South Africa: MPs, World Bank And IMF Mull Poverty Reduction

from All Africa

BuaNews (Tshwane)

A network of international parliamentarians has heard Africa needs two to three decades of sustained economic growth to make a substantial dent in the level of poverty on the continent, writes Shaun Benton.

Finance Minister Trevor Manuel impressed upon international MPs meeting in Parliament at the weekend, the need for a system of improved global governance that is representative and effective.

This, as the effects of world economic integration reach deeper into the social, economic and political lives of billions of people.

The MPs were gathered in Cape Town as part of the annual conference of the Parliamentary Network on the World Bank, which was hosted by South Africa's Parliament, making it the first time that this gathering of MPs and officials from the leading international financial institutions had met outside of Europe.

Created in 2000, the Parliamentary Network on the World Bank is an independent and non-partisan network of 800 parliamentarians from 110 countries concerned at fighting poverty and promoting transparency and accountability in development, providing a platform for policy dialogue and officials from the World Bank and IMF.

Also present was the president of the World Bank, Paul Wolfowitz, and the managing director of the International Monetary Fund, Rodrigo de Rato, who joined Mr Manuel in a panel discussion on economic issues facing Africa and the developing world and the role in this of the international financial institutions (IFIs).

In a wide-ranging speech that appeared to be well-received by the delegates who ranged from as far afield as Paraguay and the Philippines, Mr Manuel also emphasised the need for developing-country governments to continue creating fiscal space.

This needed to be done through reducing debt service costs and other means, which would allow more resources to be spent social services and economy-boosting infrastructure.

"Our multilateral institutions have tended to dissuade us from focusing too much on fiscal space issues, but I think it is critical to moving African economies and governments from a condition of dependence to one of independence," Mr Manuel said.

"It's very important that elected governments - and with all the elements of democracy - can account to their people for their decisions - it's fundamental to sustaining peace in the world."

Recently, many African governments including South Africa have recorded surpluses or moderate deficits, said Mr Manuel.

This ocurred in the context of Africa's economic growth averaging 5.2 percent last year.

Mr Manuel said "the efforts of recent decades to improve governance needs to be strengthened, accelerated and made irrevocable, in large part by ensuring that we make major strides forward to improve global governance."

Increased aid to Africa continues to support poverty alleviation as it creates new employment opportunities, said the Finance Minister, adding, however, that "the volatility and unpredictability of aid flows presents a significant obstacle to proper budgeting and quality spending".

Aid to Africa, he said, began rising after the early 1970s, growing from 16 per cent of global aid in 1974 to 28 per cent in 1992.

After this, however, the continent experience a sharp downturn in aid that lasted until 2000, followed by a recovery but one which has recently been affected negatively by wars in Iraq and Afghanistan, which have put pressure on donors to support redevelopment there.

As a result, the share of aid going to sub-Saharan Africa declined, according to the Organisation for Economic Cooperation and Development, from 35 per cent in 2003 to 30 per cent in 2005.

"I think one needs to take it a bit further and recognise that if the donor aid were driven to deal with deficits of the budgets, where there is public accountability for the way in which money is spent, the world could make very significant advances," Mr Manuel said.

International development aid should be raised substantially higher, he said, reminding delegates that agreements on international partnerships - particularly North-South partnerships - made at a landmark international conference on financing for development held in Monterrey, Mexico in 2002, still need to be met.

Another area where international cooperation needs to be deepened is in the multilateral forum governing trade.

The collapse of the Doha "development" round of the World Trade Organisation is "a serious indictment on the intention of developed countries to increase market access to the developing world".

Trade-distorting agricultural subsidies and other non-tariff barriers - practised largely in the north - remain "significant obstacles to increased trade between Africa and the developed world", said Mr Manuel.

Half of the continent remains poor, said Mr Manuel, using IMF data to point out that Africa's aggregated gross domestic product (GDP) in 2006 was only about US$2 trillion.

This compares poorly with India's contribution of US$4 trillion to world GDP of US$65 trillion, China's US$10 trillion share and the United States at US$13 trillion.

On a per head basis, Africa's GDP based on a purchasing-power-parity comparison ranges from a low in US$645 in Malawi to a high of US$17 426 in oil-rich Equatorial Guinea, one of the oil-rich economies on Africa's west coast.

The billions of dollars pouring into the continent from oil money has in turn raised concerns among the elected representatives, with Mr Wolfowitz later agreeing with one senator, that more transparency is required over the destinations of the US$300 billion in oil money that has poured into the continent in recent years.

A Danish MP later acknowledged the danger to Africans of the agricultural subsidies, asking whether, with 80 per cent of Africans engaging in subsistence agriculture, it was really to the benefit of consumers in developed countries to continue to see these subsidies in place.

Mr Wolfowitz agreed that the agricultural trade subsidies "are hurting the poorest people in the world ... the people we care most about", and that they might not eventually be in the interests of people in the developed world.

He added that US$260 billion is coming out of the pockets of consumers and taxpayers in the United States, Europe and Japan, saying the World Bank would do anything it could to help push "for more effective trade negotiations".

He added that lack of accountability around oil revenues coming into Africa means these resources can "more often than not turn out to be a curse rather than a blessing", saying that a move towards getting all the oil companies and all the countries they operate in to declare what the revenues from oil are "would be a start".

Mr Wolfowitz also suggested that MPs in developed countries could increase pressure for stronger legislation combating bribery, pointing out "every corrupt transaction has at least two parties" and that bribe-payers in multinational companies could be more effectively prevented from such actions.

Mr De Rato of the IMF later said unless Africa's economic growth is actually accelerated over the next 10 to 15 years rather than sustained at current levels, "things will not change".

If Africa continues to grow at its current rhythm it will not achieve the millennium development goals, "so the challenge is not small", the head of the IMF added.