Post on 16-Oct-2020
Shanta Devarajan, World Bankhttp://blogs.worldbank.org/africacan
Africa’s new era:Balancing market and government failures
Growth performance•Thanks to continued, prudent economic policies, rapid rebound from the crisis
Equatorial GuineaAngolaChadSudanNigeriaCameroonCongo RepGabon
LiberiaMozambiqueSierra LeoneRwandaSao Tome and Princ.EthiopiaTanzaniaCape VerdeMaliBurkina FasoBotswanaGhanaGambia, TheMauritiusNamibiaSenegalNigerBeninZambiaMadagascar
KenyaMalawiSouth AfricaGuineaLesothoSwazilandSeychellesBurundiCongo, Dem. Rep.ComorosCARTogoCote d’IvoireEritreaGuinea-BissauZimbabwe
0.0-5.0 5.0 10.0 15.0 20.0 25.0
Per
cent
age
of to
tal A
frica
n po
pula
tion
30%
40%
30%
Oil countries
Growth 4% or higher
Growth less than 4%
Average GDP growth rate 1998-2008
Progress in human development in Africa
Primary school enrollment ratesPopulation living under $1.25/day
Child mortality rates Maternal mortality ratio
Dynamic and transformative private sector
World Dev. Countries Africa
Per 1
00 in
habi
tant
s
Source: ITU World Telecommunication/ICT Indicators database
Private Capital Inflows(Billions of US Dollars)
Rwanda is top reformer of business regulations
Source: Doing Business 2010
Mobile cellular penetration
ICT Growth in Africa and the world, 2003-2008 CAGR (%)
Fixed Phone lines
Mobile cellular subscriptions
Internet users
Africa 2.4 47.0 30.6
World 2.5 23.0 17.0
1724
29 31 33 31 33 30 3227 28 31 33
13 137 6 6 7 6 5 4 2 3 2 2
0
20
40
60
80
100
120
140
Aver
age
Infla
tion
Rat
e %
0
5
10
15
20
25
30
35
40
45
Num
ber o
f Cou
ntrie
s Inflation>20%
10%<inflation<=20%
Inflation<=10%
Median inflation rate
Macroeconomic policies have improvedInflation in Africa
Average oil Average non- oil All countries
Economic policy improvements
Pr
However, private investment in Sub-Saharan Africa is lagging
0.0
5.0
10.0
15.0
20.0
25.0
30.0
South Asia LatinAmerica &Caribbean
Europe &Central Asia
Middle East& NorthAfrica
Sub-Saharan
Africa
Priv
ate
inve
stm
ent a
s %
of G
DP
1995-2004 2005 2006 2007
Private Investment as % of GDP
Source: World Bank WDI Database
Normalized units
Sub Saharan Africa-Low Income Countries
Other Low Income Countries
Paved Road Density 31 134 Total road density 137 211 Main line density 10 78 Mobile density 55 76 Internet density 2 3 Generation Density 37 326 Electricity Coverage 16 41 Improved water 60 72 Improved sanitation 34 51
InfrastructureAfrica’s Infrastructure Gap
• Infrastructure• Education• Health
Government failures
PrInfrastructure
Transport in Africa
Selected corridors of the study
11
23.5 4
5 5 57
8
11
02468
101214
Pakis
tan
Braz
il
USA
China
Wes
tern
Euro
pe –
long
distan
ce
Afric
a-Du
rban
-Lu
saka
Afric
a- Lo
mé -
Ouag
adou
gou
Afric
a –Mo
mbas
aKa
mpala
Afric
a-Do
uala-
Ndjam
éna
Avera
ge tr
ansp
ort pr
ices
(in U
S ce
nts pe
r tkm
)
Central Africa
East Africa
West Africa
Southern Africa
France
Variable costs (USD per veh-km) 1.31 0.98 1.67 1.54 0.72
Fixed costs (USD per veh-km) 0.57 0.35 0.62 0.34 0.87
Total transport costs (USD per veh-km) 1.88 1.33 2.29 1.88 1.59
Average Transport Prices(in US cents per tkm)
Corridor Gateway - Destination Price(USD/ veh-km)
Variable cost
(USD/veh- km)
Fixed cost(USD/veh- km)
Average yearly
mileage (‘000)
Profit margin
(%)
West Africa
Tema/Accra - Ouagadougou 3.53 1.54 0.66 30-40 80%
Tema/Accra - Bamako 3.93 1.67 0.62 40-50 80%
Central Africa
Douala - N’Djaména 3.19 1.31 0.57 60-70 73%
Douala - Bangui 3.78 1.21 1.08 50-60 83%
Ngaoundéré - N’Djaména 5.37 1.83 0.73 20-30 118%
Ngaoundéré - Moundou 9.71 2.49 1.55 10-20 163%
East Africa
Mombasa - Kampala 2.22 0.98 0.35 130-140 86%
Mombasa - Nairobi 2.26 0.83 0.53 90-100 66%
Southern Africa
Lusaka - Johannesburg 2.32 1.54 0.34 160-170 18%
Lusaka - Dar-es-Salaam 2.55 1.34 0.44 160-170 62%
An interesting observation: On Central Africa corridor, trucks with lower average yearly mileage
have the higher profit margins
Profit margins
Average transport prices (constant and current) from Mombasa to Kigali
0
50
100
150
200
250
300
35019
89
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Years
US$
/Ton
0
100
200
300
400
500
600
700
800
900
US$/Ton
Current transport tariffs (left) Real transport tariffs - GDP deflator (right)
After liberalizationBefore liberalization
Example of the impact of market deregulation:The case of Rwanda
• Infrastructure• Education• Health
Government failures
Pr
InfrastructureTransport in Africa
Education
• Read in Kiswahili at 2nd grade level: 20%• Do a 2nd grade multiplication problem: 30%• Read English: 50%
Percentage of 7th grade students in Tanzania who CANNOT
Absence rate among teachers
Country Rate (percent)
Bangladesh 15
Ecuador 14
India 25
Indonesia 19
Papua New Guinea
15
Peru 11
Zambia 17
Uganda 27
17
In class, teaching, 18.2%
Out of class, break, 17.6%
Out of class, in school, 34.2%
Can't find teacher, 19.2%
Administrative work, 8.1%
With surveyor, 0.2%
In class, not teacher, 2.4%
Uganda: What enumerators found
• Infrastructure• Education• Health
Government failures
Pr
InfrastructureTransport in Africa
EducationHealth
Country (year) % of cash/in-kindresources leaked
Resource Category
Kenya (2004) 38 Non-salary budget
Tanzania (1991) 41 Non-salary budget
Uganda (2000) 70 Drugs and supplies
Ghana (2000) 80 Non-salary budget
Chad (2004) 99 Non-salary budget
Source: Gauthier (2006)
Leakage of resources in health
• Infrastructure• Education• Health
What can be done?
PrResponse to global
economic crisis
Policy Response
LEGEND
Fiscal Tightening - ET, GH, RW
Full adjustment - GN
Partial Adjustment – MZ, SD, UG
No Adjustment – SN, BF
Stimulus – KE, NG, TZ, ZM
Based on comparing 2009 fiscal stance projected in July 2008 with projection of July 2009
Revenue, Expenditure and Deficit (relative to earlier projections)
Source: Krumm, Dhar and Choi, “Fiscal Response to the Global Crisis inLow Income African Countries”, August 2009
Fiscal Stance County
Debt Distress Risk
Fiscal Projection ChangesCountry
Debt Distress Risk
Fiscal Projection Changes
Revenue Expenditure Balance(Ex. Grant)
Balance(In. Grant) Revenue Expenditure Balance
(Ex. Grant)Balance
(In. Grant)
Fiscal Tightening
Ethiopia Moderate Ghana Moderate
Rwanda Moderate
Partial Adjustment
Mozambi-que Low Uganda Low
No Adjustment Senegal Low Burkina
Faso High
Stimulus
Zambia Low Kenya Low
Tanzania Low
-0.5
-4.1
3.6
2.3
-10
0
10
0.31.1
-0.8
1.3
-1.0
0.5
-1.3
1.9 2.0
-3.0
2.0
-0.5
-0.1
-0.5
-0.3-0.5
-2.8 -3.1 0.2
-0.2
-4.0
-2.0
0.0
2.0
-1.5
0.4
-2 -1.9
-4.5
0.5
-0.8
0.0
-1.0
0.4
-2.0
0.0
2.0
-1.00.8
-1.7-0.9
-4.0
1.0
0.11.8
-1.6 -1.6
-5.0
0.0
5.0
-0.20.9
-1.1 -1.4
-1.5
Domestic financing dominated
-5
-3
-1
1
3
5
7
Ghana Ethiopia Uganda Sudan Mozambique Senegal Tanzania Zambia Kenya Nigeria
Domestic Financing
Foreign Financing
Total
Fiscal TighteningPartial Adjustment No Adjustment
Stumulus16.6
Source: Krumm, Dhar and Choi, “Fiscal Response to the Global Crisis in Low Income African Countries”, August 2009
• Infrastructure• Education• Health
What can be done?
PrIncentives for service
providers
Indicators DHS-2005 DHS-2008
Contraception (modern) 10% 27%
Delivery in Health Centers 39% 52%
Infant Mortality rate 86 per 1000 62 per 1000
Under-Five Mortality rate 152 per 1000 103 per 1000
Anemia Prevalence : Children 56% 48%
Vaccination : All 75% 80.4%
Vaccination : Measles 86% 90%
Use of Insecticide treated nets among children less than 5
4% 67%
Fertility 6.1 children 5.5 children
Rwanda 2005-2008
36.3
49.7
34.9
55.6
30.0
40.0
50.0
60.0
Baseline (2006) Follow up (2008)
Prop
ortio
n of
of i
nstit
utio
nal
deliv
erie
s
Control facilities Treatment (PBF facilities)
7.3 % increasedue to PBF
Source: Basinga Paulin, Paul Gertler, Claude Sekabaraga, Louis Rusa, Jennifer Sturdy, Christel Vermeersch, Agnes Binagwaho, Agnes SoucattImpact Evaluation of Performance Based Financing in Rwanda. World Bank, 2009
26
Performance Based Financing leads to more assisted birth deliveries
Proportion of Institutional Deliveries
-0.10
0
-0.13
0.15
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
Baseline (2006) Follow up (2008)
Stan
dar
diz
ed
Pre
nat
al e
ffo
rt s
core
Control facilities Treatment (PBF facilities)
15 % Standard deviation increase due to PBF
23Source: Basinga Paulin, Paul Gertler, Claude Sekabaraga, Louis Rusa, Jennifer Sturdy, Christel Vermeersch, Agnes Binagwaho, Agnes Soucat. Impact Evaluation of Performance Based Financing in Rwanda. World Bank, 2009 27
Performance Based Financing Improves quality (2006-2008)
Standardized Prenatal Effort Score
• Infrastructure• Education• Health
What can be done?
Pr
Incentives for service providers
Information
Primary Education in Uganda(PETS)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1990 1991 1993 1994 1995
US$ per
Student
Intended Grant Amount Received by School (mean)
1999
Grants for primary education in Uganda
In 1995, survey of 250 primary schools in 19 of 39 districts;Survey repeated in 1998 and 2000.
Yes, Africa Can
Gorilla tourism in Rwanda
Mali’s mango exports
U.S. Imports of clothing and textiles from AGOA countries ($ million)
Lesotho’s apparel industry
Countries producing NERICA, 2005 Countries producing NERICA, 2006
The new rice for Africa (NERICA)