Africa's Challenge

IN MAY LAST YEAR, the Board of Directors of Millennium Challenge Corporation (MCC), a new government entity created to administer the Bush administration's programme of assistance to developing nations, voted to make 16 countries 'eligible' for Millennium Challenge Account (MCA) assistance. Many sub-Saharan African countries were jubilant at the news that they would claim a major part of the $3.5 billion approved for the fiscal year before they realised that there was a condition attached to it. Unlike the traditional American aids to developing nations, this programme aimed to reward only countries that govern responsibly and invest in their people. When Mr Bush announced the Millennium Challenge strategy in 2002, he called for a new compact for global development, defined by new accountability for both rich and poor nations alike.

Eligibility test

A total of 16 indicators were used to select the 16 countries invited to apply for assistance. The indicators were grouped in three categories - 'ruling justly', 'investing in people' and 'economic freedom'. In addition, to receive MCA assistance for the year, countries must have less than US$1,415 in average per capita income, which eliminated many more countries on the continent, including Botswana, Namibia and South Africa. The then Secretary of State Colin Powell who chaired the MCC board, said, The MCC will only support poor countries that are committed to growth-promoting governance, health, education and economic policies. The prospect of obtaining MCC funding will serve as an incentive for developing countries that have not yet adopted pro-growth policies to do so.
Of the 16 nations selected by the administration's Millennium Challenge Corporation to receive aid, eight were from Africa, three from Latin America, and five from both Asia and Eurasia. They were Madagascar, Armenia, Benin, Bolivia, Mozambique, Nicaragua, Cape Verde, Sri Lanka, Georgia, Honduras, Ghana, Lesotho, Mali, Mongolia, Senegal, and Vanuatu. Following their selection, the nations were then asked to submit proposals for specific projects to be financed. In contrast to traditional foreign aid, the process aims to have countries design their own aid programs, apply for project financing, sign three-year 'compacts' with the United States and demonstrate their progress.
Today is a milestone, said Paul Applegarth, chief executive officer of Millennium Challenge Corporation, whose appointment was confirmed a day before the vote. Mr Applegarth called the MCC a new approach to foreign assistance, and added that it will focus on the longer term and encourage policy-reform in countries that promote growth. Over the years, short term needs have squeezed out focus on long-term growth. But he denied that the MCC will supplant the foreign assistance programs operated by the US Agency for International Development (USAID). If the MCA gets it right, it can be an example for other elements of foreign assistance, he explained.
The administration sought to match the aid to government commitments to political, economic and social policies that promote economic growth. It used indicators from outside government, like a ranking by Freedom House, a human rights group, on civil liberties. One early favourite for inclusion in MCA was Uganda. But when the 'ruling justly' criteria were developed, the country scored poorly for political rights and civil liberties, in large part because of the 'no party' system that has been championed by President Yoweri Museveni since he took power in 1985.

Curb on recklessness

During his June 2003 visit to Washington, which included a White House meeting with President Bush, Museveni's argument that Uganda is more democratic than many multi-party nations, failed to win over critics. So, in April last year, a close presidential aide, Dr. Crispus Kiyonga, was sent to Washington to make Uganda's case. There, he argued that the rest of the world doesn't understand how Uganda's political arrangement is serving the interests of its people. Kiyonga, who gained international prominence as health minister by leading Uganda's ground-breaking campaign against HIV/AIDS, said the government has taken important strides to eliminate corruption and protect human rights. But the progress is being blurred, in part, he said, because Uganda has a very free press, which highlights misdeeds and abuses that might not get as much attention in less-open countries. Though the lobbying had an impact, according to officials close to the MCC deliberations, raising Uganda's ranking, it still was not sufficient for the country to make the eligibility list for MCA assistance in 2004.

Most likely to qualify

A study released last April by the Centre for Global Development listed seven of the African nations that were eventually chosen among those most likely to qualify. Mauritania was included, while Mozambique was not. Dr. Steve Radelet, the study's author, named Burkina Faso among the countries coming very close to eligibility, and Kenya and Malawi as nations eliminated by corruption. Among countries expected to miss by one indicator were two more from Africa - Sao Tome & Principe and Djibouti. The MCC Board also approved a 'threshold' programme aimed at a small number of 'candidate countries' that did not meet eligibility requirements, but seemed to be demonstrating a significant commitment to achieving them.
The MCC didn't identify which countries fell into this category, but Mr Applegarth, the Chief Executive Officer, told the media that the MCC may set aside some money to work with those countries to improve their performance. Explaining the dynamics of these so called 'threshold' nations, Mr Applegarth, said, There are a number of countries that are close, including some in East Africa. It's pretty clear where they don't measure up against the criteria, and the governments can figure that out, adding that we'd be glad to talk about that with them. Steven Radelet, a former Treasury official who works at the non-profit Centre for Global Development, said, These countries still face huge obstacles. They're still far from perfect. They're at risk; some of them could fall back.
However, many policy makers in Washington believe the MCC initiative could help curb the recklessness in the style of governance in some African nations, as well as create a sense of responsibility in a number of other corruption-prone ones, especially as President Bush, in addition to the US$2.5bn he is asking Congress to approve for this fiscal year, has pledged to request US$5bn for 2006, which would nearly double current US assistance to developing nations. As African countries stand to benefit from a good chunk of it, this indeed is good news. In confirming this, Charles R. Snyder, the assistant secretary of state for Africa, said the Millennium Challenge Account could in effect triple the amount of American aid to Africa. Maybe for this reason, said Mr Radelet, the aid, in addition to helping provide help for the efforts of reformers, could also help prevent countries from backsliding into corrupt or negligent practices.

US-Africa trade boost

Interestingly, another good news was waiting around the corner for Africa. Last June, just a month after the MCC vote, the US House of Representatives unanimously passed legislation [H.R. 4103] to extend and modify the trade benefits under the African Growth and Opportunity Act (AGOA), a landmark trade legislation first passed in 2000 to develop a trade relationship between the United States and the nations of Sub-Saharan Africa. The Chairman of the House Subcommittee on Africa, and an original co-sponsor of the legislation, Rep. Ed Royce applauded its passage, and called on the Senate to take immediate action on the legislation. According to a report, the bill builds upon the proven success of AGOA, extends the third country fabric provisions, which permits African apparel producers to use non-African produced fabric, and takes other measures to boost US - Africa trade.
Representative Edward R. Royce said, In a short few years, AGOA has managed to draw hundreds of millions of dollars of foreign investment to the African continent, creating hundreds of thousands of desperately needed jobs. This makes AGOA the most effective of our development programs for Africa that I'm aware of. The House Subcommittee on Africa, in its argument for the passage of the bill, had maintained that AGOA has encouraged difficult economic reforms, as African countries have strived to maintain their AGOA eligibility. If the US Congress fails to pass this AGOA legislation before the third country fabric provision expires in September, we will be undoing much of the good that AGOA has done.
A statement issued by the Executive Office of The President, Office of Management And Budget, said AGOA is the centrepiece of the Bush Administration's trade and investment policy to enhance US-African trade, spur regional economic development, encourage economic and political reforms, alleviate poverty in sub-Saharan African countries, facilitate the region's integration into the global economy, and create jobs here at home. It said that the H.R. 4103's extension of AGOA to 2015 fulfils the President's commitment to work with Congress to extend AGOA beyond its 2008 expiration date, explaining that it will increase investor confidence, and underscore continuing US support for boosting African growth and development through trade.
The Administration however urged Congress to remain cognizant of ongoing Free Trade Agreement (FTA) negotiations with certain AGOA beneficiaries, saying that while it considers the development studies called for in H.R. 4103 as generally useful, it objects to mandating a study for every country in sub-Saharan Africa which would include those not designated as AGOA beneficiaries. With respect to technical assistance related to agricultural exports, the Administration opposes a requirement that a minimum of 20 technical experts must be assigned to no fewer than 10 countries. Such mandates limit Presidential discretion to address Africa's resource needs as appropriate.