|The Courier N° 140 - July - Aug 1993 - Dossier: National Minorities - Country Reports: Dominica, Mozambique (EC Courier, 1993, 96 p.)|
|CTA - Bulletin|
La France et l'Afrique, Vademecum pour un nouveau voyage (France and Africa, Guide for a new journey). Compiled by Serge Michailof; Karthala, Paris, 1993
This collection, which sets out the conclusions of a working party formed at the request of Edwige Avice, France's former Minister of Cooperation, was produced under the direction of Serge Michallof, the head of various agencies of the Caisse Francaise de Developpement over the past 10 years and a consultant to a large number of organisations, including the World Bank, in more than 30 countries in the South before that. His books include 'Les apprentis sorciers du developpement (Sorcerer's Apprentices of Development; Editions Economica, Paris, 2nd edition, 1988) and a practical guide to project analysis, which he cowrote with Manuel Bridier (also Editions Economica, Paris, 4th edition, 1987).
Mieux aider le. Sud and Pour un nouveau dialogue avec l'Afrique, two associations with no ideological or political affiliations, were reluctant to see the fruits of the working party lost and decided to carry on the work of the independent personalities-from very different horizons, but all familiar with Africa-who had been involved in it. This book is the result. It goes beyond specific analyses of France-Africa relations and looks at general issues. Is Africa on the verge of the abyss? With industrial failure, agrarian crisis and educational collapse to cope with, is aid not overlooking the poorest members of society? Is the structural adjustment they are supposed to need just make-believe? Is regional integration just another fad? The conclusion is a plea for a different sort of cooperation.
Is Africa doomed?
The general feeling is that Africa is not doomed and that, although it may not have any outstanding comparative advantages, it is not saddled with unavoidable disadvantages either.
The usual, despairing explanations of Africa's economic crisis, however, are pronounced unconvincing, partly because any analysis of the efficiency or inefficiency of African institutions is inevitably bound up with an historical and socio-political analysis of the nature of economic and political power and the aims and strategies of the dominant groups in the state.
Here, the domestic constraints include unearned income, discussed by Jacques Giri, and mechanisms which represent a pitfall for economic development, discussed by A. Bonnessian.
Serge Michailof points out that 'there are excellent African managers who make a fine job of running western firms and can give a clear picture of everything that prevents them from doing the same in Africa'. One historical explanation for this could be that these are economies in which people have always had incomes which they do not have to earn and feel that it is better to go for unearned income than boost productivity. Although unearned income is beginning to be a thing of the past, the economic set-up is still the same and adjustment destabilises by threatening the domestic accumulation redistribution machinery which is often at the heart of the local internal balance.
The search for the mechanisms which have been and still are a pitfall as far as economic development is concerned starts with the historical assessment according to which the economic and political systems of the post-colonial world continued with and perfected the colonial economy, thus condemning it in a competitive world. This made economic production and diversification a problem, particularly once the trade sectors became profitable in the 1970s.
Mr Bonnessian outlines the five main pitfalls as situations in which:
-newly independent systems relied on tribes which were close to the colonial population and therefore geared to administration, so an opposition grew up amongst tribes which were keen on trade and industry and the tribes which held the power wanted to create an economy which they themselves controlled;
-the laws which developed were geared to exceptions and everything not explicitly allowed was banned and every ban included derogations which could be bought;
-domestic savings were systematically discouraged by the relative lack of returns outside the unearned income sectors and by constraints on productive activity;
-an average capital drain of more than 60% of the total amount of foreign capital entering the country;
-this had led to a conservative, patronising, anti-liberal social structure.
Yet there are models for successful emergence from under development elsewhere. The Asian successes are proof that it can be done if people are willing to adapt to others and do not wait for others to adapt to them.
Robert Hirsh takes the palm oil and rubber industries as illustration of the fact that, ultimately, what distinguishes the countries of Asia from the countries of Africa is the way they interpret the world market. The Asians see it as a system of regulation to which they always have to adjust, while the Africans all too often see it as the cause of their problems -even if those problems have been brought about by their own policies.
How can the African crisis be overcome?
First of all, the state and the economy have to be separate. 'Public' has to stop meaning 'State' and the welfare state, an unrealistic concept for Africa today, has to give way to a state which lays down the rules of the game and allows independent operators to meet the fundamental needs of society.
Serge Michailof suggests that crying for better terms of trade will not provide a way out of the crisis. Greater competitiveness is the only answer.
In their analysis of agricultural export industries, Michel Griffon and Isabelle Marty emphasise the fact that there is no practical hope of any lasting reversal of the trend in the prices of agricultural raw materials. And competition between producers threatens the viability of agreements designed to control supply. So gradual, systematic adjustment of the export sectors is the realistic choice.
There is no practical hope of restraining price fluctuation either, so the countries have to make their industries flexible enough to cushion price shocks. They also say that, in the present state of the market, countries which systematically use the exchange rate as an instrument of adjustment are also those whose agricultural income is declining.
Other contributors discuss whether competitiveness should be restored by adjusting real terms - i.e. squeezing production costs until African businesses can compete again-or monetary terms. But they all stress that it would be wrong to overlook the benefits of devaluation in situations where it is impossible to compress domestic costs which strongly affect competitiveness. And not devaluing means that none of the benefits of position need be held up to question.
Some people feel that boosting the competitiveness of businesses also-and necessarily-means taking direct steps to rationalise production and improve the productivity of the factors.
There are political considerations here too. Mr Bonnessian analyses the ambiguity of recent democratic movements, in which he sees ethnic challenging of unequal power-sharing as often emanating from the most productive groups in society. Ethnic rivalry is also economic rivalvy, for access to money is at stake. Those who raise challenges may have two contradictory aims - replacing the previous regime and turning the same predatory system to their own ends or changing the rules of the game to make economic initiative the road to fortune. Only the latter is compatible with development.
Where will economic growth come from?
Regional integration, exports to the world market or domestic and essentially urban demand?
Brazil's and Mexico's experience of industrial policy has led Claude Sicarol to attach greater priority to looking for export activity than to setting up big regional units. Others point out that, even if people in bad faith suggest that regional integration exists on a de facto if not de jure basis, it is more essential now than ever it was for states to cooperate with each other, particularly given that frontiers are permeable.
Conversely, and with some degree of innovation, Michel Griffon, Isabelle Marty and Jean-Marie Cour point to the role of domestic needs and urban demand especially, maintaining that the growth of domestic demand should in future do more for economic growth in general than for exports. Why?
Assumptions about the growth of external outlets and prices are not encouraging, while domestic demand prospects are linked to the rapid growth and solvency of the urban population. Experience suggests that urban demand does indeed bring growth in its wake, because, provided the economic activities of the town can absorb new arrivals at a steady rate, there is a long period during which there is no increase in the relative poverty of poor urban social categories.
Jean-Marie Cour has no hesitation in saying that the main driving force behind sustained and sustainable growth is urbanization. The stimulus is in fact the regional demand for money (other than home consumption) and the best service a country can do for its farmers is to find them solvent customers-mainly city dwellers.
Little may be known about the trends in real inter-African trade, but 5-7% long-term growth is there for all to see, he points out. Urbanisation is the main driving force behind the growth and diversification of private spending. The total average per capita spending is two or three times as high in the town as in the country and the outlay in terms of cash is three or four times as high. The need to spend more is what powers the growth of productivity and of migrants' incomes. In some conditions, the permanent system of urbanisation resulting from relatively stable rates of migration makes the economy grow faster than the population.
He has no hesitation either in countering the demographic projections of the countries and international institutions which systematically assume net migratory flows of nil or rapidly approaching nil. Population redistribution, he says, has to be considered as a form of continent- or world-wide accumulation of capital.
Aid-quantity or quality?
Serge Michailof claims that, when it comes to aid, quantity is not so important as quality. The abundant resources showered on Africa in the 1970s did nothing to facilitate economic upswing and the ODA target of 0.7% of GNP is not significant, he says, if only because it includes the cost of wiping out the debts and, therefore, the weight of all the mistakes of the past. In particular, the total amount of (non-project) aid for adjustment should be considerably reduced to the benefit of targeted aid for particular sectors.
Jean-Frans Bayart has something to say about structural adjustment too. In his eyes, the continuation of programmes authorises the multilateral institutions to pay back to themselves the loans which they have very liberally granted to potentially insolvent debtors.
Jean Hanoi notes satisfactory development as far as the financial indicators are concerned, but still no economic growth. The real economy runs from the consequences of the financial austerity cures and tax nostrums prescribed by the funders. And it all leads to a distortion of procedures and a system of condition management, with the funders pretending that the state is a better pupil than the facts suggest and the state is seeming to apply the letter rather than the spirit of the criteria of implementation.
Elliot Berg's more general claim is that there is too much aid in too many countries of Africa and that too much of it is tied. 'Less aid and less donor interference in economic and political affairs are what is wanted from now on.' Why? Because aid shrinks the political will to undertake reforms and prevents responsible policies, because it reduces the need to make vital choices.
This book is vital to anyone wanting a proper understanding of relations between France and Africa and relations in Africa itself. Not all of it breaks new ground, but some of the associations of ideas are particularly instructive. We have not attempted to cover it all in this article, but simply to look at one or two aspects of what is a comprehensive, multi-faceted work swarming with ideas and free of all allegiance. Some readers will see in it a discussion of the patronage of French cooperation while others will find evidence of a vast interest in the CFAF zone in Jones Dowe's article 'Free for all in CFAF City'.
Africa: From Stagnation to Recovery, Edward V.K. Jaycox, Vice-President, Africa Region, World Bank; 21 pages, February 1993. Obtainable free from the Africa Region Department, World Bank, Washington DC, USA or the Bank's resident missions in Africa.
This report from the World Bank gives brief details of its programmes to help African countries through their economic difficulties and states the arguments for various familiar structural adjustment policies in Africa.
In a continent where, the report says, economic and political mismanagement in most countries has led to inefficiency, low productivity and limited investment in human capital and institutions, and where economic growth has barely kept ahead of rising population figures, the Bank's overriding mission must be to help alleviate the abject poverty in which most Africans live. In Africa today, the author maintains, 'the debate on adjustment has shifted to questions of how, not whether, to adjust. And on this question there is general agreement that reforms should focus on promoting sound macroeconomic policies, price liberalisation, a reduced role for the state, and measures to enhance the market and increase agricultural productivity'.
Now, the Bank says, the time has come to build on existing achievements. Africa must diversify into new markets and industrial countries must liberalise their import policies. The Bank is supporting thorough reform of the machinery of government and public administration in African countries, and backing new strategies of social service delivery and cost recovery. The balance in African economies needs to shift from public to private enterprise, backed by well-functioning credit and capital markets. Above all, donors and African governments must maintain the commitment and the stamina for reform, even where progress is only modest.
Much emphasis is placed on the need to encourage the private sector: only it, says the report, can create the jobs needed to occupy a labour force which is likely to double in size in the next 30 years. African countries must create a supportive environment for domestic and foreign investment in private business, and 50 to 60% of World Bank lending to subSaharan Africa goes towards private sector development in one way or another.
But should countries go for structural adjustment at all? Some have found it a painful process, especially in terms of trying to find new livelihoods for the thousands laid off when inflated public sectors are divested, or of trying to help the poor and vulnerable when controlled prices are deregulated. But Mr Jaycox has no doubts: 'The continuing deterioration in the condition of the poor in some countries is the result of the crises that demonstrated the need for policy change rather than of the structural adjustment policies adopted to deal with the underlying problems.' And there is a stern lesson to be learned by any government looking for World Bank help but apprehensive about adjusting: the Bank's lending strategy is 'highly differentiated and selective' depending on whether or not countries conform to its prescriptions or not.
As the purveyors of aerobic exercise courses say, 'No pain, no gain'. To help with the pain, the Bank runs programmes to cater for the social dimension of adjustment, in such fields as human resource development and promotion of the role of women, poverty assessment and alleviation, education, fertility reduction, environmental protection and combating Aids.
Regional economic integration is another priority. The focus, in fact, is largely the same as that of the EC Commission, and Mr Jaycox welcomes the recent improvement in the dialogue among international organisations as well as governments and beneficiaries. The task facing everyone now, he says, is to ensure that future investments in Africa work with maximum efficiency.