Africa- Dimensions of a Continent
Least Developed Countries and the financial crisis.
Let me begin by saying how delighted I am to have been invited to give this lecture by the Bruno Kreisky Forum. It is an indeed an honor to be among such esteemed company and a privilege to participate in an event which encourages serious reflection on some of the more pertinent issues of our time.
I sincerely hope that my intervention this evening will allow for even further discussion and contemplation long after you have left this venue tonight.
My lecture this evening is perhaps best delivered in two parts. Firstly, I would like to briefly attend to the subject of Africa – a continent which is as complex, as multi-dimensional and ultimately as ambitious as any other. It is of course always a pleasure to speak to an audience such as you who can appreciate that the 21st century will be shaped by what happens not just in Washington or Moscow or Vienna, but by what happens in Johannesburg, Lagos, Nairobi as well.
For the latter part of my presentation, I would like to take the opportunity to share with you the extent to which the current global financial crisis threatens to unravel some of the hard-won progress made in the world’s 49 Least Developed Countries.
Ladies and Gentlemen,
When journalists or scholars write or talk about Africa, normally they talk about poverty, corruption, coups d'etat or regional conflicts. More often than not, an extremely diverse continent is seen as one prolonged tragedy in need of endless charity. This of course is a serious misconception, and while it may make for sensational headlines, it betrays and distorts the truth.
Allow me to present to you what I believe is a far more nuanced and constructive account.
As many of you are well-aware, Africa is endowed with human and natural resources, environmental diversity, and cultural and archaeological richness. The region is a youthful continent with over 920 million people, of whom 60 per cent are under 25 years of age.
Politically speaking, the last decade witnessed the end of several long-running civil wars and the consolidation of democratic rule in a majority of States in the region. Today, democratic elections are the norm rather than the exception. African citizenry are hard at work at putting democracy on a firmer footing, with peaceful transfers of power even in the wake of closely contested elections.
Across Africa, we have seen countless examples of people taking control of their destiny, and making change from the bottom up. We saw it in Kenya, where civil society and business came together to help stop post-election violence. We saw it in South Africa, where over three quarters of the country voted in the recent election - the fourth since the end of apartheid.
And with improved governance and an emerging civil society, the sub-Saharan economy has shown impressive rates of growth. In 2007, Africa’s real growth averaged 5.8 per cent, a rate comparable to and even higher than those of many other developing regions. This growth rate is attributable not only to improvements in the continent’s terms of trade resulting from the boom in commodity prices in recent years, including for oil, but also to improved macroeconomic management and political governance.
Across the continent, rates of inflation are low, fiscal balances are strong and reserves are being accumulated. Recent external debt relief has contributed to a reduction in debt overhang and liquidity constraints, which has opened space for enhanced social spending.
From cell phone entrepreneurs to small farmers, Africans have shown the capacity and commitment to create their own opportunities.
A brilliant example of this is the case of Malawi which used to be very poor particularly in terms of agricultural production. In 2005 they faced a famine. In response, the government began subsidizing fertilizers and high-yielding seeds for small farmers. In just four years they moved from being a recipient of food aid to becoming an exporter. Zambia, Senegal and Kenya have announced similar plans to replicate this model.
With better governance, I have no doubt that Africa holds the promise of a broader base for prosperity.
But just as governance is vital to opportunity, it is also critical to highlight the progress in social and health indicators.
In 2008, Tanzania recorded massive gains in primary education enrolment – 97.2 per cent. Uganda and Kenya, too, are on track to reach universal primary education. Far more children across the continent are attending and completing school.
Africans have also shown their commitment to gender parity.
In Rwanda, 56 per cent of parliamentarians are women. Women make up approximately a third of the cabinet in South Africa and Africa’s first ever female president Ellen Johnson Sirleaf of Liberia is among the many women in the forefront of progressive change.
One area that holds out extraordinary promise is energy. Africa gives off less greenhouse gas than any other part of the world, but it is the most threatened by climate change. Across Africa, there is bountiful wind and solar power; geothermal energy and bio-fuels. From the Rift Valley to the North African deserts; from the Western coast to South Africa's crops -Africa's boundless natural gifts can generate its own power, while exporting profitable, clean energy abroad.
Ladies and Gentlemen,
What I have done is enumerate the positive developments in recent years in order to demonstrate the multi-faceted nature of the continent.
Naturally, there are also outstanding challenges.
The challenges to human security are deep and structural in nature and many African States are still institutionally weak despite improvements in government capacity.
The escalation of acts of piracy in the Horn of Africa, the worrying instances of non-constitutional changes in Madagascar, Guinea and Mauritania and the resumption of warfare in some regions continue to imperil the lives of many. At the same time the African Union and the regional economic communities have shown their resolve to peacefully settle post-electoral disputes, conduct effective conflict-management and mediation efforts and take a firm stance on leaders emerging from military coups d’état by excluding them and their countries until the return to constitutional order.
Equally disheartening is that far too many still die from preventable diseases. When children die because of a mosquito bite, and mothers die in childbirth, then we know that more progress must be made.
But yet again across the continent, we see examples of ordinary Africans tackling these problems.
In Nigeria, an Interfaith effort of Christians and Muslims has set an example of cooperation to confront malaria. In Ghana, we see innovative ideas for filling gaps in care - for instance, through E-Health initiatives that allow doctors in big cities to support those in small towns.
These are certainly daunting and serious obstacles, but it is my sincere hope that I have demonstrated tonight that even in the face of seemingly insurmountable challenges, Africans themselves are beginning to unlock the potential of the continent.
It is of course a tremendous task which requires strong partnership based on a universal truth that Africa is a fundamental and integral part of an increasingly interconnected world.
Ladies and Gentlemen,
This brings me to the second part of my lecture this evening. It is unfortunate that it took a global crisis in the financial sector to illustrate the extent to which we are all interconnected.
Any notion that Africa's relative isolation from global capital markets would shield it from the effects of the financial crisis has now been proven to be wishful thinking.
While the magnitude and depth of the impact has been uneven, the continent as a whole has seen growth prospects reduced from an encouraging average rate of 6 per cent in recent years to less than 3 per cent growth in 2009.
Given the continent high rate of population growth, per capita income will shrink for the first time since 1994. The crisis poses a real threat to hard-won gains in boosting growth and achieving progress toward the Millennium Development Goals. Indeed, the financial and economic crisis could rapidly become a human and social crisis, with severe political implications.
Allow me to cast my attention now to the world’s 49 Least Developed Countries, 33 of which are in Africa, 15 in Asia and 1 in the America.
The Least Developed Countries or LDCs are considered among the poorest in the world. What makes them particular vulnerable is a number of structural constraints that militate against their sustained growth and development. Weak productive capacities and limited diversification as well an underdeveloped agricultural sector are just some of the impediments which render them vulnerable to external shocks.
These vulnerabilities have been particularly heightened by the ongoing global financial and economic crisis.
Prior to the current global financial and economic crisis, LDCs showed improved economic performance, with real GDP growth averaging over 6 % per annum over the period 2001-2007. Gains, albeit modest have been recorded in several Millennium Development Goals, including primary education and gender equality.
The impact of the crisis on LDCs has been felt mainly through falling exports, reduced investment inflows, remittances and declining tourism receipts.
Widening budget deficits and current account gaps pose a serious threat to the macroeconomic stability that many countries have achieved after years of sound economic policy and structural reforms. Least developed countries also face reductions in bank lending and domestic financing.
It is also necessary to underline the gender dimension of the crisis. Women are seeing drastic reductions in income and in the budgets they manage on behalf of their households.
Although some are predicting global recovery as early as next year, there is no doubt that the effects of the crisis on LDCs will linger for years, if not decades. Therefore international support for LDCs should not only focus on recovery, though that is extremely important, but also strive to lay the foundation for sustained economic growth and development.
This calls for prioritizing productive capacity development, agricultural development and facilitating structural transformation. The overarching objective should be to support LDCs reduce poverty and achieve the MDGs. Better alignment of resources behind these priorities is vitally important.
Ladies and Gentlemen,
Much needs to be done to mitigate the adverse impact of the crisis on LDCs and return to the path of progress.
African countries have responded at the regional and national levels with stimulus packages, targeted assistance and other steps. Some countries have introduced reforms aimed at boosting domestic resource mobilization. Others have sought to increase liquidity in the banking system. African Ministers of Economy and Finance have pledged to strengthen accountability and the regulation of financial institutions, harmonize policies, diversify export structures and improve debt management.
However, financial constraints limit the range of policy measures that African nations and other vulnerable countries can adopt. This is where the international community can play an important role.
The United Nations system has pooled its assets to help the poor and vulnerable. We are working with our multilateral partners to implement the recommendations of the Millennium Development Goals Africa Steering Group. And we have launched a Global Impact and Vulnerability Alert System to monitor the effects of the crisis in real time.
Ladies and Gentlemen,
Let me outline some of our highest funding priorities: we must close the gap between needs and resources at the Global Fund to Fight AIDS, TB and Malaria and the Global Alliance for Vaccines and Immunization. Further, we must fill the resource gaps in the Education for All Fast Track Initiative and in related funding streams to ensure universal access to primary education. It is equally incumbent upon us to extend local improvements in water and sanitation to more regions. Finally, we must address the major gaps in access to clean energy.
We know what needs to be done. We know where additional resources can yield the greatest returns.
It is then my belief that G8 leaders should complement the work of the United Nations by ensuring that the 2005 Gleneagles aid commitments are met. The G20 reaffirmed these commitments in April. Yet with less than a year until the 2010 deadline, annual aid to Africa remains at least $20 billion below the Gleneagles targets. Donors need to spell out how they will scale up. The “Gleneagles Scenarios” show how aid can be translated into development results at country level.
In Africa, and the LDCs, we have abundant evidence that aid can help transform lives. Despite constrained private capital flows and falling revenue from trade and remittances, aid must remain a central part of the global development agenda.
However, we must also recognize that aid works best in concert with market forces.
We must therefore also help developing countries gain and maintain access to markets by concluding the Doha Development Round of trade negotiations. We must also increase the resources available for the Aid for Trade initiative, in order to create employment and increase production capacity.
The proposed redesign of the international financial architecture provides another opportunity to address the crisis. African countries and the LDCs should be better represented in forums where important decisions that affect their economies are made.
African States and the least developed countries face a deepening human and development crisis. A variety of forums and processes have developed initial responses to the crisis. Perhaps the most important expression of this determination to make the 21st century Africa’s century was the establishment of the New Partnership for Africa’s Development in 2001. NEPAD was conceived as a plan by African leaders themselves to tackle the continent’s economic, social and governance challenges that had shackled the continent for so long.
In the broadest sense, we need to see a new multilateralism take hold –- one that is defined by stronger global cooperation, so that we can enter 2010 and the decade beyond with the financial crisis behind us, a climate change agreement in hand, and renewed progress towards the Millennium Development Goals.
In conclusion, these achievements can restore global hope, mutual trust and solidarity, and build a renewed foundation for increased security and peace in Africa and across the developing world.
I thank you.