June 10, 2005

Archived - Notes for Remarks by the Honourable Ralph Goodale, PC, MP, Minister of Finance for Canada, on African Development in Advance of the G-7 Meeting 

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Chatham House, 
London, England

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I am very glad to be here today to continue a dialogue about the future of Africa.

This is a topic of keen interest to me as one of the 17 Commissioners who served on Prime Minister Tony Blair's Commission for Africa (CFA). Our CFA report was launched about three months ago, after a full year of study and deliberation.

I want to congratulate the UK government and the CFA Secretariat for all of their hard work in creating and supporting the Commission, and in launching our report. Because of that effort, Africa and its future are once again prominent on the agenda for international attention-including at next month's G-8 Summit in Gleneagles.

This will not be the first time that G-8 Leaders have focused on the challenges of Africa. In 2002, at the Kananaskis Summit in Canada, we opened the dialogue and produced a G-8 Action Plan on Africa-particularly in support of the African leaders who had then come together in the NEPAD, the New Partnership for Africa's Development.

Their homegrown African initiative and leadership built around good governance and genuine socio-economic progress were encouraging. The G-8 needed to show support. And we made a start.

The summits of 2003 at Evian and 2004 at Sea Island focused on other issues. This year, through UK leadership, Gleneagles will return to a consideration of "where to from here" in Africa. And Canada welcomes it!

As a result of both globalization and new technology, more and more people are coming to see themselves as citizens-not just of their own countries-but of a much broader and interdependent global community. And we know that global security and global prosperity require that all people and all nations feel that they have a stake in the future of that global community. They must feel that they can fully and fairly benefit from it, and that they have a responsibility to contribute to it. Nowhere is that more relevant or more compelling than in relation to Africa.

It was in that spirit that I accepted Mr. Blair's invitation to join the Commission for Africa, comprised of 17 men and women, more than half of them Africans. We served in our private capacities, rather than as representatives of any organization, political office or country. But on behalf of the Government of Canada, I am pleased to confirm that on the CFA's most fundamental recommendation-a doubling of global aid flows to Africa in the period immediately ahead-my country will in fact reach that milestone by 2008.

The Commission's objective was to generate concrete advice to make tangible progress in Africa. That meant being honest about issues such as poverty and corruption in Africa, as well as our propensity for indifference or inaction here in the richer parts of the world.

Initially, the task seemed overwhelming. In many ways, Africa is truly a continent in crisis. It faces enormous economic and human development challenges, the scope and scale of which defy comprehension. For example, more than 260,000 people die in Africa of AIDS and malaria-the equivalent of the recent Asian tsunami-every single month.

But there are also important signs of progress. There are fewer conflicts. Governance is improving. Africa is a seedbed of entrepreneurial potential, and governments on the continent are changing past ways-working toward the kind of enabling environment that will allow Africans themselves to become the true economic engines of their own futures.

I saw many of these signs first-hand when I had the opportunity, as part of my personal consultations, to spend some time in Africa last year. I learned from Africans about what works, what doesn't work and what they believe needs to get done.

My travels took me to four separate nations-Tanzania, South Africa, Mali and Nigeria.

I had the privilege of meeting people from all walks of life-presidents and prime ministers, ministers and officials, business people, academics, non-governmental organizations (NGOs), the voices of civil society and private citizens.

I was riveted by Trevor Manuel's compelling stories about the final days of apartheid, about the very day that Nelson Mandela was freed from prison, and how things have evolved in South Africa, now some 15 years later.

I listened to cotton farmers and mill workers in Mali who wanted more value-added processing of cotton products and more open and less distorted access to other markets around the world.

I remember walking through the Tandale market in Tanzania, where shop owners and commodity traders spoke passionately about the need for improved infrastructure and better access to financing for new enterprises.

From a North American perspective, those sound like difficult things to get "passionate" about. But in Tanzania and the Tandale market, discussions about infrastructure and financing stir strong emotions because they are so lacking.

Nigerian legislators told me"we cannot even breathe because of the debt we carry." And again they said"we know our Nigerian reputation for corruption and we must convince the world with hard evidence that we are fighting it and making real progress." And remember, please, that there is now a new generation of younger Nigerian leaders who really want to make the necessary changes, and they are doing it.

I think often of Nigerian President Obasanjo telling me, frankly, perhaps skeptically, that moving forward on even one or two of the good ideas coming from this Commission's final report would greatly surpass the expectations of most Africans about "just another official report" about their continent.

Following this visit, I also had the chance to consult with private sector groups and NGOs in Canada. All these encounters have shaped the way that I think about Africa and its many challenges.

Paramount among the challenges and a key theme in our CFA report is that if Africa is to become a success story, it must be able to take the lead on its own development. True and sustainable progress, especially in the critical areas of governance and security, cannot be bootstrapped externally by any foreign nation. It must come from within. That's why supporting the NEPAD is so important.

But for Africa to reach its Millennium Development Goals, it will take more than simply acknowledging the importance of African leadership. It requires finding the ways to support that leadership in making sustainable economic, social and political progress.

With Gordon Brown, the Chancellor of the Exchequer, and Trevor Manuel, South Africa's Finance Minister, my primary focus in the writing of the CFA report was on the economy. How to build a more vigorous, viable and durable economy? And how to engage business in developmental issues?

Gone are the days when "development" and "business" are antithetical. There is now global consensus that mobilizing the private sector-and its potential contributions to economic growth, job creation, living standards and the incomes of the poor-must be an integral part of sustained and sustainable poverty reduction.

A vibrant indigenous private sector can help create a growing middle class, which in turn will drive more consumer demand and more economic growth-while also fostering democratic development.

It is easy to make the mistake of assuming that Africa does not even have a significant private sector. This is simply not the case. In Africa, there are millions of low-income men and women who make their livings by providing goods and services to others-in informal markets and on anonymous street corners.

The problem is that these entrepreneurs face huge barriers that hinder the development of their businesses and that hinder both foreign and domestic investment.

Among the barriers are limited access to financing and business capital; weak policy, legal, fiscal and regulatory environments; poor governance; and inadequate public infrastructure for transportation, communications, energy and water-to name just a few obvious examples.

These barriers have resulted in Africa having the highest level of "capital flight" in the world-40 per cent from Africa, compared with only 4 per cent in Asia.

These are just some of the specific issues identified in the 2004 UN report called Unleashing Entrepreneurship, which was co-authored by Canada's Prime Minister Paul Martin and former Mexican President Ernesto Zedillo.

The Martin/Zedillo analysis and the CFA report agree that a strong enabling environment in which people can do business-one that is firmly rooted in the rule of law-is essential to achieving both domestic and foreign investment and thus economic growth and development. And it is crucial that small entrepreneurs and people in poor households feel and believe they are (or can be) a part of it-the beneficiaries of it.

With our tactical help and tangible support, African governments can and must make an unambiguous policy commitment to sustainable private sector development. They need to invest in public infrastructure, eliminate inefficiencies, address legal and security issues, and improve access to finance.

They can improve trade capacity by reducing supply-side constraints and increasing export readiness, including access to capital and skills.

They must eliminate the barriers to intra-African trade. In North America, through the North American Free Trade Agreement and here in Europe through the European Union, intra-regional trade has led to impressive results. Lending our experiences on this matter could help the development of a vibrant free trade zone in Africa. And from hard experience, we can also explain the pain and failure that flow from mindless protectionism.

Most importantly, African governments must involve their indigenous private sectors in the policy-making process. The formation of a real partnership between governments and small and medium-sized enterprises is essential to beginning real action on economic growth, and through this, poverty reduction.

But Africans, and their governments, cannot reasonably be expected to make this progress all on their own. While I firmly believe they must be the catalysts and the leaders of change, if the change is to be real and lasting, there is a big role for wealthy countries and donor organizations in poverty reduction.

Helping reverse Africa's economic decline will require improved international "rules of the game." We must do more to enable Africa to compete globally. While the rest of the developing world has seen its share of world trade rise or at least remain constant, Africa's share has dropped from a meagre 6 per cent to an even more meagre 2 per cent over the last 20 years.

Market access is key to helping developing countries achieve the economic growth required to meet the Millennium Development Goals.

That is why we all need to work very hard toward a fairer international trading system, and ensure that the Doha round-which has a mandate for various trade and development reforms-delivers on its commitment to create greater opportunity for trade.

We in the developed world can also help Africa improve its trade capacity. Trade-related technical assistance from donor countries can speed this process. Canada is already providing such assistance-about $316 million through both bilateral and multilateral initiatives-and we should do more.

We also need to help harness the potential of foreign direct investment (FDI). Global FDI is consistently larger than aid flows from donor countries. In 2002, net private capital flows to developing countries were more than three times the net official development assistance-about US$150 billion in FDI compared to US$50 billion in aid.

Donor countries like Canada must find ways to encourage our firms to do more business in Africa. By promoting the ways and means to allow more and more partnerships between firms in Africa and firms abroad, we simultaneously bolster Africa's trade capacity while contributing to the economic sustainability of their indigenous private sectors. That's why we have launched a Canada Investment Fund for Africa.

Let me close by mentioning two particularly tough barriers to African well-being which must be tackled more aggressively-those of debt and disease.

Too many resources in Africa are being used up to pay for the debts of the past when they should be invested in better social and economic opportunities for the future.

In a continent where young people now make up half of the entire population, the importance of future-oriented investments simply cannot be overstated. Alleviating the "dead weight" of debt empowers African nations to use more of their own money to invest in their own priorities-health, education, economic and social opportunities.

Canada has long been a champion of debt relief for those many poor countries that show the will and the determination to break free from the past, to embrace good governance and transparency, and build better futures for their people.

We have participated fully and pro-actively in the work of the Paris Club and in the global initiatives to ease the debt burdens of certain Heavily Indebted Poor Countries (known as the HIPC processes).

With respect to bilateral debt-that which is owed directly to Canada-we are in the midst of a $1.2-billion effort to eliminate that burden altogether. When we are done-and we are at about the mid-point now-no poor country anywhere will owe anything to Canada!

As for the multilateral debt owed by poor countries to the World Bank, the African Development Fund and the IMF, in February Canada proposed that wealthy countries should assume right now 100 per cent of the debt-servicing responsibilities of poor countries throughout this coming decade. We focused on servicing costs because that technique can make available resources go further, and the effort can get going immediately "among the willing" without waiting for all potential donors to get onside.

I am encouraged by the recent discussions between President Bush and Prime Minister Blair, especially with respect to "additionality" and we believe that other G-7 countries should be prepared to show a similar willingness to move and to contribute.

Starting later today, I will be discussing the elements of a common debt relief plan with my G-7 counterparts. Our goal? Between now and the Gleneagles Summit, to come up with a meaningful plan which all of our countries can rally behind and which can have the largest impact upon the largest possible number of qualifying countries.

Not only HIPCs, but all low-income countries.

Not just for the debt owed to the World Bank, but also IMF debt. Not dependent upon some accounting change, or the selling of gold reserves or the creation of some new global tax regime.

And not "instead of" other aid flows to these indebted countries, but in addition to them.

The current debate about further debt relief for the poorest of the poor needs to end. It needs to end now. No more excuses. No more delays. Let's just do it!

A second major barrier to progress is the scourge of disease. The impact of diseases like HIV/AIDS, tuberculosis, malaria and polio is so devastating that it is no longer simply a social issue-it has enormous implications for the future of market economies in Africa.

It is not unusual to find businesses in Africa that cannot stay at full capacity because of the effects of illness among their staff. And while I am personally troubled by the humanitarian implications of this pandemic, as a CFA Commissioner and a G-7 Finance Minister, I am also greatly disturbed by the consequences of disease on Africa's ability to create and maintain a thriving economy.

It therefore falls to us to help Africa to combat disease in order to provide the kind of environment where greater health and economic growth are possible. We simply must stop that "monthly tsunami" of death and deprivation.

Tangible progress can be and is being made. Through programs like the Global Alliance for Vaccines and Immunization and the World Health Organization's 3 by 5 HIV/AIDS initiative, much-needed treatment and vaccinations are getting to more of the people who need it most. In fact, due to the success of one such program, the Global Polio Eradication Initiative, we are now only months away from wiping out polio, forever. In my 2005 federal budget this spring, Canada has contributed an incremental $342 million to the fight against disease in Africa.

Conclusion

The Commission for Africa sets the bar for action in Africa rather high. But it points us, I think, in the right direction. What was strategically important in the writing of our report was to ensure that, beyond the 17 of us who put it together, the report offered entry ramps that will allow more and more players and partners to join in as time goes by.

In Nelson Mandela's autobiography Long Walk to Freedom he wrote: "I have walked that long road to freedom. I have tried not to falter; I have made missteps along the way. But I have discovered the secret that after climbing a great hill, one only finds that there are many more hills to climb."

Those words convey the kind of challenges Africa faces.

My hope is that our CFA report, and the response to that report by the global community, will help to lower some of those hills, lessen the climb, add to the number of willing climbers, and reach a future that is more genuinely "free"-free from violence and oppression, free from poverty and disease, free from hopelessness and despair.