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NEPAD is the plan Africa needs
September 9, 2002
The New Partnership for Africa’s Development must be owned by Africans, who must stop looking to the west, writes Duma Gqubule.
This article was published in the Sowetan, September 9, 2002
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It was supposed to be an uplifting moment when I arrived for the first time at the African Union’s headquarters in Addis Ababa, the capital of Ethiopia, earlier this month.
The event was a workshp to chart the way forward for the New Partnership for Africa’s Development (NEPAD) after meetings in Kananaskis in Canada and Durban in the past two months.
But hope turned to despair as I entered the derelict headquarters of the AU, a shambles of an organisation that giave its employees their first pay rise in 12 years last month.
An hour later, during a discussion about bridging Africa’s infrastructure gap, the lights went off – the first of several power failures.
“It could only happen in Africa,” a member of the Nepad steering committee remarked.
To say that Sub-Saharan Africa is marginalised is an understatement.
We may be the miracles that God made, as Nigerian poet Ben Okri said in his poem An African Elegy, but in 1998, the region’s 628 million people – about 10 percent of the world’s population – could only generate a gross domestic product (GDP) of R30,4 trillion.
This is equivalent to one percent of the world’s GDP and is not much higher than that of Belgium with a population of only 10 million.
In 2000, Africa’s share of world foreign direct investment (FDI) was o,6 percent; its share of world exports was 1,6 percent.
About 41 percent of Africans older than 15 cannot read and at least 50 percent live on less that $1 (about R10) a day.
Meanwhile, 200 million Africans are chronically hungry; malaria kills one million Africans a year and HIV-AIDS another two million. One in five Africans live in areas with armed conflicts. God is clearly not an African.
Despite these challenges, there is now a mood of cautious optimism sweeping across Africa, following the launch of Nepad, a new vision and framework for Africa’s development. There is a new set of acronyms to describe the components of Africa’s Marshall Plan.
African bureaucrats are energised again and shuttling between workshops in Ethiopia, Nigeria, Canada, Italy and South Africa.
The AU moves into a new state-of-the-art building, opposite the current one, soon. It has an ambitious agenda to se up nine new institution, including an African parliament and court of justice, to manage the complex process of political and economic integration.
After four decades of disaster and indecision, why should the AU work this time?
Nepad, which is described as the fuel that will drive the AU, has set a GDP growth target of six percent a year.
This will require a new relationship betweenm Africa and the international community and a commitment by African leaders to good political and economic governance to create the conditions for increased investment, Nepad says: But why should Nepad succeed when so many previous plans have failed? “When I first heard about Nepad I thought we had been there before,” AU interim chairman Amara Essy remarked in Addis Ababa.
Nepad is not the first African-owned development plan for the continent. African countries have experimented with everything from Marxism to thw world Bank’as Structural Adjustment Programmes (SAPs) in the past four decades in futile attempts to get their economies going.
There have been so many plans to revive African in the past two decades that United Nations secretary-general Kofi Annan said last year that he could bnot remember all their acronyms.
In 1980, the Organisation of African Unity (OAU) produced the Lagos Plan of Action (LPA). It gave detailed plans of how collective self-reliance would result in rapid economic development and the setting up of an African Economic Community (AEC). The LPA did not address political governance issues. Its state-led development model was criticised by organisations such the World Bank.
The bank ignored the LPA and started implementing its anti-state SAPs, which forced African countries its anti-state SAPs, which forced African countries to privatise and liberalise their economies. The bank’s interventions were countered by the UN, which came up with four ambitious programmes, starting in 1986, which charted a middle way. All the inititatives came to zero. Africa’s decline continued.
In 1991, the OAU came up with the Abuja Treaty, which extended the deadline for establishing the AEC by 25 years. The same year, the UN produced the New Agenda for Development of Africa (UN-Nadaf).
The document, which resembled Nepad, was described as a “compact of mutual commitments by African countries and the itnernational community”. African countries made certain political and economic governance commitments. The international community said it would increase Overseas Development Assistance (ODA) by four percent a year from R300 billion in 1992. The target was economic growth of six percent a yaer. The results were dismal, according to former Ghanaian finance minister Kwesi Botchwey, who headed a UN panel to evaluate the programme.
In a recent report, the UN noted that: ODA to Africa declined, from R286,2 billion in 1990 to R163,8 billion in 2000. FDI to the region decreased from R80 billion in 1990 to R56 billion in 2000. During the decade, Africa’s GDP fell. The report gives a number of reasons for the programme’s failure.
Firstly, far too many conflicts remain unresolved. Secondly, there is a need to revise the thinking that has guided programmes in Africa. “None of the countries that faithfully implemented SAPs have progressed in the manner anticipated. Countries and regions should be allowed to design their own policies and be free to depart from the dominant wisdom, without incurring penalties for doing so,” the report says.
Thirdly, commitments made must be kept. “Africans have come to embrace improved standards of governance as fundamental conditions of economic development. Donors also have an obligation to deliver on the promise they make”.
The report includes that there is a need for sustained advocacy for African development.
Africa’s leaders are confident that Nepad will succeed. P Anyang’ Nyong’o, of the African Academy of Sciences in Nairobi, Kenya, says Nepad differs from previous initiatives because it confronts the issue of good governance and regards issues of peace, security, democracy and human rights as critical to development.
It is an initiative of African heads of states. Therefore, there is African ownership. However, a new document – Nepad at Work – has identified three risks to its plan. There is a political risk that some coutries may not implement, or delay. Nepad-endorsed programmes. The new framework could spawn a new bureaucracy that encounters capacity constraints and results in lengthy processes. There is also a financial risk that there will be delays in implementing projects due to a lack of funds.
The political risk will be dealt with through the African Peer Review Mechanism that will measure the progress countries have made in meeting certain governance standards. In Addis Ababa, the Nepad steering committee gave the UN Economic Commission for Africa and the African Development Bank three months to develop benchmarks for the mechanism.
African countries will then have six months to accede to the mechanism. It remains to be seen how many countries will accede, since Nepad is a voluntary programme.
Nepad says it will minimise institutional risks by avoiding layers of bureaucracy. Its mandate is to facilitate, energise, coordinate and add value to development efforts on the continent. It will also play an advocacy role on the international stage and within the continent. But African countries and the AU will be responsible for actual implementation.
There are demands from other African coutnries that are not represented on the steering committee, and civil society, that the process should be more inclusive. Already there are calls for the steering committee, which includes only 15 African leaders, to be expanded.
“The ownership by African people is deep enough. Nepad does not yet resonate in many countries. It must be more than a plan that sits in the foreign ministry. For that you need real ownership,” says Garth Le Pere of the Institute for Global Dialogue.
Nepad will have to be crystal-clear about its mandate. There are fears it will usurp the role of the AU and step on everyone’s toes. Botchwey’s answer is that Nepad should concentrate on areas where it can deliver continental public goods.
“For example, the negative image of Africa is a collective blemish that can only be addressed at the continental level.”
Howevery the financial risk could make or break Nepad. Investment does not miraculously appear because there is political and economic stability as South Africa found out with its failed Growth, Employment and Redistribution (Gear) programme.
Nepad is a good funding proposal, especially since it does not ask the West awkward questions about its role in Africa’s underdevelopment. But it sometimes take bargaining too far. It tamely calls for debt remission rather than debt cancellation. “This is strange considering the progress that has been made in putting the issue of outright debt cancellation on the international agenda,” says Professor Adebayo Olukoshi of Nigeria.
However, the risk is that foreign funds will not materialise and that the developed countries will not reduce their agricultural subsidies – worth R10 billion a day – in the next decade, despite polite bargaining from Africa’s leaders.
The initial outline of Nepad,, released in Abuja, Nigeria in October was criticised for under-emphasising the role of the state in development and the ridiculous suggestion that the bulk of Africa’s estimated R640 billion resource gap would have to come from outside the continent. “A plan that relies on FDI is not a plan. It is like saying God will help us all. Africa needs a plan B,” says Congress of South African Trade Unions economist Neva Makgetla.
“What can Africa do for itself?” AU interim commissioner Lawrenece Agubuzu asked over and over again during the workshop in Addis Ababa. By comparison , the US’s Marshall Plan pumped more than R930 billion into 16 European countries between 1984 and 1951.
It was not a siginficant economic stimulus and was more important in political than economic terms, the experts now say. It was most successful in Germany because of the added impetus of increased state spending.
“The economic policy of Germany was wise and courageous. Germany was willing to go sharply into debt to build for the future,” a former US secretary of state said.
If this so-called Plan of Plans could only mobilise today’s equivalent of about R250 billion a year for four years, how can Africa mobilise R640 billion a year?
FDI cannot fill the savings and investment gap. Emerging economies have been able to finance only 10 percent of their total investment with foreign capital during the 1990s. In South Africa, FDI has averaged one percent of GDP since 1994.
Nepad at Work addresses some of the flaws in the initial plan with detailed and costed development plans. The document now says that the search for adequate resources will begin at hom.
The problem is that the funding model continues to use Gear methodology. It says Africa has too little savings – 15 percent of GDP – to finance the investment required – 33 percent of GDP – to meet the seven percent growth rate. This is conceptually appealing, but misleading. Africans do not save because they are poor and because they have a high proportion of young people. Growth drives savings. Its is not the other way round.
The ability to sell what is produced informs the investment decision, not available savings. If Africa were to double its share of world GDP to two percent, FDI would also double. The question is how to kick-start GDP growth in the short term.
The answer is that African countries must never again listen to the “development charlantans” from the West who advise them to sacrifice growth by pursuing mindless fiscal monetary austerity and liberalisation in the hope of a better harvest in the future.
In another era, the followers of Xhosa prophetess Nongqawuse burnt their crops and livestock in the hope of a better harvest in the future. The result was starvation for decades.
Africa clearly needs a new deal. Countries which pass the first stage – of meeting certain political, economic and corporate governance standards – should be allowed to set economic growth targets during the second stage. If economic growth threatens to fall below an agreed minimum level, such countries could invoke an escape clause allowing them to reach a deficit ceiling of, say, six to eight percent of GDP on condition that the funds are not used for consumption expenditure.
To answer Agubuzu’s question, if every African country were to pay 0,5 percent of GDP to a Nepad fund, the continent would raise up to R30 billion a year to immediately implement several development projects.
Nepad is too important an iniative to be rejected outright as some sections of civil society have done. But real ownership will require that there aer new mechanisms and structures for Africans to engage the plan from within.
(The writer is a leading freelance financial journalist in South Africa).
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