POLICIES FOR AFRICAN DEVELOPMENT From the 1980s to the 1990s ©International Monetary Fund. Not for Redistribution This page intentionallyleft blank ©International Monetary Fund. Not for Redistribution POLICIES FOR AFRICAN DEVELOPMENT From the 1980s to the 1990s Editor I. G. Patel Papers presented at a symposium held in Gaborone, Botswana, February 25-27, 1991 INTERNATIONAL MONETARY FUND Washington • 1992 ©International Monetary Fund. Not for Redistribution © 1992 Jmcrnar•onal Mom·rary Fum] Cover and inrerior design by IMF c;raphits Secrion Joinr Bank-Fund Library Caraloging-in-Publicarion Dara Politics for Afncan development : from rhc l9SO� w rhe 1990s editor, I. G. Parci.-Waslungron . lnn.:rnarlllnal Mont:t.lr} Fund, 1992. p. em. "Papers pr.-scntt'd ,11 a sympos1um hc:ld 111 Gaborone, Bor,wdn,,, . February 25-27. 1991 . Includes bibliograph1cal references. 1 B l-'S577'S-232X l. Afrit·a-ELOnomit policy-C..ongrc�;c� 2 Afric.I­ Etonomit conclinons-1960- -Congresses. '\ Finance-Afm<l­ Congrcssc:s. l. Pard , l G. (indraprasad GordhanblmJ. 192'1- JJ. 1 nrernanonal Monetary Fund. 11C800.P55 1992 Priu.. · U S2·t.OO Addrco;' nrdc:r' ro: I nrernauonal Monetary Fund, Publlcauon erviCe'> 700 19rh rreer, N. \XI., \XIashingmn, D.C. 204 '\I, lJ. � .A. Telephone: (202) 62 )-7.J30 Tc:lcfax: (202) 62)-7 �91 c.. bl<:: lnrcrfund ©International Monetary Fund. Not for Redistribution Foreword Africa, despite great economic adversity during the past twenry years, has managed recendy ro record positive real growth, steadily transform and improve irs economic srrucrures and systems, and improve the living standards of the rural population. This has been achieved through the perseverence of nearly thirty African counrries in fo llowing growth­ orienred adjusrmenr programs, with rhe support of rhe International Mon­ etary Fund (IMF). A seminar held in Gaborone, Botswana, from February 25-27, 1991, sponsored by rhe Association of African Central Banks and the IMF, provided an opportunity for frank evaluation and discussion of rhe prog­ ress made by Africa during the 1980s and of the prospects and needs for continued development in rhe 1990s. The propositions char regional coop­ eration in Africa has fo rmidable potential in enhancing economic effi­ ciency and chat the industrial countries have a special responsibil icy in helping Africa drew broad agreemenr. In view of the importance of the issues discussed, ir has been decided to publish rhe proceedings of rhe seminar so as ro make them available ro a wider audience. There is no doubt that for Africa rhe road ahead is hard, bur ir is my deep conviction char many African countries during the 1990s will be able ro successfully launch homegrown programs, deserving strong interna­ tional support and leading ro increased regional cooperation. The respon­ sibility for development and economic adjustment is a shared one. The IMF is ready ro do irs parr in helping Africa face rhe challenges chat lie ahead. M. CAMDESSUS Managing Director International Monetary Fund ©International Monetary Fund. Not for Redistribution This page intentionallyleft blank ©International Monetary Fund. Not for Redistribution Acknowledgment I should like co say what a great pleasure and privilege it has been to participate in this symposium and what a rich and rewarding experience it was. 1 am grateful co the Association of African Central Banks and to the IMF for providing me with chis unique experience. The staffof the Cen­ tral Bank of Botswana and Governor Hermans spared no effort in making our stay comfortable and our discussions fruitful; and special thanks are due co Mrs. Hermans for keeping our spouses safely and happily away from the conference hall. I am grateful also to all che participants for che rich fare they served. I have done scant justice co rhe actual discussion at rhe symposium in rhis introduction. Unlike the invited authors whose papers are reproduced here, chose who spoke on rhe spur of rhe moment, and rhus rose splendidly to rhe occasion so to speak, have to be conrenr with what I can recollect and record in a shore introduction in which I have nor been able co resist the temptation of inserting my own overtones. Perhaps ic is nor roo much co hope chat it is interactions such as chose char have taken place at the symposium-free from rancor, clearheaded, hard-hitting, and yet nor allergic co delineation of agreement as well as disagreement-that give grounds for hope that the transition from che 1980s co the 1990s in Africa may well be a journey from stagnation and decline co revitalization and renewed vigor. I am greatly indebted to the IMF staff, Ahmed Abushadi, who ably coordinated che seminar, and Juanita Roushdy, who edited and prepared che volume for publication, and to Varghese Thomas and his associates of the Indian Petrochemicals Corporation Limited, Baroda, for voluntary assistance so readily given at every stage. l. G. PATEL Editor and Moderator ©International Monetary Fund. Not for Redistribution This page intentionallyleft blank ©International Monetary Fund. Not for Redistribution Contents Page Foreword v Acknowledg menr VII Introduction I. G. PATEL Opening Remarks ABDUl. R. TURAY 15 M. CAMDESSUS 19 Structural Adjustment in Africa: Future Approaches and Lessons Learned from the Past A View from Africa A.K. MULLEI 29 A View from the TMF JACK BOORMAN 48 Tanzania's Experience G. RUTIHINDA 69 II Africa's Adjustment and the External Debt Problem: Issues and Options A View from the African Development Bank A. SANGOWAWA 83 A View from the Paris Club DENIS SAMUEL-LAJEUNESSE 92 An Unofficial View G. K. IIELLEINER 97 IX ©International Monetary Fund. Not for Redistribution X CONTENTS Page Discussants Africa's Adjustment and the External Debt Problem PERCY S. MISTRY 115 Issues and Options JACK BOORMAN and AJAI CHOPRA 126 Official Debt Reduction: Toronro Terms, Trinidad Terms, and Netherlands Initiative FRANCESCO ABBATE and ANH-NGA TRAN-NGUYEN 140 Ill Financing Growth and Development 111 Africa: Outlook and Issues Estimating the Cost of Financing African Development 1n the 1990s MARIA CRISTINA GERMANY, CHARLES P. HUMPHREYS, and ' STEPHEN o BRIEN 153 A View from the UN Commission for Africa 0\XIOOUNNI TERJBA 171 Discussants Resource Gaps and Financing for Growth 10 Africa BENNO J. NDULU 188 Just How Important Is Finance for African Development TONY KILLICK 198 Scrucrural Adjustment Program: Lesotho's Experience in a Nutshell A. M. MARUPING 210 IV Trade, Investment, and Growth: Prospects for Africa A View from UNCTAD K. S. DADZIE 221 ©International Monetary Fund. Not for Redistribution CONTENTS XI Page A View from Africa BEKELE TAMIRAT 237 A View from Africa KERfALLE YANSANE 244 Panel Discussion Adjustment, Resources, and Growth: How to Manage m the 1990s ROBERT J. BERG 255 G. K. HELLEINER 265 MATTHEW MARTIN 270 G. E. GONDWE 281 List of Participants 291 ©International Monetary Fund. Not for Redistribution This page intentionallyleft blank ©International Monetary Fund. Not for Redistribution Introduction I.G. Patel The joim symposium of the Association of African Central Banks and the International Monetary Fund (IMF), held in Gaborone, Botswana, February 25-27, 1991, was a sequel co a similar gathering held in Nai­ robi, Kenya, May 13-15, 1985. The concrasr in rhe mood on the cwo occasions was remarkable. The 1985 symposium had a him of confronta­ tion, or, pur another way, illustrated a need for much greater understand­ ing, between the IMF and Africa. The 1991 symposium had a marked positive and constructive rone, and rhe views expressed had a remarkable degree of correspondence. Emphasis was on the dynamics of a suitable policy framework for the 1990s rather than on dialectics, which had been che emphasis of rhe 1980s. There was a srrong undercurrent that the primary emphasis should be on African development, which had sadly received such a serious setback in the 1980s. The African central bankers in Gaborone were noticeably free from any tendency ro minimize the magnitude of their cask or ro explain away the mjstakes of the past. While emphasizing the importance of the external environment and of the policies of rhe rich, they were unsparing in high­ lighting the far-reaching responsibilities that Africans alone can shoulder. The representatives of the IMF, the World Bank, che Paris Club, and the Western intelligentsia present were also remarkably free from dogma. Quire clearly, neither rhe earlier debates nor the experience of recent years had gone unheeded. As Governor Yansane of Guinea so aptly pur it, one important consequence of the experience of structural adjustment is rhar it has brought about some adjustment of minds as well. One should perhaps be somewhat wary about the signs of an emerging consensus ar the conference. Consensus can be a kind of tranquilizer that dulls our perception about viral differences and nuances. These can get lost in catchphrases that easily roll off our tongues. One has also regretfully to admit that while more powerful now than before, central bankers do ©International Monetary Fund. Not for Redistribution 2 I.G. PATEL nor always refleC[ correcrly rhe public mood nor rhe perceptions and compulsions of political leaders. Some might even suggest char chose present at the conference-the Managing Director of rhe IMF nor excluded--could well be a little ahead of their respective constituencies! The evidence so far as co the right recipe for countries char differ in circumstance as much as rhey resemble each ocher in terms of policy responses generally is such as ro warn against any simplistic view about a policy framework for the development of Africa as a whole. All these caveats notwithstanding-and they were made during the discussion-it has to be reckoned as a hopeful sign that rhere is now considerable com­ mon ground on which our analysis and aspirations rest.