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Compliance, Conditionalities and the role of Independent Monitoring in the Implementation of NEPAD
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| 2. Conditionality of Aid/Investment |
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In respect of the first mechanism George Soros, the President and Chairman of Soros Fund Management, has proposed a novel solution involving the creation of an international body by the IMF to make recommendations on projects which should qualify for donor funding in developing countries1. Although this body would be established by the IMF its membership would be independent of both governments and the IMF itself. It would not be responsible for actually allocating funds but, rather, would present a ‘menu’ of recommended funding proposals to donors from which they could choose to support specific projects. Recommended projects would be selected on the basis of their contribution to sustainable development in the particular country.
The direct control over the administration of the funding would still rest with the individual donor agencies. In addition, civil society organizations and public-private partnerships in developing countries, as well as governments, would be able to propose projects for inclusion on this ‘menu’.
From an African point of view, if the membership of this body were sufficiently independent and credible, this proposal would eliminate the problem of donors putting their own interests before those of the recipients of aid. It would also help to coordinate the programmes of donors and eliminate some of the unnecessary bureaucracy that currently characterizes the work of international donors. Specifically, from the point of view of African civil society the proposal would serve to ensure its ability to voice its own proposals for socially relevant projects designed to meet the needs of ordinary citizens in African states. In the past project proposals have been submitted by African governments and have often been designed to serve the interests of the government itself or the ruling elites within African states.
Soros has proposed that these recommended projects could also be funded by the IMF through the once-off issuance of Special Drawing Rights (SDRs) to developing states. These are essentially lines of credit issued by the IMF to all contributing states against a quota, which could be transferred to developing countries. Specifically, the SDR allocations of advanced industrialsed countries could be transferred to a fund for use by developing countries2. The proposal to issue SDRs has already been endorsed by the NEPAD Heads of State Implementing Committee (HSIC) in Abuja3.
The question that remains to be addressed, however, is the basis on which governments applying for aid and investment, or access to SDRs, should qualify for this assistance. In this regard NEPAD provides an ideal mechanism for attaching conditionality to new sources of funding and investment for African signatory states. The heads of participating NEPAD states have already committed themselves to the implementation of basic principles of good governance in the adoption of the NEPAD policy statement in October 2001.
This statement recognizes that ‘true democracy, respect for human rights, peace and good governance’ are prerequisites for development. It specifically commits African leaders to:
- Respect global standards of democracy
- Political pluralism, and
- Fair, open, free and democratic elections (Sect 79).
The NEPAD policy document goes further to establish an initiative on Democracy and Governance to implement these principles. It sets out a number of formal commitments and undertakings. These overlapping (and sometimes circular) commitments include the following:
- To create and/or consolidate governance processes and practices
- To take the lead in supporting good governance initiatives
- To institutionalize the commitments made by the NEPAD leadership (Sect 81)
- To meet basic standards of good governance and democratic behavior (Sect 82)
- To effect institutional reforms which will:
- strengthen administrative and civil services;
- strengthen parliamentary oversight;
- promote participatory decision making;
- adopt effective measures to combat corruption;
- effect judicial reforms (Sect 83).
It is these principles and practical commitments, proposed and adopted by African governments themselves, which would form the logical basis for establishing conditionalities to the awarding of aid to African states. It stands to reason that non-NEPAD signatory states would not qualify at the outset for aid/investment on account of their failure to commit to the above principles of good governance. On the other hand, it follows that signatory states applying for aid or SDRs, which have neither the constitutional nor legislative and institutional mechanisms in place to implement NEPAD principles, should be met with a precondition to effect the necessary political reforms before qualifying for initial support. That democracy and good governance form the bedrock cannot be emphasized enough if the pledge of the African leadership is a “determination of Africans to extricate themselves and the continent from the malaise of underdevelopment and exclusion in a globalising world.”4
Consistent with this schema, continued financial support for countries that already have the foundations for democratic governance in place (including constitutional and institutional arrangements), and have already received initial support from donors, should be conditional on their substantive realization of, as opposed to formal commitment to, the above undertakings in practice. The pledge by African leadership must translate from overarching purpose and find expression in concrete steps that can be monitored and assessed.
This, however, raises the thorny issue of who would be best placed to make the necessary judgment about whether African governments and leaders are performing in accordance with NEPAD undertakings. This brings us to the second critical point mentioned at the outset: the need for credible and effective monitoring mechanisms.
Footnotes:
- See ‘Special drawing rights for the provision of Public Goods on a global Scale’, Roundtable on ‘New proposals on financing for development’, 20 February 2002, Institute for International Economics, Washington DC. See also George Soros, On Globalisation, 2002, Oxford: Public Affairs Ltd.
- Ibid.
- See paragraph 21 of the Communiquй issued at the end of the second meeting of the NEPAD Heads of State and Government Implementation Committee, Abuja, 26 March 2002.
- See Nepad policy statement, October 2001, Introduction section 1
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