Meeting Africa’s New Development Challenges in the 21st Century

Kasirim Nwuke

Chief, MDGs/Poverty Analysis & Monitoring Section, ACGS, ECA

To the Meeting of Committee of Experts of 1st Joint AUC CAMEF and ECA Conference of Ministers of Finance, Planning and Economic Development, Addis Ababa, Ethiopia, March 28, 2008

Presentation of the

Issues Paper

Outline of presentation

• Introduction • Challenges• Issues for Discussion• Conclusion

Introduction

• The Context;

• Objectives of the Issues Paper;– To surface some new 21st century challenges

to Africa’s development;– To propose issues for discussion by Experts;– To enable agreement on policy options by

Experts for presentation to Ministers for their consideration and adoption.

Challenges

The Challenges

• Four specific but interlocking and intersecting challenges:– Growth and Employment;– Climate Change;– Emerging Social Sector Challenges -

• Legal Empowerment of the Poor;• Long-term sustainable financing for HIV treatment

– Good Governance and Building a Capable State.

Challenge No. 1: Growth and employment

• Africa’s recent growth and employment experience;– Impressive economic expansion;– Less than desirable employment effect;

• Preventing growth collapse – a major task;• Preventing growth collapse and promoting growth and

employment complicated by new 21th century realities:– Emerging global economic powers in the South: China and

India;– Rising food and energy prices;– Climate change; and– Terrorism.

Challenge No. 2: Climate Change• Climate change is real and could constrain

efforts to improve the human condition in Africa

• Possible adverse impacts of climate change:

– Water stress and water-related conflicts;– Decreased agricultural output and

increased food insecurity;– Energy constraints;– Rising sea level and faster rate of

desertification;– Loss of bio-diversity, forests and

habitats;– Expanding range and prevalence of

vector-borne diseases– Increased risk of conflicts related to

population movements• Possible positive impacts of climate

change: This is not much debated but there could be

opportunities for Africa from climate change for example:

– A much stronger position to negotiate on international treaties;

– New trading opportunities.

Challenge No.3: Emerging social Issues

• What is meant by legal empowerment of the poor?

• No more than 30% of the world’s poor can take advantage of the law to secure their assets;

• Benefits of legal empowerment of the poor:– Creation and expansion of

fiscal space;– Contraction of the under-

ground economy;– Promotion of a greater sense

of ownership;– Reduction of transaction cost

Issue No. 1: Legal Empowerment of the poor

Do these fishermen/women “own” their boats?

Challenge No.3: Emerging social Issues

• Evidence shows that progress in response to HIV/AIDS is closely associated with the amount of resources available

• No. of people receiving treatment has risen from 100,000 in 2003 to 1.3 million in 2006;

• Long-term financing remains a critical issue;

– Abuja Commitment yet to be met;• The reality of people with

HIV/AIDS living longer presents a long-term financing challenge

Issue No. 2: Long-term sustainable financing of access to HIV/AIDS Treatment

Expenditure by Scenario

Indicator (US$ billion, except where otherwise indicated)

Tough choices

Times of Transition

Traps and Legacies

Total expenditure on HIV/AIDS

98.65 70.89 195.46

- Prevention 45 25 75

- Care and treatment 25 30 67

- Orphans and vulnerable children

28 15 53

- Cumulative new infections (million)

65 89 46

Source: UNAIDS, AIDS in Africa Scenarios Project

Challenge No.4: Accelerating and sustaining progress in good governance and building of capable states

• A capable democratic state – a prerequisite for progress and security of progress ;

• Obstacles to good governance – (see matrix);

• Progress in good governance;– Very commendable– But difficulties remain

• High level political commitment to good governance and state capability building (e.g. APRM to which 28 countries acceded).

Leading obstacles to Good Governance in Africa, in rank order (Source: ECA, 1998)

1 Corruption

2 Tax regulation

3 Inadequate supply of infrastructure

4 Inflation

5 Crime and theft

6 General uncertainty on cost and regulation

7 Regulations on foreign trade

8 Policy instability

9 Labour relations

10 Foreign currency regulations

11 Safety and environmental regulations

12 Regulations for starting a business

13 Price controls

14 Terrorism

Issues for Discussion

Issues for Discussion 1: Growth and employment

• How best can African countries harness the new opportunities presented by expanding economic relations notably, China and India, to ratchet up growth and expand employment?

• What options are available to African countries to attenuate the adverse impact of rising food and energy prices and exploit the opportunities that they present?

• How can African countries accelerate the positive growth performance of the recent past and minimize the risk of a growth collapse?

• How can regional continental integration contribute to tackling the growth and employment challenge?

Issues for Discussion 2: Climate Change

• What financing mechanisms should African countries consider to finance the technological options (use of improved crop varieties, water harvesting and watershed management) to research and information exchange, capacity building, institutional as well as human resource development currently available for mitigating the adverse impact of climate change?

• How should capacity building be financed? Out of public or private resources? What are the implications of public financing of capacity acquisition in the context of brain drain and international migration?

• Is there a need to create new regional facilities to finance climate change interventions? How can the efficiency of existing facilities be improved?

• How can climate change mitigation and adaptation be integrated into regional and national development frameworks as well as policy processes and decision-making across a range of sectors and scales?

Issues for Discussion 3: Emerging Social Issues 1

How can governments• Enhance access to justice and rule of law for the poor promote economic

growth?• Promote efficient governance of individual and collective property

systems that systematically brings the extralegal economy into the formal economy and that ensures it remains easily accessible to all citizens?

• Create a functioning market for the exchange of assets that is transparent and accountable?

• Improve the quality of labour regulation and the functioning of labour market institutions, creating synergy between the poor’s protection and productivity?

• Strengthen access to employment opportunities in the growing and more inclusive market economy?

Strengthen effective economic governance that makes it easy and affordable to set up and operate a business, access markets – and exit business if necessary?

Legal Empowerment of the Poor

Issues for Discussion 3: Emerging Social Issues 2:

• What is the scope for additional private financing of HIV/AIDS treatment and care, and mitigation in Africa?

• What possible new international financing mechanisms can countries consider?

• What measures should countries adopt to increase allocation to health to meet the minimum15% of national budget agreed in the Abuja Declaration?

Long-term Financing for HIV/AIDS

Issues for Discussion 4: Good Governance and the Capable State

• How can governments mainstream initiatives such as the Extractive Industries Transparency Initiative in order to improve governance in the extractive sectors of their economies?

• What measures should governments adopt to improve public sector financial management?

• How can governments improve the financing and accountability of institutional infrastructure of good governance in a way that attenuates the tension between the demands for investment in good governance and the demands for increased investment in the economic and social sectors?

• To what extent is obedience to the rule of law an undergird for improving governance and how can it be promoted by Ministers of Finance, Planning and Economic Development?

• Should the APRM National Plan of Action (NPoA) be integrated into country’s MDGs-consistent national development plans? How should this be done and what mechanisms should be considered for financing the NPoA?

Conclusion

• A new century presents its own challenges;• The ability of each region to tackle these

challenges depends on the readiness of the region and the resources at its disposal;

• Africa, “can claim the 21st century” if it address in an effective, strategically inter-temporal manner the emerging 21st century challenges;

• A capable, effective and democratic state is a pre-requisite for success.

Thank you

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