RS21353 -- New Partnership for Africa's Development (NEPAD) Updated April 30, 2003 The New Partnership for Africa's Development (NEPAD), described as a multi-sector sustainable development policy framework, was collectively formulatedand promoted by leading African heads of state. It was endorsed and adopted in mid-2001 by the Organization ofAfrican Unity (OAU), founded in 1963 duringthe decolonization era, and later also endorsed by the African Union, which in July 2002 superseded the OAU. (1) NEPAD seeks to reduce poverty and increaseeconomic growth across Africa, in part by improving the policy-making and implementation capacities of Africanstates. It has won the support of many Africanleaders and regional inter-governmental organizations, and has been generally well-received by leaders ofinternational multilateral organizations and the Groupof Eight (G-8). NEPAD is based on a policy blueprint, the New African Initiative (NAI), which merged severalearlier continental economic development plans. Objectives. NEPAD seeks to spur economic growth and improvesocio-economic development across Africaby increasing capital flows to Africa in the form of private sector investment, development assistance, debt relief,and broadened market access for Africanexports. A key NEPAD aim is improving the institutional, regulatory, and planning capabilities of African statesto allow them to achieve gains both asindividual entities and as economically integrated sub-regional groupings. NEPAD seeks to increase democraticdecision making, transparency, andaccountability in governance; improve economic policy-making and public sector management; and increaseinvestments in infrastructure. Other goals includeexpanding access to social services and education; eradicating poverty; and promoting peace, security, and humanrights. Sectoral investment targets includeagriculture, energy, environment, physical and communications infrastructure, and institutional efforts to increaseeconomic diversification and trade. Economic Integration. NEPAD endeavors both to strengthen linkages among African countries, and todeepen and accelerate Africa's economic and political integration with other world regions. A key aim is to ensurethat Africa surmounts what one NEPAD textasserts is the significant degree of Africa's marginalization in the face of increasingly interconnected global tradeand markets. At the same time, NEPAD seeksto buffer Africa from the perceived negative effects of "globalization" on public health, local industries, theenvironment, and public safety. Some NEPAD critics assert that increased African economic integration with global markets may yield significant unanticipated problems, such as increasedexternal pressure to adhere to trade rules and regulatory frameworks defined by market forces and policy makersoutside of Africa. Some critics fear that rates ofnatural resource extraction in Africa, possibly accompanied by increased rates of environmental degradation, maygrow. They also argue that as greaterintegration takes place, Africa's relative lack of industrial capacity will prevent it from taking advantage of potentialearnings opportunities generated byvalue-added secondary processing of export commodities, which typically takes place in importing countries. Criticsalso maintain that weak prices for manykey African exports may make it vulnerable to exploitation by powerful global economic actors, while global labormarkets may drain Africa of much of itseducated work force. Governance and Reform. NEPAD aims at promoting good governance, democratization, and public sectorreforms as primary means of attracting greater foreign investment, political support, and aid flows to Africa. Themain NEPAD document posits these ends asnecessary pre-requisites for socio-economic policy success, long-term political stability, and social justice. It callsfor market-oriented economic and governancereforms that substantially mirror those advocated by multi-lateral lenders and western donor governments. NEPADrequires, however, that these policies beimplemented and monitored by African states themselves -- not by foreign actors. A new NEPAD institution, theAfrican Peer Review Mechanism (APRM,discussed below), has been described as a primary means of implementing NEPAD's governance goals. Organizational Structure and Linkages. NEPAD, a term used interchangeably to refer both to the keyNEPAD policy document and to the governments and organizations that support it, is a major policy vehicle forAfrican Union (AU). The AU assumed theOAU's organizational apparatus and affirmed many of its decisions, including OAU's adoption of NEPAD as a keypolicy framework. The annual AU summitof heads of state is the supreme NEPAD decision-making body. Subsidiary to it is the NEPAD ImplementationCommittee, which must annually report to theAU summit. The AU Chairman and Secretary-General are ex-officio members of the Implementation Committee,and the AU Secretariat will participate in itsmeetings. The final OAU heads of state summit enlarged the Implementation Committee in July 2002 from fifteento twenty members by adding to it anadditional representative from each of five AU sub-regions. Subsidiary to the Implementation Committee is theNEPAD Steering Committee. It coordinatesNEPAD's relations with multilateral lenders, bilateral donors, and with international and regional multilateralbodies. The Steering Committee is supported by aNEPAD Secretariat that supervises NEPAD marketing, communication, finance and administrative functions andoversees NEPAD program initiatives onsocio-economic development, market access, infrastructure development, and governance. NEPAD includes a private component, the NEPAD Business Group, which is made up of twelve business councils, chambers of commerce, and relatedorganizations. The group will disseminate information and coordinate relations between NEPAD and private firmsthat support its aims, with a particular focuson trade and investment opportunities in Africa. The U.S. Corporate Council on Africa (CCA), a coalition of over170 U.S. companies with Africa-relatedbusiness interests and a NEPAD Business Group member, plans to act "as a major source of support in the UnitedStates" for NEPAD. (2) Financing. NEPAD is primarily a framework for coordinating policy-making by sub-regional economicdevelopment bodies and specialized functional agencies, particularly as regards cross-border initiatives. Fewreferences to specific amounts required for thefinancing of NEPAD goals or sector-focused projects appear within NEPAD texts. The primary NEPAD policydocument, however, anticipates that to achieve"the goal of reducing by half the proportion of Africans living in poverty by the year 2015, Africa needs to fill anannual resource gap of 12% of its GDP, or $64billion." It also calls for an annual $10 billion increase in funding for public health. (3) Meeting such goals, it asserts, "will require increased domestic savings[and] improvements in the public revenue collection systems." It also states that "the bulk of the needed resourceswill have to be obtained from outside thecontinent... [in the form of] debt reduction and overseas development assistance (ODA) as complementary externalresources required in the short to mediumterm." Private capital flows are described by the document as a longer-term concern. Some analysts have criticizedthe lack of specific cost projections and thegeneral nature of many statements in the document, asserting that it contains few measurable, explicit benchmarksby which to judge the success of itsimplementation. Defining the Goals of NEPAD. The NEPAD Implementation Committee was enlarged in July 2002, in partto broaden and diversify the base of support for NEPAD, and to accommodate leaders who had not played key rolesin its formation. A key figure in this regardwas Libyan leader Muammar al-Qadhafi. He has long advocated greater African integration, but has alsoemphasized a need for broad African politicalautonomy. He has rejected donor-imposed conditions on development assistance and has opposed close politicalties between Africa and the industrializedworld. Al-Qadhafi largely initiated the OAU reform process that led to the AU's formation, but he criticized theheavily NEPAD-oriented policy agenda that theAU adopted, calling NEPAD a project of the "former colonisers and racists." (4) Several other African leaders have echoed these sentiments. Efforts to bridgethedifferences between al-Qadhafi and advocates of NEPAD, in particular President Mbeki of South Africa, appearto have been successful, albeit broadly in favorof the South African agenda. Libya has indicated its acceptance of NEPAD and the APRM, and has joined theNEPAD Implementation Committee. Some commentators view NEPAD as a state-centric, elite-generated framework created with little input from political opposition parties or civil society.Although many civic activists see much hope in NEPAD, some warn that NEPAD may fail without greater publicengagement in its implementation -- acriticism publicly recognized by leading NEPAD architects, such as President Mbeki. African Peer Review Mechanism. Under the APRM, signatory states will monitor one anothers' adherenceto the collective, economic and corporate governance goals, codes, and standards contained in the NEPAD Declaration on Democracy, Political, Economic andCorporate Governance . APRM participation is voluntary, and African leaders emphasize that it will functionby providing a positive incentive structure forlong-term, incremental political reform and regime transformation. They stress that the APRM is not intended asa punitive instrument or as a mechanismthrough which APRM member states would condemn or sanction their peers. Despite such assurances, someNEPAD critics believe that implementation of theAPRM will eventually cause NEPAD to become subject to donor demands for externally defined economic andpolitical reforms, imposed as conditions on aid.The effectiveness and intent of the APRM was questioned by many observers after South African President ThaboMbeki made statements that appeared tofundamentally redefine the purpose and scope of the APRM. He reportedly suggested that the APRM would assessstates' economic performance but not theirgovernance or human rights records.