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Small amounts spent on promoting Africa's economy can save billions and make the West more secure
AFRICA'S importance for global security has risen dramatically in recent years. Africa has served
as a staging-post for terrorist attacks both within the continent and in the Middle East. West
Africa's development prospects have brightened with the discoveries of offshore oil and gas
reserves that could supply perhaps 25% of America's hydrocarbon imports within a decade, yet
the orderly and transparent development of these reserves is threatened by violence and
instability. Al-Qaeda has reportedly tapped into the illicit diamond trade in west Africa and has
promoted insurgencies across the Sahel (the border region between desert and savannah).
Governments in countries such as Ethiopia, Kenya, Tanzania and Uganda are co-operating closely
with America to fight these threats. But poverty, hunger and disease leave the region vulnerable
to security and humanitarian disasters.
In every aspect of Africa's complex plight an ounce of prevention will be worth a ton of treatment.
In recent years America gave a negligible $4m a year to Ethiopia to boost agricultural productivity,
but then responded with around $500m in emergency food aid in 2003 when the crops failed. In
the 1990s America gave less than $50m a year for Africa to prevent AIDS, so now will spend $3
billion per year to treat the disease after it has spread to more than 50m Africans—20m dead and
30m currently infected (see article).
America's security outlays in Africa have shot up by $100m in the new East Africa
Counterterrorism Initiative, and could soon dwarf economic development assistance. America
recently committed almost 2,000 troops in the Combined Joint Task Force Horn of Africa, based in Djibouti, and is providing security and intelligence training in the Sahel. But direct military efforts
will not achieve long-term security when Africa's underlying crises of hunger, disease, poverty and
bulging youth populations remain unaddressed. Indeed, under today's conditions, a growing
American troop presence in Africa could easily provoke a backlash.
American strategic planners generally recognise the value of economic development assistance in
the aftermath of wars, as in the case of $20 billion that America will spend in Iraq and the $2.3
billion committed to Afghanistan. Yet when it comes to development assistance to prevent conflict
there is almost no money to be found. America's foreign policy is strikingly out of kilter, allocating
$450 billion per year for the military and a meagre $15 billion (at most) for development
assistance.
Strip out sums for emergencies such as food aid and anti-retroviral medicines, military assistance,
debt service, as well as sums paid to American consultants rather than to African countries, and
total American development assistance for Africa will be less than $1 billion this year for more
than 700m Africans. What about America's new Millennium Challenge Account, budgeted this year
at $1 billion, but to be scaled up to $5 billion per year by 2006? This sum is distributed throughout
the developing world, and in any case will be much too small to address Africa's financing needs
for roads, power, clean water, sanitation, children's health, schools, fertilisers and irrigation, and
other specific investments that could unlock the continent's economic growth.
A much smarter plan for Africa would save a fortune in the future by ending Africa's trap of
poverty, disease, hunger and violence and bolstering Africa against the virus of terror. America
and its allies need to appreciate that there are several well-governed African countries in which
investments on a meaningful scale would fuel regional economic development rather than
corruption and misrule. Specific and well-targeted investments over the coming decade would
provide the foundation for self-sustained growth. And donor countries need to realise that they are
sitting on under-utilised systems that could deliver that aid effectively.
Find your partners
The first step is to identify plausible African partners. In Afghanistan and Iraq America has not
withheld development assistance pending “good governance”. It has ploughed ahead with
development spending even in the midst of extreme violence and even though the respective
American-backed governments in Baghdad and Kabul barely have a writ of authority that runs
beyond (or even within) their respective capitals. In Africa, the options are vastly better. At an
over-arching level, the new African Union, with its development flagship, the New Partnership for
African Development (NEPAD), has launched an enormously valuable process of “peer review”. So
far, 16 African governments have signed up.
Strong national leadership backed by regional peer review
offers a powerful combination to improve the performance
of governments. In west Africa, at least two strategically
positioned countries stand out for their exceptionally good
governance: Ghana and Senegal. Both are multi-party
democracies. Both are led by impressive and popular
elected leaders, Presidents John Agyekum Kufuor and
Abdoulaye Wade. Both countries have an educated cadre
that can lead a bold strategy. Both have acceded to peer
review. Yet both are mired in poverty because of the lack of
key infrastructure and because of unabated disease,
especially malaria.
Other impressively governed yet impoverished countries in
the region include Mali and Benin. Nigeria too could turn the
corner on governance. President Olusegun Obasanjo
inherited a corrupt governance mess when he came to
power in 1999, but he has worked hard and against the
odds to improve the situation. His new and widely admired
finance minister, Ngozi Okonjo-Iweala, has recently tabled
an impressive poverty-reduction strategy backed by much
more rigorous systems of public administration and
accountability.
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In east Africa, there are also several outstanding partners.
Effective leaders in Ethiopia and Uganda have taken two
seemingly hopeless countries and set them on a path of
development despite desperate initial conditions. Meles
Zenawi, the prime minister of Ethiopia, has the most
insightful, indeed ingenious, ideas about rural development of any leader in that country's modern
history. President Yoweri Museveni of Uganda has fashioned the fastest-growing economy in east
Africa, and the only country in all of Africa to have turned the corner on AIDS. All of this is despite
Uganda being landlocked and victimised by an insurgency in the north backed by Sudan's Islamist
forces. Both Messrs Meles and Museveni have been staunch and unstinting supporters of America's
anti-terrorism efforts, and both have also acceded to African peer review.
To the east and south, Kenya and Tanzania have democratic and development-minded
governments, but are under extreme stress from pervasive poverty and disease. Well-governed
poor countries farther south include Botswana and Mozambique, among others. The situation in
Kenya is especially poignant. A bold democratic opposition united to unseat the deeply entrenched
and corrupt ruling party in the 2002 elections. But just as this government came to power, Kenya
was hit by an American State Department travel advisory warning of potential terrorist threats.
Tourism fell off and the government was immediately on the ropes.
On anybody's list—the World Bank, Freedom House, Transparency International—a growing and
significant number of African countries has the quality of leadership and governance to achieve
economic development and to fight terrorism. But these countries lack the means. Consider the
dire infrastructure situation in six of these well-governed countries (see table). They lack the
roads, electricity, health care and teachers needed to break out of poverty. Without this basic
infrastructure, these countries cannot reliably feed themselves, much less attract investors for
long-term growth.
Even Uganda, with its impressive record of economic growth in the 1990s, has experienced an
upturn of poverty. Without a multi-lane highway from Kampala, the capital, to the port of
Mombasa in Kenya, and without a network of roads connecting villages to such a highway, the
economy is trapped in a straitjacket.
Needs to know
The first step to help these countries is a detailed “needs assessment” of the kind that the UN and
World Bank carried out last summer for Iraq at America's request. The assessment in Iraq was a
joint product of the World Bank, the International Monetary Fund and about a dozen specialised
UN agencies. These agencies identified Iraq's infrastructure-investment needs on a sector-bysector
basis. The results showed that Iraq would need around $36 billion over four years for roads,
power, water and other priorities. Another $20 billion was needed for targeted spending in “softer”
areas like human rights and culture. The total assessment therefore came to $56 billion over four years. America has so far pledged around $20 billion of that. In the case of Afghanistan, a similar
exercise in April identified $27.5 billion in investment needs over the next seven years, and the
plan was backed by pledges of $8.2 billion during the coming three years.
This kind of needs assessment has never been done for Africa. In recent years, African countries
have been told by the rich world simply to “live within their means”, however meagre those means
might be. The IMF and World Bank have had to deliver this painful donor message. “Belt
tightening” for people who cannot afford belts became the order of the day. The professional staffs
of the Bretton Woods institutions know full well that their programmes lack adequate donor
financing. But since these agencies are run by the same donor governments that are withholding
adequate aid, deep frustrations are rarely expressed in public.
As special adviser to the UN secretary general, Kofi Annan, I asked my colleagues in the
Millennium Project to undertake a needs assessment in order to assay what a more detailed study
might show. Our much smaller team undertook a process very similar to the multi-agency study
for Iraq, looking sector by sector at the gaps in infrastructure, social-service provision and human
resources, and the costs of filling them in relatively well-governed countries. With only a small
portion of what America is now spending on military and reconstruction outlays in Afghanistan and
Iraq, it would be possible to enable hundreds of millions of people to break out of poverty. The
average annual financing needs for the period 2005 to 2015 are roughly as follows.
Basic infrastructure—roads, investments in soil health, water harvesting for crops, drinking water
and sanitation, modern cooking fuels, electricity—would cost around $45 per person per year
between now and 2015 (using an average of the per-capita costs identified for Ghana, Tanzania
and Uganda). Basic health care—for control of malaria, AIDS, TB, childhood diseases, safe
childbirth, nutrition and family planning—would be another $30. Upgrading primary and secondary
education would add another $15 per person per year. Other high-priority items would add
roughly another $10, bringing the total needed investments to around $100 per person per year.
Some of these needs are, of course, covered by domestic budgets, while a small part comes from
the out-of-pocket spending of the extremely poor. In total, domestic outlays might cover as much
as $40 per person per year, if these poor countries push hard (but not punitively hard) on
mobilising local resources. The remaining $60 gap would require international help. These
countries already receive around $10 per person per year in aid that is directed at these priorities
(additional aid is directed at other purposes). The unmet need is therefore around $50 per person
per year. Applying these results to six countries—Ethiopia, Ghana, Kenya, Senegal, Tanzania and
Uganda—with a combined population of 180m, this amounts to only $9 billion per year in addition
to current aid flows, far less than what was targeted for Iraq alone with its 24m people.
Beacons of stability
Could this money be well absorbed? The answer is a decisive “yes”. In the six countries, the
governments are stable. Bridges, pipelines and power pylons are not being blown up each day. All
six countries have already prepared detailed, often ingenious, plans for scaling up their
investments in the key infrastructure sectors. Ghana has its Ghana Poverty Reduction Strategy
(GPRS), Ethiopia its Sustainable Development and Poverty Reduction Programme, and so forth.
Indeed, these plans reveal a powerful and poignant truth.
Ever since the UN Millennium Assembly in September 2000, the low-income countries were told to
“scale up” their ambitions in order to meet the poverty-reduction targets summarised in the
Millennium Development Goals. They were told to make plans for Education for All (EFA), to Roll
Back Malaria (RBM), to treat AIDS patients on the scale of 3-by-5 (3m patients in poor countries
on anti-retroviral treatment by the end of 2005, covering half of all those who would need such treatment), and so forth. The well-governed countries took these initiatives seriously, making
detailed plans and submitting them to the donors. But the donors got sidetracked by the
September 11th attacks. Africa's plans are on the table, but the financing is not.
Ghana's GPRS, to name just one example, brilliantly identified the sources of rural poverty. It
systematically laid out the case for a five-year investment programme, identifying regional needs
and timetables for filling them. It produced, in short, a first-rate analytical effort. But the donors
said that it was “unrealistic”—not in terms of Ghana's needs, potential, goals, or plans, but in
terms of what the donors were prepared to fund. The GPRS went through four drafts as it was
beaten down to “realism” by the donors. In consequence, the plan addresses only a fraction of the
country's real needs.
With strategic and well-governed countries identified, with plans of action in place, and with
relatively modest financing needs, the last remaining step is to set in motion a process in which
the elements are combined. Such a process is surprisingly close at hand, if America can rouse
itself even briefly from its election-year and Middle East preoccupations. The key lies in a
multilateral approach to helping Africa, and America is the biggest missing element for greater
multilateral assistance.
The International Development Association (IDA) of the World Bank is the right focal point for
revamping and expanding the aid flows. IDA provides the most successful form of development
assistance in the world today, and it can be made even better. It does five important things. First,
it provides the world's single largest flow of low-cost development assistance to poor countries,
though not enough of it and not at low enough cost. IDA currently makes commitments of around
$8 billion per year, of which 80% is low-interest long-term loans and the remainder outright
grants. Second, it directs its outlays towards the priorities identified by the recipient countries.
Third, IDA harmonises donor resources. Typically, the 22 rich-country donors torment recipient
governments by insisting on separate aid projects that allow each donor to “show the flag”. In the
case of IDA, however, the donor governments agree, wisely, to pool their resources into a single
basket that can back the specific strategy of the recipient country. Fourth, IDA commits its
resources over a three-year time horizon rather than a one-year donor budget cycle typical of
bilateral aid. Fifth, it aims to base its allocations on good performance, using indicators for
governance and economic management.
Bigger is better
Still, IDA needs to be strengthened in four ways for it to play a breakthrough role in Africa. Most
important by far, instead of $8 billion, IDA's annual programmes should be up to $25 billion, with
around half of that going to Africa. Second, IDA needs to make grants rather than loans to the
poorest recipients, which would include almost all of the countries in sub-Saharan Africa. The
American government called for grants rather than loans to finance Iraq's recovery so as not to
encumber future Iraqi generations, and the same principle applies even more emphatically for
impoverished Africa. Third, IDA should work with the aid recipients on strategies that have a time
horizon long enough to carry them from today to 2015 when they are supposed to meet the
Millennium Development Goals. Fourth, IDA can and should focus even more on measurable,
monitorable and proven interventions—roads, soil nutrients, anti-malaria bednets, to name a
few—which in combination enable a country to break free of poverty.
In fact, the timing for introducing properly ambitious programmes could not be better. The next
three-year round of IDA financing (IDA-14, covering fiscal years 2006-08) is currently under
negotiation among donors. The African Union's peer-review mechanism is getting under way. Next
year, Britain hosts the G8 Summit, and Tony Blair's government has made clear that a doubling of development assistance will be at the core of the agenda. Mr Blair's Africa Commission is due to
report in spring 2005. And in September 2005, the world's leaders will gather at the UN to review
progress in the five years since the Millennium Assembly. Will they still be enmeshed in bitter
controversy over a highly contested war? Or will they say with confidence that well-governed
developing countries will finally find a partnership with their rich counterparts to help the world
escape from violence, terror, disease and extreme poverty?
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Jeffrey Sachs is the director of the Earth Institute at Columbia University in New York and special adviser to UN secretary general, Kofi Annan, on the Millennium Development Goals
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