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Helping Poorer Countries

7/10/2005 - 5:00 AM PST

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Opinions Differ Over Action Needed

GLENEAGLES, Scotland, JULY 10, 2005 (Zenit) - In the lead-up to this week's Group of Eight meeting in Scotland much ink was spilled over what is the best way to help developing nations, particularly in Africa, overcome poverty. Writing in the British newspaper the Guardian on June 8 African businessman Andrew Rugasira said he seeks what all entrepreneurs desire: "markets and equal opportunities to exploit them."

What Africa needs, he explained, is wealth creation, and this is best done by the private sector. But trade barriers in the richer countries prevent African countries from exporting their goods.

Rugasira argued that if the continent's exports could grow by just 1% this would generate revenue of more than 40 billion pounds ($70 billion) a year, a greater stimulus than could be hoped from the often-broken promises of additional aid.

In a similar vein on June 24 the Guardian published a commentary by Matthew Lockwood, former aid worker and author of a new book on Africa. He argued that Africa needs to imitate the example of the Asian Tiger economies.

He observed that in 1981 there was a call for a doubling aid, and that over the following years it rose by 130%. In those years, however, incomes fell. In some cases, aid did bring economic growth, Lockwood said. But aid alone is not sufficient. Lockwood doubts that relying on agricultural exports will generate sufficient income, even if trade barriers are reduced.

What Africa needs to do, he argued, is to diversify its economies and develop new industries. As well, it is essential to reduce corruption and to improve the functioning of government bureaucracy, making additional aid conditional on these reforms.

Security and health

Nancy Soderberg, the Africa program director of the International Crisis Group, stressed the importance of improving security. Writing in the Financial Times on June 24 she explained that aid or emergency relief cannot be delivered if a country is in chaos, or if the civilian population lives in constant fear.

Congo, for example, has received just $10 million to $20 million to establish and train a national army. But, with the country still riven by conflicts, it is impossible to deliver aid to the population.

In an article published by the Spanish daily El País on July 2, Michel Camdessus and Gro Harlem Brundtland put the emphasis on health issues. The two, respectively former executive directors of the International Monetary Fund and the World Health Organization, pointed out that each year millions of Africans die from diseases that don't kill hardly anybody in rich countries.

These deaths, and the loss of productivity due to people affected by recurrent problems such as malaria, seriously diminish economic production. Some progress has been made, they noted, with vaccination programs, but much remains to be done.

Reforms

Moeletsi Mbeki, the brother of South African President Thabo Mbeki, was skeptical about what can be achieved through additional aid without accompanying political reforms. In an article published July 3 by the newspaper Scotland on Sunday he observed that after some $400 billion of aid during the past 30 years many Africans are poorer than before. "Will doubling aid and channeling it through those selfsame governments change anything?" he asked.

The post-World War II Marshall Plan for rebuilding Europe was driven by the principle of strengthening democratic institutions and free markets, he noted. But in Africa, "Since independence, political elites have suppressed or prevented the development of the civic institutions that strengthen society and provide a balance to the power of the rulers."

In these circumstances, Mbeki said, "The more the African political elites consolidate their power, and the more aid they get, the poorer Africans will become and the more African economies will regress or, at best, stagnate."

And, regarding the economy, Mbeki listed a number of factors hamstringing growth in African countries: Bureaucratic obstacles make it impossible to get a license to establish a business without bribery; few countries have any form of private land rights; most Africans have no access to open and stable financial institutions that could provide loans; and there are too many internal barriers to trade.

"The emphasis in Africa should be placed on strengthening national economies and democratic practice by freeing the private sector," he concluded. And for its part the West needs to remove barriers to African exports.

In a commentary published Tuesday in the Financial Times, Jagdish Bhagwati, professor of economics and law at Columbia University, and Ibrahim Gambari, undersecretary-general at the United Nations and special ...

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