Oil slump cuts Arab aid funds to Africa

Press, 2 June 1982, Page 10

Oil slump cuts Arab aid funds to Africa

By

JOHN DIMSDALE

in Khartoum

Arab generosity to black Africa is being squeezed by falling oil prices and the effects of the Gulf war between Iraq and' Iran. At the annual meeting in Khartoum of the Arab Bank for Economic Development in Africa it became ‘ plain that no new funds from donor nations can be expected for at least a year. The message to Africa was that only the most needy, and best planned, schemes will be eligible for consideration. The director of the Iraqi Fund for External Development, Dr Abdul Amir Imbari, told the meeting that because of the Gulf war his country was lifting less than 20 per cent of its normal amount of oil. “We will honour existing aid agreements with African countries and elsewhere but there is no way in which new agreements can be examined this year,” he said. Like Iraq, other important Arab donors promised that existing agreements would be upheld but offered little else other than protestations that Afro-Arab solidarity was the best way of reducing mutual dependence on the

industrialised North. Only days before the meeting " the’ United Arab Emirates announced the cutting of their aid budget by 58 per cent and Kuwait the reduction of its national budget by 40 per cent with consequential effects on aid. Most of the six or seven big Arab aid agencies engage in bilateral aid schemes with individual African countries, and all contribute to multinational efforts such as the bank's and Organisation of Petroleum Exporting Countries’ funds. The Bank for Economic Development is the only Arab fund which by charter restricts its gifts to non-Arab League African States — a policy which once led President Siad Barre of Somalia to remark that it might well be in his interests to leave the Arab League and join the bank as a client State. While the heavy cloud of world recession, oil production cutbacks, and unresponsive world commodity markets hung over Arab and African alike in Khartoum, there was some cheer for four countries. Senior Ministers of Kenya, Botswana, Mauritius, a’nd Comoros signed new loan agreements granted on very

soft terms of either 5 per cent or 8 per cent and spread over 15 to 20 years. In the last financial year the bank helped nine African countries, plus the Sahel (subSaharan), region. Cynics have said that Arab aid to Africa must be conscience money. In fact it is statistically transparent that most aid goes to those countries which import least oil. Unlike some “northern” aid, the bank’s has no buy-back clauses. Providing the feasibilitystudies meet the Bank for Economic Development's strict requirements, aid money can be spent on expertise or equipment from any country that tenders. At this year’s meeting the board of governors had hoped for pledges of more capital from its 18 member States; the bank’s subscribed capital has remained static at $738.25 million since 1977. Whatever officials had hoped for, the closed working session of the board resulted in the director-general's announcing that “a scheme of alternative ways of raising new capital would be presented to the governors next April.” In other words, no new funds are expected for at least a year. — L.O.S.