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Africa needs strong institutions and smart policies

K.Y. Amoako, President, African Center for Economic Transformation

Sept. 8, 2020 9 min read

Dr. K.Y. Amoako spent two decades as a leading economist at the World Bank. He was also an Under-Secretary-General and Executive Secretary of the United Nations Economic Commission for Africa (ECA). He is the founder and President of the African Center for Economic Transformation (ACET), a think tank based in Accra, Ghana.

In his recently published book, Know the Beginning Well: An Inside Journey Through Five Decades of African Development, Dr. Amoako examines Africa’s development history to better inform future actions, including how to achieve economic transformation.

He spoke with Africa Renewal’s Kingsley Ighobor about the key elements of the book: development policies, gender and political leadership, among others. These are excerpts from the interview.

From your decades of experience as an economist with the World Bank and the United Nations, why do you think African economies are struggling?

The title of my book Know the Beginning Well addresses your question. An African proverb says that if you know the beginning well, the end shall not trouble you.

I draw four key lessons that apply to Africa's development. First is that policies matter. You need good policies to drive growth. Second, institutions that drive the policy agenda matter. Third, capacity to implement policies matters. Finally, leadership matters.

Over the last 50 years, I have seen up close how some countries have excelled in a few areas but fallen short in others. All of these [lessons] are important, and they must work in tandem. That said, economies are struggling, especially in light of the global pandemic, but we have made progress. Countries have improved in their policies, and the capacity of institutions has also improved.

What economic policies would you recommend for countries?

Growth is important, but growth is not enough. For example, economic growth must be accompanied by diversification of production and adoption of new technologies. Many African countries rely heavily on commodities and natural resources, but not manufacturing or high-value services.

We need to be very competitive in the export market. So, diversification of production, export competitiveness, increased productivity and application of technology are important factors.

At ACET, we came up with the African Transformation Index to measure the progress of countries. Some countries are doing very well while others are lagging.

The African Transformation Index compares countries based on progress made in five main categories of economic transformation. These are:

Diversification of production and exports

Export competitiveness

Productivity increases

Technology upgrading

Human economic well-being

Source: African Center for Economic Transformation

Which countries are doing well?

We track progress over the past 10 years. It's not just over one or two years. Countries like Mauritius, South Africa, Ethiopia, Côte d’Ivoire, Senegal and Kenya are on top of the list in transforming their economies, but other countries are coming up - Ghana and Gabon, for example.

In your book you elaborate on political economy, which has wider ramifications.

The impact of economic development is what we call human economic well-being. It is not an end in itself; it is the impact on people’s livelihoods.

The last chapter of the book is about visionary leadership to drive the political economy. We need leaders in Africa who put human well-being first and then design policies that support economic transformation and lead to equitable growth, which will ensure decent jobs, good service delivery, improved health, etc.


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About 33 of 47 countries classified as Least Developed Countries are in Africa. How could these countries tackle the economic impact of the pandemic?

The worry about COVID-19 is that the progress made in the past could be derailed.

At ACET, we developed what we call “10 Policy Priorities” that countries can adopt to mitigate the impact of COVID-19. In most cases, they are actions that policymakers should be taking anyway. But we believe if they are prioritized now, they will help immediate recovery efforts as well as keep long-term transformation goals on track.

They cover four broad areas. The first is domestic resource mobilization and management. The second is government effectiveness and transparency. The third is business and investment environment. And the fourth is digital innovation and entrepreneurship.

Africa’s young people are spearheading a digital transformation. That must be a positive.

Very much so. We actually have some research coming out very soon on that topic. ACET produces the African Transformation Report every three years. It’s our flagship publication.

The latest, which we will publish this fall, covers digital innovation along with a few other “big picture” topics that not only pose challenges but opportunities to accelerate transformation in the coming decade. Demographics, jobs and climate are the other topics. Digital innovation is very important, and the news has been positive, but there is still a lot to do to accelerate the momentum.

What more can be done?

Countries need to develop clear-cut innovation policies that include a role for the government and for the private sector. We need also to, for example, bring more venture capital and training into the innovation ecosystem.

The Structural Adjustment Programme (SAP) of the ’80s failed, especially in Africa, primarily because it was based on conditional lending. In your book, you advocate for collaborative partnership as an alternative. Why?

Let me be clear about what I said in the book. I said the way the SAP policies were implemented was wrong. A lot of policies were forced on countries that did not have the implementation capacity, or that may not have believed in those policies.

I also said the cuts in expenditures had adverse impacts on social services. The process of deciding policies without the involvement of countries was wrong.

However, everything I did at the ECA indicated my belief that partnership works, but you need to put the African countries at the center of leadership. Many of the initiatives we were involved in at the ECA, including NEPAD [New Partnership for Africa’s Development], the APRM [African Peer Review Mechanism] and others, we managed to make African-driven and African-owned.

What about partnerships with multilateral institutions such as the World Bank and the IMF? How much leverage does Africa have in how partnership plays out with these institutions?

The international multilateral environment today is very different than what it was 15 or 20 years ago.

Individual African countries’ relationship with the World Bank is not the same. If you take my own country, Ghana, or many other African countries, finance ministers and other officials are effectively managing affairs with the Bank. I think the Bank has learned also to take more of a back-seat role.

So, the dynamics are different today. Ghana’s president Nana Akufo-Addo has been aggressive in trying to reorient the country’s development around a “Ghana Beyond Aid” strategy. This concept resonates with many countries.

It’s about more than taking ownership or exerting leverage. It’s about putting the right policies in place first. The role of the Bank and the IMF should be seen in that context.

“Beyond government, there is more that countries can do to empower women. Take agriculture. If women farmers have access to the type of support that men farmers get, productivity will go up, GDP will go up, as well as value addition,” says K.Y. Amoako President, African Center for Economic Transformation.

Will increased intra-African trade and regional integration make aid less important for Africa?

I don't look at it that way. Integrated economies absolutely will be great for Africa, and aid cannot be a perpetual answer. But we need to be realistic and once again apply what we have learned in the past.

A lot of time was spent in the ’90s on what was called the aid effectiveness agenda, which was an overdue effort to engage African countries more as collaborative partners but also to improve the delivery and increase the volume of aid.

The UN was at the center of that—the MDGs [Millennium Development Goals], debt relief, the doubling of aid, the Monterrey Consensus, remember? We had the targets and pledges. It turns out that many of the goals were not met.

What did we learn? We learned that aid was important, but it was not the answer. Even on the supply side, some of the developed countries were beginning to look at their own internal policies and interests. And the whole aid agenda lost steam. That's the reality.

In the current pandemic, we need aid. But if you talk about transformation and long-term development, aid is not the answer. That's why domestic resource mobilization and private sector investment become important.

Why did you devote a whole chapter in your book to making a case for gender equality?

That chapter was very emotional for me. It relates to my upbringing - my family. My mother never went to school. She and my father separated early, and she lived in poverty her entire life. She had few opportunities. I saw the plight of an African woman up close.

Working at the World Bank and the ECA as an economist, I really pushed, when given the chance, to elevate gender. Because I saw what investing in women - and removing the bottlenecks to equality and opportunity - can do.

Gender equality is not just a moral pursuit. Women constitute more than 50% of the population. It is an economic imperative.

What more can countries do to foster gender equality?

To start, Africa needs to invest in girls’ education and skills development.

But we also need more women in leadership positions now. I strongly believe in affirmative action for women in government, particularly in parliaments or legislative bodies where their voices are needed, but also in cabinet positions. I also hope we get more African women heads of state.

Beyond government, there is more that countries can do to empower women. Take agriculture. If women farmers have access to the type of support that men farmers get, productivity will go up, GDP will go up, as well as value addition.

You highlight economic integration as one of seven steps for transformation. Can the African Continental Free Trade Area (AfCFTA) help achieve regional integration?

I think it can help a lot. Again, I come back to Know the Beginning Well - the need to learn from the past. We’ve had the integration agenda for a long time. It was Nkrumah’s vision. We had the Lagos Plan of Action and the Abuja Treaty.

What lessons have we learned? You need strong institutions to drive the integration agenda. You need the political will. We often think that politicians make declarations and adopt protocols, and then everything falls in place. It is not so.

Integration is about people. It's about the private sector and the movement of goods and services.

Integration is not just about trade, it's also about how you use your waterways for trade or power pools to provide electricity across sub-regions.

Having said that, trade liberalization and facilitation is key. And that's where the AfCFTA comes in. I like the consultative process that led to the AfCFTA. Also, the process of setting up the Secretariat in Accra with the support of the Ghanaian government has been very positive.

Are you hopeful?

I'm optimistic, but I am a realist. If anything, COVID-19 has increased the urgency for regional integration, and we are seeing commendable efforts.

We now have the African Medical Supplies Platform, which is a supply chain response to the pandemic, and we have the Africa Centres for Disease Control and Prevention.

What one message would you give African leaders?

Build trust with the people. Implement policies that engender trust. Govern selflessly.

For more information on COVID-19, visit www.un.org/coronavirus

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