Mukhisa Kituyi has had a long and impressive career. Not only has he been an academic and a minister of trade for Kenya, he also has wide-ranging experience in trade negotiations, as well as in African and international economics, and diplomacy. It has been said that one could hardly find a better qualified person to head the United Conference on Trade and Development (UNCTAD), with its focus on achieving prosperity for all. (In addition – believe it or not – he speaks fluent Norwegian!) With characteristic modesty and good humour, Dr. Kituyi discusses the aims and achievements of UNCTAD in this, its fiftieth year.
Q: You have a very impressive curriculum vitae. What has given you the most satisfaction in your life or career?
Satisfaction varies. Passing a competitive examination and being admitted to a very prestigious high school was a very fulfilling moment. At another level, I think the three years I served as the Chairman of African Ministers of Trade and chair the Working Group on Sustainable Consumption and Production of the Nordic Council of Ministers was a very fulfilling time in a challenging situation. Fulfilment varies too. The birth of my grandson was another fulfilling moment. There is no way of measuring [the fulfilment one gets] between passing a competitive exam and becoming a grandfather.
The level of international acceptance that was displayed – at a particularly difficult time for this organization – when my nomination was presented to the General Assembly of the United Nations also represents a humbling and enriching experience for me.
Q: You are now at the head of an international economic think-tank. What are your main objectives for the organization?
There are a number of things. First of all, as the leader of an institution that is fifty years old, the core responsibility is how to make the organization do better. What has it been doing well? What is its core mandate and how can it fulfil this role more efficiently? There is a ministerial conference that sets out our mandate and gives us our terms of reference for the next four years. The thirteenth UNCTAD Conference, which was held in Doha in 2012, set out clearly what the organization has to accomplish by 2016 before its next meeting in Peru. My responsibility is to offer efficient, competent leadership to all the professionals in order to keep the promises of Doha and what is set out in the approved work-plan.
The second level of my responsibility is that this is an institution that prides itself on its independent analytical work, offering a bold view from the perspective of developing countries. What is the state of world affairs economically? What are the challenges for developing countries? What can the international community do to strengthen their ability to grow through international integration and engagement? I remain aware of that responsibility. We will seek to guard our analytical independence, but I try to anchor it in the relevance of the moment. Look at globalization. Look at the uncertainty of the financial markets after the recent economic troubles, and look at the significance of the emerging economies as players in international trade and in economic diplomacy. In this context, what is the narrative? What is the meaning for developing countries at the macro-economic level?
On another level, during its fifty years, and particularly over the last thirty years, UNCTAD has created major competencies for development problems and technical assistance for comprehensive specific issues. This concerns our tool kits, like ASYCUDA, which is the most widely used customs software in the world, or DMFAS, a debt management instrument for developing countries, or EMPRETEC, a programme which is very popular with enterprise development support. We have developed competencies that are widely respected. Similarly, we have developed a voice on investment. We are the world’s premium institution focusing on investment trends in the world, both through our publication, the World Investment Report, and the biennial World Investment Forum to be held next in October 2014.
We are at the forefront of international mainstream leadership. These pragmatic programmes remain an important focus of the work we do – how to improve them, how to keep the programmes within manageable limits, make them relevant for developing countries and to find the extra-budgetary resources to complement our own budget. These are some of the responsibilities I see for myself.
Thirdly, I am trying to shift some of the focus of the organization. I want greater policy influence through interaction. What this means is that I am cutting down some of our publications, reducing their appearance to one annual edition, collapsing some publications into one, and putting some others online instead of publishing hard copies of them. What we will save in time and money we want to put into direct policy discussions with developing countries. For example, we want more field offices, more government meetings, more experts on concrete challenges, more best practices, more relevant institutional reforms and more peer review comparisons. What are your neighbour’s best practices? In this way we will have a bigger impact than just inviting countries to attend our meetings in Geneva or giving them our publications – as much as this remains important.
Lastly, since the narrative on development within the UN family for the next thirty years is going to be substantially directed by the sustainable development goals (SDGs), we have to find a niche within this discourse for our expertise. We are finding opportunities to demonstrate the economic pillars of sustainable development and also suggesting new ones and engaging new partners within the sustainable development process: private sector players; hedge funds; sovereign funds; and investor resources to compensate for the deficit in pledged international support for these SDGs.
Q: UNCTAD has been criticized in the past and some donors have reduced their extra-budgetary funding. Are you trying to win them back?
Every country has the right to decide on its priority areas of programme support. One of the challenges of a new Secretary-General in this organization is to see what the priority areas are and which donors support them. I am glad to say that for some countries and some programmes, I have noticed a positive tone in their resource allocation and programme support. We have just signed a new programme to set up a centre of excellence on trade facilitation for Africa, which is going to be funded by the Swedish Government. I think this is the first fresh funding from the Swedish Government to UNCTAD in quite a few years. The Government of Finland has retained substantial levels of funding for this year; it has slightly increased its activities. The Netherlands is also one of our major donors. Our programmes for the least-developed countries (LDCs) have been supported by non-traditional extra budgetary sources. So, I do not agree that there has been a decline in resource support. We are looking at how to grow from where we are. If I believe in a cause enough, I engage the potential donors directly.
Q: Most of the LDCs are found in Africa. What are your plans for them?
First of all, we are dealing directly with the African Union Commission, which has a comprehensive roadmap and architecture for the continent. This was adopted by African presidents at the end of January 2012. We have signed a Memorandum of Understanding with them and we are providing them with technical back-up and advice. We were involved in dialogue with the African Union Commission, as Africa prepared its position at the European Union Summit in Brussels in April 2014. In August the African presidents will be in the United States. We are giving them some technical background on the challenges, the consistency of the message and possible implications and ramifications of the positions they are adopting.
We deal with the African countries as a regional group, developing a platform of transparency and sustainability on natural resource use. Since 2009, UNCTAD has developed what is called the Sustainable Natural Resources Exchange Initiative. Countries become transparent in all their declarations of audited natural resources, and the platform clears the negotiated contracts they have with multilaterals before going into production. This is important for benchmarking and good governance of natural resources.
The third thing is that we are encouraging countries to have a structural transformation tax. This is taken from natural resources revenue and committed to investment in education or healthcare. The intention is to avoid typical illnesses like those, for instance, in Equatorial Guinea. This country has a GDP of US$16,000 per capita, but its infant mortality rate is comparable to Burundi which has a GDP of US$280. Thus, prioritizing investments in human resources and social indicators of growth influences the sustainable use of natural resources.
We are also supporting an initiative establishing a Minerals Observatory for Africa, examining natural resources, best practices, abuse of workers’ rights within countries, and also the unsustainable transformation price that has been exposed where African natural resources lose billions of US dollars every year by being transferred to low tax territories – not excluding Geneva! We want to see how we can create a stronger voice for dealing with this.
There is another thing we are planning to do in support of African LDCs in their declared commitment – at least 50% of them should graduate from LDC status by 2020. The Declaration of Istanbul in 2012 set targets and we are trying to achieve them. We give advice to national governments on what it takes and how to adjust to post-LDC status. This process has helped Vanuatu and Angola. We want to work with others to expand the process. How to expand on the Human Growth Index? How to create competitiveness and not be dependent on the unlimited privileged market access of being an LDC? It is a question of getting them out of the complacency of wearing the LDC status as a badge of honour.
Q: Wearing the LDC as a badge of honour – is it not, rather, a heavy burden to carry?
When the LDCs category was created in the early 1970s it was expected that countries would graduate to become emerging economies. Today, forty years later, you have more LDCs than ever before! Our feeling is that, unless there is a commitment to stop being an LCD, it becomes a trap. Developed economies allow greater access to their markets for LDCs [so] countries fear graduating because it will reduce their market access. The diplomacy has to go both ways; industrial markets have to accept market access for countries that are making an effort to grow. They should not punish people who wish escape the LDC status. You should encourage them by sustaining acceptable market access, even if they graduate.
As an LDC, you can export anything into the European Union apart from drugs and armaments. But the moment that you stop being an LDC, customs duties are applied. Thus, it encourages countries to remain poor. At one level, we are telling countries that you owe it to your population to grow, but at another level we should say to the developed economies that, as an instrument of solidarity, you should allow for these countries to graduate without erosion of market access.
Q: How do you do see the economic outlook for African countries over the next few years?
I am not as optimistic as most people for a number of reasons. Firstly, if you look at the boom in Africa, there have been two main engines. One is a steady and relatively high international price for commodities, substantially fuelled by consumption in China and other parts of Asia. If you look at African countries as great performers, they have been dependent on commodity prices that will decline over the next decade.
Secondly, if you look at African growth over the past few years, economies have been growing at 7% to as much as 10%, but employment creation has constantly been below 3%. If employment creation remains below population growth, it means that you are planting the seeds of future distress.
Thirdly, there has been an inadequate organic relationship between growth by extraction of natural resources and the rest of the economy. If you look at the dynamics of the African economy, the majority of the population does not work in the extractive industries; they are in what we call non-tradable sectors. So, the spin-off from oil and mineral exports has been fuelling the management of state affairs and has not been improving human resources within the country. More deliberate action, linking the spin-off of natural resources with the local population through investment in education, competitiveness, agriculture and the tourism sector, is the only way that the gains of the commodity boom can be good for countries.
The other fact is that countries that have done extremely well are those investing heavily in infrastructure, like Ethiopia with 6,000 kilometres of asphalt roads, 2,000 kilometres of railways, etc. These efforts, in the short term, create a boom in construction employment, but unless there is a sustainable boost to economic activity beyond this phase, you face many challenges. In 2050, Ethiopia will be placing 2.5 million new persons on the labour market every year. To employ that level of population represents a very substantial challenge. The absence of investment in structural transformation makes the current boom very vulnerable. That is the reason why I am not totally optimistic. I would be more optimistic if it were possible to add more value to African products, to have a more organic relationship between the extractive industries and the rest of the economy, to invest more in human resources – the most important guarantee of future prosperity.
Q: Many African countries have universities. People say that it is only a matter of time before there is social disorder due to the lack of private sector development. What is UNCTAD doing in this field?
Well, we cannot fix every problem. We have no ability to do so, nor even the ambition. I remember a Danish minister made a very famous remark when his government was accused of investing too much money in education. He said: “If you think education is expensive, try the alternative. What is the price of an illiterate population?” To my mind, the growth in modern education – investment in the intellectual development of the population – is not only important to create jobs, it is liberating for individuals. Despite the political consequences, liberated individuals are better whether they have modern sector jobs or not. There may be problems in the short term for the governments that fail to expand employment opportunities. I cannot trade off the desire for stability with illiteracy.
Q: The United Nations is currently working on the post-2015 development goals. What is UNCTAD doing in this sphere?
As a member of the UN family, we are facilitators as countries move towards their involvement, which will start in September at the General Assembly. Having said that, there are two areas where we continue to contribute. Sustainable goals should not just be a bucketful of social deliverables: so many health centres, so many schools, etc. China has taught us that the best way to eradicate poverty is to create sustainable livelihoods. If people have sustainable incomes they become the main players in achieving social goals – better education, better housing, better healthcare, etc.
So we say, do not just set the goals of social aspiration, but of economic empowerment. That is one major area of our contribution. The second [area to which UNCTAD makes a contribution] is to look at innovative ways of financing these goals. How do we tap into sector financing more than before? How do we include the private sector as partners in conceiving and implementing social development and sustainable development goals? We also note the wealth of sustainable resources that are held back by such players as Norway and Qatar. They have huge sovereign funds that are basically held back from circulation and productive activity. What is necessary for them to transform these resources into non-traditional investments? These are some of the areas in which we are engaged. We are hosting an open dialogue taking place in Geneva. The next one will be in June 2014. We believe that the trade hub of Geneva has something refreshing but important to say in the process [determining the post-2015 goals] going on in New York.
Q: Finally, do you have something that you would like to highlight?
On 16 June this year we will be marking the fiftieth anniversary of the signing of the constitutional act setting up UNCTAD. We are proud of our contribution to humanity and some of the work we have done has been translated into long-term progress in the world, such as the concept of the LDC, the proposal to write-off debt, the proposal of 0.7% for development assistance, and others.
