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Can Kenya replicate Indonesia’s turnaround?

Wolfgang Fengler's picture

JakartaRecently, a friend from Indonesia visited me in Nairobi. He is one of the world’s leading experts on social development and a long-term Jakarta resident. One of his observations stuck in my mind: “Kenya is just like Indonesia ten years ago”, he said. 

Comparing Kenya with Indonesia is counterintuitive—except perhaps when it comes to traffic jams—because of the many differences between the two countries. Indonesia is the world largest island state with more than 17.000 islands and a demographic heavyweight with 240 million people (six times more than Kenya). It is also 85 percent Muslim, while Kenya is about 85 percent Christian. Indonesia has massive natural resources – coal and gas (and some oil) – that it exports to other Asian countries, especially China, while Kenya’s economy is fuelled by a strong service sector.

There are many more reasons to challenge a comparison between these two countries but when one digs below the surface, there are also some similarities. Economically my friend was spot on: in GDP per capita terms, Kenya is roughly at the level of Indonesia a decade ago (about US$800 per capita). Today Indonesia is far ahead, but I don’t see any reason why Kenya couldn’t follow suit. Indeed, Indonesia is a good benchmark case for Kenya because it was never a “star reformer”, but instead a consistently strong performer.

Thou shall not die: Reducing maternal deaths in sub-Sahara Africa

Patricio V. Marquez's picture

Mother and child in South Sudan There is growing optimism in the development community that the dawn of the “African Century” may be upon us.  The reasons for this optimism are real.  Over the last decade, six of the world's 10 fastest-growing economies were in Africa, and substantial political and social progress has been achieved.  

But I would say that the potential for this development may be undermined if the everyday tragedy of preventable maternal deaths continues unabated across the continent. 

 

The recently-released report “Trends in Maternal Mortality: 1990 to 2010. WHO, UNICEF, UNFPA and The World Bank estimates” paints a dramatic picture. Overall, close to 60% of global maternal deaths occur in sub-Saharan Africa, and at 500 maternal deaths per 100,000 live births, the region has the highest maternal mortality ratio (MMR) in the world, well above Southern Asia (220), Oceania (200), South-eastern Asia (150), and Latin America and the Caribbean (80).

A wiki on Africa Youth Employment

Shanta Devarajan's picture

Ever wonder how a World Bank  flagship report gets written?  A team of experts drafts an outline and shares it with stakeholders for their comments, suggestions and inputs.  Based on this feedback, the team drafts the report and shares the draft for further comment, before publishing the final draft.

Today, we are proposing to write our flagship report on youth employment in Africa differently.  We are launching a wiki platform and inviting the world to participate in the writing of the report. The wiki contains the preliminary outline which you can revise and rewrite.  I emphasize that the outline is preliminary; it contains assertions that may not be borne out by further analysis (I know because I wrote some of them).  So please add to, subtract from and edit the outline.

 

Why are we doing this?  First, the topic of youth employment in Africa is so important that we need to engage as many people as possible in finding solutions.  And second, young people are so tech-savvy that this may be a way of harnessing that talent and energy.  

 

As you can imagine, the idea of writing a report on a wiki platform raised some questions, even from my teammates ("if you needed brain surgery, would you crowd source that too?"). But we decided that the benefits outweigh the risks.

 

Writing a report on a wiki is the logical extension of the World Bank's open knowledge and open data programs (link to these), not to mention this blog.

 

And if we succeed in collaborating with a large number of people, we could call it the world's development report.

Africa's success story: Infant mortality down

Gabriel Demombynes's picture

There is a tremendous success story in Sub-Saharan Africa that has only barely been recognized. Infant and under-5 mortality has plummeted in many countries in the region in recent years.

The under-5 mortality (U5MR) measure captures the number of children per 1000 live births who die before their 5th birthday. One of the Millennium Development Goals is a two-thirds decline in U5MR between 1990 and 2015, which would require an annual decline of 4.4 percent per year.

 

In the 20 countries for which recent data is available, 12 show rates of decline above this “MDG rate.” In particular, Senegal, Rwanda, Kenya, Uganda, and Ghana have experienced extremely large drops at a rate of more than 6 percent per year. This does not necessarily indicate that any particular country will meet the MDG. But it does tell us that the African Renaissance is bringing tangible benefits to the continent’s citizens. Because of this miracle, hundreds of thousands of parents will be spared the agony of the loss of a child.

To boost trade between Ghana and Nigeria: implement existing commitments

Mombert Hoppe's picture

Most people seem to think that intra-African trade could be substantially larger than it currently is. This would explain the recent statement of the heads of the African Union to “boost” intra-African trade substantially and to create an Africa-wide Free Trade Area by 2017.

Five reasons why Kenya and Africa should take off

Wolfgang Fengler's picture

A week hardly goes-by without one or more international investors announcingmajor investment interests in Nairobi, or other African capital cities.

Nokia, Nestle, and IBM are some of the companies which intend to position themselves more strongly in (East) Africa. True, their investments may still be low by international standards, but they are increasingly becoming noticeable. 

On a macroeconomic level, the new Africa momentum has also been evident. Africa has weathered both the global financial crisis, and the turbulence in the Euro zone. According to World Bank’s latest economic outlook, Sub-Saharan Africa is projected to grow above 5 percent in 2012 and 2013. This would be higher than the average of developing countries (excluding China), and substantially, above growth in high-income countries. This means that at some point in this decade, Africa could grow above the levels of Asia.  A few years ago, it would not have been possible for economic observers to consider such a scenario.  Once Africa becomes the fastest growing continent in the world; this will also be the true turning point for Africa’s global perception.

About Development Economics

Shanta Devarajan's picture

UPDATE (May 15th, 2012) Caroline Freund, World Bank Chief Economist for the Middle East and North Africa has joined the debate. See her remarks.

The Chief Economists of all the regions where the World Bank implements programs got together recently to exchange thoughts about the current state of development economics.

You can read a summary of our views related to Africa, South Asia, and Europe and Central Asia here. 

And we hope you can participate in this debate by sharing your own views via the comments section below.  

Who benefits from fuel price subsidies?

Punam Chuhan-Pole's picture

Over half the countries in Sub-Saharan Africa subsidize fuel to protect consumers from high and volatile prices. But fuel subsidies are neither cheap nor likely to be sustainable (see the full analysis in the new Africa's Pulse). 

Data for 2010-11 show that fuel price subsidies consumed, on average, 1.4 percent of GDP in public resources: The fiscal cost in oil exporters was almost two-and-a-half times that in oil importers. In the face of high (and rising) world fuel prices, a number of countries have raised domestic prices to stem fiscal costs.  

For example, Ghana raised fuel prices by about 30 percent in January 2011. The Nigerian government removed the subsidy on gasoline this January, although a portion of the subsidy was subsequently reinstated.  With oil prices likely to remain elevated, fuel subsidies will continue to weigh on government budgets in Africa.

But who benefits from fuel price subsidies?  

Expenditure data for seven African countries show that the distribution of these subsidies is disproportionately concentrated in the hands of the rich.  Richer households spend a larger amount on fuel products, and, consequently, benefit more than poorer households from any universal subsidy on these products. On average the richest 20% receive over six times more in subsidy benefits than the poorest 20%. 

Big shifts and what they mean for Africa and Kenya

Wolfgang Fengler's picture

Can Africa claim the 21st century? When the World Bank’s Africa department published this book in April 2000, most observers were doubtful that African countries would ever be in a position to become emerging markets. That year, The Economist called Africa “The hopeless continent” and global attention was focused mainly on Africa’s problems: HIV/Aids in Southern Africa; the relentless war in Somalia; and, droughts in the Sahel—which gave the pessimists plenty of ammunition. 

But over the last several years, something remarkable has happened: Africa’s fragile and conflict-affected countries remain a major development challenge, but besides these, a Stable Africa has emerged. Most of this Stable Africa has experienced continued high growth for a decade, and major improvements in social indicators. Africa is becoming an investment destination, and there is hardly a week which goes by without a major investor dropping by my office, to discuss the region’s economic fundamentals.

How has Africa changed over the last decades?

Will oil be a blessing or a curse for Kenya? – Lessons from Indonesia and the rest of the world

Wolfgang Fengler's picture

This piece was co-authored with Günther Schulze1.

Kenya may have found oil in Turkana that could change the development trajectory for the country. In 2011, Kenya spent US$ 4.1 billion on oil imports, equivalent to approximately 100,000 barrels per day. For Kenya to become a net oil exporter, the resources in Turkana would need to be substantial and similar to those of Sudan or Chad. 

If indeed Kenya has substantial oil reserves, will they benefit the country in the long-term?

Some observers are predicting similar problems as in Nigeria, Equatorial Guinea and many other resource-rich African countries where corruption has been amplified.

Others argue that this need not be the case. Countries as diverse as Botswana, Chile and Norway have shown that natural resources can be a blessing. If managed well, they can even support the fight against poverty by providing the resources needed to scale up the delivery of public services. In the last ten years, many of the world’s fastest growing economies, including in Africa, have benefitted from exporting natural resources.

So who should we believe?

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