WIDER Africa Research
by Wim Naudé
The development crisis faced by Africa has been described as the ‘greatest tragedy of our time’. The continent’s generally poor growth record, documented by Augustin Kwasi Fosu in the lead article of this WIDER Angle, has led to high poverty, low incomes, and moreover a low share of the global distribution of wealth.
Over the past two decades WIDER has generated a substantial body of research addressing Africa’s development. Since 2000 alone, over a hundred research and discussion papers and a number of substantial books have focused on Africa. This article reviewes a selection of a most recent WIDER Africa research.
The message from this research is clear—that four interrelated requirements need to be met for Africa’s development:
- lay a foundation for growth,
- strengthen institutions as the guardians of growth,
- promulgate appropriate and credible policies, and
- relax constraints on resources.
From a selection of recent WIDER research on Africa (see the box on essential WIDER reading, p. 11) the following four interrelated requirements are identified for Africa’s development.
A foundation for growth
First, a foundation for growth needs to be put in place by ending conflicts, establishing accountable states, and building the capacity of the state. WIDER has been at the forefront of research into moving beyond conflict in Africa. The WIDER book, From Conflict to Recovery in Africa (2003) details how a number of African countries have entered an underdevelopmentconflict cycle, with weak institutions (where grievances cannot be channeled into non-violent actions) leading to conflict, which in turn further harms institutions, creates high uncertainty and transactions costs, and depresses investment. The book also documents, with case studies from Angola, GuineaBissau, Eritrea, Ethiopia, and Mozambique, the complexities involved in ending conflict and sustaining reconstruction. The need for international action is found to be crucial, especially in the areas of aid, debt relief, peacekeeping, corruption, war profiteering, and arms supplies. This work has important lessons for the current efforts to establish peace and a basis for sustained growth in countries such as Burundi, Côte d’Ivoire, Democratic Republic of the Congo, Liberia, Sierra Leone, Somalia, and Sudan.
WIDER has also been active in directly supporting capacity building in Africa. One of the most recent initiatives in this regard is a project to support policymakers to assess the impact of policies at the level of individual households using microsimulation models. This project has produced a website with user-friendly models where policy makers and others can experiment with the impacts of policy changes for Botswana, Cameroon, Nigeria, South Africa, and Uganda (see www.models.wider.unu.edu).
Second, institutions—broadly defined as the ‘rules of the game’ and including the judiciary, the public service, and civil society— are a necessary foundation for development, and need to be strengthened and expanded in Africa. Institution-building has indeed been at the centre of the reform effort since the 1990s. The WIDER study Reforming Africa’s Institutions: Ownership, Incentives, and Capabilities (2003) focuses on the importance of good governance, on the importance of the ownership of economic reforms, and on the opportunities that reforms such as privatization and decentralization can create for economic development.
The study illustrates, with case studies from Ghana, Kenya, Malawi, Mozambique, Nigeria, Tanzania, Uganda, Zambia, and the countries from the West African Economic and Monetary Union (WEAMU), that greater public sector efficiency, and innovations in the approach of the public sector, are vital for service delivery. Improved incentives for civil servants, such as better working conditions, career prospects, and opportunities for skills development have been identified as key ingredients, currently sadly missing, for public sector efficiency in Africa.
Third, credible policies need to be put in place that will result in increased investments in health, education, ICT, and critical public infrastructure. WIDER’s work has made important contributions, in particular to trade policy, monetary and fiscal policy, anti-poverty strategies, and ICT.
In trade policy, the WIDER study Non-Traditional Export Promotion in Africa: Experience and Issues (2002) was one of the first serious cross-African analyses of exports. It points out that weak export growth in Africa is linked to weak performance in private investment, and that it remains important for African countries to increase and diversify their exports. The study offers policy advice for the promotion of Africa’s non-traditional exports, making a case for conscious and selective non-traditional export promotion, whilst stressing the importance of appropriate exchange rate and trade policies with limited anti-export biases.
In monetary policy, the WIDER study Macroeconomic Policy in the Franc Zone (2005) makes a significant contribution towards understanding the way in which a single currency area should operate when member countries face different economic conditions and how monetary policy in a monetary union affects the poor. It concluded on the importance of price stability and credibility in monetary policy for growth, and on the need for supporting fiscal measures to buffer the poorest of the poor in times of monetary contraction. This study continues to offer pertinent insights for the monetary unions that may be considered elsewhere in Africa in the future.
Appropriate fiscal policy is important in Africa, not only to temper grievances from arising and to facilitate the transition to peace in many countries, but also to ensure that poverty and inequality are effectively addressed through the provision of basic needs, transfer payments, and safety nets. In the WIDER study Fiscal Policy for Development: Poverty, Reconstruction and Growth (2006) the design of new tax systems in weak states and public expenditure management, received attention.
Many aspects of poverty and inequality, and the role of fiscal policies (public expenditures and taxes) in addressing poverty and inequality in Africa have been under scrutiny. One such WIDER study, on Insurance Against Poverty (2004), described the various risks which makes households in developing countries, including in Africa, vulnerable to external shocks, and which condemns many to persistent poverty. It identifies public policy as important to limit households’ vulnerability in Africa, and calls on government action to provide new forms of insurance, savings, safety nets, and to strengthen the asset base of poor households. Government initiatives should complement rather than replace indigenous community-based support networks.
Fourth, resource constraints need to be relaxed through especially foreign direct investment (FDI) and aid flows. Substantial research at WIDER on aid and FDI offers important guidelines for policymakers in Africa.
WIDER is a thought-leader on aid (or official development assistance). The WIDER special issue of the Journal of International Development (vol. 17 no. 8, 2005) entitled ‘Aid to Africa: An Unfinished Agenda’ examines the effectiveness of aid across sub-Saharan Africa, with case studies from Ghana in particular. The research concludes that aid has been effective in raising economic growth, but that the modalities of aid can be improved upon, including more attention to the fiscal management of aid.
While aid has an important role to play, especially in the fragile and post-conflict states in Africa, it is important that Africa succeed in attracting greater volumes of FDI, without downplaying the importance of domestic private sector investors. The WIDER special issue of The World Economy (vol. 29 no. 1, 2006) entitled ‘FDI to Developing Countries: The Unfinished Agenda’, notes the importance of FDI to Africa, identifies the constraints to FDI to Africa, and shows that FDI to Africa is not driven by exogenous factors (such as resource endowments). The implication is that even small, resource-poor African countries can attract FDI by improving their institutions and policies. The latter is indeed the key to unlocking resources for Africa’s economic development.
‘African governments need to write a new social contract with their populations, based on the creation of democratic institutions and the expansion of the private sector’ (Kayizzi-Mugerwa, ed. 2003: 4)
‘For African countries to benefit from economic reforms demands a new modus operandi for the public sector’ (Kayizzi-Mugerwa, ed. 2003: 1)
‘Exports have played an important role in African economic progress in the past and are bound to continue to do so in the future’ (Helleiner, ed. 2002: 3)
‘For countries vulnerable to violent conflict fiscal weakness can be fatal to social peace when one or more ethnic, religious or regional group is taxed unfairly, or receives little from public spending’ (Addison and Roe, eds. 2006: xix)
‘Reconstruction itself must be a fundamentally decentralized process in which communities themselves take the final decisions regarding priorities, allocations and timing’ (Addison, ed. 2003: 43)
Wim Naudé is a Senior Research Fellow at WIDER and co-editor of the WIDER Angle newsletter.