Sunday Times (Johannesburg) - June 26, 2005

THE G8 Africa Action Plan adopted at Kananaskis in 2002 should continue to be the basis for supporting, not usurping, African leadership at Gleneagles.

The plan committed the G8 to enhance our partnership with African countries whose performance reflects the good political and economic governance standards set by the New Partnership for Africa's Development (Nepad) plan.

The plans recognise that development is essentially a human phenomenon dependent on a commitment to good governance and the pursuit of policies that spur growth and alleviate poverty. Africans should know that, as the world's single largest source of development assistance, the US stands ready to help those countries who help themselves.

The US will continue to focus on results rather than rhetoric. On the eve of the G8 Gleneagles Summit, much has been made of what has been termed US reluctance to increase Official Development Assistance (ODA).

The facts tell a very different story. At the Monterey Conference on Financing for Development, President George W Bush pledged a 50% increase in ODA levels by 2006, over 2000 levels. The US met this commitment three years ahead of schedule in 2003.

In fact, the US's ODA has almost doubled since 2000, from $10-billion to $19-billion, and to Africa it has tripled to a historic high of $3.2-billion. Today, the US accounts for 20% of all ODA from Organisation for Economic Co-operation and Development members.

The US is also the single largest donor to multilateral development and relief organisations, contributing over $3.8-billion in 2004 and, at $2.8-billion, the largest donor of official humanitarian aid for victims of famine, war, and natural disasters.

While ODA can play an important catalytic role for policy reform and in capacity building in poor countries * and while humanitarian assistance is often the only way to stave off tragedy* ODA alone is not sufficient to trigger the type of sustained economic growth needed to alleviate soul-wrenching poverty.

The more important financial flows, in terms of sustainable economic development, are foreign direct investment and trade. In 2003, US companies invested $14-billion in developing countries. In that year the US also bought more goods from developing countries than any other country * over $600-billion.

Under the African Growth and Opportunity Act, 98% of imports from sub-Saharan Africa enter the US duty free, which resulted in an increase in two-way trade of 37% in 2004.

Remittances and private philanthropy are also no small factors. In 2003, US residents sent an estimated $28- billion to their relatives in developing countries, and US non-governmental organisations gave at least $6.3-billion to developing countries in 2003, representing 62% of private contributions from major donor countries that year.

Thus, President Bush's message that private financial flows are far more important for development than ODA reflects a reality, not a lack of US will or commitment.

The Nepad programme of action also prioritises mobilising resources from multiple sources: increasing domestic savings and investments; improving management of public revenue and expenditure; improving Africa's share in global trade; attracting foreign direct investment; and increasing capital flows through further debt reduction and increased ODA flows.

Strengthening Africa's ties with the US will pay off substantially, since it is the source for more than two-thirds of all G7 trade, investment, remittances, foreign assistance and philanthropy to the developing world.

In the final analysis, the question is not how much financing has been put in but rather what are the results or outcomes?

In the case of President Bush's Emergency Plan For Aids Relief, the results are dramatic. It is the largest commitment ever made by a single nation to any international health initiative * $15-billion over five years. It has already more than tripled the number of people receiving antiretroviral treatment in sub-Saharan Africa and supported care for more than 1.7 million people infected and affected by HIV/Aids, including 630200 orphans and vulnerable children.

In 2004 the US contributed twice as much global HIV/Aids funding as all other donor nations combined, at $2.4- billion.

What can we expect in Scotland? President Bush will seek concrete results that remove barriers to Africa's prosperity, including cancelling debt and pushing to eliminate agricultural subsidies.

In 2001, President Bush called on the World Bank to "Stop the Debt" by providing 100% grants to the poorest countries through its International Development Association facility.

At last year's Sea Island G8 Summit, the US tabled a proposal to "End the Debt" by cancelling 100% of heavily indebted poor countries' debt owed to the World Bank, African Development Bank and International Monetary Fund. The G8 finance ministers have finally agreed to the proposal.

Under the US plan, 18 countries * 14 of which are African * are for the first time immediately eligible for $40-billion in multilateral debt cancellation, conclusively ending the lend-and-forgive cycle. Under the proposal, increased grant assistance will replace future debt.

President Bush might also look for G8 countries to pledge support for 100% agricultural subsidies elimination.

In July 2002, the US tabled a proposal at the World Trade Organisation to eliminate all agricultural export subsidies and dramatically reduce domestic supports and tariffs.

In July 2004, the US secured agreement at the World Trade Organisation to include sharp cuts in agricultural trade barriers in the final phase of the Doha round of negotiations.

Finally, unleashing Africa's entrepreneurs is key. The private sector, not ODA, ultimately drives development.

Practical experience and economic research show that * as the criteria for our multibillion-dollar Millennium Challenge Account set forth * a government's propensity to invest in its own people, to govern justly, and to grant economic freedom to the private sector are the critical foundations of growth and lasting progress.

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