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Africa, Trade and Poverty

July 16, 2001 In a speech today to the UN's Economic and Social Council, World Bank President James D Wolfensohn called on G7 leaders to take steps to open their markets to developing country products and meet their commitments to devote 0.7 percent of their annual GDP to overseas aid. Currently the average figure for rich countries is 0.22 percent with some countries like the United States falling well below by devoting only 0.1 percent of annual GDP to development aid.

Wolfensohn said that if all wealthy countries were to grant complete market access to developing countries, the exports of the least developed countries would expand by more than 11 percent, with significant benefits to the poor. Saying that actions will speak louder than words, Wolfensohn said that it was time for rich countries to rise to the challenge of Africa -- the only continent in the world where poverty is on the rise.

"As African leaders flesh out the New African Initiative in Lusaka," he said, "heads of government of the world's richest countries prepare to meet in Genoa. Their agendas could not be more different - as African leaders speak of a level playing field for poor countries , G7 leaders talk about possible economic slowdown in advanced economies. We need to bring these discussions together. We need to forge a common front. African leaders are rising to the challenge of Africa. Rich countries must rise to that challenge too."

It is simply unacceptable, Wolfensohn said, that while the developed world enjoys unprecedented prosperity, one in seven African children will die before his or her fifth birthday. "It is time that politicians and voters in rich countries realize that without a bright future for Africa's poor, the future cannot be bright for the rest of the world. It is time that G7 leaders put Africa front and center of their agenda. It is time to make actions speak louder than words."

Wolfensohn said the international community must push ahead with debt relief but he emphasized that "rich countries must also recognize that it is hypocritical to give debt relief with one hand, and then deny poor countries the ability to export their way out of poverty with the other. Rich countries must open their markets and reduce their agricultural subsidies. OECD countries today spend more than US$300 billion a year on agricultural subsidies, a total roughly equivalent to the entire GDP of Sub-Saharan Africa."

The recent decision by the European Union to grant full duty and quota free access to Least Developed Countries (LDCs), the world's most impoverished nations, should be emulated by other rich nations, he said. Beyond improving market access, rich countries should ensure that rules governing trade support development. Multilateral trade rules should not impose an undue burden on developing countries by requiring large scale investment in sophisticated administrative systems that are not priority areas for action and which may divert resources from roads, clinics or schools.

Intellectual property rights is another area, he said, where rich countries should ensure that international rules do not unfairly discriminate against low and middle-income countries.

Wolfensohn said that the next round of multilateral trade talks due to open in Qatar in November must be a "Development Round" that puts the welfare and the interests of developing countries firmly at its center.

In addition to action on trade, rich countries should also honor their commitment to devote 0.7 percent of their annual GDP to overseas aid. Development assistance to Africa has fallen drastically from $32 per person in 1990 to just $19 in 1998, despite real evidence of the development effectiveness of aid to countries which orient their economic and social policies to improving living standards.

"We must remind rich country leaders that their current levels of foreign aid, at some 0.22 percent of yearly GDP, fall far short of the 0.7 percent target they promised to meet. The difference is worth a hundred billion dollars a year. That difference is life and death for millions of African children."

Wolfensohn said the World Bank was already working in many African countries on technical assistance to building capacity so Africa can take advantage of opening markets, and can strengthen its ability to negotiate in WTO fora. This work would be stepped up in coming months. But he said that rich countries need to take action to ensure that the rules of the trade game are not stacked against poor countries.

On HIV/AIDS and communicable diseases, an agenda item at Genoa, Wolfensohn called on G7 leaders to throw their weight and their money behind the call for a multi-billion dollar global fund to fight AIDS, malaria and tuberculosis. "The World Bank is the world's largest financier of HIV/AIDS programs and I have said that no viable program for HIV/AIDS will go unfunded by the Bank. We recently approved a $500 million multi-country AIDS program for Africa, and a second $500 million phase is under preparation. But much, much more is needed. We need to enhance collaboration to raise awareness both in Africa and within the international community. We need to speak out about sex, about condoms, about rape and violence against women. We need to support Kofi Annan's call for a multi-billion dollar war chest to fight AIDS, malaria and tuberculosis. And we need to keep up public pressure until it happens."

Useful links: Full text of the speech at:



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