Interview with Jakaya Kikwete, president of Tanzania
By Barney Jopson
Published: March 13 2009 10:56 | Last updated: March 13 2009 10:56
The global financial crisis that began in the developed world and then hit emerging markets is now striking Africa and threatening to undo economic gains made in the past decade on the worlds poorest continent.
Ahead of a G20 meeting in London in April, African leaders and development agencies are lobbying to prevent Africas needs being forgotten by richer countries. Their efforts were acceleratedat a meeting on the crisis organised by the International Monetary Fund and the Tanzanian government in Dar es Salaam on March 10 and 11.
Jakaya Kikwete, president of Tanzania, spoke to Barney Jopson, FT East Africa Correspondent, about Africa, the IMF and the crisis at State House in Dar es Salaam on March 12.
Financial Times : Id like to start by asking you about the IMF conference. The IMF came with an offer to be the voice of Africa at the G20 meeting. Whats your reaction to that offer?
Jakaya Kikwete: Of course its okay with us. We will be represented, but if we can have somebody else amplifying our message, then especially after this meeting its the right thing for the IMF to do, because now they have our views, our opinions. We will be represented, but also the IMF as an important partner of Africa will be there, to pitch support for Africa. Its highly desirable.
FT: I think youre going to London on Monday to meet Gordon Brown, the UK prime minister. Whats your message going to be for him?
JK: Well, Im going to transmit the outcome of this meeting. In essence what came out of this meeting is that we underscored the fact we are not responsible for the current crisis, but the crisis affects us all, and because it affects us all then in any attempt to find a solution to the problem it is useful for us also to be involved. Hearing our voices is important. We are glad well be given the opportunity at the next meeting of G20 for our voice to be heard. At the last meeting in Washington we were not part of it. We are glad at least that the chairman of Nepad [the African Unions development programme], prime minister Meles Zenawi of Ethiopia, is going to participate, to attend that meeting. We also appreciate the initiative taken by prime minister Gordon Brown [of the UK] before the meeting of the G20 to have a meeting with a few African leaders to consult and get African views.
FT: At the conference I felt there were two competing feelings among the delegates. On the one hand everybody recognised that Africa needed more financial support. On the other hand because of the history of the IMF and because of its association with the countries that caused this crisis, there was a little bit of wariness. How do you see those two things competing?
JK: At this meeting we were discussing the IMF-Africa partnership. In the discussion we looked at our history, even in my speech I said the history has not been quite smooth. The term I used was bitter sweet. There were times when there were riots in Africa, demonstrations against the IMF because of the policy advice they were giving, the conditionalities they were imposing, and the difficulties that arose out of the implementation of those conditionalities. On one side there is this impression of the IMF.
But after decades of taking the advice and then implementing some of the advice, particularly the advice on economic reforms and fiscal and financial management, many of our countries have now attained macroeconomic stability.
So when we discuss this we are not talking about the past. The discussion now is how do we sustain the gains that have been made with the IMF as a partner? Thats why the discussion was about getting continued technical support from the IMF. Thats why the fact theyre going to open up new centres for technical support was highly appreciated. The discussion revolved around the fees countries have got to pay to access technical support. The feeling has been it would be better if we got all this for free. Then the IMF says no, no, no, at least you must pay something. The fee is close to nothing, but they say if somebody pays for it he feels a sense of responsibility. So now the essence is about sustainability, continued support.
When we were an IMF programme country we used to get support for economic reform, financial sector reform, support for capacity building in auditing, in financial management and so on. Now we are not a programme country. We are under the policy support arrangement, but we still need this continued advice from the IMF for sustaining the gains. The discussion now is more about sustaining the gains rather than as in the past when the discussion was about the reforms and what needs to be done. This was the painful part of it. It was quite difficult. A lot of friction.
FT: Do you think the IMF itself needs to reform to be a better partner for Africa?
JK: Precisely, this is what we are saying again. Part of the discussion has been about governance within the IMF. We supported the reforms that are going on, being undertaken by Dominique Strauss-Kahn [IMF managing director], and what we are saying is that in these reforms we need a stronger voice. One thing were saying is within the management itself there is no harm if you have one deputy managing director for Africa. Thats why you find in the declaration from African finance ministers and central bank governors that there was this other recommendation. Of course were also talking about voting rights.
But at the G20 we wont be talking about Africa-IMF relations. The message has been that we need a stronger continued partnership with the IMF. Thats fine. Then we look at the current global financial crisis and economic meltdown. Of course its something that is impacting us negatively. When it started with the banking sector our focus was on the banking sector. We looked at it, we tried to put in monitoring mechanisms. We are doing fine in that area and the reason may be simple. Our banking systems here are not integrated into the international financial markets. Even the international banks that are here are essentially local banks. Theyre part [of bigger organisations] in name, but the actual Tanzania operation is a pure Tanzania operation for Citibank, Barclays bank and so forth, so we are safe in that regard. But the spill-over effect of declining demand is affecting us. Those are our markets for our commodities.
FT: You said in the conference declaration that you want the G20 to increase aid, but theres no certainty that will happen. If theres not an increase in aid how can Africa cope?
JK: The first thing were saying is let developed countries honour their commitments to Africa. Thats the first message. They made these commitments in Gleneagles [Scotland, at a 2005 G8 summit] and in Monterrey [Mexico, site of a UN summit in 2002]. So honour those commitments.
One of biggest worries about the current economic problems is of course demand, where we are losing markets for our commodities; prices of commodities are falling; we are losing [foreign] investments, we are seeing postponements, withdrawals of commitments made; another big danger is tourist arrivals coming down.
But our other biggest worry is what would happen to development assistance, to development aid, to ODA. Of course the message we get from all our partners is that theyve not cut aid to Africa. Thats the message weve got. First, we wish that commitment would be a firm commitment. Then of course were looking for additional resources. Because you have the capacity in developed countries for bails out, for stimulus packages. We dont have that capacity. Its a luxury we cannot afford. Its a necessity, but for us it turns into a luxury you cannot afford. So the other thing were saying is that in those bail out packages let there be some consideration for assisting the countries on the African continent that are also victims of a crisis they have not created. Bob Zoellick [president of the World Bank] is talking about 0.7 per cent of stimulus packages being set aside [for a vulnerability fund for poor countries], which is something which we support.
FT: But if the commitments are not honoured then how does Africa cope on its own? Can it?
JK: Well, there isnt much we can do. Weve got to depend on ourselves. The little that we have. But we will see the consequences. The danger is the reversal of the gains that have been made. As I was saying in my speech, after the oil shock of the 1970s, in the 80s and 90s we ended up losing almost one and a half decades of gains that had been made in the past. We should not get back to that kind of situation. There is this shock now, but this shock should not again mean loss of the hard won gains that have been made.
FT: If the western countries do not step up, do you think China could be an alternative source of support?
JK: Well yes, but theyre also affected. They also have limits. Thats why we say our prayers are the bail out packages, the stimulus packages. Let these succeed. If the bail outs succeed and the stimulus packages succeed in north America, in Europe, in Japan and in China, if they succeed then the problem is gone. The deal is done. Things will be fixed. So our prayers are first fix the situation. We want the efforts to succeed. And then, meet your commitments to Africa. If this is done, we are home and dry.
FT.com / UK - Interview with Jakaya Kikwete, president of Tanzania