15 March 1996

Press Briefing



Debt relief for highly-indebted African countries would be one of the issues that would be addressed as part of the international community's efforts to ensure the success of the United Nations System-wide Initiative on Africa, the President of the World Bank, James D. Wolfensohn, told a press briefing after his joint launching, with Secretary-General Boutros Boutros-Ghali, of the Initiative. Mr. Wolfensohn said that an April meeting of the interim and development committee would address proposals by the Bank and the International Monetary Fund (IMF) on highly-indebted nations.

The Bank President was responding to a correspondent who, after suggesting that Africa had not suffered from a shortage of speeches or sentiments but of capital, asked whether the Initiative could help stem the Bretton Woods institutions' extraction of capital from that continent.

"The fact is that there is money going in but there is also money going out. That is a consequence of the debts which had been sustained in the past. The issue on everybody's mind at the present moment is the question of the possibility of relief for those countries that are highly indebted", he said. "It's certainly an issue that I think is real and needs attention and the Bank and the Fund are now trying to give attention to it."

"There is a net outflow of capital but that's not unusual in banking actually. It sounds as though it's a terrible crime but what has happened is when people borrow money, they repay it", he added, when pressed on whether capital flew out of Africa. "But the question is `can you put additional funds that can be effective in a country?'" What was necessary was to look at countries that were overburdened by debt and address the problem.

The press briefing, opened by the Assistant Secretary-General for Public Information Samir Sanbar, included such participants in the Initiative's New York launch as James Gustave Speth, Administrator of the United Nations Development Programme (UNDP) and Co-Chairman of the Initiative's Steering Committee; Carol Bellamy, Executive Director of the United Nations Children's Fund (UNICEF); Dr. Nafis Sadik, Executive Director of the United Nations Population Fund (UNFPA); and Ellen Johnson Sirleaf, UNDP Assistant Administrator and Director of its Regional Bureau for Africa, also took part.

The Special Initiative is described as the United Nations system's most significant mobilization of support ever for developing a continent's people and its largest coordinated action. The Initiative's implementation will require up

to $25 billion, mostly from reallocating existing resources at the national and international levels. The World Bank has agreed to lead in mobilizing the bulk of the funds, which will go primarily towards improving basic education and health in Africa. Peace-building, good governance, and water and food security are some of the Initiative's other areas of emphasis.

In response to a question as to how much of the Initiative's funds would be fresh and how much would be reallocations of existing resources, Mr. Speth said that the programme included plans to mobilize and implement the Initiative, which would need some $2.4 billion to $2.5 billion yearly. That sum would be about 20 per cent of the $12 billion of official development assistance (ODA) flowing annually into the continent. Therefore, the funds would be met both through redirection of funds and enhanced resource mobilization. The World Bank would lead in mobilizing resources for two of the most expensive initiatives such as education and health care for all. Concerted efforts and parallel initiatives would be made to elevate the attention given to Africa in the international agenda and mobilize funds for the continent.

There were 11 priority initiatives in the package, he said, adding that the effort was to get the international community to concentrate on and get them done. What was new was a sense of the development assistance community coming together behind African countries' priorities with a defined set of initiatives, agreeing on broad strategic approaches and working together to support those initiatives "and not going off in our separate directions". He expressed the hope that more money could be generated for Africa despite the fact that ODA was falling worldwide.

Pressed to say how much of the entire estimates would be fresh funds, he said donors would be encouraged to focus their efforts on the priorities identified by Africans themselves, with the hope that extra money, beyond the annual $12-billion ODA flows to Africa, would be collected. Anything beyond that figure could be seen as fresh money. Public opinion would be mobilized to ensure the success of such a goal. But, there was presently no way to predict how much fresh money would be raised.

Mr. Wolfensohn, President of the World Bank, added that several billion dollars a year coming from the World Bank could be regarded as additional money. However, the important thing was that the Bank had not previously taken part in such a coordinated effort but in ad hoc enterprises. The importance of the Initiative was that it would help ensure more focused and efficient spending and help raise more cash from the private sector. The Initiative constituted the first coordinated effort to focus on Africa and spend cash in a better, more efficient manner. The World Bank and the United Nations system should draw a line against further declines of ODA, spend the money at hand well and see what more could be generated by using it to get more funds elsewhere.

In response to a question as to whether there were any guarantees that such a launching would not be repeated in future, Mr. Speth said he could not

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guarantee that. Efforts should be made to spend the money well. A major difference between the Initiative and preceding programmes was that the current case was not a set of policies principles or guidelines but contained concrete and specific programmes that would be implemented. The United Nations system would focus and rally behind the initiatives identified by African countries in order to ensure success. The current Initiative was goal-driven and different, but needed commitment to meet its objectives.

The Executive Director of UNICEF, Ms. Bellamy added that it would not be accurate to say that all previous action in Africa had failed. In terms of children's health and education, for instance, she said that the situation had improved gradually even though more should be done. Resources should be maximized and what was available used more efficiently. Such an approach might create a success model that would convince investors to increase resources.

Dr. Sadik, UNFPA Executive Director, added that she, too, had witnessed some successes in many areas of her organization's work. However, the effectiveness of resources could be increased by consolidating the programmes of various United Nations agencies with, for instance, the health and education sectors being addressed in their totality. Regarding the issue of population, she said Africa was the last region to become interested in that field but its resources for population activities were rising. For example, in the 1970s, about 10 per cent of UNFPA funds were allocated to that region, compared with 40 per cent today. Africa was being accorded greater priority and more money. For instance, while some $39 million was spent on it in 1992, the amount had doubled to about $74 million last year. African countries themselves were also according more to population matters and the UNFPA would follow their lead and implement concrete goals.

Mr. Wolfensohn added that, as one looked at Africa, one should recall some of the progress that had been made. Also, one should look to African governments and civil societies to initiate ideas and then ask the international community for resource assistance to implement the priority programmes they had chosen. That was the essence of the launching of today's Initiative. Further efforts would be made to mobilize the needed funds, which should then be used with better coordination. The Secretary-General should be congratulated for his efforts in that regard.

While $25 billion seemed a lot of money, an annual $2.5 billion for 600 million Africans was not much compared to the $1.3-billion yearly budget for New York city public schools, a reporter asserted before asking whether the $25 billion was a downpayment for more funds or whether he should "read your collective lips and say no new money"? In response, Mr. Speth said that, beyond the ODA flows, the Initiative would try to move private investments and trade and technology to Africa. Official development assistance would not be the solution. Therefore, it should be used as a lever to pry loose for the continent greater shares of trade, foreign direct investment, portfolio investments and access to technology. The Initiative would also deal with the broader context of using ODA

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as a means to help Africa move from the little foreign direct investment it was getting to generate more, enhance savings and get debt relief.

"The issue is how we spend the money", added Mr. Wolfensohn in answering that question. He said that spending existing amounts efficiently would make a major difference. Private investments were nearly three time the size of ODA, at $170 billion, compared to $50 billion annual ODA amounts. One of the outcomes of the Initiative should be an improvement in how resources were used not just how much was actually generated. It should therefore not be judged a failure if, in five years, an extra $5 billion to $10 billion was not raised. It would be a mistake to judge the Initiative solely by the amount of money it raised.

Replying a question as to what was being done to getting Northern constituents behind the efforts to help Africa, Mr. Speth said that a team had been assembled to contact large and new donors on that matter. Moreover, the Secretary-General would announce the formation of a high-level group to work on mobilizing political commitment and support from Western publics for the programme. He referred reporters to an Initiative document which states that the Steering Committee, working closely with the Department of Public Information (DPI) and public affairs centres of the United Nations system, would work on mobilization. That was because political mobilization was an important part of the entire effort.

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For information media. Not an official record.