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Infrastructure deficits have long been recognised as being central to Africa’s developmental malaise. This paper looks at the state of the continent’s infrastructure, with a focus on the actions that governments can take to spur its development. In other words, it attempts this analysis from the perspective of governance. By any measure, Africa is on average less well provisioned with infrastructural assets (roads, railways, power grids, communication networks, water and sanitation systems) than any other part of the world. Much of what does exist has been degraded by unsatisfactory maintenance. The most comprehensive estimate is that an amount of some $93 billion annually will be needed until 2020 to achieve the necessary development. Funding continues to fall short of this, although the sums available are growing. Africa’s governments, bilateral and multilateral donors and the private sector are all investing large amounts in infrastructure. Funding is no longer the defining problem in relation to Africa’s infrastructure development, and questions of governance need to be accorded greater recognition.
Studies demonstrate that gains are to be had through better project preparation, greater efficiencies and so on. Adequate maintenance is particularly important. These actions would help secure better infrastructure without significantly greater outlays. Achieving them would, however, require sometimes tough and politically unpopular decisions – making appropriate governance choices are therefore critical. Managing infrastructure construction and maintenance across borders is central to Africa’s infrastructure needs. With so many countries landlocked, cross-border links are imperative for their economic fortunes. This is a complex issue, and resolving it demands that governments and regional institutions cooperate with one another, imposing another set of governance choices. The paper concludes by noting the need to shift debate around Africa’s infrastructure to the governance obstacles it needs to confront. It suggests that governance action could be taken in seven areas to help achieve this: finance; policy, planning and project preparation; efficiency; the regulatory environment; private sector involvement; engagement of Africa’s people; and a focus on regional integration.
South Africa’s Industrial Policy Action Plan (IPAP) identifies local content as a strategic industrial policy instrument to leverage the power of public procurement; reduce the country’s trade deficit; address market failures; foster infant industries; and increase the
government’s tax base (the dti, 2016). Although local content is a commonly used industrial policy lever, there is no formally agreed definition of what local or content means, and this makes implementing the policy difficult.
The main problem with local content policies in South Africa is they are not leading to the desired level of procurement from local manufacturers. This problem persists for several reasons. Local producers often fail to compete against foreign suppliers on both quality and price, unless they are given more time to increase, improve and modify their capacity and capabilities to suit specifications. However, procurement regulations allow no space for negotiations between procurers and suppliers, leading to non-compliance by many local suppliers or total exclusion from the process. Moreover, transaction costs of locally manufactured goods are usually higher than foreign-sourced goods. The relevant systems required to measure and monitor imports and compliance on local content and procurement are inadequate, compounding the difficulty of monitoring and evaluating the policy.
Key findings from the research suggest no overarching cost and quality data on local content exists. Therefore, programmes should be established to provide suppliers with timely information on specifications, price, and quality, so that local producers can comply, and have sufficient forewarning and upgrading support. Systems to monitor imports and compliance need to be put in place, including providing a clear regulatory and legislative framework that provides a simple and concise definition of local content.
This policy brief assesses the key challenges and lessons that determine the success and failure of local content policies in South Africa. In particular, it analyses the economic rationale for using local content policies. Furthermore, the brief highlights the reasons
local content policies are not effecting the desired level of local procurement and why the problem persists, and suggests possible solutions.
Dealing with the aftermath of the current situation in northern Iraq requires a a mid-and a long-term strategy. Both have to recognize limitations that are due to the cyclical re-occurence of conflict and that mirror specific historical and socio-political circumstances. The success of mid-term strategies to tackle the stream of refugees and internally displaced persons (IDPs) will depend in large part on the convincing development of long-term positive scenarios for the future of Iraq, introducing noticeable political and socio-economic change.
In the mid-term, promoting good governance practices, the protection of human rights, integration of refugees and ethnoreligious minorities with aid projects that benefit both the displaced and host communities ought to be rewarded. In the long-term, a sustainable conflict resolution as well as a solution for the withdrawal of international actors must be found even if the current political realities and military strategies in the country impede this and increase the need for external aid.
This issue of the Open Access IDS Bulletin examines the impact of decentralisation at the local level through detailed case studies of five countries – Ghana, Nigeria, Kenya, Uganda and Ethiopia. The issue deals with all three of the main aims for decentralisation reforms in Africa: improved service delivery, democracy and participation, and a reduction in central government expenditure. It analyses micro, comparative stories by accumulating evidence on how decentralisation works differently within each featured country, and the factors that are responsible for differential outcomes.
Contributors are mostly African scholars who live under the region’s decentralised systems and study them with a proximate lens often denied to visiting scholars. Their research questions, on their countries’ respective policy agendas, are joined by the common belief that more innovative methods should be applied to these questions in order to get at better explanations.
While decentralisation is an important issue, systematic analyses of its outcomes are limited. This IDS Bulletin represents first efforts to use more innovative and incisive methods to understand decentralisation and its impact.
lthough Ghana has implemented several donor -sponsored public sector reforms (PSRs) in an attempt to improve core areas of state functionality, the impact of such reforms remains generally disappointing. In this paper, we show that the nature of the political settlement in Ghana, described as one of ‘competitive clientelism’, is central to understanding the country’s limited success in improving the effectiveness of public institutions.
Ratings and rankings have become a staple output of advocacy groups and think tanks worldwide. This document offers a quick ten-step guide on how to write and achieve maximum impact with ranking reports.
Environmental, social and governance (ESG) concerns are an increasingly important factor worldwide for banks when they invest in large projects. In the Southern African region with its rich mineral deposits, this trend has added importance. Mining companies extract minerals from the ground, and their activities routinely give rise to public concerns about the pollution of water sources, adequate land for agriculture, and fair community participation in mining projects. South African law accepts that the directors of corporations such as banks have fiduciary obligations to act in the best interests of shareholders.
Given the importance of mining activity to economies in Southern Africa an important question aligned to this fiduciary duty is this: Are banks when conducting business obliged to act in the best interests of stakeholders affected by the activities of the mining companies they fund? The trite response is that banks have recognised their obligations to communities through their commitment to SRI (socially responsible investment) practices and internal ESG processes that ensure that their funding decisions result in no harm to communities.
This paper sets out to critically consider the effectiveness of ESG principles implemented by South Africa’s banks when they fund mining projects in the SADC region. There are internal differences in ESG principles between banks, and a variety of funding methods to which the principles are applied. The study evaluates the ESG frameworks used by each bank and, given the significant market share, aggregates this information to present a picture of the effectiveness of these frameworks. The approach taken is a critical one, meaning that what is presented in bank annual reports and sustainability reports is not merely accepted, but (to the extent possible) internal ESG risk frameworks are interrogated for adequacy of application by banks when funding mining projects. The effectiveness of the implementation of internal ESG procedures by banks is then measured against available evidence. This evidence includes the effects of mine project funding decisions of banks on ESG categories as ascertained from public information.
After consideration of the evidence, observations and conclusions are provided on the analysis. In the closing section, recommendations are provided on areas for possible focus to improve the effectiveness of ESG principles used by banks in the SADC region.
Southern Africa is endowed with lucrative mineral resources such as diamonds, gold, copper, coal, platinum, and uranium. This rich endowment can be a major asset in the quest for inclusive and sustainable development, yet mining in Southern Africa has often been criticised as an enclave sector that at best contributes little to economic development and at worst does substantial social and environmental harm. To avoid such pitfalls emerging international consensus emphasises the importance of good mineral governance. This involves the adoption and implementation of regulatory frameworks that promote deeper linkages between the mining sector and the broader economy, and that protect people and the environment from the potentially harmful consequences of mineral extraction.
This pilot study provides a barometer of mineral governance in ten Southern African countries: Botswana, Democratic Republic of the Congo (DRC), Lesotho, Madagascar, Malawi, Namibia, South Africa, Swaziland, Zambia, and Zimbabwe. The barometer takes stock of mining regulations in place at the end of 2015, the extent to which they are implemented, and features of supporting institutions. It is based on the observation that while regulations impose obligations on mining companies, in doing so they directly impose obligations on the state to monitor and enforce compliance, and they also indirectly impose obligations for citizens and civil society to hold the state and mining companies accountable. The barometer includes indicators of mineral governance across four main issue-areas: national economic and fiscal linkages; community impact; labour, and the environment, with artisanal and small-scale mining (ASM) treated as a special topic. The barometer also includes indicators of state capacity and state accountability with respect to mineral governance.
Renewable energy technologies have experienced an exponential growth in South Africa, thanks to the procurement of large-scale power plants. However, South Africa’s electricity sector still lacks a level playing field. Significant vested interests have maintained overwhelming support for centralised, coal-based electricity generation, preventing the development of renewable energy technologies to their optimal potential. Active efforts are required to enhance the transformation of electricity supply in the country by truly incorporating the low-carbon transition in electricity planning, opening the policy space for the development of embedded generation, and phasing out fossil fuel subsidies.
The electricity sector in South Africa is a highly contested space. The emergence of renewable energy technologies (along with energy efficiency and other demand-side management opportunities) has generated healthy revitalisation and disturbance of the status quo in the industry. Discussions around other technologies, such as gas-to-power and nuclear energy, are also adding to this vibrant dynamics. Significant vested interests are still at play alongside massive state support to maintain the domination of the coal industry over the electricity supply industry in South Africa.
Active efforts are required to provide a level playing field for all energy technologies and enhance the transformation of electricity supply in the country. This includes truly incorporating the low-carbon transition in electricity planning, open the policy space for the development of embedded generation and phase out fossil fuel subsidies.
Between 2015 and 2016, Jimma University developed and ran a training and mentoring programme with the Ethiopian Federal Ministry of Health to improve the Ministry’s capacity for using evidence in policy making. This case study discusses the project and its potential for shaping the institutional culture of this busy department.
The rise of the social protection agenda in Zambia over the past few years seems in some ways to fit with mainstream accounts of how welfare states are likely to emergein developing countries, particularly in terms of the links to elections and pro-poor political parties. However, here the authors demonstrate that this (still incipient) policy shift flows more directly from two alternative sources, namely shifting dynamics within Zambia’s political settlement and the promotional efforts of a transnational policy coalition.
The general aim of the research project, The Post Amnesty Conflict Management Framework in the Niger Delta, was to ascertain how the implementation of the Presidential Amnesty Programme (PAP) which had been introduced by the Shehu Musa Yar'Adua-led administration in 2009 was perceived by the people of the Niger Delta, and to what extent it had contributed to creating lasting conditions for peace and stability in the region.
The following policy recommendations derive directly from the findings of the research:
This study explored ways in which Mali’s 25-year old decentralized governance system empowers local government to help communities adapt to the changing climate. The findings suggest that local development plans hold promise as a vehicle for engaging communities and integrating adaptation into local development planning, but that more needs to be done to strengthen the process. Centered in the southern regions of Mopti, Koulikoro and Sikasso, where most livelihoods derive from farming and livestock, the study also found that decentralized governance creates particular opportunities to facilitate problem-solving across villages and build external linkages to NGOs, donors and others. Such relationships are important as households increasingly compete for water and land for grazing and farming, and trees for charcoal and fuelwood. With higher temperatures and decreasing rainfall likely in these regions in the future, effective management of natural resources is vital to maintaining livelihoods and minimizing conflict.
Multilateral development banks increasingly struggle to respond effectively to the needs of middle-income countries, influencing not only their potential development impact but also their own financial stability. This challenge has been driven by a changing external environment, including additional competition from other financiers, the changing needs of middle income countries and institutional constraints. Business processes that deter greater borrowing by countries, especially in the presence of other financiers with less strenuous requirements, also contribute to this situation. These include lengthy loan approval processes, limited use of in-country management systems and sensitivities around environmental and social safeguards. There is also a need for greater responsiveness and an emphasis on the importance of knowledge services. This paper highlights some of these challenges and offers some alternative solutions. The New Development Bank, as a new entrant to the development finance milieu, will do well to draw on the experiences of existing multilateral development banks to improve its offerings to countries.
Illicit financial flows (IFFs) are garnered through the proceeds of illicit trade, trade mispricing, transfer pricing and other forms of organised profit-motivated crime. This paper focuses on the commercial tax evasion component of illicit financial flows (IFFs), clarifying concepts often used interchangeably, namely transfer pricing, abusive transfer pricing, trade mispricing (or trade mis-invoicing), trade-based money laundering (TBML), tax evasion and tax avoidance. It also shows how they link to IFFs. It estimates the extent of trade mispricing by enhancing the model currently used by Global Financial Integrity, and by developing a TBML model as a means of quantifying IFFs between two developing countries. There are data challenges with this methodology, as it is an estimation of illegal or hidden activities, using the International Monetary Funds Direction of Trade methodology.
The research points to declining trade mispricing in South Africa and Zambia for the period 2013-2015, and Nigeria for the period 2013-2014. Morocco and Egypt exhibit increasing trade mispricing from 2013 to 2014. The TBML model, which addresses the criticism regarding flows between two developing countries, points to increasing financial outflows for all five countries. These flows mean less revenue is available to the fiscus to invest in socio-economic infrastructure and pro-poor growth strategies, which would benefit women and the poor. Policy recommendations address commercial tax evasion as well as proposals to remedy the data anomalies.
Low-income countries (LICs) in sub-Saharan Africa face a substantial infrastructure-financing gap. multi-lateral development banks (MLDBs) have traditionally played an important role in mobilising finance for infrastructure in LIcs, but their funding alone cannot match demand. the african development Bank’s (AfDB) concessional window, the african development fund (ADF), is a key infrastructure financier for african LICs, and comprises 37 regional member countries (RMCs), including emerging markets and fragile states. however, in recent years the ADF has faced funding and technical constraints.
This policy brief, based on a discussion paper, outlines the ADF’s role in providing infrastructure financing to LIcs and the challenges that countries face in accessing these funds. It also examines the changing context confronting LIcs as they weigh their infrastructure demands against the requirement to maintain sustainable debt levels. Lastly, the brief explores the challenges and opportunities of mobilising additional finance for LICs.