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Africa: UNCTAD Documents
Africa: UNCTAD Documents, 2
Date distributed (ymd): 971125
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
Summary Contents:
At its October meeting, the UN Conference on Trade and Development (UNCTAD)
considered recommendations on ways to sustain Africa's fragile recent economic
progress. The recommendations stressed the need for a significant increase
in public investment in physical and human infrastructure, export promotion
in non-traditional sectors, and a balanced agricultural policy.
+++++++++++++++++end profile++++++++++++++++++++++++++++++
For additional information on UNCTAD and UNCTAD studies related to African
development, see
http://www.unctad.org/en/enhome.htm or
contact: Office of Secretary of the Board
Tel: +4122-907-4815
Fax: +4122-907-0056
E-mail: awni.behnam@unctad.org
Press Release
TAD/INF/2727 21 October 1997
UNCTAD SECRETARY-GENERAL CALLS FOR ACTION TO SUSTAIN AFRICAN
ECONOMIC RECOVERY
Is the current recovery in Africa sustainable? What are the prerequisites?
These questions are being addressed, yesterday and today, at the intergovernmental
level, by the UNCTAD Trade and Development Board which is holding its annual
session in Geneva from 13 to 24 October.
After many years of stagnation and decline, Africa has registered three
successive years of improved economic performance, beginning in 1994, engendering
much optimism. But caution rather than complacency is warranted, the UNCTAD
Secretary-General, Mr. Rubens Ricupero, warned in an address to the Board
today, as cyclical and transitory factors had been important in the recent
economic upturn. There was no reason to underrate the amount of difficulties
still laying ahead. He saw a need for a balanced approach both in assessments
and solutions to Africa's economic problems.
Agricultural development was a key component of the solution to development
in the continent. But, the green revolution for instance which had helped
in bringing about food security in other regions, could not easily be replicated
in the African continent due to problems related to climate and soil. It
was already anticipated that after a few years of improved weather conditions,
agriculture could suffer a setback this year, especially in sub-Saharan
Africa, owing to "El Nino". Similarly, because of its geographic
location, African countries had not benefitted from the 'flying geese'
pattern, as had Asian developing countries from spill-overs from rapidly
growing neighbouring economies.
Mr. Ricupero saw a growing willingness to take up the challenge of African
development, demonstrated by initiatives taken within the United Nations,
by the European Union, Japan, the United States, and political commitments
as expressed by the G7 at the Denver Summit. These various initiatives
directed towards African countries needed appropriate coordination.
The call for non-complacency was shared by Ambassador Agnes Yahan Aggrey-Orleans
of Ghana, who is chairing the debate, within the Board's Sessional Committee
II. Africa's recovery was fragile and prone to the vicissitudes of the
weather and commodity markets. "Now that Africa seems to be on the
way to recovery, it would indeed be regrettable", she stated, "if
the international community were to miss the opportunity of placing growth
and development on a firm footing in Africa."
The view emerged clearly from statements made, not only by African countries,
but also from other developing and developed countries, that a long-term
recovery in Africa would be within reach only if there was a significant
reduction of the debt burden which absorbed funds that would otherwise
be available for investing in productive capacity. Much emphasis was placed
also on the need for vertical and horizontal diversification in the commodity
sector. It was also stressed that for African countries, Official Development
Assistance (ODA) needed to be increased, as foreign direct investment (FDI)
was not a substitute but only a complement to ODA.
Presenting a report to the Board on "African economic performance,
prospects and policy issues" (TD/B/44/12 -- a version in Wordperfect
is available at http://www.unctad.org/en/special/pdfs/tb44d12.exe),
Mr. Kamran Kousari, UNCTAD Coordinator for Africa, attributed the improvement
in external indicators to growth in export revenues and a reduction in
current account and trade deficits. Export growth went from -4.2 per cent
in 1993 to 3.3 per cent in 1994 and 16.2 per cent in 1995. This was largely
due to higher prices for commodity exports, improved weather conditions
and better management of national economies. However, investment ratios
appeared to have fallen in more than half of the countries in which export
earnings increased between 1993 and 1995, representing only 17 per cent
of GDP for sub-Saharan Africa as a whole.
The report puts forward three main conclusions on policies to be pursued
for sustaining growth in African countries.
The first calls for a significant increase in public investment in physical
and human infrastructure. This would, through spillovers if accompanied
by the right policies, help lay the basis for recovery of private investment
and a process of diversification.
The report explains that investment in infrastructure has been constrained
by balance-of-payments considerations, which have been negatively affected
by the servicing of external debt which is a major burden for the economies
of sub-Saharan Africa (SSA). SSA's debt represents 10 per cent of the total
debt owed by developing countries to official creditors, but the region
has the highest debt-to-exports ratio of any developing region: 270 per
cent! There is a huge stock of debt arrears which is the fundamental problem
underlying SSA's debt overhang. Only through a major debt relief and an
increase in ODA could resources needed for investment in physical and social
infrastructure be released, the report stresses. In the context of the
IMF/World Bank Initiative for the highly indebted poor countries (HIPCs),
added flexibility in eligibility criteria, time frame and interim financing
is required.
The second policy recommendation aims at export promotion in non-traditional
sectors through increased competitiveness and exchange rate stability.
The possibility for the adoption of selective and temporary incentives
for exports in non-traditional sectors should be considered.
Many African countries have virtually eliminated, or reduced, their
non-tariff barriers, and many have also reduced their tariff rates. However,
the report notes, rapid import liberalization will create difficulty in
enhancing productivity when the industrial structure is weak. Furthermore,
with respect to Africa's competitiveness, there are significant financial
and foreign exchange constraints impeding capacity-building and raising
productivity of the existing capacity. Real wages have already been considerably
depressed. Hence there is little scope for reducing wages in the interest
of competitiveness. Finally, the scope for an active exchange rate policy
is being narrowed by financial liberalization.
The third policy recommendation focuses on agriculture: a balance should
be struck between food self-sufficiency, surplus extraction, price incentives
and income security for producers. Policy instruments and institutions
should be reformed rather than dismantled to achieve these objectives.
Agriculture requires substantial investment in, and maintenance of, infrastructure,
which cannot be undertaken by the private sector.
On agricultural price policies, while world terms of trade for food
and agricultural raw materials have fallen, domestic terms of trade in
SSA countries have generally improved. However, contrary to expectations,
UNCTAD findings suggest that in recent years, farmers in countries where
the liberalization of prices and marketing institutions has been slower
have, in general, fared better than farmers in countries where agricultural
markets have been liberalized. Policies designed to remove price distortions
appear to be insufficient to provide greater incentives. In short, any
benefits accrued have been to the benefit of traders as price-based reforms
have left untouched severe market imperfections and shortcomings.
Delegations also heard the views from experts invited to speak on the
subject: Mr. Rashad Cassim, Director, Trade and Industrial Policy Secretariat,
International Development Research Center (IDRC), South Africa; Mr. Louis
Amedee Darga, StraConsult, Mauritius; and, Mr. Gerry Helleiner of the University
of Toronto, Canada.
Informal discussions on Africa will continue today in preparation for
the Board's High-Level Segment on "Globalization, Competition, Competitiveness
and Development", which will be held on Thursday 23 October (see TAD/INF/2722).
Ambassador Aggrey-Orleans will report the outcome of these discussions
to the High-Level Segment. (The afternoon of the High-Level Segment will
be an interactive session through video-conferencing with the Second Committee
of the United Nations General Assembly.)
For more information, please contact: Kamran Kousari, UNCTAD Coordinator
for Africa, Telephone: +41 22 917 5800, Fax: +41 22 907 0043, e-mail: kamran.kousari@unctad.org
or Carine Richard-Van Maele, Press Officer of UNCTAD Telephone: +41 22
917 5816/28, Fax: +41 22 907 0043, e-mail: press@unctad.org
This material is being reposted for wider distribution by the Africa
Policy Information Center (APIC), the educational affiliate of the Washington
Office on Africa. APIC's primary objective is to widen the policy debate
in the United States around African issues and the U.S. role in Africa,
by concentrating on providing accessible policy-relevant information and
analysis usable by a wide range of groups and individuals.
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