2 November 2000 Edition
Africa needs pro-poor development policies
BY SOLEDAD GALIANA
Not just any kind of growth may achieve poverty reduction. It is necessary to think in terms of equality, as the higher the level of inequality, the lower will be the impact of any given level of growth on poverty reduction
Poverty is now the biggest challenge for people everywhere, especially in developing countries. About 1.5 billion people live on less than a dollar a day and this figure is set to rise to 1.9 billion by 2030. Poverty is a dominant factor in the entire developing world, and at the moment is at the centre of the economical debate in Africa, Latin America and Asia.
On Monday 23 October, the president of Uganda, Yoweri Kaguta Museveni, delivered the millennium lecture at the University College of Dublin on ``Challenges for Africa-European Union Partnership''. The following day and also in Dublin, Professor Ventakesh Seshamani of the University of Zambia, was talking about pro-poor growth as the best strategy for poverty reduction at a meeting organised by the Debt and Development Coalition - two very similar experiences around the difficulties of improving economic and social standards in African countries.
Africa suffered greatly during the colonial era and the roots of most of its problems can be traced back to the arrival of the Europeans. As the Ugandan president pointed out, ``colonialism was replaced by the informal control and debilitating methods of: manipulation during the Cold War; aid with conditions that are not always for a good cause; a paternalistic posture in ideological matters; and extremely unfair trading relationships where the Europeans preach ``free trade'' but practice protectionism of the worst type''.
Concentrating on Uganda's present problems, President Museveni referred to the ``unfair terms of trade and trading arrangement between Africa and Europe''. In 1998, world trade was valued at US$ 6,590 billion. Africa accounted for only 2% of the total value. The so-called rules of free trade are responsible for that.
Most of Africa's agricultural exports consist of low-value export crops such as coffee, cotton and cocoa. And this is where the market rules seem to play against the developing countries. As an example, President Museveni explained that in the case of coffee, the value of the finished product is US$28 per kg, yet the primary coffee growers only get US$0.22. There is a lot of resistance from the developed countries to Africa's efforts to add value to its exports, explained the Ugandan premier, who sees how the efforts of some African governments to improve the economic situation in their countries are being resisted by the international financial institutions and their school of economists, ``who believe in the omnipotence of the invisible hand of the free market''.
The Western economies are using the developing countries of Africa, America and Asia as extensive farms, where they force these weak economies to produce for the European, North American or Japanese markets, while at the same time, they close their markets to other products that could add to a more balanced economy in Africa, said Museveni.
Because of the rigidity of these colonial structures, Africa finds it impossible to establish a market within the continent, he argued. Most of the African countries remain mainly, agricultural producers. Therefore, the machinery, chemicals, processed products and electronic goods... Africa must buy these from the outside. Hence, Africa needs foreign currencies... And then there is the problem of low incomes. WHO recommends that an adult should take 50 kgs of meat a year. Yet, the average consumption for Ugandans is only 5.6 kgs. This is a problem that can only be solved with more growth, one of the fundamental instruments to bring about poverty reduction. The higher the levels of sustained economic growth are, the greater will be the prospects of reducing poverty, he argued.
But this should not be taken in isolation, as not just any kind of growth may achieve poverty reduction. It is necessary to think in terms of equality, as the higher the level of inequality, the lower will be the impact of any given level of growth on poverty reduction.
As Professor Ventakesh Seshamani of the University of Zambia explains, a focus on policies to generate growth does not automatically mean poverty reduction. Seshamani has been involved as an advisor in the preparation of a Poverty Reduction Strategy Paper, part of the new debt relief strategy orchestrated by the IMF and the World Bank. When advised by the committee chairperson that any growth for Zambia would be a bonus, Seshamani replied: ``I would prefer we do not have any growth and at least maintain the status quo, which is already very bad, rather than worsen the status quo by having growth that it is not going to achieve anything, because growth it is not an end in itself. The end is development. The end is the eventual eradication of poverty. Now, if you are not going to achieve that end, these means are useless.''
After years of designing disastrous economic policies for the developing world, the international financial institutions have decided to introduce some cosmetic ethics to their actions. Following demionstrations against globalisation in Seattle, Okinawa and Prague, and after two years of the Jubilee 2000 campaign for debt cancellation, the World Bank and the International Monetary Fund announced at their 1999 annual meetings that poverty reduction strategy papers would be the central part of their lending criteria.
But once again, in their poverty reduction strategies they seem to forget about an essential element: the poor. Their strategies, in Professor Seshamani's opinion, will not work if they ignore the need for pro-poor growth.
Seshamani points out that the whole concept of pro-poor growth is a biased concept. It has to be biased in favour of the poor and take into account key concepts to any poverty reduction strategy. Empowerment is one of them, because ``development has to come from the people themselves''. Gender-biased growth research conducted by the UN has shown that when a given amount of income goes to women, rather than to men, there are higher chances of that income being spent in development activities; and finally there is the need for growth to be sustainable. ``Reducing poverty today, or for the next four or five years, does not mean that in 20 years time the poverty situation would not be worse. Why? Because the process is not sustainable. So growth has to be sustainable.''
Not just any kind of growth may achieve poverty reduction. It is necessary to think in terms of equality, as the higher the level of inequality, the lower will be the impact of any given level of growth on poverty reduction
Poverty is now the biggest challenge for people everywhere, especially in developing countries. About 1.5 billion people live on less than a dollar a day and this figure is set to rise to 1.9 billion by 2030. Poverty is a dominant factor in the entire developing world, and at the moment is at the centre of the economical debate in Africa, Latin America and Asia.
On Monday 23 October, the president of Uganda, Yoweri Kaguta Museveni, delivered the millennium lecture at the University College of Dublin on ``Challenges for Africa-European Union Partnership''. The following day and also in Dublin, Professor Ventakesh Seshamani of the University of Zambia, was talking about pro-poor growth as the best strategy for poverty reduction at a meeting organised by the Debt and Development Coalition - two very similar experiences around the difficulties of improving economic and social standards in African countries.
Africa suffered greatly during the colonial era and the roots of most of its problems can be traced back to the arrival of the Europeans. As the Ugandan president pointed out, ``colonialism was replaced by the informal control and debilitating methods of: manipulation during the Cold War; aid with conditions that are not always for a good cause; a paternalistic posture in ideological matters; and extremely unfair trading relationships where the Europeans preach ``free trade'' but practice protectionism of the worst type''.
Concentrating on Uganda's present problems, President Museveni referred to the ``unfair terms of trade and trading arrangement between Africa and Europe''. In 1998, world trade was valued at US$ 6,590 billion. Africa accounted for only 2% of the total value. The so-called rules of free trade are responsible for that.
Most of Africa's agricultural exports consist of low-value export crops such as coffee, cotton and cocoa. And this is where the market rules seem to play against the developing countries. As an example, President Museveni explained that in the case of coffee, the value of the finished product is US$28 per kg, yet the primary coffee growers only get US$0.22. There is a lot of resistance from the developed countries to Africa's efforts to add value to its exports, explained the Ugandan premier, who sees how the efforts of some African governments to improve the economic situation in their countries are being resisted by the international financial institutions and their school of economists, ``who believe in the omnipotence of the invisible hand of the free market''.
The Western economies are using the developing countries of Africa, America and Asia as extensive farms, where they force these weak economies to produce for the European, North American or Japanese markets, while at the same time, they close their markets to other products that could add to a more balanced economy in Africa, said Museveni.
Because of the rigidity of these colonial structures, Africa finds it impossible to establish a market within the continent, he argued. Most of the African countries remain mainly, agricultural producers. Therefore, the machinery, chemicals, processed products and electronic goods... Africa must buy these from the outside. Hence, Africa needs foreign currencies... And then there is the problem of low incomes. WHO recommends that an adult should take 50 kgs of meat a year. Yet, the average consumption for Ugandans is only 5.6 kgs. This is a problem that can only be solved with more growth, one of the fundamental instruments to bring about poverty reduction. The higher the levels of sustained economic growth are, the greater will be the prospects of reducing poverty, he argued.
But this should not be taken in isolation, as not just any kind of growth may achieve poverty reduction. It is necessary to think in terms of equality, as the higher the level of inequality, the lower will be the impact of any given level of growth on poverty reduction.
As Professor Ventakesh Seshamani of the University of Zambia explains, a focus on policies to generate growth does not automatically mean poverty reduction. Seshamani has been involved as an advisor in the preparation of a Poverty Reduction Strategy Paper, part of the new debt relief strategy orchestrated by the IMF and the World Bank. When advised by the committee chairperson that any growth for Zambia would be a bonus, Seshamani replied: ``I would prefer we do not have any growth and at least maintain the status quo, which is already very bad, rather than worsen the status quo by having growth that it is not going to achieve anything, because growth it is not an end in itself. The end is development. The end is the eventual eradication of poverty. Now, if you are not going to achieve that end, these means are useless.''
After years of designing disastrous economic policies for the developing world, the international financial institutions have decided to introduce some cosmetic ethics to their actions. Following demionstrations against globalisation in Seattle, Okinawa and Prague, and after two years of the Jubilee 2000 campaign for debt cancellation, the World Bank and the International Monetary Fund announced at their 1999 annual meetings that poverty reduction strategy papers would be the central part of their lending criteria.
But once again, in their poverty reduction strategies they seem to forget about an essential element: the poor. Their strategies, in Professor Seshamani's opinion, will not work if they ignore the need for pro-poor growth.
Seshamani points out that the whole concept of pro-poor growth is a biased concept. It has to be biased in favour of the poor and take into account key concepts to any poverty reduction strategy. Empowerment is one of them, because ``development has to come from the people themselves''. Gender-biased growth research conducted by the UN has shown that when a given amount of income goes to women, rather than to men, there are higher chances of that income being spent in development activities; and finally there is the need for growth to be sustainable. ``Reducing poverty today, or for the next four or five years, does not mean that in 20 years time the poverty situation would not be worse. Why? Because the process is not sustainable. So growth has to be sustainable.''