The good governance of public financial resources is often more challenging during good times than during bad times. In the event of an unexpected negative shock – say a drought or a sudden decline in demand for the commodities produced in the country – it is generally rewarding, from a political perspective, for the government to launch ‘stimulus packages’ to keep the economic engine running.
We took over the management of the obstetrics, gynecology, and pediatric hospital in Yaoundé (HGOPY) in 2014, inheriting an institution that faced chronic structural debt, obsolete equipment, and dilapidated buildings. No debt repayment plan was in place and fixed expenses such as staff salaries and benefits were extremely high.
This situation was regrettably common in many institutions across Africa which were hit hard by the economic and social crisis that resulted from structural adjustment policies implemented in by several countries, including Cameroon. Furthermore, the decision to increase health care charges adversely affected the poorest, limiting their access to health care and leading to a rise in maternal and infant mortality rates.
In response, African countries signed the Abuja Declaration in 2000, committing to earmark at least 15% of their national budget to the health sector. In addition to the goal of providing universal health care, the sector was expected to enhance the performance, effectiveness, and efficiency of its services.
“The mentality of youth in Senegal is changing. These days, young Senegalese aren’t waiting for job opportunities to fall from the sky. They are actively working towards creating them for themselves, and for other youth.” These words, spoken by 30 year old Thierno Niang, a social entrepreneur and co-founder of Rev’evolution, a youth run, self-funded start up incubator, struck a chord with me. Thierno and I were discussing his role as a panel moderator for the Youth Forum on Employment, Training, and Inclusion: A Knowledge-Sharing Event for Sub-Saharan Africa, the first ever youth event of its kind organized by the World Bank office in Senegal.
Countries coming out of crises undergo rapid structural changes, including migration and big economic shifts. This can complicate the measurement of their progress, sometimes in unexpected ways, as we found out recently in Sierra Leone.
Travelling across Africa these days you are likely to run into increasing numbers of mining, oil, and gas industry personnel engaged in exploration, drilling, and extraction across the continent. Although commodity prices are moderating, the discoveries being made in Africa offer the real prospect of significant revenue to many cash-poor, aid-dependent governments in the decade ahead. If you care about development, the question is whether these revenues will catalyze broad economic development and whether they will benefit the poor in Africa.
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.
Most of the literature about Africa’s growth, “Africa Rising”, “Lions on the Move”, etc., refer to the present or the future. An oft-quoted World Bank report said, “Africa could be on the brink of an economic takeoff, much like China was 30 years ago and India 20 years ago.”
Meanwhile, Alwyn Young has recently published a paper that claims that per-capita consumption on the continent has been growing at 3.4-3.7 percent a year for the last two decades—about three to four times the growth rates documented in other studies. Instead of using national accounts data (which, as we know, suffer from several deficiencies), Alwyn adopts the Demographic and Health Surveys (DHS), which calculate the households’ ownership of assets and other indicators of well-being (ownership of a car or bicycle; material of the house floor; birth, death or illness of a child, etc.).
Teachers in Tanzania are absent 23 percent of the time; doctors in Senegal spend an average of 39 minutes a day seeing patients; in Chad, 99 percent of non-wage public spending in health disappears before reaching the clinics.
These and other service delivery failures have been widely documented since the 2004 World Development Report, Making Services Work for Poor People.
But why do these failures persist? Because they represent a political equilibrium where politicians and service providers (teachers, doctors, bureaucrats) benefit from the status quo and will therefore resist attempts at improving services. For instance, teachers are often the campaign managers for local politicians. They work to get the politician elected, in return for which they get a job from which they can be absent. Powerful medical unions ensure that their members can work in the private sector and neglect their salaried government jobs. The losers are the poor, whose children don't learn to read and write, or get sick and die because the public clinic is empty.
Prevention strategies have had limited impact on the trajectory of the HIV/AIDS epidemic. New, innovative approaches to behavioral change are needed to stem the epidemic.
In a joint effort with many colleagues, and in collaboration with the Ifakara Health Institute in Tanzania and, the University of California at Berkeley, we launched a study with the acronym RESPECT (“Rewarding STI Prevention and Control in Tanzania”).
We started with an observation: Conditional cash transfers (CCTs) have been used successfully to promote activities that are beneficial to the participants such as school attendance and health check-ups for children. The Tanzanian experiment asks whether CCTs can be used to prevent people from engaging in activities that are harmful to themselves and others, such as unsafe sex. This is a controversial idea.