§ The Minister for Overseas Development (Mr. Neil Marten)I beg to move,
That the draft African Development Fund (Third Replenishment) Order 1982, which was laid before this House on 21 June, be approved.I welcome the hon. Member for Birmingham, Ladywood (Mr. Sever) to the Opposition Front Bench. I know that he has taken a close interest in these matters and I hope that we shall hear many of his sensible views in the remainder of this Parliament.The purpose of the order is to authorise an increase in our payments to the soft lending resources of the African development fund. The United Kingdom has voted in favour of the proposed contributions, subject to the approval of Parliament. I shall describe the order in more detail in a moment, but first I shall say something about the fund, its place in the developmental scene and our attitude towards it.
The African development fund was set up in 1973, and it is an integral part of the international economic system. It serves as a charnel for joint multilateral action to help solve the urgent, but long-term, problems facing developing countries in Africa. The United Kingdom was a founder member of the fund. It has broadly the same developmental objectives as our own aid programme—to help the poorest countries. Our support for it reflects our historical interests in Africa. Thirteen independent African members of the Commonwealth have received ADF loans. The fund is, therefore, one of the channels by which we help the Commonwealth. We have always strongly supported it, and we shall continue to do so, within the limits of what we can afford.
Our own contributions will gear up a greater flow of money to the poorer countries, and to the poorest people within those countries. While the Government's policy is to put more weight where possible on their bilateral aid, this gearing-up effect from an appropriate basic share is one main argument for continuing our support to multilateral bodies.
I now turn in more detail to the draft order. The African development fund is a joint partnership to provide soft loans between the African Development Bank, which holds 50 per cent. of the votes, and these non-regional donors wishing to create a special multilateral channel to help the poorest countries in Africa. The bank was itself established at Abidjan in the Ivory Coast in 1963 but is legally a separate body.
Up till now all the members of the African Development Bank have been African States. However, they have recently ratified amendments to their agreement so as to allow non-regionals, including the United Kingdom, to join. 1 hope to present a similar draft order to the House for this purpose in the autumn, together with the necessary order to give the bank the privileges and immunities that we shall be bound to extend to it when we join.
There are now 25 non-regional fund members, including all major Western donors except Australia and New Zealand, three OPEC countries—Saudi Arabia, Kuwait and the United Arab Emirates—and some developing countries from other continents.
About 80 per cent. of the fund's loans have gone to the very poorest member countries and this will continue. 379 Loans are interest-free with a service charge of 0.75 per cent., and are paid back over 50 years with a 10-year period of grace. The agricultural sector has received the largest share, 38 per cent., of the fund's resources, transport has received 26 per cent., public utilities 16 per cent. and education and health 15 per cent.
By the end of 1981 the fund had approved 213 loans amounting to $1,360 million. Of that, $331 million had been spent, giving a ratio of disbursements to commitments of about 24 per cent. This figure is improving over the years, but it is still low. That reflects the need to improve implementation of projects, and for more technical assistance to help achieve this.
The initial funding, a special increase and the first two replenishments, have provided resources of some $1,251 million for commitment between 1973 and 1981. The United Kingdom's commitments so far have totalled £31 million—about $58 million at the rate of exchange for this replenishment—of which nearly £8 million, or about $15 million, has so far been disbursed. Negotiations for the third replenishment of the fund's resources, to cover the commitment period 1982–84, started in January 1981. They were successfully concluded in February 1982.
The participating States and the African Development Bank have agreed to provide jointly some 1,008 million fund units of account—about $1,059 million. That is a 50 per cent. increase on the amounts put up for the last replenishment, which is not bad going considering the restraints on everyone's ability to help in the present economic circumstances. Our share, subject to parliamentary approval, will be 43 million fund units of account, about $45.2 million at the agreed exchange rate, or £24,170,300.
§ Mr. Eric Deakins (Waltham Forest)Will the Minister confirm that the expression "fund units of account" has nothing at all to do with the similar EEC expression?
§ Mr. MartenIndeed.
That is a 4.3 per cent. share of the total replenishment—the same in percentage terms as our contributions to the last replenishment. The proposed replenishment and its terms and conditions were approved by the boards of governors of the African Development Bank and fund on 8 May 1982.
Special provision is included in the replenishment for 5 per cent. of the whole to be available for technical assistance on extremely concessional terms. This is an important new feature, which should help overcome the implementation and administrative problems that I have mentioned.
In accordance with the agreed resolution of the fund's governors, our subscription must be paid in three annual instalments starting on 1 October 1982 or not later than 30 days after the United Kingdom's instrument of subscription becomes effective, whichever is the later, payments will be in the form of the deposit of non-interestbearing notes encashable on demand. We expect them to be encashed over several years. It is only at the encashment stage that there will be an actual call for funds on the aid Vote. The draft statutory order authorises the Secretary of State to pay this subscription.
I should mention that we have just been advised that the agreed board of governors' resolution is numbered 9/82, not 10/82 as indicated in the draft order. This will be 380 corrected in the final version. This is not a printing error of Her Majesty's Stationery Office but an error of the bank.
Finally, the replenishment arrangements include provisions which envisage that other countries' contributions may be released more slowly for commitment if one or more of the donors fails to meet its obligations in full or in time.
I commend this draft order to the House in the conviction that the African development fund will continue to help the poorest countries of the region to solve their serious problems by promoting economic and social progress. Britain must play its full part in this important work.
§ 10.3 pm
§ Mr. Frank McElhone (Glasgow, Queen's Park)I shall be advising my right hon. and hon. Friends not to oppose the order, but the House still has a responsibility to question the Minister on how our contributions to the African development fund have been spent, although he gave some illustrations, and on what action he and his Department have taken to ensure that money is getting to the poor and the poorest countries. This is an issue that we have raised continually at Question Time and in debates over the past three years.
Since the United Kingdom became a member of the fund in 1973, I gather that we have committed it to about £31 million and that only £7.8 million of that has been spent. If these figures are correct, it is a disgraceful performance by any standard and the Government must accept a great deal of criticism for it. As the African Business News stated last year, the African Development Fund is notorious for the slow disbursal of its funds.
We look to the World Bank for some guidance in these matters, but I understand that even its procedures can take up to seven years between the initial identification of a project and the country's receipt of the loan. Is it any wonder, despite the development fund and other aid agencies, that we still have 800 million people living and dying in absolute poverty? This crisis, especially in the poorest countries of Africa, has not been helped by the Government's decision to restrict the number of students from the poorest countries by the savage imposition of full-cost fees. This is an issue that my hon. Friends and Conservative Members have raised with the Government repeatedly. We have told the Minister that it is an extremely foolish "saving" to tell students from the poorest countries that they must pay full-cost fees if they are to come to the United Kingdom to be educated. The right hon. Gentleman knows that the Russians, the French, and others are taking full advantage of the situation.
The Minister must realise that if full value is to be derived from the various funds and from the money of United Kingdom taxpayers, steps must be taken to increase the numbers of trained personnel in the developing countries. It is the lack of such people that makes it difficult for full advantage to be taken of the money that is allocated by the aid agencies.
I listened carefully to the percentages that the Minister gave to the House and I assume that they refer to 1981–82. My figures refer to 1980. In that year the fund allocated $273 million to countries in Africa. About 46 per cent. went to agriculture, 26 per cent. to transport, 11 per cent. to public utilities, 10 per cent. to the social sector and 7 per cent. to industrial banking.
381 Why was no mention made of health and education in the figures for that year? The fund spent only 15 per cent. of the total allocation on health and education in 1981–82, and that is insufficient to attempt to eradicate the terrible diseases prevalent in Africa's poorer countries. Illiteracy and a lack of trained people to make use of the funds are critical reasons why more money should be spent on health and education.
The Minister will be bored with me for raising again the question of land reform. Will he concede that much of the money that goes to agricultural development, not only in Africa but in many other countries, ends up in the pockets of rich farmers and that the poor farmers lose out year after year? The Minister's radicalism, which was so evident before he became a Minister, might still linger. I hope that in the next series of meetings with development Ministers he will attempt to persuade countries in receipt of substantial funds from development agencies to introduce land reform. I hope that the Minister will consider the critical state of land reform in Zimbabwe. The desperate position there could be eased if more finance was allocated through the fund.
The Minister said that 15 per cent. of the money was spent on health and education. We are disturbed because much of the money allocated to health projects in Third world countries ends in the pockets of the multinational pharmaceutical companies. The World Health Organisation has reported on abuse by multinational drug companies. For example, excessive charges are made for simple products such as vitamin C. People from poor countries sometimes have to pay four times as much for vitamin C as we pay in Victoria Street. I hope that the Minister will pay serious attention to that.
A substantial percentage of the allocation is spent on transport. We have the figures, but we do not know on what type of transport the money is spent. Will the Minister consider the need for an all-purpose, tough, resilient vehicle along the lines of a project that I presented to the Department just before the last general election? I am sure that the papers on that project are available. I had the support of many skilled people in the motor industry. The project would be of immense value to poor countries lacking transport, especially in Africa.
With the euphoria of Brandt having largely disappeared from sight—it never emerged in the Government—and with the summits of Ottawa, Cancun and Versailles producing nothing but platitudes from the Prime Minister, the future of the poorest countries is bleak. If there is a touch of optimism in the Minister's speech, I draw his attention to what the Financial Times reported on 18 March. Its correspondent in Nairobi referred to the World Food Council report which was released on 17 March. He wrote:
Africa faces critical food problems in the 1980s … Food production on the continent per person fell 7 per cent. in the 1960s, declined a further 15 per cent. in the 1970s, and is likely to continue deteriorating this decade".There is nothing to be complacent about in the allocations that we are making. They are insufficient to meet the basic needs of the poorest countries in Africa. I concede, however, that we face a serious problem of how to spend money in those countries and how to get the money to the poorest people in the shortest time. That responsibility lies with the Government as a member of the fund and as an intending member of the African bank.382 Although the Opposition will not oppose the order, I hope that the Minister will recognise that we are not complacent about the needs of poor people in the countries to which I have referred. Their needs are a priority of Labour Party policy. I should like to think that before the next general election the 11 per cent. cut in aid in real terms will be made good. I should also like to think that the compassion and humanity of the communiqués will produce something for the poor people of Africa.
§ Mr. Bowen Wells (Hertford and Stevenage)I congratulate my right hon. Friend on the orders. They demonstrate to Britainand the world that Britain cares about Africa, her poverty and the starvation suffered by many of her people. It demonstrates that in spite of many political disagreements with many African countries we still keep faith with the people of Africa and will try to improve the conditions in which many of them live.
The Government are to be congratulated. The hon. Member for Glasgow, Queen's Park (Mr. McElhone) is to be congratulated on welcoming the order. I am sure that it is not necessary to point out to him that the order refers to the African development fund. It does not have much to do with overseas students' fees or with the selection of projects in which the fund invests or to which it lends money. One of the features of the fund and the African Development Bank is that they are controlled by the African countries. That is to be welcomed. It means that African countries select projects and decide how money will be spent. They administer the scheme. It is a great development for African people. Whereas the World Bank and even our bilateral organisations are dominated by Europeans and European thinking, this bank is dominated by African thinking.
§ Mr. McElhoneI hope that the hon. Gentleman has not misunderstood me. To set the record straight, I did not say that the fund was responsible for sending overseas students here and paying their fees. I said that because full cost fees prevented many students from the poorest African countries from coming here, students do not go hack as trained agronomists and the other skilled people who are badly needed to ensure that the projects funded by the African development fund and other bodies come to fruition far more quickly than at present.
§ Mr. WellsI am glad that the hon. Member has made that clear.
My right hon. Friend the Minister has made a substantial gesture towards the objectives that I think that we all share. I am sure that my right hon. Friend shares them with me, and I know that the hon. Member for Queen's Park does. Our objective is to increase the number of educated people in Africa. Against all the trends in the overseas budget, my right hon. Friend has increased the amount of money available for scholarships for the poorest of the most able people in Africa to come to Britain.
Of course, this is not enough. Many of my right hon. and hon. Friends and I greatly regret the way in which the overseas students' fees question has worked out. I believe that it should be changed. I make no bones about that. It is not right that Britain should effectively withdraw from teaching and helping the poorest people. It should be remembered, however, that many students from rich countries do not need subsidised places in our schools. The 383 children in our own constituencies need nursery education and the betterment of their own education more urgently than the children of rich parents overseas.
We must therefore develop a new policy. I hope that with consensus this can be done. I have always said that it is marvellous how much can be done in the House if we work together. I believe that we can work together on overseas student fees. It is, after all, a cross-party problem. It was originally brought up by a Labour Minister and if the Labour Party were in office it would no doubt have made the same, perhaps wrongly taken, decision.
It is an important feature of the African development fund that Africans decide its priorities. It is also important that my right hon. Friend has introduced this order to support the Africans in making their own decisions. Lo and behold, however, the African development fund finds itself facing the same problems as other development finance institutions in paying for its administration and overheads and disbursing its funds effectively.
I hope that my right hon. Friend will take note of the problem faced by all development banks, including the World Bank, in having to work through the host Governments. In considering overseas aid, it is a commonplace that the host Government do not usually consist of the poorest people in the country. Often, they are an elite who are concerned not to improve the conditions of the poorest members of their society but rather to bolster their own position.
§ Mr. William Hamilton (Fife, Central)Like the Tory Government.
§ Mr. WellsThe hon. Member is quite wrong. It is entirely unlike the Conservative Government, as the order demonstrates. The Government are concerned and are showing compassion. They are not reducing their contribution to an African-dominated fund.
The African development fund faces the same problems as many similar development finance institutions. One of its problems is to whom it lends. It lends through the host Governments. One of the great problems of the cry for aid to the poorest—to which I strongly subscribe, as I know that my right hon. Friend does—is, how do you do it? The African development fund is suffering from precisely the same difficulties as other world institutions.
Agriculture and food are a great priority. According to its most recent report, one of the objectives that the African Development Bank has set itself is the conquest of hunger, poverty and disease. That policy favours agriculture, and specifically food production. The report shows that nearly 30 per cent. of its commitment is to agriculture. But does that produce food? In spite of that investment, many of those countries are increasing food imports. The internal policies of those countries discourage food production. The poorest people are not encouraged by the price and distribution mechanisms and the marketing methods. They are inhibited from increasing productivity because their countries have run out of foreign exchange. What does that say about the administration of those countries?
Many of those countries are the victims of world economic circumstances and their own problems of development—poverty, lack of education and so on—but often a shortage of foreign exchange is the result of poor administration. One can see from the fund's lending that 384 time after time in places such as Lesotho, Madagascar, Rwanda, Sudan, Somalia, Burundi, Ethiopia, Egypt, Mozambique—to name those merely concerned with agriculture—the loan given is primarily to make up for the foreign exchange difficulties which those countries are experiencing. They are, therefore, unable to buy spare parts and import the technology and organisation necessary to improve and increase agriculture and food production. The solution to the problem is often in the hands of those Governments.
§ Mr. Eric Deakins (Waltham Forest)The hon. Gentleman will not wish to have it on record that he believes—if he does he will be the only hon. Member to do so—that the major reason why African and other developing countries have balance of payment crises and a shortage of foreign exchange is bad administration or bad internal policies. Surely he will recognise, as the Brandt commission and the World Bank have done, that it is basically oil price increases and the weakness of the commodity markets over the decades that is responsible. In real terms commodity prices have gone down and oil prices have increased. That has been a major reason for the deficits. There may have been other minor reasons, but I hope that the hon. Gentleman will put the matter in perspective.
§ Mr. WellsI shall not put all the countries of Africa, or anywhere else in the Third world, into one great lump, because there are major differences between them and it would be wrong to give a generic reply to the hon. Gentleman. The poorest countries are afflicted by all the problems enunciated by the hon. Gentleman. All suffer to a greater or lesser extent. I concede that this is not the only, or possibly even the major, problem that creates foreign exchange difficulties. However, the host Governments of many countries have played a significant part in the creation of foreign exchange problems. They are showing no ability and no political will to change that situation. They are relying on large imports of foreign aid and assistance, thereby avoiding the necessary domestic reforms that they need to increase food production and decrease their reliance on foreign exchange imports.
Tanzania is a case at which we must look extremely closely. There is no doubt that Tanzania can increase its food production if it changes its internal priorities. Fuel accounts for only 17 per cent. of Tanzania's imports, because it is not a highly industrialised country and does not rely heavily on oil imports. In that case, fuel is not a major factor in the foreign exchange problem.
The hon. Member for Queen's Park referred to disbursements, and I agree that the African development fund does not have a good record in this regard. That must have something to do, first, with the administration of the fund and the people doing it and, secondly, with the host Government's ability to absorb money that is allocated to them. That problem exists in respect of all development banks such as the African Development Bank.
The United Kingdom has only one representative on the African development fund, and we control only 2.46 per cent. of the voting power. Therefore, we are not particularly influential. However, it is important that the United Kingdom representative makes certain that the management of the fund and the tailoring of the projects to the needs of the country to enable it to disburse the funds 385 quickly to begin work in the field, are carefully monitored. It is important that those responsible for the fund be encouraged to do so.
I pay tribute to the formation of the organisation known as Shelter Afrique. Housing in Africa does not attract much support from international agencies. In fact, many countries have strongly criticised housing as a net diseconomy. Yet housing is a real social and health need, especially in the towns. However much we regret the rush to the towns in Africa, it is happening and to ignore it would be absurd. We must provide something for the future, however inadequate.
I pay tribute to the hidden influence of many European development agencies in helping to develop Shelter Afrique, which is a major step towards better African housing, especially in the urban areas that are developing rapidly into the most appalling health hazards and slums. It is a tremendous step forward for which I hope British funds will be used.
The order demonstrates the compassion of the British Government and people towards Africa. It is a gesture of faith in the African people that they can manage their affairs and direct funds to the matters that they believe are the most important. I urge the House to welcome this move with open arms, but I ask that the African nations try to improve the way in which they disburse and administer the funds available so that they benefit the poorest in the countries that we are trying to help.
§ Mr. Eric Deakins (Waltham Forest)Unlike my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) and the hon. Member for Hertford and Stevenage (Mr. Wells), I intend to concentrate on one aspect of the activities of the African development fund—what it is doing, if anything, about population policy on the African continent and family planning.
The facts are fairly straightforward. The population of the continent of Africa is growing by 2.9 per cent. a year. The world's population is growing at only 1.7 per cent. a year, so Africa's population is growing 70 per cent. faster than the world's population. Africans have a high fertility rate, and the increase in population is based on the fact that the average African woman has 6.5 children. Forty-five per cent. of its population is aged under 15, which has many implications for the future. The population of the continent in 1950 was 220 million. By 1975, it had almost doubled to 400 million and, on present population projections, by the year 2000 the population will be 850 million. If those trends continue, by the year 2025—which is only 43 years away—its population will be 1.5 billion.
Those are stark facts and the African development fund is well placed to do something about them. If it cannot reverse the trends, it must at least try to slow them down. We cannot rely on famine or the Malthusian trilogy to defeat the population problem.
The position varies enormously in different countries. Kenya, which many hon. Members know well, has the highest population increase in the world at 3.9 per cent. a year, and 25 per cent. of the population is aged under 5. Such growth rate means that the population of Kenya and other African countries will double within 17 to 20 years. That has many implications for resources.
So much that we are trying to do to help people in the Third world, especially in Africa, depends on adequate population policies in the countries concerned. Although 386 we cannot always take direct action, because we do not have an aid programme for each country, we can work through institutions such as the African development fund and the African Development Bank.
Population increases such as I have described are the highest in the world and they automatically impose great strains on food and water supplies, agricultural land and social and education services. Kenya spends about 25 per cent. of its budget on education, but that does not guarantee every child a secondary education. That percentage will grow during the next decade, and that worries the Kenya Government.
There will be problems of food production in relation to the rising population. One of the messages that we have to convey to the African people and their Governments, through organisations like the African development fund, is that people from other countries might increasingly resent having to provide more and more aid merely to stave off disaster and ensure that present living standards are maintained for a rapidly increasing population. If we were to double our aid—as suggested by the Brandt report and many others, and as the Government are not doing—it would be eaten up by the demands of the rising population of those countries.
Population is a serious problem in all Third world countries, but Africa probably has the greatest problem. All those problems can be resolved by development in the broadest sense. That is why we particiate in the African development fund. However, the world cannot wait for prosperity to reduce the birth rate in African or other Third world countries. There must be direct action with regard to population and family planning in all those countries. The African countries are belatedly waking up to the problem which confronts them and which will become increasing serious, if not disastrous, by the end of the century.
African politicians and Governments who were previously hostile to a population policy and birth control for religious, cultural, social or other reasons are becoming more receptive to the need for such policies. I hope that we shall eventually have a director and executives involved with the fund so that we can exert more influence to ensure that the fund spends an increasing proportion of available resources on population policies and family planning supplies and facilities.
Money needs to be spent on education, and provision needs to be made for mother and child care facilities in rural areas. That is a problem in many parts of the world. All those matters must be subsumed under the general heading of development in favour of population policies and birth control to ensure that the problem does not become worse. Those problems are increasingly because we cannot provide enough money to deal with them adequately. We shall probably never succeed unless we can call a halt to the population explosion in African and many other countries.
My last point relates to the fact that the fund will need extra resources. The Minister has said that we are providing money at the moment. I hope that eventually, under this Government or another Government who are more favourably disposed to developing countries, more money will be paid into the African development fund I also hope that even at present levels of British assistance, and that of our bilateral aids as well, the Minister and his officials will insist, as we are entitled to, that some part of the money, and not just a small 387 percentage, goes into the population component of development policies fostered by the African development fund. The fund, moreover, in the advice that it gives to Governments in Africa, should insist, and I think that the Governments will be receptive to this concept, that there is a population component in their national development plans.
There are far too many countries in Africa, and in many parts of the Third world, that still tend to dismiss the population component in development planning and plan airily without any idea of the effect of the expansion of their population at the rate of 2 per cent., 3 per cent., or 4 per cent. a year. As we all know, if one cannot plan on 388 a statistically sound basis then the plans will come unstuck. That is what many development plans in that part of the world are likely to do unless they include, at the most basic level, a population component.
The population aspect should be included in every part of the development plans. I make this plea to the Minister because this is one question on which we can help the African countries without necessarily having to supply more money to them. He will find that they are receptive. It is best that it should be done through something like a regional development fund, such as the African development fund; and I hope that when we have our own director on the fund, and have a bigger say in the fund's activities, this will be one of the dominant themes that we shall be advancing.