Africa is facing difficult times. The effects of the global economic recession and climate change have already begun to reverse the progress the continent has made over the last decade.
Many countries are experiencing reduced trade and economic activity, withdrawal of investors and an acute scarcity of credit. Projects are being postponed or cancelled altogether. Financial inflows are dropping, including levels of international assistance and remittances.
The result is that the ability of African countries to support basic services, tackle their developmental challenges and achieve the Millennium Development Goals is being heavily impaired. The human, social and political consequences could be enormous.
Africa now needs urgent support to maintain economic activity and protect the vulnerable from the crisis. But while trillions of dollars are being found, at short notice, for stimulus plans and bail outs in the richer countries, the least developed countries find themselves lacking access to credit and faced with lending policies and practices that minimise their chances of receiving loans.
The evidence is that Africa is hit twice. Not only are poorer countries going to be most affected by the global crisis, but the very way in which the developed world has responded to the crisis continues to worsen their situation by encouraging capital to flee to perceived safety. Lacking the means to argue their case at the top tables in the global economic and financial architecture, Africa’s countries are left to face the very real danger of malignant decoupling, derailment and abandonment.
In the articles below, a number of eminent individuals argue that a new and improved form of multilateralism is needed to allow the developing world, and Africa in particular, to overcome these bleak prospects. They argue that Africa cannot afford to watch from the sidelines as the global crisis unfolds. Instead, they call for its leaders to use this opportunity and push for substantial reforms of the world’s governance structure to make it more responsive, supportive and ultimately effective. I share both their sense of urgency as well as their main policy recommendations.
The Bretton Woods institutions must be reformed at several levels to make them more inclusive. The World Bank’s allocation of a third seat on its executive board to sub-Saharan Africa is a step in the right direction, but others like it must follow to ensure a more equitable and fair distribution of voting power. At the same time, the ways in which the leadership and staff of these institutions are chosen should be revised.
Backroom deals should give way to transparency and full representation, whether in the Bretton Woods or other financial institutions such as the Financial Stability Forum and the Basel Committee on Banking Supervision. The bigger message is that until all parts of the world are included in critical deliberations, including on trade and climate change, these institutions lack the reach and legitimacy they need to provide truly global answers to today’s challenges and the inclusiveness to make the most of tomorrow’s opportunities.
In the short term, if the G20 is to become the premier forum for coordinating a global response, then the African Union should be systematically represented. In the longer term, multilateralism must be underpinned by institutions with universal reach such as the UN whose legitimacy is beyond question. The real challenge will be to ensure that legitimacy can be combined with purposeful capacity and effective decision-making.
These reforms are possible if there is sufficient political will to make them happen. That will require strong leadership including from those who might see their relative share of decision making power in the world’s institutional architecture decrease.
At the same time, this crisis will not be overcome by institutional reform alone. Donors must renew their commitment to boost resource levels for the least developed countries, ease access to credit, review debt sustainability criteria and lessen aid conditionality. Africa must do its part too. If they are to profit from the new multilateralism outlined in the contributions published below, the continent’s states must heed their commitments regarding governance, accountability and transparency and find ways to act in a more coordinated and concerted fashion.