Africa's development impacted by lack of farm trade reform, UN report
Regional, Economics, 7/25/2003

Faltering global talks on farm trade reform and increased United States subsidies for its crop and dairy industries could impede Africa's efforts to achieve the goals of reducing poverty and hunger set by the United Nations Millennium Summit of 2000, according to the latest report of the UN Economic Commission for Africa (ECA).

"Medium term prospects for Africa depend to a great extent on external developments," ECA said on Wednesday in a press release on the 2003 edition of the Economic Report on Africa (ERA 2003), its annual flagship publication to be launched on 30 July. The main theme this year is accelerating the pace of development, which examines how Africa can achieve growth rates necessary to attain the Millennium Development Goals (MDGs) by 2015.

"Unfortunately for Africa, the World Trade Organization talks on farm trade reform - by far the most important issue in the Doha (Qatar) development round for Africa - appear to have faltered," the ECA release added. "The US decision in May 2002 to introduce a six-year $51.7 billion farm bill increasing crop and dairy subsidies by 67 per cent will not help Africa's prospects." The report warns that the subsidy will reduce agricultural prices, making it difficult for small African countries to compete.

ERA 2003 finds Africa's economic performance last year lackluster, with growth slowing to 3.2 percent in 2002 from an average 4.3 percent in 2001. The report ascribed the slowdown to weaker global economy, effects of low commodity prices in 2001, droughts in various parts of southern and eastern Africa, and political and armed conflicts, notably in Cote d'Ivoire, Zimbabwe, Madagascar and the Central African Republic.

But some well-managed reformers with a record of stability and good governance, like Uganda, Rwanda and Mozambique, managed to buck the trend with growth rates of 6.2 percent, 9.9 percent and 12 percent, respectively.

The report includes in-depth analyses of seven African economies - Egypt, Gabon, Ghana, Mauritius, Mozambique, Rwanda and Uganda. The purpose of the country-specific chapters is to identify policies that provide the best stimulus for sustained growth and development.

The importance of fiscal discipline is demonstrated by Ghana's economy, hobbled by massive public expenditure hikes during electoral cycles. Mozambique demonstrates the importance of implementing pro-poor policies in order to tackle deep pockets of poverty, since although the economy has grown by more than 10 per cent in the past few years, over 60 percent of the population still live in poverty.

Countries where second generation reforms are entrenched, like Mauritius, have managed steady growth over long periods with lower poverty rates. These economies provide the best opportunities for the private entrepreneurs to flourish, while Egypt shows that public sector reforms need to focus on strengthening the sector's ability to manage the economy, rather than concentrating on quantitative targets like overall wage bill and staffing levels.

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