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Africa needs more knowledge not just more money and projects

Sudharshan Canagarajah's picture

It is now widely understood that achieving a sustained acceleration of GDP growth over the long term is a prerequisite for eradicating mass poverty. In most developing countries, fiscal policies, including expenditure and tax policies, provide some of the most feasible tools available to governments for achieving their development objectives. Hence the role of fiscal policies as instruments for promoting long term sustainable economic growth is of great importance, an issue that was discussed at the “Fiscal Policy, Equity and Long Term Growth” conference which took place at the IMF on April 21-22, 2013. What matters in this context is how fiscal policies are designed and implemented such that they affect the long term growth of the supply side of the economy, rather than as a tool of short run demand management. The quality of fiscal policy is of critical importance in this regard.

There is a large volume of academic research, both theoretical and empirical, on the effects of different aspects of fiscal policy on economic growth (Easterly and Rebelo, 1993; Gemmel, 2001; Moreno-Dodson, 2012; World Bank, 2007, etc to cite just a few). This research has yielded broad fiscal policy advice for developing countries. For example, governments should avoid excessive fiscal deficits and public debt, allocate budgets towards human capital development and public investment in infrastructure which provides “public goods and services” and levy taxes on as broad a base as possible without distorting incentives to save and invest.

While the academic literature provides broad guidance, the contribution it can make to fiscal policy formulation on the ground is inevitably somewhat circumscribed, for several reasons. First, the binding constraints to growth differ among developing countries and over time and this has important implications for priorities. Second, policymakers need to make budget decisions, for example choosing between competing spending demands, for which detailed country specific knowledge is required. Third, whether fiscal policy works in practice also depends on the implementation capacity in the public service; a project with a potentially high social rate of return may not deliver the expected benefits if the public investment management system is weak. Consequently, designing and implementing growth-promoting fiscal policies is very challenging; technically, institutionally and politically.

This suggests that the “knowledge agenda” needs to be extended to include issues pertaining to how governments in developing countries, especially in Africa, design and implement fiscal policies and the challenges which they face in doing so. For example, how do governments translate their strategic development objectives into a coherent fiscal strategy which addresses the binding constraints to growth? Are governments able to prioritize – technically and politically - between competing public investments projects on the basis of rigorous project analysis? How do governments create fiscal space for priority growth promoting policies? What are the reforms which are most useful for strengthening government’s capacities to design and implement growth promoting fiscal policies? The answers to such questions should prove valuable in enhancing the growth promoting impact of fiscal policies in poor countries, especially in Africa, and are likely to occupy an important space in our quest to find “transformational” solutions. In short, Africa needs more knowledge, not just more money and projects, to address these challenges.

Comments

Submitted by tunde on

I believe the disease in Africa continent is corruption as well greediness which has to be treat and cure totally first, b/4 we can talk about either knowledge or strategy for way forward.

Submitted by Z.B.K. on

I agree with Tunde, many of these corrupt and tyrannical leaders have no sense of right or wrong. Many are solely concerned about how they can advance themselves and their supporters. Leaders need to be schooled on the importance of investing in their country and its people. Until the greed in many African countries is controlled, Africa will continue to fall behind.

Submitted by Mpho on

That's nonsense Africa's development is hampered by the west,their evil infiltration in terms of financing war in order to ensure that some of our countries with mineral resouces such as gold,oil,diamond etc remain a critical component in undermining our efforts,progress and plans(IDP),knowledge is not an issue stop supporting terrorism,bad media coverage about africa.

Submitted by Brown on

We HAVE brains & revolutionary ideas that address many obstacles & answer a lot of self reliance queries. Somehow idiots get into office & positions of great influence.

Submitted by Keitsitse on

I agree strongly with Tunde and Z.B.K. We are plagued with many corrupt and greedy officials who want to take care of themselves first and want to pocket everything without thinking about the citizens who got them into power. In South Africa we have a corrupt president, corrupt ministers and all of whom can never be held accountable for their actions. We are as citizens treated as if we are idiots born yesterday! I hate living in this country and would rather live in a different country because the poor are still poor if not getting poorer and the rich keep getting richer! It's utter nonsense. So before we talk about strategies and so forth we need officials that work selflessly to improve their country and not corrupt officials!

Submitted by NJERU on

I agree. Among advantages of knowledge investment would be corruption perception by the education marginalised. Deliberate investment by kenyan government on higher education investment and focused trainings has for example increased the corruption perception for the country. This has greatly contributed to the country positive economic growth rate.

Submitted by JIMMY SOMAWIRYA... on

Africa people is better than past cos Many African succeed from other country and return back to African for build up the Africa

Submitted by Bob Mbori on

The fundamental challenge (captured well in most comments so far) is, Africa 1st needs servant leadership and then all other things will fall in place. The continent & indeed globe has brilliant African brains frustrated from service by corruption and other dis-incentives.

Deliberate investment by kenyan government on higher education investment and focused trainings has for example increased the corruption perception for the country
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Submitted by Cliff Lin on

My take on the issue here is more than about knowledge, but more so on moral values. Indeed, knowledge is important, but it can be an even more powerful tool to segregate the different classes. For example, the corrupted government bodies may very well take advantage of the knowledge and use it against civilians that are more vulnerable. The main concern here is that could those fiscal growth policy or other strategies be used by immoral individuals. My take on it is to establish solid moral values first prior to implementing such tools to ensure that those in power will seek the benefits of the society and less on the individual level.

Submitted by Z.B.K. on

Cliff Lin, I couldn't agree with you more. The lack of morals and a sense of right and wrong is seriously absent in so many countries in the world. A country that fails to invest in its people and in its country has basically set the country up for failure.

Submitted by CAA on

Dear Sudharshan,very interesting and thought provoking article. Indeed the problem is a gap in knowledge. The gap is in the middle level management of these economies. Why I say middle level is, most countries already have long term development goals, poverty reduction strategy plans, medium term goals etc. They have identified where they want to get to and when they want to get there. But this is on a high level. The 'how', which is the next most important question seems to be the problem. And this is where there is a glaring gap in knowledge. Every African country is unique with unique endowments, and indeed the choice of projects that could utilise these endowments and resources to help african countries get out of poverty is the problem. But as most have mentioned in their comments above, it is not that there is a complete lack of knowledge, corruption and politics play a major role. This, in my opinion, is the main problem.

Submitted by Nyarai Gwazvo on

All comments before mine captured issues that are important. Knowledge, ledership and all others mentioned are pertinent. Corruption indeed has eroded our societies in Africa, and obviously affecting service delivery, and marginalising the poor even more. However, there has been endless discussion about the need for good governance, policies and all that is required for meaningful development. Personally I feel tired and drained to go over the same issues over and over, and over, and no progress. Could someone help me come up with an answer as to what should be done for us to move ahead? We have had all the policy discussions and policy prouncements in the right direction, knowledge and discussions, where do we go from here? Elections have not helped dislodge the poor leadership, eradicate poverty and improve livelihoods. Does anyone have an innovative idea? We seem to be stuck where we are with isolated cases of success.

What do you think about running countries along a business model? Would that work? At least there, the CEO knows that their tenure is dependent on performance, the board of directos demands results, and the customer is king. This is not applied in politics. In politics the CEO is also the king, at least in many African Countries, and the presumed board of directors is sub-servient to the King. I could be dreaming to think of such an approach, but I strongly believe it is time for alternative approaches.

What do others think?

Nyarai.

Submitted by Kwaku on

Yes,indeed we can recount the various problems plaguing Africa;from poor leadership to apathy even among the school children.I agree with the previous comments,but again the big question still hangs unattended-How do we alleviate all these cankers?How do we save our Africa?

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