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Relaunching Africa Can and Sharing Africa’s Growth

Francisco Ferreira's picture

Dear Africa Can readers, we’ve heard from many of you since our former Africa Chief Economist Shanta Devarajan left the region for a new Bank position that you want Africa Can to continue highlighting the economic challenges and amazing successes that face the continent. We agree.

Today, we are re-launching Africa Can as a forum for discussing ideas about economic policy reform in Africa as a useful, if not essential, tool in the quest to end poverty in the region.

You’ll continue to hear from many of the same bloggers who you’ve followed over the past five years, and you’ll hear from many new voices – economists working in African countries and abroad engaging in the evidence-based debate that will help shape reform. On occasion, you’ll hear from me, the new Deputy Chief Economist for the World Bank in Africa.

We invite you to continue to share your ideas and challenge ours in pursuit of development that really works to improve the lives of all people throughout Africa.

Here is my first post. I look forward to your comments.

In 1990, poverty incidence (with respect to a poverty line of $1.25) was almost exactly the same in sub-Saharan Africa and in East Asia: about 57%. Twenty years on, East Asia has shed 44 percentage points (to 13%) whereas Africa has only lost 8 points (to 49%). And this is not only about China: poverty has also fallen much faster in South Asia than in Africa.

These differences in performance are partly explained by differences in growth rates during the 1990s, when emerging Asia was already on the move, and Africa was still in the doldrums. But even in the 2000s, when Africa’s GDP growth picked up to 4.6% or thereabouts, and a number of countries in the region were amongst the fastest-growing nations in the world, still poverty fell more slowly in Africa than in other regions. Why is that?

Why Germany wins and lessons from the Champions League final

Wolfgang Fengler's picture
Gary Lineker, the British footballer, is not only known for his talent on the pitch, but also for this memorable quote: “Football is a simple game; 22 men chase a ball for 90 minutes and at the end the Germans win”.  Last weekend his theory proved correct. For the first time ever, two German teams contested in the Champions League Final. Bayern Munich (winner in 2001) played Borussia Dortmund (winner in 1997).

Saving is the key to future growth for Kenya

Wolfgang Fengler's picture

How do countries and individuals become rich? Human history provides a clue. One of our most defining moments as a species took place some 10,000 years ago, when a group of humans started to switch from hunting and gathering food to growing it. This allowed them to settle down (in an area called Mesopotamia). If they produced more than they consumed, they could save for the future. With proper storage facilities, they no longer needed to eat and drink everything they had; instead they could put some aside literally for "rainy days", and, even more importantly, invest some of the agricultural output to produce even more.

Now zoom forward several thousand years: saving has become central to individual and collective prosperity. As a rule of thumb those who save more become wealthier because foregoing consumption today allows one to invest in the future (e.g. you can save to buy a bicycle, a car, or a house). Businesses can invest in new equipment and governments in new roads, schools and health facilities. All of these investments are associated with better economic futures.

People and companies tend to save and invest if they can trust the institutions that manage their money and the economy at large. In the past, it was not always safe to keep deposits at banks in many African countries. It is different today. In fact some may feel more secure entrusting their savings to African banks than those in Europe (as depositors in Cyprus’ banks recently realized). But you need more than robust and credible banks for increasing savings and investments. Investors will only enter and stay in large numbers if they can trust that the state won’t change the rules of the game in mid-course.

Why are Kenyans still brilliant runners but disappointing footballers?

Wolfgang Fengler's picture

 When Churchill was asked for the secret of his long and healthy life, he famously quipped: “No sport!” (that was Winston, not Kenya’s beloved entertainer). The British PM would have been a poor ambassador for the London Olympics, which just ended in great fanfare.

Today, many would challenge his perspective. Obesity is a massive problem in rich societies and rapidly becoming one in emerging economies too. As a result, heart disease and diabetes are also on the rise.

But for me, sport means so much more than just personal fitness. I practiced Judo competitively as a child, which helped me to stay focused, taught me important life skills –especially teamwork— and formed friendships that have lasted until this day. My passion for sport has been reenergized in Kenya, where you can be outdoors all day long and all year round… much better than sitting in front of the TV (football games excepted).

But at the macro level, is sport also contributing to national development? Does it help or hurt in building a nation and growing an economy?

Delivering Aid Differently – The New Reality of Aid

Wolfgang Fengler's picture

This month Homi Kharas and I published a book titled “Delivering Aid Differently – Lessons from the Field”. We launched the book yesterday at the University of Nairobi.  Here is a summary of the main messages:

We live in a new reality of aid. Rich countries delivered US$ 3.2 trillion of aid to poor countries between 1960 and 2008, and it is a US$ 200 billion dollar industry today. Despite disputes and convulsions, the core of the aid industry has changed little over the past few decades. Now the new pressures on the aid systems may be too strong to resist fundamental change.

Running on One Engine

Wolfgang Fengler's picture

This week, the World Bank launched its second Kenya Economic Update. We have been positively surprised to see such a strong uptake of our previous report and were pleased to have a full house at the launch and informal briefings we have in the run-up of the launch. These Economic Updates aim to replicate a model of shorter, crisper and more frequent country economic reports, which have become a trademark of the World Bank’s analytical presence in other countries, in particular China and Russia.