Select Committee on International Development Minutes of Evidence

Examination of Witnesses (Questions 20-34)



  20. I know that to be the case but forgive me for putting it in these terms. The discussions going on at present in America where they committed $5 billion of that $12 billion in the Millennium Challenge Fund is not necessarily committed to Africa. They are defining the criteria now and, when we have asked people, "Will it go to Africa?", the reply we have had is, "Not necessarily." So, that could take nearly half of that money away from Africa at the first shot.
  (Baroness Amos) That is precisely why this commitment is so important. The Americans are currently working on the criteria for their Millennium Challenge Account. They are consulting with other donors, with the civil society, and this is something which has to go to Congress. G8 leaders have really said, ". . . half or more of our new development assistance could be directed to African nations that govern justly, invest in their own people and promote economic freedom." This is a commitment that the G8 leaders have made.

  21. If America decide the five billion goes to Latin America, not to Africa, what else goes to Africa other than the commitment that the British government is giving now? Where is any more added? There is no more money.
  (Baroness Amos) This is a commitment that President Bush signed up to and there are discussions ongoing now that we all know with respect to the criteria for MCA. We have to go through Congress and get congressional approval but my understanding is that, as far as the Americans are concerned, half or more of their MCA could go to Africa.


  22. John Battle and myself were in Washington a couple of weeks ago. Can we look at the raw politics? We all want to ensure that countries are governed justly. What was quite clear to us in Washington was that President Bush had gone to Monterrey and people had not had great expectations for what he would do at Monterrey. He produced this money for the Millennium Challenge Account and everyone was very pleased about that. It was beyond most people's expectations of what the United States would produce. It was then clear that this was going to be hedged around with conditions and it was also clear to us that absolutely no one in the machinery of government in Washington had the slightest idea how they were going to deliver on this, a fairly bizarre kind of machinery of government, where you make an announcement and work out how you are going to deliver. Not in the wildest days of Whitehall would anyone ever do that. I note the smiles on the witnesses' faces but we would never do it like that. I can see from your perspective—this is not a criticism; it is a fact—that you have to engage in what the office has describe as interlocutors where it is probably easier to engage if one can demonstrate success of the process. On this side of the table, there is some considerable cynicism as to whether Congress is actually sufficiently engaged in Africa and whether Congress and our colleagues in Congress, other than HIV/AIDS, where I think they are concerned about transmission from mothers to children and that, because it is mothers and children, gripped people in Congress. If you take it beyond that, it seems to me that all these phrases, govern justly and people investing their own future and so on, are all phrases which can be taken any which way. I think we are just concerned that maybe the G8 meeting was not promoted as being too much of a success when in reality one did not get the feeling that President Bush, notwithstanding the amount of time that G8 was giving to Africa, was making any fresh, intellectual, political commitment to Africa.
  (Baroness Amos) Can I say something about the process that led up to the development of the Africa Action Plan because that might help the Committee? We had a group of Africa personal representatives appointed by G8 leaders, reporting directly to their leaders on this issue. On the side of our African colleagues, they also had personal representatives of a 15 member implementation committee. The two groups have been meeting consistently. We had six meetings together since September last year, working through a whole range of issues including what were the priorities on the African side, where could we as G8 deliver added value, how could we work through a process that delivered a degree of trust between the two sides that enabled us to develop an action plan that our African colleagues would have some degree of confidence in? It would be no secret around this table that clearly there would be differences between G8 countries about priorities but, in addition to that, G8 countries are in very different places. We have some G8 countries that are currently going through economic crises, for example, which would make their ability to respond to the totality of the aspirations in NEPAD more constraining than for some other G8 countries. The process is very important in terms of G8 countries actually understanding the red lines for each and every one of us but also agreeing and understanding the priority areas that our NEPAD colleagues wanted us to address. Their key areas were looking at issues around trade and market access and debt relief. We had to have some pretty honest, straight talking about the extent to which the G8 felt able to deliver on those two areas. The extent to which parliamentarians in different G8 countries are engaged in this process is something that we have tried to foster and we were very pleased that Members of this Committee, for example, were able to go over to the United States. There were other visits between other G8 countries. The NGOs were also very active in terms of raising awareness of these issues in G8 countries and in African countries. This is a process that has not just now stopped. To come to the specific question about how can we ensure effective implementation, we will have a continuation of the meetings between G8 and NEPAD colleagues to enable us to report to the G8 next year. We will have elements of the Africa Action Plan being placed within the appropriate place internationally, be it the UN, the OECD, the World Bank or the WTO, and we will have, through our individual work as G8 countries but also collectively as G8 in different fora, to deliver on our commitments. I do not think that this will be at all an easy or straightforward process. Just within Whitehall, we have worked very well and I was very well supported, I feel, as the Africa personal representative. We had a cross Whitehall group involving the key government departments chaired by Graham Stegmann from DFID, which gave me excellent support and ensured that the kinds of issues that we wanted to see on this agenda that I was able to argue for, even though I was not able to get everything that we wanted into the document. Some form of cross Whitehall coordination to facilitate implementation will continue to exist within the UK government. We are talking about that process right now. We are engaged in talking to the French who will be the chairs of the G8 next year about how they see the implementation process and how they will oversee the implementation process on behalf of G8 colleagues. I would like to assure the Committee that these conversations are going on. They began before the Action Plan was agreed and they have continued post the agreement of the Action Plan. We are involved in discussions with our American colleagues about the Millennium Challenge Account and whether there are elements of our own experience and our own understanding that the Americans may wish to take on board in setting up that account. I know that they are consulting with others. I will continue to work with G8 colleagues both on a bilateral basis and collectively on the implementation agenda. It is not an easy agenda precisely because there are so many different international institutions and organisations that will have a responsibility in terms of that implementation, but I do feel that we already have the experience and expertise in the way that we currently work and in particular in the way that the Department for International Development works in terms of influencing these organisations that will stand us in very good stead. I think we have the right kinds of policies and strategies in place that will enable us to know very quickly if things are going wrong or if things are not happening at all.

Mr Walter

  23. I wonder if we could look at a couple of specifics. I wonder if you could give us some clue as to what the G8 is doing to ensure that African countries that do not have the capacity to produce their own essential medicines to treat HIV/AIDS and other diseases will be able to source them from other countries.
  (Baroness Amos) The Committee may know that we have had a working group on access to medicines which has been meeting over the last year. We have been working with other international players. What we have been looking at is to try to develop a voluntary differential pricing package. Once that is agreed, we would want to see that become part of the broader international agenda. I think it would be very important for me to say that, whilst we want to facilitate widespread, predictable, differential pricing on essential medicines, what we are absolutely concerned about is ensuring that the health systems exist within developing countries which will facilitate not only access to those medicines but their use. What we have in the majority of countries in Africa are health systems which are not functioning effectively. We have people who do not have access even to the basic primary care so even if people have access to medicines they need, for example, to have access to clean water. This is an agenda that is about poverty and not just about health or access to medicines. Our entire approach is to work with countries to put in place the right kinds of health systems which will facilitate access, not just to medicines, but also to support and care more broadly.

  24. That is a longer term project than the specific crisis which exists today. We had some striking evidence just before you came in from the High Commissioner of Malawi on the subject. What are we doing in terms of the crisis that is there right at this moment and getting those medicines to those people? Water and all the other things are important obviously as part of the whole programme but there is a crisis there which is getting worse by the hour.
  (Baroness Amos) Are you talking specifically about HIV/AIDS?

  25. Yes.
  (Baroness Amos) There are a number of things. We cannot just say that because developing health systems is a long term agenda we cannot do it. That is absolutely part of our focus. We have contributed, as Committee Members know, to the research on trying to find a vaccine. We have been told that there is a possibility of a vaccine with 30 per cent coverage being achieved over the next five years. We have bilateral development programmes in a number of different countries in Africa. For example, we have a programme in Nigeria where we have committed some £53 million. We have new commitments in Ghana for £25 million; in Malawi, commitments for 30 million; in South Africa, 15 million, and we continue to have an HIV/AIDS programme in Zimbabwe for 13 million. This is separate and distinct to the money that we have given for the AIDS vaccine and is separate and distinct from the work that we are doing in those countries in terms of trying to get their health systems in place. As I mentioned, we also have the working party on access to medicines which is due to report at the end of July.

  26. I wonder if we could move to another specific, which is debt relief. NEPAD refers to costed poverty reduction outcomes. I wonder if you could comment on what you think the prospects are in the HIPC process of that being revived so that debt relief is calculated on the basis of development needs and countries' requirements for meeting the millennium development goals?
  (Baroness Amos) What we have been working on at the moment is to ensure that countries which exit HIPC do so without unsustainable levels of debt. Part of the additional one billion that was agreed at Kananaskis is to help with topping up for countries which potentially could leave the HIPC process with unsustainable levels of debt. We are extremely worried about that. The World Bank is currently engaged in a review of HIPC. They will report in September on that and we are waiting to see the terms in which that review has been concluded. The United Kingdom has really led the way in arguing that we cannot afford to have countries leave HIPC with unsustainable levels of debt. The additional, bilateral debt relief which is given by countries is not included in the calculations which are made for HIPC purposes with respect to debt sustainability. In terms of the extent to which we will manage to get the HIPC process to be altered to look more specifically at the achievement of the millennium development goals, clearly this is an aspect that is already included in terms of countries having to develop their PRSPs, for example. I am sure that this is an area that we will continue to look at because what we are concerned about is the number of countries in Africa where we can see that they are falling behind in terms of the achievement of the MDGs.

Hugh Bayley

  27. Lots of people quite rightly have commented on the Prime Minister's commitment. It would have been inconceivable a few years ago that Africa would have got onto the G8 agenda at all, but I would like to start by paying tribute to your role. If you had not woven together this agreement with your colleagues from other G8 countries and in dialogue with African leaders, we would not have an agreement at all. It is inevitable that we talk about what is not in the agreement, but it is a great step forward. I am particularly interested in the role of the private sector. I do not see that the resource gap which NEPAD identifies can ever be closed by aid alone. We have to create from our end in the rich world and African leaders in Africa have to create conditions where private investment and trade will flourish. Looking at paragraph 3.3 of the plan, the second blob says, "Without prejudicing the outcome of the negotiations, one of the things that has to be done is applying our Doha commitment to comprehensive negotiations on agriculture aimed at substantial improvements in market access and reducing subsidies with a view to them being phased out altogether and substantial reductions in trade distorting domestic support." I am very pleased to see that in there but rather alarmed at the opening phrase: "Without prejudicing the outcome of the negotiations . . .". Who from the G8 wanted to put in that rider and what does it mean? Does it really mean that we are not committed to achieving the eventual phasing out of export subsidies and substantial reductions in trade distorting domestic support, because if we are not we have given up before we start.
  (Baroness Amos) Can I first of all thank you very much for your kind comments about my role? I agree with you that it is inevitable that we will concentrate on what is not here rather than what is here. On 3.3, bullet two, the reading of it should be the other way round. There was a very strong feeling in our discussions around the G8 table that the appropriate place for the discussions about trade and market access was the negotiations following on from the agreement at Doha; that there are some good, very specific commitments which already exist following the Doha meeting; that the negotiations around the Doha agenda involve a great many countries and the G8 did not want to prejudge what might be the outcome of those negotiations. It is not going back from the commitments that have already been made. It is recognising that commitments have already been made at Doha which will form the basis for the discussions, which we hope will lead to the kinds of conclusions that we all want to see by January 2005, but there was a feeling that that was the most appropriate place for those negotiations to take place and that the G8 table was not the appropriate forum.

  28. Market access is one of those less than transparent phrases but what it means is creating conditions in which more agricultural produce from Africa is sold in the G8 countries and in our case the EU. Are you in a position to take a stab at what we would regard as a successful outcome, say a doubling of agricultural produce by volume sold in the EU? And what would be your stab at a successful outcome for eliminating export subsidies, a halving of food exports from Europe to Africa?
  (Baroness Amos) I think it is too soon to take a stab at either of those areas. I will say two things. One is that the G8 were very concerned not just about trade between Africa and G8 countries or Africa and EU countries but also about intra-African trade and working with our African colleagues to try to facilitate the creation of free trade areas and customs unions between African countries which sometimes have even higher tariff barriers than between Africa and the European Union or other G8 countries. We were very keen to ensure that we put in the document our commitment to working towards enhanced market access for trade with African free trade areas or customs unions which we did manage to include in the document, which is included under 3.5. The other important area for us was to work to ensure that African countries understand and appreciate AGOA and EBA, for example, and the plethora of other market access arrangements which exist. The point under 3.4, bullet two, is also very important because we have agreed to establish these market and trade information offices which will support trade related technical assistance and capacity building, but will also be a mechanism for ensuring that countries knew what existed and they could make the maximum use of that. One of the concerns that we have about the Everything But Arms initiative is that the Americans have made an excellent job of marketing AGOA and African countries understand the benefits of AGOA but very few of them understand the benefits of EBA and maximise the opportunities that exist within EBA, which is one of the things that we would want to look at.

  29. Setting up initiatives to promote regional trade is important and badly needed but they are inputs so I would simply ask that, when the G8 has its review next year, it is looking for indicators of outcome and I think trade volumes must be a key indicator. Whether they look good or bad on the sheets of paper, I hope the figures will be presented to G8 leaders next year and in subsequent years so that you can track whether you are making progress. In relation to private sector flows, NEPAD talks about there being a US$64 billion resource gap. The World Bank estimates that 39 per cent of Africa's private wealth is not in Africa but held abroad, largely in our banks. What is being done to arrest the capital flight of Africa's resources? If Africa's resources are not pledged to Africa's development, how can you expect relatively poor people in my constituency and other parts of the country to pay taxes to increase aid contributions when people who are Africans, a minority of Africans who are much richer than they are, take their money out of their country and invest it over here? What can we do to create conditions in which the wealth of Africa is repatriated?
  (Baroness Amos) I totally agree with you about the importance of stemming capital flight. It is a discussion that I have constantly with colleagues from Africa. It has been a key part of the discussion around NEPAD and the G8 Africa Action Plan. There were two important meetings which were held, one in Senegal which President Wade presided over, inviting the private sector not just within Africa but also from other parts of the world, where African leaders were engaging the individuals from the private sector about how to create the best kind of climate for investment. The Commonwealth Business Council had a very similar meeting in Abuja looking at the same kinds of questions. One of the things that we have had to ensure our African colleagues understand is that G8 governments cannot make their private sectors invest in Africa. African countries have to create the right kind of environment. Some of that is about the nature of the bureaucracy; some is about the nature of the regulatory environment, but it is also about issues around peace, stability and security. It is about the image, that stereotype, that continues to exist about Africa and the fact that the difference between countries is not necessarily recognised. Many countries have not understood the impact that the situation in a country like Zimbabwe, for example, has not just on neighbouring countries but on perceptions of the region as a whole. We have had a number of conversations about this and about the ways in which we can support countries in Africa to put the right kind of environment in place. We are doing that. We are working with countries in making sure they have the right kind of judicial systems, the right kind of regulatory frameworks, working on reform of the public service, dealing with corruption. Even with all of that, there is still I think a perception gap. If the kinds of resources that we are talking about—US$64 billion—are going to be delivered, one, it is going to take time and, two, it is also going to take a great deal more work. If those conditions are created, not only will foreign direct investment be attracted but it will be exactly the kind of conditions that will stop capital flight. A lot more money is leaving African countries than is staying in these countries. In a way, that needs to be the starting point.

John Barrett

  30. Obviously, there are people who want to make investments outside Africa but there are also very large sums that are coming out of corrupt regimes into this country and others. One complaint I have heard from the banking industry is, whereas the banks are doing a lot and investing millions in this, they are not seeing the same amount of commitment from this government. I wonder if you have anything to say about that. The banking industry are feeding leaks into the government but they are not getting any response and, while they are investing a lot, they are saying that the government is under-resourcing the same research that is required to establish where these large sums are.
  (Baroness Amos) I hope that is not the case. As you know, through the Proceeds of Crime Bill, for example, we are putting in place the measures that we think will help with respect to issues of embezzlement, corruption and money laundering. In the Africa Action Plan under section two, which is strengthening institutions and governance, paragraph 2.6 talks specifically about putting in place the measures to combat corruption, bribery and embezzlement. The UK government has been in the past criticised for not ensuring that the terms of the OECD Convention on Bribery have been put in place in terms of our domestic legislation. We have now dealt with that and there is a commitment for G8 countries across the board, not only to make sure that the UN Convention on Corruption is put in place; we also want to work within the G8 for the early ratification of the UN Convention against transnational, organised crime. We want to strengthen and assist the implementation of the OECD Convention on Bribery but, as a government, we have also supported a number of voluntary initiatives, including the ethical trading initiative, the UN Global Compact and the OECD guidelines for multinational enterprises. We have been in the forefront of support for those and we will continue to do that.

  31. The Prime Minister, yourself and others have taken a very positive response in the G8 to NEPAD but from the UK's perspective what are the main areas of disappointment? Where are the stumbling blocks? Is it individual countries on the G8 side or the NEPAD side?
  (Baroness Amos) The areas where we were particularly disappointed were in the areas of trade and market access. We felt the G8 could go further. Also, on the aid effectiveness agenda. We published at Monterrey a document that was produced jointly by the Treasury and the Department for International Development looking at the whole area of aid effectiveness and ways in which, if countries for example move to sector wide approaches in the way that they work with developing countries to create donor groups and think about the sectors that they will support, rather than going down the route of just supporting individual projects, untying aid, this could deliver in terms of effectiveness up to 50 per cent more in terms of the use of our development resources. Those are the two areas where we would have wished to see more. We pushed on the areas that we were particularly concerned to see in the document and where we have cause to be pleased with the outcome is in the area of peace, security and debt relief, where we have worked very hard to have debt relief retained as an agenda item within the G8. Those two areas we are particularly pleased with the outcome of, and we are very committed to working on the education millennium goals. Within our own bilateral programmes, we have given a considerable amount in terms of education resources. On trade, we had wanted to see a commitment to the doubling of Africa's share of world trade. It is extremely low at the moment. It is currently under two per cent and a doubling of Africa's contribution to world trade would have made a significant difference to development within Africa.

Mr Khabra

  32. What is the G8 going to do to implement this Action Plan and what are the prospects of the G8 holding a special Africa summit in 2003? What might such a summit be reasonably expected to achieve? The Action Plan is a very ambitious plan and there is the NEPAD pledge to implement it, but there are two big problems. One is the conflict between states and within states and the question of corruption. How is it going to be tackled?
  (Baroness Amos) In terms of the call for a special Africa summit next year, this is a proposal which was put by a number of NGOs. The proposal was first made in a meeting the Prime Minister had with NGOs on the day we left for Kananaskis and was put again to the G8 leaders at Kananaskis. It is not at all clear to me what NGOs at a special African G8 summit might achieve. We have the G8 Africa Action Plan. We have a number of G8 leaders who have made trips to African countries, including before the summit our own, Prime Minister Chretien, President Chirac and it has been announced that President Bush will travel to Africa next year. I am not clear what the added value of a special Africa summit would be and I am also very mindful of the costs of holding summits, particularly in terms of security. We would not want to see the burden of that on any particular countries in Africa. In terms of implementation of the G8 plan, I hope that I have assured the Committee in terms of the procedures which we will be continuing within our own government, in terms of the cross Whitehall machinery, my own involvement and delivery of the elements of the plan through the different government departments that have a responsibility. Clearly, the Department for International Development will have a key role but so will the DTI, the Treasury and the Foreign and Commonwealth Office. There will be other commitments no doubt arising out of the World Summit on Sustainable Development. DEFRA plays the key role in relation to that. The African personal representatives will continue and France will take the lead role in terms of overseeing the implementation on behalf of the G8. G8 countries individually and collectively, within other international fora like the UN, the OECD and the international financial institutions, will also play a role in implementation. I would describe the plan as comprehensive in terms of ambition. We would have liked to have seen more in some areas. The areas dealing with peace and security which particularly tackle the conflict agenda do take us much further than ever before and it is an area that the UK government takes a particular interest in. On corruption, this is an area that our NEPAD colleagues are looking at, particularly in the context of the Africa peer review mechanism which has been developed in terms of the ideas being put on paper that need to be implemented. Of course, we and other donors will continue to work through our bilateral aid programmes in African countries on rooting out corruption; but also globally in supporting for example the mechanisms coming out of the UN and through OECD. We all recognise that tackling corruption is absolutely critical to the development agenda.

Mr Robathan

  33. I apologise for missing part of your evidence. As you know, being a Member of Parliament means trying to be in several places at one time. I would like to pick up on what you said to John Barrett because John particularly asked about corrupt money being syphoned off by corrupt leaders into banks in the UK. You gave an interesting answer about the Proceeds of Crime Bill which I have not studied the details of as closely as I might have. About 20 months ago, we had a delegation from Nigeria about Abacha's millions and you may recall that Abacha moved billions out of Nigeria and the new government tried to get its hands on some of it. I think they succeeded and there were some rather dodgy deals but would the Proceeds of Crime Bill allow the government to act on a case like Abacha, where it was known that some of his money was in the UK? Would it allow the government to act for instance against former President Balangiga, who is rich beyond the bounds of avarice in Nigeria and certainly did not make the money by conventional means, according to everybody in Nigeria? Would it allow us for instance to act, particularly with the sanctions now imposed, against President Mugabe if he had a bank account in the UK? These are examples rather than the overall picture.
  (Baroness Amos) On the Abacha money, it was not that the UK government did not act or could not act. A request came to the UK government from Nigeria. We agreed that we would act on that request. The government was then subsequently judicially reviewed, which meant that our decision to act on the request was then put on hold. As I understand it, the Nigerian government subsequently came to an agreement with respect to the Abacha money. In relation to Zanu PF and Robert Mugabe, there is an EU asset freeze which has been imposed on 19 members of Zanu PF which enables us to freeze bank accounts. The Proceeds of Crime Bill is a much bigger and broader piece of legislation which is looking at criminal activity, money laundering and so on, and tightens up in certain key areas. The implications of these two specific examples that you have given I am not able to answer here, without going back to my colleagues who are responsible for the legislation but I am very happy to write to the Committee.

  34. Is it your understanding that it gives the British government greater power to follow up leads which I believe are given by commercial banks on money which we would accept has been obtained corruptly by a leader or politician?
  (Baroness Amos) It certainly gives greater powers to do that with respect to criminal activity in the United Kingdom. Whether or not it gives greater powers applied in that general way to money which is not related to criminal activity in the United Kingdom, I am not able to answer in that blanket way but I am very happy to write to the Committee.

  Chairman: Minister, thank you very much for having answered our questions over nearly two hours. We will watch with very considerable interest the process that has been initiated by NEPAD or the G8 process. I think there is a real danger that we are all feeling that Africa could well become the lost continent. Just two per cent of world trade comes from Africa. We heard today before you came in from the High Commissioner of Malawi that, whilst highlighting the achievements that Malawi has made in recent years, he was describing in human terms the impact on that single country of HIV/AIDS and it is pretty desperate. These are all issues that this Committee is going to be continuing to observe in our work over the coming months. Many of the Committee are going to Malawi later this year on the whole issue of food security, but thank you very much for very full answers. We wish you well with your work. I am glad that the Foreign Office and DFID are working closely on these issues and I hope that we can come back and discuss some of these topics with you again in the future.

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