September 2008

Etant donné l’appréciation de l’Euro vis-à-vis du dollar, la question de la parité du Franc CFA (qui est fixé à l’Euro) doit être encore soulevée.  L’appréciation est comparable à celle des années 1985-1993 [voir graphique].  Pendant cette période, les économies des pays de la zone CFA ont connu une forte diminution de leur compétitivité, des exportations, et de croissance économique.  Dans la plupart des pays, la pauvreté a augmenté.   Il faut se rappeler que le

My colleagues and I are trying to think through the implications for Africa of the recent turmoil in global financial markets. Here are four propositions.

1. African banking systems are unlikely to experience the turbulence of the U.S. banking system.  African banks retain loans they originate on their balance sheets, the interbank market is small, and the market for securitized or derivative instruments is either small or nonexistent.  Even though some African countries’ banking systems have significant foreign ownership, the parent banks are typically not in the U.S.  Furthermore, the foreign ownership share in the largest economies, Nigeria and South Africa, is less than five percent (compared with a developing-country average of 40 percent).

The Millennium Development Goal of reducing child mortality rates by two-thirds between 1990 and 2015 is proving to be one of the most difficult for African countries to reach.  A recent book published by some colleagues at the World Bank   points to some reasons why.  Many of the determinants of child mortality lie outside the health sector—they include water, sanitation, and malnutrition.  Yet this MDG is often seen as the province of the health sector, requiring health inputs.  At a recent launch of this book, I asked why, since we have known for a long time that these environmental factors affect child mortality, has it been so difficult to make progress in child survival. One reason may be that, precisely because it has so many determinants, no one in government is willing to hold him or herself accountable for reducing child mortality. 

In the past, policy advice on promoting trade in Africa may have overstressed the need for African countries to bring down their own trade barriers, such as import tariffs, and insufficiently emphasized the need to improve trade logistics, infrastructure, business competition, and regulation. As I mentioned in a recent interview, lowering tariffs may not help if it takes an average of four days to clear goods at the port of Mombasa, Kenya. It can take up to 21 days for a vessel to offload its cargo at Dar es Salaam port. Given the large number of landlocked countries in Africa, poor infrastructure—such as road and communications networks—could be as much a barrier as trade tariffs.

Furthermore, some of these infrastructure constraints may be due to excessive regulation and barriers to entry in the trucking industry. Finally, Africa’s “spaghetti bowl” of overlapping regional trading arrangements makes it difficult for firms to compete abroad. While trade tariffs continue to be a barrier in some countries, relaxing some of these “behind-the-border” constraints may be one of the most effective ways of promoting trade in Africa.