The G 8 Gleneagles Summit (7-8 July 2005 in Scotland) was preceded by an unprecedented worldwide hope that leaders of the G 8 rich countries will deliver more than hope. Expectations from the international civil society and from African populations were just too high. Cancellation of the reported $ US 218,4 millions of the total debt stocks of sub-Saharan African countries did not occur even if according to the 2005 Development index, poverty reduction is not just about flows of money. The Prime Minister Tony Blair summing-up the G 8 meeting said: “It isn’t all everyone wanted, but it is progress”. The diplomatic comment of the UN Secretary General, Kofi Annan was “The G 8 was good day”, but that it was only “a beginning”. Translated in common language, G 8’s commitments exceeded real delivery and actions.
1. Commitment as a “postponement strategy”
The G 8 of Gleneagles confirmed a decision made by the finance ministers one month earlier to cancel, with no official conditionalities, 100% of the debt owed by selected poor countries to development finance institutions (African development Bank, International monetary fund and the World Bank). 14 African countries out a total of 18 low-income countries (LICs) benefited immediately provided that they are part of the Highly Indebted Poor Countries (HIPC) process, which focuses primarily more on social issues and less on wealth creation in Africa. G 8 agreed to reduce by 40 billions the debt of 18 LICs and the Nigerian bilateral debt by $ US 17 bn as part of a separate deal. The lack of concrete transfer of cash and of a clear financing of existing tangible proposals of NEPAD were major severe disillusionments for a majority of Africans, though not for the first time. In Kananaskis, Canada in 2002, the G 8 committed itself to earmark 50% of all official development aid to sub-Saharan Africa. A commitment for which to date there is little evidence of fulfilment. The overall disappointment in Gleneagles was overshadowed by the London terrorist attacks, a direct aggression on the innocent civilians.
The decision of the G 8 leaders not to provide any clear guidance on free and fair trade including ending an unfair Western countries system of subsidies suggests that some difficulties occurred on the reforming of a long standing complex western subsidy system, such as the Common Agricultural Policy. Negotiations will take place at the forthcoming Ministerial conference of the World Trade Organisation in Hong Kong in December 2005 based on the usual power relations between powerful and less powerful countries. No date for ending export subsidies was provided by G 8 leaders, mainly due to the European Union. The fact that the World Bank was designated as solely responsible for delivering aid dedicated to trade capacity-building assistance is a clear indication that G 8 leaders may not favour an independent African trade reform. In the contrary, it will increase the administrative burden on Government officials and will jeopardize the effective “country ownership”. Furthermore, they were no new financial commitments to support for example:
- The Fast Track Initiative on Education (free, compulsory, good quality, primary education for all children by 2015),
- The universal free basis health care, or
- The replenishment of the Global Fund to fight AIDS, Tuberculosis, Malaria, Tuberculosis, Polio, etc.
In fact, the G 8, moved forwards on selected commitments, but moved backwards on many existing commitments or simply failed to support existing African initiatives.
The report of the UK Commission for Africa after all emerges as a good report, laying down the root of the problem of Poverty but fails to “integrate as a priority” the vision and approaches promoted in the Millennium Challenge Account and the new AGOA, which recently ensured that a minimum of productive capacities are promoted locally as a mean to boost trade and export.
In parallel to the G 8 meeting, World leaders were requested to collectively act to effectively eradicate poverty. Along with other interest groups, the UK coalition “Make Poverty History” marched in Edinburgh and played music with the objective to increase the pressure of over 2 billion people worldwide on the G 8 leaders, thanks to the Media. Unfortunately, many poor people were really disappointed by the minimum level of responses from the G 8 leaders and wondered what could be the next step if basically “making commitments” become a new system of “providing solutions”? The new awareness raised by the risk of the poverty syndrome on collective security, the powerlessness of the civil society to “influence” the major world decisions-makers and the fact that African Leaders’ voices were diluted during the Summit also gave the impression that the rhetoric of commitment has reached a new advanced level of double standards.
According to official promises, rich countries agreed collectively to reach 0.51% of gross national income (GNI) as ODA by 2010 and 0.7% in 2015. With the active lobbying of Mr. John R. Bolton, the new representative of the United States at the United Nations, there are chances that selected donors countries finally officially diverge from the target of 0.7% of Gross national Income (GNI) allocated by rich countries for ODA. The United Nations Millennium goals are under threat. One could be doubtful about selected rich countries’ interest to assist Africa becoming economically independent. Any increase of aid by $ US 48 billion in 2010 should be benchmarked with the official $ US 600 billion spent by rich countries in 2004 on military spending. Although the G 8 commit itself to strengthen the capacity of African Union on conflict resolution ($ US 460 millions in Sudan), it failed to refocus on the international Arms Trade Treaty as requested by the African Union and fully supported by the UK Government.
For the 60th anniversary of the United Nations, it seems that the United States of America’s current position is to diverge from the “rhetoric of commitments”. Commitments which could not be “implemented” or are not resulting in concrete “actions” should not be offered at all by the international community. This rhetoric of commitments should be replaced by a system of negotiation based on the defence of national interests which favours “real politic”. The so-called “international consensus approach” is questioned because predictable and collective pressures should not take precedence on countries national interests. Such a system favours countries with a capacity to influence. Africa may become a structural looser in such a system based on the “promotion of real politic”. To escape this rhetoric, most of the countries’ leaders develop a double-standard language favouring both the promotion of commitments and a low-level of implementation of those commitments on the ground. It is therefore not surprising, despite some recent improvements, that major donors were unable collectively to reach the 0.7% of GNI although this commitment was made more than 30 years ago, and is supposed to be reached by 2015.
2. Official development aid: instruments to produce influence
There is no fundamental change in the overall objectives of freeing Africa to help itself but a lot of noise. Some Africans do not understand why African Heads of State did participate in a meeting where concrete actions did not rhyme with promises. The wishful thinking became a promotion of a window-dressing media-led system of generosity. The actual burden of the debt does not really change on the ground after Gleneagles. Debt cancellation appears as a new system, which aims at promoting a good image of western countries’ Governments before their taxes payers. In fact, there is a need to revisit the definition of aid and debt. The OECD development assistance committee’s definition of official development aid (ODA) covers some 150 low- or intermediate-income countries. It consists of grants including technical cooperation and loans whose interest rate is below the market rate. Even loans at market interest rate are counted as ODA as long as 25% of the overall fund allocated is a grant. It is therefore not surprising that ODA became gradually a debt generating system in which a majority of African countries are trapped.
According to some experts and based on World Bank statistics, between 1996 and 2003 developing countries reimbursed more ($ US 31 bn) than what they received as new ODA (mainly concessional bilateral loans). With such a system, rich countries are in fact subsidized by developing countries, African countries in particular. UNCTAD did calculate this deceit in one of its report. “Between 1970 and 2002, Africa received some $540 billion in loans; but despite paying back close to $550 billion in principal and interest, it still had a debt stock of $295 billion as at the end of 2002. And the figures are even more disconcerting for sub-Saharan Africa (SSA), which received $294 billion in disbursements, paid out $268 billion in debt service and yet remained straddled with a debt stock of some $210 billion”. The G 8 has not discussed the issue of reverse transfer of resources from the world’s poorest continent. Auto-censorship contributes to the political correct syndrome. It is obvious that the objectives of the Millennium Development Goals for 2015 cannot be achieved if that system of debt servicing, which constitutes primarily a reverse transfer of resources from selected poor countries to creditors, persists.
Any increase of ODA generates more “value” for Western countries than for poor countries. It is also clear now that debt cancellation for selected poor countries means that somebody will have to pay it anyway. Who? The taxpayers in G 8 countries, of course! Governments of G 8 countries need to pay back the “cancelled” debt to development finance institutions (DFIs) at a discount value, which could reach 92% according to normal practices in the United States. Part of the tax payers’ money which then goes to pay back discounted debt to international DFIs or commercial banks will be counted one year later as an increase in the level of aid disbursed. Planned intentionally by some of the G 8 countries, this unilateral system is in fact unfair, and indeed illegal. Who dares to say it? Who will have the boldness to change it? Debt cancellation and increase of the contribution to ODA are the head and tail of the same coin. No fundamental changes on the ground in Africa. From one year to another, this system boosts the statistics and is misleading Western taxpayers. While real development aid is allocated to developing countries, African countries in particular, it is in fact being reduced; statistics tend to provide “evidence” of an increase as was the case for Portugal in 2003 with a jump of 187.5% due to debt cancellation in Angola…
Assuming that funds finally released go to Africa, who finally benefits? Africans? Certainly not, but usually what they get are peanuts… some 10% to 20% of the total ODA! Most of the ODA (grant, technical cooperation and loans) benefit primarily rich countries’ people in various ways: international experts’ fees, support to Western countries Diaspora in Africa, buying back of Western countries products, equipments and services, direct influence of decisions favouring Western countries in the international arena, support on asymmetric basis of selected African governments (including sometimes dictators) if the latter accepts to protect western countries’ interests in Africa…To make it short, Official development aid is finally an integrated component of the instruments that powerful and rich countries do use and often misuse to produce undesirable influence from the African perspective. Nobody really reports officially on that! How can they? Most of the Media belong more and more to Weapon sellers who usually subsidize electoral campaign of selected western political parties.
The G 8 leaders were more active in promoting the ratification of the United Nations Convention against Corruption but failed to acknowledge that a large part of those who are fuelling and benefiting from the corruption are not necessarily in Africa. G 8 commitments are not neutral. Why did the G 8 not just simply acknowledge the progress made by the New Partnership for Africa’s Development and its Peer Review Mechanism and support financially and technically NEPAD projects and programmes? Why did G 8 not make a symbolic announcement such as financing at least one of the NEPAD infrastructure projects leading to regional integration in Africa, which will spill over in terms of increases in intra-trade activities for millions of Africans? Although African Governments have committed themselves to spend some 10% of their budgets on agriculture, G 8 did not make any specific financial commitment to support specific NEPAD’s driven initiatives. Why for example, did the G 8 not build on the UK Commission for Africa’s proposals which identified the African Productive Capacity Initiative and its flexible facility (African Productive Capacity Facility) as one of the innovative and complementary approaches to reduce commodity dependency while promoting trade and investment in Africa?
There is no clear answer yet unless an operational “global implementation committee” with a meaningful budget is established with partners such as African Union/NEPAD, Commission for Africa, Millennium Challenge Account, AGOA, European Union’s Everything but Arms and Cotonou Agreement, Japan development initiatives, China, India, Brazil and Emerging countries new deal for development, private sector representatives dedicated to promote “corporate social responsibility”, governments and civil society organisations (CSO) including African Diaspora.
France’s determination to push first the European Union and latter the United Nations member states to introduce a levy of solidarity of up to three euros in support to the International finance facility (IFF) is very much appreciated. This voluntary and compulsory tax on air travel will be dedicated to “immunisation and the buying of vaccines”. Africans were not given the opportunity to express their views on the use of these funds (i.e. AU, NEPAD, Governments, Regional economic communities and CSO, Diaspora). One would expect a clear negotiation on the future production of those vaccines in Africa. Real politic here again favours the “importation” of value added products from selected rich countries. Production at local level and intellectual property related matters are crucial for Africa to take control of his future. It should be treated separately from the WTO usual negotiation approach to trade related issues.
From a strategic perspective, the real objective of the G 8 meetings seems to be primarily about increasing and controlling geo-economic and geo-political influential zones in Africa through the disbursement of the “so-called aid”. In fact, the G 8 is about “real politic” and commitment to reach the objective of the Millennium Development Goals in 2015 should be implemented with that in mind. Public Aid alone will not solve the problem. Private sector actors, civil society and overall management and behaviours in implementing projects and programmes in Africa by multilateral and bilateral institutions as well as by corrupted Africans need to be questioned as well. It is a matter of improving the world governance toward a fairer and balanced decision-making structure. One cannot expect to promote “our common interest” when the present United Nations Security Council does not pro-actively enlarge the Council to some 26 Members and does not dismantle their “veto” prerogative. A new Council should accept the principle that each continent shall have at least two permanent seats and three non-permanent seats as well as one representative of the civil society per region. Otherwise, Africa, which constitutes the most discussed matter in the Security Council, will not be able to protect its interests. As a consequence, non-Africans will make decisions on Africa’s future and Africa’s sovereignty. Did not the leaders of rich countries make a commitment that African leaders should decide on their own “affairs”?
3. Does G 8 alleviate Poverty? A diplomacy of status quo
Leaders of the G8 Summit did not meet the expectations of alleviating poverty in Africa. On the contrary, debt reduction became a substitute to poverty eradication and led to a new world order based on unilateralism of the G 8 leaders in their respective “world zones of influence”. It does not stop competition for operating among them. When competition among developing countries or African countries is promoted, it usually results in cheaper prices for G 8 consumers. Commodities are often prevented from being processed in order to ensure that value added in Africa does not result in the emergence of new competitors to Western Businesses and job market contraction in G 8 countries. It is then convenient to promote a diplomacy of status quo hidden behind a diplomacy of double-standard poverty eradication scheme, which does not work effectively because of lack of goodwill of government leaders.
Really, African people did not gain at Gleneagles. Selected African leaders, may be! It is therefore understandable that Middle-income African countries were not included in the list of those selected for the debt reduction exercise. The fact that non-democratic countries were not on the first list may not lead to any change in those countries, on the contrary. Some countries, which did work hard to reduce their overall debt are penalized and might not see their efforts rewarded. Such a contradiction is a sign of a G 8 which is paying lip service to “effective multilateralism” and continues in fact to promote “national interests” in the global context. Is G 8 not de facto promoting “multi-bilateralism approaches”?
In light of this Summit, the future for African leaders lays in internal reforms in Africa. They should be encouraged to review and promote their effective representation through more democracy, transparent elections, peaceful power transfer above all, promotion of the private sector and work for their people. They need to defend collectively the interest of their people before the interest of the G 8 countries. Consensus after negotiation should promote collective peace, security and progress. Begging which leads to debt increase with no correlation with productive capacity should be brought to an end. Resources do exist in Africa and in the Diaspora. International Private Sector communities dedicated to corporate social responsibility can help Africa to overcome this difficult transitional period if legal and institutional environments become more predictable in Africa.
Many recommendations and suggestions are already available in various reports such as AU/Strategic vision, NEPAD, UK Commission for Africa, Millennium Challenge Account, European Everything but Arms, Japan New Development programme, etc. Too often, governments discretely promote “Nations’ interests”. In Africa, it could become “Leaders’ interests”. What is lacking in Africa is the desire to implement with the private sector and the civil society national and regional interests. The Global economy needs new instruments and institutions, which can effectively take care of “public goods” on a balanced manner. Enlarging the United Nations Security Council to some 26 Members will be a good starting point for a balanced global governance system.
European Union and the United States should also acknowledge the “collateral and disastrous effects” of their protectionism on the African rural people. Effective progress should be achieved on reducing their respective agricultural subsidies. A predictable timetable to gradually dismantle subsidies would have been another good sign of G 8 leaders’ willingness to assist African people. This timetable cannot be de-linked from an improved and fair access of African goods to European markets (non-trade barriers) as well as to North American markets through the AGOA successful Passport mechanism, which needs to be enlarged to more African countries. Dismantling entirely the “rules of origin” criteria may reduce delays in the industrialization process of Africa. Lesotho did benefit on a temporary basis from such a dismantling in AGOA. The forthcoming World Trade Organisation Ministerial conference in Hong Kong (December 2005) should move into that direction and finally demonstrate whether the rich countries are serious about the Development Agenda for which they committed themselves at the Monterrey Conference as well as in Doha (Qatar).
Fresh money should flow and should be managed together with African people including the Diaspora. G 8 governments should gradually take their share of the overall debt burden they are “delocalising” to poor countries and accept to make a serious sacrifice through the gradual cancellation of subsidies at the sectoral levels. Should they build on African forceful economies such as South Africa, Egypt, Nigeria, Tunisia to support poverty eradication effectively, then debt cancellations of African nations should be widened to intermediate income countries (IIC) on a collective basis under one condition: regional “economic locomotives” (which are also IIC) in Africa should play their role in financing regional economic integration facilities within a given period.
4. Financing the Productive Capacity in Africa
Finally, it seems that in addition to all necessary support to social environment and infrastructure needed, one could reduce poverty by improving on trade and investment. But with less than 2.4% of the world trade, Africa needs to add more value to its commodities and improve its quality of services, and gain in terms of productivity. But almost all Poverty Reduction Strategy Papers in Africa, the almost compulsory document to get access to ODA (multilateral and bilateral) do not usually have a single chapter on industrial development. Institutions such as UNIDO, UNCTAD, ILO, African Union, NEPAD, UK Commission for Africa etc. are promoting productive capacity at the sectoral level as a mean to generate decent employment and promote wealth creation. Even AGOA success in Lesotho in the textile and garment value chain is mainly due to the temporary end of the rule of origin which de facto attracts the investors who are transferring and diffusion technology, knowledge and productive capacity. Such a success should not be limited to Lesotho. The Millennium Challenge Account approach coupled with NEPAD and the UK Commission for African could be structured to support selected African initiatives such as the Africa’s productive Capacity Facility which became in July 2004 the NEPAD sustainable industrial development. In partnership with the Millennium Challenge account and AGOA of the United States, one should be able to replicate Lesotho’s success region-wide.
In addition to the establishment of a global joint-implementation committee as a follow-up to Gleneagles, the way forward is to ensure that the G 8 does something meaningful to Africa during the WTO ministerial conference in Hong Kong in December 2005. As an example, the Cotton, Textile and Garment value chain is becoming one of the most serious “trade and production issues” at the global level. Unprocessed Cotton has lost more than 65% of its value within 20 years and this should be stopped. With various non-official safeguards measures of the European Union against China and the flood of cheap textile products in Africa preventing local cotton to be processed, Africa and Donors Countries may enter a new Tripartite Partnership agreement with China or any emergent countries on a Sectoral Initiative on the cotton, textiles and garments value chain with the objective to become more complementary.
Besides difficulties related to the 2005 WTO Hong Kong Conference in reducing rich countries unfair subsidies, WTO, together with other United Nations and civil society organisations, should take the lead in calling a donor meeting on the promotion of the African Productive capacity initiative with special focus on African priorities, such as the cotton, textiles and garment value chains. This Sectoral Facility should collect a minimum of 53 million Euro as a seed and grant money to support the upgrading of Africa’s textile sector in partnership with the non-African producers of textile products and equipments. This facility is about modernizing Africa and not promoting exclusively, again, indirectly, non-Africans products and markets. This approach could then be duplicated to any other non-processed goods. G 8 should also accept the principle of compensation of Africa for damages caused by their subsidies, as the WTO dispute settlement body already highlighted it at several occasions to selected western countries (cotton sector for example). Any attempt towards this direction will be a sign of a real renaissance of the G 8, the end of both the double standard commitments and the diplomacy of status quo towards people from Africa and weak influential countries.
Nevertheless, without civil society’s continuous pressures and after being at the top of the Agenda of G 8 for five years, interest of G 8 leaders for Africa may slowdown with Russia becoming the next President of the G 8 in 2006, followed by Germany in 2007. The economic benefit to be gained for Africa and rich influential countries in the short and long term will be a renewed and forward looking global partnership. YEA
Published in Corporate Africa Magazine, September 2005 | Author and Strategic Economist at UNIDO | (The paper is prepared in his personal capacity)
 World Bank, Global Development Finance, 2005, p. 26. Latin America and Caribbean’s total debt stocks is about $ US 773.4 millions.
 See Center for Global Development, www.cgdev.org
 Max Lawson and Duncan Green from Oxfam International, “Gleneagles: what really happened at the G 8 summit?” Oxfam Briefing Note, 20 July 2005.
 Yves Ekoué Amaïzo, From dependency to interdependency. Globalisation and marginalization: Any chance for Africa?, L’Harmattan, Paris, 1998, book published in French.
 GNI reached 0.25% in 2003 which represents an average of $ US 7 per capita of donor country.
 UNCTAD, Economic Development in Africa: Debt Sustainability, Oasis or Mirage?, Geneva, 2004
 Damien Millet et Eric Toussaint, « Les faux-semblants de l’aide au développement », in Le Monde Diplomatique, juillet 2005, p. 8.
 Rapport sur la Dette et développement 2003-2004. La dette face à la démocratie, see www.dette2000.org
 UNIDO, Africa Productive Capacity Initiative: From Vision to Action. Main Report, 16th CAMI Meeting, Vienna, 28 November 2003; see http://www.unido.org/file-storage/download/?file_id=25984
 Commission for Africa (CFA), Our common interest, Report of the CFA, March 2005, pp. 276 and 353.
 France, Germany and Belgium agreed for a compulsory scheme, whereas Cyprus, Ireland, Malta, would like to give the passengers the choice to pay it or not, see BBC news, published 29/08/05 – 11:09 GMT: Chirac announces air tax for aid
 Yves Ekoué Amaïzo, “Reforming the United Nations: unilateralism, minimum service and interdependency”, see www.afrology.com, Afrology Monthly Newsletter published in French, September 2005 (click on politic).
 WTO, International trade statistics, 2004, p. 76.