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Home | ZimCrisis -- Africa on Brink of Collapse -- Financial Times Article

Date: Wed, 31 May 2000 17:42:28 -0700
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Subject: ZimCrisis -- Africa on Brink of Collapse -- Financial Times Article
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Donor's mistakes and leaders' failures must be confronted, write Michael Holman and Tony Hawkins of the Financial Times

FORTY years after the end of colonial rule in most of Africa, the continent that is the birthplace of humanity, home to an eighth of the world's population and a treasure trove of resources, is on the brink of catastrophe.

Africa has been in turmoil enough for its tragedies to have grown commonplace. But this time the crisis is deeper and its potential consequences wider than before. Racked by war and sapped by disease, burdened by a traumatic past and failing to get to grips with the economic and technological revolutions that are reshaping the globe, Africa is slipping out of the control of the leaders who claim to govern it, and beyond the reach of the international institutions and coalitions that seek to rescue it.

During recent months it has seemed as if unseen hands are playing snakes-and-ladders across Africa, on a board with snakes marked famine or flood, corruption or coup, and ladders called cease fire and peace pact, foreign investment and multi-party elections.

Power changes hands at the ballot box in Senegal and debt relief comes closer. But torrential rains batter Mozambique and drought threatens the lives of 8-million people in the Horn. Democracy is flouted in Zimbabwe, Eritrea and Ethiopia go back to an old war, Uganda and Rwanda threaten to start a new one.

A United Nations (UN)-monitored settlement collapses in Sierra Leone and conflict in the Democratic Republic of Congo sucks in the region; decades-old civil wars continue in Angola and Sudan: long snakes, short ladders, loaded dice.

Cynics might ask what has changed: disease and disaster, flood and famine are the familiar litany associated with Africa.

The answer is that the strains are now intolerable; the continent cannot cope and the rest of the world cannot avoid being affected, roused if not by compassion then by fears of the consequences. Deepening poverty spreads disease, encourages drug-trafficking, destroys the environment and encourages extremism.

"The truth is," UN Secretary General Kofi Annan said earlier this year, "Africa is suffering from multiple crises ecological, economic, social and political. Fresh water, forests and arable lands are under unprecedented stress. Billions of dollars in public funds continue to be stashed away by some leaders, even while roads are crumbling, health systems have failed, schoolchildren have neither books nor desks nor teachers, and the phones do not work."

The background to all this is poverty: "It makes Africans more vulnerable to war and disease. And war and disease constantly thwart Africans' efforts to lift themselves out of poverty."

It is a vicious cycle that Africa and its donors have failed to break.

It is 20 years since the World Bank launched its structural adjustment policy and just over 10 since it published a report titled From Crisis to Sustainable Growth and rang the alarm bell: unless Africa's economies grew by at least 4% to 5% a year, the alternative was "too ghastly to contemplate".

To help Africa reach the target, donors have sunk billions of dollars into the continent. Since the mid-1970s, sub-Saharan Africa has received an estimated $270bn in aid, with the annual average growing to more than $17bn in the 1990s. Today aid accounts for 4% of the region's gross domestic product and no less than 22% of total investment.

Yet the target of minimum sustained annual growth of 4% to 5% proved to be wishful thinking. Growth in the 1990s has been half that, and all the efforts of the past 20 years have achieved little:

Real per capita incomes at 1987 prices have tumbled from $670 in 1975 to an estimated $520 in 1999, while income per head rose more than 50% in developing economies as a whole;

In the mid-1970s the average African income was 12% higher than that for all developing countries. Today, African per capita incomes are 40% below the developing world average; and

More than 40% of Africa's population lives on less than $1 a day. Two hundred million people have no access to health care and 2million children die before age five.

The reasons for this catalogue of pain range from the obvious to the complex. Hopes that the emergence of multi-party politics would prove a stepping stone to good governance have proved premature. The continent remains heavily dependent on volatile and in real terms declining commodities. Savings are low, as are investment rates, privatisation has been slow, attempts to industrialise have been a failure and capital flight has been accompanied by an exodus of skills.

AIDS is also taking a terrible toll. Of the 36-million people afflicted, 23-million live in Africa.

Despite these grim realities and its own evidence, the World Bank and many other development agencies persist in maintaining that recovery is under way.

"Reforms have begun to bear fruit in the past five years; growth has returned to Africa," Callisto Madavo, the World Bank's vice president for Africa, declared in February. "Africa is poised for transformation in both political and economic spheres, which even optimists would have been wary of predicting 10 years ago."

It is not the first time that the World Bank, the largest source of aid to Africa $60bn, mostly interest-free has succumbed to wishful thinking. It was Robert McNamara, the former World Bank president, who helped fund an impractical socialist vision for Tanzania held by its former president, Julius Nyerere, but the lessons were not learned from the economic failure that ensued.

Kenneth Kaunda, former president of Zambia, as well intentioned as Nyerere and with equally disastrous consequences, received no less than four structural adjustment loans from the World Bank in the 1980s.

Donors became less amenable at the end of the Cold War. No longer did they feel it necessary to tolerate dictators or bribe presidents to stay in the western fold. Aid was made dependent on good governance in theory.

But principles were not put into practice and past lessons continued to go unheeded, as recent examples show. As Zimbabwe's domestic debt escalated it has more than doubled in the past year the World Bank proposed an adjustment credit to allow Harare to pay down domestic borrowings on the back of offshore loans.

And as Congo sank deeper into civil war, the International Monetary Fund (IMF) was lending to at least three countries involved on different sides Rwanda, Uganda and Zimbabwe. Only when he left office did Michel Camdessus, the IMF's former MD, call for a ban on arms sales to Africa.

Tackling Africa's crisis will require a global initiative. But an essential first step is an end to the fiction that recovery is under way, recognising the mistakes of the donors as well as the failures of the leaders of a fragile continent on the verge of collapse.

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