Toward a Brighter Horizon for Africa Well-Directed Aid Can Foster Reform, Create Conditions for Trade, Investment

Article excerpt

President Clinton recently announced a new trade and development initiative for Africa. Observers quickly zeroed in on what was new in this initiative: an increased use of private capital, debt relief, and the lowering of American trade barriers in an effort to bring economic growth to Africa. Some went so far as to say the trade and investment initiative represented the demise of traditional foreign assistance to Africa.

On the contrary, Mr. Clinton's initiative wisely combines a more focused approach to foreign assistance, with trade and investment incentives to encourage economic and political reform.

For the first time, the conditions may be right for positive change in Africa. Several of Africa's new leaders are determined to abandon approaches that were based on aid dependency. They want trade and investment to replace aid - not today, but as soon as possible.

These leaders are realists. They know that no corporation or company will help them address development challenges that are more serious in Africa than anywhere else. They know that a quarter of all African children will die before their fifth birthday from disease and malnutrition. They know that only half of all African adults are literate, fewer than 20 percent of young people attend high school, and the continent's HIV and AIDS infection rates are the highest in the world.

African leaders such as Nelson Mandela of South Africa, Meles Zenawi of Ethiopia, Afworki Isaias of Eritrea, and Yoweri Kaguta Museveni of Uganda understand that development assistance is more necessary now than ever to create the conditions needed to attract private capital and spur lasting economic growth. Foreign assistance to reform-minded governments is essential if these nations are to succeed in escaping aid dependency.

Four areas are crucial:

* Deepening reforms is a must. In Africa, even the best-performing economies remain more closed and regulated than many of their Asian and Latin American competitors. United States foreign assistance is helping African nations liberalize markets, remove institutional and legal trade barriers, and create environments receptive to investment. …