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	December 1998

On 3 and 4 August, the UNU Headquarters hosted a conference on Asia and Africa in the Global Economy, with the goals of comparing systematically the African and South-East Asian linkages to the global economy and suggesting ways for African countries to increase and improve these external links.

The week before TICAD II, the UNU Centre hosted a workshop and public forum on African development. Experts first presented and discussed the most recent research on key challenges to African development from an institutional perspective in closed workshop sessions on 14 and 15 October. The following day a public forum, "African Development in the 21st Century," drew hundreds of diplomats, government officials, students, citizens and media representatives to listen to presentations by nearly 20 scholars and policy makers. Discussion focused on the challenges of poverty reduction, of strengthening Africa's participation in the global economy and of revitalizing the state in Africa. The forum was a rare opportunity for the public in Japan to hear directly from - and ask questions of - African policy makers and researchers, as well as representatives of the World Bank and African Development Bank.

Making aid count

The August conference on Asia and Africa in the Global Economy featured many contrasting points of view. Among the most lively exchanges took place at the session on Foreign Aid, Debt and Development between the Asian Development Bank's Haider Khan and Sam Wangwe of Tanzania's Economic and Social Research Foundation.

Both Khan and Wangwe focused on measuring and increasing the effectiveness of aid, but from greatly differing perspectives. Khan stated the thesis of his remarks about the South-East Asian experience thus: "The issue is accountability: What is done with aid?... Are the allocations within development programmes effective?"

This is not strictly quantifiable, he noted, because "One cannot really expect bureaucrats to be completely rational" when uncertainty is endemic in their societies. Thus he proposed that interactive bureaucratic models must consider "bounded rationality."

Khan said one of the major impediments to capacity building is the persistent relative weakness of secondary education in all the developing countries he discussed. This is a promising area for long-term returns from aid, he said, particularly given that he has found no persuasive evidence that aid has led to poverty alleviation in South-East Asia, though it has been shown to work indirectly in other areas.

Khan also questioned the efficacy of aid as a stimulus for foreign capital investment: "There is a translation problem here; aid hasn't translated into investment dollar-for-dollar."

He concluded, "The main lesson to be learned is that aid bureaucracies can be self-serving, both donors and recipients." Thus a longer-term perspective is critical for the strategic vision required for institution building.

"Aid addiction" dilemma

Tanzania's Sam Wangwe took a different perspective on African countries making the most of aid. He observed that, along with trade and investment, aid is one of Africa's three major links to the global economy. Yet even in the context of economic turnaround in sub-Saharan Africa, the trends over the past decade are unclear.

As Khan also noted, even countries such as Indonesia, which until recently enjoyed stability as well as steady income from oil exports, have been found, in the words of Benedict Anderson, to suffer from a syndrome of "aid addiction."

What is clear, Wangwe said, is that "Aid has been positive wherever it has been complemented by the policy environment" in recipient nations. Unfortunately, in many African countries weak policy environments have undermined aid efforts.

At the Public Forum on 16 October, UNU Rector Hans van Ginkel greets Malawi's Finance Minister Cassim Chilumpha, the keynote speaker of the Forum.

He cited four dimensions of the policy environment:

• The micro-economic environment is crucial because instability undermines aid efforts. Indicators to be monitored in this respect include budget surplus or deficit, inflation rates, and the economy's openness to international linkages.

• "Commitment capacity" is significant because aid recipients tend to value continued flows of aid rather than contractual arrangements based on performance. He paraphrased this perspective as: "Give me the money and don't ask any questions."

• The aid relationship itself is reflective of outmoded or innovative policies, because historically in Africa, aid recipients have been passive and donors active.

• Finally, Wangwe cited weaknesses in "ownership of the aid agenda," due to deficiencies in educational resources and other capacity-building efforts.

Wangwe's most urgent remarks addressed African nations' debt burden, asserting that this undermines aid efforts. He noted that compared with other regions, foreign debt continues to grow fastest in sub-Saharan Africa.

Yet this region has the fewest resources to help it shoulder foreign debt; in some nations, he said, debt service amounts equal up to 40 per cent of exports value.

Despite some discussion on these insurmountable problems, relief has not been forthcoming - and postponement of the issue only compounds the debt problem.