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An Agenda for the 21st Century
Alassane D. Ouattara
Africa is at a crossroads. Will it continue to open up its political systems to broader participation and reform its economies to integrate them more fully into the global economy, or will it revert to political and economic practices that have delayed its integration into the economic mainstream?
AT THE DAWN of the twenty-first century, Africa must quickly select the path it wishes to follow. On the one hand, it could allow the forces of implosion and ethnic warfare to become the masters of its fate, to the advantage of a few potentates lacking in vision or warlords with transient alliances. Thus, history would repeat itself, with all the suffering that this entails, and this old continent would be at the mercy of all types of corruption. Africa would be stripped of the wealth of its soil and the promise of its youth and left marginalized, adrift in the wake of history.
On the other hand, it could say no to marginalization and fully integrate itself into the great global village that the world has become in this internet era. This would mean that its youth could build a future brimming with hope and every man and woman could participate in developing their nations, thereby ensuring both transparency in the management of public affairs and a sense of a common destiny. These are the foundations of a stable, inclusive, and predictable environment.
Since the early 1990s, many countries in sub-Saharan Africa, the region on which this article is principally focused, have been implementing sound macroeconomic policies and structural reforms to raise real per capita incomes, reduce inflation, and narrow financial imbalances, thereby changing the economic landscape dramatically. But despite these reforms, poverty remains widespread, private investment is subdued, and most African countries continue to depend heavily on external assistance. Moreover, macroeconomic imbalances are still sizable, and most countries remain highly vulnerable to changes in external conditions.
Today there is a widespread consensus, both within Africa and among its international partners, that intensified efforts are required to increase growth by fostering private investment through more open markets and trade and by ensuring a more secure environment through economic, political, and judicial reforms.
Africa's economic recovery
Sub-Saharan Africa has made substantial progress toward macroeconomic stability during the current decade through sound financial policies and market-friendly structural reforms. The IMF has often supported these efforts by providing technical assistance and making financial assistance available under various facilities, most prominently under its highly concessional Enhanced Structural Adjustment Facility (ESAF).
After years of stagnation, average real economic growth in sub-Saharan Africa has increased from an average of 1.0 percent during 1992–94 to about 5 percent during 1995–98 (see table). Strong growth has been seen in an increasing number of countries, and real per capita GDP has started to rise. Forty out of 47 countries are now showing increases in their annual per capita incomes. There has also been considerable success in bringing down inflation and reducing internal and external financial imbalances. For the region as a whole, average inflation (as measured by the consumer price index) declined from a peak of more than 60 percent in 1994 to some 10 percent in 1998. The region's external current account deficit, including grants, fell from an average of 7.0 percent of GDP in 1992 to 5.5 percent in 1998, while the overall fiscal deficit was cut from about 8 percent of GDP to 5.5 percent over the same period.
Meanwhile, the restructuring of many African economies has been gaining momentum. Government intervention in economic activity is on the wane. Administrative price controls are being removed, and agricultural marketing has been widely liberalized. Most countries have made considerable strides in opening their economies to world trade by eliminating multiple exchange rate practices and nontariff barriers and also lowering the degree of tariff protection. In most countries, the process of restructuring and privatizing state enterprises has been under way for some time, though it has proceeded with varying speeds and has enjoyed varying degrees of success. Labor markets are also progressively being liberalized. Fiscal reform is gaining ground: African countries are taking steps to rationalize their tax systems, reduce exemptions, and enhance their administrative efficiency while reorienting expenditures away from wasteful outlays and toward improved public investment and spending on key social services, particularly health care and primary education. On the monetary front, most countries have made progress in establishing market-determined interest rates, eliminating selective credit controls, and introducing indirect instruments of monetary policy, such as reserve requirements and open market operations. Greater attention is also being paid to rehabilitating weak banks and promoting healthy and competitive banking sectors. Moreover, the IMF and the World Bank have recently launched a joint initiative to help heavily indebted poor countries (HIPCs) that pursue sound policies to tackle their external debt burdens, including their large multilateral debts. So far, five African countries—Burkina Faso, C�te d'Ivoire, Mali, Mozambique, and Uganda—have become eligible under the HIPC Initiative.
Need for faster growth
The recent achievements in Africa are undoubtedly encouraging, but are they sufficient to make a real dent in poverty? African countries would need to achieve sustained real per capita annual growth of 8–9 percent to attain one-half of today's real per capita income levels in industrial countries within a generation, and growth rates of 6–7 percent would be needed just to keep up with the expected increase in Africa's labor force. The remarkable fact about such numbers is not that they are high, but that they fall within a range that an increasing number of policymakers would consider feasible. If Africa is to sustain such growth rates, however, it urgently needs to become a better place to save and invest, first and foremost for Africans themselves but also for foreign investors.
Toward economic security
The basic objective of the "second generation" of reforms before us, in IMF Managing Director Michel Camdessus's words, is "to expand the scope for private investment by promoting greater openness in domestic and external trade and creating a more secure environment." Meanwhile, it is essential that the progress made to date in maintaining macroeconomic stability be consolidated and extended. Let me spell out this agenda before discussing how it may be advanced.
Appropriate regulations and their evenhanded implementation are necessary to support free trade, which is critical for a better allocation of resources and the spread of know-how and innovation. This requires the following actions:
Ensuring economic security is critical for eliciting the participation of each and every individual in developing the nation. The steps needed to achieve this goal include the following:
A variety of instruments is available to support free trade and advance economic security, including the following:
Economic security, good governance, and a better dialogue with civil society to build a social consensus for reforms should be the key concerns of African policymakers in the future, in addition to implementing sound macroeconomic policies and bold structural reforms.
As I consider Africa's agenda for the twenty-first century, I am struck above all by its hopeful character. All approaches converge on the single objective of building institutions to release and support the initiative of each and every African. But I am also all too aware that African news headlines often tell a different tale, one of terrifying ethnic strife, cynical corruption, and widespread misery and disease. How can this hopeful agenda be reconciled with these stark realities? The answer lies in the power of human creativity, once it is released in a secure environment.
An African renaissance is unfolding before our eyes. Most countries, through most of their years of independence, have been ruled by autocratic leaders—autocratic because, whether enlightened or not, they stood above the law. Today, the rule of law is asserting itself. More than ever before, Africans are demanding accountability and honesty from their leaders, freedom from repressive governance, and the right to participate in influencing and formulating public policy. The growing demands for more participatory systems of political representation are overdue and will enable African governments to build popular consensus behind their economic and social policies. Ethnic strife and widespread misery can be resolved only under the rule of law, which is the foundation of peace and prosperity—initiative, investment, and saving cannot flourish without it.
A new partnership is needed to support sustainable growth and development in Africa. International support should be—and is—focused on those African countries that have the will to break clearly with the past and that are ready to implement far-reaching economic and political reforms. It is in the interest of the international community for democracies to spread and market economies to develop in Africa.
Let there be no mistake: the fight for economic security is political. It is a fight for the substance of power. A new basis of power exists in Africa today in all the men and women who are struggling to establish a new order. In their hopes lies my hope for a more humane Africa.
An earlier, expanded version of this article was published in the Winter/Spring 1998 issue of the Brown Journal of World Affairs.