M EMBERS OF THE C ONSORTIUM · C ONSORTIUM POUR LA R ECHERCHE E CONOMIQUE EN A FRIQUE 2004/2005 1 Overview 2 004/05, the final year of Phase V, was a year of both closure and anticipation

AF R I C A N EC O N O M I C RE S E A R C H CO N S O RT I U M

ANNUAL REPORT

MEMBERS OF THE CONSORTIUM

Department for International Development (DFID)

International Development Research Centre (IDRC)

MacArthur Foundation

Ministry of Foreign Affairs, Denmark

Ministry of Foreign Affairs, the Netherlands

Ministry of Foreign Affairs, France

Norwegian Agency for Development Cooperation (NORAD)

Rockefeller Foundation

Swedish International Development Cooperation Agency (Sida)

Swiss Agency for Development and Cooperation (SDC)

US Agency for International Development (USAID)

The World Bank (IBRD)

Non-member funders:

African Capacity Building Foundation (ACBF)

African Development Bank (AfDB)

Commission of the European Union

Ford Foundation

BOARD OF DIRECTORS

Caroline Pestieau* , Chair and Director at Large; CanadaKerfalla Yansane* , Vice Chair and Director-at-large;Consultant, GuineaUlrich Camen* , Secretary; Programme Director, MonetaryPolicy and Financial Reform Programme, GraduateInstitute of International Studies, and representative ofSDC, SwitzerlandAntoine Hawara ,* Treasurer; amh Consulting, CanadaMthuli Ncube* , Director at Large; Professor of Finance,Wits Business School, University of Witwatersrand, SouthAfricaJoyce Moock* , Associate Vice President, RockefellerFoundation, USA Thorbj Ørn Gaustadsæther* , Norwegian Ambassador toMozambique, representing NORAD, NorwayShamsuddeen Usman , Director at Large; Deputy Gover-nor, Central Bank of NigeriaSusan Horton , Academic Vice-President of Wilfrid LaurierUniversity and representative of IDRC, CanadaAnna Maria Oltorp , Head of Division, Thematic

Programmes, Department for Research Cooperation,

SAREC, Sida

Tony Killick , Senior Research Associate, OverseasDevelopment Institute, and representative of DFID, UKJohn Page, Chief Economist, Africa Region, The World

Bank, USA

Milena Novy-Marx, Program Officer, Global Challenges,

The MacArthur Foundation, USA

Ole Winckler Andersen, Head, Technical Advisory

Service, Royal Danish Ministry of Foreign Affairs, Denmark

Antoine Grassin , Directeur de la Coopération Scientifique,Ministère des Affaires Etrangères, FranceM.O. Kayode , Ex-officio Member of the Board, Chair,

AERC Programme Committee, University of Ibadan, NigeriaWilliam Lyakurwa, Ex-officio Member of the Board,

Executive Director, African Economic Research Consortium

*Member of the AERC Executive Committee

PROGRAMME COMMITTEE

M.O. Kayode , Chair; AERC Programme Committee,University of Ibadan, NigeriaCaleb Fundanga , Governor, Central Bank of Zambia,

ZambiaPatrick Guillaumont , President of CERDI, Universitéd’Auvergne, FranceAllechi M’Bet , Chief Economic Advisor to the President,Republic of Côte d’IvoireJoseph Kinyua , Permanent Secretary, Ministry of Finance,KenyaManana M. Bakane , Director General, Office of thePremier, South AfricaArne Bigsten , Department of Economics, GothenburgUniversity, SwedenMachiko K. Nissanke , Professor of Economics, SOAS,University of London, UKBenno Ndulu , Research Manager, The World Bank, USAPaul Collier , Professor of Economics, Centre for the Studyof African Economies, University of Oxford , UKErnest Aryeetey , Department of Economics, University ofGhana, GhanaLuc Oyoubi , Member of Parliament and President ofFinancial Committee, GabonWilliam Lyakurwa, Ex-officio Member of the ProgrammeCommittee, Executive Director, African Economic ResearchConsortiumDavid Olusanya Ajakaiye, Secretary to the ProgrammeCommittee, Director of Research, African EconomicResearch ConsortiumNjuguna Ndung’u, Assistant Secretary to the ProgrammeCommittee, Director of Training, African EconomicResearch Consortium

CONSORTIUM POUR LA RECHERCHE ECONOMIQUE EN AFRIQUE

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AN N U A L RE P O RT

AFRICAN ECONOMIC RESEARCH CONSORTIUM


2004/2005For the period 1 April 2004 to 31 March 2005


ANNUAL REPORT

© 2005 African Economic Research Consortium

AERC Annual Report 2004/2005

Published by: African Economic Research ConsortiumP.O. Box 62882, City SquareNairobi 00200, Kenya

ISBN: 9999 - 944 - 58 - 3


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Contents

Members of the Consortium inside front cover

Board of Directors inside front cover

Programme Committee inside front cover

Foreword iv

Overview 1

The Research Programme 9

Communications 15

The Training Programme 19

Management and Administration 27

Financial Report 31

Annexes 35

Secretariat Staff Inside back cover

iii


ANNUAL REPORTiv

Foreword

AERC has now closed another successful year of operations. It was – as the story that unfolds in thisreport will attest – a fast-paced and exciting period, marked by the articulation of our Strategic Planfor 2005–2010, even as we wrapped up the current period – Phase V – and maintained our day-to-daywork activities.

We remained focused on our key mandate, building capacity for policy relevant economic researchand graduate training, and saw the synergies between Research and Training ratchet up a notch as thefirst cohort of Collaborative PhD Programme students presented their thesis proposals through themechanism of the biannual research workshop with its access to a rich array of resource persons andcommentary by peers.

All of our programmes, in fact, are growing from strength to strength, building on the lessons of thepast and tailoring those lessons to the future. As always, the emphasis has been on a commitment toquality as we continue our quest for excellence and relevance in sub-Saharan Africa’s shifting policyenvironment. For their contribution to that quest we are indebted to the members of the AERCnetwork for their commitment and perseverance. The activities and demands of the year particularlytested us at staff level as well, and I am happy to say that my colleagues in the Secretariat rose to theoccasion through their dedication to professionalism and quality.

I am therefore pleased to present this Annual Report for 2004/05, with a summary of the auditedfinancial statements, to the members of the Consortium, the Board of Directors, the ProgrammeCommittee, the network and other AERC stakeholders. We could not have managed without thesupport of all of you.

William Lyakurwa

Executive Director


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Overview

2004/05, the final year of Phase V,was a year of both closure andanticipation. The Consortiumendeavoured to completeprojected activities planned for

the phase even as it developed the Strategic Planfor 2005–2010. Additional challenges includedevaluations of its performance over the past fiveyears and increasing demand for its products andservices.

As part of the Programme of Work and Budgetfor the year, the Research Programmemaintained its core emphasis on capacitybuilding and retention through the modalities ofthematic, collaborative and comparativeresearch. The Programme convened twobiannual research workshops, two immenselypopular plenary sessions and a policy roundtableto inform researchers about emerging issues ofinterest.

The Training Programme’s key activities revolvedaround consolidating the growth of the trainingportfolio occasioned by the introduction of theCollaborative PhD Programme (CPP). This hascreated opportunities for important synergieswith the Collaborative Master’s Programme(CMAP), in particular in two key activities: thecombined CMAP and CPP Joint Facility forElectives (JFE) and joint subject specialistworkshops. The CPP also conducted its firstthesis review workshop, held in conjunction withthe December biannual research workshop,making a combined event that was one of thelargest AERC has ever convened.

Research Programme

The Secretariat awarded 40 thematic researchgrants in the year. There were 56

presentations in the four concurrent sessions ofthe year’s first biannual research workshop, held

in May. These included 32 new and revisedproposals, 9 interim and revised interim reports,and 15 final and revised final reports. Seventy-four researchers participated, 12 for the firsttime. The workshop also included specialsessions on Corporate Governance, by Mr. StijnClaessens, University of Amsterdam; Writing and

Presentation Skills for AERC Researchers, by Ms.Anke Hoeffler, University of Oxford; and apresentation on the GDN project, The Impact of

Rich Country Policies on Poverty: A Global View,by Mr. Gary McMahon of the Global DevelopmentNetwork (GDN).

The year’s second workshop, held in December,featured a record 59 presentations in fourconcurrent sessions: 38 new and revisedproposals, 13 interim and revised interimreports, and 8 final and revised final reports. Ofthe 89 researchers who attended, 21 wereparticipating for the first time. A special sessionpresented the evaluation reports of povertyreduction strategy papers by Mr. William G.Battaile, Task Manager, Operations EvaluationOffice of the World Bank, and the PovertyReduction and Growth Facility by Mr. SteveKayizzi-Mugerwa, Senior Economist, IndependentEvaluation Office of the International MonetaryFund (IMF). The two reports were discussed byMr. Jean-Paul Azam, University of Toulouse I,France, and Mr. Arne Bigsten, GothenburgUniversity, Sweden.

The May plenary session highlighted Syntheses of

Recent AERC Collaborative Research Projects,

which summarized key project findings. Thistwentieth plenary session thus contributed toAERC’s aim of informing policy makers abouttopical and relevant research findings to supportthe decision making process, while it impartedvaluable information on collaborative researchprojects related to researchers’ thematic areas.


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The session was chaired by Mr.Nuwe Amanya Mushega,Executive Secretary of theEast African Community, andfeatured papers on fourprojects – trade, growth, aidand poverty.

December’s twenty-firstplenary session, on theCommission for Africa,elicited significant interest asit presented preliminaryfindings of the United Kingdom(UK) Commission for Africa.The Commission was launchedin February 2004 with theimmediate aim of determininghow the MillenniumDevelopment Goals can beachieved in Africa; itsrecommendations will beconveyed to the Group ofEight in May 2005. TheCommission initiated aconsultative process inNovember 2004 withrepresentatives from Africancountries to comment on itswork to that point, thusfacilitating the collation ofnew material for its report.The AERC plenary sessionmarked the culmination ofthese consultations, with thepresentation of theCommission’s preliminaryreport serving as an important

sounding board for feedbackand “error correction” fromthe diverse categories ofresearchers and policy makerspresent.

The first segment of theplenary was chaired by Mr.Joseph Kinyua, PermanentSecretary of the KenyaMinistry of Finance, thesecond by Mr. Harris Mule,Chancellor of KenyattaUniversity, Kenya, and thethird by Mr. Gobind Nankani,Vice President-Africa of theWorld Bank. The papers werepresented by Sir NicholasStern, Director of PolicyResearch for the Commissionfor Africa and SecondPermanent Secretary and Headof Government EconomicServices, UK, on Supporting

Africa’s Resurgence: The Role

of the Commission for Africa;Mr. Paul Collier, Professor ofEconomics, Centre for theStudy of African Economies,Oxford, on African Growth:

Why A Big Push Is Needed, andMr. Benno Ndulu, ResearchManager, the World Bank, onInfrastructure, Regional

Integration and Growth in

SSA. The papers werediscussed, respectively, by Mr.Humphrey Moshi, President’s

Overview

Professors in universities andresearch institutes, directors ofresearch in central banks, andother senior economists give creditto their earlier thematic researchinvolvement for setting them on aresearch career path that hasallowed them to advance withinthe economics profession to theircurrent positions.

- Phase V evaluation

Senior Policy Seminar VII - 22-24 March 2005 Cape Town, South Africa


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Overview

Economic Unit, Zanzibar, Mr.Nii Sowa, Centre for EconomicPolicy Analysis (CEPA), Ghana,and Mr. Ademola Oyejide,University of Ibadan, Nigeria.

As the implementation ofcollaborative researchprojects continued, the secondphase of the project onPoverty, Income Distribution

and Labour Markets registered31 proposals, of which 14 wereapproved for funding. Aneditors’ conference was heldin August 2004 for the projecton Explaining Africa’s Growth

Performance and adissemination conference isplanned for 2005. Plannedactivities for the project onAfrican Imperatives in the

New World Trade Order werecompleted, and a finaldissemination conference washeld in Dar es Salaam,Tanzania, on 16–17 November2004.

The Programme Committeeapproved a total of 19institutional attachments withthe World Bank andInternational Monetary Fund(IMF) and 3 from AERC’s ownresources, along with 14proposal and grant awards insupport of PhD thesis research.The meeting reviewed thedraft report of the evaluationof the Research Programme,the final version of which wassubmitted to the Secretariat inJuly 2004, and determined thecriteria for appointment to theproposed categories ofResearch Fellow and ResearchAssociate. Those eligible forappointment as ResearchFellows are AERC networkmembers, resident in Africa,who have completed twothematic research cycles and/or have an article listed inECONLIT since 1988 whenAERC was founded. Research

Associates are members whoare non-resident in Africa withat least two articles listed inECONLIT since 1988.

Communications

To enhance outreach topolicy makers and the

wider community ofeconomists, AERC turned astrategic spotlight on fine-tuning print and electronicmedia, events and informationservices, as well as otherspecific policy-relevantproducts. A revisedCommunications Strategy,complete with budget, wasapproved at the ExecutiveCommittee meeting of theBoard in July 2004 to facilitatethe implementation of AERC’srenewed focus. It isnoteworthy that this revisedConsortium-wide strategy hasa strong emphasis onelectronic communication andincludes detailed performanceindicators to facilitatemonitoring and evaluation.The implementation of thisstrategic document willfeature as part of theConsortium’s overall StrategicPlan for the period 2005–2010.

The strategic focus onmaximizing electronic

“Africa suffers from a knowledge-dependency trap. This erodes theconfidence of Africans and reduces accountability, while the profferedsolutions to the region’s problems are non-contextual, with limitedresources devoted to research and development. There is no otherregion in the world where the locals have not thought through theirproblems. An important Big Push should therefore be to build and utilizelocal capacity.”

“To escape from this ‘knowledge-dependency trap’ there is a need for‘intellectual freedom fighters’.”

- Participants’ observations at AERC’s plenary sessionon the Commission for Africa, December 2004

(NB: Plenary papers, rapporteur’s report and Commissionfor Africa Report are available from AERC.)


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Overview

communication to disseminateresearch products washeightened in the year asAERC formally launched itsrevamped and relocatedwebsite during the May 2004biannual research workshop.The website changes werelauded as a step in the rightdirection, particularly inaccessibility, user appeal andpracticability, which are listedas key challenges for Africanresearchers. The “new”website currently boasts awide variety of AERCpublications, announcementsof events, and mostimportantly, 231 research andother papers online. A grandtotal of 1.4 million “hits” orvisits were registered during2004/05, a monthly average of118,000 hits.

Selected software forcomputerizing the AERCLibrary was acquired duringthe period and is expected tosupport library systems andprocesses at the Secretariatand the Joint Facility forElectives. The online journalsubscription service, Journal

Storage (JSTOR), was selectedto facilitate subscription to awide range of multidisciplinaryjournal collections that will beof immense value to AERCnetwork members.

A particular feature of PhaseV, rooted in a series of pre-phase evaluations of AERCactivities, has been enhancedoutreach to policy makers.The aim is to sharpen the toolsAERC uses for outreach andpolicy relevance in order tomake them more valuable topolicy makers and moreaccessible to the widersociety, and to enhance AERC’soutreach efforts to make thetools more widely known.AERC Senior Policy Seminarsare one such tool. They

provide a forum for thediscussion of policy-orientedsyntheses of AERC researchand for obtaining feedbackfrom policy makers on theAERC research agenda. Therehave been seven seminars todate, with Senior PolicySeminar VII held in March 2005in Cape Town, South Africa, onthe theme Growth, Poverty

and Institutions. Theparticipants included deputyministers of finance, centralbank governors and othersenior African financial policymakers, as well as individualsfrom the private sector andacademia. The presentationelicited animated exchange onthe latest findings on the pro-poor debate, the linksbetween growth and povertyreduction, the MillenniumDevelopment Goals, and therole of leadership as well asinstitutions such as the NewPartnership for Africa’sDevelopment (NEPAD) and theAfrican Union (AU) in the fightagainst poverty. Discussionsalso touched on thepossibilities for future work bypolicy makers andresearchers.

TrainingProgramme

The combined CMAP andCPP JFE was perhaps the

best concentration of graduatetraining in economics insub-Saharan Africa, as AERCmaximized economies of scaleas a vital lesson for the future.The sessions presented achallenge in coordinating thedifferent cohorts of studentsand diverse profiles oftrainers, including a few fromthe African diaspora.

There were 131 CMAP and 25CPP students, along with acombined teaching team ofabout 40 lecturers. The

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Overview

training facility was reservedfor full use by AERC students,thereby providing a favourableatmosphere for maximumconcentration, synergy andcollegiality between themaster’s and PhD students. Ofnote is that the University ofPretoria sent eight students topilot the first semester of theCMAP JFE, in addition to thefirst-time representation ofSudan and the DemocraticRepublic of Congo in theprogramme, through anoutreach effort to under-represented areas/countries.The joint JFE was furthercommended for introducing alanguage module to facilitatecommunication, with Frenchbeing taught to CPPanglophone students and aparallel English languagemodule for francophonestudents.

A second joint effort by thetwo training programmes was asubject specialist workshopthat reviewed the courses onoffer at the JFE, particularlyPublic Finance for CMAP andIndustrial Economics andLabour Economics for bothCMAP and CPP. The subjectspecialist workshop alsomarked the re-entry ofIndustrial Economics to the JFECMAP elective courses after afive-year absence due toinadequate student demand.

An assessment of CMAP by theAfrican Capacity BuildingFoundation (ACBF) in Junefound that the programme wasgenerally on track as itcompleted its third phase ofACBF financing, thus strategicdirections for the period 2005–2010 provide for thecontinuation of CMAP, whiletaking into account anticipatedbenefits from itssynergy with CPP.

There are currently 70students participating in theCPP, which has recorded arapid increase in numbers anddiversification from the 19pioneer students. The 70students span 18 nationalities.There are 22 from EasternAfrica, 15 from anglophoneWest Africa, 18 fromfrancophone Africa and 15from Southern Africa. Thesecomprise 52 men and 18women, a notableadvancement in genderbalance. Sixty of the studentsare fully sponsored by AERC;one has partial sponsorshipand nine are privatelysponsored.

Despite these successes, theTraining Programmeexperienced some perennialchallenges during the period.Both CMAP and CPP haddifficulty attracting qualityinstructors for the JFE, giventhe opportunity cost for suchindividuals, adverselyaffecting the CPP componentin particular given its timespan and intensity. Constraintswere also encountered insourcing lecturers to teachcore courses in participatinguniversities. These problemsmay persist until theprogramme generates enoughof its own graduates to boostthe teaching of courses in thefuture. AERC also faces thechallenge of being unable tomeet the current demand forscholarships, which stands atmore than 80 qualifiedapplicants per year, yet thenumber of available awards islimited to 21 new studentsannually. Concerted resourcemobilization efforts willcontinue, with emphasis ondirect or private sponsorshipof qualified candidates tofacilitate the sustainability ofthe programme.

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The high calibre of the studentswas manifested in the results ofthe 2004 African DevelopmentBank Essay Competition, whichawarded the top prize to a studentparticipating in the CPP, Mr.Sheshangai Kaniki, a Tanzaniannational at the University of CapeTown.


ANNUAL REPORT6

Overview

Management andAdministration

With Phase V drawing to aclose, Management

focused on the completion ofthe evaluation of Phase V andthe development of theStrategic Plan for 2005–2010.The Phase V evaluation,conducted by Rashid Hassan,University of Pretoria, andHenry Rempel, University ofManitoba, commenced inFebruary 2004. The twoparticipated as observers atthe JFE, the Sixth Senior PolicySeminar, and the May/Junebiannual research workshopand Programme Committeemeetings. They also visitedseveral universitiesparticipating in the AERCcollaborative programmes andconsulted with individualnetwork members, donors andstaff. The final report of theevaluation was submitted inSeptember and presented at aSpecial Meeting of the Boardin November. Animplementation plan wasprepared and presented to theMarch 2005 Board meeting andrecommendations of theevaluation were considered forincorporation into theStrategic Plan for 2005–2010.

An evaluation of the ResearchProgramme by Marc Wuytsfrom the Institute of SocialStudies at The Hague, TheNetherlands, was completed inJuly 2004. The evaluation wascommissioned to assess theprogress of the programme inmeeting its objectives, as wellas the current realities of theeconomic and researchenvironment in the Africansub-continent. It began inOctober 2003 with deskresearch at the AERCSecretariat, followed byinterviews of researchers and

an extensive process ofconsultation with stakeholdersand network members. Thedraft report was submitted atthe June 2004 ProgrammeCommittee meeting andsubsequently revised andre-submitted in July 2004. Thereport’s recommendationsinformed the preparation ofthe Strategic Plan for 2005–2010 and the initiation of theprocess of developing adatabase for AERC.

The development of the 2005–2010 Strategic Plan alsobenefited from a broad rangeof consultations withinterested stakeholders, witha view to distilling a consensuson the way forward for theConsortium. Theseconsultations includedbrainstorming sessions withvarious categories of networkmembers, including seniorAfrican researchers, staff andmembers of the governingbodies. Consultations werealso held with policy makersand the New Partnership forAfrica’s Development,resulting in a draft strategythat was reviewed by theBoard at its special meeting inNovember, and the subsequentmeeting of the ProgrammeCommittee in December. Thefinal revised version of theStrategic Plan was presentedand approved at the March2005 Board meeting forimplementation.

The new strategic plancontains some addeddimensions that will helpstrengthen AERC’s coremission. Our long experiencewith capacity building andresearch into Africaneconomies has pointed overand over again to the criticalrole of institutions ineconomic growth. Thatexperience is reflected in a

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specific strategic objective tostrengthen the AERC networkby emphasizing institutionalpartnerships. A second newthrust will be applying soundmarketing principles toenhance the Consortium’sreputation even further. Theapproach will support and besupported by the newcommunications strategy, anew information andcommunications technology(ICT) strategy, a new resourcemobilization strategy, and arefined performancemanagement framework, allmaking an appearance in aformal way for the first timeduring this plan period.

The primary objective of theICT strategy is to ensure theeffective consolidation,management, exploitation anddissemination of informationand knowledge. The resourcemobilization strategy willguide fund raising efforts overthe period with an emphasison the maintenance andexpansion of the Consortium’sfunding base.

AERC has already taken stepsto maximize advances in ICTby installing an intranet andprocuring a computerizedfixed assets register. Thesetools are expected to allowgreater flexibility andaccessibility in gathering,retrieving, combining,analysing and reportinginstitutional data as well asimprove organization-widecoordination and capacity. Thedetailed performancemanagement framework for2005–2010 links outputs toobjectives and activities andintegrates all programmeoperations. It is expected toserve as an important tool formonitoring and evaluatingprogramme activities over theplan period.

The recruitment of a Directorof Research was completedduring the year, resulting inthe appointment of Dr. DavidOlusanya Ajakaiye, formerDirector General of theNigerian Institute for Socialand Economic Research(NISER). Dr. Ajakaiye reportedfor duty on 1 October 2004,bringing a wealth of regionaland international experiencein economic research and thepublic policy arena. Hisappointment completes thevacancies in internationalpositions, bringing thereorganization of the AERCSecretariat, which began in2002, to a close. Maintainingstaff capacity remains acontinuous process, however,as four members of staffresigned during the period fora range of personal reasons;their replacements wererecruited and joined theSecretariat just before theclose of the fiscal year.

For optimal motivation of thework force, Management fullyimplemented the new staffperformance appraisal systempiloted in 2003/04. The systemincludes a “360-degreefeedback” component throughwhich colleagues, includingsubordinates, are offered anopportunity to comment on anindividual’s performance.Performance was alsoenhanced through severalshort courses, including afinancial management seminarin April 2004, a 7 Habits of

Highly Effective People

workshop and in-house Frenchlanguage classes. Staffseminars on self-motivation,empowerment, andenhancement of personal andprofessional potential wereconducted in April andOctober 2004, during which

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staff also contributed to thedevelopment of the StrategicPlan for 2005–2010. Otherteam building activitiesincluded several social events,among them a special one withthe AERC Board during its visitto Nairobi in November 2004and a New Year’s dinner towhich staff members’ spouses/companions were also invited.

FinancialManagementIssues

AERC received yet anotherclean bill of health from

the statutory audits and theUSAID A133 audit for the fiscalyear 2004/05, which weresuccessfully conducted in May2005 by the audit firm, Ernstand Young. Positive reportswere also received from thespecial audits for the AfricanCapacity Building Foundation(ACBF) and the EuropeanUnion (EU), both conducted byPeat Marwick (KPMG). Thereports of the special auditshave been submitted to therespective donors as a basisfor fund reimbursements.

Income for the year 2004/05was US$10.3 million whileexpenditures were US$10.3million. The income remainedat fairly the same levels asthat of 2003/04 while theexpenditure of US$10.2 millionis an increase of 24% over theprevious year. This isattributed to increasedactivities under thecollaborative PhD programmeand Collaborative ResearchProgramme. The net assets atthe consortium at the year endwas US$ 11 million. The majorcomponents of expenditurerelate to grants and workshops(41%) and travel and workshoprelated expenses forresearchers and students(27%). Personnel costs

comprised 13% of the totalexpenditure. The marketvalue of the Consortium’sinvestments as at 31 March2005 was US$3,758,187 millionfor the Reserve Fund andS$2,013,334 for the ResearchInnovations Endowment Fund.

Renewed efforts to enhancethe resource base resulted inpartial funding of the TradeProject disseminationworkshop in November 2004 bythe Rockefeller Foundation. Inaddition, the Consortiumsecured funding for the UKDepartment for InternationalDevelopment (DFID)administered Analytical TrustFund (ATF). This Fundfacilitates the commissioningof research on behalf of theWorld Bank Executive Directorsof sub-Saharan Africa. TheConsortium will vigorouslycontinue its resourcemobilization efforts, to ensuresmooth operations of itsprogrammes in the period2005–2010.

Looking Ahead

One simple mark of AERC’smaturity is the implicit

recognition in the StrategicPlan for 2005–2010 that theConsortium has moved beyond“phases” and has evolved intoan institution. Over the comingplan period, it is expected thatthe pace of activities will beheightened and fine-tuned tomeet the growing demand forAERC programmes in a regionthat remains in dire need ofwell trained, locally basedprofessional economists tofacilitate sound economicmanagement. The Consortiumis poised to meet thischallenge with a wellstructured implementationstrategy backed by asupportive Board of Directorsand a continent-wide networkof experienced economists.

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Research programme

n the period 2004/05, the ResearchProgramme renewed its focus onbuilding capacity for policy-orientedeconomic research and promoting theretention and self-confidence ofprofessionals in the region. The

significant achievements during the year wererealized in the face of several constraints.Following the departure of key staff – theDirector of Research, Deputy Director ofResearch and Programme Administrator – over2003/04 the programme operated with new stafffor most of 2004/05. The position of Director ofResearch was not filled until October 2004. Thedevelopment of the Strategic Plan for 2005–2010thus presented a considerable challenge for theexisting staff complement. Other activities thatdrew on the already thin capacity were theevaluations of both the Research Programme andPhase V.

With the new Research Manager and ProgrammeAdministrator fully integrated and a Director ofResearch on board, the programme is ready toseize new opportunities as elaborated in the planfor the next five years. Action will continue tostreamline the pre-workshop review process toreduce the number of proposals rejected in thebiannual workshops. Reorganization of thematicgroups will be undertaken to rationalize andbalance demand across groups. Improvements inthe management of the research process willalso be implemented to speed up the completionof approved projects and production of finalreports. New collaborative research projects willbe initiated to replace those that are expectedto end by the 2005/06 fiscal year. Otheractivities will be implemented as outlined in theStrategic Plan for the period 2005–2010.

Thematic Research

Forty thematic research grants were awardedthis year. Measures were taken to improve

Ithe pre-proposal review process and verify theadequacy of revisions following reports ofexternal reviewers. As a result, there were fewerrejections of new and revised proposals in theMay and December 2004 workshops – only 21(30%) of the 70 proposals presented, a significantimprovement over the previous year. TheResearch Programme fielded a total of 80 activeprojects in the year, 26 by francophones, 24 byNigerians and 30 by other anglophones. Figure 1presents the geographic and thematicdistribution of research grants, while the list ofgrantees and their research topics is contained inAnnex A. One hundred and nineteen researcherswere involved in these projects including 13women.

Thematic Research WorkshopsThe year’s first biannual research workshop washeld in Nairobi from 29 May to 3 June. A total of56 presentations were made in four concurrentsessions. These included 32 new and revisedproposals, 9 interim and revised interim reports,and 15 final and revised final reports. In total, 74researchers took part, including 12 whoparticipated for the first time. There were 15women participants.

The second biannual research workshop, alsoheld in Nairobi on 4–9 December, saw a total of59 presentations consisting of 38 new and revisedproposals, 13 interim and revised interimreports, and 8 final and revised final reports.Eighty-seven researchers, including 21 firsttimers, participated in the workshop. Eightwomen took part.

Plenary SessionsThe twentieth AERC plenary session, whichformally opened the May biannual, highlightedSyntheses of Recent AERC Collaborative Research

Projects. Chaired by Mr. Nuwe Amanya Mushega,Executive Secretary, East African Community, the


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Research Programme

session offered an opportunityfor researchers to learn aboutcollaborative research relatedto their thematic areas in theirrespective countries andtherefore helped create a linkbetween the thematic andcollaborative researchmodalities. Four papers werepresented and discussed:• Africa and Trade, by Mr.

Ademola Oyejide, Universityof Ibadan, Nigeria. Thediscussant was Mr. Jean-PaulAzam, ARQADE, Universityof Toulouse I, France.

• Explaining African Economic

Growth: Emerging Lessons

from the Growth Project, byMr. Steve O’Connell,Swarthmore College, USA.The discussant was Mr. Jean-Claude Berthelemy,University of Paris I, France.

• Poverty in Africa: AERC

Research Results and the

Road Ahead, by Mr. ErikThorbecke, CornellUniversity, USA, and Mr.Germano Mwabu, Universityof Nairobi, Kenya. Thediscussant was Mr. Ali A. Ali,Arab Planning Institute,Kuwait.

• Managing the Transition from

Aid Dependence in Sub-

Saharan Africa, by Mr.Samuel M. Wangwe,Economic and SocialResearch Foundation (ESRF),Dar es Salaam, Tanzania. Thediscussant was Mr. MwangiKimenyi, Kenya Institute forPublic Policy Research andAnalysis (KIPPRA), Kenya.

The plenary session of theDecember workshop focused onthe United Kingdom Commissionfor Africa and featured paperson:• African Growth: Why a Big

Push Is Needed, by Mr. PaulCollier, Centre for the Studyof African Economies, OxfordUniversity, UK; discussed byMr. Humphrey Moshi,President’s Economic Unit,Zanzibar.

• Infrastructure, Regional

Integration and Growth in

SSA, by Mr. Benno Ndulu,The World Bank, USA;discussed by Mr. Nii Sowa,Centre for Economic PolicyAnalysis (CEPA), Ghana.

• Supporting Africa’s

Resurgence: The Role of the

Commission for Africa, by SirNicholas Stern, Second

Rese

arc

h

Biannual workshops are acostly, but highly effectiveinstrument for capacitybuilding.

-Research Programmeevaluation

Participants in a biannual workshop


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Research Programme

Permanent Secretary andHead of GovernmentEconomic Services, UKTreasury, and Director, Policyand Research, Commissionfor Africa. The discussantwas Mr. Ademola Oyejide,University of Ibadan, Nigeria.

The December plenary agendaalso included a roundtablediscussion on aspects of theCommission’s report. Thepanellists were Mr. AllechiM’Bet, President’s Advisory Unit,Côte d’Ivoire; Ms. Sicily Kariuki,Chief Executive, Fresh ProduceExporters Association, Kenya;Ms. Speciose Baransata, FirstVice Governor, Bank of Burundi;Mr. Ernest Aryeetey, Institute ofStatistical, Social and EconomicResearch, University of Ghana –Legon; and Mr. Mwangi Kimenyi,KIPPRA.

The components of the plenarysession in which the paperswere presented were chaired byMr. Harris Mule, Chancellor,Kenyatta University, Kenya; Mr.Joseph Kinyua, PermanentSecretary, Ministry of Finance,Kenya; and Mr. Gobind Nankani,Vice President-Africa, The WorldBank, USA. Mr. John Mitala,Head of Public Service andSecretary to the Cabinet,Uganda, chaired the roundtablediscussion.

Special SessionsThe May 2004 biannual researchworkshop included specialsessions on CorporateGovernance, by Mr. StijnClaessens, University ofAmsterdam; Writing andPresentation Skills for AERCResearchers, by Ms. AnkeHoeffler, University of Oxford;and The Impact of Rich CountryPolicies on Poverty: A GlobalView, by Mr. Gary McMahon, theGlobal Development Network(GDN). The session on CorporateGovernance was a logical

follow-up to the December 2003plenary on Governance andEconomic Development, whichgenerated a lot of interest. Thesession on Writing andPresentation Skills wasespecially useful in enhancingthe skills of AERC researchers,who often have good ideas butlack the writing andpresentation expertisenecessary to communicatethem effectively.

During the December biannualAERC researchers had anopportunity to discuss thereports of evaluations ofpoverty reduction strategypapers (PRSPs) and the PovertyReduction and Growth Facility(PRGF). The reports werepresented, respectively, by Mr.William G. Battaile, TaskManager, OperationsEvaluation Office of the WorldBank, and Mr. Steve Kayizzi-Mugerwa, Senior Economist,Independent Evaluation Officeof the IMF. The leaddiscussants of the two reportswere Mr. Jean-Paul Azam,University of Toulouse I,France, and Mr. ArneBigsten, GothenburgUniversity, Sweden. Thisspecial session was veryuseful for everybodypresent and benefitedboth the AERCresearchers and the twoorganizations. It mayalso encourage theWorld Bank and IMF toenhance theirinteractions and thedissemination of theirproducts in thecontinent, therebyimproving the PRSPprocesses.Discussants brought upcrucial issues forconsideration in thedesign of the twoprogrammes.

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Figure 1 Thematic research grants by group and geographical distribution

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CollaborativeResearch

Poverty, IncomeDistribution and LabourMarkets in SSA

The second phase of thisproject (Poverty II)

continued with the variousteams submitting their interimreports by 30 September 2004.Twinning arrangements enabledthe Ethiopia and Uganda teamsto visit Gothenburg University,while the Mozambique team washosted by University ofCopenhagen. Visa problems forthe second year runningprevented the Nigeria teamfrom visiting Cornell Universityin May 2004. The Guinea teamvisited in March 2005, while theKenya team visited in

September 2004. The Congoteam went to Université Laval inMay 2004 and the Burkina Fasoteam visited in January 2005.This followed resolution of visaproblems that had prevented theBurkina Faso team from visitingthe university in September2003. The Benin and Cameroonteams had visited Laval inOctober 2003.

The project Steering Committeemet during the December 2004biannual research workshop toreview progress of the projectand noted that it had beensatisfactory. The problem ofobtaining visas to visit twinninginstitutions in North Americaimplies some delay in finalizingthe project, and the likelycompletion date is now2006/07.

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How are we doing?All of the 110 participants whoresponded to the evaluations of theMay and December biannual researchworkshops rated the overall workshoporganization as either “excellent” or“good”, indicating a high level ofsatisfaction.

Presenters at a biannual researchworshop

Biannual research workshop participants listen keenly


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Explaining Africa’s GrowthPerformanceThis project is edging towardscompletion. An editors’meeting was held in Goelo,France, in August 2004. Themeeting determined the set ofdraft chapters that will formthe core of the analyticalvolume, agreed on thestructure and main themes ofthat volume, and developed adetailed plan for bringing thefour-volume Cambridge

Economic Survey of Africa tocompletion. A follow upeditors’ meeting convened inNairobi during the December2004 biannual researchworkshop.

The Steering Committee forthis project also met duringthe December biannual toreview progress. The Committeenoted that the researchactivities of the project havebeen completed and the casestudies were being synthesizedin preparation for disseminationactivities. A small academicworkshop was held at HarvardUniversity in March 2005; theformal dissemination conferenceis planned for later in 2005.

African Imperatives in theNew World Trade OrderThe final disseminationconference for this project washeld in Dar es Salaam, Tanzania,on 16–17 November 2004. Theparticipants, the majority ofwhom were policy makers fromthe region and stakeholders fromthe private sector, requestedthat the next phase of theproject focus on export supplyconstraints. Arrangements forpublication of the full versions ofthe country case studies fromthe project are under way in theform of national level books inthe cases of Cameroon, Ghana,Kenya, Nigeria and Uganda.

Special Workshopon Foreign DirectInvestment

This workshop isco-sponsored by AERC and

the IMF. Based in part on inputfrom the project coordinator,the Secretariat commissionedtwo framework papers andeight country case studies(Botswana, Cameroon, Côted’Ivoire, Ghana, Kenya,Nigeria, South Africa andUganda). The frameworkpapers together with thecountry case studies on Côted’Ivoire and Kenya werefinanced by the IMF.A research workshop todiscuss interim reports ofthese studies, held in Nairobion 2–3 December 2004,identified areas of furtherresearch on the links amongFDI, growth and povertyreduction.

Other Activities

Technical WorkshopA technical workshop on TimeSeries Econometrics was heldin Nairobi from 18 Septemberto 1 October 2004. Of the 45researchers who expressedinterest in participating, theSecretariat was able to invite15. They represented nineAfrican countries, including fivefrancophone. Two were women.Mr. Boo Sjöö from theUniversity of Skovde, Sweden,conducted the workshop.

Evaluation of the ResearchProgrammeThe Programme Committeeselected Marc Wuyts from theInstitute of Social Studies atThe Hague, the Netherlands,to undertake this review,which intended to assess boththe progress of the programme

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One of the most noticeable andcommendable achievements ofAERC has been its ability to createa network – or, better still, acommunity – of African economicresearchers across the continent,including across the languagedivide.

- Research Programme evaluation

A proven track record in bothcapacity building and researchprovides AERC with credibility.Increasingly, this experience andreputation is being drawn upon,both within African countries and ininternational forums.



ANNUAL REPORT14

Research Programme

in meeting its objectives andthe current realities of theeconomic and researchenvironment in the African sub-continent.

The evaluation commenced inOctober 2003 with desk researchat the AERC Secretariat andsubsequently involvedinterviews with researchers atthe Biannual Research Workshopand Programme Committeemembers in November–December. Prof. Wuyts then

embarked on an extensiveprocess of consultation withstakeholders and networkmembers in January 2004 andparticipated as an observer atthe Sixth Senior Policy Seminarin Kampala, Uganda, in March2004. He presented a draftreport of the evaluation at theJune 2004 ProgrammeCommittee meeting. The finalreport of the evaluation wassubmitted in July 2004 and itsrecommendations haveinformed the preparation of theAERC Strategic Plan for 2005–2010.

AERC Research Fellows andAssociatesThe Programme Committeereviewed and approved thecriteria for appointment intothe honorary categories of AERCResearch Fellows and AERCResearch Associates. Thoseeligible for appointment asResearch Fellows are to beindividuals associated with AERCwho are resident in Africa andhave completed two thematicresearch cycles and/or have anarticle listed in ECONLIT since1988 when AERC was founded.Research Associates will bethose who have been associatedwith AERC, are non-resident inAfrica and have at least twoarticles listed in ECONLIT since1988. The Secretariat hadprepared a preliminary list ofmore than 150 potentialResearch Fellows and more than20 potential ResearchAssociates.

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AERC is very fortunate to be ableto count on the commitment interms of time and energy of itshighly dedicated and competentgroup of resource persons forwhich it pays only a token cost.

- Research Programme evaluation

Visiting Scholars Programmes

The AERC/IMF Visiting Scholars ProgrammeThirteen researchers were selected to visit the IMF during the fiscalyear. This programme assists AERC researchers to access the facilitiesand staff of the Fund, thereby facilitating the strengthening andretention of local capacity for research and policy analysis in sub-Saharan African countries. Seven of the researchers had visited byDecember 2004. These were Godwin E. Akpan (Nigeria), Michael Atingi-Ego (Uganda), Nathan Okurut (Uganda), Godwin Akpokodje (Nigeria),Francis Mwega (Kenya), Allechi M’Bet (Côte d’Ivoire) and Ms. AdeolaCarim (Nigeria). Mr. Ayalande Babatunde and Ms. Oluwatoyin Chete(Nigeria) postponed their visit due to extenuating circumstances. Fourothers —Adeola Adenikinju (Nigeria), Jane Kabubo-Mariara (Kenya),Lloyd Ahamefule Amaghionyeodiwe (Nigeria) and Olomide StevenAyodele (Nigeria) — were selected during the December 2004 biannualworkshop and were expected to visit before the end of the Fund’s fiscalyear on 30 April 2005. With the year’s cadre, more than 120 AERCresearchers have benefited from the programme since it started in1994.

The World Bank Visiting Scholars ProgrammeThis programme caters for those researchers who are not eligible toparticipate in the IMF programme by virtue of their areas of study. TheBank, in collaboration with AERC, selects African researchers workingon proposals that are of interest to its work. Applicants should submit a2–3 page outline of the proposed work to be undertaken at the WorldBank as well as a copy of their curriculum vitae. To be eligible, theapplicant should have either a pertinent research proposal in the AERCpreliminary review process or an ongoing project.

Six participants were selected to participate in the programme in 2004:Ms. Folasade L. Ayonrinde (Nigeria), Mr. Kolawole W. Olayiwola(Nigeria), Ms. Abibatou Diop-Boaré (Côte d’Ivoire), Mr. Ephraim W.T.Chirwa (Malawi), Mr. François B. Aka (Côte d’Ivoire) and Ms. OlufunkeAlaba (Nigeria). All successfully completed their visits except for Mr.Chirwa who could not visit the Bank at the appointed time because ofother engagements.

AERC Institutional Attachment ProgrammeAERC also offers its own short-term institutional attachment grants forAfrican scholars to write up research results or develop proposals fornew research. For this fiscal year, three grants were offered: to Mr.Milton Iyoha (Nigeria) and Mr. Eugene Kouassi (Côte d’Ivoire) to visitthe University of Ibadan, Nigeria, and to Mr. Arséne Konan Kouadio(Côte d’Ivoire) to visit University of Toulouse I, France.


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ommunications related activitiescontributed to the Consortium’smandate in a variety of ways duringthe fiscal year 2004/05, throughelectronic outreach, publications,

information resources and other means. Theseare summarized in the following paragraphs.

Strategy Development

The revised and costed CommunicationsStrategy was presented to the Executive

Committee in July 2004 and approved forimplementation. The strategy is a Consortium-wide effort that will facilitate the impact ofAERC training and research products on economicpolicy formulation in Africa. It calls for print,electronic and event-based disseminationtechniques to convey the products to AERC’saudiences and includes a strong emphasis onelectronic communication. The CommunicationsStrategy is reflected across the board in AERC’sStrategic Plan for 2005–2010.

Website

AERC’s now fully revamped website hascontinued to earn praise since its formal

launch during the May 2004 Biannual ResearchWorkshop. The posting of AERC publications,announcements of events, notifications andother relevant information to the website is acontinuous process. There are 231 AERCpublications available online and the numbercontinues to grow. Table 1 delineates the numberand type of publications available online, whileFigure 2 shows the trends in visits to the AERCwebsite.

AERC was also contracted to run the GDNetAfrica window for six months on a trial basisunder contract with the Global DevelopmentNetwork. GDN staff stationed at the Institute of

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Communications

Development Studies in Brighton, UK, visited theSecretariat and conducted a two-day training forAERC staff on the management of the window.

Information ResourcesService/Library

Software for computerizing the AERC Librarywas identified and acquired during the

period and the library automation is now inprocess. The automation will support nearly alllibrary systems and processes at the AERCSecretariat and JFE libraries, from managementand circulation to stock-taking, borrower/patronfile systems, and electronic file and websitecataloguing. The system will enable the library’scatalogue to be accessed online through theAERC website. This amounts to a radical changethat will yield an electronic information servicecentre and intelligence unit for Consortiummembers and other stakeholders.

Identification and analysis of various onlinejournal subscription services was completed inthe period and Journal Storage (JSTOR), anonline multidisciplinary journal storage facility,was selected. The areas considered here are theBusiness Collections, which builds on theeconomics and finance titles. Major onlinejournal networks contain a wide range ofmultidisciplinary collections and AERC hascommenced subscribing to discipline-specificcollections that will be of value to AERC networkmembers, including researchers, CPP and CMAPstudents, and others.

Publications

Research PapersNine new Research Papers were published duringthe year, while 24 reports entered the externalreview process prior to publication. There are 78


ANNUAL REPORT16

research reports in thepipeline, of which 37 are withauthors for final correctionsand revisions. Another threeare in final pre-press stages.The division significantlyreduced the turn around timein the publication process ofthe papers, and the pipelinewas purged last year to removepapers that had lingered forlong awaiting action by theauthors. The division continuesto streamline the pipeline toensure the flow is up to date.Bulk mailings are doneannually to distribute copies oflatest publications touniversity libraries, researchinstitutions and other selectednetwork members. Papers arealso posted to the website asthey are published.

Special PapersMarc Wuyts’ report ofthe evaluation of theResearch Phrogrammewas edited forpublication as thelatest entry in thisseries, bringing thetotal to 42. AERCsenior managementidentifies selectpapers for the SpecialPapers designation.

Collaborative ProjectsThe first volume of thecollaborative researchcollection comprising theframework papers for Africa

and the World Trading System

was published by Africa WorldPress after some delay. Thesecond volume, which containsthe country case studies, andthe third, which containssynthesis papers as well as theset of papers from the GenevaWorld Trade Organization

(WTO) Trade Negotiations

Seminar, will follow in thethird and fourth quarters ofthe coming year.

Promotional MaterialsThe French translation of thenew AERC brochure waspublished; distribution beganduring the December 2004biannual research workshopand is ongoing. AERC alsocommissioned and suppliedtext and graphics for an articleto run in the magazine African

Decisions, a publication thatreaches economic leadersacross Africa, Europe andNorth America.

Other PublicationsThese are not among thetraditional AERC publications

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Figure 2: Website hits, April 2004 – March 2005

Month Hits % of theyear total

Apr 2004 95,890 6.8May 2004 110,850 7.8Jun 2004 108,850 7.7Jul 2004 120,000 8.5Aug 2004 135,256 9.5Sep 2004 136,000 9.6Oct 2004 115,000 8.1Nov 2004 139,000 9.8Dec 2004 119,000 8.4Jan 2005 110,850 7.8Feb 2005 108,850 7.7Mar 2005 120,000 8.5Total 1,419,546 100.0Monthly average 118,295.5

Table 1: AERC publications available online

Publication No.Research Papers 65Special Papers 8Executive Summaries 40Trade papers 40Financial markets and monetary policies 10Poverty framework Working Papers 10Growth project Working Papers 4Other collaborative research papersand reports 31Senior policy seminar reports 3AERC Newsletters 4Research News 8Brochures 2Others 8


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series, but are key publicationsfor the Consortium:• A comprehensiveCommunications Handbookdescribing the processes andprocedures of communicationsproducts and activities wascompleted and circulated forinternal review. The book is aguide to AERC’s policy onpublication, dissemination,electronic outreach andpreparation of internaldocumentation.• The Publications Variable,also known simply as the AERCStyle Guide, was substantiallyrevised and will be printed indue course. It will bedistributed widely toresearchers, students andother network members whoprepare papers and reports forAERC. An expanded versionwill be posted to the AERCintranet for in-housereference.• A glossary of terms oftenused within the Consortiumwas developed and will be puton the intranet for easy accessby members of staff to helpguide them through thesometimes arcane vocabularythey encounter on a day-to-day basis in their work withAERC.

Senior Policy SeminarsSenior policy seminars remainone of the most visible andimportant of the Consortium’sefforts to enhance outreach topolicy makers. Seven suchseminars have been convenedto date, with Senior PolicySeminar VII held in March 2005in Cape Town, South Africa, onthe theme Growth, Poverty

and Institutions. A total of 33participants consisting ofministers, central bankgovernors, permanentsecretaries, and other seniorAfrican financial policy makersand individuals from the privatesector and academia attended.

The seminar featured eightpapers on the theme:• “Growth and PovertyReduction: Is there a MissingLink?” by Mr. Ali. G. Ali,Economic Advisor, Arab PlanningInstitute, Kuwait.• “Growth, Income Inequalityand Poverty in Africa”, by Mr.Ibrahim Elbadawi, LeadEconomist and Manager,Regional Programme forEnterprise Development, WorldBank, Washington D.C., USA.(Presented by Mr. Gary Milante,World Bank)•“Institutions of Governance,Power Diffusion, and Pro-PoorGrowth and Policies”, by

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New AERC Publications for 2004/2005

External Publication

• Africa and the World Trading System: Volume I, edited by T.A.

Oyejide and W. Lyakurwa (Africa World Press)

AERC Research Papers148 Analysis of the Cost of Infrastructure Failures in Developing

Countries: The Case of the Electricity Sector in Nigeria, byAdeola Adenikinju

147 The Determinants of the Real Exchange Rate in Zambia, byKombe O. Mungule

146 An Evaluation of the Viability of a Single Monetary Zone inECOWAS, by Olawale Ogunkola

145 A Positive and Normative Analysis of Bank Supervision inNigeria, by A. Soyibo, S.O. Alashi and M.K. Ahmad

144 The Cost of Aid Tying to Ghana, by Barfour Osei143 The Determinants of Inflation in South Africa: An Economic

Analysis, by O.A. Akinboade, E.W. Niedermeier and F. Siebrits142 Financial Deepening, Economic Growth and Development:

Evidence from Selected Sub-Saharan African Countries, byJ.E. Ndebbio

141 Dynamic Inter-Links between the Exchange Rate, Price Leveland Terms of Trade in a Managed Floating Exchange RateSystem: The Case of Ghana, by V.J. Bhasin

140 Uganda’s Equilibrium Real Exchange Rate and its Implicationsfor Non-Traditional Export Performance, by M. Atingi-Ego andR.K. Sebudde

AERC Special Papers42 The Report of the Evaluation of the Research Programme,

by Marc Wuyts

Other AERC Publications

• Financing Pro-Poor Growth: AERC Senior Policy Seminar VI,

Kampala, Uganda, 2–4 March 2004 – The Seminar Report, byMatthew Martin, Joseph Karugia and Margaret Crouch

• Financing Pro-Poor Growth: AERC Senior Policy Seminar VI,Kampala, Uganda, 2–4 March 2004 – The Seminar Papers

The quality of [AERC]research has been maintainedby subjecting the publicationof research output to aprocess of external peerreview.

- Research Programmeevaluation


ANNUAL REPORT18

Mr. Mwangi Kimenyi, Universityof Connecticut, USA.• “Human Capital Investment,Growth and Poverty Reduction”,by Mr. Germano Mwabu, Head,Department of Economics,University of Nairobi, Kenya.• “Institutions and Policies forPro-Poor Integration into theGlobal Economy: A Perspectivefor Sub-Saharan Africa”, by Ms.Machiko Nissanke, Professor ofEconomics, SOAS, University ofLondon, UK.• “Agriculture, Labour Marketsand Pro-Poor Growth”, by Mr.Ade Olomola, Agriculture andRural Development Department,NISER, Ibadan, Nigeria.•“Regional and GenderDimensions of Poverty in sub-Saharan Africa and Implicationsfor Poverty ReductionStrategies”, by Ms. KasseyGarba, Senior Lecturer,Department of EconomicsUniversity of Ibadan, Nigeria.(Presented by Mr. Abdul GaniyuGarba, Ahmadu Bello University,Zaria, Nigeria).

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• “The Role of the FinancialSector in Securing Pro-PoorGrowth”, by Mr. ErnestAryeetey, Director, ISSER,Ghana.

The papers elicited animateddebate and were muchappreciated by the seminarparticipants, who concluded thediscussions with a brief outlineon possibilities for futureresearch areas to be worked onby policy makers andresearchers. The report ofSenior Policy Seminar VI wasalso distributed at the event,while a newspaper supplementinformed readers about AERC,the seminars and AERC links inSouth Africa.

Participation in [Senior PolicySeminars] has created anawareness of the need for an Africa-wide network of policy makers andresearch economists to organizeresearch projects, to nominatepersons to participate in such joint-ventures, and to establish focalpoints to maintain dialogue at bothnational and international levels.


Working groups at the March 2005 SeniorPolicy Seminar


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s the Training Programme matures,synergies are growing between itand the Research Programme, andbetween the Collaborative PhDProgramme (CPP) and the

Collaborative Master’s Programme (CMAP).Important to the latter was the Joint Facility forElectives (JFE), which in 2004 accommodatedboth CMAP and CPP students for the first time.This endeavour presented a managerial challengein the coordination of the different cohorts ofstudents and different profiles of trainers(including a few from the African diaspora). Theactivity brought together 131 CMAP and 25 CPPstudents, along with a combined teaching teamof about 40 lecturers. The training facility wasreserved for exclusive use by the students,thereby providing a favourable atmosphere formaximum concentration, synergy and collegialitybetween the master’s and PhD students. Thecombined group is perhaps the bestconcentration of graduate training in economicsin SSA today.

Besides the JFE, a combined subject specialistworkshop for both CMAP and CPP was held inJune 2004 with the aim of reviewing electivecourses on demand at the JFE, particularlyPublic Finance for CMAP and Industrial Economicsand Labour Economics for both the CMAP andCPP. The subject specialist workshop marked there-entry of Industrial Economics to the CMAPelective courses after a five-year absence owingto lack of demand.

The introduction of the CPP also created theneed to strengthen the overall grantsmanagement system, especially with recipientuniversities. A review of the requirements wasundertaken with the objective of sourcing forappropriate technical solutions.

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Training programme

Despite these successes, the Training Programmeexperienced challenges in the period 2004/05,particularly the difficulties in attracting qualityteachers for the JFE, given the opportunity costfor such individuals. This has been the case forCMAP for some time, but is also true for CPP,because of its longer time spans and intensity. Toaddress this, despite the underlying costimplications, an elective course at the CPP JFEhas to be taught by three lecturers over 16weeks. Some universities also faced constraintsin sourcing lecturers to teach core courses; suchconstraints are likely to persist until theprogramme generates enough graduates to boostthe teaching of the courses in future. As thenumber of CPP students continues to grow, it isanticipated that the supervision of PhD theseswill become difficult as well, particularly forsubjects such as Health Economics and FinancialEconomics in which there are not many senioracademicians teaching and researching on thecontinent.

Collaborative Master’sProgramme (CMAP)

At the start of Phase V in the year 2000, theTraining Programme targeted an intake of

128 CMAP students per year for the first threeyears of the phase and 140 for the last twoyears, thus 644 CMAP graduates in total. A quickanalysis reveals that CMAP enrolment reachedthe 596 mark or 92.5%, of which 542 studentsparticipated in the JFE. Even though the targetsof the phase were not fully attained, theperformance on the whole has been veryencouraging. Had the universities participating inCMAP maintained a constant admission patternduring the period 2000 to 2005, the targets mighthave been met: The year 2004 saw 142 studentsenrolled in CMAP universities, but over the


ANNUAL REPORT20

course of Phase V only theUniversity of Addis Ababadisplayed steady expansion inits admissions.

Joint Facility for Electives2004The eleventh JFE of the CMAPstarted on 28 June 2004 andended on 3 October. Inattendance were 123 studentsfrom the seven Category B(these are 7 universities inAnglophone Africa capable ofteaching a Masters degree)universities and an additionaleight from the University ofPretoria for a total of 131students. The Pretoria studentswere participating at the JFEon a pilot basis and weresponsored by their university.In all, the studentsrepresented 15 Africannationalities. Women’sparticipation improved from13% in 2003 to 21% for 2004.The overall participation trendhas remained upward over theyears, bringing the number ofthose supported through CMAPto a total of 1,203 by 2004.

Of particularinterest was thefirst-timeparticipation oftwo previouslyunder-representedcountries in thenetwork, Sudanand DemocraticRepublic ofCongo. Ethiopiacontinued todominate interms of numbersfollowing thedoubling ofenrolment ratesat thedepartment aspart ofgovernmentpolicy. Also worth

noting is the unprecedentedhigh enrolment of studentsfrom two other universities,Ghana (23) and Nairobi (22).University of Addis Ababa hasdeveloped a collaboration withthe University of Pretoria thatfacilitates a few students toattend summer school atPretoria and take an electivein Environmental Economics,as not all students can beaccommodated at the JFE.This is a very positive moveand will be encouraged forother universities.

Securing additionalscholarships remains achallenge for both AERC andthe affected universities. Table2 shows the 2004 JFEadmissions distributed acrosscountries. The universities areallowed a maximum of 22students to the JFE. Thedominant countries are Kenya,Ghana and Ethiopia, whichtogether take up over 50% ofthe JFE CMAP population.

Figures 3 and 4 delineate theenrolment of CMAP JFEstudents by gender anduniversity, while Table 3 showsthat few universities havesignificant femaleparticipation, with theUniversity of Ghana recordingthe lowest proportion ofwomen students. Generally,the percentage of womenstudents at the JFE is just over21%. Excluding the Universityof Pretoria students, thepercentage stands at 19.5%,the long-run AERC averageaccording to the Phase Vevaluation.

MA ScholarshipsThese scholarships supportqualified students fromCategory A (there are 15category A universities thatsend their students to category

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The capacity built to date hasdemonstrated an ability toaddress policy issues and tointeract with the policy processin African economies.


Table 2: JFE 2004 – Student enrolment by country

Country Students Country StudentsCongo 1 Nigeria 2Ethiopia 21 Sierra Leone 2Ghana 21 South Africa 5Kenya 24 Sudan 1Lesotho 1 Tanzania 19Liberia 1 Uganda 4Malawi 6 Zimbabwe 19Botswana 5Total number of students 131

Table 3: JFE 2004 student enrolment by university and gender

University M F University totalAddis Ababa 18 3 21Botswana 4 6 10Dar es Salaam 16 3 19Ghana 23 1 24Malawi 7 1 8Nairobi 16 5 21Pretoria 4 4 8Zimbabwe 15 5 20Gender total 103 28 131


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B as they do not haveadequate capacity to teach theCMAP). These universities sendtheir students to study in aCategory B institution and inparticular target staffdevelopment personnel andwomen applicants. A stipend isprovided to cover airfare, areasonable living allowance,books and other instructionalmaterials. This year theprogramme awarded 17 newscholarships to students joiningthe first year, while anadditional 13 scholarships wererenewed for those continuingto the second year of study. InNovember 2004, theSecretariat signed the 2004Service Agreements withCategory B universities tofacilitate the settlement of theMA scholarship recipients forthe 2004/05 academic year.

Support to CMAPUniversitiesThe programme renewedoperating grants for Category Buniversities for 2003/04 and2004/05. In addition, studentsin the second year receivedthesis preparation grants tosupport the completion of theirthesis research andpresentation. Category Ainstitutions received grants tofacilitate the procurement ofcomputer equipment andreading materials, renewal ofjournal subscriptions, andpurchase of relevant andup-to-date books.

Support to PhD ThesisResearch and PhDFellowshipsThe Programme Committeeapproved grant awards for 14candidates under this modalityduring the year, bringing thetotal since 1994 to 202individuals. The programmealso continues to support PhDfellows already in the pipeline,

which currently stands at 32students on full scholarship.One full and threesupplementary fellowshipswere also renewed during theperiod, and the ProgrammeCommittee approved one newpartial fellowship in December2004. The PhD Fellowshipsupport has benefited a totalof 48 doctoral students.

Monitoring andEvaluationThe first of a number ofplanned monitoring visits toCategory B universities wasconducted in June 2004. Thisone targeted the universitiesof Ghana-Legon and AddisAbaba. The main objective ofthe mission, conducted by theCMAP Manager and ProgrammeAdministrator, was to providesupport and understanding ofthe process and procedures forgrant disbursement and toenhance capacity of theuniversities to utilize, manageand account for operating,thesis andinstitutional grants.The mission alsosought to verify therelationship betweentransactions andactivities in order toensure that statedobjectives areachieved inaccordance with theterms of the contract.Interaction withprogrammebeneficiaries(students) andimplementers(faculty, universityofficials) was animportant feature aswell, in order toenhance workingrelationships andencourage exchangeon ways to improvethe programme. When

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Figure 3:CMAP 2004 JFE students by gender

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all Category B institutions havebeen covered, the missions willmove on to those inCategory A.

Activities of the CMAPAcademic BoardThe CMAP Academic Boardheld its two statutory meetingsduring the year – in Nairobi inMay and in Swaziland inNovember. The May meetingapproved the faculty for the2004 Joint Facility for Electives(JFE) and agreed on the tenelective courses to be offered.The Board also approved theparticipation at the JFE ofstudents from the University ofPretoria, on a pilot basis, andreceived updates on progressin implementing and managingprogramme activities at thevarious departments. Newboard members were alsoapproved and elections heldfor the five subcommitteesfollowing expiration of theterm for all members. Key onthe agenda of the Novembermeeting was the ProgrammeEvaluation Committee’s reporton the performance ofstudents at the JFE 2004,approval of the examinationresults, discussions on thePhase V findings and thedirection of the next planningcycle of the programme. TheBoard’s subcommittees werealso active during the year.

Review of Elective CoursesOn the basis of externalreviewers’ and examiners’comments, the AcademicBoard recommended therevision of three electives –Labour Economics, IndustrialEconomics and Public Finance –with emphasis on overhaulingLabour Economics. A subjectspecialist workshop convenedon 22–24 June to review thethree electives. The workshopwas held concurrently with

similar reviews for theCollaborative PhD Programme,thus maximizing synergy. Thedeliberations and subsequentreport from the workshop wereimplemented immediatelythereafter by the lecturersteaching the first session ofthe CMAP JFE 2004.

Outreach MissionsThe Director of Training, theCMAP Manager and the CPPManager visited the Inter-university Council for EastAfrica Secretariat in Kampalain August to brief theExecutive Secretary on AERCactivities and discusspossibilities for collaborationand networking, especially inthe exchange of informationand expertise. This followedadvertisements for PhDscholarships in economics forEast Africans in East Africanuniversities that would besupported by the East AfricanDevelopment Bank.

In addition, the Director ofTraining and the CMAPManager visited the nationaluniversities of Burundi andRwanda to explore how thetwo institutions, both victimsof the debilitating effects ofcivil strife, could be assisted tore-build their capacities in theeconomics discipline. Themission also held discussionswith high ranking governmentofficials in Rwanda with theobjective of fast-tracking thecollaboration process. Bothuniversities and other relatedinstitutions that were visitedindicated a high sense ofappreciation for the initiativeto re-integrate the twocountries into the East Africaregion. It is expected thatthese universities will soon jointhe CMAP network.

Training Programme

All indications are that AERC hasdone a respectable job inadministering the programme,providing needed inputs andmonitoring the quality of outputs.As the CPP comes of age, it willboost staff levels, enhance thequality of CMAP graduates andbenefit undergraduate training inAfrican universities.

- CMAP evaluation


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Midterm PerformanceReviewAs CMAP approached thehalfway point in its third phaseas an ACBF project, theFoundation conducted amidterm review of theprogramme during September2004. Key considerations of theassessment were the validityof the premises andassumptions of the design ofCMAP Phase III; project outputsand their relevance;bottlenecks toimplementation; andrecommendations forimproving the effectivenessand impact of the project.

Among other things, theevaluation concluded thatCMAP has been largelysuccessful, and that its raisond’être remains valid todaysince the need for high qualityeconomists capable ofundertaking much neededpolicy analysis in governmentministries continues to be veryhigh in many African countries.The evaluation found that thepositive externalities obtainedfrom the JFE include the gainsfrom networking amongstudents and lecturers, thebenefits from geographical andcultural cross-fertilization, andeconomies of scale.

The CollaborativePhD Programme(CPP)

There are currently 70students on the CPP. Of

this number, 60 students(85.9%) are sponsored by AERC,one (1.4%) is partiallysponsored by AERC and nine(12.7%) by non-AERCresources. The CPP has alsoprogressivelyexpanded the diversification instudent admissions as thepioneer students largely

represented the countrieswhere the degree-awardinguniversities are located. Bycontrast, they now span 18nationalities/countries: 22(31.40%) come from EasternAfrica, 15 (21.4%) fromanglophone West Africa, 18(25.7%) from francophoneAfrica and 15 (21.4%) fromSouthern Africa. The majorityof the privately sponsoredstudents are from the EasternAfrican region, being four ofthe nine admitted to theprogramme. Just over aquarter of all the students arewomen.

Finally, one way to assess thequality of CPP students at thisearly stage is how they seek tocompete internationally, as theresults of such a competitionmay reflect innovativeness andself-drive on the part of thestudent, on the one hand, andthat the CPP is admitting andtraining the best in the region,on the other. A case in point isthe 2004 African DevelopmentBank Essay Competition, whichawarded the top prize to a CPPstudent, Mr. Sheshangai Kaniki,a Tanzanian national at theUniversity of Cape Town.

Progress to DateThe 18 pioneer students havereached the point of preparingand implementing their PhDthesis proposals and areprogressing satisfactorily. Thesecond cohort of 25 studentscompleted elective courses atthe CPP JFE in October 2004,and the third cohort iscurrently taking core coursesat the four host degree-awarding universities (CapeTown, Dar es Salaam, Ibadanand Yaoundé II). The thirdcohort consists of 27 students –22 sponsored fully by AERC,one Mozambican partiallysponsored by AERC at the

Training Programme


ANNUAL REPORT24

University of theWitwatersrand, two sponsoredby the University of Malawi,one sponsored by theUniversity of Botswana, andone sponsored by MakerereUniversity, Uganda. The twoMalawians and one Ugandansponsored outside AERCresources are at the Universityof Dar es Salaam, while theMtswana is at University ofCape Town. Figure 5 shows theCPP students by region.

To enhance the visibility andcreate awareness of theprogramme, a page on theAERC web site(www.aercafrica.org) providespertinent information aboutthe participating universities.Other new information on theprogramme is also accessiblethrough the web page, forexample, advertisements forvisiting lectureships and foradmissions in CPP.

Student AdmissionsThe demand for CPP isgrowing, with nine applicants –four in 2003 and five in 2004 –sourcing funding from outsideAERC. It is also encouraging tonote that universities in theregion (Botswana, Makerereand Malawi), organizations(including the GermanAcademic Exchange Service –DAAD) and central banks(Uganda) are sponsoringstudents to the programme.

This trend will be encouragedby AERC and the degree-awarding universities.

Such external support isnecessary because the demandfor CPP places to date is muchhigher than the availablescholarships from AERC. Sincethe academic year 2002/03,the number of applicants isover 80 annually, against the21 scholarships AERC is able toprovide for the wholecontinent – three scholarshipsfor each of the hostuniversities and twoscholarships for the remainingdegree-awarding universities,with the exception of theUniversity of Cocody, which isalso allocated threescholarships per year. In orderto target the best with theavailable resources, all theparticipating universities arerequired to advertise widelythe availability of thescholarships and the selectioncriteria. Modalities to linkthese advertisements with theAERC website are beingworked out.

Teaching of Core Coursesat Host UniversitiesThe teaching of core courses atthe host degree awardinguniversities has beencollaborative through a systemof visiting lecturers/professors.The host and non-host degree-awarding universities in aregion are encouraged to havea joint teaching plan, so thatthe core courses are not taughtby lecturers/professors fromthe host universities alone, butfrom across the region. Thishas led to the use of the bestexperts in various areas inteaching the courses, thusreaping comparativeadvantages across participatinguniversities and regions. Inaddition, lecturers and

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Figure 5: CPP student distribution by region


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professors from outside theregion have also been invitedto participate in the teachingwhere capacity has beenconstrained.

Curriculum DevelopmentA subject specialist workshopwas held in Nairobi on 23–25June 2004 to develop courseoutlines and reading lists fortwo additional CPP electivefields, Industrial Economicsand Labour Economics. As astarting point the workshopused draft materials that hadbeen prepared earlier bycontracted experts in thefields. The course outlinesdeveloped by the workshopwere approved by the PhDAcademic Board on 3December.

The CPP JFE 2004The JFE for the 2003 CPPcohort started on 5 July 2004,with 25 students – 21sponsored by AERC and foursponsored outside AERCresources. The JFE wassuccessfully concluded on 1November 2004. Table 4 showsthe enrolment data for theseven elective fields classifiedby course and degree-awardinguniversity.

The CPP Academic BoardThe CPP Academic Board holdsits meetings at the eightdegree-awarding universitieson a rotational basis. This yearit met at Yaoundé II in May and

at Nairobi in December. Duringthe May meeting the Boardvisited the university, met withthe CPP students, and touredthe teaching and researchfacilities of the Faculty ofEconomics and Management.Also on the Board’s agendawere the comprehensiveexaminations for the core andelective courses, progress onteaching of the core courses athost universities, andpreparations for JFE 2004. TheDecember meeting discussedthe examination results for thecore and elective courses,progress on teaching of thecore courses, approval of thecurricula for IndustrialEconomics and LabourEconomics, and a report on the2004 JFE.

The PhD Thesis WorkshopModalityThe inaugural PhD thesisproposal workshop was held inNairobi from 5 to 8 December2004, immediately after thebiannual research workshop. Atthe workshop, the 18 pioneerstudents presented theirproposals in the presence oftheir thesis supervisors,resource persons and AERCresearchers.

The CPP students are requiredto present work related totheir theses at threeworkshops: one to reviewthesis proposals (the PhD thesisproposal workshop), one to

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Table 4: CPP enrolment at the 2004 JFE by university and elective field

Elective courses Benin Cape Cocody Dar es Ibadan Nairobi Yaoundé II Wits TotalTown Salaam

Agricultural Economics 1 - 2 - 1 - - 4Development Economics 1 - - 6 1 - - - 8Econometrics - 3 3 - 1 - 2 1 10Environmental Economics - - 1 4 - - 1 - 6Financial Economics 1 - - 2 - - 1 2 6International Economics - 3 - 4 1 - 1 1 10Monetary Economics 1 2 - - 2 - 1 - 6


ANNUAL REPORT26

review work in progress andanother to review draft theses.Each workshop is attended bythe students, their supervisorsand resource persons in variousareas. It was originally plannedthat the thesis proposalworkshops would be held back-to-back with the biannualresearch workshop and thiswas piloted in December 2004.Not only did the students gainfrom comments by supervisorsand resource persons on theirpresentations, but they alsobenefited from the otherparticipants at the biannual.Although this is a significantaspect of the synergy betweenTraining and Research, holdingthe workshops back-to-backmay not be possible as theprogramme matures becauseof the increasing numbers –more than 70 students atvarious stages, more than 70supervisors and over 10resource persons at thesisworkshops (eventually totallingnearly 200 participants –equivalent to an entirebiannual function). The PhDAcademic Board together withthe Secretariat will developthe PhD thesis workshopmodality to maximize thesynergy between Training andResearch withoutoverwhelming AERC resourcepersons and the biannualresearch workshop.

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ChallengesThe CPP has taken off quitesmoothly and successfully. It isstill in its fledgling stage,however, and considerableeffort is needed to consolidategains and streamline activities.CPP will continue to encouragemore students to join theprogramme on self-sponsorship– that is on sponsorship outsideAERC resources. This wouldcontribute considerablytowards attaining sustainabilityof the programme beyond the15 years of its anticipatedlifespan under currentarrangements. Other fundraising efforts will need to beenhanced to see the progra-mme through its lifetime andbeyond.

Continued strengthening ofteaching and research facilitiesat the participatinguniversities is essential. Thiswill involve constantlyreviewing the lists of resourcepersons to ensure theinvolvement of the best humanresources available andmounting courses as the needarises for re-tooling teacherson the programme. It is alsonecessary to encourage high-calibre and experiencedacademicians to continueparticipating in programmeactivities. Targeting membersof the African diaspora andtheir institutions for support athuman resource/expertiselevel will form part of thisinitiative.

The curriculum will becontinuously reviewed toensure that all courses arepitched at the frontier ofknowledge and do not lose the“African flavour”. Women inparticular and individuals fromunder-represented countriesand regions will be encouragedto join the programme asstudents and resource persons.

JFE students in a briefing session


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Management &Administration

uring 2004/05, Management waspreoccupied with four majoractivities: settling into theSecretariat’s new offices;completing the evaluation of Phase

V; developing the Strategic Plan for 2005–2010,and facilitating routine external and specialaudits of the Consortium’s finances. Otheractivities included the recruitment of a Directorof Research, the filling of several vacancies andthe further development of the Consortium’sperformance indicators. The Secretariat alsocompleted the job analysis exercise started in2003/04, including revisions of job descriptionsin response to recommendations resulting fromthe analysis.

Human Resource Capacity

The second phase of the search for a Directorof Research was completed during the first

half of the year. A search committee chaired bythe Vice Chair of the AERC Board, KerfallaYansane, and comprising members of the Boardand the Programme Committee interviewed fourcandidates in London in April 2004. David OlusanyaAjakaiye, Director General of the Nigerian Institutefor Social and Economic Research (NISER) since1999, was selected and accepted his appointmentas the Director of Research effective 1 October2004. Prof. Ajakaiye, a member of the AERCnetwork and former researcher, comes with awealth of regional and international experienceand is widely published. His appointmentcompletes the vacancies in international positions,bringing the reorganization of the AERCSecretariat, which began in 2002, to a successfulclose.

Routine recruitment for local staff continued,however, in order to fill vacancies that arose duringthe year. New to the Secretariat as a result areMarjory Gichohi, Communications Manager, Joyce

DKiplimo, Research Programme Administrator, andDorine Mutanda, Receptionist/Secretary. GraceOmodho moved up and over from ResearchProgramme Administrator to CMAP Manager.

Those who left the organization within the periodwere Amyrose Opiyo, Administrative Secretary,Jennifer Mpungu, CMAP Manager, Jane Ngunjiri,Secretary, and Seneiya Kamotho, CommunicationsManager.

Team BuildingA staff seminar was held in April 2004 with theobjective of providing staff with an opportunity tocontribute to the development of the StrategicPlan for 2005–2010 and to review progress on therevision of the staff performance appraisal system.A session on self-motivation, empowerment, andenhancing personal and professional potential wasalso conducted. A second staff seminar, held inmid-October 2004 to further integrate theSecretariat staff had as its theme, “EnhancingEfficiency and Effectiveness in Meeting Challengesfor 2005–2010”. The seminar explored leadershipand communication, team synergy, efficiency andeffectiveness on the job, and work–life balance.

Among other team building activities were severalsocial occasions, including a special one with theAERC Board during their visit to Nairobi inNovember – incidentally the first time the Boardhas met in Nairobi and with the staff since 1996.Other events were a New Year’s dinner, to whichmembers’ spouses/companions were also invited,and tea parties held to welcome and bid farewellas staff changes occurred.

Staff Training and DevelopmentFour staff members were supported for skillenhancement courses relevant to their areas ofoperation, while staff training and developmentneeds were identified through the performance


ANNUAL REPORT28

appraisal system andappropriate training wasscheduled. Additionally, in-house French language classeswere initiated for allSecretariat staff to build theConsortium’s capacity tointeract with francophonemembers of the network. Mostmembers of the Secretariatparticipated.

Staff Welfare CommitteeThe Staff Welfare Committeecontinued to be an effectivevoice for staff concerns. Thecommittee provides amechanism for catering fornon-management staff needsbeyond those formallyaddressed by the Consortium.It extends financial and moralsupport in cases ofbereavement, hospitalization,weddings and births.Contributions from staff aremade to the Staff Fund for thispurpose. The committee alsoaffords an alternative channel ofcommunication betweenmanagement and staff tosupplement existing ones. Thisyear the committee was

particularly active in assistingwith the fine-tuning of the staffappraisal system.

The committee looks outward aswell. With the facilitation of thecommittee, the Secretariat staffcontributed Ksh91,400 to boostthe Save-a-Life fund run jointlyby the East African Standard/Kenya Television Network (KTN)and the International Red Cross.The presentation of the chequeby the AERC Executive Directorwas telecast on KTN news inSeptember 2004. In themeantime, the committee isexploring modalities ofregistration with the Kenyagovernment as a formal welfareassociation. They are hopefulthat this will be accomplishednext year.

EnhancingEfficiency andEffectiveness

Lessons learned from thepilot staff performance

appraisal system undertaken in2003/04 were used to refineand improve the system. Forms

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Management and Administration

Training session and teambuilding exercise

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AERC has demonstrated awillingness to learn. Evaluations ofits programmes are conductedregularly. Subsequent evaluationstypically report thatrecommendations have beenconsideredseriously and, in most cases, havebeen implemented.



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were revised and staffre-trained on how to setobjectives and how to use theforms. The strength of thesystem has been its ownershipby all members of staff, asthey were involved throughoutthe review and testing process.This tool is expected tosignificantly enhance staffperformance and morale. Theestablishment of a staffperformance appraisalcommittee will ensure internalcapacity to guide staff in thisprocess and provide continuousreview and strengthening ofthe system.

Financial ManagementWorkshopAn in-house financialmanagement seminar was heldin early April to strengthendisciplined income andexpenditure planning,budgeting, monitoring andreporting for activities; toenhance understanding offinance and administrationpolicies and procedures; and tostreamline the process forprocurement of goods andservices. The underlyingobjective was to promoteefficiency, accountability andcost-effectiveness.

Enhanced Use ofInformation andCommunicationsTechnologies (ICT)The implementation of theintranet is well advanced andstaff were trained in-house onits utility. The intranet isgeared towards providingmodern, web-based, real-timesystems for AERC businessprocesses. In addition, a newcomputerized assets-trackingsystem was purchased, allfixed assets were tagged andthe fixed assets registerbrought up to date.

Facilitation ofStrategic Activities

The development of theStrategic Plan for 2005–

2010 benefited from a broadrange of consultations withinterested stakeholders.Brainstorming sessions,initiated in December 2003,continued with variouscategories of network membersand the Programme Committee –this in addition to consultationswith senior African researchersand policy makers during theSenior Policy Seminar held inKampala in March 2004. AERCstaff contributed during thestaff seminar of April andplanning workshops in May andSeptember.

Following review and discussionof the initial draft by theProgramme Committee and theExecutive Committee, and inputfrom the recommendations ofthe Phase V and ResearchProgramme evaluations, thedraft strategy was discussed at aspecial Board meeting held inNovember 2004. A revisedversion, incorporating theBoard’s comments and furtherinput from the ProgrammeCommittee, was approved bythe Board at its meeting ofMarch 2005.

ICT StrategyAn information andcommunications technologystrategy was developed as partof the five-year plan to guidethe Consortium’s operations inthe full application of ICT. TheICT strategy seeks to respondto AERC’s overall strategy andmeet the needs of differentAERC stakeholders.

Resource MobilizationStrategyA strategy for resourcemobilization that will be used


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ANNUAL REPORT30

as a tool to guide fund raisingperformance in the period2005–2010 was also developed.The priority is to maintain thesupport of existing funders andexpand the list of funders asappropriate. Other strategiesinclude marketing theprogramme to new andpotential donors, in particularfoundations, and attractingAfrican governments andinstitutions to support specialprojects or provide one-offfunding to the ResearchInnovations Endowment Fund.Additional possibilities includemobilizing resources fromAERC alumni, increasing cost-sharing from recipients of theprogrammes, and developingmodalities to share costs ofpublications and reports.

Performance ManagementFrameworkA detailed performancemanagement framework forthe next strategic planningperiod specifically linksoutputs to objectives andactivities to outputs, andintegrates all programmeoperations. The framework willserve as an important tool formonitoring and evaluatingprogramme activities.

Fund RaisingA funding proposal ofUS$120,000 submitted to theRockefeller Foundation as arequest for partial financing ofthe Trade Projectdissemination workshop held inNovember 2004 was approvedand funding received.

FinancialManagementAspects

The statutory audit and theUSAID A133 audit for the

fiscal year 2004/05 weresuccessfully conducted in May

2005 by the audit firm, Ernstand Young. Special audits forthe African Capacity BuildingFoundation (ACBF) and theEuropean Union (EU) wereconducted by Peat Marwick(KPMG). The reports of thespecial audits were submitted tothe respective donors as a basisfor fund reimbursements.

Income for the year 2004/05was US$10.3 million whileexpenditures were US$10.3million. The income remainedat fairly the same levels asthat of 2003/04 while theexpenditure increased by 24%over the previous year. This isattributed to increasedactivities under thecollaborative PhD programmeand collaborative Researchprogramme. The net assets ofthe consortium at the year endwas US$11.1 million.

The major components ofexpenditure relate to grants(41%) and travel and workshoprelated expenses forresearchers and students(27%). Personnel costscomprised 13% of the totalexpenditure.

The market value of theConsortium’s investments as at31 March 2005 wasUS$3,758,187 million for theReserve Fund andUS$2,013,334 for the ResearchInnovations Endowment Fund.

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Report of the Independent AuditorsTo the Members of African EconomicResearch Consortium, Inc.

We have audited the financial statements of the African Economic Research Consortium for the yearended 31 March 2005, from which the summarized financial statements on pages 32 to 34 werederived, in accordance with International Standards on Auditing. In our report dated 27 July 2005, weexpressed an unqualified opinion of the financial statements from which the summarized financialstatements were derived.

In our opinion, the accompanying summarized financial statements are consistent, in all materialrespects, with the financial statements from which they were derived.

For a better understanding of the Consortium’s financial position and statement of activities for theyear and of the scope of our audit, the summarized financial statements should be read in conjunctionwith the financial statements from which they were derived, and our audit report thereon.

Certified Public Accounts

Nairobi27 July 2005

Financial Report


ANNUAL REPORT32

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Statement of Financial Position for the Year Ended 31 March 2005

2005 2004

US$ US$

ASSETS

Current Assets

Cash and bank balances 5,191,565 4,260,835

Investments 6,951,344 6,051,594

Grants receivable 3,237,944 3,769,925

Other receivables 230,661 174,595

Total Current Assets 15,611,514 14,256,949

Non-Current Assets

Property and equipment, net of 214,536 250,131

accumulated depreciation

TOTAL ASSETS 15,826,050 14,507,080

LIABILITIES AND NET ASSETS

Current Liabilities

Accruals 334,399 348,645

Grants payable 4,363,332 3,022,734

Total Liabilities 4,697,731 3,371,379

NET ASSETS

Unrestricted net assets 2,289,493 1,597,280

Board restricted reserve 3,873,128 3,835,810

Temporarily restricted net assets 2,926,302 3,611,706

Research innovations endowment fund 1,924,536 1,924,536

Unrealized currency translation account 114,860 166,369

Total Net Assets 11,128,319 11,135,701

TOTAL LIABILITIES AND NET ASSETS 15,826,050 14,507,080

The financial statements were approved by the Executive Committee of the AERC Board on 2005 and signed on its behalf by:


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Statement of Activities for the Year Ended 31 March 2005

Boardrestricted Temporarily Permanently Total Total

Operating reserve restricted restricted 2005 2004

US$ US$ US$ US$ US$ US$

Support and RevenuesGrant from governments 2,875,291 - 4,150,962 - 7,026,253 6,394,960Grants from foundations 270,000 - 1,953,279 - 2,223,279 1,655,945Grants from otherorganizations 320,000 - - - 320,000 1,223,220Investment income 36,407 37,318 50,218 - 123,943 338,200Other income 529,796 - - - 529,796 572,707

Subtotal 4,031,494 37,318 6,154,459 - 10,223,271 10,185,032

Net Assets Released fromRestrictionSatisfaction of programmerestrictions 6,839,863 - (6,839,863) - - -Expiration of time -restrictions - - - - - -Grants forfeited 64,726 - - - 64,726 123,935Appropriation to reserve - - - - - -

Subtotal 6,904,589 - (6,839,863) 64,726 123,935

Total Support and Revenues 10,936,083 37,318 (685,404) - 10,287,997 10,308,967

ExpenditureGeneral administration 988,328 - - - 988,328 1,128,091Program management 298,080 - - - 298,080 163,614Research Programme 3,506,550 - - - 3,506,550 2,030,874Communications 679,893 - - - 679,893 602,729Master’s Programme 2,325,487 - - - 2,325,487 2,668,998Training Programme 222,556 - - - 222,556 251,366Doctoral Programme 2,478,621 - - - 2,478,621 1,907,676Overhead recovery (255,645) - - - (255,645) (470,396)

Total Expenditure 10,243,870 - - - 10,243,870 8,282,952

Change in net assets 692,213 37,318 (685,404) - 44,127 2,026,015

Net assets at beginning of year 1,597,280 3,835,810 3,611,706 1,924,536 10,969,332 8,943,317

Net Assets at End of Year 2,289,493 3,873,128 2,926,302 1,924,536 11,013,459 10,969,332


ANNUAL REPORT34

Grants Income for the Year Ended 31 March 2005 (in US$)

Income Incomefor year for year2004/05 2003/04

Government EntitiesDanish International Development Agency (DANIDA) U 483,870 467,705

R - -European Union (EU) U - -

R 347,538 1,035,736International Development Research Centre ( IDRC) U 190,694 158,434

R - -Ministry of Foreign Affairs- Netherlands U 480,000 480,000

R 457,104 457,104Norwegian Agency for Development Cooperation ( NORAD) U 128,572 125,523

R 757,143 739,191Department for International Development (DFID) U 340,001 340,001

R 95,000 79,895Swedish International Development Cooperation Agency U 769,231 744,456(Sida/ SAREC) R 576,924 585,802United States Agency for International Development (USAID) U - -

R 1,917,253 700,000Swiss Agency for Development and Cooperation ( SDC) U 176,923 174,639

R - -Ministry of Foreign Affairs – France U 306,000 306,474

R - -Subtotal 7,026,253 6,394,960

FoundationsAfrican Capacity Building foundation (ACBF) R 1,313,279 1,130,945Rockefeller Foundation U 195,000 250,000

R 490,000 -MacArthur Foundation U 75,000 125,000

R 150,000 150,000Subtotal 2,223,279 1,655,945

Other Organizations & IndividualsInternational Bank for Reconstruction & Development (IBRD) R - -

U - 158,000Global Development Network (GDN) U 320,000 300,000African Development Bank (AfDB) U - 380,235

R - 384,985Subtotal 320,000 1,223,220

GRAND TOTAL 9,569,532 9,274,125

Key: U – Unrestricted funding; R – Restricted funding

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Annex A: Thematic Research Grants, 2004/05

No. Project title Researcher(s) Group

1. Extent and Determinants of Child Labour in Uganda Thomas Mwebaze A

2. Protection Sociale et Demande en Soins de Sante en Milieu A.K. Kouadio A

Urbain Ivoirien V. Monsan

M.Gbongue

3. The Effects of Parental Education and Household Resources Harry A. Sackey A

on Children’s Education in Ghana

4. Quality and Demand for Health Care in Uganda: Does Darlison K. Okwi A

Service Provider Matter? Evidence from 2002/03 Household Paul O. Okwi

Survey

5. Determinants of Child Labour and Schooling in the Cocoa G. B. Nkamleu A

Sector of Côte d’Ivoire

6. Analysis of Variations of Human Development Index (HDI) Jean-Claude Saha A

of the United Nations Development Programme (UNDP)

7. Poverty Status and Occupational Choice in Kenya Kivuti Nyaga A

8. Infrastructure and Productivity in Cameroon Manufacturing O. Njikam AT

Industries

9. ECOWAS Common External Tariff and Differential Okey G. Oji AT

Efficiency of Lagos and Cotonou Ports: Implications for Firm

Level Productivity and Competitiveness in Nigerian Ports

10. Household Demand and Welfare Implications of Urban Water J. Onjala AT

Pricing in Kenya

11. Economic Valuation of Natural Resources in Nigeria’s Delta F. Olokesusi AT

Region for an Improved Compensation Policy Regime in the J. Akpokodje

Petroleum Sector

12. The Demand for Tourism in Tanzania: A Stated Preference Cyril Chami AT

Approach* Joseph Semboja

13. Empirical Analysis of Factors Determining Food Imports in Leonard S. Nkouka AT

Congo** Mathias Ndinga

14. Factors Influencing Technical Efficiencies in Wheat Production James Njeru AT

in Kenya

15. Regional Convergence in Franc Zone Countries in Africa: Latif G. Dramani AT

Spatial Econometric Approach Aliou Ndiaye

Raoul Antinhounnon

Mammadou Chabi-Sika

16. Impact of Rice Market Liberalization on Delta Agricultural François Cabral AT

Households in Senegal: A Computable General Equilibrium

Micro Simulation Analysis.

17. L’Essor du Marché de Plantain au Cameroun: Une Alternative Robert Nkendah,

de Lutte contre la Pauvreté Ms.Nzouessin Chantal AT

18. Supply Response, Risks and Institutional Change in Nigerian Joshua Ajetomboi AT

Agriculture

19. Impact de l’Education sur la Productivité des Agriculteurs Ruraux Andalla Dia AT

au Sénégal: Une Analyse Comparative

20. Is There Scope for an Independent Monetary Policy in the Common S.I. Ikhide B

Monetary Area? (CMA) Ebson Uanguta

21. Fiscalité Indirecte et Inégalités de Revenus au Sénégal et au Mbaye Diene B

Burkina Faso: Une Etude Comparative

22. An Econometric Analysis of Capital Flight from Nigeria: A Portfolio A.O. Lawanson B

Choice Approach

23. Channels through Which Parallel Market Exchange Premiums Affect O.S. Ayodele B

Economic Growth in Nigeria F.N. Obafemi

24. Relative Price Variability and Inflation: Evidence from the Obasi O. Ukoha B

Agricultural Sector in Nigeria

Annexes


ANNUAL REPORT36

No. Project title Researcher(s) Group

25. Oil Price Shock and Macroeconomic Variables: Evidence from Philip A. Olomola B

a Multivariate VAR Model of Oil Exporting Sub-Saharan Countries

26. The Debt Servicing Capacity of Nigeria’s Economy Akperan Adam B

27. A Modelling of Ghana’s Inflation Experience, 1960–2002 M. Kofi Ocran B

28. The Impact of Migrant Remittances on Household Welfare in Ghana Peter Quartey B

29. Modelling the Inflation Process in Nigeria O. Olubusoye B

R. Oyaromade

30. Determinants of Interest Rate Spreads (IRS) in Uganda P. Birungi C

31. The Impact of Microfinance on the Welfare of the Poor in Uganda: F.N. Okurut C

A Case Study of the UWFT and FOCCAS in Pallisa District L. Bategeka

32. Managerial Characteristics, Corporate Governance and Olayinka Adenikinju C

Corporate Performance: The Case of Nigeria’s Quoted Companies

33. Governance Structure, Managerial Characteristics and Firm N.O. Magbagbeola C

Performance in Nigeria’s Banking Industry

34. Policy Implications of the Effects of Financial Development on Peter K. Maina C

Economic Growth: A Case Study of Kenya in the Period 1970–2001

35. Diversification, Product Mix and Risk–Return Benefits of the Robert Asogwa C

Nigerian Banking Industry: A Portfolio Model Analysis

36. Asset Price Developments in an Emerging Market: The Case Sunil K. Bundoo C

of Mauritius

37. Monetary Policy Implications of Banking Crises in Nigeria Ayodele O. Odusola C

38. Sustainability and Success of Micro Finance: The Case of C.K. Adjasi C

Ghana A. Kyereboah-Coleman

39. Corruption and Microenterprise Growth: Evidence from a D. Gbetnkom C

Cross-Section of Firms in Cameroon** D. Ngepah

40. Shocks and Coping Strategies: Household Response to J.B. Asiimwe C

Rainfall Variability in Uganda Paul Mpuga

Key:* Supplementary grant** Small grant to revamp proposal

A Poverty, Income Distribution and Labour Market Issues

AT Trade, Regional Integration and Sectoral Policies

B Macroeconomic Policies, Stabilization and Growth

C Finance, Resource Mobilization and Investment

Annexes


2 0 0 4/ 2 0 0 537

EXECUTIVE OFFICE

Dr. William Lyakurwa Executive Director

Jacqueline O. Macakiage Executive Assistant

Rachelle C. Siele Secretary

RESOURCES

Grace Amurle Chief, Resources

Edith Musella Administrative Secretary

Leonard N. Chiunda Finance Manager

Evar Kiambuthi Accountant

Lamiku Kidamba Accounts Assistant

Jane Mayoli Muema Manager, Human Resources and Administration

Paul M. Mburu Human Resources Administrator

Edmund W. Njoroge Information Technology (IT) Administrator

Florence Maina Conference and Travel Coordinator

Herbert Asava Administrative Assistant

Dorine Mutanda Receptionist/Secretary

Jackson N. Ng’ang’a Driver/Office Assistant

RESEARCH PROGRAMME

Olusanya Ajakaiye Director of ResearchJoseph Thuo Karugia Manager, Research

Joyce Kiplimo Programme Administrator

Pamellah Lidaywa Administrative Secretary

Angelina D. Chikombe Secretary

TRAINING PROGRAMME

Njuguna S. Ndung’u Director of Training

Grace Omodho Manager, Collaborative MA Programme

Mukwanason Hyuha Manager, Collaborative PhD Programme

Lucy W. Mbugua Programme Administrator

Zaddock Onyiego Joint Facility for Electives (JFE) Administrator

Catherine C. Mwalagho Administrative Secretary

Vacant Secretary

COMMUNICATIONS

Marjory Gichohi Manager, Communications

Charles Owino Publications Administrator

Winston Wachanga Information Resources Administrator

Miriam Rahedi Publications and Communications Assistant

SECRETARIAT STAFF


ANNUAL REPORT38

Documents

M EMBERS OF THE C ONSORTIUM · C ONSORTIUM POUR LA R ECHERCHE E CONOMIQUE EN A FRIQUE 2004/2005 1 Overview 2 004/05, the final year of Phase V, was a year of both closure and anticipation