The Perils of Confrontation

Supported by many of the finance ministers of Africa, the United Nations Economic Commission for Africa (ECA) has called for an alternative to the tough structural adjustment programs imposed on African nations by the World Bank, the International Monetary Fund and the major aid-giving nations, led by the United States. The move invites a confrontation that could endanger the already meager flow of funds to the desperate African nations.

Behind the initiative is a controversy over whether the bitter medicine being administered by major sources of money, including the World Bank and IMF, has been working. A report by the World Bank in March argued that nations adopting strong reform programs are indeed doing better than the others. The ECA disagrees and, in a report released Thursday, concluded that “more often than not, even the positive results that might be achieved through the conventional programs, could be outweighed by . . . negative consequences.”

ECA’s report promotes the “African Alternative Framework,” a complex formula for a “more human-centered development process.” It would modify the existing emphasis on reduced budgets, traditional export promotion, credit squeezes, free trade and what the authors of the new study call “doctrinaire privatization.” The report is laudable in its sensitivity to the dimension of suffering in Africa, its recognition of the importance of agriculture and its candid recognition of African weaknesses, including the centralized, non-democratic governments that prevail. It calls for “a prominent focus” on such things as “employment generation for the majority of the population, equitable income distribution especially to households and vulnerable groups and the satisfaction of the essential needs of the people.” But World Bank officials can argue persuasively that the best way to address those problems is to make growth the first priority, increasing the size of the pie, rather than making equitable divisions of an admittedly inadequate pie the first priority.

Adebayo Adedeji, the respected Nigerian executive secretary of the ECA, is the moving spirit behind the report. Through it, he is asking the sources of external credit and aid to soften the conditions imposed on recipients and to provide funds on more flexible terms, trusting that the money will be well-spent. But the report admits that “government interventions in Africa have so far become discredited, not because there is an effective alternative in the form of efficient market mechanism, but because of inefficient management, poor results and misallocation of resources.”

The report’s lack of confidence in the private sector raises the danger of allowing Africa to repeat the errors of the past when bureaucracies paralyzed progress. If nothing else, the report may serve to underscore one issue on which all agree, and that is the desperate need for more money. The United States, for example, has failed to provide the increased aid promised in exchange for economic reform, but the debt relief plan announced Thursday by President Bush will help many nations significantly.

Africa stands out among the developing continents, the only region where there has been a decline in almost every element of society and the economies. Unlike Asia and Latin America, Africa is seeing a steady decline in per capita food supplies and per capita gross national product, despite what had been a relatively high flow of aid. That has now reversed into a net outflow because of declining new credits and debt repayment burdens. Internal organizational failures have been made worse by the collapse of prices for primary commodities on which most African nations depend for export earnings. Droughts and civil wars have compounded the misery, flooding already impoverished nations with tens of thousands of refugees from neighboring states.

Some of the ECA report’s proposals may contribute constructively to fine-tuning the essential reforms to minimize the impact on the already impoverished people. It may be possible to do that without turning off the flow of resources so urgently needed. That, however, will require a process of collaboration and consultation rather than the confrontation that appears implicit in the new report.