A new development paradigm for Africa?
This week, the fourth Joint Annual Meeting of the African Union Conference of Ministers of Economy and Finance and the Economic Commission for Africa’s Conference of African Ministers of Finance, Planning and Economic Development was held here in Addis Ababa on March 28th and 29th. The theme was “Managing Development in Africa: the role of the State in economic transformation”. In addition to ministers attending also present were the AU Commission’s Chair, Dr. Jean Ping, Under-Secretary-General and Executive Secretary of the United Nations Economic Commission for Africa, Mr. Abdoulie Janneh, and the president of the African Development bank, Mr. Donald Kaberuka, as well as special guests Mr. Sha Zukang, Under-Secretary General for the United Nations Department of Economic and Social Affairs and Secretary General for Rio 2012, and Mr. Achim Steiner, Executive Director of the United Nations Environment Programme.
Prime Minister Meles gave a key note speech at the opening session emphasizing that Africa now needed a new development paradigm. African economies might have been growing faster in recent years but the quality of that growth left much to be desired. It had not transformed African economies nor had it been inclusive enough. The evidence showed that the prevailing neo-liberal paradigm in advanced countries was associated with widening gaps in income. Comparative studies in Africa and Asia demonstrated it could not bring about economic transformation or sustained growth. The failures of development in Africa were associated with the development paradigm imposed on Africa for the last three decades. In the context of the search for an alternative, which he underlined needed to be discussed by the ministers, he noted that there was growing interest in the paradigm of the developmental state.
The Prime Minister said adherents of both paradigms started from the basis that an environment of unproductive and persuasive corruption (rent-seeking) was at the root of Africa’s economic ills. Neo-liberals argued the cause of this lay in the African state, oversized and interventionist. So, downsize the state. This has been the imposed solution for three decades. It hasn’t worked, not least because the campaign has failed to overcome the environment of unproductive and persuasive rent-seeking. This suggests the suggested source of the problem and its solution were both equally wrong.
The alternative view was that the problem was the function of Africa’s place in the global economy, with massive infrastructural bottlenecks, lack of skilled and trained manpower and other structural constraints, making it difficult to create value and compete globally. This was a situation which inexorably led to natural resource-based rent-seeking. Many of the now spectacularly successful Asian economies originally faced similar problems. It was the establishment of developmental states which had transformed their economies.
The Prime Minister emphasized that the primary objective of a developmental state would be the radical transformation of a country’s political economy to ensure that the creation of value through the production of globally competitive products becomes the dominant path to wealth creation. This would involve removing bottlenecks to production and eliminating unproductive rent-seeking. To do this the developmental state needs to be deeply committed to equitable growth and transformation, to build a national consensus to provide for the necessary support for a radical reordering of the political economy, and have sufficient independence and economic levers in its hand to be able to reward and support private sector operators. These are difficult tasks and not all states would undertake them, nor would all be successful. Equally, however, the policies associated with this paradigm can be partially implemented with considerable benefit.
Prime Minister Meles said that while all might agree that the private sector had a role to play in overcoming the gap in infrastructural development, the state had to play the leading role. Three decades of waiting for the private sector had merely widened the gap. Africa needed serious investment in tertiary education to promote a major skills training program. It needed to mobilise its own resources to provide massive investment but also to engage development partners and obtain additional external resource flows. The recent G20 decision to mobilize some of the world’s excess savings for infrastructural development in Africa is of vital significance.
These suggestions for future actions, the Prime Minister said, were consistent with the policies of a developmental state. The debate on a new development paradigm based on a developmental state was something that needed to be pursued in academic institutions and in political parties, but, he noted “we can discuss while we act, and act while we discuss”. He emphasized that time was running out, and the meeting provided an excellent opportunity to start to address the possibilities.
In his welcoming address to the conference, Under-Secretary-General Abdoulie Janneh said Africa’s economic and social prospects as a whole remained encouraging. Growth was 4.7% last year and is projected to rise to 5% this year. Africa was making steady if varying progress towards achieving the MDGs. Equally, political events will continue to impact on economic performance and the challenges of unemployment, rising fuel and food prices and climate change as well as developments such as fiscal consolidation, the debt crisis, and the inter-related issue of global imbalances and exchange rates all affect Africa’s growth prospects. This underlined the need to focus efforts on diversity and on the transformation of economies. Africa needed to build on the commitment to improve political governance by making economic transformation a top priority. The real question was how to implement the role of the state while taking into account the benefits of a market economy.
Mr. Donald Kaberuka, President of the African Development Bank, said events in North Africa were an urgent reminder of the challenges of inclusive growth, of job creation, of opportunities for the young. He stressed that every country was different; there was no one path to development, and added that dogmatic or doctrinaire approaches have had their day. From centrally planned economies to free market fundamentalism, they had shown their limits. Irrespective of the role of the state or of markets, poverty could only be overcome with effective participation in global trade and markets for capital. External aid might still play a role for now but in the end it was access to trade and capital that will deliver. Equally, growth that was not inclusive was neither economically nor politically sustainable. Over the last fifty years in Africa policies had been largely externally driven rather than endogenous and, worse, had often been based on frequently shifting fashions in development thinking. Mr. Kaberuka said he believed there was now a broad acceptance that both the state and the markets were essential as the recent trajectories of countries as different as China, Vietnam, India and Brazil demonstrated.
Dr. Ping also spoke of the need to transform the structure of African economies and to expand the provision of social services as well as ensure food security. Noting the central role a state can play in the governance of development, he emphasized the experience of Ethiopia in achieving double-digit economic growth, underlining its process of independent policy-making.
Panel sessions during the conference covered a range of topics from the “Green” economy and global sustainability, to health financing, leveraging opportunities for accelerated growth, and prospects and policies for the next decade. The conference concluded by adopting resolutions which urged governments to promote the developmental state that would transform political systems which open the door to systemic corrupt practices (rent-seeking) to developmental ones; restructure economies to ensure sustained diversification of production and of the export base; and restructure bureaucratic incentives to move away from rent-seeking to facilitate pro-growth and pro-poor allocation of resources.
Preparations for next week’s meeting on Somalia in Nairobi
Ambassador Mahiga, the UN Secretary-General’s Special Representative for Somalia was in Mogadishu on Wednesday this week. He held discussions with Somali leaders on the current situation in Somalia and their participation in the upcoming meeting on Somalia scheduled for April 7th and 8th in Nairobi. Ambassador Mahiga met with President Sheikh Sharif Sheikh Ahmed, Prime Minister Abdullahi Mohamed ‘Farmajo’, and the Speaker of the Somali parliament, Sharif Hasan Sheikh Aden.
At a press conference he held with Prime Minister ‘Farmajo’, Ambassador Mahiga said the purpose of his trip was to deliver an invitation for the meeting which would bring together the leaders of the autonomous regions of the country and representatives of the Transitional Federal Institutions of Somalia. He emphasized that the conference in Nairobi would be a consultative one and the agenda would cover the situation in Somalia and on how the international community could assist the government to bring peace, security and stability to replace the twenty years of anarchy and violence.
Prime Minister ‘Farmajo’ said it was important “to understand that we want to see the country come out of the transitional period of government in which it was ruled for the last seven years as many opportunities were lost and it is not in the interest of the country to continue with this transitional arrangement”. The Prime Minister pointed out that his government was trying its best to make the TFG and its institutions work properly, organize the security agencies, bring back good governance and rebuild the capital Mogadishu so that the country can function normally once again.
Although Ambassador Mahiga has received promises by all leaders that they will attend the meeting in Nairobi some hiccups in representation can be expected. Somali parties and the international community both have different expectations of the format of the meeting and of its expected outcome. A concept note circulated to participants indicates that the aim of the meeting is to bring out the views of a wider range of Somali stakeholders and provide advice on how to take forward much needed reforms. It is also intended to provide a forum for dialogue among Somalis to identify and agree on key principles and issues for joint consideration on ending the transition and to provide for post-transition arrangements prior to the 19th meeting of the International Contact Group (ICG).
The meeting will also reaffirm the commitment of participants to the principles of the Transitional Federal Charter and the Djibouti Agreement on promoting outreach and reconciliation as well as reiterate and intensify coordinated action by all stakeholders in the fight against the Al-Shabaab insurgency and extremism. It is expected to exchange information on the principles and responsibilities for advancing political outreach, reconciliation, reform and service delivery, on sustaining the war effort against Al-Shabaab and on establishing political and administrative authority in the liberated areas. This is critical to ensure that the gains achieved in recent months will not be reversed. The meeting would also consider basic principles and benchmarks for assessing and facilitating the Somali peace process in political, security, reconstruction, development and humanitarian areas. Having a dialogue on these issues and producing a concrete roadmap to provide for a smooth transition is extremely important.
Nevertheless, participation of all the actors may be difficult to achieve as some have already indicated that they feel this may have an effect on their status. It will be necessary to take particular care about this. The timetable for the transition must be sorted out quickly. It might be recalled that IGAD’s Heads of State and Government in January expressed the view that extending the term of the Transitional Federal Parliament with a view to avoiding a political vacuum would be critical. Following this, the TFP extended its term to three years and called for an election of all leaders of the TFP and of the TFG.
In another development the President of Somalia has appointed six state ministers and five deputy ministers. Some of these are new and others have been reshuffled. Abdiaziz Hassan Mohamed “Laftagaren” is nominated as state minister of Information, Post and Communications; Mohamed Sheikh Negeeye becomes state minister of Federal, Constitution and Reconciliation Affairs. Feysal Omar Guuleed is named state minister of Public Works and Reconstruction while Khadija Mohamed Diiriye takes the post of state minister of Petroleum, Energy and Minerals. Da’uud Abdikarim Haji Omar is the new state minister of Labor, Social Affairs, Youth and Sports. Mohamed Abdi Hayir Mareeye has the important post of state minister of Parliamentary Affairs; Abdirashid Mohamed Hidig is state minister of Defense and Ahmed Hussein Hassan becomes deputy minister of Planning and International Cooperation. Mrs. Sa”iido Hassan Osman is appointed as deputy minister Federal, Constitution and Reconciliation Affairs; Ali Sheikh Abdullahi Afgoye is deputy minister of Labor, Social Affairs and Youth and Sports and Shari Saiidd Mohamed Jimale deputy minister of Education, Culture and Higher Education. After all those present had been sworn in, the President encouraged them to undertake their duties diligently.
Meanwhile, three attempts appear to be going on to form a regional state administration for Juba area, comprising the regions of Lower Juba, Middle Juba and Gedo. The best organized appears to be that led by Professor Ghandi, former Defense Minister of the TFG. This appears to be aiming at something similar to the autonomous region of Puntland and may use the name of Azania. It claims to have a parliament with two chambers; one which will be occupied by elders and the other by politicians. It will also have a cabinet and it is in the process of drafting a charter as well as reforming the districts of Gedo, Middle and Lower Juba. The capital of the regional state is expected to be in Buaale rather than Kismayo as Kismayo is still the subject of considerable clan rivalry. Thirty members of the TFP and a few TFG state ministers and a number of former military officers are attending the founding conference of the state, and Kenyans as well as UNPOS and AU representatives also attended the opening ceremony. This is the most inclusive of the efforts and aims specifically to include people from Ogaden, Harti, Marehan, Gere, Digil and Mirifle, Ajuran, Jererwyne, Banjuni, Galjeal, south Dir, Sheikaal and other clans and sub-clans. Despite this, there are still some who claim that the right personalities from each sub-clan have not been involved.
This mushrooming of efforts to set up a regional administration in Juba appears to be directly connected with the success of the current offensive against Al-Shabaab. This is providing a vacuum in the Juba regions and Gedo into which these politicians believe they will be able to fit. This suggests that the forthcoming Nairobi meeting should take time to exchange views on these new movements and discuss how the international community might help efforts which will further assist sustainable peace and stability.
An AU Experts Assessment Mission to Sudan
The Post-Conflict Reconstruction and Development (PCRD) Experts Committee is currently on an assessment mission in the Sudan. The committee was established through a decision of the Executive Council meeting of the AU at Maputo. Under the Chairmanship of South Africa, members of the Committee include Egypt, Kenya, Gabon, Nigeria, Senegal, Algeria, Ethiopia and the Sudan. The mandate of the committee includes assessment of the needs and magnitude of the post-conflict situation, mobilization of support for capacity building to enable the Sudan to meet the challenges of post-conflict reconstruction and thirdly to sensitize the international community and donors to the need for support. The committee, in line with agreed policy, has organized its technical team of experts to provide assessments under six headings: Security, Humanitarian/Emergency, Political Governance and Transition, Socio-Economic Reconstruction and Development, Human Rights, and Justice and Reconciliation together with Women and Gender. Based on these six elements, the team is conducting an extensive assessment of the situation in cooperation with governments in both North and South, international NGO’s and civil society.
In line with the mandate given by the AU’s Ministerial Committee on Post-Conflict Reconstruction and Development on the Sudan, the technical team has now held an extensive discussion with the Ministries of Foreign Affairs and of Finance and National Economy in Khartoum. During their meeting respective officials of the ministries briefed the team on the needs as outlined in the mandate. The under-secretary of the Ministry of Foreign Affairs presented the Sudan’s priority areas which among other things included the issue of Sudan’s US$40 billion debt and the current levels of debt servicing. He said the cancellation of the debt was critical and needed African support. The under-secretary also expressed Sudan’s deep regret for the lack of cooperation from donors in fulfilling the commitments pledged during the Oslo I and II conferences. As he pointed out, US$8 billion was pledged to the Sudan at Oslo. Since the signing of the CPA, Sudan has received no more than US$400 million. This “wait and see” approach to debt cancellation and US foot dragging on revoking its unilateral sanctions against Sudan had led to a sense of betrayal. He did, however, note that US’s recent initiative to normalize its relations with Sudan was encouraging, if “belated”. He also noted that since the holding of the successful referendum, the US had been particularly keen to engage further with Sudan. Sudan was emerging out of a long period of conflict and it had fulfilled the requirements of the CPA. It, therefore, deserved to have its debts written off and has indeed requested AU support in this regard. The two CPA signatories agreed at their last month’s negotiations in Kuriftu, Ethiopia, to work together towards securing full cancellation of the debts. The technical team is now expected to visit various states in the north and then go to South Sudan.
Meanwhile, the Security Cluster meeting, as part of the CPA implementation agreement, is going to be held April 2nd to 4th in Ethiopia, under the chairmanship of former President Pierre Buyoya from the AU High level Implementation Panel on Sudan. The Economics Cluster meeting was held last month. The agenda for the meeting will include such issues as defining the security zone along the border; the extension of the mandate of the UN Mission to Sudan and its support; Joint Integrated Units and SPLA forces in and from South Kordofan and Blue Nile and the matter of southerners associated with the Sudan Armed Forces. The outcome of the meeting will be reported to Sudan’s Minister of Defence and to the Minister of SPLA Affairs. High level delegations of senior officials of the NCP and SPLM have already arrived in Addis Ababa to attend the meeting.
The Building Blocks of Ethiopia’s Renaissance
The government of Ethiopia has been making continuous efforts to extricate the country out of the abject poverty that its people have suffered for centuries. A number of the policies put in place by the government have shown considerable success, and Ethiopia now appears to be one of the few countries expected to achieve nearly all the Millennium Development Goals. This success in different areas has instilled a genuine sense of optimism that the country has indeed turned a corner and can continue on the path of progress to usher in a new era for the peoples of Ethiopia. The admittedly ambitious Growth and Transformation Plan that has been drawn up by the government aims not only to consolidate the gains made so far but even to double the country’s GDP over the next five years. The aim is to finally remove the chronic food insecurity that has made Ethiopia the poster child of famine and hunger for decades. Indications so far suggest this not just an idle wish but a realistic expectation that can be achieved with the right amount of effort.
There are many factors that give hope that Ethiopia is indeed on the right path of progress. The fact that the government has jealously guarded its autonomy and the ownership of its pro-poor policies has gone a long way to make sure that what has been achieved so far is extensive in terms of the size and distribution of the population that has benefited. Major infrastructural development projects have contributed immensely towards achieving more equitable economic growth throughout the country. The construction of tens of thousands of kilometers of roads has helped significantly to narrow the gap between rural areas and urban settlements. It has also made it possible for the bulk of the population to have access to amenities such as potable water and electricity. The building of schools and health facilities has greatly enhanced life expectancy and contributed to improving the quality of peoples’ lives. Rural electrification projects are well underway throughout the country and the construction of health and education facilities is being speeded up further. Millions of children are enrolled in schools and the annual intake of higher education institutions is growing by leaps and bounds. This will gather even more momentum in future years.
Ethiopia has also been investing substantially in other projects. The government has been making tangible efforts to complete a number of sugar plantation projects in various parts of the country. It recently set up an independent sugar corporation which aims to have nearly a dozen sugar plantations at an outlay of more than 80 billon Birr up and running within five years. This will meet local demand and also allow for increasing the potential to export. The government has also launched sizeable metallurgy projects intended to enhance national capacity in the metal engineering sector. These projects are expected to improve the country’s capacity to benefit from technological transfer in areas where local capacity is absent or scarce.
In addition to the road building under construction, the government has also announced plans for an impressive rail construction program to build some two thousand four hundred kilometres of railway to connect remoter regions and their markets with the center and with regional port facilities. These projects are not just a dream. They are already in the pipeline and are expected to be completed within the next four years or so. Importantly, the funding for many of these projects is going to come from domestic sources. It is a sign of just how much domestic capacity has increased in the last seven or so years.
One of the most impressive aspects of these developments has been the building of hydroelectric dams. In the last few years, the government has successfully completed the construction of dams that have more than tripled the power-generating potential of the country. This has gone a long way towards fuelling the country’s economic growth. It will continue to do so. The Gilgel Gibe series of dams, Tana Beles and Tekeze are only some of the dozen or so such projects now either completed or under construction. The building of these dams makes perfect sense not only in terms of the export potential and the domestic use of the power produced. They also provide the best and most effective path towards the kind of green growth that Ethiopia has always championed in international forums. It might be noted that the bills for these projects have been largely paid by Ethiopia because international financiers, pressured by some countries, have been reluctant to fund the projects. This has not, and will not deter Ethiopia from even larger projects.
The soon to be launched Grand Millennium Dam on the Blue Nile is a testimony to the government’s resolve. The Grand Millennium Dam is going to provide a reservoir twice as large as Lake Tana and is expected to generate more than five thousand megawatts of power upon completion. The project’s estimated cost is more than 70 billion Birr. It will be met totally by the Ethiopian government. Despite some alarmist claims, this project will not be a threat to anyone. It will be a much needed addition to Ethiopia’s arsenal against poverty, and will have the potential to link Ethiopia and the two lower riparian countries, Sudan and Egypt, in a number of ways. Prime Minister Meles indicated that both countries could join in co-owning the project since the benefits are decidedly mutual. It will provide for enormous power supplies for all three countries as well as regulation of floods and of irrigation potential. It is a classic example of why countries should foster cooperation rather than indulge in zero-sum games.
The project will quite simply be the largest infrastructural project ever undertaken in Ethiopia. It will be a monumental feat of engineering in its own right of which all Ethiopians will be able to feel proud. Above all it demonstrates that Ethiopia is on the right trajectory to achieve the grand ambitions it set itself during the celebrations of the third Millennium: the intent to caste off the image of hunger and war that characterized its history throughout most of the second Millennium and endeavour to restore the glories of the first Millennium. It is a more than welcome development heralding that the first chapter of Ethiopia’s Renaissance is indeed under way. The Grand Millennium Dam and other major projects are its building blocks, and there will be no turning back.
Federal Democratic Republic of Ethiopia
Ministry of Foreign Af