The World Bank - Working for a world free of poverty

Views menu

June 2009

How have policies and institutions in low-income African countries fared?

Submitted by Shanta on Tue, 2009-06-30 15:02

Last Friday, the World Bank released its Country Policy and Institutional Assessment (CPIA) of low-income countries.  While the assessments are mainly used to determine the allocation of concessional IDA resources to poor countries, they can also provide a useful picture of the evolution of policies and institutions in Africa, as a recent note by my colleagues Delfin Go and Vijdan Korman shows.  They find that:

  • Over the past eight years, African countries’ performance is about average compared with East Asia and South Asia.
  • Within Africa, Cape Verde, Tanzania, Uganda and Ghana have consistently had strong CPIA scores, while Zimbabwe, Comoros, Central African Republic and Eritrea seem to be stuck at the low end of the scale.
  • Over the past five years, the biggest improvements in CPIA scores were registered by Ghana, Rwanda, Zambia and Mozambique, while Eritrea, Chad and Zimbabwe experienced the largest deterioration.  Seven of Africa’s nine oil exporters (Angola and Nigeria were the exceptions) saw their CPIA scores decline.
  • For Africa as a whole, most of the improvement in policies and institutions was in the category called “economic management”—essentially macroeconomic and fiscal policies.  The average scores on the other dimensions—structural policies, equity and social inclusion, and public management—stagnated.  While some countries showed improvements along these other dimensions, an equal number of countries saw their scores go down.

Madagascar: a transition...but challenges are coming soon

Submitted by Noro Andriamihaja on Mon, 2009-06-22 16:30

So far the dialogue between the main political parties has failed to produce an agreement on the way forward for a return to a democratic Government. For the time being, the economy continues to deteriorate but has shown some resilience due to two factors; 

(i) Fiscal Policy: The strict fiscal policy pursued by the authorities has helped stabilize key financial indicators (interest rates, inflation, and the exchange rate) 

(ii) The dual impact of the crisis on private sector and households: A segment of the economy has been seriously affected (such as tourism, textile and construction) resulting in job losses in urban areas. In contrast to these vulnerable sectors, a large fraction of the Madagascar economy has been isolated from the current recession (likewise they benefited less from growth in good times) because of the good rice harvest.  

Three main challenges in the near future: (i) the payment of salaries to community teachers when classes will open in September, (ii) the reaction of textile companies to the uncertainty surrounding the US decision to maintain Madagascar as part AGOA, (iii) investment and planting decisions for the rice counter-season.

The question is will the Government be able to pass those tests in the absence of a political agreement?

To see the full report on the Madagascar economy, click here

Critiques from inside the World Bank

Submitted by Shanta on Tue, 2009-06-09 09:08

While my blog posts seemed to elicit a fair number of comments, I had been wondering how many of them, if any, were coming from my World Bank colleagues. Last Friday, I got to find out. Our Internal Communications department ran a story on the Bank’s intranet with the headline “The effects of the global recession on Africa will be permanent, says Africa Chief Economist.” The story then linked to my blog post, “Why aid to Africa must increase”. My first reaction to some of the comments was “Ouch!”

One person said, “[Please] note that this is the same man who was saying (not too long ago) that South Asia would not be impacted by the crisis!” Touché. I had a blog post in January 2008 in my former South Asia blog that took the forecast for U.S. economic growth at that time, and inferred that the effect of the subprime crisis on South Asia would be mild. But most people were not forecasting such a big recession in the U.S. and elsewhere at that time. Of course, the bigger recession had a bigger impact on South Asia, although every South Asian country benefited from the fall in oil prices.

Another person said:  "The effects of global recession on Africa will be permanent! What nonsense. Who is the presumed seer who knows all about the future? And what will the effect on other places be? This is not a conversation rather it is purveyance of stereotypes under the guise of analysis, something that is very common at this institution. Disgusted."

Does Africa need industrial policy?

Submitted by Shanta on Mon, 2009-06-08 09:04

My good friend and predecessor John Page gave a provocative seminar with the title of this post the other day. His main point, echoed in this year’s UNIDO Industrialization Report, was that Africa’s industrial sector was declining, and some type of collective action (he called it “policies for industrialization” rather than the maligned phrase “industrial policy”) is needed so that the continent could resume industrial growth.