Africa’s policy and institutional strength declines, World Bank finds

25 Jul 17

The quality of economic and social policies and institutions weakened in Sub-Saharan Africa in 2016 amid challenging economic conditions, the World Bank has found.

This adverse trend was present in 40% countries, notably commodity exporters and fragile states.

The bank’s annual Country Policy and Institutional Assessment (CPIA) gives ratings used to determine the allocation of zero-interest financing and grants for eligible countries from the bank’s concessional financing arm the International Development Association.

CPIA scores are based on 16 indicators covering economic management, structural policies, social inclusion and equity, and public sector management and institutions. Countries are rated from 1 (low) to 6 (high) for each.

The average CPIA score for the 38 countries assessed was 3.1. Rwanda led at 4.0, closely followed by Senegal and Kenya, both on 3.8.

South Sudan was the worst performer on 1.6, followed by Eritrea (1.9) and the Central African Republic (2.4).

Côte d’Ivoire, the Comoros, Cameroon, Guinea, Madagascar, Mauritania, and Sudan saw the greatest gains in CPIA scores.

But the number of countries with worsening overall scores outpaced improvers by a margin of two-to-one.

According to the bank, a common pattern across countries that experienced weakening was slippage in monetary and exchange rate, fiscal, and debt policies.

It said this could partly be explained by unfavourable economic conditions across the region, where weakening of fiscal and external buffers constrained the scope for macroeconomic policies to mitigate the effects.

Performance on policy and institutional quality in sub-Saharan Africa’s non-fragile countries is comparable to that of similar countries elsewhere but fragile countries fell generally behind other comparable nations.

Punam Chuhan-Pole, lead economist for the World Bank Africa region and author of the report, said: “African countries exhibiting economic resilience tend to have stronger macroeconomic policy frameworks, better quality of policies that promote sustainable and inclusive growth, and more effective public institutions than other countries.

“Nonetheless, there is scope for all countries in the region to speed up policy reforms and strengthen institutional quality.”

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