Developed Countries further away from the trajectory of world economy. In our final negotiations, we must break the barriers of partial commitments and strive to effectively address those issues relating to the financing of development in the Least Developed Countries. The financial needs of the Least Developed Countries, in particular those in Africa have, in recent years, been compounded by the phenomenal spread of HIV/AIDS pandemic. It has been calculated that $3 billion would be required annually in the coming years to tackle the problems of HIV/AIDS in Africa. As it is today, HIV/AIDS is poised to reverse the economic achievements of most countries. It poses considerable threat to the existence of a number of economies in the continent as the infected people are essentially children and the working population.

V. Financing for Development: Towards Innovative international cooperation

In conclusion, Mr. Chairman, an innovative international cooperation is necessary to address the financing for development in the Least Developed Countries. As have already been noted, the Least Developed Countries understand the virtues of democracy, good governance, and accountability. This is well acknowledged to be indispensable to overall long-term sustainable development. However, while they continue to stay on course in these and in the implementation of macroeconomic policies, there will be a need for a change in the existing assumptions about international economic cooperation in the new program of action.

(a) The disbursement of foreign aid should not be solely based on the yardstick of "aid effectiveness". In the current economic dispensation of the LDCs, there is an urgent need for an increase in the inflow of foreign aid. For the immediate future, given the constraints on private capital inflows and external trade, most LDCs will rely on ODA as their major source of external finance. There is a need for cooperation by those countries that have not done so, to attain the aid target of 0.15 percent of gross national product (GNP) set for the LDC. There should be increased aid coordination among donors and the LDCs should be securely placed in the driver's seat of aid programs.

(b) HIPC Initiative could remove some of the financial constraints to development. But there are doubts about its capacity to effectively and timely address the external debt issues of the LDCs in a manner that would ensure the building of capacity for higher productivity. While it remains the dominant strategy, I will urge that there is a need for deeper, faster and broader debt relief, which is based on lower thresholds for judging debt sustainability. There is clear evidence that debt burden has detrimental effect on private capital inflows. The policies on external debt should improve the expectations of the private sector. Beyond these, the cancellation of external debt should be a new option for our development partners in the coming decade in a new spirit of concern for the plight of the LDCs.

(c) The case for standard environment for investment should not be seen as one of absolute necessity for investment flows to the LDCs. There is a need for a change in mind-set in order to increase foreign direct investment to support the ongoing efforts in the implementation of sound macroeconomic policies and respond to the improvements in investment codes and climate. The LDCs cannot count on portfolio investment given the low level of development of their financial system. Without substantial increases in foreign direct investment, the LDCs could continue to be in the vicious circle of low income, low savings and low domestic investment.

(d) The case for the expansion of the external trade of the LDCs is debatable. Market access for goods and services from LDCs remains the most important contribution that the international community can provide to the LDCs. A market regime that provides all LDCs with quota-free and tariff-free access to the markets of the developed countries would go a long way in assisting them in building the capacity for higher productivity.

Mr. Chairman, these recommendations are by no means the comprehensive solutions to the development problems of the LDCs. However, they are essential elements in cooperation that are critical for change and development in the Least Developed Countries, to elevate the people from despair to optimism, to move their economies from stagnation to growth, from poverty to wealth, and to move the LDCs from the periphery into the orbit of globalization.

Thank you for your attention.