The challenges of economic development are placing rapidly increasing demands upon African governments. Fostering economic growth, reducing poverty, administering more complex budgets, and supervising growing banking systems, require strong institutions and relevant knowledge. Quite often, the problem is not a question of political commitment to undertake reforms, but lack of sufficient capacity.

This points to the crucial importance of developing strong domestic institutions staffed with policymakers and administrators who have skills in economic development. With that in mind, a new effort has been launched in East Africa that should help develop the region's human and institutional capabilities.

The International Monetary Fund (IMF), working with the governments of Tanzania, Eritrea, Ethiopia, Kenya, Rwanda, and Uganda-and drawing upon financial assistance from bilateral and multilateral partners-yesterday opened the East African Regional Technical Assistance Center (East AFRITAC) in Dar es Salaam. The East AFRITAC is the first IMF regional capacity-building center to be opened in Africa, with the second to follow soon in West Africa. If this effort proves successful, there are plans for a total of five such centers in Africa-all with the common goal of developing local expertise.

It has become increasingly clear in recent years that a country's ability to devise and successfully implement its own policies is indispensable to economic development. This is a lesson that the IMF is taking to heart with the AFRITAC initiative. The initiative emphasizes building up local institutions and know-how, not just, as in the past, stepping in to supply expertise that is lacking. It will be also important to enhance donor coordination in capacity-building assistance.

This initiative will be effective because it responds to urgent calls from Africa, a call reinforced by the New Partnership for Africa Development (NEPAD). The initiative builds upon the IMF's commitment to deepen its collaboration and coordination with existing capacity-building efforts in Africa, including the work of the World Bank's Partnership for Capacity Building in Africa and its Africa-led implementing agency, the African Capacity Building Foundation (ACBF).

With the first two centers, the IMF is aiming to increase the volume of technical assistance it provides to Africa while refocusing such assistance on capacity building. At the East AFRITAC, resident experts, whose skills reflect the demands identified by the member-countries, will be in a position to address technical assistance needs in each country more effectively. In particular, they will provide hands-on assistance promptly and help coordinate ongoing capacity-building efforts.

The focus of the work of the new East African center, which has been defined jointly with the six-member governments and donor partners, will be on the following key areas: banking supervision; financial market development, exchange rate policy, handling finances of lower levels of government (otherwise known as fiscal decentralization); strengthening revenue collection, and developing sound statistical systems to provide accurate economic information.

Member countries will also benefit from substantial training programmes, which will be carried out jointly by the ACBF.

Much of this work is linked to the joint efforts of the IMF and World Bank to bolster Africa's poverty reduction efforts, which are based on the Poverty Reduction Strategy Paper (PRSP) approach. This approach is supported by concessional loans under the IMF's Poverty Reduction and Growth Facility.

At its heart is the notion of country ownership of the poverty reduction effort, with government working closely with civil society organizations to define policies most likely to have an impact on poverty. A country's strategies inevitably place new demands on Government institutions in terms of policy formulation and implementation; thus the need for more technical assistance directly related to programs underway in the field.

The AFRITAC approach to collaboration rests on the premise that existing capacity-building efforts in African countries are already showing results and can contribute to the initiative.

The East AFRITAC programme is founded on a commitment to country ownership already quite evident in the initial stages-as well as mutual accountability and effective coordination with the donor countries and regional institutions that have made this undertaking possible.

Ultimately, its success will rest in the hands of Africans, who will provide the ongoing vision and guidance. The IMF will do everything it can to support that success by providing the expertise and working in partnership with the governments of East Africa.