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Ghana Makes Progress Against the ‘Resource Curse,’ but Challenges Remain | Africa Portal

Newcomers to Accra may be surprised to see evidence of corporate social responsibility strewn around Ghana’s capital city. Billboards and posters remind passers-by of the constant stream of summits, workshops and initiatives taking place to address the challenges posed by managing the country’s newfound oil reserves.

For those familiar with Ghanaian politics, however, the 2007 discovery of significant offshore oil reserves has already brought the petroleum industry to the centre of heated national policy debates.

Two recently publicized oil industry events illustrate the wide scope of actors and vested interests at the table within these emerging debates.

Last month there was second edition of the “Ghana Oil and Gas Summit,” which caters to a corporate audience with a networking platform for potential foreign investors in Ghana’s oil and gas sector. Previously, there was also the Regional Extractive Industries Knowledge Hub’s (REIKH) fourth annual ‘summer school’ on the governance of oil, gas and mining activities, targeting extraction industry professionals from across Africa.

While there is no doubt these developments are promising for the future management of Ghanaian oil reserves, the checks being placed on governments and corporations have not been formulated with realities facing local communities in mind.

The fact that REIKH emerged alongside the discovery of petroleum reserves in Ghana underscores how policy debates have revolved around oil revenue management. The Hub has focused on capacity building among government professionals, civil society organizations (CSOs) and news media, with the aim of building virtuous cycles of accountability with local communities affected by oil extraction.

Despite the diversity of actors in Ghana’s oil industry, however, one buzzword is common to all stakeholders — transparency. Understood as an essential component of accountability in revenue management, the advent of transparency has led to growing debate over the relevance of the Extractive Industries Transparency Initiative (EITI), an international program that promotes global standards of oil and mining sector accountability at the local level.

With Ghana’s mining industries already EITI-compliant, multiple stakeholders — CSOs, government and corporate actors — are now working to extend the standard to the country’s oil and gas extraction. In this effort, Ghana has even gone beyond global EITI guidelines that focus on revenue management, and pushed for earlier onset transparency in contract negotiations and agreements.

But while there is no doubt these developments are promising for the future management of Ghanaian oil reserves, the checks being placed on governments and corporations have not been formulated with realities facing local communities in mind. While information on revenue flows to local chiefs and other traditional authorities may be known, for example, “there are no requirements regarding how the chiefs utilize the royalties that they receive,” says Dominic Ayine, a legal practitioner and consultant who has been involved in drafting the bill to extend Ghana’s EITI compliance.

Viewed by some as an unfortunate status quo, the practices of traditional authorities have the potential to undermine the achievements of higher-level programs such as EITI. With the importance of national government revenue and expenditure acknowledged, however, it will be equally important for policy makers to ensure that resources reaching local communities is being distributed with the same degree of scrutiny. With the culture of nation-wide transparency that Ghana is trying to foster, no wallet is too small for inspection.

W. R. Nadège Compaoré is a Ph.D. candidate in the Department of Political Studies at Queen’s University. Her research interests include international political economy, international security, corporate social responsibility and global governance, while her doctoral research investigates the political economy of extractive energy in Gabon and Ghana.

via Ghana Makes Progress Against the ‘Resource Curse,’ but Challenges Remain | Africa Portal.

via Ghana Makes Progress Against the ‘Resource Curse,’ but Challenges Remain | Africa Portal.

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NAI Forum » Can Cities or Towns Drive African Development?

NAI Forum » Can Cities or Towns Drive African Development?.

via NAI Forum » Can Cities or Towns Drive African Development?.

Can Cities or Towns Drive African Development?

Economy-wide Analysis for Ethiopia and Uganda

2012-08-27

September 25, 2012

by Paul Dorosh, International Food Policy Research Institute, Washington DC; and James Thurlow, UNU-WIDER, Helsinki.

The relative importance of agriculture versus industry in African development remains a major area of both academic and policy debate, informing the allocation of aid and other resources across rural areas, towns and cities, while Africa is rapidly urbanizing.

We examine whether urban agglomeration economies significantly alter the debate over the potential drivers of Africa’s structural transformation. More specifically, we develop an economy-wide model that captures the benefits from urbanization.

We apply the models to data for Ethiopia and Uganda––two agriculture-based African countries that have much in common with the rest of low-income Africa, and where urban development is central to the policy debate.

We conclude that while urban agglomeration provides an additional argument against an ‘agro-fundamentalist’ approach to African development, the shorter-term political and socioeconomic imperative to reduce poverty still supports further investment in African agriculture.

The development literature often provides conflicting recommendations to African countries. On the one hand, governments are encouraged to direct physical and financial resources towards urban industrialization, in part to harness the agglomeration effects brought about by concentrating economic activity in specific geographic locations.

On the other hand, governments have for a long time been told that agriculture has strong growth linkages, both within rural areas and national economies. Investing in agriculture may therefore generate large economy-wide multiplier effects―as is said to have occurred during Asia’s green revolution. While urban and rural development are not necessarily mutually exclusive, a scarcity of public resources, and the need to meet both short- and long-term development objectives, implies that trade-offs between rural  and urban investments are expected.

The relative importance of agriculture versus industry in African development remains a major area of academic as well as policy debate. This debate is crucial since it informs the allocation of foreign development assistance across rural areas, towns and cities at a time when Africa is rapidly urbanizing. The subject of the debate is also crucial for African governments who routinely allocate scarce resources across competing development objectives.

For example, Uganda’s government must decide how best to reallocate resources away from southern regions towards post-conflict northern cities and rural areas. Similarly, Ethiopia’s government limits urban migration through its land tenure policies, but must weigh this policy against the benefits of urban development.

At its broadest level, the academic debate hinges on whether the traditional development models that sought to explain the drivers and process of structural transformation are still relevant for Africa. Early dual economy models viewed non-agriculture as the dynamic sector that draws surplus farm workers into more productive jobs. Agricultural growth was seen as necessary to prevent rising food prices and wages from slowing industrialization.

Subsequent models attributed a more active role to agriculture given its industrial production linkages and its household consumption linkages, particularly within rural economies. For those who some call ‘agro-fundamentalists’, these models still provide the core justification for an agriculture-led growth strategy in Africa. Agriculture is also seen as a direct link to poorer Africans given their dependence on farm-based livelihoods.

The traditional models face two major criticisms. First, integrated global markets mean that countries might be able to use food imports rather than domestic production to support industrialization. Second, the sources of growth are not explicitly identified in traditional models making it difficult to determine which sectors drive structural transformation. In this regard, African agriculture has yet to demonstrate that it is able to generate productivity gains like those experienced in Asia’s green revolution.

Counter-arguments contend that a reliance on food imports would weaken inter-sectoral growth linkages and widen the rural-urban divide. Moreover, African agriculture’s historically poor performance might reflect long-term underinvestment in the sector rather than its growth potential.

The above arguments focus on agriculture itself and are well-trodden areas of the debate. An area that receives less attention is the benefits from urban agglomeration economies and the growing interest in new economic geography. From this perspective, economic growth accelerates when resources or activities concentrate within geographic areas. Urbanization and industrial localization can generate positive externalities by situating producers closer to labour markets and customers, as well as to each other.

Urban agglomeration could therefore generate the productivity gains required to drive structural transformation. Agglomeration economies were not explicitly considered in traditional models and so might provide an additional argument in favour of directing resources towards industries in major cities and towns.

However, over the short-term, investing in major cities does little to address national poverty. Agricultural growth is found to be a more effective means of reaching the poor, albeit at the cost of slower national growth. Given these trade-offs, we conclude that while urban agglomeration does provide an argument against an ‘agro-fundamentalist’ approach to African development, the shorter-term political and socioeconomic imperative of reducing poverty supports further investment in African agriculture.

To examine these trade-offs, we developed a dynamic economy-wide model inthis paper.  We examine whether urban agglomeration economies significantly alter the debate over the potential drivers of Africa’s structural transformation. More specifically, we develop an economy-wide model that captures the benefits from urbanization.

Unlike most models, ours is designed to capture both traditional and new elements of the rural-urban debate, including sub-national growth linkages, internal migration, and agglomeration and congestion effects. It distinguishes between rural areas, small towns and major cities. It captures rural-urban production and consumption linkages as well as international trade including food imports, thereby incorporating many of the arguments for or against agriculture.

We apply the models to data for Ethiopia and Uganda―two agriculture-based African countries that have much in common with the rest of low-income Africa, and where urban development is central to the policy debate. The models are used to simulate the effects of accelerated urbanization, and the growth and poverty impacts (and trade-offs) of reallocating public investment between rural areas, towns and major cities.

Simulation results indicate that urbanization and agglomeration economies are important sources of economic growth and could be drivers of long-term structural transformation in Africa. It also has the potential to reduce the rural-urban divide. This is especially true in Uganda, where the industrial sector has stronger linkages to rural agriculture. However, without supporting investments in urban growth and job creation, there is likely to be an ‘urbanization of poverty’ in both Ethiopia and Uganda.

Rising urban poverty could prevent the use of large-scale rural-to-urban transfer programmes aimed at offsetting the decline in agricultural growth from reallocating away from rural areas. As such, our findings suggest that, at least over the short-term, investing in cities is unlikely to adequately address national poverty concerns.

In contrast, agricultural growth is a more direct and effective means of reaching the poor in the short run, but it comes at the cost of slower national growth and with possible long-term implications for the rate of structural transformation.

Given these trade-offs, we conclude that while urban agglomeration provides an additional argument against an ‘agro-fundamentalist’ approach to African development, the shorter-term political and socioeconomic imperative to reduce poverty still supports further investment in African agriculture.

 

Doing Business” 2011

l’Afrique subsaharienne progresse vite, le Maghreb un peu moins

Le rapport “Doing Business” 2011 a été publié le 4 novembre. © Banque mondiale

La Banque mondiale a publié jeudi 4 novembre son rapport “Doing Business” 2011. Il montre une très nette amélioration du climat des affaires en Afrique subsaharienne et un bilan plus mitigé pour le Maghreb. Explications.

Un très bon cru

Les rapporteurs de la Banque mondiale rendent hommage à l’Afrique pour la poursuite des progrès accomplis dans le climat des affaires, grâce à des efforts continus malgré la crise. Ils recensent 49 réformes mises en œuvre dans 27 pays d’Afrique subsaharienne et 22 dans 11 pays du Maghreb et du Moyen-Orient.

Ces deux régions s’illustrent en particulier dans l’amélioration du commerce international : ils sont responsables, à eux seuls de la moitié des réformes recensées à travers le monde dans ce domaine. Les auteurs soulignent notamment les effets bénéfiques des efforts réalisés pour une meilleur intégration régionale des économies nationales.

Maurice au top

Maurice reste le pays africain le mieux classé, au 20e rang sur 183, comme en 2010 et en 2009. Il devance notamment des pays riches comme l’Allemagne et la France.

Le Maghreb boosté par la Tunisie

Le bilan pour le Maghreb est contrasté. Le Maroc (114e) et l’Algérie (136e) stagnent. Seule la Tunisie tire réellement son épingle du jeu. Elle est toujours en haut du classement (55e) et, en gagnant 3 places, elle accroît même son écart avec ses voisins maghrébins hors Égypte (qui passe de la 99e à la 94e place).

Selon les experts du Pnud, Tunis bénéficie de l’informatisation croissante de son administration, ce qui accélère les procédures. « La technologie rend le respect des réglementations plus facile », commente Dahlia Khalifa, un des auteurs du rapport. Le pays enregistre par exemple la plus forte progression au monde dans le domaine de la perception des taxes au cours de l’année écoulée.

Mention spéciale pour le Rwanda

À la 58e place, ex-æquo avec la Zambie, le Rwanda fait le bond le plus spectaculaire du continent (+12 places). Les réformes dans la délivrance des permis de construire, l’accès au crédit ou encore le commerce international ont porté leurs fruits, selon le rapport.

L’Afrique anglophone progresse vite

L’Afrique subsaharienne anglophone, vers laquelle le Rwanda se tourne de plus en plus, progresse à grande vitesse. De belles avancées sont enregistrées notamment au Ghana (+10 places, 67e) et en Ouganda (+7 places, 122e). Mais c’est toujours l’Afrique du Sud qui est la mieux classée de cet ensemble (34e), bien qu’elle ait perdu deux places.

L’Afrique francophone à la traîne

Les poids lourds de l’Afrique francophone restent au-delà de la 150e place, pour la plupart. Parmi eux, certains progressent notablement, comme le Cameroun (+5 places, 168e) qui a réformé ses procédures de création d’entreprise. Ou encore la République démocratique du Congo (RDC, 175e), qui gagne 4 places, notamment grâce à la délivrance facilitée des permis de construire.

Le Burkina Faso (151e), qui a mené a bien des réformes dans 4 des 9 secteurs précédemment évalués par la Banque mondiale, progresse de 3 places. Le Bénin (170e), le Gabon (156), le Mali (153e) et le Togo (160e) n’en gagnent que 2.

Surtout, le Niger (-3, 173e), Madagascar (-2, 140e), mais aussi la Côte d’Ivoire (-1, 169e), qui ont pourtant mené à bien des rénovations validées par le rapport, perdent des places au classement. Les troubles politiques dans ces pays ne sont certainement pas étrangers à cette régression.

Au titre des baisses, il faut signaler également le Sénégal (152e) et la Guinée (179e), qui reculent chacun d’une place. Et se rapprochent un peu plus des deux derniers de cet index que sont la Centrafrique (182) et le Tchad (183e).

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