Appendix
Crisis in southern Africa
1. The simultaneous occurrence of major crises
in southern Africa and the Horn of Africa poses a serious challenge
to the international community's ability and willingness to respond.
We share Clare Short's concern that the international humanitarian
system may be getting over-stretched. (Paragraph 17)
We agree.
2. We are concerned that Africa is the only
continent which is moving backwards as regards reaching the Millennium
Development Goals (MDGs). If the international community fails
to respond adequately to the humanitarian crises in southern Africa,
Ethiopia and elsewhere, it will be impossible for countries to
halve poverty and hunger by 2015 in line with the Millennium Development
Goals. (Paragraph 18)
We share the Committee's concern. It is essential
to ensure an effective response to humanitarian crises in Africa,
but it is also essential to ensure that the humanitarian response
promotes longer-term food security.
3. Southern Africa is not suffering a drought-induced
famine. It is suffering a complex humanitarian crisis, which was
triggered by erratic rainfall and a relatively modest fall in
food production. (Paragraph 19)
We agree DFID's views on the complex causes of the
crisis in Southern Africa were set out in our submissions and
evidence to the Committee.
Vulnerable livelihoods: From shock to crisis
4. We would not wish to see the HIPC process
undermined, even for the best of motives, and fully understand
that debt relief is not the only form of development assistance.
But we do urge DFID and its international partners to consider
seriously the possibility of revising the HIPC framework. Realistic
debt relief must take account of the resources which creditors/donors
are prepared to spend, but development-focussed debt relief should
surely take more account of poor countries' development needs.
We would like to hear DFID's views about the role of debt relief,
and about whether or not the HIPC initiative should be revised
to take more account of poor countries' development needs. (Paragraph
27)
Debt relief has an important role in freeing up resources
for poverty reduction. However, as the Committee notes, it is
not the only source of development financing, and will never be
sufficient as financing for the MDGs. Relief must be sufficient,
however, to reduce debts to a manageable level. HIPC has been
an important success in this—countries now spend nearly
four times as much on priority social spending as on debt servicing.For
example in 2002 Malawi spent around 14% of its revenues on debt
servicing, and 68% on social expenditure. Nevertheless, many HIPC
countries remain vulnerable to external shocks. The Government
is actively seeking ways to improve the HIPC Initiative, to ensure
that it can deliver sustainable debt levels. We are pressing to
ensure that additional relief is provided at Completion Point
to all countries that risk exiting the Initiative with debts above
the HIPC thresholds due to exogenous shocks. We are also pressing
for a change in the rules, to ensure that additional relief provided
by some bilateral creditors beyond HIPC is not included in the
calculation of topping-up at Completion Point, and remains as
an additional 'safety cushion'.
In the longer term, the key challenge for HIPCs will
be how to ensure that they have sufficient access to concessional
finance for their Poverty Reduction Strategies (PRSs) without
incurring unsustainable debts. In some HIPCs, new International
Development Association (IDA) loans could push external debt back
over the HIPC programme thresholds and possibly back up to unsustainable
levels. In these cases it may not be advisable for the country
concerned to take on large quantities of new debt. This issue
has arisen in Rwanda, Ethiopia and Niger, although it is likely
to arise in more countries in the future. Topping up will be part
of the solution, but we also need to consider a more flexible
approach to IDA grants, so that they are concentrated on the most
debt vulnerable countries, as well as a more sophisticated, country-specific
approach to assessing debt sustainability. Further debt relief
may play a role in some countries, but as remaining debts are
owed to multilateral creditors, any further relief will have to
be financed from existing multilateral resources. This means that
the issue is about the most appropriate choice of instruments—grants,
loans or further debt relief—within existing aid allocations.
The Government is working with the World Bank and IMF to find
a solution, to ensure that no country that is committed to sound
economic management and poverty reduction is denied access to
funding for its poverty reduction strategy.
5. Deep poverty at national and household
levels is a major source of vulnerability. The depletion of household
assets, together with declining opportunities for off-farm employment
have raised vulnerability to future shocks throughout southern
Africa. DFID and its donor, government and civil society partners
must support strategies to restore household assets and to generate
non-agricultural employment. (Paragraph 31)
We agree. This is the objective of the livelihoods
approach, which is explored further in answer to Recommendation
25.
6. We believe that the UK Government is failing
to communicate clearly the ways in which Zimbabwe is exacerbating
food insecurity in southern Africa. DFID should explain clearly
the culpability of Robert Mugabe's policies on land reform, and
emphasise too that restrictions placed on the movement of genetically-modified
maize have hampered the relief effort and contributed to the deteriorating
situation across the region. If he continues with the same policies
and approach, Zimbabwe will remain part of the problem rather
than part of the solution to famine and food insecurity in southern
Africa. (Paragraph 34)
DFID and others donors/agencies have been explicit
about problems Zimbabwe's policies and practices have caused,
but we agree that we should continue to spell this out, including
as planning for assistance to the region in 2003-04 is taken forward.
7. We are pleased that the Secretary of State
is keen to learn from the past, and we welcome DFID's support
for Poverty and Social Impact Assessments. We trust that such
assessments will be made in the field of agricultural and food
security policy, so that policy decisions and DFID's position
itself are evidence-based rather than reactive, broad-brush and
ideological. Oxfam called for mandatory impact assessments of
the likely impacts of agricultural liberalisation. They recommended
that donors, particularly the World Bank and IMF, end all lending
conditions that promote further liberalisation of agriculture
in Malawi, Mozambique and Zambia, pending thorough Poverty and
Social Impact Assessments on agricultural policy reform in these
countries, which can be used to inform policy choices about long-term
food security and sustainable livelihoods. We endorse Oxfam's
recommendation and urge DFID to do the same. (Paragraph 41)
DFID is committed to holding the Bank and IMF to
their due diligence commitments to ensure that Poverty and Social
Impact Assessments (PSIAs) are undertaken for major policy reforms
likely to affect poor groups and agreed within Poverty Reduction
Strategy Papers. This includes major agricultural sector policy
changes where appropriate and agreed with national governments.
DFID believes in supporting the development of nationally owned
Poverty Reduction Strategy processes and nationally led PSIAs
as part of an ongoing policy dialogue. Our experience is that
this is more effective than pressing for the inclusion or exclusion
of particular policy areas from donor financing negotiations.
We also recognise that PSIAs are at an early stage of development
and one of a range of available policy review mechanisms to which
countries should have access.
8. HIV/AIDS is central to the unfolding humanitarian
crisis in Southern Africa. In a continent ravaged by the HIV/AIDS
pandemic, southern Africa is at its epicentre. The first defence
against HIV/AIDS is food. Famine exacerbates disease, as disease
exacerbates famine, in southern Africa. In creating new groups
of vulnerable people, and exacerbating existing vulnerabilities,
HIV/AIDS plays a major role in the cycle of vulnerability, crisis
and poverty. (Paragraph 47)
Agree.
9. If the people of southern Africa are to
escape from the cycle of vulnerability, crisis and poverty, the
sources of vulnerability—poverty, weak governance and inappropriate
policy, and HIV/AIDS must be understood and addressed, both in
terms of immediate humanitarian response and in laying the foundations
for longer-term development. This will also require that policy-makers
do not latch onto the latest fashion in the misplaced hope that
it will provide a solution to development problems. (Paragraph
52)
We agree. DFID's support for nationally owned Poverty
Reduction Strategies is intended to encourage the move away from
short-term fixes and sectoral priorities to address longer-term
issues. This will mean longer term commitments and the need for
increased emphasis on capacity building.
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