It also belies stronger performance in several smaller economies that continue to grow steadily. In Nigeria, growth reached 1. South Africa came out of recession in the third quarter of , but growth was subdued at 0. Growth picked up in some resource-intensive-countries like the Democratic Republic of Congo and Niger, as stronger mining production and commodity prices boosted activity alongside a rebound in agricultural production and public investment in infrastructure. In others, like Liberia and Zambia, growth was subdued, as high inflation and elevated debt levels continued to weigh on investor sentiment.
In the Central African Economic and Monetary Community, a fragile recovery continued as reform efforts to reduce fiscal and external imbalances slowed in some countries. However, many challenges remain. While growth is expected to increase in , it will remain insufficient to reduce poverty significantly. The World Bank Group strategy for Africa builds on opportunities for growth and poverty reduction to support structural transformation, economic diversification, resilience, and inclusion.
Africa also has 13 small states, characterized by a small population, limited human capital, and a confined land area. The Bank is responding to this diversity by providing a wide range of instruments — both traditional and innovative — tailored to the needs of the countries. Achieving higher inclusive growth and reaping the benefits of a demographic dividend will require going beyond a business as usual approach to development for Africa. Going forward, it is imperative that the region undertakes the following four actions, concurrently : invest more and better in its people; leapfrog into the 21 st century digital and high-tech economy; harness private finance and know-how to fill the infrastructure gap ; and build resilience to fragility and conflict and climate change.
With digital economy investments and reforms, Africa may be able to accelerate, possibly even leapfrog the traditional growth model, and transition from an agriculture-based economy to a digital economy, leaping over intermediate steps, while building core infrastructure, systems, and competencies. The World Bank Group, through the Digital Economy for Africa DE4A Moonshot initiative, is helping the region catalyze digital transformation and massively scale-up efforts and resources to build the foundations of a thriving digital economy. The Africa Climate Business Plan , launched in , has delivered significant results ahead of schedule, particularly in the areas of climate-smart agriculture, integrated watershed management, climate-smart ocean economies, climate resilience in coastal zones, social development, and renewable energy.
There will be a greater focus on fewer and bigger operations in areas like the digital economy, promoting power trade, human capital, and sub-regional fragility hotspots. The World Bank Group will continue to scale up successful regional and country level approaches. Maximizing finance for development: At a time when public resources are increasingly scarce, and the aspirations of African populations are rising, the World Bank Group has embraced the Maximizing Finance for Development approach to systematically leverage all sources of finance, expertise, and solutions that will help create an enabling environment for investors, particularly those in the private sector.
Thanks to the concerted efforts of the WBG, most of the energy generation conducted in Africa is handled by the private sector, and in a clean way. Boosting resilience to conflict and violence: Sub-Saharan Africa faces serious challenges related to fragility, conflict and violence FCV that threaten to undermine development gains.
With violent conflict surging, the fight to end extreme poverty in Africa will require a stronger focus on addressing the underlying drivers of fragility in order to create opportunities for peace and shared prosperity. Together with the United Nations, the International Committee of the Red Cross, and global technology firms, the World Bank is developing the Famine Action Mechanism , a new initiative that harnesses technologies such as Artificial Intelligence and Machine Learning to strengthen our ability to forecast famine risks and ensure funds are released before a crisis emerges.
NGO Letter on the World Bank's Return to Mega-Dams in Africa | International Rivers
In countries like Somalia or the Central African Republic, we are focusing our efforts on building state capacity and legitimacy, strengthening accountability and inclusive institutions, and ultimately building the trust needed between citizens and the state for long-term peace and stability to take root. Country Economic Updates, produced in consultation with member countries and other stakeholders, help promote substantive discussions around key policy issues. Key focus areas include boosting human capital and empowering women, promoting regional integration particularly in the Horn of Africa and the Great Lakes regions, increasing access to affordable renewable energy, building resilience to climate change, and maximizing finance for development.
Of the million children under the age of five in Africa, one-third are stunted and less than one-quarter are enrolled in preschool. The neo-Keynesian consensus was breaking up quite rapidly as a consequence of the inflationary and other macroeconomic distortions in the industrial economies. There was strong political attack on big government as being both incompetent and oppressive, and this was reinforced by the evident failure of centralized planning in the former USSR and other communist countries in the s.
The classicals vigorously criticized the range of established theoretical constructs in development economics, such as dual-gap analysis, the Lewis theory of growth and the use of input-output in planning. The critiques sought to show how such theories violated normal economic principles of response to price incentives, while offering empirical proof of rational economic behavior by the poorest peasants in developing countries Toye Factor substitution was shown to be high, and commodity markets performed well wherever they were allowed to operate.
Furthermore, the classical view also challenged the argument that developing countries in Africa could not develop because of the adverse terms-of trade shocks, limited access to foreign credit, and declining demand for African exports. Both the faster growth of low-income countries in other regions especially South-East Asia that have faced similar external conditions as African economies and better performance in Africa in earlier periods with similar external shocks point to the potential dominant impacts of domestic policies.
The localization of these arguments in the African case was made in the Berg Report, and more so, the World Bank and the IMF have become the major converts and protagonists of this diagnosis. Stabilization had failed in some Latin American countries —62 because it neglected the structural issues, and structuralist policies have failed in most of Latin America and Africa, arguably because, they focused on long-run structural transformation while ignoring the imperatives of short-run macroeconomic.
The Fund is primarily in the stabilization business: reducing external, fiscal, banking, exchange rate, and price imbalances, and doing so by cutting absorption of domestic production and imports into private consumption, public services, and investment. The main instruments used in practice include drops in real wages, cuts in real public spending except on external debt service , lower real credit, sharp devaluation, and high real interest rates. By its own account, the Fund is not in the development or growth business, although it engages in limited lending.
The Fund does not derive its power from its limited net lendings which have been negative to SSA from , but from the fact that a highly conditional agreement with the Fund is a precondition for a Bank SAPs, a Paris Club official creditors debt rescheduling and for enhanced bilateral assistance see Green —8. The SAPs on the other hand seek to restructure production capacities in order to increase efficiency and help to restore growth over the medium to long-term.
It is believed that SAPs should complement stabilization measures on the logic that once equilibrium is established by the Fund program, the best way to prevent imbalances from recurring is to remove structural impediments and microeconomic distortions that may impede the increase in productive capacities.
The major policy instruments can be categorized into four groups as follows see Stewart et al.
The World Bank Group’s Role in Global Development
In program design, though the principles are the same for most countries, the specifics are shaped to the local context more, and is less monolithic-and sometimes, less internally consistent-in approach than the Fund. Over the years, the Bank has undergone some important paradigmic shifts, and in the process attempted to reform the SAPs at least in rhetorics. For example, the first generation of SAPs were essentially the orthodox stabilization measures with scant attention to the structural issues. Ever since the introduction of the SAP policies in the early s, controversies about their relevance to the African conditions and effectiveness in achieving stated and desired growth and development objectives have dogged the process.
Thus, one major area of apparent consensus among most analysts is that what countries do or do not do in matters of policy responses to internal and external shocks will have great implications for their growth and performance. What is perhaps not too obvious, and in fact the major source of controversies, is the claim that one particular type of policies is more consistent with growth and development than others which is what the BWIs are insisting. In broad terms, the debate relates to questions about the diagnosis of the African crisis, the policy objectives of SAPs, the choice of instruments and relevance to African conditions, and the empirical results of SAP policies.
The World Bank has published numerous performance evaluation reports and the verdict is the same: countries that have tenaciously and consistently implemented SAPs are experiencing growth and improved economic performance.
On the other hand, performance assessment by individuals and other agencies have produced results that are as varied as the number of assessments. The results range from those which are cautionary with mooted success stories at best, to ones that are downrightly critical-pointing to the deteriorating economic crisis and thus to the. Among Africans and African institutions, there is hardly any consensus about the desirability and performance of SAPs. This is reflected in the disparate views of several African economists about the adjustment process.
No African country has achieved a sound macroeconomic policy stance, and there is considerable concern that the reforms undertaken to date are fragile and that they are merely returning Africa to the slow growth path of the s and s. Granted that some important aspects of SAP may not have been properly implemented, several important gaps and weaknesses of the program itself are increasingly being recognized. In addition to the above criticisms, a fundamental shortcoming of the Bank! Fund program and on which most other development institutions and scholars agree, is its neglect of, and inconsistency with, requirements for sustainable long-term development in Africa.
Even the World Bank has shifted significantly from an earlier position that SAP also promotes long-term development. That is the challenge of long-term development, which requires better economic policies and more investment in human capital, infrastructure, and. In such cases, fundamental restructuring of the economy is needed to make development possible. In essence, it implies that development concerns should be postponed until SAP succeeds.
According to AAF-SAP, these features include: the predominance of subsistence and commercial activities; a narrow production base with weak inter-sectoral linkages and ill adapted technology; neglect of the informal sector; environmental degradation; fragmentation of the African economy; openness and external dependence; and lack of institutional capability. Based on this premise, it adopts a philosophy of development which reaffirms the primacy of self-reliant and self-sustained growth as the appropriate long-term development strategy for SSA countries.
Essentially, AAF-SAP was anchored on the Lagos Plan of Action which, inter alia, called for the alleviation of mass poverty, improvement in living standards, the attainment of self-sustained development and the pursuance of national and regional collective self-reliance.
With respect to the choice of policy instruments to realize the program, AAF-SAP insists on active state intervention, and prescribes policies which at every level, contradicts the SAP policies. For example, it insists on directed credit and opposes financial liberalization ; favors selective trade policies involving import controls and import management as well as export promotion; supports multiple exchange rate to be administered by government; increased domestic resource mobilization; supports capital.
Finally, it expects the international community to assist Africa with the requisite funds to finance the AAF-SAP through: debt write-offs, better terms of trade and market access, and increased financial assistance. Both institutions had diametrically opposed perceptions of the problem, and the differences were seemingly irreconcilable.
It is simply a collection of normative statements and unproven propositions, each of which stands on its own, and bears no relationship to what has gone before, and what follows. It is not possible therefore to determine whether it will, in fact, work within the totality of the economy, or what will be the cumulative effect of any given combination of measures on the economy of the adjusting country. There is something in it for everyone, but this is unrealistic.
Economics is about choice, determining priorities, and taking rational decisions. Finally, if this model is to run, it must have a price tag, and external funding agencies have got to be convinced that, compared with conventional structural adjustment programmes, it represents better value for money.
This has not been done.
It is, in effect, a distraction from the central concerns of the debate which is no longer whether SSA countries ought to adjust, but about operational. It is argued that it is a broad framework, providing broad principles around which a coherent theory or model could be fashioned.