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Public Sector Development

Aid and Corruption

Submitted by Shanta on Thu, 2009-11-19 09:42

Many of the objections to my blog post, “Another reason why aid to Africa must increase”  centered around corruption.  “I disagree.  Africa needs to get rid of corruption…” said one commentator, while another said, “Aid to African countries must follow country steps in good governance, democracy, fighting corruption, etc.”

I think we can agree on the following two facts:

 

But even with these two facts, it doesn’t necessarily follow that aid should be cut off from countries with high corruption. 

Your Comments on Africa's Successes

Submitted by Shanta on Wed, 2009-10-07 10:58

The African Successes post has generated a vigorous exchange of ideas.  I appreciate receiving your comments on the study, your suggestions for success stories, and your views on development approaches that have worked and those that have not.  

Many of you felt, as I do, that we need to highlight Africa’s recent successes.   Your responses voiced strong support for a focus on education, knowledge and dissemination, health, private-sector development, agriculture (irrigation and fertilizer), community-level development, governance, infrastructure, and information and communication technology.  

Les Réussites Africaines

Submitted by Shanta on Wed, 2009-10-07 10:47

Ces dernières années, de nombreux pays africains ont commencé à faire preuve d’un dynamisme remarquable.

Le taux de croissance  enregistré au Mozambique est fulgurant, affichant une moyenne annuelle de 8 % sur plus de dix ans. Le Kenya est devenu l'un des plus importants fournisseurs mondiaux de fleurs coupées. Le service M-Pesa, qui permet d’effectuer des transferts d’argent à partir d’un téléphone mobile, rencontre un succès grandissant tandis que le programme KickStart aide les petits agriculteurs à irriguer leurs cultures à moindre coût. Le tourisme rwandais fleurit depuis qu’il s’est axé sur la vie des gorilles et dans la ville de Lagos au Nigéria, les nouvelles infrastructures du BRT (réseau de transport rapide par bus) facilite un développement urbain plus efficace. En deux mots, l’Afrique est en train de vivre une réelle transformation.

Can Zimbabwe Turn the Corner?

Submitted by Praveen Kumar on Mon, 2009-08-31 15:11

Much has changed in Zimbabwe since last November. There are signs of recovery following the return of price stability after full dollarization in January. However doubts about the political situation continue to obstruct further recovery.

The most visible sign of improvement is the demise of surreal hyperinflation which according to one estimate peaked at about 80 billion percent. Interestingly, full dollarization initially occurred not because the government chose it as a deliberate stabilization measure.  Exasperated residents simply abandoned the Zimbabwean dollar and moved on to using multiple hard currencies.  In January, the Government too abandoned the Zimbabwean dollar and started using the US Dollar and the South African Rand for both collecting taxes and spending.  Hyperinflation died a natural death in Zimbabwe, it was not tamed.

Education and Finance in Africa

Submitted by Shanta on Fri, 2009-07-17 17:48

At a recent conference that brought together African Finance and Education ministers, the keynote speaker, Tharman Shanmugaratnam, finance minister (and former education minister) of Singapore gave a beautiful speech about Singapore's experience that contained some potentially difficult and controversial messages for Africa.

1.  There is a virtuous circle of education and growth, but you need to create it.  This means that finance ministers should be concerned about education, and education ministers about economic growth. [At the conference, one participant, when asked a question about education in his country, said "I'm the finance minister, not the education minister."]

2.  Singapore emphasized technical and vocational education by giving it prestige that was almost equal to academic education.  This involved, among other things, a public relations campaign.  As participants at the conference said, in Africa, we also need to deliver on the quality of vocational and technical education.

3.  Singapore's insistence on education being a meritocracy (students advance purely on merit) has led to equity.  For instance, the top 5 percent of the students come from 95 percent of the schools.  But to make this work, the education system needs to be insulated from politics.  As Tharman said, the role of political leaders is to keep politics out of education.

4.  In Singapore, universities charge full fees, and give scholarships to low-income students.  The government encourages private donations to universities, matching them one-for-one.  How many African universities can overcome the political resistance to charging fees?.

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.

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.

Africa: Least integrated but worst hit by the crisis

Submitted by Shanta on Mon, 2009-04-20 09:33

Even though it is the least integrated with the global economy, Africa may be the worst hit region by the global economic crisis. Each of the four channels through which the crisis is affecting Africa has a particularly nefarious impact. 

  • Private capital flows, which in 2007 had surged to $53 billion—for the first time exceeding foreign aid to the continent—are declining.  Since last year, African stock markets have fallen by an average of 40 percent, with some such as Nigeria's falling by over 60 percent.  Ghana and Kenya have postponed sovereign bond offerings worth over $800 million, delaying the construction of toll-roads and gas pipelines.  The Democratic Republic of Congo has lowered its expected foreign direct investment by $1.8 billion. These flows were financing much-needed infrastructure and commodity-based investments. More importantly, the surge in capital inflows had raised expectations that African economies had “turned the corner”—only to have those expectations deflated for reasons that are not remotely the fault of Africans.
  • Remittances, which had peaked at about $20 billion a year in 2008, are expected to decline by 4.4 percent this year.  Typically, remittances are counter-cyclical: when your family is having difficulties, you send them more money. But this time the crisis is in the remittance-sending countries. Over 77 percent of Africa's remittances come from the U.S.

What kind of fiscal stimulus for Africa?

Submitted by Shanta on Wed, 2009-04-01 14:26

I said earlier that more important than the level of additional aid is what governments do with their own and donors' resources. My colleague Jorge Arbache provides some answers. He observes that, even if the recession was caused by a commodity price decline, public spending should not necessarily be spent on the commodity exporting sector--unless it employs large numbers of people, as does the cotton sector in West Africa, for instance. He also advocates expenditures on infrastructure (maintenance and even new investment) because they create jobs in the short run, and leave the economy better placed to benefit from a turnaround in the global economy in the medium-run.

Buddy, can you spare $20 billion?

Submitted by Shanta on Mon, 2009-03-30 08:48

How much additional foreign aid will it take to prevent the global financial crisis from becoming an economic, social, political and human crisis in Africa?

As my co-authors and I tried to point out in an earlier study of the additional aid needed to reach the Millennium Development Goals, this is not the most important question. Much more important are: (i) what developing country governments can do, and (ii) how the additional resources will be spent. Nevertheless, as world leaders gather for the G-20 summit outside London, the magnitude of additional resources to the world’s poorest continent will be discussed.