African Development Report 2005

291 Pages·2006·1.11 MB·English

by  The African Development Bank

AFRICAN DEVELOPMENT REPORT
2005
AFRICA IN THE WORLD ECONOMY
PUBLIC SECTOR MANAGEMENT IN AFRICA
ECONOMIC AND SOCIAL STATISTICS ON AFRICA
PUBLISHED FOR THE AFRICAN DEVELOPMENT BANK
BY
OXFORD UNIVERSITY PRESS
1
Great Clarendon Street, Oxford OX2 6DP
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
and education by publishing worldwide in
Oxford New York
Auckland Cape Town Dar es Salaam Hong Kong
Karachi Kuala Lumpur Madrid Melbourne
Mexico City Nairobi New Delhi Shanghai Taipei Toronto
With offices in
Argentina Austria Brazil Chile Czech Republic France Greece
Guatemala Hungary Italy Japan Poland Portugal Singapore
South Korea Switzerland Thailand Turkey Ukraine Vietnam
Oxford is a registered trade mark of Oxford University Press
in the UK and in certain other countries
Published in the United States
by Oxford University Press Inc., New York
© 2005 by African Development Bank
The moral rights of the author have been asserted
Database right Oxford University Press (maker)
First published 2005
All rights reserved. No part of this publication may be reproduced,
stored in a retrieved system, or transmitted, in any form or by any means,
without the prior permission in writing of Oxford University Press,
or as expressly permitted by law, or under terms agreed with the appropriate
reprographics rights organization. Enquiries concerning reproduction
outside the scope of the above should be sent to the Rights Department,
Oxford University Press, at the address above
You must not circulate this book in any other binding or cover
and you must impose this same condition on any acquirer
The African Development Report 2005 is produced by the staff of the African Development Bank,
and the views expressed therein do not necessarily reflect those of the Boards of Directors
or the countries they represent. Designations employed in this Report do not imply the expression
of any opinion, on the part of the African Development Bank, concerning the legal status of any
country or territory, or the delineation of its frontiers.
British Library Cataloguing in Publication Data
Data available
Library of Congress Cataloging-in-Publication Data
Data available
ISBN 0–19–928084–3 978–0-19-928084-1
Typeset by Hope Services, Abingdon, Oxon
Printed in Great Britain
on acid-free paper by
Ashford Colour Press Limited, Gosport, Hampshire
F O R E W O R D
The African Development Report, prepared percent. Only three countries witnessed
annually by the staff of the Development negative growth rates, compared with six in
Research Department of the Bank, provides the preceding year.
an in-depth review of recent macro- Several factors, both external and
economic performance and structural internal, contributed to this strong overall
issues in Africa, viewed from continental, economic performance. Externally, Africa’s
regional and national perspectives. It also terms of trade improved considerably — by
assesses the prospects of the African 6.7 percent — largely due the rise in oil
economy in the context of recent global prices and the further strengthening of the
developments. In addition, it provides an prices of major non-fuel commodities,
in-depth analysis of a topical issue that is particularly metals. In addition, the rebound
critical to Africa’s development — with this in the global economy along with strong
year’s focus being on Public Sector demand from Asia for the region’s primary
Management in Africa. export commodities also boosted the
With respect to Africa’s economic Continent’s exports. As a result, Africa’s
performance in 2004, the Report notes that current account improved significantly in
it improved markedly. The region’s GDP 2004, recording a surplus of over $5 billion.
growth rate reached an average of 5.1 Improved export performance and debt
percent from 4.4 percent in 2003, resulting relief measures have contributed to a
in a per capita GDP growth of 2.8 percent. continuing decline in the debt service ratio
This is the highest GDP growth rate for the Continent, which reached 11.8
recorded for the continent since 1996, and percent in 2004, the lowest in some two
considerably above the average of 3.7 decades. Similarly, Africa’s total debt in
percent for the previous five years. It is also relation to its GDP continued its trend
noteworthy that this is the first time in over decline, reaching 43 percent from a high of
two decades that the continent has 76 percent in 1994.
recorded growth rates exceeding 4 percent On the domestic front, most African
per annum for two consecutive years. As countries made good progress towards
was the case in the past, growth in 2004 sound macroeconomic policies and
exhibited a considerable variation across management. And although much remains
individual countries, although the trend, to be done, many countries continued to
overall, was quite positive. Some 20 pursue their programs of reforms, including
countries achieved GDP growth rates privatization of state-owned enterprises,
exceeding 5 percent and 14 others public sector reforms, and the strengthen-
recorded growth rates of between 3 and 5 ing of regulatory frameworks. Significant
iv Foreword
strides in creating a better environment for particular, financial sector and governance
private sector participation and for reforms are critical to create a more
attracting foreign direct investment favorable climate for the growth of the
were thus made, with many adopting private sector. Third, in an era of globaliza-
policies to promote small and medium tion, it is imperative that African countries
enterprises. strengthen their regional cooperation and
This combination of policies has integration arrangements, particularly in
resulted in strikingly improved key macro- the context of the NEPAD initiative. And
economic indicators. For the first time, fourth, African countries would need to
Africa’s average fiscal position produced a give high priority to combat the HIV/AIDS
balanced outcome in 2004, thanks to the pandemic.
fiscal surpluses achieved by many countries In all such efforts, African countries will
and prudent policies in most. Monetary continue to need the support of the
growth was also quite restrained. These international community. Such support is
two factors contributed to an average particularly critical with respect to official
inflation rate of 7.7 percent, the lowest in development assistance (ODA), debt
over two decades. reduction, and enhanced market access for
While welcoming the improved eco- Africa’s exports. With respect to ODA, there
nomic performance of the African economy, have been sizeable increases in ODA to
it should nonetheless be noted that the Africa in recent years, although much of it
overall GDP growth rate is still below the was accounted for by debt relief. Despite
6–8 percent required to achieve the these developments — and as the recent
Millennium Development Goals (MDGs). report of the UN Millennium Project makes
Indeed, on current trends only the countries clear — ODA still falls short of what is
of North Africa, South Africa and Mauritius required for Africa to be on course towards
are likely to attain the goal of halving by attaining the MDGs. It is, however, essential
2015 the number of people living below the that the donor community takes further
poverty line, although a number of others action to increase ODA in line with the
may meet some of the education and health pledges it had made earlier at Monterrey
MDGs. Clearly, African countries would and other fora.
need to build on the achievements of the Progress has also been made in terms
recent past and accelerate their economic of reducing Africa’s external debt burden
and social progress. This would require a — in part due to the HIPC initiative —
number of policy measures. but more needs to be done. In this regard,
First, it is essential that peaceful and the recent decision by the G8 member
stable conditions are maintained or countries to cancel the debts owed
restored. Second, countries would need to by post-completion HIPC countries to
sustain the prudent macroeconomic the international financial institutions
policies that they have begun to implement is commendable. And with respect
as well as deepen their reform programs. In to external trade, the WTO July 2004
Foreword v
Framework holds the promise of elim- institutionalizing democratic institutions
inating the tariff and non-tariff barriers for much remains to be done. In particular,
Africa’s exports as well as reducing the African governments would need to
trade-distorting agricultural subsidies of redouble their efforts to fight corruption.
industrial countries. In assessing public sector management
Meeting the development challenges of reforms in Africa, the Report finds that
Africa requires the state to be an effective good progress has been made in a number
regulator, facilitator and provider — the of countries. Nonetheless, the process of
topic that the African Development Report rationalizing the role of the state and
deals with extensively this year. The Report adapting it to the requirements of a modern
addresses these and other public sector competitive economy remains a major
management reform issues in Africa and challenge in many. A number of factors
provides a number of recommendations. have contributed to this state of affairs. Past
The Report notes that a development- approaches to public sector management
oriented state needs a strong administrative reforms have often relied heavily on
capacity, with an efficient, open, and strategies that failed to take account of the
accountable public service. This is critical historical legacies and peculiarities of
for designing and implementing sound individual countries. Reform efforts have
policies, managing the public sector, also often over-emphasized one facet of
regulating the private sector and providing reform over others.
key services — particularly in public Given the limited success of such
health, education and some infrastructure approaches, the Report recommends the
services — where the private sector may be adoption of a broader and long-term
reluctant to invest. To perform these approach that takes into account the
essential development functions more specificities of each country. Of critical
effectively, African governments would importance in this regard is the need to
need to build a public service capable of mobilize political support among all
understanding the challenges of develop- stakeholders. In addition, success in public
ment, evaluating development policy sector management reform requires a
proposals, and effectively implementing clarity of vision, the development of well-
them. trained and professional administrators,
Clearly, these tasks are best performed and effective collaboration with all relevant
under conditions of good political and stakeholders. A critical challenge in this
economic governance. By contrast, lack of regard is developing an effective incentive
accountability and transparency, and system to attract and retain skilled
corruption often serve to undermine administrative officials. Clearly, when the
competitiveness, economic growth and incentive structures in the public service
development. Despite the significant remain unattractive, its efficiency as well as
progress that most African countries have ability to effect policies will remain very
made in the past decade in developing and low.
vi Foreword
As in past years, this year’s African continent and elsewhere will find the
Development Report provides rich reference information and analysis useful.
material on the African economy and on
public sector management reforms in
Africa. I am confident that policy makers,
researchers, and representatives of the civil
Omar Kabbaj
society and the private sector on the
President
African Development Bank
Regional Economic Profiles vii
A C K N O W L E DG EM E N T S
The African Development Report 2005 has Preparation of the Report was aided by
been prepared by a staff team in the the background papers listed in the
Development Research Department under bibliographical note. Comments from
the direction of Henock Kifle. within and outside the Bank are noted with
The research team was led by appreciation. From the Bank, Claudius
Mohamed Nureldin Hussain and comprised Bamidele Olowu; and from outside, Janine
Mohammed Salisu, Barfour Osei, Bernhard Aron of the Centre for the Study of African
Gunter, Audrey Verdier-Chouchane and Economies, University of Oxford; Goran
Christina Okojie (consultant) from the Hyden of the University of Florida; Ladipo
Research Division. Adamolekun, an Independent Scholar;
The Economic and Social Statistics on Charlotte Vaillant, an Independent
Africa were prepared by the Statistics Consultant; Joseph Ayee of the University
Division led by Charles L. Lufumpa and of Ghana all made comments and
comprised André Portella, Beejaye Kokil, suggestions to improve the Report.
Maurice Mubila and Koua Louis Kouakou. Dominic Byatt and Claire Croft at Oxford
Rhoda R. Bangurah provided produc- University Press oversaw the editiorial and
tion services and Richard Synge editorial publication process.
services.
viii African Development Report 2005
ABBREVIATIONS
AAF-SAP African Alternative Framework to Structural Adjustment Programs
AAPAM African Association for Public Administration and Management
APPER Africa’s Priority Programme for Economic Recovery
ADB African Development Bank
ADF African Development Fund
ACP African, Caribbean and Pacific
ADR African Development Report
AFRACA African Rural and Agricultural Credit Association
AFROSAI African Organization of Supreme Audit Institutions
AGOA African Growth and Opportunity Act
AIDS Acquired Immune Deficiency Syndrome
ANC African National Congress
APC Adaptable Program Credit
APL Adaptable Program Loan
APRM African Peer Review Mechanism
AsDB Asian Development Bank
ATLE Africa’s Ten Largest Economies
AU African Union
BAC Botswana Accountancy College
BCC Banque Centrale du Congo
BCEAO Banque Centrale des Etats de l’Afrique de l’Ouest
BEAC Banque des Etats d’Afrique Centrale
BEST Business Environment Strengthening in Tanzania
BNA Banco Nacional de Angola
BoB Bank of Botswana
BoM Bank of Mauritius
BOO Build-Own-Operate
BOT Build-Operate-Transfer
BOU Bank of Uganda
CAR Central African Republic
CDF Comprehensive Development Framework
CFA Communaute Financiere Africaine
CFAA Country Financial Accountability Assessment
CGP Country Governance Profile
CIDA Canadian International Development Agency
CIP Competitive Industrial Performance
CITI Corruption Index of Transparency International
Abbreviations ix
COMESA Common Market of East and Southern Africa
CPAR Country Procurement Assessment Report
CPMS Computerized Personnel Management System
CSO Civil Society Organization
DAC Development Assistance Committee
DANIDA Danish International Development Agency
DFID Department for International Development
DMO Debt Management Office
DPSA Department of Public Service Administration
DRC Democratic Republic of Congo
EAC East African Community
EBRD European Bank for Cooperation and Development
EC European Commission
ECA UN Economic Commission for Africa
ECZ Electoral Commission in Zambia
EIB European Investment Bank
EPZ Export Processing Zone
ERP Economic Recovery Program
ESAAG East and Southern Association of Accountants General
EU European Union
FAO UN Food and Agriculture Organization
FDI Foreign Direct Investment
FMOC Financial Markets Operations Committee
GCA Global Coalition for Africa
GDP Gross Domestic Product
GENA Global Education Network for Africa
GTZ Technische Zusammenarbeit
HIV Human Immunodeficiency Virus
IADB Inter-American Development Bank
ICPC Independent Corrupt Practices Commission
ICT Information and Communications Technology
IDA International Development Association
IDB Islamic Development Bank
IDF Institutional Development Facility
IFAD International Bank for Agricultural Development
IMF International Monetary Fund
IRIS Integrated Risk Information System
ITD International Tax Dialogue
KACA Kenya Anti-Corruption Authority
KUBI Kenyan Urban Bribery Index