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Industrialized countries spotlight Africa

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Industrialized countries spotlight Africa

Summit of G-7 and Russia promises greater market access
From Africa Renewal: 

For the first time in its history, the Group of Seven (G-7) industrialized countries devoted extensive discussion to broad African development concerns at their annual summit meeting. In order to develop, African economies especially need more private investment and expanded access to world markets, declared the Summit of the Eight (the G-7 plus Russia), held 20-22 June in Denver, Colorado. "Our objective is not only to facilitate the progressive integration of African countries into the world economy," said the final communiqué, "but also to foster the integration of poor populations into the economic, social and political life of their countries."

Observing that external aid alone cannot help African countries develop, the communiqué stressed, "Increased prosperity ultimately depends upon creating an environment for domestic capital formation, private sector-led growth and successful integration into global markets." It praised the increasing number of African countries that are adopting market-oriented policies, while also undertaking democratic reforms, reducing military expenditures and strengthening public institutions and civil society.

The summit also implicitly acknowledged that high tariffs and other trade barriers in the industrialized countries impede African efforts to boost export earnings. "Access to our markets is a crucial tool for fostering economic growth in sub-Saharan Africa," the summit participants declared. "We each will continue to improve, through various means, access to our markets for African exports."

Debate over aid

In key respects, the summit's "Partnership for Development" with Africa echoed a US initiative designed to enhance private investment and trade links between Africa and the US (see box below, and next page). Unlike the US initiative, which focuses largely on trade and investment and touches only marginally on aid, the summit communiqué stated: "Substantial flows of official development assistance will continue to play an essential role in building the capacity of sub-Saharan African countries to achieve their sustainable development objectives."

During the summit discussions, several of the European heads of state similarly cited the importance of aid. Mr. Tony Blair, Prime Minister of the UK, announced that over the next three years his government would increase by 50 per cent support for primary education, basic health care and clean water in sub-Saharan Africa.

Several also noted their long-standing aid, investment and trade programmes in Africa. French President Jacques Chirac said he was glad the US government was finally thinking about the continent, while German Chancellor Helmut Kohl said he welcomed "America's discovery of Africa."

At a news conference, in response to a reporter's question about the "one-sided emphasis on trade and investment" in the US initiative, US Treasury Secretary Robert Rubin clarified that "the object was not to in any way reduce aid," but to target it more toward countries undertaking market-oriented reform. Mr. Daniel Tarullo, President Clinton's national economic policy adviser, added that "the formula was trade plus aid plus reform."

High tariffs and other trade barriers in the industrialized countries impede African efforts to boost export earnings.

With insecurity and conflict such serious impediments to development in Africa, the summit participants also applauded the growing efforts in the continent, especially by the Organization of African Unity (OAU), to develop local capacities for conflict prevention, peacekeeping and post-conflict reconciliation and recovery. In support of such efforts, they encouraged the UN Secretary-General, as part of his reform proposals, "to identify ways the international community can further strengthen Africa's initiatives."

Reflecting concern that the summit's agenda might be regarded by some as yet another external imposition on the continent, the summit promised to "deepen the dialogue with African partners, work for greater local ownership of development strategies and encourage the participation of non-governmental actors."

During the summit, however, leaders of the US Congressional Black Caucus, religious groups and other non-governmental Africa advocacy organizations issued a statement criticizing the summit participants for failing to invite any African leaders to be present in Denver. "Policymakers must consult with representatives of African civil society organizations and grassroots movements before deciding how they can most effectively promote economic development," declared Mr. David Beckman, President of Bread for the World, one of the signers of the statement.

Russia to join debt relief efforts

In addition to supporting implementation of the Highly Indebted Poor Countries (HIPC) initiative (see article "Debtors queue up after Uganda deal"), the Denver summit marked an important opening toward debt relief on developing countries' obligations to Russia.

The G-7 recommended that Russia be admitted to membership in the Paris Club of official bilateral creditors, a move that will need to be approved by the full Paris Club, possibly later this year. As a basis for entry into the Paris Club, Russia has agreed to reduce its claims on developing country debt owed to the former Soviet Union. In 1994, according to official Russian sources, sub-Saharan countries owed Russia $14.3 bn and North African countries owed another $10.7 bn. The UN Conference on Trade and Development suggests that Russian claims on sub-Saharan Africa in 1994 were about $16.8 bn.

The adjustments on Russian claims, combined with prevailing Paris Club debt-relief arrangements, may lead to a reduction of up to 90 per cent in the debt owed to Russia by heavily indebted poor countries in Africa, according to initial estimates. This would mark a particularly important development for Angola, Ethiopia, Guinea, Mali, Mozambique, Somalia, Tanzania and Zambia, which have significant outstanding obligations to Russia. In Ethiopia's case, Russian debt amounts to 58 per cent of total debt, while for Angola it is 44 per cent and for Mozambique, 31 per cent.




US backs 'dynamic new Africa'

Just days before leaving Washington for the Denver summit, US President Bill Clinton unveiled his administration's new initiative, "Partnership for Economic Growth and Opportunity in Africa." Pledging to support "a dynamic new Africa" that is joining "the global march toward freedom and open markets," he announced on 18 June a series of measures under discussion with Congress to offer new trade and investment incentives.

These would include increasing the number of categories of African exports eligible for duty-free access to the US market from about 4,000 to 5,800, which could lead to a 50 per cent rise in the value of African exports to the US, Mr. Clinton estimated. In 1996, US purchases from sub-Saharan Africa reached $15.2 bn, 20 per cent higher than the year before. In addition, the plan would use government guarantees through the Overseas Private Investment Corporation to encourage $150 mn in new US private investments in Africa, as well as $500 mn for investment in African infrastructure projects.

The President's initiative incorporates major portions of a Congressional bill which has backing from both parties in the legislature, and which will be finalized toward the end of the year. Unlike the President's proposal, however, the Congressional bill includes a provision to allow quota-free imports of African textiles and apparel, a move that would benefit such African exporters as Mauritius and Kenya, but which is opposed by US clothing and fabric manufacturers. Beyond the discussions between the administration and Congress, the initiative has prompted a wider public debate on US policy toward Africa. The Congressional Black Caucus, American Assembly, US-Africa Trade Policy Working Group and other organizations are pushing for broader action, including in such areas as conflict resolution and increased aid flows.

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