Business News of Tuesday, 1 August 2017
The quality of policies and institutions weakened in Sub-Saharan Africa in 2016 amid challenging economic conditions, according to the latest review by the World Bank.
This weaker trend was observed in 40 per cent of the region’s International Development Association (IDA) countries, notably commodity exporters and fragile states.
A release issued from the World Bank office in Ghana said, “The review is the annual World Bank Country Policy and Institutional Assessment (CPIA) Africa analysis, which scores the progress Sub-Saharan African countries are making on strengthening the quality of their policies and institutions. Since 1980, CPIA ratings have been used to determine the allocation of zero-interest financing and grants for countries that are eligible for support from the IDA, the concessional financing arm of the World Bank Group”.
CPIA scores are based on 16 development indicators in four areas: economic management, structural policies, policies for social inclusion and equity, and public sector management and institutions. Countries are rated on a scale of 1 (low) to 6 (high) for each indicator. The overall CPIA score reflects the average of the four areas of the CPIA.
The average CPIA score for the 38 African countries assessed in the 2016 review edged lower to 3.1. Rwanda again led all countries in the region with a score of 4.0, closely followed by Senegal and Kenya, both with a score of 3.8.
Although some countries saw a strengthening in policy and institutional quality, the number of countries with worsening overall scores outpaced improvers by a margin of two to one.
A common pattern across countries that experienced a weakening in their overall policy and institutional quality was slippage in economic management: monetary and exchange rate, fiscal, and debt policies.
The release said, “This can in part be explained by unfavourable economic conditions—deteriorating terms of trade, sluggish global growth, and difficult economic conditions—that continued to take a toll on countries across the region, deepening macroeconomic vulnerabilities. Weakening of fiscal and external buffers constrained the scope for macroeconomic policies to mitigate the effects of adverse shocks to economic activity.”
“On the upside, Côte d’Ivoire, the Comoros, Cameroon, Guinea, Madagascar, Mauritania, and Sudan have experienced a modest gain in the CPIA score, with most of these countries showing a stronger performance in the quality of governance. In a few countries, the quality of policies for social inclusion and equity also improved, reflecting a strengthening of safety net programmes”, it added.
According to the World Bank Chief Economist for Africa, Mr Albert Zeufack, “Governance underpins all sectors of World Bank Group engagement, and moving forward, despite these slight gains, it will remain critical that Sub-Saharan countries implement or expand governance and public-sector reforms that will upgrade financial management systems, increase transparency, reduce corruption, protect rights, and improve public services.”
The latest CPIA results reveal that performance on policy and institutional quality in Sub-Saharan Africa’s non-fragile IDA countries is comparable to that of similar countries elsewhere. However, this is not the case for fragile countries, which generally fall behind other fragile countries outside the region. The combination of the two categories of countries pulls the overall CPIA score for the region’s IDA countries below the average for other IDA countries.
The Lead Economist for the World Bank Africa Region and author of the report, Mr Punam Chuhan-Pole, also explained that “African countries exhibiting economic resilience tend to have stronger macroeconomic policy frameworks, better quality of policies that promote sustainable and inclusive growth, and more effective public institutions than other countries, nonetheless, there is scope for all countries in the region to speed up policy reforms and strengthen institutional quality.”