Economic drought strangles African recovery: Assembly calls for increased aid, debt relief.

Economic drought strangles African recovery

Assembly calls for increased aid, debt relief

Despite courageous internal reform by African Governments since 1986, spiralling debt, cuts in foreign aid and the crash of commodity prices threaten to exacerbate the ongoing African economic crisis, devastating millions of people across the continent.

"The economic crisis now facing Africa can exact a toll every bit as deadly as the drought (of 1983-1985)," Secretary-General Javier Perez de Cuellar reported to the forty-second General Assembly in October 1987. The situation has deteriorated, he said, since the Assembly adopted the United Nations Programme of Action for African Economic Recovery and Development, 1986-1990, at a special session of the General Assembly in May 1986.

His report examines conditions in Africa one year after the adoption of the Programme, under which African Governments agreed to adjust internal policies, and the international community pledged to increase aid and improve terms of trade.

African reforms have resulted in substantial gains in agriculture and manufacturing, but these were undermined by developments in the international economic environment, the Secretary-General reported. And far-reaching structural adjustment is provoking social strife in Africa.

"The strength and candor of the Secretary-General's report is very admirable -- it makes clear that Africa is going downhill and it's not Africa's fault," said Stephen Lewis, Canadian Ambassador to the United Nations and the Secretary-General's Special Political Adviser on Africa.

Underlining the urgent importance of increasing official development assistance (ODA) to Africa, the General Assembly on 8 December called on the international community to increase monetary aid and nonconcessional loans, stabilize commodity prices, extend more humanitarian aid, and enact debt-relief measures, including writing off some loans.

Anticipated aid has not materialized

In resolution 42/163 the world body also appealed for lasting solutions to deal with problems in the commodity market, so that more predictable conditions could be achieved in commodity trade: diversification in the processing, marketing, distribution and transportation of commodities, improving market access to commodities and promoting diversification programmes in the context of growth-oriented structural adjustment. Finally, the Assembly established an Ad Hoc Committee of the Whole of the Assembly to prepare the review and appraisal of the Programme of Action, which will meet for 10 days in September 1988 prior to the Assembly's forth-third session.

"In adopting the Programme, the international community signified the acceptance and recognition that Africa's own efforts required assistance," said Mrs. Mavis Muyunda, Zambian Minister of State, who addressed the Assembly on behalf of the Chairman of the Organization of African Unity (OAU). "The sacrifices which the African countries have made . . . have been done in the face of severe social and economic problems. (But) the anticipated increase in official development assistance . . . has not materialized."

A bleak financial picture

The report on the first year of recovery underscored the bleak financial outlook for Africa:

From 1980 to 1985, total net resource flows to the sub-Saharan region showed a decline of 5 per cent in real terms, reaching some $11 billion in 1985, the report said. Yet Africa's total external resource requirements now stand at an estimated $24 billion.

ODA, which accounts for some 70 per cent of total resource flows, stagnated in 1986 in real terms. While some donors increased assistance -- Canada, for example, wrote off the debt of seven African countries -- performance of individual donor countries varied considerably.

Between 1986 and February 1987, the net outflow from Africa to the International Monetary Fund (IMF) was three and a half times what it received in 1985. In 1986, Africa sent $960 million back to the IMF. Lending "has reached an Alice in Wonderland quality that makes no bloody sense at all," Ambassador Lewis said of the situation.

At the same time, private lending fell to $1.5 billion in 1985 from $3.5 billion in 1980, reflecting a pessimistic view of Africa's credit-worthiness. Official export credits, valued at $1 billion in 1985, virtually ceased in 1987.

Along with an overall decline in aid, prices of African commodities have collapsed and debt-servicing problems have skyrocketed. Income from commodity sales, virtually the sole source of hard currency for the continent, plunged to $45 billion in 1986 from $64 billion in 1985, the sharpest fall in export values since 1950, the report said.

In addition, Africa's total debt hit $200 billion in 1986, and debt-servicing cost now exceed 50 per cent of the gross national product (GNP) across the continent. Debt-servicing payments for 17 of the poorest African countries have nearly tripled, from $6.9 billion in 1988 to $2.15 billion in 1985.

Adjustment provokes unrest

The report detailed structural adjustment efforts within the African countries, both indigenous reforms and those prescribed by the World Bank and the IMF. In the area of agriculture and its related sectors, 28 African countries have reformed policies. Of 38 African nations surveyed by the Economic Commission for Africa (ECA), more than 80 per cent have adopted price incentives; about two thirds have made efforts to improve internal distribution channels; and more than two thirds cut subsidies.

The ECA survey also found that 63 per cent achieved their goal of allocating 25 per cent of total investment to agriculture. A further 29 per cent said they intend to reach this target by 1990. In the past, few African nations spent more than 10 per cent of their budgets on agriculture, which had starved farmers of the funds needed for development and operational efficiency, according to the Food and Agriculture Organization of the United Nations (FAO).

In the financial sector, African countries have introduced reforms to improve the long-term efficiency of their economies, by expanding financial resources and using them more efficiently, liberalizing market and investment codes, improving infrastructure, and reducing subsidies to public enterprises.

In addition, Governments have cut spending, causing national deficits in low-income sub-Saharan Africa to fall to their lowest levels in this decade -- between 4 and 5 per cent of the GDP.

Finally, 29 of the poorest countries in 1986 devalued currency by 30 to 50 per cent from their 1983 peak. Overvalued currencies had made food imports as much as three times cheaper than domestically grown food, depriving farmers of their most important market, according to the FAO.

While such measures are crucial for long-term growth, they have created severe social and political risks for individual Governments: 12 Zambians died in rioting that broke out in December 1986 after the Government lifted the subsidy on maize and its price increased. The removal of the subsidy had been a key World Bank recommendation aimed at encouraging food production.

Adjustment with a human face

Aside from immediate political peril, structural adjustment policies were found to reduce employment and earnings for low-income households; increase the price of food and other basic commodities; and reduce government expenditure on basic services, especially health, education and sanitation, according to "Adjustment With A Human Face," a 1987 study by the United Nations Children's Fund.

"There is a time-lag between initiation of reforms and their positive results, as when you remove food subsidies," said ECA Executive Secretary Adebayo Adedeji. "It is during this period that the human dimension, human suffering, must be addressed."

President Julius Nyerere of Tanzania summed up the frustration of Africans tightening their belts to promote recovery: "Must we starve our children to pay our debts?"

The future

In September 1986, the Secretary-General established a Steering Committee to oversee the Recovery Programme, comprising the heads of relevant United Nations agencies and chaired by the Director-General for Development and International Economic Co. operation. In addition, the Secretary-General also established an Advisory Group on the Resource Flows to Africa, 13 experts charged with recommending ways to improve the financial situation of the African countries.

'Getting Africa back on its feet, No greater priority': UN Special Adviser

Stephen Lewis, the Permanent Representative of Canada to the United Nations, served as Chairman of the main negotiating body at the May-June 1986 Special Session of the General Assembly on the critical economic situation in Africa, and is now the Secretary-General's Special Political Adviser on Africa. An articulate and passionate advocate for Africa, he has been called "the UN's chief lobbyist for African recovery efforts". A former history and English teacher, Mr. Lewis has lived in Ghana, Nigeria, Kenya and Uganda. These are the highlights of an interview with the UN Chronicle conducted in November 1987, shortly after the release of the Secretary-General's report on economic recovery in Africa one year after the special session.

UN Chronicle: After the special session, you said Africa was "high on the agenda everywhere". Given that the Secretary-General's report on the first year cited a lack of international financial support, do you still think it's high on the agenda?

Mr. Lewis: I don't think that any of the negligence and delinquency on the part of the international community in responding to Africa's crisis is a reflection that the issue is reduced on the agenda. There is a terrible moral, political and financial inconsistency in not responding to Africa's needs, but I don't believe Africa's priority has been diminished.

UN Chronicle: In retrospect, and given the conditions in Africa now, are there any changes you would have made in the Recovery Programme?

Mr. Lewis: I think the agreement we had was the best we could get at the time. We couldn't get that agreement today. There's been a decline in the situation in Africa because of external problems over which they have no real control, and it has occurred so calamitously that the needs are much greater than they were a year ago. Additional resources and relief are now required to face those problems. (A year ago) it would have traumatized the Western world, and I don't think we would have been able to come to an agreement -- the numbers simply would have been too high.

UN Chronicle: What do you think is the essential ingredient in getting the African economy back on its feet?

Mr. Lewis: The logical breakthrough is debt. We know commodity prices and foreign aid will not rise. The only plausible answer is debt relief -- renegotiation and rescheduling simply delay or amortize the pain. Unless major chunks of it are written-off, Africa is not going to make it.

UN Chronicle: The Secretary-General's report describes the social and political upheaval provoked by structural adjustment programmes. Are you concerned that some of the African countries now following adjustment programmes will back away from those reforms?

Mr. Lewis: So many of the African countries are doing this at high social and political risk that can't be sustained. Of course some will back away -- it might mean refusing to pay debt, it might mean the kind of riots that occurred in Zambia. Senegal is very highly regarded in the West -- they are implementing everything, but now they have no more money to cushion the shock.

UN Chronicle: The list of countries in the most critical condition varies, depending on the sources. Do you have a "most-critical" list?

Mr. Lewis: I think choosing "most-critical" nations is rather insidious. The whole continent is on the knife's edge. A country could be going well and six months from now it'll be in trouble. But there's scarcely a country you can think of that isn't engaged in an urgent economic and human struggle.

UN Chronicle: What is your outlook for the continent's future?

Mr. Lewis: An enormous, unending, painful and desperate struggle. But the United Nations is the only international organization that never gives up. I believe in the improvement of humankind, I feel issues very deeply. I love that continent, I'm exhilarated every time I set foot on the African continent. I can think of no greater priority than getting Africa back on its feet.

'Africa is going downhill, and it's not Africa's fault'

Photo: 'Sacrifices in the face of severe problems'

Photo: Prices on African commodities, such as oil, have collapsed.

Photo: Mr. Lewis