Speech

Remarks by Alassane D. Ouattara
Deputy Managing Director of the International Monetary Fund
at the National Summit on Africa
San Francisco, June 4, 1999

Mr. Chairman, ladies and gentlemen, it is a great pleasure for me to join you in your reflections on how best to help Africa prepare for the 21st Century. My point of departure is simple. It is that of a highly interconnected world economy. A world in which opting out is no longer an option. For to do so would be to miss out on the opportunities that globalization offers, such as access to a larger volume of financial savings, a wider range of goods and services at lower costs, new export markets, and new technologies. These are opportunities that Africa cannot forgo in its quest to raise living standards and lower poverty.

In recent years, Africa has been making impressive strides in its economic performance. Indeed, behind the headlines lurks the beginning of a quiet renaissance. Let me cite a few examples:

• From 1995-98, average real growth exceeded 4 percent, or more than three times the average of the preceding four years;

• Real per capita incomes rose in most countries;

• The average rate of inflation has fallen sharply, from nearly 50 percent in 1994 to about 10 percent last year.

This is not just a tale of better economic indicators. On the social side, indicators such as infant mortality, life expectancy, and adult illiteracy have been improving over the past decade--although they are still very low even compared with other developing countries. Moreover, most African countries have made substantial progress in freeing the private sector from cumbersome government controls on prices, international trade, investments, and foreign exchange. Economies are more efficient, access to markets is more open, and the groundwork has been laid for deeper integration into the world economy.

Efforts are also under way to promote good governance and ensure respect for human rights. Indeed, throughout Africa, a popular consensus is building for the establishment of more democratic systems, and political systems are gradually being liberalized. This means that checks and balances are being strengthened, along with changeovers of political power. If this process continues--and it must, with the full support of the international community--leaders will be able to build consensus behind their policies, the private sector will feel more secure, and civil society will be able to flourish.

But as remarkable as these achievements may be, they are certainly not enough. Africa needs growth rates of at least 6-7 percent per year on a sustained basis, just to keep up with the expected increase in its labor force. Moreover, a growth rate of 8-10 percent would be even more appropriate if Africa hopes to make a significant dent in the pervasive poverty over the long-run. And these growth rates are feasible, if Africa perseveres with its reforms and receives needed help from the international community.

An agenda to help Africa

So what can be done to help Africa secure its rightful share of economic prosperity? The industrial countries could help by first and foremost, promoting world economic growth and stability. They could also help greatly by redressing the declining trend in official development assistance, continuing to provide technical assistance in support of capacity building efforts, and fully opening up their markets to Africa's exports.

Of course, we welcome the U.S. commitment to a new economic "partnership" with Africa, with its emphasis on trade and investment and mutually beneficial relations. This is vital as Africa must build up its private sector to serve as the principal engine of growth. Although private investment, both domestic and foreign, has increased in many African countries in recent years, it is still too low to give the needed boost to growth. Higher foreign direct investment-especially in the form of more joint ventures-would bring the latest technology and know-how to a young set of entrepreneurs eager to take advantage of such opportunities. For these reasons, we support the African Growth and Opportunity Act and any other initiatives that take into account the need for bilateral debt reduction and forgiveness, greater trade and investment, and improving living conditions for all Africans.

How about the IMF? First, we are providing policy advice, wide-ranging technical assistance, and training for government officials. Second, we are providing financial support--some $3.6 billion in subsidized loans--to more than 20 sub-Saharan African countries pursuing reform programs, through the Enhanced Structural Adjustment Facility (ESAF), to help foster higher growth and reductions in poverty. Along this line, I might note that as part of our ESAF programs, we recognize the need for government and civil society ownership of the programs. We also are trying to increase our country knowledge by working more closely with our development partners to determine the poverty and social impacts of our programs in Africa. Moreover, ESAF support has been a catalyst for other financing from the international community.

In addition--in recognition of the exceptional needs of many African countries--we are pursuing two special initiatives. The first is aimed at further reducing the debt burden of the poorest countries. Already, five countries in Africa have benefitted from commitments under the initiative. We have heard the calls for faster, deeper, and broader debt relief, and are working hard, together with the World Bank, to strengthen the initiative. We aim to agree on an enhanced initiative--guided by the G-7 Summit in Cologne in early June--by the Annual Meetings of the IMF and World Bank this fall.

The second initiative is aimed at countries that are trying to rebuild after political turmoil, civil unrest, or armed conflict. And here, I would like to urge the international community not to forget the large number of refugees in Africa. As we reach out to the refugees in the Balkans, let us also reach out to those in Africa.

This brings me to a crucial point, namely that the image of an Africa ready to take off economically is being undercut by the image of an Africa increasingly mired, once again, in political turmoil, civil unrest, and armed conflict. Now is the time for the international community and regional groupings to intensify their efforts to secure lasting peace across the continent. And now is the time for Africa itself to say "enough." For only with peace can Africa attract the trade and capital flows it so desperately needs. And only with peace can Africa's citizens enjoy the benefits of sustained high-quality growth and join the global economy of the new millennium.

Ultimately, Africa holds its destiny in its own hands. What should it be doing? Besides maintaining macroeconomic stability, it can help strengthen the virtuous circle of better policies and higher growth by the intensified pursuit of good governance and by focusing, above all, on five key policy areas:

• ensuring a predictable environment for investment by promoting good governance, transparency, and accountability-and by shunning all forms of corruption and cronyism. This is vital to remove the sense of uncertainty that still too often plagues investor decision-making.

• strengthening human capital by giving priority to education and health in public expenditure. This is vital to help spur more broad-based sustainable growth and greater poverty reduction.

• strengthening the financial sector . This is needed to better mobilize savings and enhance financial intermediation.

• speeding up trade liberalization . This will boost the efficiency and competitiveness of domestic producers, along with enabling African countries to benefit more from the liberalization of other countries' trade barriers and the growth of world trade.

• and deepening regional integration. This would allow African countries to better overcome the disadvantages of their relatively small economies, permit them to realize economies of scale, and enhance their ability to trade on a global basis.

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This is a weighty agenda. For all concerned. But a feasible one. I am heartened by the growing commitment of so many industrial countries--including the United States-to help put Africa on a sustainable growth path. I am also heartened by the growing commitment of so many African nations to take the difficult reforms, for delay would risk losing a valuable opportunity for durable progress.