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African Successes

Submitted by Shanta on Thu, 2009-09-17 11:44

In recent years, a broad swath of African countries has begun to show a remarkable dynamism.  From Mozambique’s impressive growth rate (averaging 8% p.a. for more than a decade) to Kenya’s emergence as a major global supplier of cut flowers, from M-pesa’s mobile phone-based cash transfers to KickStart’s low-cost irrigation technology for small-holder farmers, and from Rwanda’s gorilla tourism to Lagos City’s Bus Rapid Transit system, Africa is seeing a dramatic transformation.  This favorable trend is spurred by, among other things, stronger leadership, better governance, an improving business climate, innovation, market-based solutions, a more involved citizenry, and an increasing reliance on home-grown solutions.  More and more, Africans are driving African development. 

The global economic crisis of 2008-09 threatens to undermine the optimism that Africa can harness this dynamism for long-lasting development.  In light of this, it might be useful to re-visit recent achievements.  The African Successes study aims to do just that.

The study will identify a wide range of development successes (see list), from which around 20 cases will be selected for in-depth study.  The analysis of each successful experience will evaluate the following: (1) the drivers of success—what has worked and why; (2) the sustainability of the successful outcome(s); and (3) the potential for scaling up successful experiences.  African success stories offer valuable insights and practical lessons to other countries in the region. 

I welcome your comments and suggestions for success stories. Click here to see the list of what we have come up with so far.

The Impact of the Global Economic Slowdown on Uganda

Submitted by Charlotte Lundgren on Mon, 2008-12-15 14:21

Uganda has in the past few years showed impressive growth rates despite a number of shocks including prolonged drought, severe energy shortage and the adverse impact of high oil and food prices. Public finances are in good shape with a very favorable debt situation and the financial sector is sound and well-capitalized. Uganda is, therefore, entering the global economic slowdown in a relatively strong position.

The first effects of the global financial crisis are already being felt on the currency and stock markets; both had been falling sharply but have now stabilized. The main transmission channels from the global economic crisis to the Ugandan economy are expected to be receding demand for Ugandan exports, reversing terms of trade and slackened capital inflows. All in all, the assessment is that the global economic slowdown will have noticeable but manageable effects on the Ugandan economy. In our new ‘global economic slowdown’-scenario for Uganda, we have revised growth downwards to average 6.9% (7.9%) during 2008/09-2010/11.

In terms of policy implications, there is room for prudent widening of the fiscal deficit. It should therefore be possible to accommodate spending as planned, including much-needed infrastructure investments. This will also serve as a much needed fiscal stimulus to the economy. Given the increasing concerns about domestic factors keeping inflation above target, the room for monetary relief is very limited.

From Poverty to Power

Submitted by Shanta on Mon, 2008-11-24 10:25

 “When I was a boy of fourteen,” Mark Twain once said, “my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished by how much he'd learned in seven years.”

My relationship with the book From Poverty to Power by Duncan Green of Oxfam is a bit like that between Mark Twain and his father. Despite all the critical things said about neoclassical economics, the World Bank and the Washington consensus in the book, I find myself agreeing fully with the conclusions of the book. 

How will the financial crisis affect remittances to Africa?

Submitted by Marilou Uy on Tue, 2008-11-04 11:18

Sub-Saharan Africa received almost $12 billion in remittances in 2007, and that was only the official number. With "informal" flows added the total amount can easily be double that number. Nigeria, Kenya, Sudan, Senegal, Uganda and South Africa received the highest volume of remittances, while in smaller countries such as Lesotho remittances represent up to a quarter of GDP.

Remittance costs are significantly higher for Africa compared to other regions; costs can go up to almost 25% of the amount remitted. Remittances between African countries (from South Africa, for example) are especially expensive. Reducing these costs will mean substantial extra transfers, and this will be a focus of the World Bank’s medium term agenda on the African financial sector. The immediate concern is, however, stability of flows: the recent international credit crisis will lead to a slowdown in remittances. Remittances have generally been counter-cyclical in the past, as they tend to increase when the receiving country experiences adverse events.

But a recession in sending countries could hurt the capacity of migrants to send money home. It is still too early to determine if the latter factor will dominate and cause a decline in the total amount remitted, although there are some disturbing signs. High-frequency data on remittances for African countries are scarce, but available data show that remittances from the US seem to have slowed down in recent months; remittances from other sending countries, however, have not yet been affected.

Since some readers of this blog are senders of remittances, and others recipients, it would be helpful to hear how you see remittances changing  in the current situation.

Poverty in Africa and elsewhere

Submitted by Shanta on Wed, 2008-10-15 09:12

Poor people are poor because markets fail them and governments fail them.  That markets fail them is well-known.  Failures in capital markets mean that young people cannot get loans to finance their education; imperfect or nonexistent insurance markets mean that poor people will not get decent health care if left to unfettered markets; economies of scale as well as the simple fact that basic services such as water are necessities mean that markets will not ensure that poor people will get the services they need to survive.  As Roy Radner, a former professor of mine once put it, “When you allocate resources by market prices, you discriminate against poor people.”

To overcome these failures—that is, to protect the poor—governments step in.  They finance and provide primary education and basic health care; they subsidize water and electricity so poor people can afford these services.  Unfortunately, these well-intentioned government interventions lead to failures of their own.  In Ugandan public schools, teachers are absent 27 percent of the time; health workers in primary health centers are absent 37 percent of the time.  Only one percent of the money allocated to non-salary spending in Chad reached the health clinics.  These “government failures” are sometimes as pernicious as the market failures they were intended to correct.  They are also difficult to overcome because various interest groups who benefit from the status quo may resist reform. 

Is information the solution?

Submitted by Shanta on Thu, 2008-10-02 15:52

Chris Blattman is right to question my enthusiasm for information as the solution to seemingly intractable development problems. (By the way, thanks for the complimentary plug for AfricaCan, Chris).  Information by itself is not useful unless people can do something with it.  And we’re talking about poor people, who typically have very little power. But if enough poor people have access to the same information, they may be able to mobilize and enforce better performance from service providers or public officials. This is the reasoning behind the work on citizen report cards, public expenditure tracking surveys, community monitoring, and the like.

A recent note by Stuti Khemani explores why community monitoring of health care in Uganda appeared to work so well, while a similar program for schools in Uttar Pradesh (UP), India didn’t.  She suggests three reasons: differences in the level of NGO activism in the two countries; differences between health and education; and the political economy of service delivery (teachers unions are very powerful in UP).  The latter is particularly troubling because another rationale for information campaigns is when reforms in service delivery are blocked for political reasons.  What then can we do?