Nepad-MCA on collision course?

HEADNOTE

George Bush's Millenium Challenge Account will reward countries with good governance while Nepad wants all African countries to develop economically. Is a collision in the offing? Tom Nevin reports.

In the

wake of the Iraq war, Africa is understandably nervous as it wonders if its development needs are to be shoved further onto the back burner. Will the awesomely costly process of rebuilding the shattered Middle Eastern country take financial priority and should Africa be worrying? No, says President George W. Bush, pledging that Africa's development will proceed as planned and agreed, and that finance for urgent issues, such as the Aids pandemic, will receive added assistance.

Many African leaders have voiced their reservations, pointing to the disappointing levels of aid and development funding that have become the norm over the past half-decade or so.

Does Africa expect too much, is it overlooking the already significant inflows of aid and development capital? Is it placing too much store in the New Economic Partnership for Africa's Development (Nepad) as the catalyst for a flood of partnered economic aid?

There are promises aplenty but the watchword for Africa should be: Listen to the signals that flash along with them.

Earlier this year President George W. Bush sent a new Africa aid initiative to Congress that would tie increases in aid to social investment and good governance. Bush described the The Millennium Challenge Account (MCA) as a new compact for development that would provide increased US foreign assistance to countries that rule justly, invest in their people and encourage economic freedom.

It's an extremely generous gesture, especially considering that the MCA proposal seeks to increase current levels of core development assistance by 50% over the next three years and provide an annual increase of $5bn by 2006.

"The Millennium Challenge Account represents a new approach to providing and delivering development assistance," said Bush.

"This new compact for development breaks with the past by tying increased assistance to performance and creating new accountability for all nations. We cannot accept permanent poverty in a world of progress. The MCA will provide people in developing nations the tools they need to seize the opportunities of the global economy." he added.

MCA and Nepad on collision course?

While the MCA is a generous and powerful financial tool and could do great things for compliant countries, it doesn't exactly help the cause of Nepad, an initiative that wants to pull Africa up by its bootstraps collectively.

It wants an internationally contributed-to kitty of $64bn a year in a central pool that it can administer on a continental, all-country basis. The US doesn't see it like that and insists on reform before assistance. Africa has its share of maverick states and these will be left out in the economic cold until they mend their ways, resulting in a splintered Nepad initiative.

Another cue comes from White House Africa Advisor, Jendayi Frazer, who considers economic growth envisioned in Nepad a key factor. She says it is a mechanism for efficient spreading of wealth through mobilisation of resources. "On that score America is making a contribution through Agoa. It is aimed at spurring the export sectors of reforming African countries by offering them favourable trade benefits," she says.

But, she stresses, "the key to our response to Nepad is independent development leading to greater investment". Frazer says it is essential for Africa to wean itself off development assistance. "What will not work is if Africans set out a vision of progress and then expect the US to pay for it. This is not the basis of a true partnership."

Frazer believes that resource mobilisation will come through trade, domestic savings and greater direct foreign investment that AGOA will help spur. "It will not come through a long-term relationship promising development assistance alone," she says.

Then there's the voice of Assistant Secretary of State for African Affairs, Walter Kansteiner III who says increased trade reduces poverty, and poverty alleviation is a key development goal of many African governments. "Increased trade means increased production, which means increased employment, which means poverty reduction. It's about productivity. It's about job creation. It's about letting people earn a fair return and that's what's so exciting. And that's why trade, quite frankly, is a very fast, immediate response to poverty reduction."

As far as most Africans are concerned, the route taken is less important than the results achieved.

SIDEBAR

Economic 'miracle' Lusophone countries

Economic miracles happening in erstwhile 'hopeless' African countries are proof that they have the resilience and the ability to transform themselves into success stories. Mozambique, Cape Verde and Angola are such models in Africa, according to USAID Chief Andrew Natsios. He administers more than $7bn in assistance to the developing world, and says Africa's three Lusophone countries are good examples of what developing nations can do to better the lives of their citizens.

USAID's current funding for assistance to Mozambique amounts to $43m, an increase of $10m over the previous year. He considers Cape Verde an example to other countries: from being one of Africa's poorest, its "per capita income now is one of the highest in Africa," he says.

USAID is currently devoting over $100m in development and humanitarian assistance to Angola. "While it is nowhere near the success story that Mozambique is, it is home to a project called the Global Development Alliance, a joint USAID and private sector investment fund that spurs the private sector in a number of developing nations."