- Matthew Gaertner, Laure Redifer, Pedro Conceição, Rafael Portillo, Luis-Felipe Zanna, Jan Gottschalk, Andrew Berg, Ayodele Odusola, Brett House, and José Saúl Lizondo
- Published Date:
- March 2012
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The MDG Africa Steering Group is composed of the heads of the African Union, the African Development Bank Group, the European Commission, the Islamic Development Bank, the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), the United Nations (UN) Development Group, and the World Bank Group. The steering group is assisted by a working group chaired by the UN Deputy Secretary-General and composed of technical level representatives.
The 10 pilot countries were Benin, the Central African Republic, Ghana, Liberia, Niger, Rwanda, Tanzania, Togo, Sierra Leone, and Zambia.
Many people have contributed to this paper. The underlying country cases (see the Appendix) were the work of teams of IMF and UNDP staff. The main contributors to the paper were Matthew Gaertner, Rafael Portillo, Laure Redifer, and Louis-Felipe Zanna (all IMF); and Brett House and Ayodele Odusola (UNDP). Benedicte Christensen, Daniela Gregr, Kayla Keenan, and Ali Zafar made critical contributions in the early stages of this project. Many other colleagues at the IMF and the UNDP provided helpful comments.
For sources and for more information, see UN (2010); UNDP (2010a, 2010b, 2010c); IMF (2008); and Radelet (2010). On the effects of the crisis, see, for example, ECA, AU, AfDB, and UNDP (2010); Conceição, Mukherjee, and Nayyar (2011); IMF (2010a, 2010b); and IMF and World Bank (2010).
See Ghana’s 2010 MDG Report (National Development Planning Commission and UNDP, 2010) and Uganda’s 2010 MDG Report (Ministry of Finance, Planning and Economic Development, 2010) for more information on the level and quality of disparities.
The countries were selected based on three key factors: (i) government support and interest to ensure ownership; (ii) countries’ development indicators (countries with GDP less than the LIC threshold, off-track on at least half of the MDGs, and in which a new Poverty Reduction Strategy Paper was being developed or being implemented since 2008); and (iii) a mix of countries to ensure broad representation across regional groupings, land-locked or coastal status, and postcrisis transition.
See Gleneagles communiqué and commitments (G-8, 2005a). The studies vary in focus and structure, partly reflecting different priorities identified by the countries.
Aid is already about that level for Liberia, so the scenario assumes a 15 percent increase.
The computation of aid per capita excludes the populations of South Africa and Nigeria. The principal authors of this chapter are Pedro Conceição and Ayodele Odusola, Regional Bureau for Africa, UNDP.
The Organization for Economic Cooperation and Development (OECD) defines ODA as those flows to developing countries and multilateral institutions provided by official agencies, including state and local governments, or by their executive agencies, each transaction of which meets the following tests: (i) it is administered with the promotion of the economic development and welfare of developing countries as its main objective; and (ii) it is concessional in character and conveys a grant element of at least 25 percent.
“Net ODA” nets out repayments of the principal of ODA loans as well as debt relief and clearance of arrears. Thus, it reflects actual flows to developing countries. There are a number of more detailed questions about the exact operational definition of ODA, which may vary slightly across country case studies.
From the Gleneagles communiqué: “The commitments of the G8 and other donors will lead to an increase in official development assistance to Africa of $25 billion a year by 2010, more than doubling aid to Africa compared to 2004” (G-8, 2005b, p. 8, para. 27).
On Africa’s infrastructure needs, see Foster and Briceno-Garmendia (2010). The principal authors of this chapter are Pedro Conceição, Brett House, Ayodele Odusola, Daniela Gregr, and Ali Zafar (UNDP).
Warner (2010) reviews these issues in the context of World Bank project assessments.
In particular, improvements in the different stages of the budget process seem to be associated with good fiscal performance; see Dabla-Norris and others (2010).
UNDP launched support missions to each country through the spring and summer of 2008, through which it worked collaboratively with governments and local representatives of the AfDB, the IMF, and the World Bank.
The role of the PRSP is reflected in the institutional setup in each of the case study countries. In particular, there is a central coordinating secretariat or unit in the Ministry of Finance or Ministry of Planning. This helps to ensure a strong alignment with MTEFs and annual budgets.
See IMF (2007) for a discussion of the different ways countries in Africa can finance public investment programs and some of the considerations involved. IMF (2010c) discusses the opportunities and challenges of debt-led scaling up and some of the ways IMF-supported programs analyze and take this into account.
Liberia is an exception. Aid was already higher than $85 per capita; the exercise thus analyzed a 15 percent increase.
This is further reinforced by Misch and Wolff (2006).
For an analysis of these issues in the context of aid scaling up, see for, example Bourguignon and Sundberg (2006). The principal authors of this chapter are Laure Redifer and Luis-Felipe Zanna (IMF).
The type of investment also matters for the timing of the return: public investment in transportation, energy, or communications infrastructure would be expected to produce growth returns sooner than public investment in education and health. Judgments were made on a case-by-case basis about what type of investment was included, but in general, cases focused on investment along the lines of that financed by what Clement, Radelet, and Bhavnani (2004) termed “short-impact aid,” typically including investment for infrastructure and in productive sectors such as agriculture and industry.
Sterilization corresponds to adjusting the domestic money supply to offset additional government spending in local currency terms, either through selling foreign exchange, issuing central government bonds, or both.
Although the standard used was to raise recipient countries’ ODA levels to $85 per capita (except for Liberia, as noted in the Appendix), for the purposes of calibrating the model and interpreting its results, this amount was converted into GDP terms for each country.
To take just one example, the cases assume no changes in domestic tax revenues associated with the aid scaling up. As emphasized above, enhanced domestic revenue efforts are critical to raising and sustaining public service provision.
The IMF papers were written over the course of 2008—10, and the consolidation was undertaken over the course of 2011. As of the time of consolidation, some of the papers’ “projections” are now in the past; however, the thrust of the analysis is still valid and the results relevant. For the IMF, the authors of the country case studies referred to in this paper were Joannes Mongardini and Issouf Samake (Benin); Martin Pietri, Noriaki Kinoshita, Takahiro Hitakatsu, and Mario Carlos Zejan (Central African Republic); Jihad Dagher and Peter Allum (Ghana); Seok Hyun Yoon and Chris Lane (Liberia); Emilio Sacerdoti and Gonzalo Salinas (Niger); Zuzana Murgasova and Stella Kaendera (Rwanda); Norbert Toé and Kadima Kalonji (Sierra Leone); Laure Redifer and Matthew Gaertner (Tanzania); Christian Mumssen and Samuele Rosa (Togo); and Nils Maehle and Jean Noah Ndela Ntsama (Zambia). The country teams at the IMF were assisted by Jan Gottschalk and Rafael Portillo. The summaries of the IMF country cases were prepared by Matthew Gaertner and Laure Redifer. For UNDP, the contributors to the country case studies were Anatole Ayisi, Jean Bogounou, Souleman Boukar, Boubou Camara, Siaka Coulibaly, Idrissa Diagne, Brett House, Usman Iftikhar, Alofa Janvier, Kamil Kamaludden, Lamin Manneh, Theodore Mpatsewenumgabo, Shantanu Mukherjee, Gonzalo Pizaro, Kodzo Sedegah, Yousouffa Sila, and Abdoulie Sireh-Jallow.