PRESIDENTIAL APPROVAL OF THE TASK FORCE REPORT ON ENDING HUNGER IN SUB-SAHARAN AFRICA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90B01013R000400200001-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 27
• Document Creation Date: December 27, 2016
• Document Release Date: July 16, 2013
• Sequence Number: 1
• Publication Date: March 25, 1987
• Content Type: MEMO

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fiettitTe
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ROUTING AND RECORD SHEET
SUBJECT:
(Optional)
Presidential Approval of the Task Force Report on
Ending Hunger in Sub-Saharan Africa
FROM:
Frederick L. Wettering
NIO for Africa
EXTENSION
NO.
DATE
25 March 1987
TO: (Officer designation, room number, and
building)
DATE
OFFICER'S
INITIALS
COMMENTS (Number each comment to show from whom
to whom. Draw o line across column after each comment.)
RECEIVED
FORWARDED
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(FYI)
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FORM 61 0 USE PREVIOUS
1.79 EDITIONS
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THE DIRECTOR OF
CENTRAL INTELLIGENCE
National Intelligence Council
MEMORANDUM FOR THE RECORD
FROM: Frederick L. Wettering
NIO for Africa
25 March 1987
SUBJECT: Presidential Approval of the Task
Force Report on Ending Hunger in
Sub-Saharan Africa
REFERENCE: Memo for Task Force Members from
Peter Rodman and Michael Driggs,
dtd 18 Mar 87, SUBJ: Presidential
Approval of the Task Force Report
After coordination with DI/ALA/AF and
NIO/Economics, I telephoned our concurrence
to Steve Farrar at the NSC. Note that NIO/Econ,
myself, and ALA had been involved throughout
the evolution of this paper, and I have attended
all the working group meetings.
Frederick L. Wettehng
Att: Ref Memo
DISTRIBUTION:
'1 - ER (via ES)
1 - NIO/AF file
1 - NIO/AF Chrono
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STAT
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THE WHITE HOUSE
WASH I NGTON
March 18, 1987
MEMORANDUM FOR TASK FORCE MEMBERS
FROM: Peter W. Rodmanchg
Michael A. Dri>ggs7-7-
SUBJECT: Presidential Approval of the Task Force Report
The President has approved the Task Force report as
submitted. A copy of the report which he reviewed and the
White House press release are enclosed for your information.
When we started this project last fall, the task seemed
overwhelming. Many of us wondered whether we would be able
to cover so many areas in such a short period of time -- and
still produce something of benefit. We have. The implemen-
tation plan we developed, if followed, will create a struc-
ture that will be the framework of U.S. economic policy for
Africa for years to come. This could be a true turning
point.
If so, it is because of the spirit of commitment and
compromise displayed by everyone on the Task Force. We thank
you for making this a rewarding and successful enterprise.
The next step to implement the President's decision is
to prepare the Executive Order that will empower the new
Coordinating Committee for Sub-Saharan Africa. A draft,
based directly upon the Task Force report, is also enclosed
for your review. Please provide any comments you might have
to Steve Farrar, 395-3543, by c.o.b. Wednesday, March 25.
Upon receiving your comments, we will send the order to OMB
for formal clearance before submitting it to the President.
Enclosures
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,
EXECUTIVE ORDER
COORDINATION OF ECONOMIC POLICES FOR SUB-SAHARAN AFRICA
By the authority vested in me as President by the
Constitution and statutes of the United States of America,
including the Foreign Assistance Act of 1961, as amended, and
in order to establish procedures for development of a common
long-term goal for all United States economic programs and
policies in Sub-Saharan Africa, it is hereby ordered as
follows:
Section 1. Establishment of the Coordinating Committee
for Sub-Saharan Africa. (a) There is hereby established a
Coordinating Committee for Sub-Saharan Africa ("the Commit-
tee").
(b) The Committee shall consist of the Administrator of
the Agency for International Development, who shall be
Chairman; the Assistant Secretary of Treasury for Inter-
national Affairs, who shall be Co-Chairman; the Assistant
Secretary of State for African Affairs; the Undersecretary of
Agriculture for International Affairs and Commodity Programs;
representatives designated by the Secretaries of Defense and
Commerce; and representatives of the Office of Management and
Budget, the Central Intelligence Agency, the U.S. Information
Agency, the Peace Corps, the Overseas Private Investment
Corporation, the United States Trade Representative, the
Assistant to the President for National Security Affairs, and
the Assistant to the President for Policy Development.
(c) Whenever matters being considered by the Committee
may be of interest to Federal agencies not represented on the
Committee, the Chairman may invite the head of such agencies
to designate representatives to participate in meetings and
deliberations of the Committee.
(d) The Chairman of the Committee may establish sub-
committees of the Committee and designate chairmen thereof.
(e) The Committee shall operate under the policy
direction of the Secretaries of State and the Treasury.
(f) All Executive departments and agencies shall keep
the Committee informed in necessary detail as to the
policies, programs, and activities relating to the functions
of the Committee described in Section 2.
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(g) Nothing herein shall be deemed to derogate from the
responsibilities of the Secretary of State, the Secretary of
the Treasury, or the Secretary of Agriculture, or from
responsibilities vested elsewhere by law.
Sec. 2. Functions of the Committee. (a) The Committee
shall operate in a manner best deemed appropriate by its
Chairman in order to ensure the following:
(1) that all U. S. economic programs and policies for
Sub-Saharan Africa are consistent with the goal of ending
hunger in the region through economic growth, policy, reform,
and private sector development;
(2) U.S. economic programs and polices for each country
of Sub-Saharan Africa are tailored to the specific needs of
that country, consistent with the goal presented in subsec-
tion (a)(1) of this Section;
(3) the U.S. is united in its dealings with other
donors and potential recipients; and,
(4) the overall level of aid the U.S. offers a country
of Sub-Saharan Africa is related to continued performance of
that country toward the goal presented in subsection (a)(1)
of this Section or willingness to undertake additional
economic reform.
(b) The Committee shall draft the annual report to the
President required of the Secretaries of State and the
Treasury as described in Section 3.
(c) The Committee shall coordinate the preparation
annually of a unified budget justification for transmittal to
the U.S. Congress. This justification shall encompass all
U.S. activities, strategies, and policies for Sub-Saharan
Africa.
(d) In addition to coordinating the alignment of U.S.
food assistance programs in accordance with the goal pre-
sented in subsection 2(a)(1) of this Section, the Committee
shall advise the appropriate Federal agencies on the selling
of grant-financed food aid in Sub-Saharan markets. The
Committee should also consider food aid programs which
incorporate incentives for food aid recipients to work on
community or individual programs, as well as those which
generate local currency for use in development or credit to
the the private sector.
? (e) The Committee shall advise Federal agencies on
means to mobilize expanded humanitarian and business involve-
ment in Africa, both U.S. and international, through an
outreach effort with appropriate Federal agencies.
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(f) The Committee shall advise Federal agencies on
means to expand U.S. business involvement in Sub-Saharan
Africa by targeting trade and investment missions, pre-
feasibility and feasibility studies, sector and regional
analyses, access to credit, and information on trade and
investment opportunities in countries undertaking economic
reform.
Sec. 3. Annual Report to the President. (a) The
Secretary of State and the Secretary of the Treasury shall
make a joint report to the President annually on Sub-Saharan
Africa.
(b) Contents of the Report. The annual report shall
discuss the economic condition of Sub-Saharan Africa and
highlight progress being made in the region toward achieving
the goal presented in Section 2(a)(1). The annual report
shall also affirm whether all U.S. economic programs and
policies conform with and support the goal of ending hunger
in Sub-Saharan Africa through economic growth and private
enterprise development.
THE WHITE HOUSE,
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THE WHITE HOUSE
Office of the Press Secretary
For Imediate Release March 11, 1987
STATEMENT BY THE ASSISTANT TO THE PRESIDENT
FOR PRESS RELATIONS .
Today, the-?resident is announcing an initiative to help end
hunger in sub-Saharan Africa by establishing a common long-term
goal for all U.S. economic programs and policies in sub-Saharan
Africa: to end hunger in the region through economic growth,
policy reform, and private sector development. The United States
will also seek to promote donor coordination on comprehensive
structural adjustment as well as on assistance programs and will
continue its efforts to encourage the constructive involvement of
the U.S. private sector in promoting African economic growth.
Last May, at the UN General Assembly Special Session on the
Critical Economic Situation in Africa, African leaders committed
themselves to economic policy reforms designed to unleash the
energies of their productive sectors, and requested donors to
review the quality of their assistance programs in order to
further this goal. The United States intends to respond to the
Africans' request. Their commitment to recovery and reform
deserves our support. while Africa has recovered from the
1984-85 famine, its economic situation remains precarious and the
threat of famine and the reality of poverty coutinue to cloud
_
Africa's future.
Last September, the President established a White House Task
Force to lead an interdepartmental review of U.S. economic
policies and programs for sub-Saharan Africa. The Task Force,
joiLtly cht,ired by the National Security Council staff and the
White House Office of Policy Development, included the
Departments of State, Treasury, Agriculture, Commerce, and
Defense; the Office of Management and Budget, the Agency for
International Development, the Central Intelligence Agency, the
U.S. Trade Representative, the U.S. Information Agency, the Peace
Corps, and the Overseas Private Investment Corporation. The Task
Force has conpleted its work and has recommended a program of
z,ction:
?
MORE
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An Implementation Plan
for the President
ENDING HUNGER IN SUB-SAHARAN AFRICA:
The Challenges and Opportunities
INTRODUCTION
In June 1986, you established a goal for all U.S. economic
policies and programs for Sub-Saharan Africa: "end hunger in
Sub-Saharan Africa through economic growth and private
enterprise development by the end of this century." As
components of this goal, you directed that the level of aid
provided a given country be directly related to its willingness
to promote the private sector, that the help of other donors be
coordinated toward the same goal, and that the U.S. private
sector and public opinion be mobilized.
This report constitutes the implementation plan you
requested the National Security Council and the Office of
Policy Development to prepare. A National Security Study
Directive was issued and an interagency task force, consisting
of 15 departments and agencies, developed this plan under a
joint NSC-OPD chairmanship.
Your initiative is the first comprehensive, systematic
U.S. program for Sub-Saharan Africa which has been designed to
focus donor, recipient, and multilateral economic activities on
the same goal. In short, there has never before been a program
presented to the Congress which -- if adopted by Africans and
donors alike -- would give such assurance that the tragic
problems of that region might be significantly eased. This
report outlines such a program. The Task Force believes that a
comprehensive program would be more saleable and popular than
any individual proposal.
The goal of the Task Force was to develop a policy
structure which would improve the effectiveness of our programs
regardless of the level of funds available. Even at current
resource levels, the program will enhance the effectiveness of
U.S. and other donor assistance and has the potential for
saving future expenditures which would be required for relief
in the event future famine occurs.
It is important to note that the other donor nations and
the African governments in the region tend to judge the
seriousness of the American commitment by the level of our
funding and not the level of our rhetoric. Today, Sub-Saharan
Africa needs both policy reform and more resources, but those
resources can be generated in many ways -- from export
earnings, foreign investment, foreign aid, or in other ways.
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The World Bank projects that the region needs an additional
$1.5 billion per year -- other estimates are as high as $4
billion -- beyond the $8 billion now provided in total foreign
assistance, if there were no increase in the effectiveness of
aid, no increase in exports, and no easing of its debt problem.
All agencies participating in the Task Force agree,
however, that just giving Sub-Saharan Africa more food and
money without policy changes would cause more harm and human
suffering. We believe that foreign assistance can and must be
made more effective in stimulating economic growth and income
generation among the region's poor. To be effective, any
policy focused on growth will require substantial policy
reform. Countries undertaking difficult reforms will be able
to generate additional resources and use those resources more
effectively to speed up the development process.
FINDINGS OF THE TASK FORCE
Finding 1.
Without policy reform, the economic base of many African
countries in the region will continue to erode for the
foreseeable future, thereby increasing both the risk and the
severity of future climatic impacts.
Sub-Saharan Africa is the poorest and least developed
region in the world. Its economic problems, however, are not
just a result of the region's poor physical endowments hut have
been exacerbated by government policies which served to stifle,
not promote, economic growth. Policy decisions kept exchange
rates too high and interest rates too low -- often below the
rate of inflation. Government bureaucracy became the vehicle
for allocating credit and access to foreign exchange. Trade
barriers proliferated. Government pricing policies and
marketing boards forced the farmers to subsidize urban popula-
tions. In short, government entered virtually every phase of
economic activity, foreclosing opportunities for private sector
enterprise and growth.
High commodity prices masked the effects of these policies
for years. But, when the inevitable price cycle turned
downward, the results of these misdirected policies were
predictable. Low-income Sub-Saharan Africa invested an average
of 19 percent of GDP through the 1970s. Rather than produce
growth, as it did elsewhere, investment in the region produced
decline. The 1960's growth rate of 3.6 percent fell to 2.3
percent in the 1970s and 0.7 percent in the 1980s. Agriculture
was particularly hard hit. Per capita food production fell by
1 percent a year from 1973 onward, while the rest of the world
was increasing food output. Finally, exports dropped by 14
percent in real terms at a time when world trade increased
7 percent annually.
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The sad truth is that Sub-Saharan African countries as a
whole, and low-income nations of the region in particular, are
less able to feed themselves today than they were at
independence. Indeed, over the past two decades, per capita
food production has plummeted by about 20 percent in contrast
to Asia and Latin America where per capita food production has
been steadily increasing as illustrated in Graph 1. The daily
calorie supply in low-income Sub-Saharan African countries as a
percentage of requirements was 13 percent below that of all low
income countries worldwide before the recent famine.
Map 1 shows that all but 10 countries in the region were
existing on less than 100 percent of daily food requirements in
pre-famine 1982 even when food aid was included. The actual
impact was much worse in rural areas, given the propensity to
support urban areas and the poor distribution system in most
countries. By comparison, industrial market economies averaged
about 133 percent of required daily caloric intake. Even
before the famine, some 44 percent of all Africans consumed
fewer calories each day than the UN Food and Agricultural
Organization thinks necessary to sustain an active working
life.
This poor performance, however, has begun to turn around.
Improved agricultural policies and incentives, encouraged by
the U.S. and the World Bank, have combined with better
post-drought weather to improve agricultural production in 1985
and 1986. While data are still incomplete, at least 10
countries show a surplus in coarse grains in 1986. Zambia has
increased agricultural output by about 30 percent over the last
three years.
Map 2 presents GNP per capita in U.S. dollars in 1984--the
year that the most recent famine began. As can be seen, at
least 19 countries had per capita GNPs below $300 per year, as
compared to an average of $11,060 for all industrial market
economies for the same period. However, even these figures
understate the actual poverty of rural areas since most of the
wealth is concentrated in the cities.
Although solid data are yet to be aggregated, informal
indications are that the underlying economic base in
Sub-Saharan Africa has weakened since the famine. Indeed,
Sub-Saharan African countries will have to do a great deal just
to stay in the same place they find themselves in today. At
the current population growth rate of 3.2 percent a year, food
supply for the region would have to double in less than 22
years and quadruple by the year 2025 lust to maintain the
current level of food availability and caloric supply.
Even the most optimistic forecasts anticipate a decline in
per capita income for the region over the next 10 years. In
addition, according to the World Bank, the region's debt burden
prior to rescheduling will continue to grow, with most of its '
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Food Production, Per Capita, 1972-83
Index: 1972=100
120
115
110
105
100
95
90
85
80
I I I I I I I I I I I I
75 1972 75
Latin America
Asia a
Sub-Saharan
Africa
80 83
a Asia excludes Japan and China
Source: UN Food and Agricultural Organization
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Sub-Saharan Africa:
Daily Calorie Supply as a Percentage of Requirement, 39 Countries, 1982
Cape
q.Verde
Dak"* Senegal
Banjul
The Gambia= ?
Bissau
Guinea-Bissau Guinea
Conakry),
fremown*
Sierra Le
North Atlantic
Ocean
El Amid
Wes ern
iShara
; Mauritania
rNotakchott
Rabat
Monrovia
Libe,
Algeria
Mali
Bamako
urkin
?nagtangos
Ivory
Abirf
Togo
hate
era
? %tims -
Tunisia Mediterranean Sea
Tripoli
Niger
nM
Nigeria
Coast
pan
Port; \?,,.
Novo
Malabo
Equatorial Guinea
Sao Tome & Principe.e
Sin Tome*
South
Atlantic
Ocean
Libya
Central
African Republic
ameroon Bangui
*Ttound
VULibreville
abon
Con o
Zaire Rwanda
Burundi
Brat:evil(e
Black Sea
f0*
Egypt
Khartraim.,
Sudan
Kinshasa
Wads
100-128 percent
91-99 percent
81-90 percent
71-80 percent
1-1 70 percent or less
Industrial market economies: 133 percent
All low income LDCs: 105 percent.
Angola
Namibia
Windhoek
S. Air.
anda
\Red
Sea
c:? DI1O0titi
Addis
Ababa*
Ethiopia
Kenya
I.
*Nairobi
1
?/
SO
'Oar es Salaam
Zambia
Lanka*
?Botswana
Gaborone
South
Africa
alawi
Ofigwe
Harare*
imbabwe
Mozambique
*,Maputo
aziland
Pritteria
Atbabon
qty.;
eiotho
alia
Mogadishu
Comoros
*Moroni 4
?
tJl
At,
Madaga
rr,
Victoria*
Seychelles
Indian
Ocean
nanarivo
car Mauritius
C Pert
Louis
1000 Kilometers
1000 Miles
Boundary representation is
not necessarily authoritative.
708796 1800206) 10-86
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Sub-Saharan Africa:
Gross National Product Per Capita in US Dollars, 1984
Cape
t" Verde
I ?
.*.
Praia
Nortt,
Ocean
El Asipt ?
Western
Sahara
Mauritania
lir Nouakchott
Oaker*senegai
Banjul
The Gambia-1-7,- ?
Bissau*,
Guinea-Bissau Guinea
corion,
Framown*
Sierra Le
Monrovia
Lube
Rabat
CCO
Algeria
? 1116,..,
4.
Mack Sea
.51------*Ttinii\-? (--\._.--,..--,
Tunisia Med,tetranea, Ses
' WIWI'
,.........,
Libya
nmn
Chad
WihaMITI
Sao
South
Atlantic
Ocean
Togo
hanLome d
Nigeria
lopos
A r
Porta:\
Novo L.A..?
? Malabo
Equatorial Guinea
Tome & Principe,e
Sin Tome`
F_J
$1,001-$3,480
$501-$1,000
$301-$500
$151-$300
$150 or less
Industrial market economies: $11,060
Lower middle income LDCs: $750
Cairo*
Egypt
Central
African Republic
ameroon Bangui
\ *Ysound
*.Ulur.ailln u'
\Gabon
Brauavi
Khartoum*
Sudan
Con
Zaire Rwanda
Burund
Kinshasa
Luanda .\
Angola
S. Aft.
Red
Sea
l'ADjibOUEr 1:1Ilb?1*i
Addit
Ababa*
Ethiopia ?
So alia
anda Kenya
clakevata
* h *5j)
Bujumbura
.-,Tanzania
Namibia
* ?Botswana
Windhaak
Gaborone
Harare*
mbabwe
Pritoris
Mbabane
South eA2r
Africa stesotho
alawi
*Eilingwe
Oar es Saturn
o'
1
Mogadishu
Comoros
i?noroni
Madaga
Moiiambique
Maputo
aziland
Victoria*
Seychelles
Indian
Ocean
nanativo
car Mauritius
C Port
Louis
1000 Kilometers
1000 Miles
Boundary representation is
not necessarily authoritative.
7087971800206) 10,86
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available financing dedicated to stabilizing current
arrearages, not promoting growth.
Thus, while the average Sub-Saharan African today has a
standard of living which is no better than experienced by his
father a generation ago, his children will be worse off in the
absence of dramatic change.
Finding 2.
Mere increases in donor assistance will not solve the problem.
Blank checks and overly zealous food shipments are neither
helpful nor acceptable.
Inadequately conditioned budget support and food aid
result in subsidies which reduce the pressure for reform and
escalate the need for additional foreign assistance. Thus,
mere increases in donor assistance can cause more harm than
good, if the effect is only to substitute for rather than to
support reform. In fact, inadequately conditioned assistance
can create totally dependent states with ever-weakening
economies, increasing political instability, and increasing
threats to our national security.
Finding 3.
To be effective, any strategy to end hunger in Sub-Saharan
Africa must overcome the barriers to investment, growth and
intra-regional trade.
The first barrier to economic growth is political. Upon
independence, many Sub-Saharan African governments adopted
centralist policies in a misguided attempt to gain control of
their economies and to redistribute income. They set prices,
subordinated economic considerations to ideology, and focused
on placating urban populations at the expense of rural areas.
This type of political barrier has only lust begun to break
down throughout Sub-Saharan Africa as governments have begun to
adopt reforms based on free-market, private sector prescrip-
tions.
Another political barrier to growth is instability. For
many Sub-Saharan African governments, recent economic troubles
are only the latest in a line of problems threatening weak
governments struggling with the politics of multitribal states,
internal dissidents or hostile neighbors, and young, growing,
and restless populations. Over the last 20 years, a
Sub-Saharan African government has been overthrown on the
average of once every six months. Moreover, during this same
period, only Mauritius has experienced a change of government
through a democratic election. Today, six countries in the
region are experiencing active insurgencies, and numerous
others have residual dissident groups. In this climate,
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the tendency of the typical Sub-Saharan African government is
to resist any weakening of central control.
Policy reform implies major shifts in rewards and
opportunities throughout an economy. It means new standards of
accountability within the public sector. It brings an end to
monopolies and the introduction of market disciplines of profit
and capital formation. Rapid economic change, particularly if
pursued under conditions of continued hardship, can threaten to
upset existing political order.
Those countries willing to consider change in spite of the
political risks confront very real financial barriers. Scarce
foreign exchange is consumed by debt servicing. Paying for
past mistakes leaves little to produce economic growth.
Without rescheduling, debt service on existing obligations will
consume some 40 percent of all export earnings through 1990 for
the low-income Sub-Saharan African countries. For seven
countries (Sudan, Somalia, Madagascar, Mali, Zambia, Tanzania,
and Guinea-Bissau), the debt service burden without
rescheduling will be greater than 50 percent of export
earnings. Even some countries with a much lower debt service
ratio have difficulty meeting their obligations. For both
Zaire and Liberia (debt service ratios of 24.1 and 20.8
percent, respectively) servicing past debt consumes more than
50 percent of their national budgets. Proportionally, for
these countries, this is a greater challenge than the one
confronting either Brazil or Mexico.
The debt burden seems even greater when one realizes that
the source of hard currency -- exports -- is a weak base. The
simple fact is that Sub-Saharan Africa is heavily dependent on
commodity exports to generate foreign exchange for debt ser-
vicing. Approximately 87 percent of its total export revenues
are generated by commodities such as copper, gold, oil, coffee,
and cotton. By comparison, the other low-income countries of
the world are able to aenerate more than 50 percent of their
export earnings from manufactured goods. Thus, the region has
been especially vulnerable to developments in primary commodity
markets. Continued weakness in these markets has translated
into a prolonged decline in the overall volume of exports from
the region. It has also meant an erosion of profitability in
the export sector; average unit value for Sub-Saharan Africa
has dropped 18 percent since 1980. Moreover, not only did
world commodity markets weaken over the period 1973-1983, but
Sub-Saharan Africa as a whole lost ground to other producing
nations and regions in full?, 19 of 25 major commodities.
Finding 4.
Increasingly, Sub-Saharan African countries are coming to the
conclusion that policy reform is the sine qua non for finding
new growth and the resiliency to repulse famine.
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The desperateness of their economic condition has forced
many Sub-Saharan African leaders to seek changes in their
economic policies. The U.S., the World Bank, and the IMF have
played a major role in this process of economic policy
reevaluation both with an expanded analysis of the economic
situation, increased dialogue with African policymakers, and a
start at redesigning assistance programs. At the U.N. General
Assembly Special Session on the Critical Economic Situation in
Africa in May 1986, leaders in the region uniformly accepted
responsibility for failed economic policies (many for the first
time). They committed themselves to reforms designed to
promote the growth of the productive private sectors of their
economies, especially agricultural development.
These commitments were not made lightly. The price of
economic reform can be high in political terms. Gambia,
for example, has just begun to streamline its bloated
bureaucracy -- by reducing its civil service by 24 percent.
Thus, some of the best educated citizens have been dumped
without pensions, unemployment insurance, or a private sector
to provide jobs. In the U.S. this would equate to about
500,000 federal employees. Zaire, Somalia, and Zambia have
taken similarly difficult actions to devalue currency, realign
exchange rates, and ease internal price controls and
regulations. Austerity measures in Zaire have been so
stringent, that it has had negative growth for the last five
years. While this report was being written, Zambians were
rioting due to a 160 percent increase in the price of corn
meal.
The fact that the Sub-Saharan African countries are
willing to take such drastic steps is, in many ways, a
recognition of what the Administration and the World Bank have
been saying and doing for the past six years. The
Administration has put into effect the Baker Plan, the African
Economic Policy Reform Program, the Food for Progress Program,
and, in general, has shifted resources to the better economic
performers in Africa to spur reform efforts.
But now the Africans are calling our bet. They have said: we
will listen; how serious are you about supporting our
commitment to economic reform and growth through the private
sector? Will the resources and the resolve to support us be
there?
Finding 5.
Before any economic growth strategy can win the lasting
commitment of African governments in the region, it must meet
four tests:
1. It must sustain and reward performance, while penalizing
the lack of it.
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2. It must represent a truly long-term commitment from both
the donors and Sub-Saharan Africans. It cannot be a
short-term fad. It must be a mature development
partnership.
3. It must allow the cooperating governments to get through
their cash and political crises as austerity measures hit
home.
4. Reform must proceed at a pace that, although meaningful,
is not politically destabilizing.
Implicit in these four tests is a fifth: the bulk of the
donors must speak as one. That is, they must conduct their
programs to a common purpose in a common structure.
Finding 6.
The conduct of Western economic assistance to Sub-Saharan
Africa cannot meet these tests today. It will not induce
growth in the region.
The international system of providing aid to Sub-Saharan
Africa has grown significantly since independence. However,
this assistance is largely government-to-government aid with
little common purpose and often feeble conditionality. By and
large, it is not yet equipped to deal with the crisis
confronting Sub-Saharan Africa today.
The U.S. program has expanded assistance to the private
sector both directly and, most importantly, through pushing for
liberalized economic policies that unfetter the private sector.
However, there are still too many special interests and
concerns reflected in the U.S. program. These markedly reduce
our flexibility to respond fully to the rapidly evolving
environment in Africa.
In too many cases, we still find support programs whose
dominating concerns reflect the needs and capacity of the donor
and creditor agencies, rather than the demands of the reform
process. To cite only a few examples:
Food assistance programs have by and large tended to
reflect donor needs and commercial interests with scant
attention to their impact on recipient country reform and
development programs. As a consequence, real agricultural
incentives for production are undercut. In response to
this evolving situation, the USG has cut its FY 1987 food
aid program in Somalia in half and is looking to
substitute commodities which do not compete with Somalia's
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newly reinvigorated agricultural sector. Other food
donors have been less responsive.
Debt management policies have remained focused almost
exclusively on short term financial crises, to the
exclusion of any consideration of longer term solutions
for creditor nations. The unfortunate truth is that for
most debtor countries, debt reschedulings remain the
only debt management tool, even in cases where it is plain
that countries will never be able to retire their debt.
Zaire's debt, for instance, has increased substantially,
almost entirely as a result of regular repeated
reschedulings. For Zambia, Sudan and Somalia, the problem
is much the same.
Bilateral programs have at times been poorly focused,
dominated by short term political considerations, and/or
offered on terms and in forms inappropriate to the
adjustment efforts underway in these Sub-Saharan African
countries. In Sudan and Liberia, for instance, U.S.
assistance was offered in support of clearly insubstantial
adjustment programs. Similarly, Italian and European
Community aid to Ethiopia has tended to substitute for,
rather than to support, reform. But, largely with U.S.
and World Bank leadership, there are also a growing number
of programs, such as in Zambia and Malawi, which have been
focused clearly and directly on adjustment and growth
efforts.
Multilateral institutions have had difficulty in dealing
with Sub-Saharan Africa's circumstances. Africa's
combination of macroeconomic and structural difficulties
cuts across institutional responsibilities. Close
collaboration among international financial institutions
has, in many cases, lust begun in an effective way.
Enhanced collaboration is needed if the financial system
is not to become a drain on resources in Sub-Saharan
Africa, especially in countries such as Sudan, Liberia,
Zambia, Zaire, and Ghana.
In other cases, institutional rigidities have blocked
effective action. Inflexible budgetary processes, for
instance, have often left us and other donors locked into
bilateral aid commitments and programs whose justification has
been lost or, more often, overtaken by higher priority needs.
Functional accounts within the development assistance budget,
for instance, are a product of the "basic human needs" strategy
of the 1970s. Unfortunately, such a structure is completely
inappropriate for the 1980s, undercutting our capacity to
deliver timely and appropriate assistance to countries
undertaking maior policy reforms, even in cases where those
reforms are geared to redressing policy abuses which have
punished the poor.
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Finally, aid coordination has remained a problem. Too
often, bilateral and multilateral programs have run at cross
purposes. The U.S. has been less guilty of this than other
donors. In fact, we have done more over the past five years to
promote donor coordination than any other donor. Nevertheless,
even in our own programs, incidents have occurred where
coordination has broken down. For instance, attempts to
privatize food marketing in Kenya failed in part because of
poor coordination between the United States, the World Bank,
and the IMF. Similarly, in Somalia, efforts to develop an
efficient and effective public investment program were
frustrated by Italian refusals to adapt their aid programs to
the overall context defined by the World Bank.
The consequence of these factors -- inefficient programs,
inflexible institutional arrangements, and poor aid
coordination -- has been to leave us crippled when facing the
multitude of problems in Sub-Saharan Africa today.
Finding 7.
The U.S. bilateral economic policies and programs for
Sub-Saharan Africa as currently structured cannot meet your
goal, nor induce the necessary changes from other donors?in the
absence of a commitment to coherent economic principles and
more effective delivery of economic assistance.
Over the last six years, this Administration has made
great strides in increasing the effectiveness of economic
assistance. It has more and more become an investment for
growth and not a subsidy of the status quo, especially in
Africa. This has built the base which makes a new initiative
possible.
In spite of the progress of the last few years, U.S.
economic policies and programs, like those of other donors, are
still focused on a multiplicity of purposes. Beginning in
1973, U.S. assistance was dominated by a Congressional
philosophy of "basic human needs." Yet, when the need was so
great, it was too easy to focus only on easing the suffering of
the moment. With each need and new fad, another special
interest group was formed and yet another program was
developed. Many now operate inefficiently with limited
coordination between programs or to the national economy. The
result has been tolimit flexibility in setting or reaching a
goal of ending hunger based upon economic growth.
Ironically, the system created in the name of human needs
has become se1f-servin4. It is not now responsive to the needs
Of the Sub-Saharan African people. For the past 15 years,
approximately 90 percent of all U.S. assistance to the region
went to governments. While this percentage has begun to decline
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somewhat in recent years, much more needs to be accomplished to
enhance the environment for a stronger private sector.
Finding 8.
Your goal of ending hunger is ambitious but essential.
The Task Force believes that a bold and concerted
international effort is needed if we are to have a prospect of
ending hunger in Sub-Saharan Africa by the end of this century
through economic growth and the development of private
enterprise. Ending hunger in this context means an economy
sufficiently strong that it can meet the food needs of its
citizens through local food production and, as necessary,
commercial purchases of food on the world market. An economy
which meets this test need never fear a famine.
Qualifications, however, are necessary. Vanquishing the
specter of famine in Sub-Saharan Africa will require that:
- -
- -
- -
governments in the region actively promote the private
sector, ease their control of the economy, and sustain
their recent efforts at economic reform;
major donors, led by the U.S., place economic growth as
their first priority, and focus their efforts toward that
end; and
we recognize that the fight to end hunger will not be won
in every case but, rather, in the overall context of what
can be achieved on a regional basis. The condition of
individual countries will continue to vary widely with
some progressing more rapidly than others.
A Program for Implementing Your Policy Goal
In crafting a comprehensive program to implement your
policy goal, the Task Force concluded that only a special
effort for Sub-Saharan Africa could capitalize on the
opportunity now present and overcome the barriers to growth.
The heart of the special effort would be to erect a policy and
budget fence around Sub-Saharan Africa for all U.S. assistance
programs and actiYities. Outside the fence, this region would
compete on the basis of strategic and budgetary considerations
with all claimants. Inside the fence, however, economic growth
geared to the elimination of hunger would be the priority and
the standard by which all U.S. actions are judged.
The specific proposals discussed below are presented in
that context. They are intended to create a special policy for
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Sub-Saharan Africa without affecting our policies and programs
for any other region of the world. Each of the proposals is
designed to contribute to at least one of the four program
characteristics we believe necessary to achieve your goal:
1. All U.S. economic policies and programs for Sub-Saharan
Africa should be consistent with your goal.
2. The policy, budget, and program structure available to the
U.S. for each Sub-Saharan African country should be
tailored to the exact needs of that country to optimize
achievement of the goal.
3. The level and form of U.S. policies and programs should be
directly related to the degree of active policy
cooperation from the Sub-Saharan African countries.
4. The U.S. should "speak with one voice" in its dealing with
the multilateral organizations, with Sub-Saharan African
governments and with other donors on economic issues for
the region.
Consistent with these characteristics, the Task Force has
developed a comprehensive program designed to have the maximum
impact on the other donors and African countries in the region.
This program envisions a refocusing of objectives to ensure
more effective use of existing resources to reach your goal; it
also proposes forthright actions and solutions. It will,
however, require recognition that there is a projected
continuing resource gap that must be narrowed either through
increased exports, debt relief, enhanced aid and investment, or
some combination of those factors if we are to achieve growth
for the entire region. None of these areas presents easy
choices.
A PROGRAM FOR ENDING HUNGER
IN SUB-SAHARAN AFRICA
Action 1.
Negotiate through the IMF/IBRD policy process long-term
compacts with each Sub-Saharan African country that establishes
long-term structural adjustment and reform programs.
These compacts would have a uniform and consistent goal
for all donors and recipients: ending hunger in Sub-Saharan
Africa by the end of the century through economic growth and
private sector development. Essentially, these compacts or
agreements would emphasize longer-term cooperation tied to
progress toward achieving economic reforms; non-project lending
and assistance where possible; reduction of tied aid
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requirements among the donors; support for the indigenous
private sector (including privatization of government managed
corporations and central planning boards); and an explicit
understanding that we are not offering to cover expanded public
investment programs or to fill all gaps and shortfalls.
Moreover, donors would agree to provide technical advice in
areas of capital markets and flight, trade promotion, and
domestic resource mobilization.
Since Secretary Baker proposed the IMF/IBRD policy
framework in Seoul, significant progress has been made toward
developing compacts where all donors agree with interested
Sub-Saharan African governments on an overarching macroeconomic
structural adjustment framework, coordinated through the Bank
and Fund, the UNDP, or other appropriate mechanisms, to
establish country targets for growth and economic reform. It
is important to strengthen this process. Policy Framework
Papers and Public Investment Programs would be based on these
general agreements, and would provide the operational building
blocks for donor cooperation with Sub-Saharan African nations.
Existing donor project portfolios would be adjusted to support
agreed country strategies. The final report of the United
Nations General Assembly special session sets forth such a
long-term framework for the African continent as a whole. This
effort is remarkably consistent with our vision of where
Sub-Saharan Africa development should go at the country level.
In this regard, it is encouraging to note that Kenya has
already developed a 15-year development framework. Finally,
donors must be willing to cut back aid when recipient countries
do not meet objectives in these compacts.
Action 2.
Create a separate budgeting account for Sub-Saharan Africa in
order to better focus U.S. assistance programs on economic
policy reform and private sector development.
As proposed in the 1988 budget, a special Development Fund
for Sub-Saharan Africa should be created. It will combine
development assistance and growth-related economic support
funds under the management responsibility of the Administrator
of the Agency for International Development.
Legislation creating this Fund would also eliminate the
current functional account breakdowns. This action will
provide the flexibility necessary to continue to reward
progress in countries which have already embarked upon
incentive economic reform programs at considerable political
risk, as well as expand these incentives to other countries
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willing to undertake such market-oriented prescriptions and
approaches. This consolidation will also facilitate the
shifting of resources from project-specific assistance to
program funding. In addition, it would permit the carry-over
of obligational authority from fiscal year to fiscal year.
(Legislation would be required.)
Finally, the Administration would present to Congress a
single statement that would outline strategies to meet your
goal in Sub-Saharan Africa. (Coordination of this report is
discussed in Action 7.)
Action 3.
Strengthen multilateral arrangements to address Sub-Saharan
Africa's crushing debt burden.
The U.S. should lead an international effort to encourage
donors to increase the ?funds directly associated with the
International Monetary Fund's Structural Adjustment Facility
(SAF) for the 1986-91 period. Innovative approaches should be
actively pursued, including seeking greater contributions from
such countries as Japan, Italy, and the Federal Republic of
Germany. Additional funds would be used by the IMF and
eligible countries to replace the current high-cost, short-term
exposure of the IMF in Sub-Saharan Africa. In addition, we
should urge that creditor nations of the Paris Club permit the
rescheduling of official debt for the region on the basis of
IMF Structural Adlustment Facility programs where appropriate.
The United States should also continue to encourage a
longer-term, growth-oriented focus on the part of both the
International Monetary Fund and the World Bank in the
preparation of Policy Framework Papers for African countries.
Moreover, we should work with both the IMF and the World Bank
to strengthen formal training programs for upgrading debt
management capabilities. Such programs should include the
provision of technical assistance to develop better accounting
and data systems, as well as advice on loan structure, currency
exposure, and possible fund raising techniques.
Finally, the Secretary of the Treasury should actively
seek solutions to the growing problem of IMF arrearages in
Sub-Saharan Africa that will not exclude reform-minded
countries in arrears from the international financial system,
threaten the financial integrity of the IMF, or compromise
funding for growth in Sub-Saharan Africa. All sound solutions
to this problem should be explored.
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Action 4.
Increase U.S. bilateral efforts to ease Sub-Saharan Africa's
debt burden.
U.S. creditor agencies should, within their legislative
mandates, seek to reschedule their non-concessional debt at
rates no higher than current cost of funds plus administrative
costs. The Secretaries of State and Treasury should also
explore other ways to alleviate the African debt burden,
including possible amendments to the Foreign Assistance Act
where appropriate. The U.S. should also encourage the
development of secondary markets for Sub-Saharan African debt,
with OPIC support as appropriate.
Action 5.
Align U.S. food assistance programs in accordance with your
goal.
Food assistance activities for countries with per capita
income below $550 per year should be converted to grants for
those recipients willing to undertake appropriate economic
reform within the framework of a long-term compact. The United
States should pay for ocean transportation of food commodities
for these same countries to the port of entry where a clear
inability to pay exists. The new Coordinating Committee for
Sub-Saharan Africa (proposed in Action 7) shall advise
appropriate agencies on the selling of grant-financed food aid
in local markets. Food commitments should be made on a
multi-year basis for countries undertaking economic reform.
Appropriate food barter programs such as triangular
transactions should be encouraged. U.S. food assistance
activities should take place in the context of country-specific
development strategies, which would orient individual country
programs to the goal of ending hunger in Sub-Saharan Africa.
In this regard, the Coordinating Committee should also consider
food aid programs which incorporate incentives for food aid
recipients to work on community or individual programs, as well
as those which generate local currency for use in development
or credit to the private sector. (Legislation would be
required.)
Action 6.
Promote continued and improved access to world markets for
exports from low-income Sub-Saharan Africa to reward good
performance.
In anticipation of increased exports from the region as
economic policy reform takes hold, the U.S. should work with
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other donors to ensure that markets remain open, and that
protectionist pressures are not allowed to stymie the process
of economic development. In addition, the United States should
encourage countries in the region to fully exploit current
opportunities under the Generalized System of Preferences.
Moreover, the United States should highlight to the U.S.
private sector those African countries which provide adequate
investor protection. OPIC insurance and financing programs,
including the proposed Africa Growth Fund, should be used to
support direct investment in Sub-Saharan Africa for those
countries which comply with U.S. investment policy principles.
Action 7.
The interagency administrative structure should be strengthened
to ensure that all U.S. assistance programs and policies for
the region are consistent with your goal, each country has a
comprehensive program tailored to its specific needs, the U.S.
Government is united in its dealings with other donors and
potential recipients, and the overall level of aid we offer is
related to a country's continued performance or willingness to
undertake additional economic reform.
A formal, high-level coordinating committee should be
established within the Executive Branch and be responsible for
implemention of your program for the region. Although
statutory authorities of agencies would remain unchanged, a
strong coordination and monitoring mechanism within the
Executive Branch created by Executive order wil assure
compliance with your goal over the 13-year implementation
period. This new Coordinating Committee for Sub-Saharan Africa
should be under the policy direction of the Secretaries of
State and Treasury. Senior officials of the Agency for
International Development and the Department of the Treasury
should serve as Chairman and Co-Chairman, respectively. The
Secretaries of State and Treasury should make a joint status
report to you annually. This report would highlight progress
being made in the region, as well as affirm whether all U.S.
economic programs and policies conform with and support the
goal of ending hunger in Sub-Saharan Africa through economic
growth and private enterprise development. (An Executive Order
would be required to assure continuity.)
In addition, any budget proposal designed to have a
positive impact on achieving your goal will require much closer
coordination among the various agencies in their Congressional
presentations. Accordingly, a new committee should coordinate
preparation annually of a unified justification for transmittal
to the U.S. Congress (as discussed briefly in Action 2). This
justification would encompass all Administration activities,
strategies, and policies for the region.
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Action 8.
Mobilize the U.S. private sector to complement African and
donor efforts.
Private voluntary efforts and private business have contributed
substantially to humanitarian relief and economic growth in
Africa. This private involvement should be encouraged to
expand to help meet your goal for Africa. The new Coordinating
Committee on Sub-Saharan Africa should be tasked to mobilize
expanded humanitarian and business involvement in Africa, both
U.S. and international, through an outreach effort with
appropriate Federal agencies. The Committee should seek ways
to expand U.S. business involvement by targeting trade and
investment missions, pre-feasibility and feasibility studies,
sector and regional analyses, access to credit, and information
on trade and investment opportunities on countries undertaking
economic reforms. These programs should be coordinated through
the Department of Commerce, the Agency for International
Development, the Overseas Private Investment Corporation, the
U.S. Trade and Development Program, and the Export-Import Bank.
ASSESSMENT OF THE PROGRAM
The Task Force believes that this program represents the
best opportunity to assist countries in Sub-Saharan Africa to
end hunger by the end of this century. It is a framework which
will offer the greatest inducement to both the countries in the
region and the other donors to promote economic growth. Even
with optimal implementation of this program, hunger may not be
eliminated in every country. Nevertheless, the past per-
formance of several countries attests to the possibility of
sustainable economic growth in Sub-Saharan Africa when the
economic environment is conducive to such growth. Botswana's
economic growth has exceeded 10 percent per year since 1963;
growth in Rwanda and Swaziland has exceeded 5 percent per year.
Even countries with the most statist traditions have recently
demonstrated that liberalization of their economies can have a
strong and positive economic impact. Zambia's .gricultural
production has grown by almost 30 percent in three years after
a decade of decline and industry grew by 9 percent last year.
The prospect of widescale famine certainly can be eliminated.
The Task Force's implementation plan will position the
U.S. to provide effective leadership for the donor community to
focus economic policies and programs to more effectively
support structural adjustment and economic growth in Africa.
The program will provide greater flexibility in the application
of resources committed to Africa while providing consistent
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criteria: reform, private sector development and economic
growth. This is essential to stimulate broad-based growth,
without which hunger cannot be overcome. At the same time,
focusing our assistance efforts on those countries that are
effectively helping themselves will have important
demonstration effects in Africa, and here in Washington in the
competition for scarce budgetary resources.
Finally, the program is predicated on a long term goal,
which can be met only with a consistent commitment of
resources. The separate account will help shield Sub-Saharan
Africa from the effects of budget cuts imposed by Congress as
long as economic growth in Sub-Saharan Africa remains a high
priority. Currently, the bulk of funding comes from
development assistance funds reserved for low-income countries.
Therefore, this treatment does not distort aid funding in
support of other U.S. foreign policy objectives.
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