Is Africa on the move?

Many barriers to sustained development in the region remain. Democratic experiments are fragile, and a large gap separates words from deeds in regard to market-based economic reform. The resulting lack of credibility deters foreign and local investment, and African countries depend increasingly on foreign aid. Several steps are recommended to get Africa really moving: (1) Donor agencies and African governments should fully review the dynamic effects of their current mutual dependence. Recent discussions have focused on finding "debt exit" strategies for African countries, but an "aid exit" strategy for Africa is just as urgently required. Aid flows are so central to the operations of most African governments, and so advantageous for donors and governments alike, that they discourage either party from making headway toward sustained growth and development. (2) African policymakers must begin to understand the policy limits imposed by economic globalization and the world marketplace. A down-to-earth approach to globalization requires African countries to determine how they can link themselves effectively to international trade and commerce. As a start, such a strategy would require creating the same conditions local and foreign investors can find elsewhere. Such conditions include macroeconomic stability; predictable and efficient institutional arrangements; ease of entry and exit; a functioning legal system; and transparent, accountable, governance. (3) African policymakers should honestly and realistically assess their spending priorities. Aside from Botswana and Mauritius, all African governments are over-stretched and require retrenchment or reorientation, though in ways that enable the public sector to focus its limited resources on the crucial social tasks that contribute to rapid economic growth and development, and this in an efficient manner. Waste is widespread in public sector activities in Africa, as evident in excessive official travel, lavish representation abroad, padded military budgets, consumer subsidies, public enterprise losses, restrictions and regulations that undermine enterprise and innovation, arbitrary legal requirements that raise business costs, deficit financing, controlled prices, fixed interest rates, overvalued real exchange rates, subsidized credit, and tariff restrictions that prevent competition. (4) The development institutions, particularly the members of the World Bank Group, should begin dealing with the institutionalized waste inherent in their activities. They should devote their attention to the few areas that are critical for modern growth and development -- education, health, infrastructure, effective macroeconomic management, and international competition. Long- term, consistent support for these items is required; provision of international welfare is not.