ECONOMIC SITUATION IN AFRICA
ESSENTIAL FACTS
CONFIDENTIAL
2
1. Africa has serious problems short and long term. Many countries continue to experience low or negative growth. High interest rates and low commodity prices accentuate debt servicing difficulties.
The problems are compounded in many cases by drought.
2. External difficulties are exacerbated by inappropriate domestic policies which include poor use of commercial borrowing,
bad agricultural pricing, inefficient parastatal monopolies, rapid population growth, overvalued exchange rate, and general lack of effective management.
3. UN Declaration on Africa. The original Declaration fell at the
last hurdle in Geneva this summer. After long negotiations a compromise draft was rejected by the Geneva Africans who prevailed upon their more moderate New York colleagues to remit the papers to
the GA for further discussion. A new draft has now been submitted.
It is relatively moderate but we still have reservations on certain financial points.
4. As Africa is a major item in the UNGA there is considerable
political pressure for the UK to be more forthcoming. Given our budgetary restraints we will have to work within a context of "flexible assistance in support of African countries, pursuing with IMF/IBRD help, structural adjustment programmes which maintain
essential development activities". We announced a a supplementary
contribution to the UNDP of £l m in 1984 during the Plenary Debate
on Africa during the current UNGA.
5. 'Special Fund for Africa'. At the recent IMF/IBRD meetings in
Washington the World Bank's paper on Sub Saharan African was generally welcomed. The Bank is exploring with donors various
approaches to mobilising additional resources for Sub-Saharan-
Africa. However, there has been no actual call by the World Bank
for a Special Fund. We would not favour such a fund as it could
fragment the international funding role of IDA and have doubts on