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UNITED NATIONS
ECONOMIC AND SOCIAL COUNCIL
Distr.: GENERAL E/ECA/CM.2I/15 20 April 1995 Original: ENGLISH
ECONOMIC COMMISSION FOR AFRICA Sixteenth meeting of the Technical
Preparatory Committee of the Whole
Addis Ababa, Ethiopia 24-28 April 1995
ECONOMIC COMMISSION FOR AFRICA Thirtieth session of the Commission/
twenty-first meeting of the Conference of Ministers
Addis Ababa, Ethiopia 1-4 May 1995
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GLOBAL MID-TERM REVIEW OF THE
IMPLEMENTATION OF THE PARIS DECLARATION AND PROGRAMME OF ACTION FOR THE LEAST DEVELOPED COUNTRIES FOR THE 19908
A REVIEW OF PROGRESS AClDEVED BY THE AFRICAN LEAST DEVELOPED COUNTRIES IN THE IMPLEMENTATION OF THE PARIS DECLARATION
AND PROGRAMME OF ACTION FOR THE LEAST DEVELOPED COUNTRIES FOR THE 1990S (1990-1994)
CONTENTS
EXECUTIVE SUMMARY
E/ECA/CM,211l5
Paragraphs
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I.
II, A, B,
e.
Ill, A, B,
e.
D, E, IV,
A, B,
e.
D, E, F, V,
A, B,
e.
D, VI.
Annex Tables
INTRODUCTION SITUATION ANALYSIS
Overall economic performance (1990- I994) Domestic resource mobilization
Assessment of social conditions (1990-1994)
EVALUATION OF EXTERNAL SUPPORT MEASURES Commitments and performance
External financial flows External debt
Debt relief measures Market access
A DEVELOPMENT VISION FOR THE AFRICAN LDCS Improving existing policy framework
Mobilization of domestic resources
Globalization and the African LDCs development The admission and graduation criteria
for LDC membership
Poverty alleviation: A renewed focus Poverty alleviation strategies
INTERNATIONAL COOPERATION AND SUPPORT MEASURES External resource flows
Debt-relief measures Market access
Economic cooperation and integration
FOLLOW-UP MECHANISMS AND MONITORING
1-6 7 - 43 7 - 10 28 - 29 35 - 43 44 - 79 45 - 48 49 - 52 61 - 62 67 - 73 74 - 80 80 - 100 81 - 83 84 - 86 87 - 88 89 - 93 94 - 10[
102 - 105 106-116 106 - 109 110-113 114-115 116 117-119
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EXECUTIVE SUMMARY
1. In accordance with the decision of the General Assembly of the United Nations, contained in its resolution 49/98 of 19 December 1994,1 the United Nations Conference on Trade and Development (UNCTAD) will convene a meeting of the High-level Intergovernmental Group on Least Developed Countries (LDCs) at New York in September/October 1995 to carry out a global mid-term review of progress achieved in the implementation of the Paris Declaration and Programme of Action for the Least Developed Countries for the 1990s.' The review will entail an assessment of the economic and social conditions in the LDCs during the first phase of the programme (1990-1994); an appraisal of the support measures provided by the international development partnersbip to assist the countries with their development efforts and consider new measures that will lead to the successful implementation of the Programme of Action during the second half of the 1990s.
2, Currently, there are 33 LDCs in Africa' after the recent admission of Angola and Eritrea and the graduation of Botswana from the group. In mid-1994, there was a combined population of 330.6 million, or 52 per cent of the total population of developing Africa. The economic and social situation of these countries deteriorated further during the period 1990-1994 when the aggregate gross domestic product (GDP) declined by an annual average of 0.03 per cent, corresponding to an average annual decline in per capita income by 3.1 per cent. The average ratio of investment in GOP was stagnant at 16.7 per cent while the average ratio of domestic savings to GOP was a mere 4.7 per cent in the same period, with a resource gap of US$7.3 billion in 1990 that increased in real terms to $8.5 billion in 1994.
3. Agriculture, which absorbs more than 50 per cent of the labour force and contributes an average of 37.8 per cent to GDP in the African LDCs, declined by 2.6 per cent per annum during the period 1990- 1994. Manufacturing ourput recorded an average annual growth rate of -2.1 per cent. Most of the African LDCs reported increasing budgetary deficits. Excluding Zaire, the rate of increase in consumer prices in all the other LDCs averaged 31 per cent during the period 1990-1993, mainly because of tbe removal of price controls, monetization of the deficits, the effects of devaluation and the liberalization of interest rates.
4. This sluggish overall performance is attributed principally to civil wars and internal strife in a number of the LDCs that caused the destruction of physical and social infrastructure, disruption in production, displacement of persons and mass exit of refugees. The 1992 drought in Eastern and Southern Africa, the 199311994 crop failure in the Horn of Africa and the worsening in the terms of trade are other significant explanatory variables. Many of tbe African LDCs are implementing adjustment programmes which have engendered dire social consequences, partly as a result of government disinvestments and budgetary cuts, unemployment, deterioration in basic social services and increased poverty. Domestic resource mobilization is rendered virtually impracticable and external resource flows, both from official bilateral and multilateral sources and foreign direct investment, is inadequate and, at best, not commensurate to the financing needs for adjustment and other reform programmes being implemented by the African LDCs.
Resolution 49/98: Implementation of the Programme of Action for the least developed countries for the 1990s: High-level Intergovernmental Meeting on the Mid-term Global Review of the implementation of the Programme of Action for the Least Developed Countries for the 1990s (Report: A/491728/Add.1,
19 December 1994).
2 UNCTAD, Paris Declaration and Programme of Action for the Least Developed Countries for the 1990s. United Nations, New York, 1992.
Angola, Benin, Burkina Faso, Burundi, Cape Verde, the Central African Republic, Chad, Comoros, Djibouti, Eritrea, Ethiopia, Equatorial Guinea, the Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, the Niger, Rwanda, Sao Tome and Principe. Sierra Leone, Somalia, the Sudan, Togo, Uganda, the United Republic of Tanzania, Zaire and Zambia .
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5. Progress is lacking in the social sector development of the African LDCs. In the education sector, for instance, as much as 59 pet cent of the population are illiterate, the primary school enrolment rate is about 68 per cent and the mean year of schooling is roughly 1.2. The main causes of morbidity and mortality are still neo-natal-related health hazards, malaria, measles, acute respiratory infection (ARl) and diarrhoeal infections, some of which have been eradicated in other developing countries. Statistics show that there is one doctor for every 18,000 people, one nurse for every 2,300 people and one bed for every 880 persons. The average government expenditure on education and health as a percentage of the total budget is 8.7 and 7.4 per cent, respectively.
6. The infant mortality rate was about 121 per 1,000 and Iifeexpectancy at birth was 50 years for the African LDCs in 1993. The total fertility rate is a mean value of 6.5, while the annual population growth rate is estimated at 3.1 per cent. The high fertility and population growth rates have intensified the high dependency burden. The status of women is far below expectation. The female to male ratio of literacy and primary enrolment is 53 and 73 per cent, respectively, and the rate of participation of women in the labour force is 63 per cent. As much as 60 per cent of the population of the African LDCs live below the poverty line and the magnitude and severity of poverty has been exacerbated by the negative impact of adjustment programmes, especially the elimination of subsidies and public sector retrenchments which have led to both higher prices of basic consumer goods and widespread unemployment.
7. Despite various efforts at economic integration in the region, no substantial progress has been made in either intra-African trade or in the establishment of joint ventures in distribution and production. There are a number of strategic market alliances that are being forged in other regions [e.g. the European Union (EU) and the North American Free Trade Area (NAFTA), to mention only two]. Inthis context, African countries, particularly the least developed, risk being isolated and marginalized which makes it imperative for them to make firm commitments and to take the necessary steps to implement effectively all the treaties and protocols of the regional and subregional economic groupings.
8. External financial flows to the LDCs were far below the commitments and targets set in the Pro- gramme of Action, notably the transfer of 0.20 percent of donor gross national product (GNP) as official development assistance (ODA). Some donors increased their aDA and have attained the target but the con- tribution from major donors, like the United States of America and Japan, remained at 0.04 per cent of their GNP. On the whole, the total aDA flows to LDCs stagnated at an average of 0.09 per cent of donor GNP.
9. The total financial flowsto the African LDCs decreased atan annual average of 2.2per cent during the period 1990-1993 as compared to 4.4 per cent during the period 1987-1989. In absolute terms, the total flows averaged $12.5 billion between [990 and 1993, much lower than the 1990 figure of $13 billion, or less than one third of the target. The oft-cited reasons for this low level of assistance are said to be the new demands on aid resources by the transitional economies of Eastern Europe and the Republics of the former Soviet Union; continued recession and aid-related budgetary cuts in the Organization for Economic Coopera- tion and Development (OEeD) countries; and the diversion of aid funds to emergencies and conflict resolu- tion operations.
10. The level of debt of the African LDCs was $86.7 billion in 1992, increasing slightlyto $87.8 billion in 1993, while the average debt to GDP ratio stabilized at around 110 per cent. Most of the countries are experiencing severe debt burden and debt overhang and,
as
such, they are being prudent in debt management and are avoiding contracting non-concessional credits. The level of debt service had declined from $2.4 billion in 1990 to $2.0 billion in 1992 and a further decline to SI.8 billion in 1993, while the average debt service to export of goods and services ratio dropped from 15 per cent in 1990 to 12 per cent in both 1992 and 1993. This is basically attributed to the growing arrears and accumulation of debt through re-scheduling rather than any fundamental change in the debt situation.ii
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II. In the context of the UNCT AD Trade and Development Board resolution 165 (S-l X) and commit- ments in the Programme of IAction, several OECD creditors have cancelled official debts owed by some African LDCs during the period 1990-1994. Multilateral financing institutions took initiatives like the special programme of assistance (SPA) for sub-Saharan Africa, the debt reduction facility (DRF) and the supplementary International Development Association (IDA) adjustment credit programme of the World Bank and the International Monetary Fund (lMF) special adjustment facility (SAF) and enhanced special adjust- ment facility (ESAF) resources, all of which have benefitted a number of the African lDCs. Nonetheless, most of the African LDCs are experiencing critical resource shortages and remain with a heavy debt burden and severe debt overhang.
12. In the light of the above, the way forward points to a multi-pronged policy and strategy directions to be backed by adequate domestic and external funds together with the necessary human and institutional capacities to design and implement reforms. The African LDCs should continue to improve their reforming stance if they are to attain and maintaina stable and sustainable economic growth-track. These reforms should cover wide ground and be "additive" in their effects, i.e., improve their reforming capacity.
accelerate their pace of development, shorten the "transition phase" of structural adjustment programmes (SAPs), etc. In addition to improved economic organization and management, reforms are expected to increase the level and rate of growth of domestic resources and enhance the integration of the African LDCs into the global economy.
13. Tax reform, the formalization and growth-enhancing initiatives in the sectors of informal finance, informal trade and informal manufacturing are likely to result in an increase in the volume of domestic resources and their improved use for economic expansion. The tax base should be broadened to reach new, previously untaxed, sources and, through their built-in elasticity, allow government revenue levels to adjust automatically to changes in the revenue base. In many African LDCs, informal finance rates very high in economic transactions, especially in rural areas, and the volume of funds involved is, in most cases, invariably more significant than the financial resources released by official banking institutions. By reform- ing the banking system and formalizing the operations of informal financial intermediation, domestic resources can be increased and effectively utilized to finance development. In the same way, improving the internal trading environment and by encouraging informal manufacturing, governments could bring forth
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large volumes of private financial resources and direct their use in a growth-enhancing manner.
14. Globalization of the economy would enable the African LDCs to overcome the limitations of their small domestic markets. Perhaps the best route for most African LDCs toward integration in the global economy is via regional and subregional integration. By actively participating in the current economic inte- gration arrangements in the region, the African LDCs could derive enormous benefits in terms of an expanded product and factor market, development finance, economies of scale, etc.
15. Donors should increase their financial aid to African LDCs in fulfilment of their commitment to assist these countries in their pursuit to create an enabling environment. External financial flows would have the desired development impact if they were to be more focused, coordinated and increased and guided by the development strategy of the African LDCs recipients. The debt problem of the African LDCs is not a matter of liquidity but one of solvency. In the light of the proposal made by the Government of the Netherlands in 1990, creditors should anchor their commitments and political will to undertake outright for- giveness/cancellation of official bilateral debt owed to them by the African LDCs. Such a gesture, as part of a strengthened development partnership, would remove the debt overhang and improve the relationship with the donor community thereby paving the way for additional financial flows to the African LDCs.
16. The widely held view about the trade-off between economic growth and equity is a myth within the African LDCs, where these objectives should be regarded as complementary. The complementarity would
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be forged through appropriate policy interventions when designing national development plans and pro- grammes and in the preparation of annual budgets with a deliberate focus on poverty alleviation. Govern- ments of African LOCs should identify techniques and approaches to alleviate poverty and social deprivation.
For instance, one major policy intervention could be a statutory commitment by governmentstoprovide the minimum calorie intake to the poorest segment of their population on a permanent basis. This requires proper identification of the intended beneficiaries so as to target the programmes in order to achieve optimal impact in the framework of national povertyalleviation goals. The provision of primary health care services and basic educationshould be top priority. Basic education should include some practical skills in farming and handicrafts to upgrade the labour of the poor, as this could contribute to increased agricultural produc- tivity and poverty alleviation.
17. A substantial amount of domestic resources combined with external assistance should be allocated to family planning progranunes within the framework of a well-researched and realistic population policy.
Improvingthestatus of women and ensuring that they are equal participants in the process of nation building would not only increase economic growth but also guarantee a gender-free socio-economic environment that would maximize the total productivity of the active labour force of the population.
18. The African LOCs were given access to the OECO markets through the generalized system of pre- ferences (GSP), the Lome Convention and other special measures for the LDCs but many of their processed primary products are not covered by these schemes which exposes them to high tariffs and non-tariff barriers, and with their low production base, they would not benefitgreatly from the schemes. The Uruguay Round Accord is a remarkable achievement in liberalization of international trade but, again, the African LOCs may not benefit from it, mainly because of their low production base and supply rigidities and their weak competitive position. Studies haveshownthat the Accord may wipe out even the modest advantages the African LDCs havegained under existing preferential schemes. The eight to ten years period of transi- tion given to developing countries to adjust is too short for the African I,.DCs. The implementation system and procedures are also too complicated for them, judging by the inadequacies of their human expertise and administrative capacities.
19. Despite the above shortcomings and weaknesses, the preferential trading arrangements should continue to be extended to the African LDCs as they are the weakest participants in the international trading system. Additionally, the African LDCs should be financially compensated for any potential loss they are likelyto incur dueto the anticipated erosion of existing benefits as a result of the Uruguay Round. In fact, they should be given a15-to 20-year moratorium for the implementation of the Accord and granted substan- tial technical and financial assistance to expand their production base, diversify and promote their exports, as well as technical and administrative support to enable them to successfully implement the complicated systems and procedures of the Accord.
20. The expanded nature of the range of conditionalities for the provision and disbursements of aid by donors are too complex and difficultand the delays and uncertainties interfere with the planning and budget- ing process in the African LDCs. This situationinvariably leadsto political and social disturbances, disloca- tions in the economy and, ultimately, in the accentuation of poverty. Efforts being made to effectively co- ordinate aid in the African LOCs need to be intensified, particularly with respect to coordination between the Paris and London Clubs, the consultative aid group and round-table meetings. In view of their special circumstances and inadequate administrative capacities, donors should be flexible in applying conditionalities, especially those relating to debt repayments and the attainment of performance criteria of adjustment pro- grammes and other economic reforms.
21. In view of the growing globalization of the world economy, African LDCs should participate effec- tively in the existing economic cooperation agreements under the various economic groupings in the African
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EIECA/CM.21/15
region. In cooperation with other African countries, systematic actions are required to implement the provi- sions of the treaties of the subregional economic groupings, particularly those related to the removal and/or reduction of tariffs and non-tariff barriers, free movement of people and capital, development of transport and communication networks [full implementation of the subregional and regional projects and programmes of the second United Nations Transport and Communications Decade in Africa (UNTACDA-II)], official recognition of cross-border trade and the joint development of multinational industrial and commercial enter- prises as required in the Abuja Treaty establ ishing the African Economic Community and the second Indus- trial Development Decade for Africa (lDDA-IT).
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I. INTRODUCTION
1. .1n accordance with the decision of the General Assembly of the United Nations contained in para- graph 4 of its resolution 49/98 of 19 December 1994, UNCTAD is to convene a meeting of the High-Level Intergovernmental Group on Least Developed Countries (LDCs) at New York in September/October 1995 to carry out a global mid-term review of progress achieved andto consider new measures, as necessary, in the implementation of the Paris Declaration and Programme of Action for the Least Developed Countries for the 1990s.
2. Currently, the African LDCs number 33, with the addition of Angola and Eritrea and the decision of the General Assembly that Botswana should graduate from the LDCs category in 1994. There are 13 land- locked and five island countries in the group. They had a combined population of 330.6 million in mid- 1994, 52 per cent of the population of developing Africa. Population sizes range from 200,000 in Sao Tome and Principe to 55 million in Ethiopia. Seven countries have a population of less than 1 million, nine coun- tries have 1 to 5 million, ten countries have 5 to 10 million, three countries 10 to 20 million and three others 25 to 40 million. The population density varies from 2 inhabitants per km' in Mauritania to 290 inhabitants/km' in Rwanda.'
3. Despite various measures taken at the national level, the economic and social situation of the African LDCs has deteriorated further during the 1990-1994 period compared to the performance during the second half of the 1980s. The reasons are derived from the impact of both domestic factors and the unfavourable international economic environment. Some of the countries are still going through civil wars and internal strife - Angola, Liberia, Rwanda, Sierra Leone, Somalia, the Sudan and Zaire - causing destruction of property, production assets and social and physical infrastructure as well as an increased number of refugees and displaced persons. Where such internal strife and wars have been settled, e.g., Ethiopia, Eritrea, Mozambique and Uganda, reconstruction and rehabilitatinn has not proceeded or been completed as rapidly as was expected.
4. Beside the disruption of production for exports caused by internal wars and the effects of drought and other supply rigidities, the deterioration in the terms of trade was largely due to the decline in primary commodity prices; inelastic income demand for primary products in the developed countries; and the rise in the prices of imports. Decline in external resource flows to the African LDCs was due mainly to budgetary cuts in major OECD donor countries; diversion of aid to new recipients in Eastern Europe and the Republics of the former Soviet Union; and the switching of aid resources from development per se to emergencies and peace-keeping operations and assistance to refugees and victims of famine. The African LDCs have failedto attract foreign direct investment (FOI) or short-term capital inflows, while capital flight and the brain-drain continue to deplete vital resources for development in these countries.
5. Inthe face of the lack of substantial debt-relief measures, the rising external debt and problems of debt services are causing an enormous debt burden and debt overhang. Besides diverting attention and priorities to short-term stabilization measures at the expense of long-term economic growth and development, SAPs have not been accompanied by the required quantum of resources to ensure their successful imple- mentation in the African LDCs. On the contrary, adjusting LDCs have experienced an aggravation of the worsening of their economic and social conditions leading to an increased level of poverty.
6. It is against the above background that ECA, as the regional focal point for the follow-up and monitor- ing of the implementation of the Programme of Action in Africa, has prepared this report reviewing the economic and social situation of the African LDCs during the first phase of the implementation of the pro- gramme, 1990-1994. It gives an assessment of the international support measures provided by the donor
ECA, Survey of Economic and Social Conditions in African Least Developed Countries, 1992-1993 (E/ECA/LDCs/93/005, p. 2).
E/ECA/CM.21/15 Page 2
community in the context of the commitments and targets agreed in Paris in September 1990. Also, the report presents a case for a renewed focus on approaches to poverty alleviation and considers new measures in the framework of a development vision that requires the creation of an enabling environment that could accommodate an accelerated pace in the process of establishing a sustainable growth and development path in the African LOCs.
II. SITUATION ANALYSIS
A. Overall economic performance 0990-1994) 7. The economic situation in the African LOCs
continued to deteriorate in 1994. Even in the few cases where some improvement is indicated, the extent of improvement has been small, and the sustainability of growth uncertain. The average annual growth rate of GOP for the African LDCs as a group is estimated at -0.03 per cent in the 1990- 1994 period, with wide variations across countries.
With their annual average population growth rate estimated at 3.1 per cent, per capita GOP growth rates have declined by 3.1 per cent (see figure I).
"
u _,.
w~-2
-a
-.
-5
FIG 1ArRIC~N LOCs GOP & GOP PER CAPll A GROWTH RATES (%)
198~~!l9 1990 1991 1992
YEARS --- GOP PER (APH,o, - - GOP
8. Economic growth during the period 1990- 1994 was not possible in some countries (e.g., Liberia, Rwanda and Somalia) because of civil war
and politically unsettled conditions. The relatively high GOP growth rate in the Sudan in 1992 was due mainly to improved weather and the resultant expansion of agricultural output. The cessation of hostilities, improved weather and a substantial injection of foreign aid are the major factors behind a similar output growth in Ethiopia in 1993-1994. The United Republic of Tanzania, another of the relatively larger economies, registered a positive growth trend in 1993-1994 as a result of similar developments.
9. External resource flows, mainly in the form of grants and other concessional lending, is a key deter- minant of economic growth in the African LDCs. Inflows of FDI are negligible, indicating the pursuit of development strategies that are increasingly official aid-dependent and vulnerable. Economic performance was also hampered by the inherent structural weaknesses, especially the inadequate human and institutional capacities, as well as the low levels of external financial support which together make it difficult for these countries to introduce and persist with macroeconomic reforms.
10. In a recent review of "adjusting countries" in Africa, the World Bank comments that, while all adjusters failed to achieve a sound macroeconomic stance, the degree of the "adjustment success" varied across countries and sectors. Among those reviewed are 21 of the African LDCs. Burkina Faso, the Gambia and the United Republic of Tanzania are reported to have introduced significant improvements in their macroeconomic stance which produced some measure of success in their growth effort. However, the reform programmes in Guinea, Mauritania and the Sudan, which were supported by the IMF and the World Bank, were interrupted for various conditionality reasons and, consequently, no discernable growth path has been charted in these economies.' Nonetheless, it is still debatable as to whether the relative success in the macroeconomic performance of adjusting countries can be attributed solely to their "better than average reforming stance".
2 World Bank (1994), Adjustment in Africa: Reforms. Results. and the Road Ahead. Oxford University Press, pp. 1-5.
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I. Food security and agriculture
11. The Paris Declaration and Programme of Action for the Least Developed Countries for the 1990s makes the improvement of food security and the development of the agricultural base a central objective of the development strategy in the LDCs. However, mid-way through the Programme, most of the African LDCs were unable to ensure an adequate and stable supply of foods for their growing population. Under- developed and war-ravaged transport and communication infrastructure and the lack of storage and relief management capacity also denied access to sufficient food by a needy population, often located in parts of these countries which are inaccessible.
12. A common measure of food adequacy is the per capita daily dietary energy supplies (DES) which takes into account all food items consumed by the population. During the period 1980-1990, the African LDCs had a positive DES growth rate of only 0.08 per cent per annum as compared with an average growth rate of 0.64 per cent per annum for all developing countries.' Seventeen-African LDCs experienced nega- tive growth and for the Central African Republic, Lesotho, Madagascar, Malawi and Rwanda, the rate of decline was in excess of I per cent per annum. During the period 1990-1994, the DES levels for most African LDCs are estimated to have deteriorated even further.
13. The trend of growing food insecurity is also shown by the widening gap between food production and the assumed minimum consumption standards' During the period 1970-1990, the shortfall in staple food production from the average trend value was above 20 per cent in Botswana, Cape Verde, Mauritania and the Sudan. Production shortfalls of 10 to 20 per cent were registered in the Gambia, Lesotho, Mali, the Niger and Zambia during the same period. In other African LDCs, production levels were below the minimum consumption standard and the shortfall was less than 10 per cent. African LDCs are net food importers and dependent on food aid. Some of those ravaged by war or drought, e.g., Malawi, Mozambique and Uganda, the level of food aid in cereals was in excess of 100 per cent of cereal imports (see annex table I). The goal of food self-sufficiency, although reachable because of the potential for expansion in the agri- cultural sector, has not been attained in most of the African LDCs.
14. Increasing food insecurity and poor macroeconomic performance generally reflect adverse develop- ments in agriculture. Most African LDCs, including almost all of the relatively larger economies in the group, depend on agriculture for GOP growth, export earnings, and employment (see table 1). The GOP share of agriculture had increased from 35.5 per cent in 1990 to 39.5 per cent in 1994. Active macro- economic reforms in many African LDCs during the period 1990-1994 did not significantly affect the rela- tive GOP share of agriculture. On average, the share of agriculture in GOP is 37.8 per cent and provides employment for 50 per cent of the labour force in the African LDCs.
15. The continued poor performance of agriculture in 1994 is evident from a cursory look at agricultural production trend data. According to the FAD production index (1990=toO), the average annual rate of growth of agricultural production was 6.9 per cent in 1991, -0.4 in 1992, 0.7 in 1993 and -0.3 per cent in 1994. In 1988/89 agricultural production declined by more than 20 per cent in the Sudan. In Liberia, the rate of decline was 32 per cent in 1989/90 and 8 per cent in 1990/91. In Somalia, agricultural production dropped by 33 per cent in 1990/91 and by 8 per cent in 1991/92. These declines in production are
UNCTAD, The Least Developed Countries 1992 Report. United Nations, New York, 1993, p. 27.
4 The Food and Agriculture Organization of the United Nations (FAO) defines consumption standard for developing countries with a positive per capita DES trend as the trend values. For those with a negative per capita DES trend, the mean values for the period under review are taken as the minimum consumption standard.
E/ECA/CM.21/15 Page 4
associated with major political disturbances and years of severe drought in the respective countries. Recent reports also show that 1994/95 may become another agricultural crisis year for many African LDCs.
Table I. Employment and share of agriculture in GOP of African LDCs
Agricultural labour force Agricultural GOP
Percentage shares 1980 1991 1980 1991
00 - 19
---
--- 4 520 - 49
---
2 21 2250 - 69 4 11 6 6
>
70 28 19 1 ISource: ECA (adapted from UNCTAD data files).
16. Some African LDCs, e.g., Cape Verde, Djibouti, Mali, Mauritania and the Niger, have little prospect in crop cultivation development because of scanty arable land and insufficient precipitation. Those that have an ample supply of arable land rely heavily on rain-fed agriculture the productivity of which fluctuates with the weather. Some countries like Burkina Faso and Chad have few or no permanent water courses which limit their development of irrigated cultivation. Even those with enormous potential for irrigated agriculture have been net importers of cereals and are heavily dependent on food aid: e.g., Ethiopia, the Gambia, Mozambique, the Sudan and Zaire. Large-scale deforestation and the destruction of soil cover are taking place in practically every least developed country in Africa resulting in loss of moisture and soil fertility and these have become major factors behind the decline in agricultural productivity.
2. Manufacturing indust!)'
17. The average share of manufacturing value added (MVA) in GOP in 1990-1994 for the African LDCs is about 9.8 per cent with a relatively high variation across countries. If the Zambian MVA share is excluded, the average GOP share of manufacturing for the remaining 32 countries drops to 8.6 per cent with a relatively low variation. During the 1990-1994 period, the share of MVA in GOP declined by 2.2 per cent.
18. As shown in table 2, manufacturing output in the African LDCs declined at the average annual rate of2.2 per cent during the period 1990-1994. However, the trends in the growth rates varied across coun- tries. Burkina Faso, the Gambia and Uganda recorded positive and relatively high MVA growth rates during this period, while major output fluctuation and decline occurred in the Central African Republic, Mozambique, Sierra Leone and Togo. Manufacturing activities of course are carried out by enterprises of different scales. The micro-enterprises and small-scale firms are mostly in the informal sector producing food, textiles, wood and leather goods, while the large-scale enterprises, often public companies, are dependent on imported inputs, sometimes functioning with production interruption and excess capacity, and are invariably judged to be inefficient and not cost-effective. Market reforms have tended to raise production costs of these enterprises by increasing the price of inputs while at the same time reducing their competitive- ness against cheaper imports and locally manufactured products of medium-scale formal sector enterprises.
Many enterprises are forced to close shop because of their inability to sustain persistent economic and finan- cial losses. These factors have contributed to the recent decline in MVA growth rates in many African LDCs.
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Table 2. Trends in manufacturing
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Average annual growtb rate MVA growtb rate (in 1990 prices) (%) (%)
Reform stance/country 1990 1991 1992 1993 I 1994 1990-1994
A. Large improvement in macroeconomic policies
Tanzania, United Republic of -2.5 3.8 1.8 3.6 4.3 3.4
The Gambia 0.5 -5.6 5.9 0.0 16.7 3.9
Burkina Faso 5.0 6.2 -1.7 1.3 18.8 5.9
B. Small improvement
Madagascar -7.2 -1.8 -3.0 6.2 8.8 2.4
Malawi -0.2 3.0 2.9 -10.2 4.1 -0.2
Burundi 9.7 9.1 4.6 5.3 1.7 5.1
Mali 2.3 -0.6 2.3 5.0 5.3 30
Mauritania -5.9 3.1 11.1 6.4 -9.4 2.5
Niger -4.4 2.6 -6.5 1.4 0.0 0.7
Uganda 7.5 14.1 19.1 0.5 14.4 11.8
C. Deterioration
Benin 4.3 0.6 3.1 3.0 2.9 2.4
Central African Republic 7.5 -4.8 -9.6 -5.0 9.8 2.6
Togo -7.0 -2.9 4.4 I 2.3
I
24.4 -8.7
Zambia 7.8 -10.7 5.6 -10.9 -2.0 4.7
Zaire -11.3 -20.0 -20.2 -20.0 -1.4 -15.8
33 African LDCs 0 -5.7 0.2 -2.5 -0.4 -2.2
Source: ECA secretariat.
19. Privatization is tbe other reform measure pursued in the hope of rejuvenating manufacturing industry growtb in African LDCs. However, privatization successes are actually few and problems abound. First, liquidations and closures of public enterprises are more numerous than their sale. Second, planned privatiza- tion of government property outstrips actual asset transfers by several fold. Third, the lack of national private entrepreneurial capacity and poor credit facilities have curtailed domestic buying of public assets, and foreign buyers have not shown interest in loss-making public enterprises. During the initial phases of SAPs, it is plant closures, cuts in expenditure and tbe rationalization and reorganization along market lines that is prevalent in tbe African LDCs which are undertaking reforms.
3, External trade and balance of payments
20. The share in world trade of the LDCs, including the African ones, is very small and is declining.
In 1992, all LDCs together accounted for only OJ per cent of the world's exports and 0.6 per cent of the world's imports. These represent a decline of 50 per cent in the share of exports and 40 per cent in the import shares from their respective levels in 1980. By the end of 1994, the African LDCs did not raise their relative trade shares from their 1992 levels. This poor trade performance is also reflected by the unfavour- able developments in the balance of payments (see table 3). The balance on the current account shows a
EIECA/CM.2111~
Page 6
deteriorating trend which is projected to continue into 1995. Restoring external viability in the African LDCs economies is highly dependent on external financing of import purchases and export enhancement funding which tend to alter the balance of payments picture within a relatively short time span, as experienced with the ThlF and World Bank credits in support of macro and sector adjustment programmes.
Even those African LDCs which reduced import growth rates and increased export growth rates, adjustment lending partially explairs the improved performance in the balance of payments.
Table 3. African LDCs: Balance of payments (1990-1995) (in millions of US$)
Years
Trade accounts 1990 1991 1992 1993 1994' 1995'
Merchandise trade balance -10508 -10285 -13172 -12762 -14486 -15333
Merchandise exports 11129 11577 10856 10081 10186 10178
Merchandise imports 21637 21842 24028 22843 24672 25511
Balance in the services account -66 -1231 1253 1774 3340 4190
Credit 4388 3141 3526 4200 4637 4648
Debit 4454 4372 2273 2426 1297 458
Balance of goods and services -10574 -11516 -11919 -10988 -11146 -11143
Credit 15517 14698 14382 14281 14823 14826
Debit 26091 26214 26301 25269 25969 25969
Net transfers 6194 6742 70Q6 6136 6506 6541
Current account balance -4380 -4774 -4913 -4852 -4640 -4602
Source: ECA secretariat.
•
e
,
projectionsestimates21. As shown in table 4, imports are growing faster than exports in many African LDCs. In the 1985- 1994 period, the average annual growth rate of imports exceeded that of exports. During the period 1990- 1994, the average growth rate of imports was 3.3 per cent per annum, while exports declined at the rate of 2.2 per cent per year. This trend is the more alarming, given that the base from which import changes are calculated is Iarger than the export base. Such growing deficits in the merchandise trade are noted in Burkina Faso, Burundi, Rwanda, Somalia and the United Republic of Tanzania. Among the countries which showed relative success in reducing the export-import growth rate differential during the same period are Benin, Cape Verde, Ethiopia, Mali, Mauritania and Togo.
22. Several basic factors explain the poor trade performance in the African LDCs. During the period 1990-1994, the purchasing power of exports was irregular: 100 in 1990; 112.4 in 1991; 105.3 in 1992;
102.7 in 1993 and 100.8 in 1994. On the other hand, unit value indices of imports were as follows: 99.0 in 1989, 100 in 1990,92.4 in 1991,92.6 in 1992, 88.2 in 1993 and 90.8 in 1994. This explains the erratic movement in the terms of trade during the period. On the other hand, domestic supply or production constraints have constricted exports. This is a structural problem which is difficultto eliminate, even in the long run, unless effective measures are introduced to enhance production. Also, many African LDCs are
E/ECA/CM,21/15 Page 7
unable toreap the full benefits of preferential treatment [IMF/Compensatory Contingency Financing Facility (CCFF), EUiStabilization of Export Earning Scheme (STABEX), Generalized System of Preferences (GSP), etc.] due to their low production base and other supply rigidities,
Table 4, African LDCs: Average annual growth rates of exports and imports (in percentage)
Year Average annual growth rate of Average annual growth rate of exports in 1990 constant prices imports in 1990 constant prices
1985-1989 2, I 5,0
1990 -3,8 -2,8
1991 3.8 0,9
1992 -6, J 10,0
1993 -7.1 -4.9
1994 1.0 8,0
1990-1994 -2,2 3,3
Source: ECA secretariat.
4. Fiscal reform
23, The fiscal reform measures in the African LDCs have been implemented to serve the goals of the ongoing SAPs in these countries, They feature four primary objectives: balancing the budget, restructuring government expenditures, enhancing revenue growth, and restoration of external viability, all aimed at intro- ducing economic growth and stability, Most countries have sustained growing fiscal deficits for well over a decade (see annex table 2). In some cases, government expenditure was increasing because of burgeoning military purchases and unbudgeted statutory expenditure financed through an increasing recourseto borrow- ing from the domestic banking system. Under structural adjustment regimes, it has not been possible for many African LDCs to increase domestic revenue, Declining incomes and tax administration difficulties have drastically diminished domestic government revenues in such countries as Burundi, Ethiopia, Rwanda and Uganda.
24. The World Bank (1994)' classified the following sample countries on the basis of fiscal performance in 1990/91: (a) surplus or small deficit countries - the Gambia, Mauritania, Senegal and the United Republic of Tanzania; (b) moderately deficit countries - Burkina Faso, Burundi, Malawi and Togo; (c) large deficit countries - Benin, the Central African Republic, Madagascar, Mali, Rwanda and Uganda; and (d) very large deficit countries - Mozambique, the Niger, Sierra Leone and Zambia, The fiscal indicators in annex table 2 show that, for all groups of countries covered in the survey, there has been a general reduction in the level of deficits in 1990-1991 from the higher deficit levels of 1981-1986, The reduction is more for the relatively small deficit countries than it is for the very large deficit group. Taking all African LDCs as a group, grants have reduced the level of deficits by an average of about 50 per cent during 1990-1991. The effectiveness of grants to reduce deficits is greater for the small deficit countries (where grants have financed nearly 100 per cent of the deficits) than for the very large deficit countries. Ittakes time to improve the fiscal reform stance of the African LDCs, i.e. to reach a situation of sustainable budget surplus, In the meantime. the reform process has made them increasingly vulnerable and heavily dependent on foreign grants and loans for their budget and economic management.
World Bank (1994), Adjustment in Africa: Reforms, Results, and the Road Ahead, Oxford University Press,
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5. Price and monetary developments
25. In all adjusting African LDCs, the governments have taken measures to deregulate prices and markets. By 1992, out of the 18 African LDCs which had "extensive price controls" before reform, six removed controls altogether and ten retained limited price controls." Furthermore, the scale of government intervention in marketing major food crops and exports through marketing boards and corporations wasalso reduced in most African LDCs. Initial market reactions to the increase in domestic prices and market liberalization was mixed in most cases. Imports increased, but domestic production remained sluggish.
Another limiting factor to the ineffectiveness of price and market deregulation in stimulating economic growth has been constricted demand in the African LDCs. Insome cases, close to 50 per cent of the popula- tion (e.g., in Ethiopia, Rwanda and Somalia) is dependent on food aid. Even in the other African LDCs, public sector reform (which includes public expenditure cuts, public sector employment reduction, reorganization of public institutions, etc.), stagnation and decline of real wages, and rising unemployment have increased the level of poverty. This development has made it necessaryto reintroduce price regulation for basic staples as a safety-net for the poor.
26. Excluding Zaire, consumer price increases have been on an upward trend since 1986 in most African LDCs, rising by an average rate of 31 per cent per annum during the 1990-1993 period. One explanation is the relatively low to moderate seigniorage (government revenue from printing money as a percentage of GOP) in the African LOCs. Calculating inflation as a percentage change in the consumer price index, the World Bank argues that the relatively high seigniorage countries (Benin, the Gambia, Sierra Leone, the United Republic of Tanzania and Zambia) have sustained relatively higher inflation rates than the moderate ones (Madagascar, Malawi, Mauritania, Rwanda and Togo) or low seigniorage countries (Burkina Faso, the Central African Republic, Mali and the Niger).'
27. A low level of monetization of the economy limits how much can be achieved by a sound monetary policy in the African LDCs. It was expected that devaluation would lead to a reduction in the trade deficits by increasing exports and reducing imports. But, in many African LDCs, domestic prices rose following devaluation (often by more than the rate of devaluation), thus curtailing export expansion. More important is the lack of supply response to devaluation. High production costs, undeveloped productive capacity and low income elasticities of demand for African LDCs products abroad greatly reduced the effectiveness of exchange rate policy. There is also a misalignment of policy instruments in that exchange rate adjustment may create the right trading environment in the short term, but supply (production) response requires measures that are effective only in the long term. However, a number of the African LOCs have succeeded in eliminating exchange rate differentials (between the official rate and the black market one) by increasing the supply of foreign exchange through official channels (loans and grants) and by exchange rate adjustment.
Also in the African LDCs, interest rates are set as part of economic adjustment but the effectiveness is circumscribed by undeveloped capital markets.
B. Domestic resource mobilization
28. The GOP share of aggregate investment in the African LDCs averaged 16.7 per cent during 1990- 1994. The stagnation in investment ratio is indicative of the general economic decline and deterioration in these economies. The average annual growth rate of investment in the African LDCs during the 1985- I989
6 The 18 African LDCs reviewed in the sample are: Benin, Burkina Faso, Burundi, the Central African Republic, Guinea, Guinea-Bissau, Madagascar, Mali, Mauritania, Mozambique, the Niger, Rwanda, Sierra Leone, Togo, Uganda, the United Republic of Tanzania and Zambia. See World Bank (1994), QI2.,
cit., p. 91.
7 World Bank, 1994, op. cit.
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period was about 3 per cent, which dropped tl:j-0.1 per cent per annum in the 1990-1994 period.' But there are wide variations across countries. For example, in 1993, the GDP share of investment was in excess of 40 per cent in Cape Verde, the Gambia, Lesotho, Sao Tome and Principe and it was below 10 per cent in the Central African Republic, Ethiopia, the Niger, the Sudan and Zaire. Likewise, the rate of decline in investment in the same year was in excess of 20 per cent in Malawi and Togo, while positive and high investment growth rates occurred in Botswana, Mauritania and Zambia. The low and fluctuating base from which investment changes are measured explains the instability of the estimated growth rates.
29. The share of gross domestic savings in the GDP of the African LDCs has been unacceptably low at 4.7 per cent during the period 1985-1989 (~s against 22 per cent in developing countries as a whole) and the average savings rate remained at this level in the 1990-1994 period. The poor savings performance is also reflected in the low real per capita savings level estimated at only $16 in 1990, dropping to $10 in 1994.
The savings gap has widened from $7.3 billionin 1990 to $8.4 billion in 1994 or 10.3 and 11.9 per cent of GDP in both years, respectively. There is a wide gap between "gross domestic savings" and "gross national savings". The latter includes foreign savings (i.e., foreign direct investment, official grants and loans) and is therefore much larger than the former. During 1985-1989, foreign savings alone made up 9.5 per cent of the GDP of African LDCs as against 4.3 per cent of GDP accounted for by gross domestic savings. The low level of savings and investment explain the poor macroeconomic performance in these economies and underscores the need for an increased effort at domestic resource mobilization.
1. Domestic private resource mobilization
30. Low income levels and high marginal propensities to consume continue to depress the level of private savings in the African LDCs. Average income levels are below the taxable income range (i.e., below tax exemption levels of income) and marginal propensities to save approximate to zero (and, in 1993, were possibly negative in such countries as Burundi, Rwanda and Somalia). Most of the population depend on subsistence agriculture and the output level in recent years has been below consumption needs in many cases.
Certain government policies have not been favourable to private capital formation in a number of the African LDCs. Nationalization of private property, implicit and high rates of explicit agricultural taxation, active discouragement by administrations to private initiatives, the brain-drain and capital flight are among the factors which explain why savings and investment rates are low (and sometimes negative) and why it has not been possible to make headway in domestic resource mobilization in the African LDCs.
31. Reform measures to enhance private domestic resource mobilization, .including market and price deregulations, have invariably raised the level of prices and thus increased the rate of return on private investment. In many cases, market liberalization was accompanied by administrative reforms to eiiminate discrimination against private industry. Previous restrictive practices against private investment are now eased in such countries as Ethiopia, Malawi, Uganda and the United Republic of Tanzania to raise the level of private sector participation in development. However, these measures are being taken at a time of wide- spread poverty and a fall in income, and are undertaken through the SAPs which have, in themselves, a grave fall-out of social maladjustment. Unemployment is on the rise, partly as a result of institutional reorganization and public sector retrenchment which has not been compensated by the growth of private activity. The instability of transitional politics has raised the private risk premiums to unacceptably high levels, and the rate of capital flight out of the African LDCs is escalating. Counterpart funding (sale of foreign exchange) and earmarked financial transfers from abroad, ease foreign exchange constraints which many private industrialists face in the African LDCs. But, the latitude given by these temporary reliefs are not capitalized upon to institute measures to mobilize domestic resources or to build local resource-generating
In fact, if the high projected growth rate of 6 per cent for 1994 is excluded, the average annual growth rate of investment for the period 1990-1993 is -2.4 per cent.
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capacity. A reverse in capital flight is noted in many African LDCs that are increasingly becoming aid- dependent.
2. Public sector resource mobilization
32. The African LDCs have a relatively small private sector and, hence, depend on the activities of government for resource mobilization and economic growth. During the first half of the 1980s, government expenditure as a percentage of GDP was in excess of 30 per cent in Malawi, Togo and Zambia; and less than 10 per cent in Uganda (annex table 3). Except for Guinea-Bissau and Mauritania" where the share of government expenditure increased significantly, the relative size of government expenditure (measured by the ratio of government expenditure to GDP) declined during the latter half of the 1980s in all the other countries under review. Government expenditure declined further during the early 1990s, but not signi- ficantly, following public sector reforms in most of these countries.
33. Increasing levels of budget deficits resulted from the gradual erosion of the tax base and rapid increase in government expenditure. Tax revenue shares started to decline as income levels fell and as tax administration difficulties worsened. Foreign trade taxes lost their relative significance in the revenue struc- ture of the African LDCs when export levels plummeted and import capacity shrank. Two other sources of expenditure finance were utilized to their limits before embarking on macroeconomic reform under SAP:
non-tax revenues and domestic bank borrowing. Regarding the former, the most important source is the revenue from public enterprises but disinvestments under privatization is gradually eliminating this. The Governments of African LDCs have had to resort to domestic bank borrowing to finance their public budget deficits. In Ethiopia, for example, domestic bank borrowing to total ordinary revenue rose to 51 per cent in 1990 and was 40 per cent in 1991.
34. The importance of external resources in the budget structure of the African LDCs is perhaps made more clear if the share of external financing of government deficits are computed. Grants make important contributions towards balancing the budget and grant levels vary across countries. The share of government deficits financed by external resources (which include grants and loans) have remained high in Ethiopia, Malawi, Mali, Togo and Zambia. Increased dependency on foreign finance to balance the budget is noted in those countries which started implementing adjustment programmes in earnest during the first half of the 1990s, for example, Benin, Ethiopia, Mali, Mauritania and Zambia.
C. Assessment of social conditions. 1990-1994
35. The human development index (HDI) is a relatively new approach of measuring the economic and social progress of societies. The method combines three variables - expectation of life at birth, educational attainment and income. More specific social indicators include education, health status, demographic indicators, status of women as well as other direct measures of poverty. Estimates of infant mortality, expectation of life at birth, total fertility rate, population growth rates and dependency ratio for the African LDCs for the periods before and after 1990 is given in annex table 12. The figures clearly show that, in general, the African LDCs had high infant mortality during the 1980s which did not improve in the early 1990s.
36. It is argued that there is a synergy between population growth and the accentuation of poverty in the LDCs. Despite the merits and demerits of this argument, the high rate of population growth is a development-retarding factor in resource-poor countries, such as the African LDCs. With the average population growth rate of the African LDCs at 3.1 per cent, the population of the group is likely to double in about 24 years. As a conscious effort, many African LDCs introduced some interventions with a view to reducing population growth. Family planning programmes are being introduced in many countries with a view to reducing fertility and population growth. With respect to fertility, African LDCs tend to exhibit a high total fertility rate. A typical mother seems to have as many as 6.5 children during the 35 years of
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her reproductive cycle as compared with 2.5 for mothers in industrialized countries. The results in annex table 12 also show that about 48.8 per cent of the population of African LDCs are classified as dependents.
37. Several studies on women in development in the African LDCs have shown that, certain cultural traits of these countries have led to the marginalization of women. The rate of participation of women in education and the labour force, as well as unemployment in the formal sector are lower as compared to those of men. Giving women access to education, health, employment and other opportunities would not only enhance economic and social progress, but could make a substantial contribution to reduce the current bigh rate of population growth in many African LDCs. Indicators on the literacy rate, gross enrolment ratio for primary education, mean years of schooling as well as participation in the labour force are given in annex table 13. Each variable is expressed in terms of females as a percentage of males which interprets a ratio of one as indicative of equality. National governments, donor countries and multilateral agencies are invest- ing in development projects the objectives of which are to enhance the status of women and to improve their level of participation in the development process. For instance, about half of all the World Bank's IDA-9 supported projects durig fiscal 1991-1993 included components that addressed the specific needs of women and efforts were made to encourage the participation of beneficiaries in project design and implementation."
38. As can be discerned from the above analysis of indicators of human resources development, it is clearly shown that the majority of the population of the African LDCs is in abject poverty. The absolute poverty level (defined as that income level below which the minimum nutritionally adequate diet, along with basic non-food requirement are not affordable) is estimated as the percentage of people below a pre-deter- mined poverty line. It is estimated that about 65 and 30 per cent for rural and urban areas. respectively, in the African LDCs, are below the poverty line. In Chad, Malawi, Sierra Leone and the Sudan, as much as 80 to 90 per cent of rural population are below the poverty line.
1. Education
39. A comparison of the illiteracy rate of African LDCs during the 19805 and early 1990sisgiven in annex table 14 which shows high rates in most of the countries. A similar conclusion is reached comparing mean years of schooling completed among the population aged 25 years or more. The value is only 1.13 years in 1990 with a slight increase to 1.18 in 1992, as compared with those of other African countries of 2.4 and 2.5 years, respectively. With respect to the gross enrolment rate of primary education, the table indicates that the African LDCs have the lowest rates compared to the other categories of countries.
40. The Governments of African LDCs are taking steps to increase budgetary allocarions for basic and higher education. A higher percentage of budgetary allocation to education would indicate a conscious attemptto improve the educational level of the population. Annex table 15 shows that, on average, there was a slight increase in 1991 (from 12.9 to 13.5 per cent) compared to 1988, but the figures are low as com- pared to those of other African countries of about 19.2 and 22.0 per cent of total public expendirure to education. Cape Verde, Lesotho and Rwanda allocated relatively higher percentages. On the other hand, Ethiopia and Guinea have had very low allocations, although, since 1992, Ethiopia has improved its budgetary allocation substantially.
41. Any increase in the literacy and enrolment rates, as well as other indicators are meant to show whether there has been a quantitative improvement in the provision of expenditure for education. Common indicators of quality of education include pupil/teacher ratio, number of students per classroom and allocation of educational budget for primary, secondary and tertiary education. Information on some African LDes show unequal distribution of resources between the three levels, and more emphasis seems to be laid on tertiary education. For example, in 1991, Ethiopia had less than one per cent of the student body enrolled
9 World Bank, Annual Report, 1994, p. 171.
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in tertiary education but as much as 15 per cent of the educational budget was earmarked for this level of education. In general, when the provision of education as an indicator of social development is taken into considerationand a comparison made between pre- and post-1990, the achievement of the African LDCs in this regard is very low compared to other African countries.
2. Health
42. In general, all comparative studies on the health status of African LDCs show that there was no significant improvement in the early 1990s, compared to previous periods. In most of the African LDCs, the prevalence of diseases that have long been eliminated in other parts of the world is observed. Mortality levels, particularly infant and child mortality are high. The reason for this is the prevalence of communi- cable and preventable diseases, such as malaria, measles, acute respiratory and diarrhoeal infections. Some of the indicators of health status include the expectation of Iife at birth which is derived from the age-specific mortality rate, population per physician, population per nurse, population per hospital bed, as well as the proportion of public expenditure allotted to health which are given in annex table 16. During the period 1986-1992, the average number of people per physician in the African LDCs was 17,984 as compared to 6,645 in other African countries. A few exceptions include Cape Verde, Guinea-Bissau and Sao Tome and Principe which seem to have a better performance. Also, the number of people per nurse decreased during the period 1986-1992, when compared with the previous period. As for the number of people per hospital bed, the pattern is similar to the other indicators.
43. According to the World Health Organization (WHO), the five leading causes of morbidity and mortality are neo-natal, malaria, measles, acute respiratory infections (ARI) and diarrhoeal infections.
Annex table 17 cross-classifies each African LDC by these causes. In 1991-1992, nine countries had the maximum leading causes, while the others experienced three to four of the causes. The data suggests that there was an all-out effort in the early 1990s to reduce or eliminate some of the leading causes of morbidity and mortality. For some African LDCs, the high morbidity and mortality rates may be due to civil strife, drought, famine and dislocation of people from their place of residence which, taken together, tend to worsen the already low nutritional intake of infants and children. Low weight at birth and incompatibility between age and weight of infants and children reflect low calorie intake even during normal periods. This is likely to expose children and adults to various types of diseases as their resistance level is reduced. In recent years, AIDS has become a major threat to the health of the African LDCs population. The disease is mainly concentrated in major urban centres but in some LDCs, such as Uganda and Zaire, the prevalence of HIV-AIDS in rural areas seems to be growing. The transfer of resources from basic health services to the AIDS programme, the occupation of many hospital beds by AIDS patients and the high cost of treatment are overstretching the meagre resources allocated to the health sector. Based on data for 1990, as contained in annex table 15, budgetary allocation to this sector was around 8 per cent. Madagascar is a noteworthy case, allocating an average of 11.5 per cent of its public expenditure to the health sector.
III. EVALUATION OF EXTERNAL SUPPORT MEASURES"
44. One of the basic principles of the Paris Declaration and Programme of Action for the Least Developed Countries for the 1990s is that "The strengthened partnership for development necessitates adequate external support from the LDCs development partners" .11 The international community committed itself to provide sufficient concessional resources; to give assistance in respect of the transfer of technology
10 All data on external resource flows and debt were obtained from UNCTAD, OECD and World Bank sources.
II UNCTAD, Paris Declaration and Programme of Action for the Least Developed Countries for the 1990s. United Nations, New York, 1992, p. 20.
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and skills; provide access to their markets for the LDCs' exports; offer substantial debt relief and adequate financial compensation for loss of export revenues. These commitments were to complement the efforts being made by the LDCs and, as such, the contributions were to be adequate in terms of volume, efficient in allocation and prompt in disbursement, so as to meet the needs of the LDCs.
A. Commitments and performance
45. In the context of the above, it was agreed that: (a) those donor countries giving more than 0.20 per cent of their GNP as ODA to the LDCs should continue to do so; (b) other donors whose ODA flows to the LDCs had already reached the 0.15 per cent target should striveto attain the 0.20 per cent by the year 2000;
(c) those that had undertaken to reach the 0.15 per cent target should reaffirm their commitment and by con- tinued effort reach the target within the following five years; and (d) the others were urged to do their best to raise their assistance to the LDCs.
46. The overall ODA contribution to the LDCs from the countries of the OECD Development Assistance Committee (DAC), as a ratio to their GNP, has remained at 0.05 per cent during 1990-1992. That is, the rate whicb was attained in the latter half of the 1980s. As annex table 18 shows, in seven countries (Australia, Luxembourg, New Zealand, Norway, Portugal, Switzerland and the United Kingdom), the ODA contribution to the LDCs, as a ratio of donor GNP, was higher in 1992 than in 1990. In four other coun- tries (Austria, Canada, Denmark and the United States), the ratio remained unchanged, while in the other remaining ten countries the ratio was lower. Norway, with the highest ratio (.55 per cent), still heads the list. The five countries (Denmark, Finland, the Netherlands, Portugal and Sweden) which have already exceeded the 0.20 per cent target, sustained their ODA.
47. The total net disbursement from all sources to the LDCs declined by 1.8 per cent during the period 1990-1992. Of this total, ODA concessional sources (bilateral and multilateral) accounted for over 97 per cent in 1992. But the contribution from ODA bilateral concessional sources decreased from 61 per cent in 1990 to 55 per cent in 1992 while the share of concessional multilateral resources in the total increased from 39 per cent in 1990 to 45 per cent in 1992. The leading single source of multilateral finance to the LDCs has been the World Bank's International Development Association (IDA), followed by the European Union/European Development Fund (EU/EDF) and the World Food Programme (WFP).
48. Failure to meet commitments and targets is mainly attributed to the limitation of external financial flows from OECD/DAC countries to LDCs, because of the emergence of new demands on donor aid budgets in the face of budgetary cuts by major OECD/DAC donors; the diversion of funds to international emer- gencies and conflict resolution operations, the continued recession in industrialized economies and the general wave of donor fatigue.
B. External financial flows
49. As shown in annex table 19, total financial flow to the African LDCs (at current prices) dropped by 12.3 per cent from a peak of $13 billion in 1990 to $11.4 billion in 1991; it rose by 13.2 per cent to $12.9 billion in 1992 but dropped again by 7.4 per cent to $11.9 billion in 1993. In other words, the total finan- cial flow to the African LDCs declined by an average of about 2.2 per cent per annum during the period 1990-1993, compared to an annual average growth rate of 4.4 per cent attained during the period 1987-1989.
The share of African LDCs in the total financial flow to all LDCs increased, however, from 69 per cent in 1987 to 77 per cent in 1992. Of the total financial flow, 51 per cent went to seven countries (Ethiopia, Malawi, Mozambique, Somalia, Uganda, the United Republic of Tanzania and Zambia). Ethiopia, Mozambique and the United Republic of Tanzania together received about 36 per cent of the total. The external flows to the Sudan and Zaire showed drastic declines during the period 1990-1993, possibly because of their classification as "non-cooperative" by IMF and the associated cross-conditionalities that block the flow of other donor support funds.
