Kofi Annan, Drawing on CGD Research, Says Africa Should Be Part of Global Stimulus Package

A new report issued last week in Davos by former UN Secretary-General Kofi Annan on behalf of the Africa Progress Panel draws in part on CGD research to argue that Africa is both at risk from the global economic crisis and potentially an important part of the solution.

The report says that experiences of past financial crises suggest that aid to Africa may be cut. But it also sees a silver lining to the crisis: measures to help Africa—including trade and investment initiatives, as well as aid—should be an important part of a global stimulus package in response to the global financial crisis.

"Africa can be an important part in a global economic stimulus plan," said Annan, who chairs the Africa Progress Panel, which is composed of leaders from Africa and high-income countries. "The scope for investment in Africa is vast."

Documenting the economic growth and positive political trends of the last few years, the report states that "Africa's medium to long term prospects are better now than at any time since independence."

However, the report also cautions that "the global crisis could arrest and even reverse steady, and in some cases dramatic, gains that have been made over the last decade." Citing research by CGD research fellow David Roodman, the report warns that despite promises to the contrary, evidence from financial crises shows that rich countries have generally reduced the level of aid in the aftermath of a financial crisis.

The panel report says that "it is more important than ever that Africa's partners honor their commitments" in terms of aid. Alluding to a new aid delivery mechanism being proposed by CGD president Nancy Birdsall called Cash on Delivery Aid, the report suggests that "rich countries can also link aid to outcomes in order to reduce the burden on African governments and improve aid effectiveness."

The report also asserts that "a real partnership between Africa and her supporters is the only way for progress to be achieved." This requires that global governance reforms "include means by which Africans are represented in a legitimate and effective manner."

Annan launched the report at Davos at a session focusing on the State of Africa with leaders from across the continent. Speaking at the session, he said:

"Economic recovery in industrialized countries is needed for Africa—for trade, remittance flows, investment, and aid levels. However, Africa is also integral to immediate efforts to reboot global growth. World leaders must grasp the opportunity to support African development as a means of driving their own economic recovery."

Annan also had strong words about the situation in Zimbabwe, stating that the African Union "did not have the courage" to back the conclusions of its own election observers.

"The crisis in Zimbabwe is man-made, unnecessary, and only getting worse," he said. "The recent cholera outbreak that has taken thousands of innocent lives is only the latest sign of the collapse of a once-thriving nation. Responsibility for this calamity falls squarely on the shoulders of Zimbabwe’s leaders, who have shown great callousness toward their own people and nothing but contempt for the exercise of their political voice and freedoms. Zimbabwe’s neighbors, the African Union, and regional bodies such as the Southern African Development Community (SADC) need to act more purposefully to bring about political change and facilitate recovery and reconstruction."

CGD senior fellow Vijaya Ramachandran served as rapporteur for the 2008 report of the Africa Progress Panel and assisted with the Davos report. "It is extremely important for the urgent issues of infrastructure investment, aid effectiveness, trade, and agriculture to remain as priorities during these times of crisis," she said. "While we are preoccupied with corporate irresponsibility and financial bailouts in the rich world, we must not forget our commitment to economic development and political stability in Africa."

The report urges three steps to mitigate the worst effects of the crisis on Africa, and to enable the continent to become a driver of global economic recovery and stability:

• Rich-country governments and institutions must lend strong support to address the problems of climate change by investing in adaptation and in the prevention of deforestation and by increasing funding for renewable energy in Africa.
• Africa's own potential for a green revolution in food production must be realized. Technical and financial support is required as well as additional investments in rural infrastructure to ensure farmers’ access to inputs and market outlets.
• There has been no progress on multilateral trade negotiations. While pressing for the impasse post-Doha to be broken, an early harvesting of gains in trade liberalization for Africa is needed.