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Afrcan Sustainable Development.

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    IMF Lists Conditions for Sustainable Development in Africa

    This Day (Lagos)

    August 21, 2002
    Posted to the web August 21, 2002

    Nneoma Ukeje-Eloagu And Kunle Aderinokun

    Ahead of the United Nations World Summit on Sustainable Development (WSSD), slated for Johannesburg, South Africa, the International Monetary Fund (IMF) has listed conditions needed to bring about sustainable development to Africa.

    Director, African Develop-ment, IMF, Mr. Abdoulaye Bio-TchanZ_ in a statement, yesterday, disclosed areas that the IMF and World Bank are intensifying efforts to help African countries develop, and identified the two key areas in which the rest of the donor community can help to include aid and trade.

    The IMF and World Bank, according to Bio-TchanZ_ would help the continent develop sound financial sectors and obtain access to international investment capital.

    Areas of emphasis would include banking sector reform and improvement in the regulatory environment, adoption of internationally recognized standards and codes, the creation of diversified financial institutions to provide start-up and working capital, and the development of soundly managed micro-finance institutions, in order to support the need of small and medium-sized enterprises and the rural sector.

    Bio- TchanZ_ also noted that the IMF currently provides $3.5 billion Poverty Reduction and Growth Facility (PRGF) and in a joint effort with the World Bank is helping 26 African countries qualify for $41.5 billion of debt relief under the enhanced Heavily-Indebted Poor Country (HIPC) initiative.

    He said the step up of efforts was predicated upon the fact that in the work on debt relief, "we are reminded that the ability to borrow and attract foreign direct investment (FDI) is crucial for financing economic development."

    TchanZ_ highlighted capacity building as another critical area where the IMF is looking to assist Africa. "We plan to establish five regional centers in Africa- the first two in Dar Es Salaam and Abidjan are set to open later this year" he said, to provide locally based assistance and training in the IMF's core areas of expertise including macro-economic policy, tax policy and revenue administration, public expenditure management, macro-economic statistics and building sound financial sectors.

    Proposing donor community assistance in the area of aid and trade, the IMF Director called for African countries to be given better opportunities to expand and diversify their exports.

    He advised industrial countries to help open markets and phase out trade-distorting subsidies beginning with agriculture, textiles and labour-intensive manufactures.

    Similarly, he urged countries to also work to reduce duties on poor countries' processed products, "as such tariff structures push African countries to concentrate on producing raw materials and increase their vulnerability to declines in world commodity prices."

    He acknowledged that African needs are great and appreciated the ambitions of the New Partnership for African Development (NEPAD) as well as the recent economic progress of many countries.

    But he said, "it will be up to the rest of us- the IMF, other international organisations and developed countries to work in partnership with African government and provide the support they need to eradicate poverty and realise Africa's potential."

    Declaring IMF's support of the action plan announced by the G8 countries in their last summit in Canada to increase assistance to Africa, he advocated for stronger assistance as "these countries demonstrate that they are putting the aid to good use."

    Bio-TchanZ_ said that meeting the United Nation's 0.7 per cent of Gross National Product (GNP) target for annual development assistance from the industrial countries would enable both an adequate response to the AIDS epidemic which has been estimated require some $10 billion per year and significant poverty alleviation.

    The IMF Director also observed that development requires both an honest, well functioning state and a dynamic private sector, which many African governments have embraced and are now carrying out the reforms needed to boost private savings and investment, growth and employment. Although the UN summit focus may be the environment, he noted that global attention would be focused on Africa, its progress, ambitions and needs.

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