October 2008

A well-known musician from Mozambique, Feliciano Dos Santos, was recently featured in a New York Times article  on his use of pop music toward changing people’s sanitation habits, especially in far-flung rural villages.  His songs include messages regarding boiling water to prevent diarrhea and washing one’s hands before leaving the bathroom.  His band, Massukos gained international fame via a combination of pop and socially relevant songs, while his nonprofit Estamos (“We are”) installs latrines and provides services to AIDS patients.

The newest addition to the family of World Bank Group blogs, Crisis Talk, "aims to provide the latest information on the unfolding financial crisis, both on specific countries and sectors, as well as on the global crisis response. The blog will also feature opinions on what solutions may be possible, what shape the financial sector may take in the future, and how the crisis affects the real economy."

Welcome to the blogosphere!

Some people still believe that corruption is a development “disease” experienced only by developing countries.  Actually, for some of us who lived for many years in low or middle income countries, we can tell that among the population there is a general perception that governments, politicians and citizens in the developed world do good and are exempt from corruption.

This perception might not prove wrong if we think in comparative or relative terms.  However, it doesn’t mean that developed countries are corruption-free.  Dani Kaufmann has blogged about this myth and specific cases, such as Hotel Baranoff in Alaska.  Recent events in the US and Europe bring again this debate into light.  For instance, earlier this week Senator Ted Stevens was convicted of receiving bribes from an oil company based in Alaska.  A few weeks ago, the OECD claimed that the UK was lacking the will to tackle corrupt firms –this issue was also raised during the 2008 Corruption Perception Index release by Transparency International. 

The 2008 presidential election in the United States has been touted as an epic battle over many things – over whether and how to continue US military involvement in Iraq, over whether and how to boost private companies’ efforts to dig their way out of a global financial markets crisis, over whether and how to change the overarching course of the country from the trajectory it has been on for the past eight years.  These contours of the fight are demonstrably in evidence.  Perhaps the most divisive aspect of 2008, however, has been a soul-searching struggle over who is the “American public” and which candidate best represents that imagined electorate. 

The financial crisis has been spreading slowly but steadily from the US to Europe, and now to Asia.  It is neither clear when the markets will finally recover nor when the world can begin to get back to business as usual.  Last week in sunny Barbados, a tinge of pessimism pervaded many of the discussions taking place at CAPAM 2008 – the annual Commonwealth Association of Public Administration and Management conference, attended by career civil servants, public management professionals, and a smattering of politicians, private sector and civil society organizations.   The pessimism was about the potential effects of the crisis on the Commonwealth countries, but more broadly to the impact of the crisis on the role of the state and civil servants, and the implications on governance. 

With the plausible nationalization of private entities and a greater post-crisis emphasis on oversight and regulation, there is a temptation to declare victory over the “down-sizing government” faction. Many at the conference did not resist the temptation to do so.  Last week, even ex-Federal Reserve Chairman, Alan Greenspan admitted that he had been mistaken about the market’s ability to regulate itself.

With a greater role of the state, both the private sector and the public sector will need to assume different roles in the new and emerging governance structure.  Some predictions about what is to come:

Like Sina, I too was recently in Cape Town as part of a team of trainers delivering a course titled 'People, Politics and Change: Communication Approaches for Governance Reform'. The participants were 29 senior government officials from 10 different African countries. The thoughts Sina expressed in his post reflect well the rich learning experience for all involved. What strikes me in hindsight is how this learning, and the country participants’ enthusiasm for it, verified the complex skill set required of communication in support of governance reform efforts. Here is what I mean.

There is widespread consensus that financial development is critical to economic growth, globally, and in Africa. Yet Mozambique, a country with very low levels of financial development (in a recent survey, only 13 percent of firms had obtained credit from the banking sector, rural credit is almost nonexistent), registered a GDP growth rate of over 8 percent a year over the last decade.

On a recent visit to Mozambique, I tried to understand this apparent paradox, but ended up with even more puzzles. A group of prominent bankers said the problem was that enterprises lacked managerial and accounting skills, which is why they didn’t want to lend to them. They insisted that subsidizing credit will not solve this problem. In a separate meeting, one of the most successful entrepreneurs in Mozambique said that even he has trouble getting credit; he needs to put up his factories as collateral, and even then it takes about seven months. Finally, the government’s plan to stimulate agricultural production includes a program of credit subsidies to farmers to buy tractors and other inputs.

So, while everybody seems to agree that access to finance is a constraint (which begs the question of how Mozambique grew so fast), there are different views on how to relax that constraint. I look forward to your comments and suggestions.

From Raj Nallari and Breda Griffith's lecture notes.

Gender Budgeting - Why and How (cont.)

Stotsky (2006) presents two hypothetical examples of gender analysis in a national budget that explicitly addresses the gender dimension of the policy objective, the means by which it will be executed, the resources needed and the indicators necessary to identify performance. This approach goes beyond the general assumption that expanding primary education, for example, will be distributed equally across the population. It represents a gender mainstreaming approach and is a gender responsive budget, responding to the inequalities that exist in primary education for girls and outlining the potential of reducing these inequalities in improving earning power for girls because of better education and other social benefits. 

Hypothetical examples of gender analysis in a national budget

Source:   Stotsky (2006).

I was in Cape Town, South Africa, last week as part of a team of trainers. We were delivering a course titled 'People, Politics and Change: Communication Approaches for Governance Reform'. The participants were 29 senior government officials from 10 different African countries, each one being responsible for a specific governance reform initiative.

As one of our trainers explained it, the idea of a 'learning laboratory' is an adult-learning moment where three-way learning occurs: the participants learn from the trainers, the participants learn one from the other, and the trainers learn from the participants.  And that is what happened over those four days in Cape Town. 

This question comes up frequently in discussions with policymakers, civil society and journalists. Two things need to happen for the crisis to lead to a significant reduction in foreign aid. First, the financial crisis has to lead to a major recession in donor countries. Second, the recession leads to such fiscal constraints that foreign aid is cut. Since the first is the subject of intense discussion among macroeconomists around the world (not all of whom agree) that a recession is inevitable, I looked into the second. How has foreign aid varied during previous recessions? According to my colleague Rocio Castro, “after a period of stagnation throughout the 60s, Official Development Assistance (ODA) has been on an upward trend since the mid 70s--except for the period of 1992-97 when it declined in real terms. This downward trend may have been linked to the economic recession of the early 90s, but it would be hard to tell to what extent.” This point is confirmed by a recent paper by Pamela Paxton and Steve Knack, which shows that aid is motivated largely by non-economic factors.

Official Development Assistance (ODA) in $ Millions

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Source: World Development Indicators

In collaboration with the African Development Bank, the World Bank is undertaking a comprehensive study of migration and remittances in Sub-Saharan Africa and destination countries outside Africa. The World Bank Household Survey of Migrants is part of this effort, and will be conducted in 10 countries (Burkina Faso, Ethiopia, Kenya, Lesotho, Mali, Nigeria, Senegal, South Africa, Ivory Coast, and Uganda). 

Findings from these surveys will provide a better understanding of the characteristics of migrants in sending and receiving countries and thereby help inform national policy-makers about trends in migration and remittances, determinants and consequences, and development impacts.

The World Bank is inviting firms to submit expressions of interest to undertake a household survey focusing on internal and international migration in at least one of the above 10 Sub-Saharan countries.  The deadline for expressions of interest is November 7, 2008, and the high quality work should be completed by June 2009. 

More information on the proposed study and how to make a submission can be obtained by downloading the detailed Terms of Reference (ToR) from the World Bank eConsultant system website, where you can look for Selection Number 100019214, "Household surveys for the Africa Migration Project." You can also read the terms of reference for this call for proposals here.