[Pages S5920-S5924]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

AFRICA

<bullet> 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.
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
------------------------------------------------------------------------
Per capita
Population\1\ GNP\2\
Country (millions) (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
Cote 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
Sao Tome and Principe....................... 0.1 360
Senegal..................................... 7.8 780
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]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual
Sector average, 1990 1991 1992 1993 1994
1985-89
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
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,
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 capacity-building
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 two-pronged 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]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Nigeria Cote d'Ivoire Sudan Total region
Item -----------------------------------------------------------------------------------------------------------------------------------------------------------
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 quick-disbursing 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 Cote 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 three-year 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--
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

\1\The 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).
\2\The countries are Benin, Burkina Faso, Cameroon, Central
African Republic, Chad, Comoros, Congo, Cote d'Ivoire, Gabon,
Mali, Mauritania, Niger, Senegal, and Togo.
\3\The 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.
Footnotes at end of article.
[[Page S5921]]
[[Page S5922]]
[[Page S5923]]
[[Page S5924]] 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

\1\World Bank. 1994. ``Better Health in Africa.'' Washington,
D.C.
\2\For 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.

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