Opinion: Starting with Africa

By Erastus J. O. Mwencha, Deputy Chairman of the African Union Commission, and Mario Pezzini, Director of the OECD Development Centre

As world leaders prepare to gather in New York to adopt the Sustainable Development Goals (SDGs), leaders and citizens across Africa already have outlined bold goals for the continent’s economic and human development. Africa’s Agenda 2063 sets out an ambitious vision. It reflects close coordination among the African Union Commission, the UN Commission for Africa, the African Development Bank and the New Partnership for Africa’s Development, because Africa’s solutions need to be homegrown. And it prioritizes the continent’s economic and social transformation by catalyzing industrialization and modernization efforts, people-centered development that values gender equality, responsive and democratic governance as well as peace and security.

The tipping point for Agenda 2063’s vision for sustainable prosperity may very well come as Africans focus on two intertwined drivers of economic growth: productive transformation and regional development. Regional development addresses the broader demographic and spatial dimensions of structural transformation. Development strategies that involve local actors and valorize local assets can unlock untapped potential by better valuing the diversity of African regions and by better connecting them, sowing the seeds for a more sustainable and faster structural transformation.

Africa’s unprecedented demographic change is perhaps one of the best explanations for why productive transformation and regional development are increasingly interconnected in advancing long-term development solutions. As Africa’s population increases—an additional 1.2 billion people will call Africa home over the next 35 years—the dependency rate between old and young decreases. This decrease is an opportunity, but it can also turn into a challenge: More than 29 million young people on average will be entering the labor force each year until 2030 in need of jobs.

Creating those jobs requires a plethora of strategies.

Natural resources need to be better exploited and in a more sustainable way. Botswana used its bargaining power as a major world diamond producer to promote forward linkages between diamond extraction by an international corporation and cutting and polishing by local manufacturing companies. Is this a model on which we can build?

Africa needs to be supported to tap in a greater share of global value chains. At present, Africa produces only 2.2% of the world’s production of intermediary goods. While the opportunities offered by greater participation in global value chains are significant, the impact on job creation in formal enterprises has been limited so far.

Space needs to be created for private sector-led activities to spur greater entrepreneurship. The urban informal sector can have annual capital returns of up to 60 or 70 percent, but economic, institutional and social constraints need to be removed to enable entrepreneurs to enhance their competitiveness, expand their businesses and enter the formal sector.

The public sector needs to be strengthened and empowered to play the part of a policy driver. Given strong population growth and the need to maintain financial efficiency, the role of the public sector as an employer may expand but, in itself, is insufficient. African governments employ about 25 million people aged 30-64, about 10 percent of Africa’s population in this age group, but only 14 million people aged 15-29 or about five percent of Africa’s population in this age group.

In reality, no one strategy for job creation is enough. Rather, the 2015 African Economic Outlook argues that designing an appropriate mix of strategies that is tailor-made to each particular African context offers the greatest promise. Innovative development strategies maximize the diverse potential of different regions.

Realising both Agenda 2063 and the SDGs in the African landscape reaffirms a fundamental truth: Development solutions need to be created by Africans for Africans. At the same time, engaging in robust dialogues and constructive peer-to-peer exchanges of experiences with developed and developing economies—including Germany and other member–countries of the OECD Development Centre—may provide Africans with insights and information to make evidence-based choices that push innovation in development policies and practices.

This article first appeared in Deutsche Welle  on September 8, 2015. Read it anew here: http://www.dw.com/en/opinion-starting-with-africa/a-18702267 


This article should not be reported as representing the official views of the OECD, the OECD Development Centre or of their member countries. The opinions expressed and arguments employed are those of the author.

World Food Day 2015: Building Resilient Societies and Breaking the Cycle of Rural Poverty in the Sahel and West Africa Region

By Ousman Tall, Sahel and West Africa Club (SWAC) Secretariat

The official programme marking World Food Day takes place today at the Universal Exposition in Milan, under the theme, “Social Protection and Agriculture: Breaking the Cycle of Rural Poverty”. This theme underscores the role of social protection in ensuring that food and other basic needs of the most vulnerable individuals and households are addressed. Furthermore, embedded in this theme is the assertion that social protection programmes tied to productive activities, such as agriculture, are the most sustainable approach to eradicating poverty and achieving food and nutrition security. This has considerable implications for Sub-Saharan Africa, where poverty is pervasive in rural areas.

Sub-Saharan Africa, especially the Sahel and West Africa region, is one of the poorest and most food-insecure regions in the world. Out of the 25 poorest countries in the world, 23 are in Sub-Saharan Africa with 11 of them in the Sahel and West Africa Region. It has the world’s fastest growing population, where 65% of countries are classified as low-income countries and over half of the population is living below the poverty line.[1] To address the high levels of food insecurity and poverty, a number of social protection initiatives have been put in place, including national social protection strategies in some countries. In 2014, the European Union alone assisted 1.7 million food-insecure people and 580 000 malnourished children in the Sahel.[2] This has provided a strong argument and a basis for a pro-smallholder agricultural intervention in rural areas in the Sahel and West Africa region.

Most Recent Food Insecurity Situations in the Sahel and West Africa Region

food-insecurity-sahel-west-africa© Map produced by CILSS/Agrhymet. Source: Regional analysis of the Cadré harmonisé (CH), Bamako, 22-23 June 2015.

Linking social protection programmes with economic activities, productivity, ownership and long-term sustainability is important. Tackling risk and vulnerability and at the same time ensuring pro-poor growth through investments in social protection programmes lead to greater inclusive growth.[3] These should be the guiding principles in the design and implementation of social protection programmes. However, most social protection initiatives and interventions in the region are project-oriented, mainly addressing poverty and food insecurity during times of crisis. With the persistent nature and recurrence of crises in the region, there is a need to go beyond interventions during crises, to build the resilience of the most vulnerable populations in adapting – in a sustainable manner – to these emerging and recurrent crises. Read more

The full post is available on the OECD Insights blog

[1] Food security in focus: Sub-Saharan Africa 2014. The Economist Intelligence Unit 2014

[2] ECHO Factsheet – Sahel: Food & Nutrition Crisis – May 2015

[3] Promoting Pro-Poor Growth: Social Protection-OECD 2009

More than money: Optimising philanthropy’s potential to fast-track development

By Bathylle Missika (Acting) Head of Policy Dialogue Division, OECD Development Centre

The Sustainable Development Goals (SDGs) have such scale and complexity that they require governments to strengthen co-operation with a broad range of development actors. Foundations, among others, may play a role both in financing development as well as in designing and implementing innovative projects. On the one hand, North-South flows from foundations based in OECD countries alone have grown almost tenfold in less than a decade, from USD 3 billion in 2003 to USD 29.7 billion in 2013.[i]  The 2012 assets of the Bill and Melinda Gates Foundation, The J. Paul Getty Trust and the Ford Foundation equal the GDPs of Panama, Mongolia and Mauritius, respectively. On the other hand, foundations also have a non-financial value as last July’s Financing for Development Conference in Addis Ababa recognised. That conference was a turning point in thinking about foundations as more than mere ATMs for development.

Foundations have the potential to fast-track development; the momentum now is on how and with whom to do so. Realising such potential is neither a given nor a clearly defined pathway. Are foundations stepping up to the challenge? Are they applying their capacity to innovate further? Are they moving at the same pace? If and when they do act, how can foundations significantly make a difference in the post-2015 agenda?

To start, a growing number of catalytic, venture or enterprise-based foundations are focusing on achieving impact and broad scale that far outlive the benefits of short-term, ad hoc grant-making. The Shell Foundation, for example, transformed its model to focus on cost-effective approaches to deliver sustainable impact at scale and measure such impact on the ground. Among its many projects, the foundation is helping create a market for clean cook stoves in India by working across the supply chain and exploring new distribution models. Other innovative approaches are starting to flourish. Randomised controlled trials are increasingly being discussed in the philanthropic sector as an alternative way to assess impact.[ii] The UBS Optimus Foundation used them to explore how causal relationships inform development outcomes in the context of the Children and Violence Evaluation Challenge Fund in Uganda.[iii] 

However, despite recent efforts towards more accountability and monitoring, evaluating philanthropic impact remains a tall order for the whole sector. While foundations have the resources and ambition to design innovative programmes to achieve social change across a range of development issues, doing so often requires replacing their cherished autonomy with solid partnerships across sectors. No organisation, no matter how powerful, can single-handedly bring about true social impact, argues Larry McGill of the Foundation Center. Thus, as McGill points out, unless foundations are only interested in local, short-term change, they need a collective, macro perspective that looks at changing entire systems. Some encouraging efforts are already visible. For example, Novartis Foundation joined forces in a multi-stakeholder coalition with Columbia University’s Earth Institute, the Millennium Promise, the Ghana Ministry of Health and Communications, Airtel and Ericsson to transform health services for Ghana’s poorest. Mobile technology will allow doctors and nurses to see more patients, while reducing transport times and costs.

Unfortunately, only a handful of such initiatives exist so far. How can they be replicated more broadly across the development galaxy? The OECD Development Centre’s Global Network of Foundations Working for Development (netFWD) is working with foundations to answer this question. netFWD is taking the lead in the Accelerating Impact 2030 initiative, which will be launched at the Ford Foundation later this week on the margins of the United Nations General Assembly. This initiative provides foundations with tools, data and a space to share lessons on how to sustain impact at scale and play their part in achieving the SDGs at the local level.

Only then will the true potential of foundations fully blossom, well beyond the money.


[i] OECD DAC statistics. Figures are in real terms.

 [ii] Originating in the medical sector, randomised controlled trials in their most basic form are experiments in which people are allocated randomly into an experiment or control group, with the only expected difference between the groups being the intervention they receive or do not receive.

[iii] Bandiera et al. (2012), Empowering Adolescent Girls: Evidence from a Randomized Control Trial in Uganda, World Bank, Washington DC,http://econ.lse.ac.uk/staff/rburgess/wp/ELA.pdf

 


This article should not be reported as representing the official views of the OECD, the OECD Development Centre or of their member countries. The opinions expressed and arguments employed are those of the author.

How to make the SDGs walk the talk about gender equality and women’s empowerment

By Keiko Nowacka, Gender coordinator at the OECD Development Centre

This September, the world will adopt a new development framework: the Sustainable Development Goals (SDGs) that aim to “transform our world by 2030.”  Gender equality and women’s empowerment feature as a stand-alone goal (SDG5) and are integrated through many of the other goals (e.g. SDG1, 3, 5, 10, 11). By 2030, the SDGs aim to ensure that “every woman and girl enjoys full gender equality” (paragraph 15) through ambitious and comprehensive targets missed in the Millennium Development Goals. Focus now includes unpaid care, violence against women, early marriage and women’s political participation. It is no exaggeration to say that the SDGs boast unprecedented potential for dramatically challenging and changing the status quo of gender equality. Continue reading

How to continue the shifting wealth momentum

By Carl Dahlman, Head of the Thematic Division and Head of Global Development Research at the OECD Development Centre and Martin Wermelinger, Economist at the OECD Development Centre

Strong growth over much of the past decade has substantially boosted developing countries’ share of the global economy and accelerated per capita income convergence with richer countries. We call this process “shifting wealth.” However, productivity is still lagging and growth is too low to allow continued convergence. Low productivity also challenges more inclusive and sustainable development. This blog argues that developing countries have many opportunities to boost productivity.

Non-OECD countries’ weight in the global economy is today above that of OECD countries in terms of purchasing power parity, a measure of what money will buy in different countries. This is remarkable especially since their share stood at around 40% just 15 years ago. This change in relative economic size of developing versus developed countries is being led by the BRIICS, particularly China and India. Together, these two countries account for almost one quarter of global GDP.

Non-OECD countries already surpass OECD countries in share of global GDP

fig1.PGD

Despite the momentum towards convergence, several lower middle-income countries, such as India, Indonesia and Vietnam, and countries in the upper middle-income bracket, such as Brazil, Colombia, Hungary, Mexico and South Africa, would fail to converge with the average OECD income level by 2050, given their average growth rates since 2010. In fact, the growth differential between OECD and non-OECD countries has narrowed dramatically relative to the pre-2008/09 crisis period. Their challenge is deepened by the recent slowdown in China, where rapid growth has up to now benefited its neighbours and suppliers, in particular natural-resource exporters.

Growth slowdowns can be associated with significant slowdowns in productivity growth. Over the past decade, productivity growth made only a marginal contribution to economic growth in many middle-income countries. It was also insufficient to significantly reduce the very large gap in productivity with advanced countries. In Brazil, Mexico and Turkey, the gap even widened. In contrast, China recorded impressive growth in productivity: around 10% annually in labour productivity in manufacturing and services.

“So, how can countries boost productivity?”

Factors associated with moving up the value chain, expanding inclusive and environmentally sustainable development and promoting effective governance are all part of the strategic mix to drive structural reforms and boost productivity. This mix includes:

Diversifying continuously into higher value-added market segments in agriculture, industry and services:Diversification is particularly important in middle-income countries that are seeing rising wages as well as those rich in natural resources.

Innovating by using global knowledge and developing domestic capabilities: Middle-income countries have significant room for technological catch-up. Besides better integrating in the global trading system and tapping foreign knowledge through trade and foreign direct investment, countries also need to develop capabilities to innovate new products and processes to better suit their own needs. This can be done by licencing technology; obtaining technology, designs, production and management assistance from foreign buyers, consulting firms and technical experts; learning from foreign education and training; copying and reverse engineering products and services; and undertaking domestic R&D.

Developing skills: In many middle-income countries, improvements in educational attainment and deeper integration into value chains have often been insufficient to ensure the competitiveness of the labour force. This suggests that education policies need continuously to adapt the supply of skills to the economy’s changing needs.

Reforming product and financial markets: In many middle-income countries, the development of competitive, innovative businesses is often constrained by an inadequate regulatory environment.

Fostering competitive service sectors: The domestic service sector can grow to meet the demand of the growing “middle classes.” Increased use of services, like engineering, R&D or marketing services, also improves the competitiveness of manufacturing. Moreover, some knowledge- and information-intensive services, such as ICT, and business services can help to improve the efficiency of the economy and can be themselves a source of export earnings. Emerging digital services such as big data analytics and the Internet of things are likely to have game-changing impact on inclusive and sustainable growth.

Growing inclusively: Development challenges are about much more than just economic growth. Many emerging and developing economies have been capable of reducing poverty over the last two decades. At the same time, however, income inequality is increasing in many of these economies. Moreover, the Arab Spring and rising social tensions in other developing economies make clear that social cohesion and equality of opportunity to more broadly share the benefits of economic opportunity deserve greater attention. This also requires identifying regional competitive edges and increasingly tailoring public services to local needs. For example, productive employment and firms can emerge in any region provided they nurture environments conducive to entrepreneurship.

Investing in “greener” growth: The problems of environmental damage caused by growth also raise issues of environmental sustainability. Diversifying into less energy-intensive sectors and adopting energy-efficient technologies would reduce vulnerability to fluctuations in energy prices and changes in regulations and preferences.

Developing capable and effective governments: Better training of government officials and improved coordination across government ministries are essential to ensure effective planning and implementation. Bold changes in strategies may be politically difficult and costly, though less so than no change. Effective communication strategies and the right timing and sequencing are critical to obtain support by multiple stakeholders to implement reforms. China’s rapid rise had been in large part due to its determined, target-oriented government with a vision to address changing economic challenges. It made bold reforms that were possible through effective organisations and procedures to implement the necessary steps. Other countries with more democratically-organised governments need to engage in effective consultations with key stakeholders to build support for necessary reforms and to develop capabilities to implement those reforms.

“Though “shifting wealth” has become more complicated, it can continue.”

A current period of low commodity prices, a slowdown in China as the global growth engine and political turbulences in larger emerging economies mean that other developing countries can today less easily free-ride on the bandwagon to global convergence. Yet, developing countries have a number of practical opportunities to tap their own strengths to advance structural reforms and boost productivity and inclusive, sustainable development.