The Aid-to-Trade initiative may be a blessing to Africa’s faltering trade competitiveness in the global economy, but like any other aid there is worry over conditions donor agencies impose, which are believed to more harmful than good.
While opening a two-day ministerial conference on modalities for Aid-to-Trade, an initiative believed to help Africa enhance trade capacity, Tanzanian Vice President Ali Mohamed Shein identified bad governance as another clog in the wheel of desired growth, despite the continent registering a relative 5 per cent GDP.
“For Aid-to-Trade to be effective, Africa must improve on her institutional and legal framework as a means to enhance good governance and rule of law,” Shein told the conference Monday in Dar es Salaam.
“We need to improve our (Africa) democratic credentials and be more accountable. This is one crucial area we fail ourselves in attracting desired investments and stifles private sector growth,” the Minister added.
African Finance and Trade ministers gathered here will come up with an agreed continental perspective on the initiative, culminating in a “Global Review” in Geneva next month.
Shien cited poor transport and commercial infrastructure as another area where Africa is failing herself.
“In order to stimulate production, we (especially in East Africa) must develop necessary energy infrastructure, and water services, both for domestic and commercial need.
“Africa must invest in education and health sectors in order to generate the caliber of human capital that can make a difference.
“An educated and healthy labour force is essential for increased productivity that leads to increased output (and) capacity to export. The same quality of labour force has greater potential for effective competition at the world market,” Shein said in an interview after the official opening of the conference.
Africa Development Bank (AfDB) President Donald Kaberuka described the initiative as tool that will help African countries take advantage of global trade openings and trading systems.
“The question is no longer whether Africa will benefit from trade liberalization. The answer is yes, provided it is well prepared.
“Aid-to-Trade initiative goes beyond traditional technical assistance to make trade a pillar in development planning and individual countries should come up with priorities,” Kaberuka said.
Worried by too much aid conditions, Africa’s leadership demands that financial resources for Aid-to-Trade should be additional rather than be reallocated or repackaged from existing programmes and sectors such as education and health.
“It must be predictable, meaning that real aid assistance should be available, instead of mere broad political statements, expressing intent and commitment by donors,” Shein said.
“Let us avoid the frustrating experiences of the unfulfilled monetary commitments on ‘AID Scaling Up’, quite often due to too much conditionality. Financial resources provided for Aid for Trade should be demand driven,” he suggested.
In his contribution, Rwanda Finance Minister James Musoni said “Aid agencies tend to impose conditions or requirements on us (Africa) which are not applicable to all because they are not or largely unaware of how we vary in many areas like democracy and geographical settings.”
“Tell me how conditions set for countries with sea ports like here in Tanzania and Kenya are fully applicable to us (Rwanda), Uganda, Democratic Republic of Congo (all land-locked)?” he wondered.
“Conditions that are applicable in some countries are not necessary applicable elsewhere and many governments in need have found themselves in trouble with donors,” he stressed.
In response, World Trade Organization (WTO) Director General Pascal Lamy acknowledged the concerns, but hastened to say “no one can tell African countries how to trade or become competitive.”
“The only export-led growth strategy is one which you want yourselves – that you design and you implement – and that remains a consistent focus over time.
“Trade and trade capacity building must be a national goal and thus with the Aid-to-Trade initiative, nations will have to set their own priorities,” Lamy explained.