Speech by DFID's top civil servant at the Economic Policy Research Centre (EPRC) conference in Kampala, Uganda.
Uganda and I have something in common. We were both 50 this year. Though I suspect Uganda will have felt more positive about this than I!
One useful feature of anniversaries and milestones is that they encourage us to stand back and look at things against a longer perspective than the ‘now, now, now’ around which much of modern life revolves.
Reaching my 50th milestone prompted me to think about how the lives of today’s 50 year olds have been different from those of earlier generations. There is no getting away from the fact that there has never been a luckier, healthier or more prosperous cohort than us.
In the last 50 years, global life expectancy on average has risen from 47 years to 67 years. 3G smartphones on sale here for $100 in Kampala today enable a Ugandan to access more information than was in any library in the world 20 years ago - and to do so 24/7. There are now approved oral pre-exposure HIV/AIDS drugs which can reduce viral transmission by 92% if taken as prescribed. And we have seen the emergence of GM mosquitoes which could lead to significant drops in the rates of malaria infection.
Development, in other words, has so changed the world that the grandparents of today’s 50 year olds could scarcely have conceived of what was about to happen.
But it has not been plain sailing. For much of the post independence period, Africa has been a disappointment - to its own citizens and its international friends. The received wisdom in the early 1960s was that Africa’s great mineral riches and vast agricultural fecundity would be the platform for rapid economic development. Average income in sub-Saharan Africa was already twice that of both South and East Asia. But the optimistic analysis was really just a façade covering some deep-seated structural, political and social challenges. Physical infrastructure was very poor. Human capital was scarce. Institutions were weak. The division of Africa into its present 54 countries was the product of Western interests not African identities, and it was a hindrance to economic development.
So Africa’s platform for development and progress in the 1960s was in fact weaker than the optimists then assumed. You will be familiar with much of what then happened between the 1970s and the mid-1990s. African economies, initially buoyed by high commodity prices, suffered massive structural shocks from the mid-1970s. The terms of trade for Africa collapsed, with the prices of exports falling and those of imports, especially oil, rising dramatically. Economic policy failed to cope with this, especially in the era of fixed exchange rates.
Macroeconomic policy and a philosophy of regulation squeezed down on the productive private sector. And then the public sector was squeezed in the fiscal crunch.
In parallel, disastrous governance and rampant conflict across many countries blighted much of the continent in the 1970s and 1980s. It’s worth remembering some of the main political features of the continent just 20 years ago. Military dictatorships in Nigeria and Ethiopia. Apartheid South Africa. Savage civil wars in Angola, Mozambique and other countries. Self-proclaimed presidents for life, many of them kleptocrats, none keen on the ballot box, across much of the rest of the continent.
And there were other burdens too. The emergence of new diseases, especially HIV/AIDS, punctured what efforts were made to create a generation of better educated and professionally qualified people.
In the midst of all this, Western policy towards Africa left much to be desired. It was dominated for much of the Cold War period, right through towards the end of the 1980s, by strategic and ideological considerations in the struggle for political edge. Aid efforts were in the 1960s initially generous, and remained so for much of the 1970s, but were undermined by their subservience to wider political considerations. Much aid was as a result ineffective. So public and political support for it fell and aid levels fell consequently. A vicious circle was created: Africa was doing badly; aid was ineffective; aid levels were cut; and that contributed to a further deterioration in the economies and public services of many countries.
However, all that has now changed dramatically. The remarkable thing is how much has improved, not the scale of the challenge left.
This 50th milestone has also prompted thinking in Uganda. Your draft National Vision for 2040 is looking to create “a transformed Ugandan society from a peasant to a modern and prosperous country within 30 years”.
The building blocks for this are clearly identified. Oil and gas. Tourism. Agriculture. Your abundant labour force. Trade, water resources and industrialisation.
But the aspiration is also set against the challenges. Improving the business environment, increasing infrastructure and increasing competitiveness. Meeting the demographic challenge of providing jobs and increasing the skills base as more young people enter the employment market. And improving public sector administration and combating corruption.
This is a scenario repeated across Africa. Where Africa was once described as “the hopeless continent” it is now increasingly seen as the rising continent.
Is this a pipedream - or a vision capturing the opportunities opening up in Africa?
Recent growth performance is impressive. East Africa is currently the fastest growing region in the world. And here in Uganda GDP growth averaged 8% a year since 2005. Since the customs union protocol was signed in 2004, total trade has grown by 62%. If Rwanda, Tanzania and Uganda maintain their momentum, all three could reach middle income status within the next two decades.
In their book The Fastest Billion, Charles Robertson, Michael Moran and other economists make the bold prediction that Africa will surpass the Asian tigers to stand out as the economic growth story of the next decade.
Their research confirms that nine of the world’s fastest-growing economies are in sub-Saharan Africa. And, more interestingly, that five of these booming African nations are not associated with either energy or metals exports. Many countries in Africa have finally begun the long-awaited period of catch-up with the developed world.
The bottom billion is thus becoming the fastest billion.
Why this optimism?
I would like to touch on just three of the reasons, though there are more: your people, your natural resources and your growing democracy.
First, Africa is on the brink of the kind of demographic shift which Asia experienced 30 years ago. By 2050 nearly 1 in 4 of the world’s people will be African. And a growing population is typically accompanied by rising average incomes - provided the right policy environment is created and there is investment in human capital.
As the ratio of people of working age to dependents rises, economic growth could get a further boost. This is potentially significant for Uganda where 60% of the population are under 18.
People are moving to urban areas. Cities and towns are real engines of growth. And people will be living longer. Already global life expectancy has risen dramatically in the last 50 years; in Uganda it has risen from 46 to 54 in just the last decade.
Second, Africa has huge unexploited natural resources. Africa covers nearly a quarter of the world’s total land area - more than the combined land masses of China, the USA, India, Mexico, Peru and Europe. Of the 600 million hectares of potentially productive agricultural land here, less than 5% is in production. And productivity is a quarter of the global average, which means that enormous gains are potentially feasible.
Africa is already the world’s top producer of many mineral commodities. 78% of diamonds, 40% of chromium, 54% of platinum group minerals. It has the world’s largest reserves of many more. Moreover, much of Africa remains to be mapped - once done, this could bring to light an even greater resource base.
Around 10% of proven global crude oil reserves and 8% of gas reserves are in Africa. And recent oil and gas discoveries are adding to the total, including in Ghana, Kenya, Mozambique, Tanzania and here in Uganda. Africa also has major renewable energy potential.
The third reason to be cheerful is that democracy is now firmly established in much of Africa. The holding of elections has become commonplace. Across the continent there have been 15 - 20 a year over the last decade. This is important. Stable, well run countries can prosper and progress. Violence and conflict have fallen in recent decades even while ungoverned spaces are still a concern in the Horn and Sahel.
But democracy is not just about elections. It is also about parliament, the judiciary, the media, political parties, and civil society. It is about how citizens, leaders and public institutions work together to deliver services including education, health and justice. Democracy expressed as open, transparent and accountable governance brings personal freedoms, and the checks and balances needed to combat corruption and ensure government spending and other activity is in the interest of its citizens.
The 2012 Mo Ibrahim Index found that across four major governance criteria almost 70% of African countries have improved scores. And while there remain differences in performances between countries and across categories, the majority of countries have got better at giving people the freedom to participate in wealth creation and benefit from development to improve the quality of their lives.
Businesses already in Africa share this optimism too: those already active in Africa rated it the second most attractive investment destination in the world, only just behind Asia. But those without experience in Africa are still negative about the continent as an investment destination, suggesting a substantial perception or reality gap to be overcome.
But this optimism is not blind.
It is the same factors which offer huge opportunities to Africa - more young people, the natural resources boom - that also pose risks.
Failure to create jobs or mismanagement of the minerals boom could lead to increasing corruption and conflict. Africa will continue to face huge challenges - some longstanding (governance, conflict) and some new (climate change, managing extractives well).
Across Africa income poverty is decreasing. In Uganda it is down from 56% of the population in 1992 to 25% in 2009, making yours the first African country to reach the halving income poverty MDG landmark. In other areas, notably health and education, we have seen substantial progress but not yet enough to achieve the MDGs. How can it be that in the 21st century around 800 women die unnecessarily in pregnancy or childbirth every day? And every year nearly 7 million children never reach their 5th birthday?
Africa today remains a fragmented continent. Many of your 54 countries still have only very limited connections to their neighbours or the wider world. Governments’ ability to reach their people with basic services is still heavily constrained by a huge infrastructure gap - lack of electricity and paved roads to name but two.
There is no greater stimulus for growth than trade - it is the lifeblood for global economies. But at present, Africa accounts for just 3% of global trade. African countries trade, on average, just 10% of their goods with each other, compared to 65% between European countries.
Not all ballots are free and fair and democracy itself is much more than having a vote. Freedom for everyone to participate, regardless of ethnicity or political persuasion is how Amartya Sen defined development. Enabling citizens to voice their opinions and concerns for example through an open media is equally important. But arguably the most fundamental piece of the social contract jigsaw is to empower citizens to hold those in power to account. We need only look at the recent Arab spring uprisings to see what can happen if these aspects of democratic governance are not put in place.
People want the opportunity to choose - and to change - their leaders. One mark of the maturity of any democracy in the peaceful transfer through the ballot box from one leader to another. That has now happened in many countries across the continent but not yet in all.
Africa’s future will, as it should be, be largely determined by Africans themselves. Indeed, another encouraging sign of progress in recent years is the growth of pan-Africanism and greater regional leadership in problem solving - whether in Somalia, Cote D’Ivoire, the Democratic Republic of Congo, or elsewhere. But there remains a role for the international community to play in supporting progress.
What should the international community do?
The MDGs have provided a powerful focus for shared international action for the last 15 years. But after 2015 we will need a new framework, building on and taking forward the MDGs.
To do just that, the UN Secretary General has established a High Level Panel co-chaired by the British Prime Minister, the Indonesian President and the Liberian President. This panel had its first meeting in New York in September; its second meeting was in London last month and there will be two more before it presents its report for discussion at the General Assembly.
Where the process differs from the evolution of the MDGs is that the UN has set up a very thorough consultative process to help shape this new framework. UN agencies will lead consultations on different themes. There are consultations in 50 countries with a leading role for civil society.
My Prime Minister, David Cameron recently set out his vision for tackling the challenges we face. He said we have a unique opportunity to become the generation that eradicates absolute poverty across the planet. He said that growth must be fueled by open economies and open societies: rights for women and minorities, a free media, integrity in government, and the freedom to participate in society and have a say over how your country is run.
Mr Cameron also recognises that the developed world must also put its own house in order. Expect to hear more about that during our G8 presidency next year.
The challenge is to tackle the causes of poverty, not just its symptoms. We need a radical new approach - “the golden thread” of conditions that ties together economic, social and political progress.
We should use this opportunity to think about what can drive prosperity and provide equal opportunities for those whose voices are all too often lost - for children, young people, students, entrepreneurs, farmers, and of course, for girls and women.
Britain doesn’t yet have a fixed position on what these new goals should be. We want to hear what other countries have to say and what poor people are telling us that they need. We have listened to those who say that the formation of the Millennium Development Goals was too influenced by the global north - so this time we want to listen much harder to what the global south has to say.
At the end of the first panel meeting last month, David Cameron said five things:
- The objective of the new framework should be the ending of global absolute poverty.
- That we should not get rid of the Millennium Development Goals, but complete them.
- We must look at the causes of poverty, not just the symptoms of poverty.
- We should consult the poorest in the world and ask what it is that they want;
- We must be bold and ambitious. If we write a complicated report we won’t be held to account for the conclusions that we reach. We want something simple, straightforward, bold and ambitious that can unite the world. And that the politicians of the world, and the leaders of the world can be held to account over.
For some people this means a need to pursue the human development agenda in greater depth - to look at education quality rather than just access; nutrition not just food. It means ensuring that the new framework is focused on the quality of our development interventions, not just the numbers of people who benefit.
Making this transformation a reality means using aid differently, as a catalyst to unleash the dynamism of developing economies.
Reflecting on this, I would like to offer some thoughts on what all this means for aid and for development agencies.
Our goal should be to get countries to the point where we are no longer needed. Graduation is victory. But in the meantime we need to carve out the right niche.
First, we need to clarify what development agencies are for. And the objectives on which development assistance should be focused. I see three:
- Supporting faster progress on the MDGs in low income fragile and conflict-affected countries where progress is lagging most.
- More support for action to tackle the global “bads”. Pandemics, dealing with the problems created by ungoverned spaces like terrorism, organised crime and so on. And climate change and other environmental threats.
- More tentatively, carving out the right niche for development assistance in those middle income countries which still have very large numbers of acutely poor people.
Second, organisations like mine need to change our offer. And improve it. Aid is no longer the dominant element in external financing or public expenditure in our partner countries. Over the last decade, trade flows, remittances and foreign investment have grown. But more importantly domestic tax revenues are a much bigger source of finance for development of public services.
So most countries are less reliant on foreign assistance as a share of the overall resources available to them. There is more competition. So development agencies need to become more agile, responsive, flexible and above all client and country focused. Decision making needs to be local and relevant. We need to offer genuine value. We need to put our global networks at the disposal of each country, and retain world class knowledge and expertise. We may also need to look again at our product lines: grants, loans, engagement with the private sector including equity and other instruments, research, linkages with institutions and sources of expertise in the developed world, skills transfer and other global partnerships including with NGOs.
Third, in changing our offer, development agencies need to keep our eyes on the big development challenges. Like focussing on girls and women. We believe that the benefits investing in girls and women are transformational. For their own lives and their families, communities, societies and countries.
We know that in some sub-Saharan African countries’ outputs could increase by 20% if women had equal access to agricultural resources. And that increase in girls’ education by a year can potentially lead to her earning 10 - 20% more every year through her life time.
Fourth - we need to sustain and increase aid. The doubling of aid volumes from $60 billion to $130 billion a year over the last decade has contributed to development progress. But aid budgets are under pressure.
Let’s be clear about this. We can only provide aid where conditions are conducive to do so. Where there is a commitment to poverty reduction and where funds are used for their intended purpose.
In Britain we remain committed, despite the global downturn, to press ahead to spend 0.7% of our national income on development. Next year we will reach this - the first G8 country to do so.
Fifth, we need to focus more rigorously on the results we are delivering and the costs we are incurring to do so. We need to make sure we are spending aid to the maximum effect. This is not just the longer term policy and system changes we aim to promote. But hard facts about what the immediate outputs are from our aid programmes.
And sixth, we need to become more transparent and accountable. Both to UK taxpayers who pay our bills, and the people for whose benefit we work. Publishing our results is a part of this. But also enabling people to check what we plan to do, whether it offers value for money, whether we achieve it and what we are doing to put things back on course when they go wrong.
What about DFID’scommitment to Africa?
The UK wants Africa to develop and prosper. We think we have a moral responsibility to support your development. But we think it is good for us too.
Two thirds of the financial and professional resources available to DFID are allocated to Africa. Between 2011 and 2015 we will finance a basic education for millions of girls and boys across the continent. We will help put in place the beginnings of a social safety net for more countries, directly financing modest cash transfers to relieve the most acute poverty of several million people. We will distribute at least thirty million bed nets protecting countless women and young children from the deadly threat of malaria. We will support five million children and pregnant women to free them from malnutrition.
But we will also finance programmes on a growing scale to accelerate economic growth. To help you improve governance and accountability. To support regional economic integration.
And we want to retain a particularly strong collaboration with Uganda. For more than 20 years this country has been in the vanguard of economic reform and poverty reduction across the continent. DFID has tried to help as you have pioneered progress. You were among the first countries to promote universal primary education. And in 1997 in support of that we gave you what was then our largest grant to Africa, £67m for the education sector support programme.
This was the first country in which we provided general budget support in its modern form, with the grant we agreed in 1999.
We are proud of the progress you have made and pleased to have played a part in supporting it.
Our development programme now is larger than it has ever been. You will know that we have currently frozen direct financial aid to the Government of Uganda. We had good reason to believe that some of the money we were providing was being stolen. We hope the freeze will not last long. We want stolen money returned. We think it is important that administrative and criminal sanctions are taken against perpetrators.
It is important to note that the problems we have encountered have been uncovered by the people and institutions of Uganda. It is not just us who want them sorted out. Much more importantly, it is the people of Uganda who want corruption tackled.
It is also important to note that the current freeze affects £11m, or about 10% of our support to Uganda in the current year. The vast bulk of our collaboration, in areas like regional trade, financial services, family planning, malaria and social protection continues as previously.
So please rest assured that Britain remains committed to transforming the lives of those twenty million Ugandans who, according to the latest National Poverty Status report, still live below the international poverty line.
The Uganda Vision 2040 includes a quote from Seneca:
Our plans miscarry because they have no aim. When a man does not know what harbour he is making for, no wind is the right wind”.
These are sentiments I share. But our plans need not miscarry - we know where we are going. The new global age brings with it a new global order and by working together, differently, we can ensure Africa’s time is now.