Africa and the Millennium Development Goals MDG_Shanta...Sources: UN MDG Report 2009, Global Monitoring Report 2010 (forthcoming) 1. The MDGs are about Africa 2. A decade of rapid

Africa and the Millennium Development Goalsthe Millennium Development Goals

Shanta DevarajanWorld Bank

http://blogs.worldbank.org/africacan

100%

80%

60%

40%

100%

80%

60%

40%

Developing Countries Sub-Saharan Africa

1. The MDGs are about Africa

20%

0%1a

Poverty2

Education3 Gender Equality

4. U5Mortality

5 MaternMortality

7c AccessWater

7c.Access Sanitation

20%

0%1a

Poverty1cHunger

2Education

3 GenderEquality

4. U5Mortality

7c AccessWater

7c AccessSanitation

5 Matern.Mortality

% of goal achieved by 2007

% of goal needed to be achieved by 2007 to be on track

Sources: UN MDG Report 2009, Global Monitoring Report 2010 (forthcoming)

1. The MDGs are about Africa

2. A decade of rapid progress in Africa

56

58

60

Poverty in Sub-Saharan Africa

46

48

50

52

54

YR1990 YR1993 YR1996 YR1999 YR2002 YR2005

Source: Chen, Shaohua and Martin Ravallion, “The Developing World is Poorer than we Thought, but no less Successful in the Fight against Poverty,” World Bank Policy Research Working Paper 4703, 2009.


Source: UN MDG Reports 2005, 2006, 2008, 2009 – in Conceição, Mukherjee and Nayyar 2010



115

120

125

Inde

x of

pri

mar

y co

mpl

etio

n ra

te, t

otal

(% o

f rel

evan

t ag

e gr

oup)

Latin America & Caribbean

95

100

105

110

1999 2000 2001 2002 2003 2004 2005

Inde

x of

pri

mar

y co

mpl

etio

n ra

te, t

otal

(% o

f rel

evan

t ag

e gr

oup)

Latin America & Caribbean

Middle East & North Africa

Low income

South Asia

Sub-Saharan Africa

High and accelerating growth until 2008

Sub-Saharan Africa GDP Growth

4

34

5

4 3 3 3

4

66 6

6

3.0

4.0

5.0

6.0

7.0

GD

P g

row

th %

(an

nual

wei

ghte

d a

vera

ge)

8

Source: World Bank WDI database. Indices were calculated based on GDP weighted growth rates.

1

22

3

1 1

-1

1

2

4

2 2

3 3 3

-2.0

-1.0

0.0

1.0

2.0

3.0

19851987

19891991

19931995

19971999

20012003

20052007

GD

P g

row

th %

(an

nual

wei

ghte

d a

vera

ge)

SenegalNamibia

MauritaniaMauritius

Gambia, TheGhana

BotswanaBurkina Faso

MaliCape VerdeTanzaniaEthiopia

Sao Tome and PrincipeUgandaRwanda

Sierra LeoneMozambique

Liberia

GabonCongo, Rep.Cameroon

NigeriaSudanChad

AngolaEquatorial Guinea

30%

Percent of total A

frica po

pulation

40%

Oil countries

Growth 4.0% or higher

-10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0

ZimbabweGuinea-Bissau

EritreaCote d'Ivoire

TogoCentral African Republic

ComorosCongo, Dem. Rep.

BurundiSeychellesSwazilandLesothoGuinea

South AfricaMalawiKenya

MadagascarZambiaBeninNiger

SenegalNamibia

Average GDP growth rate 1998~2008

Percent of total A

frica po

pulation

30%

Growth less than 4%

Source: World Development Indicators, World Bank

Inflation in Africa

13 137 6 6 7 6 5 4 2 3 2 2

80

100

120

140

Ave

rage

Inflat

ion R

ate

%

25

30

35

40

45

Num

ber

of C

ountr

ies Inflation>20%

10%<inflation<=20%

17

2429 31 33 31 33

30 3227 28

31 33

0

20

40

60

80

Ave

rage

Inflat

ion R

ate

%

0

5

10

15

20

25

Num

ber

of C

ountr

ies

Inflation<=10%

Median inflation rate

Challenge 1: Infrastructure

Infrastructure deficit(billions of dollars per year)

Total gap $93

Already spending $45

Efficiency gains $17Efficiency gains $17________________________

Funding gap $31

Source: AICD 2009Note: Road density is in kilometers of road per thousand square kilometers; telephone density is in lines per thousand population; generation capacity is in megawatts per million population; electricity, water and sanitation coverages are in percentage of population.

Equally important to the investment climate and competitiveness, and intimately related, is infrastructure. As you can see, Africa has a massive infrastructure deficit—even compared to other low-income countries. Our recent work (the AICD) shows that, to get all African countries’ infrastructure up to the level of, say, Mauritius, we would need $93 billion a year. Of this, $45 billion is already being spent. Furthermore, an additional $17 billion can be “found” in efficiency gains. That leaves a funding gap of $31 billion a year, about 60 percent of total ODA to the continent. Clearly, this funding gap cannot be filled by governments alone—there just isn’t that kind of public money around—so private sector participation is critical to meeting this need. On that note, I would like to add that, although the IFC is prioritizing Africa and infrastructure, the scale is dwarfed by these numbers—even in the “high case,” their investment will be about $400 million a year, or about 1.3 percent of the funding gap. [In answer to Messrs. Ong Seng, McIntosh and Dib’s question, the Bank has been scaling up IDA’s support to infrastructure—from $1.6 billion in FY06 to a projected $3.3 billion this fiscal year; and a proposed $4.1 billion in IBRD resources to the power sector alone. These efforts are part of a wider scale-up taking place by all donors under the Infrastructure Consortium for Africa. In terms of the efficiency gap, almost all our infrastructure operations include components aimed at improving operational efficiency and cost recovery of utilities. In road transport, with the Sub-Saharan Transport Policy Program, the Bank has been setting up “second-generation” road funds and road agencies to provide sustainable finance for, and implementation of, road maintenance]. There was also a question about some of the IFC’s funds, which I will let our IFC colleagues (who are joining us by VC from Johannesburg) answer at the end of the presentation. [In case there is a problem with the VC, here is the answer: 1) As of December 2009 IFC's Funds portfolio in Africa comprised 30 funds that had invested in excess of 200 portfolio companies, for total commitments of US$600 million. Through the above investments IFC had mobilized US$4.3 billion. The global financial crisis has resulted in a difficult fund raising environment, which in turn has led to heightened demand for IFC's funds services. For FY10 IFC expects to commit approximately 10 new funds investments for a total of $200 million. 2) The Sub-Saharan Africa, Latin America and Caribbean fund is a target $1 billion fund which will co-invest with IFC in equity transactions. The fund is planning a first closing for $500 million in early March and will invest accross all industry sectors. 3) The IFC Capitalization Fund is expected to invest up to $750 million in the Africa Region's systemic banks. The most advanced cap Fund parallel project is the Africa Capitalization fund, where we are targeting to raise $200 million. EIB’s Management Committee approved taking the project to the Board on 13 March. The Africa Development bank is scheduled to be in DC for due diligence at the beginning of March. OFID has already has Board approval. We estimate that we should be targeting for a first closing ($120 million) during the first half of April. There are currently 2 potential African bank investments being evaluated. You may also want to note that IFC is a partner with the African Development Bank and other DFI's to coordinate due diligence and financing on large projects, the Africa Financing Partnership.]

SELECTED CORRIDORS

OF THE STUDY

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

Transport costs are not excessively high in Africa comparing to France for example

However, average transport prices in Africa are high in a global comparison

23.5 4

5 5 5

78

11

0

24

68

1012

14

Pak

ista

n

Bra

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US

A

Chi

na

Wes

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ope

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ance

Afr

ica-

Dur

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ica-

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ica

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Afric

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Dou

ala-

Ndj

amén

a

Ave

rage

tra

nspo

rt p

rices

(in U

S c

ents

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 Douala - N’Djaména 3.19 1.31 0.57 60-70 73%

Central Africa

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

Average transport prices (constant and current) from Mombasa to Kigali

200

250

300

350

US

$/Ton 500

600

700

800

900

US

$/Ton

After liberalizationBefore liberalization

0

50

100

150

200

1989

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

US

$/Ton

Current transport tariffs (left) Real transport tariffs - GDP deflator (right)

Challenge #2: Investment climate and competitiveness

Jobs• Even in fast-growing economies, little growth in productive employment

• 70-80 percent of labor force in (low-productivity) informal sector

• 7-10 million young Africans enter the labor force each year

• Skills deficit• Skills deficit

Women’s Empowerment• Lack opportunities to access credit, land rights, and legal rights

• Some progress on micro-finance for women

Turning to the specific long-term challenges facing Africa, clearly that of creating opportunities for growth is paramount. As we know, critical to creating these opportunities is the climate for investment, and competitiveness. But within this area of investment climate and competitiveness, two priorities stand out for Africa. The first is jobs. Plainly, the growth that Africa has experienced over the last 10-15 years has led to insufficient productive employment. The problem is particularly acute because 7-10 million young Africans are entering the labor force every year. Unless they are engaged in productive employment, this could be a political and economic crisis. The second priority is the empowerment of women to participate in the private sector. Women are the backbone of African economies, but their productivity is constrained by a number of factors, including access to credit, land rights and legal rights—all of which we can work to address.

In some countries, improved business climate

Jobs in Uganda: from conflict to rapid growth

Share of all workers Annual growth rate

1992/93 2005/06 1992/93-2005/06Wage employment:Private wage employment – agriculture

2.8 4.5 6.6

Private wage employment – non-agriculture 5.2 8.9 7.3

Wage employment – government 4.7 3.0 -0.6

Non-wage employment:Self-emp & family workers – agriculture

80.7 70.3 1.8

Self-emp & family worker non-agriculture 6.6 13.3 8.6

All economically active 100 100 2.9Memo: GDP growth 8.3

Source: Louise Fox, « Youth and Employment in Low-income Africa »

Notice- no unemployment. SSA has little unemployment, but more underemployment, Uganda urban unemployment was 3.1, rural is 0.7.

The inescapable math:Informal is normal

Uganda Labor Force Projection, 2005-2020, elasticity approach, high non ag. growth

Share of all workers2005/06 2010 2020

Private wage employment - agriculture 4.5% 4.5% 4.5%

Private wage employment - non-agriculture 8.9% 11.0% 15.9%

Wage employment - government 3.0% 2.6% 2.0%

Self-employed & family workers - agriculture 70.3% 65.9% 58.9%

Self-employed & family workers non-agriculture 13.3% 15.9% 18.7%

All economically active 100.0% 100.0% 100.0%

This is a good picture. If you look at Nigeria or Angola or Chad forget it – no way you see this type of growth.

Challenge #3: Agricultural ProductivityYi

eld

(196

1-65

=100

)Yi

eld

(196

1

The second of our long-term challenges is, as the Post-crisis Directions paper calls it, targeting the poor and vulnerable. In the African context, this translates, first, to increasing agricultural productivity because 70 percent of the poor earn their income from agriculture, and productivity has not been rising fast enough (certainly compared to Asia). Secondly, it implies making sure the poor have access to quality health and education, so they can benefit from a growing economy, as well as contribute to that growth. In Africa, we find that improving health and education means not just pouring money into these sectors, but strengthening the systems that deliver these services, because it is these systems that are often failing poor people. Absentee teachers and leakage of public funds are two examples of this system failure.

CHALLENGE #4: QUIET CORRUPTION

ESTIMATES OF TEACHER ABSENTEEISMCountry % of teacher absent (direct

observation)Days absent per month (teacher

self report)

Uganda (2003)a 27

Uganda (2007)b 20

Kenya (2003)c 20

Zambia (2007)d 20

Burkina Faso (1995-8)e 2.2

Cameroon (1995-8)e 1.8

Cote d’Ivoire (1995-8)e 1.3

Madagascar (1995-8)e 2.5

Senegal (1995-8)e 4.7

Zambia 2002)f 2.0Sources: a. Chaudhury et al. (2006); b. Habyarimana (2007); c. Glewwe, Kremer, and Moulin (2009); d. Ha;sey, Rogers, and Vegas (2009); e. Postlethwaite (1998); f. Das et al. (2004)

LEAKAGE OF RESOURCES IN HEALTH CARE

Country (year) % of cash/in-kindresources leaked

Resource Category

Kenya (2004) 38 Non-salary budget

Tanzania (1991) 41 Non-salary budgetTanzania (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)

PREVALENCE OF SUBSTANDARD FERTILIZERS IN WEST AFRICA

Product Total Samples Deficient Samples Percentage

Urea 50 4 8

Ammonium sulphate 7 2 28.6

Calcium ammonium nitrate (CAN) 9 3 33.3Calcium ammonium nitrate (CAN) 9 3 33.3

Triple super phosphate (TSP) 4 0 0

Muriate of potash (MOP) 2 0 0

Diammonium phosphates (DAP) 19 1 5.3

Nitrogen phosphorus potassium (NPK) 54 19 35.2

Total 145 29 20

Source: IFDC (2007)

Rwanda: Results-based Financing

Donors

National Government

Sub-National Government

District

Households or Individuals

Results Based Aid

Results Based Contracting for

CCT, RB bonuses

Hospitals, Health Centers

Results Based Planning and Budgeting

National PBF model for Health Centers• Learning from 3 pilot experiences (since 2001)• Roll-out since May/June 2006• Currently 23 out of 30 districts covered• Seven control districts• 16 Primary Health Care indicators, e.g.

– New Curative Consultation = $0.27– Delivery at the HC = $3.63–– Completely vaccinated child = $ 1.82

• 14 HIV/AIDS indicators, e.g. – One Pregnant woman tested (PMTCT) = $1.10– One couple tested voluntarily (PMTCT)= $1.10– HIV+ women treated with NVP = $1.10

• Separation of functions between stakeholders

Rwanda 2005-2008Indicators DHS-2005 DHS-2008

Contraception (modern) 10% 27%Delivery in Health Centers 39% 52%Infant Mortality rate 86 per 1000 62 per

10001000Under-Five Mortality rate 152 per

1000103 per

1000Anemia Prevalence : Children 56% 48%Vaccination : All 75% 80.4%Vaccination : Measles 86% 90%Use of Insecticide treated nets

among children less than 54% 67%

Figure 4 Performance Based Financing leads to more assisted birth deliveries

49.7

55.6

50.0

60.0

Pro

po

rtio

n o

f o

f in

stit

uti

on

al d

eliv

eri

es

7.3 % increasedue to PBF

36.3

34.9

30.0

40.0

Baseline (2006) Follow up (2008)

Pro

po

rtio

n o

f o

f in

stit

uti

on

al d

eliv

eri

es

Control facilities Treatment (PBF facilities)

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

27

Figure 5: Performance Based Financing Improves quality (2006-2008).

0

0.15

0.00

0.05

0.10

0.15

0.20

Sta

nd

ard

ize

d P

ren

ata

l e

ffo

rt s

co

re

15 % Standard deviation increase due to PBF

-0.10

0

-0.13-0.15

-0.10

-0.05

0.00

Baseline (2006) Follow up (2008)

Sta

nd

ard

ize

d P

ren

ata

l e

ffo

rt s

co

re

Control facilities Treatment (PBF facilities)

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

28

New challenge #1: Climate change

• Adaptation strategy: irrigation, hydropower, land management

• Mitigation: renewable energy, low-carbon fuels

4. Hurt by the crisis, but African response gives hope

Real GDP growth rates

Revenue, Expenditure and Deficit (relative to earlier projections)

Fiscal Stance

CountyDebt 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

-0.5

-4.1

3.6

2.3

-10

0

10

0.3

1.1

-0.8

1.3

-1.0

0.5

-1.3

1.9 2.0

2.0

Source: Krumm, Dhar and Choi, “Fiscal Response to the Global Crisis inLow Income African Countries”, August 2009

Partial Adjustment

Mozambi-que

Low UgandaLow

No Adjustment

SenegalLow Burkina

FasoHigh

Stimulus

ZambiaLow

KenyaLow

TanzaniaLow

-1.3-3.0

-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

-1.0

0.8

-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

Documents

Africa and the Millennium Development Goals MDG_Shanta...Sources: UN MDG Report 2009, Global Monitoring Report 2010 (forthcoming) 1. The MDGs are about Africa 2. A decade of rapid