S5920 CONGRESSIONAL RECORD — SENATE May 1, 1995

But there is another lesson to be

drawn. Until the political earthquake

of November 8, 1994, I served on the

Senate Foreign Relations Committee

and chaired the Subcommittee on African Affairs. I learned to my chagrin, a

little more than a year ago, that only

11⁄2 percent of American economic aid

to sub-Sahara Africa goes for higher

education.

In our aid programs we have to meet

emergencies—and Africa has more than

its share of emergencies—but we also

have to be looking long-term, and one

of the ways that we help Africa longterm is to see to it that they have leadership in the future. One of the most

effective ways to see that they have

good leadership in the future is to

make an investment in higher education.

I hope we reflect on the Tom Friedman column.

RICH NATIONS CRITICIZE UNITED

STATES ON FOREIGN AID

∑

f∑ Mr. SIMON. Mr. President, recently,

I read a New York Times article titled

‘‘Rich Nations Criticize U.S. On Foreign Aid,’’ by Steven Greenhouse. It referred to a report of the Organization

for Economic Cooperation and Development [OECD], and I ask that the article be printed in the RECORD at this

point.

The article follows:

RICH NATIONS CRITICIZE UNITED STATES ON

FOREIGN AID

(By Steven Greenhouse)

WASHINGTON, April 7—An organization of

wealthy industrial nations issued a stinging

report today criticizing the United States for

moving to cut foreign aid when it already

gives a smaller share of its economic output

to such assistance than any other industrial

nation.

The Organization for Economic Cooperation and Development, a Paris-based group

of 25 nations, said the United States, once

far and away the world’s leading donor, was

setting a poor example by cutting its aid

budget and warned that the move might

prompt other countries to follow suit.

Using unusually blunt language, the report

said that ‘‘this seeming withdrawal from traditional leadership is so grave that it poses a

risk of undermining political support for development cooperation’’ by other donor

countries.

The report said the United States had

slipped to No. 2, well behind Japan, in the

amount of foreign aid provided excluding

military assistance. The United States provided $9.72 billion in 1993, compared with

$11.3 billion for Japan.

It said the United States contributed 15-

hundredths of one percent of its gross domestic product for economic aid, putting it last

among the 25 industrial nations. The average

among these nations was 30-hundredths of

one percent, while Sweden, Denmark and

Norway all give 1 percent of their overall

output to foreign aid.

J. Brian Atwood, Administrator of the

Agency for International Development, the

Government’s principal aid arm, welcomed

the report, making clear that he intends to

use it as ammunition in the Clinton Administration’s fight to persuade Congress not to

cut foreign aid. At a news briefing today, Mr.

Atwood criticized Congressional committees

for proposing to cut $3 billion from the $21

billion international affairs budget, which

includes State Department spending as well

as foreign aid.

The report was written by the O.E.C.D.

Secretariat and was overseen by James H.

Michel, the chairman of its development assistance committee. Mr. Michel was an assistant administrator of A.I.D. in the Bush

Administration.

Mr. SIMON. After reading the article,

I asked for a copy of the OECD report,

and it is a somewhat technical but important insight into our deficiencies.

Let me give a few quotes from the report:

A perplexing feature of the US development assistance effort is that while public

opinion responds readily to situations of

acute needs in developing countries (contributions to private voluntary agencies are

among the highest per capita among DAC

Members), there is no strong public support

for the Federal aid budget. This may be explained in part by the fact that the public

greatly overestimates the share of foreign

assistance in the US Federal budget. According to a recent poll, the majority of respondents believe it to be around 20 percent of

total US Government spending. In fact,

USAID spending represents only 0.5 percent

of the Federal budget and the US has the

lowest ODA/GNP ratio among DAC Members.

Two other important points are

made:

There is considerable apprehension in the

donor community that some proposals may

be given voice in the new Congress which

raise the possibility of major cut-backs in

US aid and even a turning away by the US

from the common effort for development

which it inspired over 30 years ago.

The second important point:

The US has accumulated substantial arrears both to the U.N. system and to be the

multilateral concessional financing facilities, due to Congressional reluctance to approve the necessary appropriations. Plans

discussed with Congress in 1994 to eliminate

these arrears over the next few years are

welcome. At the same time these plans appear to imply a reduction in US contributions to future financing of these agencies

and facilities. This would represent a shift in

burden-sharing to other DAC Members, and

might have serious consequences for upcoming replenishments of the International Development Association (IDA) and the soft

windows of the regional development banks.

But perhaps more telling than anything else is the percentage of gross national product [GNP] that is used for

foreign aid among the 21 wealthy nations.

I ask my colleagues to look at this

table, and I do not believe we can look

at it with pride.

Mr. President, we are shortly going

to be making decisions on our budget,

and one of the questions is: Are we

going to be less sensitive to the needs

of the poor, both within our country

and beyond the borders of our country?

I hope we will provide a sensible and

humanitarian answer, that suggests we

should be helpful to those in need.

The table follows:

Net ODA from DAC countries in 1993

[As percent of GNP]

Denmark ............................................ 1.03

Norway .............................................. 1.01

Sweden ............................................... 0.98

Netherlands ....................................... 0.82

France ............................................... 0.63

Net ODA from DAC countries in 1993—

Continued

Canada ............................................... 0.45

Finland .............................................. 0.45

Belgium ............................................. 0.39

Germany ............................................ 0.37

Australia ........................................... 0.35

Luxembourg ....................................... 0.35

Switzerland ........................................ 0.33

Italy ................................................... 0.31

United Kingdom ................................. 0.31

Austria ............................................... 0.30

Portugal ............................................ 0.29

Japan ................................................. 0.26

New Zealand ...................................... 0.25

Spain ................................................. 0.25

Ireland ............................................... 0.20

United States ..................................... 0.15

Total DAC ................................. 0.30

f ∑

AFRICA

∑ Mr. SIMON. Mr. President, the World

Bank issues an annual report on regional perspectives.

Because I formerly chaired the Subcommittee on Africa for the Senate

Foreign Relations Committee and have

a continuing interest in that continent, I read their report on Africa

with special interest.

There are some things that are worth

noting.

One is that, excluding South Africa,

the gross domestic product [GDP]—national income—grew by just 1.4 percent. That is a low growth rate for an

area with a high population growth

rate. Fundamentally, it means there is

a continuing decline in the standard of

living that should concern all of us.

The high debt burden they mention is

also something to be concerned about.

They did note ‘‘the political transition sweeping the continent, noting

that a few years ago there were only

six democracies in Africa and the number had reached 29 by the end of June

1994.’’ But they also note in the story

that while in general democracies fare

better, some of them are having a difficult time, and there are exceptions to

democracies faring better, including

the repressive Government of Sudan.

Mr. President, I ask that the article

be printed in the RECORD.

The article follows:

AFRICA

The year 1993, on the whole, was a difficult

one for the countries of the Africa region, as

gross domestic product (GDP), excluding

South Africa, grew by just 1.4 percent. Although this represents an improvement over

1992, it is nevertheless disappointing, considering the region’s high rate of population

growth and the level needed for development. As in previous years, the countries implementing major reforms, and therefore

benefiting from the Special Program of Assistance (SPA), saw their aggregate output

increase by 2.1 percent, or more than the average for the region.1 The sixteen core (or

steady) reformers did still better, as their

GDP rose by 2.8 percent; the countries comprising the CFA Zone, however, saw their

economies contract for a third consecutive

year.2 A positive development in 1993 was

that, on average, the low-income countries

performed better than the middle-income

Footnotes at end of article.
May 1, 1995 CONGRESSIONAL RECORD — SENATE S5921

ones, although neither group recorded an increase in per capita terms.

TABLE 5–1.—AFRICA: 1992 POPULATION AND PER CAPITA

GNP OF COUNTRIES THAT BORROWED DURING FISCAL

YEARS 1992–94

Country Population 1

(millions)

Per capita

GNP 2 (U.S.

dollars)

Angola 3 .............................................................. 9.7 NA Benin .................................................................. 5.0 410 Burkina Faso ...................................................... 9.5 300 Burundi .............................................................. 5.8 210 Cameroon ........................................................... 12.2 820 Cape Verde ........................................................ 0.4 850 Central African Republic ................................... 3.2 410 Chad .................................................................. 6.0 220 Comoros ............................................................. 0.5 510 Congo ................................................................. 2.4 1,030 Coˆte d’Ivoire ....................................................... 12.9 670 Equatorial Guinea .............................................. 0.4 330 Ethiopia .............................................................. 54.8 110 Gabon ................................................................. 1.2 4,450

Gambia, The ...................................................... 1.0 370 Ghana ................................................................ 15.8 450 Guinea ................................................................ 6.1 510 Guinea-Bissau ................................................... 1.0 220 Kenya ................................................................. 25.7 310 Lesotho ............................................................... 1.9 590 Madagascar ....................................................... 12.4 230 Malawi ............................................................... 9.1 210 Mali .................................................................... 9.0 310 Mauritania ......................................................... 2.1 530 Mauritius ............................................................ 1.1 2,700

Mozambique ....................................................... 16.5 60 Niger .................................................................. 8.2 280 Nigeria ............................................................... 101.9 320 Rwanda .............................................................. 7.3 250 Sa ̃o Tome ́ and Principe ..................................... 0.1 360 Senegal .............................................................. 7.8 780

TABLE 5–1.—AFRICA: 1992 POPULATION AND PER CAPITA

GNP OF COUNTRIES THAT BORROWED DURING FISCAL

YEARS 1992–94—Continued

Country Population 1

(millions)

Per capita

GNP 2 (U.S.

dollars)

Seychelles .......................................................... 0.1 5,460 Sierra Leone ....................................................... 4.4 170 Sudan 4 .............................................................. 26.5 NA Tanzania ............................................................ 25.9 110 Togo ................................................................... 3.9 390 Uganda .............................................................. 17.5 170 Zaire 4 ................................................................ 39.8 NA Zambia 4 ............................................................ 8.3 NA Zimbabwe .......................................................... 10.4 570

1 Estimates for mid 1992.

2 ‘‘World Bank Atlas’’ methodology, 1990–92 base period.

3 Estimated as lower-middle-income ($676–$2,695).

4 Estimated as low-income ($675 or less).

Note: The 1992 estimates of GNP per capita presented above are from the

‘‘World Development Indicators’’ section of World Development Report 1994.

Some of the highest growth rates were

achieved by those countries, such as Lesotho, Malawi, Mozambique, and Zambia that

were recovering from the severe drought of

1991–92. The rather quick recovery of these

and other countries from the effects of the

drought is testimony to the relative resilience of their economies and to the effectiveness of collaboration among their public administrations, donors, and nongovernmental

organizations (NGOs). The improvement in

weather conditions was not generalized, however. Drought persisted in some areas, posing

a serious threat in parts of Ethiopia and

Kenya, and the countries of the western

Sahel experienced poor rainfall. In addition,

in these and other countries growth was held

back by political transition, a high debt burden (despite debt forgiveness and

reschedulings), a deterioration in the terms

of trade, and weak policy implementation.

The political transition sweeping the continent has resulted in increasing multiparty

democracies; whereas there were just six democracies a few years ago, the number had

reached twenty-nine by the end of June 1994.

The transition, however, has not been easy,

without cost, or uniformly smooth. Where

transition governments are in place, power

sharing has proven difficult to achieve, and

opposing groups still vie for power in many

places. On the economic front, the transition

has sometimes disrupted production and

commerce, affected the mobilization and allocation of resources, and diverted attention

away from needed policy reforms. Yet the

transition continues nearly everywhere.

There were sharp contrasts on the African

scene in 1993/94. The installation of democratically elected governments in Malawi

and South Africa stand in sharp contrast to

the mass killings in Rwanda. There were a

variety of outcomes in the economic sphere,

too, due to the contradictory forces at play

not just across countries, but within them

and even

TABLE 5–2.—LENDING TO BORROWERS IN AFRICA, BY SECTOR, 1985–94

[Millions of U.S. dollars; fiscal years]

Sector

Annual average,

1985–89

1990 1991 1992 1993 1994

Agriculture ................................................................................................................................................................................................................................. 533.9 997.4 504.9 707.4 318.3 152.6 Energy:

Oil and gas ...................................................................................................................................................................................................................... 20.6 ................... 300.0 48.5 2.4 186.2 Power ................................................................................................................................................................................................................................ 113.9 230.0 155.0 86.0 356.0 90.0 Environment ............................................................................................................................................................................................................................... ................... ................... ................... ................... ................... 2.6 Human resources: Education .......................................................................................................................................................................................................................... 122.8 350.7 265.9 402.9 417.4 325.5 Population, health, and nutrition ..................................................................................................................................................................................... 75.7 232.7 432.8 100.3 131.2 161.6 Social sector ..................................................................................................................................................................................................................... ................... ................... ................... ................... ................... ................... Industry and finance:

Industry ............................................................................................................................................................................................................................. 124.6 180.1 11.0 200.0 83.5 29.6 Finance ............................................................................................................................................................................................................................. 241.3 193.6 138.8 619.9 252.3 400.1 Infrastructure and urban development: Telecommunications ......................................................................................................................................................................................................... 50.0 225.0 12.8 ................... 89.1 ................... Transportation .................................................................................................................................................................................................................. 339.4 543.6 309.5 242.8 483.0 515.0 Urban development .......................................................................................................................................................................................................... 177.2 360.4 98.3 233.8 61.2 111.4 Water supply and sewerage ............................................................................................................................................................................................. 102.9 257.2 256.0 297.4 67.2 74.1 Mining and other extractive ...................................................................................................................................................................................................... 31.5 ................... 21.0 6.0 ................... ................... Multisector ................................................................................................................................................................................................................................. 504.0 285.6 861.0 895.0 434.2 711.0 Public sector management ....................................................................................................................................................................................................... 81.0 76.6 27.2 133.6 121.5 48.2 Tourism ...................................................................................................................................................................................................................................... ................... ................... ................... ................... ................... ...................

Total ............................................................................................................................................................................................................................. 2,519.0 3,932.9 3,394.2 3,973.6 2,817.3 2,807.9

Of which:

IBRD ........................................................................................................................................................................................................... 909.3 1,147.0 662.9 738.4 47.0 127.7

IDA .............................................................................................................................................................................................................. 1,609.7 2,785.9 2,731.3 3,235.2 2,770.3 2,680.0

Number of operations ......................................................................................................................................................................................... 80 86 77 77 75 60

Note: Details may not add to totals because of rounding.

within sectors. Some countries (such as The

Gambia, Sierra Leone, and Zimbabwe),

where the implementation of reform programs is on track, nonetheless experienced

low GDP growth rates due the deterioration

of their terms of trade, weather conditions,

the lingering effects of the 1991–92 drought,

or the disruptions caused by rebel activity

and political transition. In contrast, other

countries (such as Equatorial Guinea and

Sudan, for example), where reform programs

were lacking or off-track, registered growth

of 6 percent to 7 percent, helped by oil exports or favorable agricultural conditions. In

yet other countries, results were uneven,

with agricultural growth coinciding with a

decline in industrial production and services,

or a decline in overall exports accompanied

nevertheless by an expansion of nontraditional exports. Contrasts also marked the

implementation of policies. While the countries of the CFA Zone as a group failed to

take the necessary measures to restore their

competitiveness in 1993, many of them implemented significant structural reforms in

the fiscal, financial, trade, and other areas.

In several of the good performers, the improvements that took place were still inadequate, however; savings rates, for example,

remained too low to support rapid, sustained

growth, and social conditions continued unsatisfactory.

Despite this panoply of variations, the

events of the past twelve months have some

common elements that provide encouraging

signs for the future. Despite delays and costs

in terms of lives and physical assets, the democratization process is moving ahead. Despite economic and political hardships, reform programs have survived in most countries and have even been strengthened in

some. Several countries improved their performance in the course of the past year, and

the members of the CFA Zone have taken an

historic, bold step to improve their competitiveness. While much remains to be done,

more countries are embarked on reform programs and face better prospects than compared with a year ago.

VARYING POLICIES, VARYING PERFORMANCE

Another common thread of Africa’s experience, despite the contrasts noted, is that African countries that have sustained adjustment policies generally have performed better than those countries that have not. This

observation, made in a recently released

staff study that covered the adjustment experience in sub-Saharan Africa from 1981

through 1991 (see Box 5–1), is complemented

by comparing the more recent experience of

a country where policy reform has been seriously interrupted (Nigeria) with a country

that strayed from, but reembarked on, policy
S5922 CONGRESSIONAL RECORD — SENATE May 1, 1995

reform (Kenya) and with one that has remained steadily on the reform path (Uganda).

Nigeria went through a tumultuous period

in both 1992 and 1993. The planned democratic transition was protracted and, in the

end, did not establish civilian rule. The process generated considerable uncertainty, economic disruptions, and social unrest. Budgetary control deteriorated, leading to fiscal

deficits, which exceeded 10 percent of GDP.

Inflation rose to 40 percent in 1992 and 58 percent in 1993. The official exchange rate was

pegged below market rates, with the spread

reaching 100 percent by late 1993. The external balance deteriorated significantly, with

reserves dwindling and arrears to external

creditors rising to more than $6 billion, or

one fifth of outstanding debt. Meanwhile, the

economy grew by only 4.1 percent in 1992 and

1.9 percent in 1993, compared with an average

5 percent in the preceding six years. The economic policies announced in the 1994 budget

abolished free transactions in the foreign exchange and credit markets, thereby removing the remaining core pillars of the structural adjustment program adopted in 1986.

In 1990–92, Kenya witnessed a sharp decline

in all major macroeconomic performance indicators. However, in early 1993, the Kenya

authorities signalled an interest in restarting the reform process, and, as a result, the

conditions for strong medium-term growth

in Kenya have improved significantly. Implementation of stabilization policies and more

effective enforcement of financial sector regulations have sharply reduced runaway inflation (falling to an annual rate of around 15

percent during the last quarter of 1993 after

peaking at around 100 percent during the second quarter). Important steps towards structural reform, particularly in the area of external trade, have begun to gradually restore

domestic and international confidence in the

government’s commitment to reform. With

the elimination of all but a short list of import licenses and the introduction of a unified and stabilized market-determined exchange rate (the Kenya shilling becoming

fully convertible in May 1994), the stage has

been set for the private, and especially the

export, sector to lead the recovery. By the

end of 1993, monetary control had been tightened, discipline had been reintroduced in the

financial sector, the maize market had been

fully liberalized, and foreign-exchange reserves had recovered to comfortable levels.

These improvements facilitated the approval

by the International Monetary Fund (IMF)

of a one-year Enhanced Structural Adjustment Facility arrangement during the

fourth quarter of 1993, as well as the successful rescheduling of external arrears with the

Paris Club in January 1994.

Uganda has gone quite far in creating a

free enterprise economy. At the same time,

the government has stabilized the economy

through tight fiscal and monetary programs.

Inflation was reduced to around 4 percent in

1993, down from 45 percent in 1992 and 240

percent in 1987, the year in which the present

adjustment program was initiated. Uganda

has in place a program of comprehensive

structural reforms covering the civil service,

public enterprises, and major financial institutions, and is undertaking a large reduction

in military forces to release resources for

priority spending programs. These reforms

have had a positive effect on the economy:

Real GDP growth is estimated to have

reached 6 percent in 1993, enabling per capita

consumption to rise by about 2.5 percent.

The lowered inflation has contributed to a

stable exchange rate and renewed confidence

in the country’s currency. In addition, the

downward slide in coffee production, the

country’s main export, has been halted.

There are also signs that nontraditional exports are growing rapidly; that the public’s

willingness to hold financial assets in the

form of savings and time deposits, which

have increased fourfold in the past two

years, is increasing; that the inflow of private capital has been substantial; and that

investment, including rehabilitation and reconstruction work on properties of returning

entrepreneurs, is on the rise. All of these

gains, together with the increased focus of

government spending on basic social services, are expected to have a positive impact

on poverty reduction.

IMPROVED COMPETITIVENESS

The countries of the CFA Zone have faced

major economic, financial, and social difficulties since 1986. These difficulties were

caused by a downward deflationary spiral of

production, incomes, and expenditures that

cut average real per capita income by 40 percent, reduced the capacity of governments to

provide basic social services, increased the

incidence of poverty, and undermined the

Zone’s financial institutions. The spiral, in

turn, was caused by a massive loss of competitiveness that resulted from a combination of the inflated cost structure existing in

the mid 1980’s and the major external shocks

suffered since then. The prices of the Zone’s

major exports (coffee, cocoa, cotton, phosphate, uranium, and oil) dropped sharply in

the second half of the 1980s, causing its

terms of trade to fall by 40 percent between

1985 and 1992. The Zone’s real effective exchange rate (REER) appreciated by 39 percent over the same period. That movement

was the result of the depreciation, since 1985,

of the United States dollar and the large depreciation achieved by many competing developing countries of their own REERs

through nominal devaluations in the context

of economic reforms. The internal adjustment programs and structural reforms pursued by various CFA countries in the period

1986–93 were able neither to correct this massive loss of competitiveness nor halt the ongoing downward spiral.

Recission and financial crisis in the CFA

Zone continued throughout 1993. Moreover,

as it became increasingly clear that internal

adjustment programs were not working, external financing for them dried up. For 1993

as a whole, per capita real income declined

by 4.5 percent, exports fell by 3.9 percent in

volume. and investment further contracted

to 13.8 percent of GDP.

Against this backdrop, in early January

1994 the heads of state of the CFA countries

met in Dakar to discuss ways to end the economic crisis. The meeting resulted in the

historic decision to change the parity of the

CFA franc from 50 per French franc, a level

at which at had been fixed in 1948, to 100 per

French franc.3 At the Dakar meeting, another important, although less publicized,

step was taken: the signing of a treaty transforming the West African Monetary Union

into a full economic union. A common approach to the implementation of economic

reforms that were needed to accompany the

parity change was also discussed.

The decisions made at the Dakar meeting

have provided a unique opportunity to restart the stalled structural adjustment process in the fourteen countries, restore growth,

and reduce poverty. Indeed, since January,

nearly all countries have adopted reform

programs that are being supported by the

World Bank and the IMF. All

postdevaluation programs give priority to

restraining inflation to ensure that the

nominal parity change actually leads to a

substantial depreciation of the real exchange

rate. Hence, public sector wage increases

have generally been limited to 10 percent to

15 percent to prevent a wage-price spiral. To

allow some time for urban wage earners to

adjust to the higher cost of imported items,

increases in the prices of selected imported

goods (petroleum products, rice, sugar, edible oils, medicines, and school books, for instance) are being curtailed through temporary tax reductions and direct subsidies.

Fiscal reform—reduction of deficits to sustainable levels, tax reform, and restructuring of expenditures—also figures prominently as an objective of the reform programs. Priority, however, has been given to

protecting vulnerable groups and

relaunching proverty-reduction programs by

increasing public expenditures on basic education and health services, developing and

implementing social funds targeted at the

poorest groups, and expanding labor-intensive public works programs.

REGIONAL COOPERATION EFFORTS

The recent events in the CFA Zone and the

new challenges facing South Africa and its

neighbors call for strengthened regional cooperation. Various actions have already been

taken in this direction, and others are under

consideration. In the CFA Zone, the member

countries of the new West African Economic

and Monetary Union (UEMOA) and the

Central African Monetary Union have decided to form economic—as well as monetary—links. In Western Africa, the signing of

the treaty for the new union by the six member states was accompanied by further efforts to render budgetary policies coherent,

harmonize tariffs and indirect taxes, and develop a regional financial market. In Central

Africa, the six member states of the Central

African Customs and Economic Union have

taken advantage of their increased competitiveness to accelerate the implementation of

a new common external tariff. Nontariff barriers have been removed, and rates have been

lowered.

These efforts are being supported by the

Bank, together with the IMF, the European

Union, and other interested donors.

At the level of the entire CFA Zone,

progress was made during the fiscal year in

the areas of social-security provision and

collection of statistics. With a view to providing a positive environment for private

sector-led growth, a treaty has been signed

that will put into place a common framework for business law.

The World Bank, together with the IMF,

the European Commission for the European

Union, and the African Development Bank,

is cosponsoring an initiative to facilitate

private investment, trade, and payments in

Eastern and Southern Africa and in the Indian Ocean countries—the cross-border initiative (CBI).

The CBI is based on a new integration concept that promotes mobility of factors,

goods, and services across national boundaries among participating countries while

minimizing chances for diversion of trade

and investment. It involves voluntary participation by countries that are ready to accelerate the reform effort, and is based on

the principle of reciprocity among the participating countries. The proposed reform

measures are in the areas of trade liberalization, liberalization of the exchange system,

deregulation of cross-border investment,

strengthening of financial intermediation,

and the movement of goods and persons

among the participating countries. The reform agenda supported under the CBI has

been developed through a two-year process of

discussion by public and private sector representatives of the participating countries,

as well as consultations with regional institutions.

The CBI endorsed by thirteen countries at

a meeting in Kampala, Uganda, in August

1993. To date, nine countries (Kenya, Malawi,

Mauritius, Namibia, Rwanda, Swaziland,
May 1, 1995 CONGRESSIONAL RECORD — SENATE S5923

Uganda, Zambia, and Zimbabwe) have confirmed their intention to participate and

have established mechanisms to prepare

country-specific proposals for implementing

the CBI-supported reform agenda.

In addition the heads of state of Kenya,

Tanzania, and Uganda (the members of the

former East African Community) recently

met in Arusha, Tanzania, to reaffirm their

commitment to strengthened cooperation.

There is a consensus that this cooperation

should be based on practical improvements

in investment incentives and tax regimes,

and streamlined border formalities.

THE BANK’S ASSISTANCE STRATEGY

The priorities for the Bank in Africa are

poverty reduction through environmentally

sustainable development; human resources

development—not just through lending but

also by defining frameworks for effective

interventions by governments and donors, as

in a recent staff study on health in Africa

(see Box 5–2); providing an exceptional response, already in progress, to the situation

and events in the CFA Zone; working with

major partners to fulfill the objectives and

the priorities of the SPA; and ‘‘getting results in the field’’ through the improved

quality of projects and their implementation, especially through strong capacitybuilding efforts.

Poverty reduction through environmentally

sustainable development. The need and urgency to reduce poverty in the region is evident; however, progress has been limited in

Africa as a whole, despite success in some

countries. Achieving a high rate of economic

growth, combined with a pattern of growth

favoring increases in incomes in the poorest

sections of society, is central to the Bank’s

poverty-reduction strategy. The Bank’s twopronged strategy, as elaborated in ‘‘World

Development Report 1990,’’ acts as a guide to

the institution’s economic and sector work,

as well as to its lending operations.

Fighting land degradation and

desertification have been key objectives of

the Bank in its environmental program for

the region. This program has been addressed

primarily through the elaboration and implementation of national environmental action plans (NEAPs) and through the Bank’s

lending program. NEAPs—which provide a

basis for the Bank’s dialogue with borrowers

on environmental issues, describe a country’s major environmental problems and concerns, and formulate actions to address

whatever problems are identified—have systematically paid attention to arresting land

degradation through better natural resource

management. The Bank’s regional portfolio

includes more than $500 million in environmental projects, some of which can be directly linked to the NEAP process. The Bank

has also been involved in the preparation of

a new international convention on

desertification that is currently being negotiated and is prepared to be a partner in its

implementation when it enters into effect.

TABLE 5–3.—WORLD BANK COMMITMENTS, DISBURSEMENTS, AND NET TRANSFERS IN AFRICA, 1990–94

[Millions of U.S. dollars; fiscal years]

Item

Nigeria Coˆte d’Ivoire Sudan Total region

Start 1994 1994 1990–94 Start 1994 1994 1990–94 Start 1994 1994 1990–94 Start 1994 1994 1990–94

Undisbursed commitments ....................................................................................... 2,461 423 181 13,118

Commitments ............................................................................................................ — 1,954 376 1,365 — 98 2,808 16,953

Gross disbursements ................................................................................................ 353 1,646 306 1,073 48 378 3,195 14,002

Repayments ............................................................................................................... 348 1,402 183 769 3 49 1,116 4,678

Net disbursements .................................................................................................... 5 243 123 304 45 329 2,079 9,324

Interest and charges ................................................................................................ 270 1,325 149 767 4 36 868 4,221

Net transfer ............................................................................................................... ¥265 ¥1,082 ¥26 ¥463 41 293 1,211 5,103

Note: Disbursements from the IDA Special Fund are included. The countries shown in the table are those with the largest amounts of public or publicly guaranteed long-term debt. Details may not add to totals because of rounding.

Assistance to CFA countries. Since the parity change and as of June 30, 1994, IDA has

provided approximately $1 billion in quickdisbursing credits and adjustment operations

to the CFA countries. For the short term,

the Bank-supported postdevaluation programs include, in addition to steps to limit

the price increases of essential goods, (a) a

draw-down of reserve stocks and additional

imports of essential foodstuffs to counter

speculative commercial practices, (b) increased budgetary appropriations for education and health, and (c) steps to assure

adequate supplies of essential drugs in public

health facilities and of low-cost generic

drugs in private pharmacies. For the longer

term, expenditures on labor-intensive civil

works programs, rural infrastructure, education, and health will be increased, as will

special programs (nutrition in particular)

that target the poorest groups and that will

be implemented by NGOs and community associations.

SPA—phase three. The third phase of the

Special Program of Assistance (SPA–3),

launched by the program’s donors in October

1993, will cover the three calendar years 1994–

96. Since the CFA Zone countries instituted

a parity change in their currency and

launched comprehensive economic reforms,

two additional countries, Comoros and Coˆ te

de’Ivoire, have met SPA eligibility requirements, bringing the total of eligible countries to twenty-nine. The estimated requirements of donor adjustment assistance for

these countries is $12 billion over the threeyear period. The SPA donors have met twice

since the parity change to discuss financing

requirements. Total donor pledges have increased, and some disbursements will be accelerated in response to these needs. In addition to mobilizing additional resources, SPA

donors have stressed the need to pursue

greater selectivity in allocating resources to

ensure that countries with strong reform

programs are adequately funded and that

scarce resources are used efficiently. As of

June 30, 1994, the donor community had

pledged $6.6 billion in quick-disbursing balance-of-payments assistance, and further efforts are continuing to close the remaining

gap.

The priorities and objectives of SPA–3 are

achieving higher growth rates and alleviating poverty; supplementing policy-reform

programs with more investment in human

resources and infrastructure; raising the

level of domestic savings and private investment; placing greater emphasis on ensuring

that the benefits of growth are directed at

reducing poverty; and strengthening local

economic management and institutional capacity. The SPA’s primary objective continues to be to assist countries to strengthen

their policy-reform programs and structural

reform efforts. However, to accelerate

growth, reduce poverty, and realize the full

benefits of policy reforms, the efficiency of

public investment financing by donors,

which still accounts for about 80 percent of

total donor financing, must be improved substantially. Discussion is continuing on

sectorwide approaches to donor financing

aimed at improving aid coordination and effectiveness. The SPA’s role would be to serve

as a catalyst to encourage donor support for

such integrated sector programs, to monitor

outcomes, and promote the harmonization of

donor procedures. Mobilization of resources

and coordination of specific sector-investment programs will continue at the country

level through mechanisms such as consultative groups, roundtables, and country-based

local aid-coordination groups.

Project quality and implementation. Despite

the difficulties faced by the region, portfolio

performance was relatively stable in 1993.

Differences among countries were caused, in

part, by variation in macroeconomic performance. Overall, adjusting countries had a

better record of project performance than

the nonadjusting ones, and operations in the

particularly difficult areas of agriculture

and adjustment lending improved their implementation records. The most serious general constraints to effective implementation

are uncertain borrower ownership and limited local capacity. To increase ownership,

the Bank is making a concerted effort to involve stakeholders (governments, beneficiaries, the private sector) in project preparation and implementation. The use of

participatory approaches—beneficiary assessments, participatory rural assessments,

and participatory workshops—is steadily increasing. In many cases, stakeholders participate not just in project design and preparation but also in economic and sector work

(ESW). Several actions are under way to improve project quality at entry such as preparation of ‘‘letters of sector policy,’’ avoiding

unnecessary complexity in project design

(through participatory approaches to project

preparation and greater involvement to

project preparation and greater involvement

by resident missions in the process, for example), testing new or complex approaches

in small pilot operations, and identifying

project-monitoring indicators that reflect

both output and impact. In fiscal 1993, the

most recent year for which numbers are

available, the amount of loan cancellations

expected to result from completed or

planned restructurings of problem projects

totaled about $500 million.

The need for capacity buildings in Africa

cuts across all sectors, and, in all cases the

need is urgent and acute. The challenge involves both making greater use of existing

local capacity and helping to build such capacity where it does not exist. The Bank’s

approach recognizes that capacity-building

issues need to be addressed at an early stage

in the project cycle and that the effort cannot succeed without improving the performance and productivity of the civil service.

This concern has led the Bank to appoint a

Capacity Building Committee to make recommendations on the most effective ways to

advance toward this goal. The committee’s

recommendations (which highlight ‘‘best

practices’’ to follow and cover a broad spectrum, from ESW and lending to the role of

resident missions) have been approved and

are being carried out.

Capacity building—as well as dialogue with

the intended beneficiaries of development—
S5924 CONGRESSIONAL RECORD — SENATE May 1, 1995

Footnotes at end of article.

continued to be the focus of the Bank’s work

in South Africa during the past year. In that

country, the Bank’s informal work has dealt

with the entire political spectrum, including

nongovernmental organizations, the private

sector, teachers, and trade unions. Dozens of

South Africans have been trained in economics, and relationships have been built up

with many of the country’s economic and political actors. In April 1994, the Bank opened

up a resident mission, following a request

from the multiparty South African transitional council.

FOOTNOTES

1The SPA for low-income, debt-distressed sub-Saharan African countries provides quick-disbursing

balance-of-payments assistance to twenty-nine eligible countries (as of the end of June 1994) in support

of reform programs developed in conjunction with

the Bank and the International Monetary Fund

(IMF). 2The countries are Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros,

Congo, Cote d’Ivoire, Gabon, Mali, Mauritania,

Niger, Senegal, and Togo. 3The parity of Comoros’ currency was changed to

75 per French franc.

BOX 5–2. TOWARD BETTER HEALTH IN AFRICA

Health issues are assuming an increasingly

important place in the Bank’s assistance

strategy in Africa. Reflecting this trend, a

major sector study was completed in 1993 in

close cooperation with the World Health Organization, the United Nations Children’s

Fund, and other partners. The study, ‘‘Better

Health In Africa,’’ aimed at building consensus on future health strategies in Africa

among the many stakeholders.1 It found that

while dramatic improvements had taken

place since independence, most African countries lagged well behind other developing

countries in health status. At fifty-one years

in 1991, life expectancy at birth in Africa is

eleven years less than in the low-income

countries as a group, and Africa’s infant

mortality rate, at over 100 deaths per 1,000

live births, is about one third higher on average than for the universe of low-income

countries. New health problems, such as

AIDS, and new strains of well-known diseases such as malaria, threaten the important health gains made in Africa over the

past generation.

The report discussed ‘‘best practices’’ for

health improvement by African governments

and their external partners in three areas.

First, as did ‘‘World Development Report

1993—Investing in Health,’’ the report emphasized the importance of strengthening

the capacity of households and communities

to recognize and respond to health problems.

This requires health and development strategies that increase the access of the poor to

income and opportunity, pay special attention to female education and literacy, provide for community monitoring and management of health services, and furnish information to the public and health-care providers

on health conditions and services. Second,

the report called for reform of African

health-care systems, and especially for making a basic package of cost-effective health

services available to Africans near where

they live and work through health centers

and first-referral hospitals. Third, the report

underscored the need for more efficient allocation and management of public financial

and human resources devoted to health improvement, and for their progressive

reallocation away from less cost-effective

interventions (largely provided through tertiary facilities) to a basic package. It found

substantial room for increases in technical

efficiency.2

The report concluded that substantial

health improvement in Africa is feasible, despite the severe financial constraints facing

most African countries. The will to reform

and to provide a limited package of quality,

low-cost, and highly cost-effective health

services to the vast majority of the population is central to success. The study found

that higher-income and middle-income African countries, in due course, should be able

to finance a basic package of health services

for their people from public and nongovernmental resources, without substantial external support. However, the low-income countries are likely to need donor assistance in

support of health for an extended period.

These countries now spend about $8 per capita annually on health from all sources—public, nongovernmental, and external—compared with the indicative estimate for the

basic package in the study of about $13. The

transition from the current to the indicative

level of spending will have to be implemented flexibly, on a country-by-country

basis, with provisions put in place of interim

targets to be met along the way.

FOOTNOTES

1World Bank. 1994. ‘‘Better Health in Africa.’’

Washington, D.C. 2For example, poor drug selection, procurement,

distribution, and prescription practices are responsible, together with other factors, for an effective

consumption of only about $12 on drugs for every

$100 in public spending on pharmaceuticals in many

African countries.

∑ Mr. SIMON. Mr. President, recently,

AMENDMENT TIME

fI came across an article by John G.

Kester, a Washington attorney. It is a

commonsense article about our Constitution and amending the Constitution.

I have great reverence for the Constitution, but I also know that the Constitution was written to meet problems

that existed more than two centuries

ago.

On the matter of a balanced budget

amendment, the author writes:

Congress, for instance, has demonstrated

for decades that institutionally it cannot

muster the discipline to restrain excessive

spending. Lately, ashamed to speak the

name, it even pretends that most expenditures are something else, labeling them entitlements. Presidents no longer refuse to

spend excessive appropriations. A balancedbudget amendment may be a challenge to express in words, but it is not impossible, and

it is certainly not, as Senator Chris Dodd asserts, very irresponsible. It imposes a new

constitutional obligation on Congress without micromanaging the policy choices for

achieving it. It is not likely to make the situation worse, even if courts will be invited

to construe it. And if experience suggests improvements, those can be added.

John Kester brings both scholarship

and common sense to this discussion.

At this point, I ask that his article

be printed in the RECORD.

The article follows:

[From the Washingtonian, March 1995]

AMENDMENT TIME

(By John G. Kester)

If the people really are serious about taking back their government, they can start by

amending the Constitution. There have been

a few lurches in that direction—like the balanced-budget amendment that was part of

the Republicans’ Contract With America,

and some talk about amendments that would

ban unfunded federal mandates or set uniform term limits for Congress.

That’s a beginning, but a modest one. The

current state legislatures are in a receptive

mood. If Speaker Gingrich and the new

tribunes of the people really want permanent

change in the way Washington and its federal judges run the country, then this spring

constitutional amendments ought to be blossoming like azaleas.

But don’t count on it. The op-ed pages already have begun to darken with warnings

from learned scholars, politicians, and columnists that to lay hands on the Constitution would be impractical, even dangerous,

downright unpatriotic. The Constitution,

they suggest, is so nearly perfect that to revise it would be like altering the formula of

mother’s milk—nothing else could be healthful, and any variation might make you sick.

Is the Constitution too flawless and sacred

a document to violate with alterations? Most

of the Cassandras stop short of suggesting it

was divinely inspired, but even that has been

claimed. The less devout shake their heads

and say that adding amendments just isn’t

practical—that it can never work, that even

figuring out the right words is too hard, that

the only way to fit the Constitution to the

times is to leave all corrections to the

courts.

Even aesthetics is invoked. To add amendments, it has been said, would make our

classically crisp federal Constitution resemble those ungainly creations of the 50 states.

State constitutions are longer, often loaded

with dozens of amendments, and deal with

such mundane affairs as off-street parking in

Baltimore (Maryland Constitution Article

XI–C) or preserving natural oyster beds (Virginia Constitution Article XI, section 3).

But no one has shown that state constitutions do not work—or, indeed, that lengthy

and detailed constitutions don’t work better

because they leave less room for doubt.

Automobile engines, reliably move your car

without being engineered to win beauty contests. If the purpose of the Constitution is to

model 18th-century elegance, perhaps the

parchment should be moved from the Archives to the National Gallery.

The Constitution exists to be applied, not

adored. A politically rare opportunity will be

lost if the hand-wringing about constitutional purity succeeds in scaring off reformers. Of course not every popular idea belongs

in the Constitution, and not every proposed

policy change would be a good one. But (dare

one say if?) there is room for improvement.

No one should take all the warnings

against amendments seriously. The authors

of the Constitution certainly wouldn’t have.

The men who spent the summer of 1787

holding secret meetings in a room in Philadelphia did not think they were Moses, chiseling stones with dictation from a Higher

Source. Their un-air-conditioned days passed

in disagreements, endless compromises, and

perspiration. The product was simply a wellorganized document that most could accept,

although with varying degrees of reluctance.

The 13-state ratification process that followed was even more contentious, and nearly

failed. To obtain agreement from the minimum nine states took nine months, and the

votes in key ratifying conventions were too

close for comfort: Virginia 89 to 79, Massachusetts 187 to 168, New York 30 to 27. No one

arguing for ratification ever gave a speech

claiming the document was perfect; the authors more humbly expressed hope and said

they had done the best they could.

All recognized that, as Virginia’s George

Mason observed at the beginning, ‘‘The plan

now to be formed will certainly be defective.’’ (So defective he finally concluded,

particularly in its treatment of slavery, that

in the end he refused to sign it.) For that

reason, the Constitution was written with

one article of its seven devoted entirely to