British Treasury chief (finansminister) Gordon Brown outlined what he called a “modern Marshall plan” Friday to boost Africas fortunes with debt relief, aid and trade, the World Bank press review reports.
He proposed erasing all the debt poor countries owe to international organizations such as the World Bank, the International Monetary Fund and the African Development bank. Brown said the new proposals would be presented to G8 finance ministers and leaders ahead of a G8 summit which starts July 6 in Gleneagles, Scotland.
Britain hopes to reach agreement on its anti-poverty agenda at the summit. Brown said that without relief from the debt owed to multilateral institutions, the poorest countries will have to pay them as much as 15 billion US dollar (90 mia. DKR) over the next 10 years.
Britain has agreed to take on 10 percent of the amount 22 poor countries owe the institutions, and Canada and the Netherlands have made similar pledges, Brown said. He urged other rich countries to pitch in so all the debt can be forgiven. The money, he said, should be used to fund free primary and secondary education for as many as 100 million children in the poor world who do not go to school.
Brown proposed selling bonds on world markets through an International Finance Facility (IFF) to raise 4 billion dollar, which he said could save 5 million lives before 2015 and 5 million after 2015. Britain, France and Sweden have already agreed to contribute, he said.
The plan would test the idea of a larger bond-selling plan for broader development aid. Britain also wants rich nations to encourage pharmaceutical companies to work on AIDS and malaria vaccines by promising to buy them in large quantities if they are developed.
Brown said it was crucial to eliminate export subsidies and other trade barriers that make it difficult for poor countries to sell their products to consumers in the rich world. Specially targeted aid should help poor businesspeople boost their capacity to do business internationally, he said.
– If sub-Saharan Africa could regain just an additional 1 percent of global trade, it would earn 70 billion dollar (420 mia. DKR) more a year in exports and that is nearly five times what it receives in aid, said Brown.
Brown appealed to the worlds oil-producing states, including Saudi Arabia, the United Arab Emirates and Kuwait, to use some of their wealth from rising oil prices to contribute to the aid to Africa. He wants the oil revenues to plug an estimated 20 billion shortfall between the 80 billion US dollar so far committed to the world’s poorest countries by 2010 and the 100 billion UN target.
The New York Times meanwhile writes that a powerful consensus is building for a doubling of aid to Africa among the worlds heavyweight donors, except the United States, a divide that is likely to come into sharp relief this week when Blair meets with President Bush.
When Bush was asked this week about Blairs effort, as well as a British proposal to raise money for development on capital markets through the IFF, he replied: – It does not fit our budgetary process.
Underlying this debate are differences over Africa’s readiness to absorb the additional 25 billion dollar in aid Blair advocates. The Europeans favor a quick and bold surge in spending that officials in Paris and London say will make it possible for Africa to join the global economy.
Their view is buttressed by the World Bank, the International Monetary Fund, Blair’s Africa commission and a panel of experts appointed by Kofi Annan. All have said that many African nations are improving governance, fighting corruption and growing economically, and could make good use of more aid.
The US contends that the problem is less a lack of money than the ability of poor countries with weak institutions to spend it wisely. The Bush administration has said that decades of extensive aid have failed to encourage economic growth. In 2002, Bush announced plans for a Millennium Challenge Account intended to change the way aid was given out, assisting only countries that controlled corruption, invested in health and education and encouraged trade and private investment.
In Mondays leader, The Financial Times further argues that Blair must persuade Bush to engage. This means setting goals that are realistic in a US context. Blair should push Bush to sign up to a doubling of G8 aid to sub-Saharan Africa by 2010.
The EU will meet much of this increase. Debt relief will help release funds, but only 1 billion-2 billion US dollar of the additional 25 billion that Blairs Africa commission says is needed. The Prime Minister must not give in to populist demands for World Bank write-offs unless Bush agrees to replenish the Banks funds.
There is more to helping Africa than aid, the daily writes. Blair should ask Bush to help countries attain good governance, not simply reward those that achieve it, and seek backing for a bold G8 offer to end all agricultural export subsidies and spur on the Doha trade talks.
Kilde: www.worldbank.org
