Brookings

By Bright Simons

In Davos, many of the assembling elites had circular economy on their mind and lips, and the program was replete with its implications. “Circular economy” is a concept described by its supporters as the biggest economic opportunity since the industrial revolution. They peg its scale at $1 trillion by 2025 and $4.5 trillion by 2030.

As both an economic means and an end, circularity is about “designing waste out of the system.” According to its proponents, by reusing resources, repurposing end-of-lifecycle items, recycling garbage, refurbishing the broken, and rewiring the torn, we can build a more sustainable world reset from the current course of depleting nature at rates unprecedented in millions of years.

It is estimated that if circularity gathers steam, global consumption of new materials could be reduced by 32 percent in 15 years and by 53 percent in 30 years. On the other hand, business as usual will see the human population increase by 20 percent by 2050 but waste expand by a far more staggering 70 percent.

A bonanza for Africa?

Considering Africa’s status as one of the most marginalized continents, circularity is expected to have massive positive impacts. Modelers relying on Cambridge University’s FRAMES tool who have undertaken deep dives into the prospects of several African countries report substantial gains should the principles of circularity take root. Below is a sample summary of circularity’s benefits to Ghana by 2030 in one such report:

dwarf the Great Wall of China.

Experts say this is tantamount to dumping $57 billion worth of precious minerals into landfills around the world. Unsurprisingly, European companies like Umicore and Ecomet (much beloved by the Vatican) are leading the charge to recover these precious substances from the waste heaps of the world.

It is to be expected that those regions that consume the most electronics and have the best technologies will be able to safely recover the most value without causing further harm to health and the environment. In low-technology contexts, such as West Africa, initiatives to manually recycle e-waste pose additional pollution and health hazards.

Furthermore, minerals usually concentrated in Africa in their raw form have the greatest commercial attraction to international recyclers. Take discarded printed circuit boards, one category of e-waste. For them, 85 percent of the value of recovery is in gold and palladium, Africa’s most prominent minerals besides petroleum. It is obvious that in a world where circularity in mineral processing is run full cycle in mineral processing, far less minerals would be required from Africa.

Poorer prospects for income-poor, resource-rich DRC

In a country like the Democratic Republic of Congo (DRC), where minerals generate 99.3 percent of exports and nearly 50 percent of government revenue, just two minerals and their derivatives, copper, and cobalt, bring in 90 percent of mineral income. DRC accounts for three-fourths of the world’s cobalt supply. These minerals are vital for the battery components of the emerging green power transition.

While many Western companies have been renewing their interest in the DRC’s riches because of the green wealth boom, others like Canada’s Electra (formerly “First Cobalt”) are choosing to recycle cobalt from discarded lithium-ion batteries as well.

It is not difficult to imagine a world where such recovery technologies mature exponentially, recovery rates soar, and source countries like DRC see their importance in the equation fall. Compounded by the intensification of an ongoing decline in demand for minerals and materials due to miniaturization of systems and components in the electronic industries.

official development strategy of Africa’s mineral-rich countries is to add value to their resources as the primary precursor to industrialization. How would that be possible in a world where those who consumed the final forms of the most minerals in the past—the Global North—will produce the most going forward?

Not all of Africa is like the DRC

But the economic significance of minerals in Africa is exaggerated. It is also true that since Harvard’s Atlas of Economic Complexity gained popularity, most analysts have realized that traditional value addition theories based on vertical integration and so-called “beneficiation” are not how industrialization happens nowadays. Rather than foster linkages, many national value-addition strategies have deepened “enclaves”.

Industrialization today principally involves the lateral expansion of production scope as a country extends capabilities from one value chain to an adjacent one by building general innovation capacity. Hence resource-rich Western countries like Australia, Canada, and Norway still export massive amounts of raw resources even as they boost R&D spending for strategic innovation capacity.

Still, resource-based industrialization policies have been triggers and catalysts for countries in tackling barriers in the way of innovation generally. By using lessons from resource-based industrialization, both Malaysia and Chile have with varying but consistent levels of success diversified from resource-dependence.

There is thus a real risk of abrupt transitions to high-tech-enabled resource circularity denying currently resource-dependent African countries from getting onto the ladder of industrialization if their mines become stranded assets.

Traceability and repeated royalties

One solution to this dilemma of encouraging circularity without deepening poverty in the Global South is to use traceability solutions. By efficiently tracking the lifecycle of precious minerals throughout the value chain, African countries could earn “royalties” each time a quantity of minerals originating in Africa is recycled.

The idea is not outlandish. Such thinking is now respectable in the market of intangibles, through concepts like intellectual property. Furthermore, Africa is a global pioneer of traceability (this author has operated in this field for a decade and a half) and can illuminate its end of the chain.

Traceability has other benefits. If not coupled with modern traceability technologies, the growth of local recycling could create an entry point for shady, conflict, and other dodgy minerals masquerading as recovered materials. In that sense, lifecycle traceability is a fundamental requirement for effective circularity anyway.

Circular royalties and reparations earned through “track and trace” have to be re-invested through multilateral arrangements into innovative circular industries in Africa in order to build resilience. For this, African nations have to improve government accountability.  Otherwise they will suffer the fate of traditional royalties that in many countries are being squandered due to poor governance.

      

By Aloysius Uche Ordu

On Monday, January 30, the Brookings Africa Growth Initiative (AGI) will launch its annual flagship report, Foresight Africa.

Since we launched the previous edition of Foresight Africa in January 2022, our world has changed remarkably. Russia invaded Ukraine—an unanticipated event that roiled the global economy and sent food, fuel, and fertilizer prices sky high. Sanctions on Russia resulted in trade and logistical bottlenecks, which added more pressure on already strained supply chains. The U.S. Federal Reserve and other major central banks’ unrelenting efforts to tame inflation ushered in a new era of high interest rates and aggravated several countries’ ability to settle their international financial obligations. Meanwhile, the uneven recovery from the COVID-19 pandemic continued to feature in headlines across Africa and elsewhere. The combination of fragility in parts of the African continent and adverse weather conditions dampened economic growth in the region in 2022.

With these external and internal headwinds, it is easy to be pessimistic about Africa’s prospects. Yet, time and time again—as we have seen in the case of the Ebola crisis, HIV/AIDS crisis, and now the COVID-19 pandemic—Africa has proved resilient. We must be conscious of the danger of a single story—especially as many African countries will continue to fare well, despite the odds. Indeed, even though the region is unlikely to be fully out of the woods in 2023, the Economist Intelligence Unit forecasts overall growth of 3.2 percent. Medium-sized economies, such as Senegal, Côte d’Ivoire, the Democratic Republic of Congo, and Kenya, will drive much of this growth—with predicted growth rates of 5 to 7 percent in the year ahead. On the other hand, the region’s economic powerhouses (South Africa, Nigeria, and Egypt) are expected to record slower growth.

Despite these obstacles, I open this year’s edition on an optimistic note, bearing in mind Africa’s resilience and demonstrated capacity to weather severe headwinds. This optimism is buoyed by several factors: an enhanced collaboration that culminated in operationalization of the African Continental Free Trade Area (AfCFTA); the coming together of African institutions (the African Union, Africa CDC, United Nations Economic Commission for Africa, African Export-Import Bank, and others) to secure funding for vaccines; and the region’s rapid adoption of technological innovations to address practical problems—as evidenced by the innovative digital services that boomed during the pandemic.

Being cognizant that there have been few moments in history where the world has experienced such a multitude of successive shocks, going into 2023, we see renewed solidarity and collaboration emerging across Africa to address the confluence of crises. I and the Africa Growth Initiative team are therefore excited to feature Africa’s newfound solidarity on this year’s cover. This is visually represented by ribbons flowing together and moving in the same direction, underpinned by a common purpose. The vibrant colors and ethnic texture in the ribbons embody the continent’s diversity, dynamism, and action toward a future together for the greater good of all Africans. Moreover, in sharp contrast to previous editions, this year’s report includes brand new themes based on feedback from policymakers on education and skills and cities and urban development. We are also proud that women account for a significant proportion of our contributors—and as we did last year, we have dedicated a full chapter to gender, specifically the gender dimensions of Africa’s economic recovery, and what strategies policymakers should be attuned to in order to close the gender gap.

As with every iteration of Foresight Africa, we aim to capture the top priorities for the region in the year ahead, offering recommendations for supporting Africa at a time of heightened global turbulence. We hope that Foresight Africa 2023 will promote dialogue on the key issues influencing development policy and practice in Africa throughout this year. Such ideas will ultimately provide sound strategies for expanding the benefits of economic growth to all Africans in the years ahead.

We will continue to incorporate the feedback we receive from our readers and lead the debate on Africa’s priorities through high-level convenings, impactful research, actionable policy briefs, and timely commentaries.

You can use #ForesightAfrica to follow the debate on Twitter or send your thoughts to @BrookingsGlobal to be part of the conversation.

Finally, we hope that you will join us for our launch event on Monday, January 30.

      

By Eric Abalahin

      

By Victoria Kwakwa, Aloysius Uche Ordu, Njuguna Ndung'u, Théophile T. Azomahou

Economic Recovery and Growth: Tackling multiple headwinds

2023

• Chapter 01

01

Economic recovery and growth

Tackling multiple headwinds

02

Food security

Strengthening Africa’s food systems

03

Education and skills

Equipping a labor force for the future

04

Health

Assuring health security for all

05

Gender

Closing the equity gap

06

Climate change

Adapting to a new normal

07

Africa’s cities

Realizing the new urban agenda

ECONOMIC RECOVERY AND GROWTH: Download chapter 1

Essay 1

Priority actions to address Africa’s economic recovery

Victoria Kwakwa and Aloysius Uche Ordu

Essay 2

African economies and overlapping crises: How to respond to the rising global headwinds?

Njuguna Ndung’u and Théophile T. Azomahou

Priority actions to address Africa’s economic recovery Victoria Kwakwa

Vice President for Eastern and Southern Africa, World Bank

Aloysius Uche Ordu

Senior Fellow and Director, Africa Growth Initiative, Global Economy and Development, Brookings Institution

As we begin 2023, Africa’s development is threatened by multiple crises. This time is distinctly different from past episodes, first in the increased frequency of crises, as well as the persistence and deepening of climate and conflict crises. While in 2008/2009 Africa was able to use debt to weather the financial crisis, today, rapidly rising global interest rates and the absence of a well-functioning framework for comprehensive debt reduction and relief, threaten to cut access to international financial markets for many countries. Moreover, deglobalization trends could limit Africa’s ability to use international trade to drive growth.

“While the external environment is precarious and may remain that way for some time given the evolving geopolitical tensions, domestic policy actions do matter, and Africa’s policymakers are not helpless.”

While the external environment is precarious and may remain that way for some time given the evolving geopolitical tensions, domestic policy actions do matter, and Africa’s policymakers are not helpless. The time to act is now, in order to regain lost ground and move towards prosperous economies and resilient, inclusive societies.

Raise more domestic revenues and spend more efficiently

This is foundational to any credible home-grown solution. The continent collects less revenue than can be generated domestically at current levels of income, with tax revenue as a share of GDP averaging 16.1 percent of GDP for sub-Saharan Africa as a whole—see Figure 1. Strengthening tax administration and expanding tax sources to real estate, sugary products, and eventually carbon, are important opportunities to significantly raise domestic revenue. It is also important to eliminate excessive inefficiencies in both recurrent and capital spending. Countries need to move away from expensive (and often regressive) large-scale generalized subsidies and towards more selective, well-targeted approaches including technology-enabled social protection programs and high value investments such as research and development and infrastructure. Targeted programs allow governments to support the most vulnerable, while effectively supporting specific strategic objectives, and eliminating wasteful expenditure. Public investment programs need to be thoroughly reviewed to weed out poorly conceived investments and ensure limited resources are truly supportive of long-term growth, while strengthening programs that build long-term public investment capacity. Commodity exporters have a huge opportunity to fully leverage current commodity windfalls to build macroeconomic buffers and invest in flagship programs that will address long-term challenges. Finally, African countries need to develop deep domestic (or regional) financial markets, anchored by high savings from national pension funds—and regional sovereign wealth funds more broadly—which will require addressing regulatory constraints.

Enable African entrepreneurship to flourish and support modern competitive economies

African entrepreneurial talent is evident across the continent. Yet it remains largely untapped.[Fox, Louise, Philip Mader, James Sumberg, Justin Flynn, and Marjoke Oosterom. 2020. “Africa’s ‘youth employment’ crisis is actually a ’missing jobs’ crisis.” The Brookings Africa Growth Initiative.] African economies are also largely informal and operating at low levels of productivity—making it challenging to provide the requisite number of decent jobs for poverty reduction and to grow the middle class.[Coulibaly, B., Gandhi, D., and Mbaye, A. (2019). “Job creation for youth in Africa Assessing the potential of industries without smokestacks.” Africa Growth Initiative Paper 22. Washington, DC: Brookings.] Policymakers can enable the emergence of a more formal, competitive domestic private sector by building competitive markets characterized by stable, transparent, and fair regulatory regimes. Much can be done in the near term and complemented with more medium-term reforms. This will also support foreign direct investment (FDI) inflows which remain at low levels compared to other developing regions—see Figure 2. A related opportunity is enabling the private sector to play a much greater role in closing key energy, transport, and digital infrastructure gaps— which is essential for competitiveness. In energy, private sector participation in off-grid solutions is already contributing to increased energy access in some countries. The private sector is also delivering huge gains in financial inclusion through use of digital technology, widespread connectivity using mobile phones, and telemedicine. Policymakers can help address constraints to scaling up these successes and extending them across the continent. In order to close the infrastructure access gaps, governments will also need reforms to strengthen the performance and financial viability of public sector utilities.

Tap Africa’s huge demographic bulge

Africa’s population is the most youthful globally, with about 60 percent below 25 years.[United Nations. 2022. World Population Prospects. United Nations Department of Economic and Social Affairs Population Division.] The time is now to turn this youth bulge into a demographic dividend to drive growth and development. Investing in the human capital of Africa’s youth is fundamental. Action is needed first to address the significant human capital losses from COVID-19, and to implement clear plans to tackle the silent learning crisis in the region. Children in sub-Saharan Africa are, on average, learning for only five out of the eight years in school due to weaknesses in education systems. A second area for attention is providing jobs for the rapidly growing numbers of unemployed youths.[Heitzig, Chris and Landry Signé. “Seizing the momentum for effective engagement with Africa.” 2022. The Brookings Institution. Initially prepared for the National Intelligence Council.] Technical and vocational educational training (TVET) programs, in partnership with the private sector, alongside well-designed apprenticeship programs need to be expanded and strengthened to provide requisite labor market skills.[Ibid.] The entrepreneurial talent of Africa’s youth, especially in the startup sector, will also need to be supported to thrive. Finally, the high fertility rate on the continent (4.8 against 2.4 globally), which drives up household consumption and reduces per capita investments in human capital, needs to be tackled. A multipronged approach including keeping girls in school, which will likely reduce child marriages and teenage pregnancy, improving access to family planning programs, and enhancing support to women’s labor force participation is needed.

Accelerate the rollout of the African Continental Free Trade Area (AfCFTA)

“Managing the crises will demand a great deal from African policymakers. It will require political will and determination, as well as sound, well-informed judgement.”

This bold initiative by African leaders is a historic opportunity to integrate the continent. Trade within the continent is currently low, compared to intra-continental trade in other regions. A truly integrated continent will support broad improvements in competitiveness over time and is likely to build resilience to global shocks and mitigate, in part, the impacts of deglobalization.[Mold, Andrew. “The economic significance of intra-African trade—getting the narrative right.” The Brookings Africa Growth Initiative.] Implementation of the AfCFTA could also reduce food security risks by promoting intraregional agricultural trade. As of May 2022, 54 out of 55 countries have signed the AfCFTA and 44 have deposited their instruments of ratification.[Tralac. 2022. AfCFTA Ratification Barometer. The Trade Law Centre.] Already the Pan-African Payment and Settlement System (PAPSS), led by the Africa Export-Import Bank in partnership with the AfCFTA Secretariat and launched on January 13, 2022 after a successful trial in six West African countries, is a step in the right direction.[Ogbalu III, Mike. 2022. “Boosting the AfCFTA: The role of the Pan-African Payment and Settlement System.” Chapter Five of Foresight Africa 2022. The Brookings Africa Growth Initiative.] [Africa Growth Initiative. 2022. Foresight Africa Podcast. Episode 8: “New tools for easing cross-border trade in Africa.” The Brookings Africa Growth Initiative] PAPSS enables African importers and exporters to settle intra-area trade obligations in their respective national currencies. Policymakers now need to focus on accelerating implementation, supporting trade facilitation, and strengthening regional connectivity, particularly in the key corridors.

Invest in developing Africa’s forward-looking mineral repositories

Several African countries have huge deposits of resources and minerals such as cobalt, lithium, copper, manganese, and nickel which will be key to achieving green transitions. As this transition takes hold globally, the increase in demand will present opportunities for African producers to capture market share and accelerate development. Also, the market for these minerals will likely be different than those for oil and gas. Three issues merit the attention of policymakers. First, is supply management: Leaders and policymakers need to define clear, credible strategies and plans for developing these resources and maintaining investments into the sector. Second, is a strategy for value addition. To use these resources as a springboard for economic transformation, a plan for local value addition, technology and knowledge transfer, and employment generation is needed. This will require difficult negotiations with often very sophisticated multinational corporations, where individual countries may be at a disadvantage. This is an area where regional coordination and cooperation, especially considering AfCFTA, can be helpful. Third, is revenue management: Investing the proceeds from these minerals wisely by putting in place effective mechanisms and frameworks to channel revenues to clearly defined and well-designed investments.

African countries are facing multiple global headwinds while their economies are still bearing the scars of a once-in-a century pandemic. Alone, each of these crises would normally present daunting challenges. But their combined impacts could be catastrophic. We believe that Africans can turn this moment of adversity into an opportunity: To accelerate development by drawing on the internal strengths of their respective nations. Managing the crises will demand a great deal from African policymakers. It will require political will and determination, as well as sound, well-informed judgement. It will also require a willingness to learn and to adapt, patience, and the ability to balance short- and long-term goals.

African economies and overlapping crises: How to respond to the rising global headwinds? Njuguna Ndung’u

Cabinet Secretary, National Treasury and Economic Planning for the Republic of Kenya

Théophile T. Azomahou

Acting Executive Director and Director of Training, African Economic Research Consortium

African economies under multiple headwinds

The COVID-19 pandemic triggered a profound setback after a quarter-century of economic and social progress. Insecurity and political instability are becoming pervasive across Africa. The Russian-Ukrainian war is exposing millions of people to food insecurity, and the most vulnerable are the hardest hit as a large share of their income goes to food and transport spending. This is compounded by a harsh drought in the horn of Africa[NASA-Earth Observatory. 2022.“Worst Drought on Record Parches Horn of Africa”. National Aero-nautics and Space Administration.] that has affected food supply and food security. In parallel to these shocks that will likely have lasting consequences, African economies still suffer from several structural challenges including the effects of climate change.

As of the end of October 2022, the COVID-19 pandemic cost the lives of around 175,000 people, with more than 9 million reported cases in the continent according to the World Health Organization (WHO).[WHO. 2022. “WHO Coronavirus (COVID-19) Dashboard.” World Health Organization.] Thanks to effective policies and “good luck,” the health impact is lower than initially predicted. However, even though Africa is less affected compared to the other regions of the world, the economic impacts remain one of the highest. The real Gross Domestic Product (GDP) declined by 1.8 percent in 2020[IMF. 2021. “Regional Economic Outlook Sub-Saharan Africa”. International Monetary Fund.]—for the first time in more than 25 years—pushing 23 million people into extreme poverty according to the World Bank,[Abay Kibrom A., Nishant Yonzan, Sikandra Kurdi, and Kibrom Tafere. 2022. “Africa might have dodged a bullet, but systemic warnings abound for poverty reduction efforts on the continent.” World Bank Blogs.] exacerbating inequality, and shrinking fiscal space. Africa’s Human Development Index also fell for the first time in nearly three decades.[UNDP. 2022. Human Development Report 2021/22 https://hdr.undp.org/content/human-develop¬ment-report-2021-22.] The recovery itself is dragged and uneven because of unequal access to vaccines and slow vaccination progress, protracted conflicts and political instabilities, and the Russian-Ukrainian war. GDP growth is expected to slow down in 2022 (3.7 percent) compared to 2021 (4.8 percent).

According to Institute for Economics and Peace (IEP)’s Global Terrorism Report 2022, six out of the 10 countries most impacted by terrorism in the world are in Africa.[IEP. 2022. “Economics and Peace Global Terrorism Report Measuring The Impact Of Terrorism”. Institute for Economics & Peace.] Four of the six deadliest countries are located in Africa (Mali, Niger, Somalia, and Burkina Faso) and they accounted for 77.3 percent of total terrorism deaths in 2021 (3,223 deaths). This terrorist insecurity triggers political instability. Between 2020 and 2021, at least six successful and one attempted coup were perpetrated in Africa[The Conversation. 2022. “Vague de coups d’État en Afrique : on les appelle désormais des réinter-prétations constitutionnelles.”] (two in Burkina Faso, one in Chad, two in Mali, one in Guinea, one in Sudan, and one attempted coup in Guinea-Bissau).[Assogba, Henri. 2022. “Vague de coups d’État en Afrique : on les appelle désormais des « réinter¬prétations constitutionnelles.” The Conversation.] This political instability not only impedes economic recovery, but sets back more than 30 years of democratic progress.

“About 30 percent of Kenya’s imported wheat comes from Russia and Ukraine, and in 2021, 44 percent of Cameroon’s fertilizer imports came from Russia. As a result, 346 million people (a quarter of Africa’s total population) are facing severe food insecurity.”

The Russian-Ukraine war further compounds the challenges to economic recovery. The war and subsequent economic sanctions against Russia increased energy prices, triggered food inflation, tightened financial conditions, and caused global uncertainty. Brent oil price went above the $100/barrel mark for the first time since 2014, creating a ripple effect on other prices and challenging the green energy transition.

Although the imports from Ukraine and Russia—as a share of Africa’s total imports—are small, many countries rely on these countries for critical imports including wheat and fertilizers. For example, about 30 percent of Kenya’s imported wheat comes from Russia and Ukraine, and in 2021, 44 percent of Cameroon’s fertilizer imports came from Russia.[Sen, Ashish Kumar.2022. “Russia’s War in Ukraine Is Taking a Toll on Africa.” United Nations Insti¬tute of Peace.”] As a result, 346 million people (a quarter of Africa’s total population) are facing severe food insecurity.[FAO, ECA, and AUC. 2021. “Regional Overview of Food Security and Nutrition 2021: Statistics and trends.” Food and Agriculture Organization.] In Kenya, the supply disruption and the increase in wheat price will affect the production and the price of bread, which is the third most consumed food item in the country.
Moreover, the pandemic and war in Ukraine have created a highly polarized world— unprecedented since the Cold War, which undermines the international community’s capability to come together and address the world’s most pressing issues. Under such circumstances, how can African policymakers properly navigate the multiple headwinds?

How African countries can deal with multiple headwindsAddressing food insecurity diligently

Africa is home to 60 percent of the world’s uncultivated arable land. This contrasts sharply with the African continent’s incapacity to feed itself.[Plaizier, Wim. 2016. “2 truths about Africa’s agriculture.” World Economic Forum, Davos.] In 2022, the African population will be equivalent to the Chinese and Indian populations. Figure 5 displays the historical evolution and projections of the population of Africa, China, and India based on the U.N.’s medium fertility scenario. As shown on the graph, Chinese and Indian populations reach a tipping point and will decrease over the coming years.

By contrast, the African population will continue to grow over the next eight decades. In less than 40 years, the African population is expected to be greater than the Chinese and Indian populations combined. Feeding this population under climate change is one of the greatest challenges for Africa.

Beyond the short-term emergency to address the threat of food insecurity caused by the Russian-Ukrainian war, African countries have an opportunity to draw lessons from this crisis and bring their agricultural sector up to par. This includes, but is not limited to, investing in supporting technologies, building fertilizer factories, and building climate resilience by investing in climate-smart agriculture and adaptation. Food security and climate change should be developed into a strategic policy design. Education is also key to improving agricultural labor productivity. Failing to feed a young and fast-growing population can turn the expected demographic dividend into a demographic time bomb.

Fostering macroeconomic stability

The pandemic and the successive negative shocks dramatically deteriorated macroeconomic fundamentals in many African countries, particularly the sovereign debt balance. As of February 2022, 23 African countries were either in debt distress or at risk of it.[Harry Verhoeven. 2022. “China has waived the debt of some African countries. But it’s not about refinancing”. The Conversation.] Fiscal space and sound macroeconomic conditions will be key to properly respond to the various shocks faced by African economies. Improving efficiency in public spending, and mobilizing more domestic revenue by increasing tax administration efficiency, can contribute to building fiscal space and a sound macroeconomic framework, which is fundamental to sustaining economic recovery. However, achieving this (i.e., improving tax revenue collection and public spending efficiency) may entail structural reforms including technology adoption and fighting against corruption.

“Governments need to take adequate measures to avoid setbacks in democratic progress. To support an inclusive recovery, governments should engage in reducing people’s vulnerability and developing social safety nets.”

Inclusive and equitable recovery policies

Crises and recovery are uneven within and between countries. While the most vulnerable are hit the hardest, they also experience slower recovery than the others. To ensure that no one is left behind, recovery policies need to be inclusive and equitable. For instance, governments should pay attention to people falling into extreme poverty due to the COVID-19 pandemic and to those at risk of falling under the poverty line, and design policies that could help people to bounce back. Governments can also leverage digital financial services to improve access to finance for the most vulnerable population.

People’s vulnerability, political unrest, and political instability

Insecurity, vulnerability, and social unrest hinder political stability and development prospects. The current food insecurity and terrorism in the Sahel heighten the risk of social unrest on the continent. Governments need to take adequate measures to avoid setbacks in democratic progress. To support an inclusive recovery, governments should engage in reducing people’s vulnerability and developing social safety nets.

Endnotes

1. 1. Fox, Louise, Philip Mader, James Sumberg, Justin Flynn, and Marjoke Oosterom. 2020. “Africa’s ‘youth employment’ crisis is actually a ’missing jobs’ crisis.” The Brookings Africa Growth Initiative.
2. 2. Coulibaly, B., Gandhi, D., and Mbaye, A. (2019). “Job creation for youth in Africa Assessing the potential of industries without smokestacks.” Africa Growth Initiative Paper 22. Washington, DC: Brookings.
3. 3. United Nations. 2022. World Population Prospects. United Nations Department of Economic and Social Affairs Population Division.
4. 4. Heitzig, Chris and Landry Signé. “Seizing the momentum for effective engagement with Africa.” 2022. The Brookings Institution. Initially prepared for the National Intelligence Council.
5. 5. Mold, Andrew. “The economic significance of intra-African trade—getting the narrative right.” The Brookings Africa Growth Initiative.
6. 6. Tralac. 2022. AfCFTA Ratification Barometer. The Trade Law Centre.
7. 7. Ogbalu III, Mike. 2022. “Boosting the AfCFTA: The role of the Pan-African Payment and Settlement System.” Chapter Five of Foresight Africa 2022. The Brookings Africa Growth Initiative.
8. 8. Africa Growth Initiative. 2022. Foresight Africa Podcast. Episode 8: “New tools for easing cross-border trade in Africa.” The Brookings Africa Growth Initiative
9. 9. NASA-Earth Observatory. 2022.“Worst Drought on Record Parches Horn of Africa”. National Aero-nautics and Space Administration.
10. 10. WHO. 2022. “WHO Coronavirus (COVID-19) Dashboard.” World Health Organization.
11. 11. IMF. 2021. “Regional Economic Outlook Sub-Saharan Africa”. International Monetary Fund.
12. 12. Abay Kibrom A., Nishant Yonzan, Sikandra Kurdi, and Kibrom Tafere. 2022. “Africa might have dodged a bullet, but systemic warnings abound for poverty reduction efforts on the continent.” World Bank Blogs.
13. 13. UNDP. 2022. Human Development Report 2021/22 https://hdr.undp.org/content/human-develop¬ment-report-2021-22.
14. 14. IEP. 2022. “Economics and Peace Global Terrorism Report Measuring The Impact Of Terrorism”. Institute for Economics & Peace.
15. 15. The Conversation. 2022. “Vague de coups d’État en Afrique : on les appelle désormais des réinter-prétations constitutionnelles.”
16. 16. Assogba, Henri. 2022. “Vague de coups d’État en Afrique : on les appelle désormais des « réinter¬prétations constitutionnelles.” The Conversation.
17. 17. Sen, Ashish Kumar.2022. “Russia’s War in Ukraine Is Taking a Toll on Africa.” United Nations Insti¬tute of Peace.”
18. 18. FAO, ECA, and AUC. 2021. “Regional Overview of Food Security and Nutrition 2021: Statistics and trends.” Food and Agriculture Organization.
19. 19. Plaizier, Wim. 2016. “2 truths about Africa’s agriculture.” World Economic Forum, Davos.
20. 20. Harry Verhoeven. 2022. “China has waived the debt of some African countries. But it’s not about refinancing”. The Conversation.

Next Chapter

02 | Food security

Related Foresight Africa: Top Priorities for the Continent in 2023

On January 30, AGI will host a Foresight Africa launch featuring a high-level panel of leading Africa experts to offer insights on regional trends along with recommendations for national governments, regional organizations, multilateral institutions, the private sector, and civil society actors as they forge ahead in 2022.

What should be the top priority for Africa in 2023?

BY ALOYSIUS UCHE ORDU

Aloysius Uche Ordu introduces Foresight Africa 2023, which outlines top priorities for the year ahead and offers recommendations for supporting Africa at a time of heightened global turbulence.

Foresight Africa Podcast

The Foresight Africa podcast celebrates Africa’s dynamism and explores strategies for broadening the benefits of growth to all people of Africa.

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By Hailemariam Dessalegn, Ahunna Eziakonwa

Food Security: Strengthening Africa’s food systems

2023

• Chapter 02

01

Economic recovery and growth

Tackling multiple headwinds

02

Food security

Strengthening Africa’s food systems

03

Education and skills

Equipping a labor force for the future

04

Health

Assuring health security for all

05

Gender

Closing the equity gap

06

Climate change

Adapting to a new normal

07

Africa’s cities

Realizing the new urban agenda

FOOD SECURITY: Download chapter 2

Essay 1

Food security in Africa: Current efforts and challenges

Hailemariam Dessalegn

Essay 2

Securing Africa’s food sovereignty

Ahunna Eziakonwa

Food security in Africa: Current efforts and challenges Hailemariam Dessalegn

Former Prime Minister of the Federal Democratic Republic of Ethiopia
Board Chair, Alliance for Green Revolution in Africa

Africa’s food systems are at a crossroad. Several challenges and exogenous shocks— including extreme weather events and climate change, recurrent outbreaks of pests and diseases, limited availability and adoption of yield-increasing technologies—have exposed fragilities of Africa’s food systems, undermining the ability to meet the food demand of a burgeoning population.

“Africa’s food systems must become more resilient and guarantee access to healthy and affordable diets for all. Tested systemic models have demonstrated that agriculture transformation is possible in input and output market systems, and that it can be scaled across the continent.”

More recently, the COVID-19 pandemic and the war in Ukraine have disrupted the supply chain for agricultural inputs, fuel, and food. The state of food security in the continent is worsening, with over 20 percent of the continent’s population (roughly 257 million people) undernourished.[Armstrong, Martin. 2022. “A fifth of people in Africa are suffering from chronic hunger. This map shows where the situation is most severe.” World Economic Forum. August 2022.] Africa bears the heaviest burden of malnutrition,[FAO. 2022. “The State of Food Security and Nutrition in the World 2022.” The Food and Agriculture Organization.] while the African Union’s Comprehensive African Agriculture Development Programme (CAADP) Biennial Review report (2019-2021) further reveals that Africa is not on track to meet its goal of ending hunger by 2025.[AU. 2021. “3rd CAADP Biennial Review Report.” The African Union.] In 2022, over 20 million people and at least 10 million children faced severe food shortage in Africa due to crop failure and four consecutive dry seasons.[UNICEF. 2022. “At least 10 million children face severe drought in the Horn of Africa.” United Nations Children’s Fund.] East Africa alone lost close to 2 million livestock in a year due to recurrent drought and low response capacity.[Bloomberg. 2022. “’On Brink of Catastrophe’: Horn of Africa Drought Kills Over 1.5 million Livestock.” Bloomberg. February 2022.] Moreover, projections by the United Nations Economic Commission for Africa point to Africa’s annual food imports increasing significantly; by a factor of seven from $15 billion in 2018 to $110 billion by 2025, and by a factor of three from the current $43 billion.[UNECA. 2021. “Regional Dialogue: African Food Systems: Seventh Session of the Africa Regional Forum on Sustainable Development.” Background paper. United Nations Economic Commission for Africa. March 2021.]

Current efforts by AGRA and other African-led institutions

Given these worrying food security trends, Africa’s food systems must become more resilient and guarantee access to healthy and affordable diets for all. Tested systemic models have demonstrated that agriculture transformation is possible in input and output market systems, and that it can be scaled across the continent. Besides engaging in immediate recovery efforts, such as our $11 million investments to tackle the impacts of the COVID-19 pandemic, the Alliance for Green Revolution in Africa (AGRA) has supported African countries to build capacities for the design of agricultural sector strategies and evidence-based policy reforms. At a country level, AGRA has made significant strides in helping resource national agriculture programs, working closely with ministries of agriculture to design 11 flagship programs. Some of the early dividends of this work include:

• Enhanced capacity of African governments to design and implement policies, and hence respond to emergent agricultural and food systems challenges. AGRA recognizes that “business as usual” is no longer sustainable and has therefore developed a program called “sustainable farming” to ensure that farmers concomitantly achieve three major livelihood objectives, namely: Food security, protecting ecosystem services, and resilience to climate and other shocks. It employs context-specific farming system solutions with emphasis on improving water and nutrient efficiency of crops, replenishing over extracted nutrients through application of judicious amounts of fertilizer, and diversifying the farming systems with climate resilient crops and management practices.
• To improve climate resilience, AGRA invested in the development of African scientists and African research institutions. AGRA has thus far trained more than 500 national research system breeders at PhD and MSc level, to create local capacity of genetic development.
• Responding to the climate risks, Africa has capacity to breed and release varieties of crop that are climate adaptive; early maturing, and drought tolerant like cassava, maize, rice, groundnuts, cowpeas, high iron beans, and b-carotene rich sweet potato that can be scaled.
• Recognizing the malfunctional extension system in Africa, the introduction of private-sector led village-based agricultural advisors’ engagement has helped to reduce post-harvest losses by about 30 percent in countries such as Mali, Mozambique, and Nigeria.
• Together with the Common Market for Eastern and Southern Africa (COMESA), AGRA is building the Regional Food Balance Sheet (RFBS) to address the dearth of reliable, timely, and accurate data and guide food and nutrition related decision making in Africa.
• Together with the Economic Community of West African States (ECOWAS) Commission and other partners, AGRA has established the ECOWAS Rice Observatory (ERO) with respective national chapters, where rice-related matters of trade policy, market development, and farmer support will be discussed, and solutions identified.
• Within the Southern African Development Community (SADC) region, AGRA has established Chinyanja Triangle Soybean Trade initiative and linked a total of 22,179 smallholder farmers to regional trade markets, supplying over 7,070 million metric tons (MT) of soybeans valued at more than $4 million unlocking trade financing valued at $2.5 million which will support aggregators to source soybeans from smallholder farmers at competitive prices.

Critical next steps

Beyond this progress, strategic and urgent measures are still needed to enhance the resilience of Africa’s food systems and bolster the ability to deliver on food security and nutrition objectives. Some of these actions include:

• Accelerating the adoption and implementation of the African Continental Free Trade Area (AfCFTA) in order to avert food supply disruptions, as experienced during the pandemic.
• Providing an enabling policy environment for the financial sector to supply more business and financial tools to Agri-SMEs.
• Supporting the establishment of Strategic Grain Reserves (SGRs) as a buffer against unexpected exogenous shocks. Social Protection Programs are also priorities and should be implemented with clear graduation targets for the beneficiaries.
• Moving towards sustainable farming: Although Africa owns about 60 percent of the world’s potential land for agricultural expansion,[Wim Plaizier. 2016. “2 truths about Africa’s agriculture”. World Economic Forum.] by 2050, about 45 percent of the additional food should come from sustainable intensification (i.e., producing more food and fiber per unit of land and water).
• African food systems should be diversified, moving from the major global commodities: Rice, wheat, and maize; and more investment must be made towards African indigenous and resilient crops including sorghum, millets, teff, and cassava.
• Increasing investments in market infrastructure and other incentive mechanisms to support African farmers to adopt climate smart policies, technologies, and practices, including afforestation and rehabilitation of degraded lands, wetlands, and protected areas to enhance carbon sequestration and reduce carbon losses.
• Investment in irrigation infrastructure is critical. Rainfed food production sits at the center of 70 percent of Africa’s livelihoods. This heavy reliance on rainfed systems exposes farmers to recurrent drought and other extreme events, hence water-centered adaptation must be a priority for Africa.
• Increased availability of clean and renewable energy for rural Africa, the absence of which is currently contributing hugely to deforestation and climate change exposure.
• Institutional capacity: Africa’s level of exposure and vulnerability is connected to its low institutional capacity and governance systems. We need to ensure that national systems have the capacity to convert climate policies and commitments into action.
• Early warning systems and associated climate advisories that are demand-driven and context specific, combined with climate change literacy and awareness, can help make the difference between coping and informed adaptation responses.

Securing Africa’s food sovereignty Ahunna Eziakonwa

United Nations Assistant Secretary General, UNDP Director, Regional Bureau for Africa

The war in Ukraine laid bare a vexing and persistent structural vulnerability in most African countries.[UNDP. 2022. “The impact of the war in Ukraine on sustainable development in Africa.” United Nations Development Programme.] The continent, with 60 percent of the world’s unused arable land, cannot feed itself because of low yields, poor farm management practices, and distortions in agricultural markets.[UNECA. 2013. “Eighth African Development Forum (ADF-VIII) Governing and Harnessing Natural Resources for Africa’s Development.” United Nations Economic Commission for Africa.] Consequently, the continent is overly dependent on food and fertilizer imports to feed its people. Africa’s farmers find it increasingly difficult to enhance productivity, create jobs, and boost wealth in the agricultural sector.[UNDP. 2022. “The impact of the war in Ukraine on sustainable development in Africa.” United Na¬tions Development Programme.] The Ukraine crisis should be a wake-up call. African countries must embrace a food systems approach to scale-up food production, overhaul farm management practices, and improve food marketing to move beyond food security and attain food sovereignty.[UNDP. 2022. “Towards Food Security and Sovereignty in Africa.” Regional Bureau for Africa Working Paper. United Nations Development Programme] This will not only ensure the availability of affordable food, but it will also help countries attain a number of the Sustainable Development Goals (SDGs), including: SDG #2 zero hunger, SDG #3 good health and wellbeing, SDG #5 gender equality, SDG #8 decent work and economic growth, and SDG #10 reduced inequalities.

The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) highlighted the challenges Africa continues to face with regards to tackling the effects of climate change. While we are buoyed by the groundbreaking decision to establish a loss and damage fund, the failure to reach global consensus on tangible action that will reduce emissions reminds us of the difficult road ahead.[World Economic Forum. 2022. “What did COP27 accomplish and what actions can we expect as a result?” World Economic Forum.] Without this thorny issue being resolved, our efforts to attain food sovereignty will remain stymied.

Food sovereignty speaks to the ability of a country to feed itself. In Africa, this must involve increasing production and ensuring that farming systems are more resilient to price and environmental shocks. The 2006 Abuja Declaration of African agriculture ministers called for an increase in Africa’s average fertilizer application rates from 20 kg/ha to 50 kg/ha to boost production. Africa’s average application rates are still at 2006 levels, while the global average is slightly over 130 kg/ha.[UNDP. 2022. “Towards Food Security and Sovereignty in Africa.” Regional Bureau for Africa Working Paper. United Nations Development Programme.] While it is evident that fertilizers are not the proverbial silver bullet, it is clear that better farming practices could be a crucial first step in Africa’s journey towards food sovereignty. Recent UNDP research suggests that meeting the 2006 Abuja target could more than double Africa’s food production in a couple of years.

In order to accomplish this, Africa does not need to be overly dependent on fertilizer imports from Ukraine and Russia. The continent produces sufficient potash and ammonia to sustain a thriving fertilizer industry. In addition, existing fertilizer blending facilities (in 19 African countries) and manufacturing plants (in 10 African countries) operate well below capacity. Concerted investments in infrastructure, technology, and skills, including through public-private partnerships, could boost fertilizer production. Leveraging the African Continental Free Trade Area (AfCFTA) could also widen and deepen Africa’s market and facilitate the availability of affordable fertilizer across Africa. In Nigeria, for example, if fertilizer-producing plants were working at full capacity (Dangote’s full capacity is 3 million tons and Indorama’s 1.4 million tons), the country could meet its own 1.5 million tons of fertilizer consumption, while also meeting the rest of the region’s needs.

“Food sovereignty speaks to the ability of a country to feed itself. In Africa, this must involve increasing production and ensuring that farming systems are more resilient to price and environmental shocks.”

A case for food sovereignty

Food sovereignty in Africa is not just about production and trade. It is also about resilience and ensuring that the continent’s food production is not held hostage by natural and market shocks. The use of technology, fertilizer, and improved farm management practices could revolutionize Africa’s food sector. In addition, African countries must take steps to reverse their dependence on food aid and food imports. Free or cheap food imports have made local food production in Africa less competitive and, in turn, shifted consumer preferences away from local brands to foreign ones. As a result, Africa is now the most food-import-dependent region in the world, dedicating more than 13 percent of its import expenditure to buying food and agricultural commodities. This contributes to overall fiscal stress.

Revolutionizing food production in Africa will improve the continent’s development prospects and build resilience. Using fertilizers produced in Africa and fully integrating research from Africa’s agricultural research institutes could help the continent attain food sovereignty by minimizing imports. This would make Africa’s food markets more resilient during global shocks and prevent the pass-through of global price shocks into domestic inflation. It would also have the added benefit of relieving stress on scarce foreign exchange earnings.

Assuming Africa had adhered to the 2006 Abuja Declaration and gradually increased fertilizer application rates from 20 kg to 50 kg per hectare between 2010 and 2020, food production could have grown cumulatively by 209 percent instead of just 24 percent. Such an increase would have had a salutary impact on reducing hunger and addressing malnourishment.

The increased agricultural productivity would also significantly impact women and girls, helping Africa make more progress on SDG 5 regarding gender equality. Research by the Food and Agriculture Organization estimates that women comprise 43 percent of the agricultural labor-force in developing countries and are mainly concentrated in harvesting and weeding.7 Boosting food production could therefore also contribute to decent work and economic growth (SDG 8), especially for women and girls.

Policy options

Some African countries are already improving food production and attaining food sovereignty. Malawi’s 2006-2010 agricultural development program, which has been described as “pro-poor,” increased yields, raised incomes, and made the crops more resilient to drought.[Arndt, Channing, Karl Pauw, and James Thurlow. 2015. “The Economy-wide Impacts and Risks of Malawi’s Farm Input Subsidy Program.” American Journal of Agricultural Economics, Volume 98, Issue 3 p. 962-980.] Ethiopia’s 2005 productive safety net policy program (PSNP) targeted households and communities that are chronically food insecure and offered insurance, as well as investment in public goods such as soil and water conservation.

“Free or cheap food imports have made local food production in Africa less competitive and, in turn, shifted consumer preferences away from local brands to foreign ones. As a result, Africa is now the most food-import-dependent region in the world, dedicating more than 13 percent of its import expenditure to buying food and agricultural commodities.”

Despite progress in a few countries, Africa needs coordinated policy changes and sustained action to increase food production, improve distribution, ensure affordability, and reduce dependency.[UNDP. 2022. “Towards Food Security and Sovereignty in Africa.” Regional Bureau for Africa Working Paper. United Nations Development Programme.] African leaders should prioritize incentives to increase domestic and regional food supply. This will include using appropriate inputs to boost and scale up production to cater to national and regional markets. An important goal in this context is the full operationalization of the AfCFTA to facilitate the free movement of labor, inputs, and food across the one-Africa market. From a policy perspective, Africa must shift the narrative from food supply to developing resilient food systems.[Ibid.] Africa’s default must no longer be only trying to address food availability. Policies must focus on ensuring that the entire continental food value chain is robust, profitable, and leaves no one (and no community) behind.

Africa’s development partners also have a critical role to play.[Ibid.] While temporary aid is needed, the primary need is to fully support programs that de-risk and boost critical investments in Africa’s food sector. This will facilitate financial and technical resources to modernize food production, storage, and marketing in Africa. Africa’s development partners can also promote efforts to maximize regional food trade, by reducing disincentives and inefficiencies in global markets—such as dumping, subsidies, and tariff structures that would disadvantage or discourage domestic production in African countries.

Conclusion

Africa has a long history of food dependency, a legacy of food-aid policies and low domestic productive capacity.[Ibid.] As a result, much of its food is imported, implying that any major global shock can lead to severe trade disruptions, increased hunger, and pass-through inflation, eroding both household and public budgets. Africa’s food sovereignty pathway involves enhancing agricultural productivity by improving farm management techniques.

UNDP analysis shows that Africa could easily produce the fertilizer inputs it needs, and that meeting the 2006 Abuja Declaration targets would boost food supply, while positively impacting the SDGs.[Ibid.]

Ensuring Africa’s food sovereignty—implying increased availability and affordability—is key to the continent’s own economic sovereignty, sustainable development, and achieving the SDGs.[Ibid.]

Endnotes

1. 1. Armstrong, Martin. 2022. “A fifth of people in Africa are suffering from chronic hunger. This map shows where the situation is most severe.” World Economic Forum. August 2022.
2. 2. FAO. 2022. “The State of Food Security and Nutrition in the World 2022.” The Food and Agriculture Organization.
3. 3. AU. 2021. “3rd CAADP Biennial Review Report.” The African Union.
4. 4. UNICEF. 2022. “At least 10 million children face severe drought in the Horn of Africa.” United Nations Children’s Fund.
5. 5. Bloomberg. 2022. “’On Brink of Catastrophe’: Horn of Africa Drought Kills Over 1.5 million Livestock.” Bloomberg. February 2022.
6. 6. UNECA. 2021. “Regional Dialogue: African Food Systems: Seventh Session of the Africa Regional Forum on Sustainable Development.” Background paper. United Nations Economic Commission for Africa. March 2021.
7. 7. Wim Plaizier. 2016. “2 truths about Africa’s agriculture”. World Economic Forum.
8. 8. UNDP. 2022. “The impact of the war in Ukraine on sustainable development in Africa.” United Nations Development Programme.
9. 9. UNECA. 2013. “Eighth African Development Forum (ADF-VIII) Governing and Harnessing Natural Resources for Africa’s Development.” United Nations Economic Commission for Africa.
10. 10. UNDP. 2022. “The impact of the war in Ukraine on sustainable development in Africa.” United Na¬tions Development Programme.
11. 11. UNDP. 2022. “Towards Food Security and Sovereignty in Africa.” Regional Bureau for Africa Working Paper. United Nations Development Programme
12. 12. World Economic Forum. 2022. “What did COP27 accomplish and what actions can we expect as a result?” World Economic Forum.
13. 13. Arndt, Channing, Karl Pauw, and James Thurlow. 2015. “The Economy-wide Impacts and Risks of Malawi’s Farm Input Subsidy Program.” American Journal of Agricultural Economics, Volume 98, Issue 3 p. 962-980.
14. 14. UNDP. 2022. “Towards Food Security and Sovereignty in Africa.” Regional Bureau for Africa Working Paper. United Nations Development Programme.
15. 15. Ibid.
16. 16. Ibid.
17. 17. Ibid.
18. 18. Ibid.
19. 19. Ibid.

Next Chapter

03 | Education and Skills

Related Foresight Africa: Top Priorities for the Continent in 2023

On January 30, AGI will host a Foresight Africa launch featuring a high-level panel of leading Africa experts to offer insights on regional trends along with recommendations for national governments, regional organizations, multilateral institutions, the private sector, and civil society actors as they forge ahead in 2022.

What should be the top priority for Africa in 2023?

BY ALOYSIUS UCHE ORDU

Aloysius Uche Ordu introduces Foresight Africa 2023, which outlines top priorities for the year ahead and offers recommendations for supporting Africa at a time of heightened global turbulence.

Foresight Africa Podcast

The Foresight Africa podcast celebrates Africa’s dynamism and explores strategies for broadening the benefits of growth to all people of Africa.

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By John Nkengasong, Edwine Barasa

Health: Assuring health security for all

2023

• Chapter 04

01

Economic recovery and growth

Tackling multiple headwinds

02

Food security

Strengthening Africa’s food systems

03

Education and skills

Equipping a labor force for the future

04

Health

Assuring health security for all

05

Gender

Closing the equity gap

06

Climate change

Adapting to a new normal

07

Africa’s cities

Realizing the new urban agenda

HEALTH: Download chapter 4

Essay 1

Finishing the job on HIV/AIDS

John N. Nkengasong

Essay 2

Leveraging lessons from COVID-19 to build stronger health systems

Edwine Barasa

Finishing the job on HIV/AIDS John N. Nkengasong

U.S. Global AIDS Coordinator and Special Representative for Health Diplomacy, U.S. Department of State

What it will take to end the HIV/AIDS pandemic as a global health threat by 2030

In the wake of the COVID-19 pandemic, there is a renewed need for domestic and donor support to end the HIV/AIDS pandemic as a global health threat. This requires a strong emphasis on galvanizing political and programmatic leadership to sustain the response, centering programs around health equity, sustainably strengthening public health systems, and health security.

Introduction

In 2001, the Heads of State of Africa met in a special summit in Abuja devoted specifically to addressing the exceptional challenges of HIV/AIDS. The HIV/AIDS pandemic had been raging worldwide with an acute impact on most countries in Africa. The spread of the disease was impacting every dimension of society–in African countries most affected, AIDS had lowered life expectancy of adults on average by 20 years. This session, which came soon after the unprecedented U.N. Security Council Resolution in 2000 declaring HIV/AIDS a security threat, acknowledged the tremendous impact that the spread of HIV was having on the continent as not only a health crisis, but also an economic and security crisis, which would lead to massive instability in the continent if left unchecked.

The Abuja summit concluded with heads of state committing to take personal responsibility and provide political leadership at the highest level to commit all necessary resources and measures to attack the epidemic–from pledging 15 percent of budgets to the health sector, providing access to affordable treatment, scaling-up educational efforts, to reforming national policies. These commitments helped spark a regional movement to attack the HIV/AIDS pandemic on the continent by governments, donors, advocates, non-profits, private companies, and more.

Progress to date

“In many countries, donors are currently performing many of the core functions around performance management and service delivery. Until countries take over programmatic accountability, the HIV/AIDS response will continue to be viewed as a donor-led activity.”

Twenty years later, the annual number of new infections has dropped by 75 percent (from 3.4M to 870,000), and deaths have dropped 80 percent (from 2.3 million to 460,000) in Africa.[UNAIDS. 2021. “UNAIDS Data 2021.” Reference. The Joint United Nations Programme on HIV/ AIDS.] Several high-burden African countries have reached the UNAIDS 90- 90-90 targets.[90% of all people living with HIV will know their HIV status; 90% of all people with diagnosed HIV infection will receive sustained antiretroviral therapy; 90% of all people receiving antiretroviral therapy will have viral suppression.] It is no coincidence that this period has resulted in the fastest economic growth in Africa’s history and has seen tremendous gains in other development indicators such as poverty alleviation, educational attainment, gender equity, and maternal and child health. Analysis comparing U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) recipient countries with similar non-PEPFAR supported low-and middle- income countries found that PEPFAR countries experienced 35 percent greater reductions in child mortality, 25 percent reductions in maternal mortality, and significant improvements in childhood immunizations. GDP per capita growth rates were 2.1 percentage points higher for PEPFAR countries compared to non-PEPFAR supported countries, and the share of girls and boys out of school declined by 9 and 8 percent respectively. The effects were strongest where PEPFAR engaged in more intensive planning and funding.[Carbaugh, Alicia, Anna Rouw, and Jennifer Kates. 2022. “HIV Policy Alignment with International Standards in PEPFAR Countries.” Kaiser Family Foundation.]

Despite this progress, we are at a new inflection point in the HIV/AIDS pandemic in part because of the COVID-19 pandemic. The pandemic particularly impacted access to HIV prevention services, and the rate of decline of new infections has slowed. If the current pace continues, we will be off-track to reach the UNAIDS global target of 370,000 infections by 2025.

What is worse is that the most vulnerable populations continue to be at the highest risk. Approximately 52 percent of children living with HIV receive the lifesaving treatment they need, compared to 76 percent of adults.[WTO. 2022. “New global alliance launched to end AIDS in children by 2030.” Joint News Release. World Trade Organization.] Adolescent girls and young women continue to be more than twice as likely to be infected relative to their male counterparts. And Key Populations (KP)–men who have sex with men, transgender persons, people who inject drugs, sex workers, incarcerated people)–make up an increasingly large share of new infections.

PEPFAR’s five-year strategy

To meet the moment in the trajectory of the HIV/AIDS response, we launched PEPFAR’s new 5-year strategy on December 1, 2022. The strategy outlines several areas that PEPFAR will be pursuing to help achieve the global goal of ending HIV/AIDS as a global health threat. There are three key areas where African policymakers have a unique role to play in the response.

1. Elevating HIV/AIDS to the highest levels of political leadership to sustain the response

The 2001 Abuja summit was a powerful example of African political leadership. African heads of state outlined concrete goals and commitments and helped to galvanize the global community to aid in the response. In the decade that followed, thanks in large part to continued African leadership and partnerships, 27 countries increased the proportion of their expenditures on health. However, the situation has deteriorated; in 2016, 19 African countries were spending less on health as a percentage of their public spending than the early 2000s, and only three countries exceeded the 15 percent threshold.[WHO. 2016. “Public Financing for Health in Africa: From Abuja to the SDGs.” World Health Organi¬zation.]

New political leadership is needed to sustain progress. Over the next decade, HIV/AIDS programs should primarily become the responsibility of African countries as support from outside donors inevitably declines, even as PEPFAR continues its commitment to our partner countries. This should start with clear political commitments from Heads of States to lead and manage their own HIV response–by articulating and acting on their own vision and holding their ministries accountable for results. This will help to unlock greater programmatic leadership for the oversight and management of HIV prevention and care efforts, and the broader strengthening of health systems (workforce, labs, data and surveillance, supply chains, etc.) that underpin HIV/ AIDS programs.

In many countries, donors are currently performing many of the core functions around performance management and service delivery. Until countries take over programmatic accountability, the HIV/AIDS response will continue to be viewed as a donor-led activity. Over time, more robust political and programmatic leadership should help to unlock financial leadership as well by encouraging ministries of finance, and development to recognize that investing in HIV/AIDS and health systems programs domestically will yield high returns.

PEPFAR will help to enable these three components of sustaining the response by working with countries in partnership with the African Union (AU) and other regional and global entities to jointly develop a sustainability roadmap, articulating a shared pathway for countries to take increasing responsibility for their own epidemics and hold all parties accountable for results.

2. Improving health equity for priority populations

“Between 70- 90 percent of drugs consumed on the African continent are imported; (China and India have comparable populations and import 5 percent and 20 percent, respectively). For vaccines, only 1 percent of vaccines consumed are manufactured in Africa.”

The HIV/AIDS pandemic does not affect people uniformly. We know that persistent inequities for the most marginalized populations persist—countries should address these inequities head-on to close these gaps. This starts with adolescent girls and young women, who remain disproportionately impacted by the HIV/AIDS pandemic in Africa. Governments need to recommit to providing holistic, multi-layered support and enabling policy environments that for meet the needs of girls and women given the intersecting challenges they face that increases their risk for contracting HIV. This includes ensuring they can stay in school, access economic opportunities to earn livable incomes, receive comprehensive destigmatized sexual and reproductive health services like PrEP, and thrive in their daily lives free from violence.

Children remain less likely than their adult counterparts to receive treatment, despite the existence of highly effective pediatric treatments in the form of dolutegravir. This gap is unacceptable, and the seven countries that make up the roughly 80 percent of these missing children (Democratic Republic of Congo, Mozambique, Nigeria, South Africa, Tanzania, Uganda, and Zambia) should especially double down on the funding and management of preventing mother to child transmission (PMTCT) and care linkage programming.

Lastly, Key Populations (KPs)—continue to bear the highest per capita risk of contracting an HIV infection. Governments and donors need to bring KPs and community organizations in the lead to inform the design and expansion of equitable and nondiscriminatory prevention, testing, and treatment services. Governments also need to look critically at the restrictive laws and policies that criminalize or stigmatize these populations and prevent them from accessing the services they need–and learn from peer countries in the region who have successfully pursued reforms.

3. Leveraging the PEPFAR platform to strengthen public health systems and health security

During the COVID-19 pandemic, the recent Ebola outbreak in Uganda, and other disease outbreaks, the public health infrastructure, relationships, and practices that PEPFAR has helped to establish and strengthen for HIV proved essential to responding to new and unexpected health threats. While maintaining focus on HIV as our core mission, moving forward, PEPFAR will continue to apply lessons learned from HIV and intentionally strengthen overall public health systems to respond to health security threats. Such investments will aim to protect HIV/AIDS gains and ensure increased sustainability for countries’ HIV/AIDS response.

Regionalized and modernized supply chains for health commodities

The COVID-19 pandemic has clearly demonstrated the need for a robust regionally diversified, sustainable pharmaceutical manufacturing and supply chain ecosystems to protect against health security threats, including in Africa. A strong, diversified, and sustainable manufacturing base would also decrease procurement costs, prevent stockouts, introduce new products faster, and create substantial economic benefits. However, between 70-90 percent of drugs consumed on the African continent are imported; (China and India have comparable populations and import 5 percent and 20 percent, respectively). For vaccines, only 1 percent of vaccines consumed are manufactured in Africa.[Nweneka, Chidi Victor and Tolu Disu. 2022. “The future of vaccine manufacturing in Africa.” Foresight Africa 2022, Public Health Chapter. The Brookings Africa Growth Initiative.] For Africa to address this challenge, it needs a holistic approach and an enabling environment for sustainable regional manufacturing that allow manufacturers to supply multi-country geographies, promote healthy competition, and enables sizeable, sustainable manufacturers to emerge. PEPFAR will lead by setting explicit, ambitious targets for African procurement of HIV commodities for the next decade and will adjust our procurement policies to help jumpstart demand–and drive other donors to follow.

To create this enabling environment, we will need to work with African policymakers and multilateral organizations to develop tariff and trade policies, environmental policies, and regulatory policies to support sustainable local manufacturing capacities. It will also be critical for African policymakers to certify and fund the African Medicines Agency (AMA) to lead in certification of products and implement the African Free Trade agreement to enable cross-border trade. Leaders of global and African development finance institutions should take this opportunity to provide financing and other support to pharmaceutical manufacturers standing up or expanding operations and enhancements to health supply chains across the region.

But manufacturing is not enough to get the products to the people who need them quickly and efficiently. We continue to see high rates of stockouts across PEPFAR-supported countries, and our supply chains are simply not people-centered.

African policymakers need to promote a long-term vision for a modern and sustainable supply chain, which includes movement away from the emergency nature of Central Medical Stores and integration of private sector providers across the value chain; strengthening government capacity in supply chain leadership, oversight, comprehensive planning and risk management; and diversifying channels of last-mile delivery of products beyond the public clinics. Policymakers need to also recognize that supply chains go beyond ministries of health and engage the ministries of finance, development, and trade to remove bottlenecks that create artificial supply shortages at the port or the border. PEPFAR will coordinate with African partners and other donors to help to strengthen country capacity to lead in the development and implementation of this long-term approach to supply chain modernization.

Robust health workforce

Despite the lessons from Ebola, COVID-19 and other outbreaks, the health workforce remains one of the most under-invested areas of the public health system. Africa needs 6,000 field and 25,000 frontline epidemiologists but has only trained 2,000 and 5,000 respectively. In 2017, the AU launched a two million community healthcare worker initiative, but to date only a few hundred thousand professionalized workers have been deployed, and many remain un-salaried, and poorly trained, equipped, and supervised. Nurses continue to be under-equipped and poorly prepared for new outbreaks, leading to high rates of mortality among their cohort.

Country leaders need to bring together ministries of health, education, and finance to develop an integrated plan to train, finance, and support the next cohort of nurses, community health workers, epidemiologists, and health data scientists. PEPFAR and other disease-specific donors need to align their future health workforce investments to better support those integrated country plans and, workforce leadership programs going forward.

Empowered national public health institutes

National Public Health Institutes (NPHIs) serve as the backbone of an effective public health response; during COVID-19, countries with strong NPHIs were more effective in coordinating the outbreak response. More than 30 African countries have already created NPHIs, and for those countries it is incumbent on political leaders to financially support their core capabilities (surveillance, lab networks, emergency operations centers, research). PEPFAR will work to strengthen NPHIs by partnering with the Africa CDC to enlist NPHIs to lead on core HIV-control functions such as conducting household surveys to measure the epidemiological change in the disease and leveraging their EOCs to tackle pockets of new infections.

Conclusion

PEPFAR has a critical role to play in the future of the HIV/AIDS response. But without leadership from policymakers, all our collective efforts will be unsustainable. African leaders need to recognize that strong public health systems are a fundamental element of strong national security and economic growth, and prioritize it accordingly in domestic budgets, laws, and policies. Country leaders also should endorse, fund, and strengthen regional institutions such as the Africa CDC and AMA who are taking a lead in coordinating the health response. Disease-specific donors including PEPFAR need to come together to harmonize and prioritize public health systems and security investments, and support country leadership in developing and implementing integrated national plans. We have come so far, and together we can end HIV/AIDS as a public health threat on the continent and globally.

Leveraging lessons from COVID-19 to build stronger health systems Edwine Barasa

Director of the Nairobi Programme, KEMRI-Wellcome Trust
Visiting Professor of Health Economics, University of Oxford

Sir Winston Churchill averred, in the aftermath of World War II, that one should never let a “good” crisis go to waste. The COVID-19 pandemic offered several lessons for Africa’s health systems that should form the basis for a stronger, more inclusive recovery. One such lesson is that African governments ought to prioritize investments in the health sector as a means, not only to improve population health, but also to safeguard the economy. African health systems are chronically underfunded; it is estimated that on average African countries’ government expenditure on health, as a share of gross domestic product (GDP), is 2 percent—far less than the 5 percent recommended threshold for low- and middle-income countries to register meaningful improvements in population health outcomes.[AHAIC Commission. 2021. “The State of Universal Health Coverage in Africa.” The Africa Health Agenda International Conference Commission.] COVID-19 has made it abundantly clear that the social and economic fortunes of a country are conjoined with population health. For example, the World Bank estimated that COVID-19 was responsible for a 3.3 percent economic contraction of Africa’s GDP in 2020, pushing 40 million individuals into poverty.[World Bank. 2020. “World Bank Confirms Economic Downturn in Sub-Saharan Africa, Outlines Key Polices Needed for Recovery.” World Bank Group.] Under-investment in the health sector meant that African health systems were ill-prepared for the pandemic, and thus, suffered great economic loss.

One way to unlock additional financing and resources for the health sector is to exploit efficiency gains by reducing wastage. Two strategies are worth considering. African countries could achieve better outcomes from existing resources by introducing and institutionalizing the use of economic evidence to guide and inform healthcare resource allocation decisions in ways that promote value-for-money. One such approach is health technology assessment (HTA). HTA is a multidisciplinary process that uses explicit methods to determine the value of health interventions and services in ways that promote efficiency and other health system goals. Good examples of countries that have implemented HTA to improve the efficiency of their health system include Thailand’s universal coverage scheme, and the UK’s National Health Service (NHS). Likewise, there is also a need for African governments to tackle corruption head-on by implementing effective anti-corruption strategies. Some estimates put the loss of healthcare resources owing to weak governance and accountability environments that in turn facilitate health sector corruption to as much as 10 percent annually.[Gee, Jim and Mark Button. 2015. “The financial cost of healthcare fraud 2015: What data from around the world shows.” PKF Littlejohn LLP.]

“It is imperative however, that these efforts are coordinated and aimed at addressing continental shortages, rather than narrow individual country needs. Vaccine and pharmaceutical manufacturing in Africa will only be sustainable if the market can support commercial viability.”

The second lesson is that African countries ought to foster self-reliance by investing in the manufacture of essential health commodities. The vaccine nationalism and apartheid witnessed during the COVID-19 pandemic, coupled with international supply chain disruptions, exposed the vulnerability of African health systems to over-reliance on imports. Some estimates indicate that Africa imports more than 80 percent of its pharmaceutical and medical consumables, and 99 percent of its human vaccines.[AHAIC Commission. 2021. “The State of Universal Health Coverage in Africa.” The Africa Health Agenda International Conference Commission.] It is encouraging that several African countries have since initiated plans to establish local vaccine manufacturing. African governments must also understand that the sustainable development of vaccines and pharmaceutical manufacturing is underpinned by a vibrant research and development (R&D) ecosystem. While African countries have committed to spending 1 percent of their GDP on R&D, the continent’s funding of R&D stood at only 0.42 percent, compared to the global average of 1.7 percent.[Adepoju, Paul. 2022. “Africa’s future depends on government-funded R&D.” Nature Africa. An Audi¬ence With, 25 September 2022.]

The third lesson is that African governments must re-prioritize universal health coverage (UHC). COVID-19 revealed that countries with advanced UHC systems are far better at responding to a pandemic or health shock.[Haghighi, Hajar, Amirhossein Takian, and Mohsen Aarabi. 2020. “The role of universal health cov¬erage in overcoming the covid-19 pandemic.” BMJ Opinion.] A system where individuals face financial barriers to access healthcare, compromises vital public health strategies during a disease outbreak (i.e., detect, isolate, and treat) such that infected individuals go undetected and cannot access isolation or treatment services, and thus continue to spread disease. While many African countries have made political commitments to UHC, this commitment has hardly translated to investment and implementation. Out-of-pocket spending, as a share of total health spending, in Africa is also among the highest in the world at 38 percent—with countries like Nigeria having levels as high as 77 percent.[AHAIC Commission. 2021. “The State of Universal Health Coverage in Africa.” The Africa Health Agenda International Conference Commission.] During the pandemic, this manifested in the form of individuals not accessing testing, isolation, and treatment because they could not afford to pay for these services, and in some cases, individuals are being forcefully detained in health facilities for not being able to pay the costs of isolation or care.

In addition to increasing health sector funding, several shifts will be required to course correct the continent’s UHC aspiration. The first shift is the need for African countries to re-orient their UHC plans and ground them on tax-funded approaches as opposed to contributory health insurance. Many African countries are planning or already implementing public health insurance systems that rely on individual/household premium contributions as a means to achieve UHC. There is overwhelming evidence that it is problematic to achieve scale and equity in coverage, with health insurance systems that rely on individual/household premium contributions—especially in Africa where large shares (up to 80 percent) of the population are in the informal sector with unpredictable and irregular incomes. A recent analysis found that only four out of 36 African countries (Rwanda, Ghana, Gabon, and Burundi) have achieved health insurance coverage levels greater than 20 percent, and that coverage for all four countries, was characterised by substantial funding from tax revenues.[Barasa, Edwine, et al. 2021. “Examining the level and inequality in health insurance coverage in 36 sub-Saharan African countries.” BMJ Global Health 6, no. 4.]

“A second shift is the need for African countries to re-orient their health systems to prioritize primary healthcare (PHC)—a platform for providing basic health interventions and essential public health services. This would be a departure from the current arrangement where African health systems are hospital-centric, prioritizing higher-level care.”

Contributory health insurance systems were also found to be highly inequitable on the continent. A third shift is the prioritization and financing of common goods for health (CGH). CGH are core, population-based functions that are essential to the health and wellbeing of entire societies, as opposed to individual-based services. Examples of CGH include disease surveillance systems, research and development, regulatory systems, and public health policies. CGH not only support the health and wellbeing of populations generally, but also bolster health security.

Lastly, several regional opportunities abound for African governments to leverage and strengthen their health systems. I will highlight two here. First, African leaders should take advantage of regional integration to strengthen healthcare markets and systems. The Africa Continental Free Trade Area (AfCFTA), is the world’s largest free trade area in terms of population (1.3 billion) and number of countries (54), and has the potential to spur the growth of Africa’s health markets by opening up markets for labour (health workers) and health commodities, and by attracting investments into the continent’s health sector. In addition, it has the potential to support the continent’s initiative to develop vaccines and pharmaceutical manufacturing.

Another regional opportunity that African health systems should take advantage of is, the continent’s strong regional organizations that include the African Union (AU), the Africa Centres for Disease Control and Prevention (Africa CDC), and the African Development Bank (AFDB). These organizations not only have immense convening power, technical capacity, and capacity for advocacy, but they have also put in place initiatives whose implementation will leapfrog Africa’s health system. For instance, the AU and Africa CDC have outlined a blueprint to strengthen health security in Africa labelled the “New Public Health Order.” The AU has articulated a plan to spur pharmaceutical manufacturing—Pharmaceutical Manufacturing Plan for Africa (PMPA), while the Africa CDC has also laid out a framework for the development of local vaccine manufacturing (the partnership for Africa Vaccine manufacturing). Further, the AFDB has established the African Pharmaceutical Technology Foundation, that plans to spend $3 billion over the next decade to support the continent’s pharmaceutical and vaccine manufacturing plans. However, these efforts will only be successful if African governments support and facilitate the leadership role of these regional agencies.

As we look forward to 2023 and beyond, here is hoping that African governments learn from the COVID-19 pandemic and invest in nurturing the resilience of the continent’s health system to safeguard

Endnotes

1. 1. UNAIDS. 2021. “UNAIDS Data 2021.” Reference. The Joint United Nations Programme on HIV/ AIDS.
2. 2. 90% of all people living with HIV will know their HIV status; 90% of all people with diagnosed HIV infection will receive sustained antiretroviral therapy; 90% of all people receiving antiretroviral therapy will have viral suppression.
3. 3. Carbaugh, Alicia, Anna Rouw, and Jennifer Kates. 2022. “HIV Policy Alignment with International Standards in PEPFAR Countries.” Kaiser Family Foundation.
4. 4. WTO. 2022. “New global alliance launched to end AIDS in children by 2030.” Joint News Release. World Trade Organization.
5. 5. WHO. 2016. “Public Financing for Health in Africa: From Abuja to the SDGs.” World Health Organi¬zation.
6. 6. Nweneka, Chidi Victor and Tolu Disu. 2022. “The future of vaccine manufacturing in Africa.” Foresight Africa 2022, Public Health Chapter. The Brookings Africa Growth Initiative.
7. 7. AHAIC Commission. 2021. “The State of Universal Health Coverage in Africa.” The Africa Health Agenda International Conference Commission.] COVID-19 has made it abundantly clear that the social and economic fortunes of a country are conjoined with population health. For example, the World Bank estimated that COVID-19 was responsible for a 3.3 percent economic contraction of Africa’s GDP in 2020, pushing 40 million individuals into poverty.[World Bank. 2020. “World Bank Confirms Economic Downturn in Sub-Saharan Africa, Outlines Key Polices Needed for Recovery.” World Bank Group.
8. 8. Gee, Jim and Mark Button. 2015. “The financial cost of healthcare fraud 2015: What data from around the world shows.” PKF Littlejohn LLP.
9. 9. AHAIC Commission. 2021. “The State of Universal Health Coverage in Africa.” The Africa Health Agenda International Conference Commission.
10. 10. Adepoju, Paul. 2022. “Africa’s future depends on government-funded R&D.” Nature Africa. An Audi¬ence With, 25 September 2022.
11. 11. Haghighi, Hajar, Amirhossein Takian, and Mohsen Aarabi. 2020. “The role of universal health cov¬erage in overcoming the covid-19 pandemic.” BMJ Opinion.
12. 12. AHAIC Commission. 2021. “The State of Universal Health Coverage in Africa.” The Africa Health Agenda International Conference Commission.
13. 13. Barasa, Edwine, et al. 2021. “Examining the level and inequality in health insurance coverage in 36 sub-Saharan African countries.” BMJ Global Health 6, no. 4.

Next Chapter

05 | Gender

Related Foresight Africa: Top Priorities for the Continent in 2023

On January 30, AGI will host a Foresight Africa launch featuring a high-level panel of leading Africa experts to offer insights on regional trends along with recommendations for national governments, regional organizations, multilateral institutions, the private sector, and civil society actors as they forge ahead in 2022.

What should be the top priority for Africa in 2023?

BY ALOYSIUS UCHE ORDU

Aloysius Uche Ordu introduces Foresight Africa 2023, which outlines top priorities for the year ahead and offers recommendations for supporting Africa at a time of heightened global turbulence.

Foresight Africa Podcast

The Foresight Africa podcast celebrates Africa’s dynamism and explores strategies for broadening the benefits of growth to all people of Africa.

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By Jeni Klugman, Caren Grown, Odera Onyechi

Gender: Closing the equity gap

2023

• Chapter 05

01

Economic recovery and growth

Tackling multiple headwinds

02

Food security

Strengthening Africa’s food systems

03

Education and skills

Equipping a labor force for the future

04

Health

Assuring health security for all

05

Gender

Closing the equity gap

06

Climate change

Adapting to a new normal

07

Africa’s cities

Realizing the new urban agenda

GENDER: Download chapter 5

Essay 1

Why addressing gender inequality is central to tackling today’s polycrises

Jeni Klugman

Essay 2

Strengthening fiscal policy for gender equality

Caren Grown and Odera Onyechi

Why addressing gender inequality is central to tackling today’s polycrises Jeni Klugman

Nonresident Senior Fellow, Africa Growth Initiative, Global Economy and Development, Brookings Institution

As we enter 2023, the term “polycrisis” is an increasingly apt way to describe today’s challenges.[Martin Wolf. 2022.“How to think about policy in a policy crisis”. Financial Times.] Major wars, high inflation, and climate events are creating hardship all around the world, which is still grappling with a pandemic death toll approaching 7 million people.

Faced with such daunting challenges, one might well ask why we should be thinking about the gender dimensions of recovery and resilience for future shocks. The answer is simple: We can no longer afford to think in silos. Today’s interlocking challenges demand that sharp inequalities, including gender disparities, must be addressed as part and parcel of efforts to tackle Africa’s pressing issues and ensure the continent’s future success.

“We can no longer afford to think in silos. … Gender disparities, must be addressed as part and parcel of efforts to tackle Africa’s pressing issues and ensure the continent’s future success.”

The burdens of the pandemic have been unequally borne across regions and countries, and between the poor and better off. Inequalities exist around gender—which can be defined as the “socially constructed roles, behaviors, activities, attributes and opportunities that any society considers appropriate for men and women, boys and girls” and people with non-binary identities.[WTO. 2022. “Gender and Health”. World Health Organization.] As Raewyn Connell laid out more than two decades ago, existing systems typically distribute greater power, resources, and status to men and behaviors considered masculine.[Connell RW. 1995. “Masculinities”. Cambridge, UK. Polity Press.] As a result, gender intersects with other sources of disadvantage, most notably income, age, race, and ethnicity.

This understanding is now mainstream. As recently observed by the IMF, “The gender inequalities exposed by the COVID-19 pandemic follow different paths but almost always end up the same: Women have suffered disproportionate economic harm from the crisis.”[Aoyagi, Chie.2021.“Africa’s Unequal Pandemic”. Finance and Development. International Monetary Fund.] Among the important nuances revealed by micro-surveys is that rural women working informally continued to work through the pandemic, but with sharply reduced earnings in Nigeria and elsewhere.[WB.2022. “LSMS-Supported High-Frequency Phone Surveys”. World Bank.] And as the burden of child care and home schooling soared, rural households headed by women were far less likely than urban households to have children engaged in learning activities during school closures.

Important insights emerge from IFPRI’s longitudinal panel study (which included Ghana, Kenya, Niger, Nigeria, Senegal, and Uganda) covering income loss, coping strategies, labor and time use, food and water insecurity, and child education outcomes.[Muzna Alvi, Shweta Gupta, Prapti Barooah, Claudia Ringler, Elizabeth Bryan and Ruth Meinzen-Dick.2022.“Gendered Impacts of COVID-19: Insights from 7 countries in Sub-Saharan Africa and South Asia”. International Food Policy Research Institute.]

Among the especially adverse impacts for women were greater food and water insecurity compared to men, including worrying about insufficient food and eating less than usual, while a large proportion of women also did not have adequately diverse diets. Moreover, many women had to add hours to their workday caring for sick family members, and their economic opportunities shrank, cutting their earnings and widening gender income gaps.

While today’s problems seem daunting, there remain huge causes for optimism, especially in Africa. Over the past three decades, many African countries have achieved enormous gains in levels of education, health, and poverty reduction. Indeed, the pace of change has been staggering and commendable. As captured in the Women Peace and Security Index, which measures performance in inclusion, justice, and security, 6 of the top 10 score improvers during the period 2017-2021 were in sub-Saharan Africa.[GIWPS.2022. “Women Peace and Security Index” Georgetown Institute for Women, Peace and Security.] The Democratic Republic of Congo was among top score improvers since 2017, as the share of women with financial accounts almost tripled, to 24 percent; and increases exceeding 5 percentage points were registered in cell phone use and parliamentary representation. In the Central African Republic, improvements were experienced in the security dimension, where organized violence fell significantly, and women’s perceptions of community safety rose 6 percentage points up to 49 percent.

Looking ahead, efforts to mitigate gender inequalities must clearly be multi-pronged, and as highlighted above—we need to think outside silos. That said, two major policy fronts emerge to the fore.

Ensure cash transfers that protect against poverty, are built and designed to promote women’s opportunities, with a focus on digital payments.[Klugman, Jeni, Zimmerman, Jamie M., Maria A. May, and Elizabeth Kellison. 2020. “Digital Cash Transfers in the Time of COVID 19: Opportunities and Considerations for Women’s Inclusion and Empowerment”. World Bank Group.] Ways to address gender inequalities as part of social protection program responses[IFPRI.2020. “Why gender-sensitive social protection is critical to the COVID-19 response in low-and middle-income countries”. International Food Policy Research Institute.] include deliberate efforts to overcome gender gaps in cell phone access by distributing phones to those women who need them, as well as private sector partnerships to subsidize airtime for the poorest, and to make key information services and apps freely available.[IDFR.2020. “Kenya: Mobile-money as a public-health tool”. International Day of Family Remittances.] Programs could also make women the default recipient of cash transfer schemes, instead of the head of household. Furthermore, capacity-building initiatives can be built into program design to give women the skills and capabilities needed to successfully manage accounts and financial decisionmaking.[Jaclyn Berfond Franz Gómez S. Juan Navarrete Ryan Newton Ana Pantelic. 2019. “Capacity Building for Government-to-Person Payments A Path to Women’s Economic Empowerment”. Women’s World Banking.]

Reducing the risk of violence against women. Women who are not safe at home are denied the freedom from violence needed to pursue opportunities that should be afforded to all. In 2018, 10 of the 15 countries with the worst rates of intimate partner violence were in sub-Saharan Africa—in descending order of average intimate partner violence these were, the Democratic Republic of Congo, Madagascar, Congo, Equatorial Guinea, Zambia, Ethiopia, Liberia, South Sudan, Djibouti, and Uganda.

“As the burden of child care and home schooling soared, rural households headed by women were far less likely than urban households to have children engaged in learning activities.”

Conflicts and crises multiply women’s risk of physical, emotional, and sexual violence. During the pandemic, risk factors like economic stress were compounded by service closures and stay-at-home orders, which increased exposure to potential perpetrators.[Peterman, A. et al.2020. “Pandemics and Violence Against Women and Children”.Center for Global Development Working Paper.] Several governments responded by strengthening existing help services, including police and justice, supporting hotlines, ensuring the provision of psychological support, and health sector responses.[UNDP/ UN Women Tracker.2022. “United Nations Development Programme. COVID-19 Global Gender Response Tracker”. United Nations Development Programme. New York.] Examples of good practice included an NGO in North-Eastern Nigeria, which equipped existing safe spaces with phone booths to enable survivors to contact caseworkers.

However, given the high levels of prevalence and often low levels of reporting, prevention of gender-based violence is key. Targeted programs with promising results in prevention include community dialogues and efforts to change harmful norms, safe spaces, as well as possibilities to reduce the risk of violence through cash plus social protection programs. These efforts should be accompanied by more systematic monitoring and evaluation to build evidence about what works in diverse settings.

Finally, but certainly not least, women should have space and voices in decisionmaking. This case was powerfully put by former President Sirleaf Johnson in her 2021 Foresight essay, which underlined that “economic, political, institutional, and social barriers persist throughout the continent, limiting women’s abilities to reach high-level leadership positions.”[McKinsey Global Institute .2019. “The power of parity: Advancing women’s equality in Africa”.] Persistent gender gaps in power and decision-making, not only limits innovative thinking and solutions, but also the consideration of more basic measures to avoid the worsening of gender inequalities. Overcoming these gaps in power and decision-making requires safeguarding legal protections and rights, investing in women and girls financially, and opening space for women in political parties so that women have the platforms to access high-level appointed and competitive positions across national, regional, and international institutions.[Foresight Africa. 2022. “African Women and Girls: Leading a continent.” The Brookings Institution.]

Strengthening fiscal policy for gender equality Caren Grown

Senior Fellow, Center for Sustainable Development, Global Economy and Development, Brookings Institution

Odera Onyechi

Research Analyst, Center for Sustainable Development, Global Economy and Development, Brookings Institution

It is often said that women act as “shock absorbers” during times of crisis; this is even more so in the current context of climate change, the COVID-19 pandemic, and increased geopolitical conflict. These three global crises have simultaneously stretched women’s ability to earn income and intensified their unpaid work. Well-designed fiscal policy can help cushion the effects of these shocks and enable women and their households to recover more quickly.

Over 60 percent of employed women in Africa work in agriculture, including in small-scale food production; women are the primary sellers in food markets, and they work in other sectors such as informal trading. At the same time, women are an increasing share of entrepreneurs in countries such as Ghana and Uganda, even as they face financial and other constraints to start and grow their firms.[Africa Gender Innovation Lab (GIL). 2020. “Supporting Women Throughout the Coronavirus Emergency Response and Economic Recovery.” World Bank Group.] In addition to earning income for their households, women bear the major responsibility for unpaid domestic activities such as cooking; collecting water and fuelwood; caring for children, elderly, and other dependents—so women are more time-poor than are men.

African women and entrepreneurs have been impacted disproportionately more than men by the triple shocks mentioned earlier. Extreme weather events disrupt food production and agricultural employment, making it harder for women to earn income.[One recent study in West, Central Africa, East and Southern Africa found that women represented a larger share of agricultural employment in areas affected by heat waves and droughts, and a lower share in areas unaffected by extreme weather events. Nico, G. et al. 2022. “How Weather Variability and Extreme Shocks Affect Women’s Participation in African Agriculture.” Gender, Climate Change, and Nutrition Integration Initiative Policy Note 14.] [Carleton, E. 2022. “Climate Change in Africa: What Will It Mean for Agriculture and Food Security?” International Livestock Research Institute (ILRI).] [Nebie, E.K. et al. 2021. “Food Security and Climate Shocks in Senegal: Who and Where Are the Most Vulnerable Households?” Global Food Security, 29.] The pandemic and conflict in Ukraine further intensified women’s paid and unpaid activities.[Sen, A.K. 2022. “Russia’s War in Ukraine Is Taking a Toll on Africa.” United States Institute of Peace.] [Thomas, A. 2020. “Power Structures over Gender Make Women More Vulnerable to Climate Change.” Climate Change News.] Beyond climate change and the war in Ukraine, localized conflicts and insecurity in East and West Africa exposes women and girls to gender-based violence and other risks as they seek to support their families and develop new coping strategies.[Ibid.] [Kalbarczyk, A. et al. 2022. “COVID-19, Nutrition, and Gender: An Evidence-Informed Approach to Gender Responsive Policies and Programs.” Social Science & Medicine, 312.] [Epstein, A. 2020. “Drought and Intimate Partner Violence Towards Women in 19 Countries in Sub-Saharan Africa During 2011-2018: A Population-Based Study.” PLoS Med, 17(3).]

“Responding to these shocks necessitates a large infusion of resources. In this context, fiscal policy can be deployed more smartly to advance gender equality and create an enabling environment for women to play a greater role in building their economies’ recovery and resilience.”

Responding to these shocks necessitates a large infusion of resources. In this context, fiscal policy can be deployed more smartly to advance gender equality and create an enabling environment for women to play a greater role in building their economies’ recovery and resilience. Public expenditure supports critical sectors such as education, health, agriculture, social protection, and physical and social infrastructure, while well-designed tax policy is essential to fund the public goods, services, and infrastructure on which both women and men rely.

Gender-responsive budgets, which exist in over 30 countries across the continent, can be strengthened. Rwanda provides a good model for other countries. After an early unsuccessful attempt, Rwanda invested seriously in gender budgeting beginning in 2011.[Stotsky, J. et al. 2016. “Sub-Saharan Africa: A Survey of Gender Budgeting Efforts. IMF Working Paper 2016/512.] [Kadama, C. et al. 2018. Sub-Saharan Africa.” In Kolovich, L. (Ed.), Fiscal Policies and Gender Equality (pp. 9-32). International Monetary Fund (IMF).] The budget is focused on closing gaps and strengthening women’s roles in key sectors—agriculture, education, health, and infrastructure—which are all critical for short- and medium-term economic growth and productivity. The process has been sustained by strong political will among parliamentarians. Led by the Ministry of Finance, the process has financed and been complemented by important institutional and policy reforms. A constitutional regulatory body monitors results, with additional accountability by civil society organizations.

However, raising adequate fiscal revenue to support a gender budget is a challenge in the current macro environment of high public debt levels, increased borrowing costs, and low levels of public savings. Yet, observers note there is scope to increase revenues through taxation reforms, debt relief, cutting wasteful public expenditure, and other means.[Ortiz, I. and Cummins, M. 2021. “Abandoning Austerity: Fiscal Policies for Inclusive Development.” In Gallagher, K. and Gao, H. (Eds.), Building Back a Better Global Financial Safety Net (pp. 11-22). Global Development Policy Center.] [Roy, R. et al. 2006. “Fiscal Space for Public Investment: Towards a Human Development Approach.”] We focus here on taxation.

Many countries are reforming their tax systems to strengthen revenue collection. Overall tax collection is currently low; the average tax-to-GDP ratio in Africa in 2020 was 14.8 percent and fell sharply during the pandemic, although it may be rebounding.[ATAF, 2021.] Very few Africans pay personal income tax or other central government taxes,[Moore, M. et al. 2018. “Taxing Africa: Coercion, Reform and Development. Bloomsbury Publishing.] [Rogan, M. 2019. Tax Justice and the Informal Economy: A Review of the Debates.” Women in Informal Employment: Globalizing and Organizing Working Paper 14.] and statutory corporate tax rates (which range from 25-35 percent), are higher than even the recent OECD proposal for a global minimum tax[African Tax Administrative Forum (ATAF). 2021. African Tax Outlook 2021.] so scope for raising them further is limited. Efforts should be made to close loopholes and reduce tax evasion.

As countries reform their tax policies, they should be intentional about avoiding implicit and explicit gender biases.[Stotsky, J. et al. 2016. “Sub-Saharan Africa: A Survey of Gender Budgeting Efforts.” IMF Working Paper 2016/512.] [Coelho, M. et al. 2022. “Gendered Taxes: The Interaction of Tax Policy with Gender Equality.” IMF Working Paper 2022/26.] [Organisation for Economic Co-operation and Development (OECD). 2021. Gender and Capital Budgeting.] [Grown, C. and Valodia, I. 2010. Taxation and Gender Equity: A Comparative Analysis of Direct and Indirect Taxes in Developing and Developed Countries. Routledge.] Most African countries rely more on indirect taxes than direct taxes, given the structure of their economies, but indirect taxes can be regressive as their incidence falls primarily on the poor. Presumptive or turnover taxes, for example, which are uniform or fixed amounts of tax based on the “presumed” incomes of different occupations such as hairdressers, can hit women particularly hard, since the burden often falls heavily on sectors where women predominate.[Joshi, Anuradha et al. 2020. “Gender and Tax Policies in the Global South.” International Centre for Tax and Development.] [Komatsu, H. et al. 2021. “Gender and Tax Incidence of Rural Land Use Fee and Agricultural In¬come Tax in Ethiopia.” Policy Research Working Papers.]

Property taxes are also becoming an increasingly popular way to raise revenue for local governments. The impact of these efforts on male and female property owners has not been systematically evaluated, but a recent study of land use fees and agricultural income taxes in Ethiopia finds that female-headed and female adult-only households bear a larger tax burden than male-headed and dual-adult households of property taxes. This is likely a result of unequal land ownership patterns, gender norms restricting women’s engagement in agriculture, and the gender gap in agricultural productivity.[Ibid.]

“Indirect taxes can be regressive as their incidence falls primarily on the poor. Presumptive or turnover taxes … can hit women particularly hard, since the burden often falls heavily on sectors where women predominate.”

Going forward, two key ingredients for gender budgeting on the continent need to be strengthened. The first is having sufficient, regularly collected, sex-disaggregated administrative data related to households, the labor force, and other survey data. Investment in the robust technical capacity for ministries and academia to be able to access, analyze, and use it is also necessary. For instance, the World Bank, UN Women, and the Economic Commission for Africa are all working with National Statistical Offices across the continent to strengthen statistical capacity in the areas of asset ownership and control, work and employment, and entrepreneurship which can be used in a gender budget.

The second ingredient is stronger diagnostic tools. One promising new tool, pioneered by Tulane University, is the Commitment to Equity methodology, designed to assess the impact of taxes and transfers on income inequality and poverty within countries.[Lustig, N. 2018. “Commitment to Equity Handbook: Estimating the Impact of Fiscal Policy on Inequality and Poverty.” Brookings Institution Press.] It was recently extended to examine the impact of government transfers and taxes on women and men by income level and other dimensions. The methodology requires standard household-level data but for maximum effect should be supplemented with time use data, which are becoming more common in several African countries. As African countries seek to expand revenue from direct taxes, lessons from higher income economies are instructive. Although there is no one size fits all approach, key principles to keep in mind for designing personal income taxes include building in strong progressivity, taxing individuals as opposed to families, ensuring that the allocation of shared income (e.g., property or non-labor income) does not penalize women, and building in allowances for care of children and dependents.[Grown, C. and Valodia, I. 2010. “Taxation and Gender Equity: A Comparative Analysis of Direct and Indirect Taxes in Developing and Developed Countries.” Routledge.] As noted, corporate income taxes need to eliminate the many breaks, loopholes, and exemptions that currently exist,[Cesar, C. et al. 2022. “Africa’s Pulse: An Analysis of Issues Shaping Africa’s Economic Future.” World Bank.] and countries might consider experimenting with wealth taxes.

In terms of indirect taxes, most African countries do not have single-rate VAT systems and already have zero or reduced rates for basic necessities, including foodstuffs and other necessities. While it is important to minimize exempted sectors and products, estimates show that goods essential for women’s and children’s health (e.g., menstrual health products, diapers, cooking fuel) should be considered part of the basket of basic goods that have reduced or zero rates.[Woolard, I. 2018. Recommendations on Zero Ratings in the Value-Added Tax System. Independent Panel of Experts for the Review of Zero Rating in South Africa.] And while African governments are being advised to bring informal workers and entrepreneurs into the formal tax system,[It is important to distinguish between firms and individuals that are large enough to pay taxes but do not (which include icebergs, e.g., which are registered and therefore partially visible to tax authorities but do not pay their full obligations) and ghosts, e.g., those which should register to pay but do not and there invisible to tax authorities) and firms and individuals that are small and potentially but not necessarily taxable such as street vendors and waste pickers. Rogan, M. (2019). “Tax Justice and the Informal Economy: A Review of the Debates.” Women in Informal Employment: Globalizing and Organizing Working Paper 14.] it should be noted that this massive sector earns well below income tax thresholds and already pays multiple informal fees and levies, for instance in fees to market associations.[Ibid.] [Ligomeka, W. 2019. “Expensive to be a Female Trader: The Reality of Taxation of Flea Market Trad¬ers in Zimbabwe.” International Center for Tax and Development Working Paper 93.]

Lastly, leveraging data and digital technologies to improve tax administration (i.e., taxpayer registration, e-filing, and e-payment of taxes) may help minimize costs and processing time, and reduce the incidence of corruption and evasion.32 Digitalization can also be important for bringing more female taxpayers into the net, especially if digital systems are interoperable; for instance, digital taxpayer registries linked to national identification or to property registration at the local level. However, digitalization can be a double-edged sword if privacy and security concerns are not built-in from the outset. Women particularly may need targeted digital financial literacy and other measures to ensure their trust in the system. Recent shocks have worsened gender inequality in Africa. It is therefore important now, more than ever, to invest in strengthening fiscal systems to help women and men recover, withstand future shocks, and reduce gender inequalities. While fiscal policy is not the only tool, it is an important part of government action. To be effective and improve both budgeting and revenue collection, more and better data, new diagnostic tools, and digitalization will all be necessary.

Endnotes

1. 1. Martin Wolf. 2022.“How to think about policy in a policy crisis”. Financial Times.
2. 2. WTO. 2022. “Gender and Health”. World Health Organization.
3. 3. Connell RW. 1995. “Masculinities”. Cambridge, UK. Polity Press.
4. 4. Aoyagi, Chie.2021.“Africa’s Unequal Pandemic”. Finance and Development. International Monetary Fund.
5. 5. WB.2022. “LSMS-Supported High-Frequency Phone Surveys”. World Bank.
6. 6. Muzna Alvi, Shweta Gupta, Prapti Barooah, Claudia Ringler, Elizabeth Bryan and Ruth Meinzen-Dick.2022.“Gendered Impacts of COVID-19: Insights from 7 countries in Sub-Saharan Africa and South Asia”. International Food Policy Research Institute.
7. 7. Klugman, Jeni, Zimmerman, Jamie M., Maria A. May, and Elizabeth Kellison. 2020. “Digital Cash Transfers in the Time of COVID 19: Opportunities and Considerations for Women’s Inclusion and Empowerment”. World Bank Group.
8. 8. IFPRI.2020. “Why gender-sensitive social protection is critical to the COVID-19 response in low-and middle-income countries”. International Food Policy Research Institute.
9. 9. IDFR.2020. “Kenya: Mobile-money as a public-health tool”. International Day of Family Remittances.
10. 10. Jaclyn Berfond Franz Gómez S. Juan Navarrete Ryan Newton Ana Pantelic. 2019. “Capacity Building for Government-to-Person Payments A Path to Women’s Economic Empowerment”. Women’s World Banking.
11. 11. Peterman, A. et al.2020. “Pandemics and Violence Against Women and Children”.Center for Global Development Working Paper.
12. 12. UNDP/ UN Women Tracker.2022. “United Nations Development Programme. COVID-19 Global Gender Response Tracker”. United Nations Development Programme. New York.
13. 13. McKinsey Global Institute .2019. “The power of parity: Advancing women’s equality in Africa”.
14. 14. Foresight Africa. 2022. “African Women and Girls: Leading a continent.” The Brookings Institution.
15. 15. One recent study in West, Central Africa, East and Southern Africa found that women represented a larger share of agricultural employment in areas affected by heat waves and droughts, and a lower share in areas unaffected by extreme weather events. Nico, G. et al. 2022. “How Weather Variability and Extreme Shocks Affect Women’s Participation in African Agriculture.” Gender, Climate Change, and Nutrition Integration Initiative Policy Note 14.
16. 16. Carleton, E. 2022. “Climate Change in Africa: What Will It Mean for Agriculture and Food Security?” International Livestock Research Institute (ILRI).
17. 17. Nebie, E.K. et al. 2021. “Food Security and Climate Shocks in Senegal: Who and Where Are the Most Vulnerable Households?” Global Food Security, 29.
18. 18. Sen, A.K. 2022. “Russia’s War in Ukraine Is Taking a Toll on Africa.” United States Institute of Peace.
19. 19. Thomas, A. 2020. “Power Structures over Gender Make Women More Vulnerable to Climate Change.” Climate Change News.
20. 20. Ibid.
21. 21. Kalbarczyk, A. et al. 2022. “COVID-19, Nutrition, and Gender: An Evidence-Informed Approach to Gender Responsive Policies and Programs.” Social Science & Medicine, 312.
22. 22. Epstein, A. 2020. “Drought and Intimate Partner Violence Towards Women in 19 Countries in Sub-Saharan Africa During 2011-2018: A Population-Based Study.” PLoS Med, 17(3).
23. 23. Stotsky, J. et al. 2016. “Sub-Saharan Africa: A Survey of Gender Budgeting Efforts. IMF Working Paper 2016/512.
24. 24. Kadama, C. et al. 2018. Sub-Saharan Africa.” In Kolovich, L. (Ed.), Fiscal Policies and Gender Equality (pp. 9-32). International Monetary Fund (IMF).
25. 25. Ortiz, I. and Cummins, M. 2021. “Abandoning Austerity: Fiscal Policies for Inclusive Development.” In Gallagher, K. and Gao, H. (Eds.), Building Back a Better Global Financial Safety Net (pp. 11-22). Global Development Policy Center.
26. 26. Roy, R. et al. 2006. “Fiscal Space for Public Investment: Towards a Human Development Approach.”
27. 27. ATAF, 2021.
28. 28. Moore, M. et al. 2018. “Taxing Africa: Coercion, Reform and Development. Bloomsbury Publishing.
29. 29. Rogan, M. 2019. Tax Justice and the Informal Economy: A Review of the Debates.” Women in Informal Employment: Globalizing and Organizing Working Paper 14.
30. 30. African Tax Administrative Forum (ATAF). 2021. African Tax Outlook 2021.
31. 31. Stotsky, J. et al. 2016. “Sub-Saharan Africa: A Survey of Gender Budgeting Efforts.” IMF Working Paper 2016/512.
32. 32. Coelho, M. et al. 2022. “Gendered Taxes: The Interaction of Tax Policy with Gender Equality.” IMF Working Paper 2022/26.
33. 33. Organisation for Economic Co-operation and Development (OECD). 2021. Gender and Capital Budgeting.
34. 34. Grown, C. and Valodia, I. 2010. Taxation and Gender Equity: A Comparative Analysis of Direct and Indirect Taxes in Developing and Developed Countries. Routledge.
35. 35. Joshi, Anuradha et al. 2020. “Gender and Tax Policies in the Global South.” International Centre for Tax and Development.
36. 36. Komatsu, H. et al. 2021. “Gender and Tax Incidence of Rural Land Use Fee and Agricultural In¬come Tax in Ethiopia.” Policy Research Working Papers.
37. 37. Ibid.
38. 38. Lustig, N. 2018. “Commitment to Equity Handbook: Estimating the Impact of Fiscal Policy on Inequality and Poverty.” Brookings Institution Press.
39. 39. Grown, C. and Valodia, I. 2010. “Taxation and Gender Equity: A Comparative Analysis of Direct and Indirect Taxes in Developing and Developed Countries.” Routledge.
40. 40. Cesar, C. et al. 2022. “Africa’s Pulse: An Analysis of Issues Shaping Africa’s Economic Future.” World Bank.
41. 41. Woolard, I. 2018. Recommendations on Zero Ratings in the Value-Added Tax System. Independent Panel of Experts for the Review of Zero Rating in South Africa.
42. 42. It is important to distinguish between firms and individuals that are large enough to pay taxes but do not (which include icebergs, e.g., which are registered and therefore partially visible to tax authorities but do not pay their full obligations) and ghosts, e.g., those which should register to pay but do not and there invisible to tax authorities) and firms and individuals that are small and potentially but not necessarily taxable such as street vendors and waste pickers. Rogan, M. (2019). “Tax Justice and the Informal Economy: A Review of the Debates.” Women in Informal Employment: Globalizing and Organizing Working Paper 14.
43. 43. Ibid.
44. 44. Ligomeka, W. 2019. “Expensive to be a Female Trader: The Reality of Taxation of Flea Market Trad¬ers in Zimbabwe.” International Center for Tax and Development Working Paper 93.

Next Chapter

06 | Climate Change

Related Foresight Africa: Top Priorities for the Continent in 2023

On January 30, AGI will host a Foresight Africa launch featuring a high-level panel of leading Africa experts to offer insights on regional trends along with recommendations for national governments, regional organizations, multilateral institutions, the private sector, and civil society actors as they forge ahead in 2022.

What should be the top priority for Africa in 2023?

BY ALOYSIUS UCHE ORDU

Aloysius Uche Ordu introduces Foresight Africa 2023, which outlines top priorities for the year ahead and offers recommendations for supporting Africa at a time of heightened global turbulence.

Foresight Africa Podcast

The Foresight Africa podcast celebrates Africa’s dynamism and explores strategies for broadening the benefits of growth to all people of Africa.

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By Kevin C. Urama, Adamon Mukasa, Anthony Simpasa, Bogolo J. Kenewendo

Climate Change: Adapting to a new normal

2023

• Chapter 06

01

Economic recovery and growth

Tackling multiple headwinds

02

Food security

Strengthening Africa’s food systems

03

Education and skills

Equipping a labor force for the future

04

Health

Assuring health security for all

05

Gender

Closing the equity gap

06

Climate change

Adapting to a new normal

07

Africa’s cities

Realizing the new urban agenda

CLIMATE CHANGE: Download chapter 6

Essay 1

Turning political ambitions into concrete climate financing actions for Africa

Kevin C. Urama, Adamon Mukasa, and Anthony Simpasa

Essay 2

The charge due to custodians of the world’s lungs

Bogolo J. Kenewendo

Turning political ambitions into concrete climate financing actions for Africa Kevin C. Urama

Acting Chief Economist and Senior Director of the African Development Institute, African Development Bank

Adamon Mukasa

Senior Research Economist, Macroeconomic Policy, Debt Sustainability and Forecasting, African Development Bank

Anthony Simpasa

Principal Research Economist in the Research, Networking and Partnerships Division, Development Research Department, African Development Bank

One of the main targets of the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) in Sharm El-Sheik, Egypt, was “to accelerate global climate action through emissions reduction, scaled-up adaptation efforts and enhanced flows of appropriate finance.” While the breakthrough agreement on a new “Loss and Damage” Fund for vulnerable countries is a welcome development, progress on climate finance leaves much to be desired. This is worrisome for African countries.

Recent reports on climate change such as the African Economic Outlook 2022 and the Sixth Assessment Report of the Intergovernmental Panel on Climate Change have reiterated that the climate crisis is likely to worsen, especially in Africa, and that the time for action to avert the impending catastrophe is now. World leaders have missed (again) the opportunity to move from mere political commitments and ambitions to concrete actions.

Africa’s climate paradox

As the late Kofi Annan perfectly put it, all continents are in the same boat when it comes to addressing climate change. However, individual regions and countries are not equally responsible for global environmental problems. This principle of common but differentiated responsibility and respective capabilities is at the core of climate justice and just energy transition.

Africa’s case is especially concerning. The continent is the least polluting region[The Intergovernmental Panel on Climate Change (IPCC). 2021. “Climate Change 2021: The Physi-cal Science Basis.” Working Group I contribution to the Sixth Assessment Report. The Intergovernmental Panel on Climate Change.] of the world but faces a disproportionate burden from the impact of climate change. Between 1850 and 2020, Africa’s contribution to global emissions remained below 3 percent[AfDB.2022. “African Economic Outlook 2022”. African Development Bank.] and yet, it lost about 5 percent to 15 percent annually of GDP per capita growth between 1986 and 2015. About 70 percent of the used global carbon budget is accounted for by just the United States, European Union, United Kingdom, and China (Figure 35a). An average African had a carbon footprint of just 0.95 tons of carbon dioxide equivalent (tCO2eq) in 2020, well below the 2.0 tCO2eq required to achieve the net-zero transition target. On the other extreme, an average American had a carbon footprint of up to 14 tCO2eq, fifteen times higher than that of an average African (Figure 35b).

From climate finance commitments to reality and at scale

The $100-billion promise,[Jocelyn Timperley. 2021. “The broken $100-billion promise of climate finance — and how to fix it.”] made by developed countries since 2009 at COP15 in Copenhagen, has still not been achieved. According to the OECD,[OECD.2022. “Climate Finance Provided and Mobilised by Developed Countries in 2016-2020.”] climate financing provided and mobilized by developed countries reached $83.3 billion in 2020, some $16.7 billion below the target. Indeed, a 2020 report commissioned by the United Nations concluded the only realistic scenario is that the $100-billion target will be out of reach in the short- to medium-term.

Africa’s share of global climate finance—provided and mobilized by developed countries for developing countries—increased by only 3 percentage points on average during 2010 to 2019, from 23 percent ($48 billion) in 2010–2015 to 26 percent ($73 billion) in 2016–2019 (Figure 36). This means that Africa benefited from $18.3 billion a year from 2016–2019, far behind Asia, which benefited $27.3 billion a year, over the same period. Yet, Africa accounted for about 40 percent of all countries eligible to benefit from this support, compared with only 20 percent for Asia. In addition, between 2010 and 2019, debt instruments (mostly loans) accounted for about two-thirds of all climate finance channeled to Africa, out of which two-fifths were on non-concessional terms.

Climate finance inflows to Africa are dwarfed by the enormity of resources needed for Nationally Developed Contributions (NDCs), estimated to range from about $1.3 trillion to $1.6 trillion between 2020 and 2030, or $118.2 billion to $145.5 billion per year over this period. Under the current climate finance trends, Africa’s annual financing gap could thus reach an estimated average of $108 billion per year until 2030. This climate injustice needs urgent attention.

Mobilizing more climate finance for Africa is within the reach of the global community. For instance, between January 2020 and September 2021, the global community mobilized about $17 trillion through various fiscal measures in response to the effects of the COVID-19 pandemic. Almost $15.3 trillion (or 90 percent of these fiscal measures) was mobilized by G-20 economies. This demonstration of political will and innovative use of fiscal policy rules to address the global threat posed by COVID-19 is commendable. Like COVID-19, climate change is a global commons problem but perhaps with even longer-term and systemic impacts.

Why Africa deserves more in climate financing

Mobilizing climate finance to avert the growing climate catastrophes in developing countries calls for similar political will and collective action. To this end, an important milestone is for the international community and developed countries to step up to the plate in mobilizing and providing the requisite climate resources to developing countries.

“Ultimately, climate change is a global commons problem. Climate solutions will not be sustainable unless all actors play their part. The climate challenge cannot be addressed if any country fails to meet its Nationally Determined Contributions.”

Achieving this will require significant reform of the current global climate finance architecture,[Charlene Watson, Liane Schalatek, and Aurélien Evéquoz. 2022. “The Global Climate Finance Architecture.”] to ensure that the most vulnerable countries (especially in Africa), effectively harness climate resilience opportunities. The structure, flow, and scale of the global climate finance architecture, as currently designed, is misaligned with climate vulnerability. For example, as illustrated in Figure 36 above, more resilient and less vulnerable regions receive more climate finance, in per capita terms, than their less resilient but more vulnerable counterparts. Moreover, the climate finance architecture is modelled to mirror the current global financial architecture that is risk averse and discriminatory against fragile economies. The loose definition of climate finance has also led to proliferation of various climate finance instruments, including debt instruments. The latter exacerbates debt vulnerabilities in countries where climate impacts are already constraining fiscal health.

There is thus need for a clearer definition of climate finance, better coordination among existing global climate finance facilities, dedicated climate initiatives, as well as enhanced harmonization of funding requirements that can channel climate finance flows to the most climate-vulnerable countries. While African countries do have their part to play, the principle of common but differentiated responsibility and respective capabilities requires that the most polluting countries bear the greatest burden of climate financing.

Ultimately, climate change is a global commons problem. Climate solutions will not be sustainable unless all actors play their part. The climate challenge cannot be addressed if any country fails to meet its Nationally Determined Contributions (NDCs).

And the world cannot expect Africa to implement its NDCs if the expected climate finance flows to fund the conditional NDCs, are not made available. Should the current trends continue, it is certain that Africa will not achieve its NDCs by 2030. By implication, the global community will not be able to reach the Paris Climate Accord.

The charge due to custodians of the world’s lungs Bogolo J. Kenewendo

United Nations Climate Change High-Level Champions’ Special Advisor
Former Minister of Investment, Trade and Industry, Botswana

It is time to rebalance the scales in Africa’s favor when it comes to climate finance. The African continent is home to 16 percent of the world’s population and 25 percent of the world’s remaining rainforests[World Bank Africa Region. 2017. “Forests in Sub-Saharan Africa: Challenges & Opportunities.” The Program on Forests (PROFOR).]—yet Africa attracts only 3.19 percent of global climate finance ($30 billion of $940 billion global climate flows), and the pledges to accelerate adaptation and mitigation financing of $100 billion by 2020 in developing countries are yet to fully materialize.[Naran, Baysa. 2022. “Global Landscape of Climate Finance: A Decade of Data: 2011-2020.” Cli¬mate Policy Initiative.] Climate finance can be a catalytic tool for fiscal stability, especially for African countries that are struggling with economic recovery, amid multiple global shocks.

However, for African countries and non-state actors to attract increased climate finance and play a greater role in structuring the green financial architecture, Africa must position itself as a worthy investment destination for climate finance focused on long-term development issues. To achieve this, I propose a few key areas of focus for policymakers. First, countries must have green investment plans, and second, it is critical to bring the private sector to the table and to give it space to innovate. In addition, policymakers should use public finance to de-risk private investment and have a regulatory environment that enables doing business with variable financing tools. Lastly, developed countries must deliver on the pledges already made without any further and new conditionalities to spur green development for a common 1.5 degrees future.

“Of the great rainforests in the world, only the Congo rainforest has enough standing forest left to absorb more carbon from the atmosphere than it releases.”

African Nationally Determined Contributions (NDCs), that is countries’ action plans to cut emissions and adapt to climate impacts, should be accompanied by national investment strategies that prioritize green infrastructure and natural resource protection. These can create a green development pathway that promises economic growth opportunities, industrialization, and jobs, propelling Africa past a more traditional, less green infrastructure and development approach.

Country platforms should also encompass the private sector, so that there is a cohesive approach as to who will invest where, and who is best placed to tackle the varying aspects of mitigation and adaptation and protection. A good example of this approach on leveraging the private sector is the proposal by members of the “Nairobi Declaration on Sustainable Insurance” that identified the African insurance sector as a key climate mitigation and adaptation agent; and re-affirmed its triple role of risk manager, risk carrier, and investor through commitment to a Africa climate risk management fund. This fund will cover $14 billion worth of climate and nature-related risks such as floods, droughts, and tropical cyclones through innovative insurance products and solutions. These kind of innovations by the private sector are in line with what the Paris Agreement envisioned.

Second, debt-for-climate swaps and carbon markets should be rolled out more broadly as part of the solution to debt crises which plague a long and growing list of African nations. This effort starts with valuing Africa’s wealth in the totality of its nature assets. Nature has become the world’s most important commodity, and its protection is paramount for the world’s survival. According to the World Resources Institute, of the great rainforests in the world, only the Congo rainforest has enough standing forest left to absorb more carbon from the atmosphere than it releases.[Harris, Nancy and David Gibbs. 2021. “Forests Absorb Twice as Much Carbon as They Emit Each Year.” World Resources Institute.]

Commercializing such nature assets, and making sure they attract fair value and benefit neighboring communities, is a key feature of the Africa Carbon Markets Initiative (ACMI)[ACMI is a joint initiative of GEAPP, SE4All, UNECA and supported by the UN Climate Change High Level Champions.]—an initiative that has created a roadmap for developing African voluntary carbon markets, with the aim to accelerate and scale carbon credit production on the continent. The initiative proposes to leverage an advanced market commitment (AMC), which in essence is an upfront guarantee from buyers and multiple corporations, to purchase African carbon credits. This AMC will help send a strong demand signal and incentivize appetite for good quality and innovative credits. There is huge potential in making carbon markets work to attract more climate finance.

Third, there is need for gender-informed investing to enhance climate adaptation and resilience. At its core, this means acknowledging climate action as a development issue; recognizing that the climate crisis is not “gender-neutral,” and that women and girls are disproportionately affected; and finally, that the devastating impacts of extreme climate occurrences cause more economic scarring to the poorest and most vulnerable in our societies. 2xCollaborative has developed a gender-lens investing toolkit that can, and should be, widely used to promote gender-lens climate finance to businesses and adaptation projects, involved or led by women.

We cannot afford the current architecture of global green finance to perpetuate existing disparities in those it serves. It is time for African countries to unite, strategically position themselves, and demand that the world does more to deliver climate finance for the continent; it promises great return for all, and it is what is due to the custodians of the “lungs of the world.”

1. 1. The Intergovernmental Panel on Climate Change (IPCC). 2021. “Climate Change 2021: The Physi-cal Science Basis.” Working Group I contribution to the Sixth Assessment Report. The Intergovernmental Panel on Climate Change.
2. 2. AfDB.2022. “African Economic Outlook 2022”. African Development Bank.
3. 3. Jocelyn Timperley. 2021. “The broken $100-billion promise of climate finance — and how to fix it.”
4. 4. Charlene Watson, Liane Schalatek, and Aurélien Evéquoz. 2022. “The Global Climate Finance Architecture.”
5. 5. World Bank Africa Region. 2017. “Forests in Sub-Saharan Africa: Challenges & Opportunities.” The Program on Forests (PROFOR).
6. 6. Naran, Baysa. 2022. “Global Landscape of Climate Finance: A Decade of Data: 2011-2020.” Cli¬mate Policy Initiative.
7. 7. Harris, Nancy and David Gibbs. 2021. “Forests Absorb Twice as Much Carbon as They Emit Each Year.” World Resources Institute.
8. 8. ACMI is a joint initiative of GEAPP, SE4All, UNECA and supported by the UN Climate Change High Level Champions.

Next Chapter

07 | Africa’s Cities

Related Foresight Africa: Top Priorities for the Continent in 2023

On January 30, AGI will host a Foresight Africa launch featuring a high-level panel of leading Africa experts to offer insights on regional trends along with recommendations for national governments, regional organizations, multilateral institutions, the private sector, and civil society actors as they forge ahead in 2022.

What should be the top priority for Africa in 2023?

BY ALOYSIUS UCHE ORDU

Aloysius Uche Ordu introduces Foresight Africa 2023, which outlines top priorities for the year ahead and offers recommendations for supporting Africa at a time of heightened global turbulence.

Foresight Africa Podcast

The Foresight Africa podcast celebrates Africa’s dynamism and explores strategies for broadening the benefits of growth to all people of Africa.

• Contact
• Media Relations
• Terms and Conditions
• Privacy Policy

      

By Babajide Olusola Sanwo-Olu, Peter Anyang' Nyong'o

Africa’s Cities: Realizing the new urban agenda

2023

• Chapter 07

01

Economic recovery and growth

Tackling multiple headwinds

02

Food security

Strengthening Africa’s food systems

03

Education and skills

Equipping a labor force for the future

04

Health

Assuring health security for all

05

Gender

Closing the equity gap

06

Climate change

Adapting to a new normal

07

Africa’s cities

Realizing the new urban agenda

AFRICA’S CITIES: Download chapter 7

Essay 1

Lagos: The challenges of managing a megacity

Babajide Olusola Sanwo-Olu

Essay 2

Kisumu: A secondary city with grand ambition

Peter Anyang’ Nyong’o

Lagos: The challenges of managing a megacity Babajide Olusola Sanwo-Olu

Governor of Lagos State, Nigeria

To achieve sustainable resilience and inclusiveness, Africa’s cities need to develop the confidence to innovate with a home-grown approach. It is all too easy to attempt to copy and paste what appears to be working elsewhere in the world in terms of city management and problem-solving. Ultimately, the only approach that works in the long-term, is tailoring the thinking and problem-solving to the local context.

All Africa’s megacities are alike in many ways—the demographic pressures, the challenge of climate change, infrastructure renewal, fighting crime, and so on—but each one is also unique, in its own way, with a history, character, and journey that sets it apart from others.

It is therefore necessary to ensure that these unique characteristics are kept in mind, in devising unique, home-grown solutions to the challenges being faced. So, that is the starting point.

Moving on to the specifics of policy areas that should be focused on in the coming year, I would say that at the top of the list would be all things related to the demographic pressure that today’s African megacities face. Rapidly rising populations require jobs, schools, hospitals, energy, transport infrastructure, and so on. Let’s start with jobs and skills. Africa is the fastest growing continent in the world, home to the largest population of people below 20.[United Nations. 2022. World Population Prospects 2022. Department of Economic and Social Affairs Population Division.] And yet, unemployment is rising rapidly, not necessarily because African economies are not creating any jobs at all, but because the jobs are not being created at a pace that can keep up with population growth.

“All Africa’s megacities are alike in many ways—the demographic pressures, the challenge of climate change, infrastructure renewal, fighting crime, and so on— but each one is also unique, in its own way, with a history, character, and journey that sets it apart from others.”

What is now clear to us is that we cannot depend on the traditional modes of thinking about jobs and skills—trying to educate everyone to tertiary level and focusing on academic certificates as proof of education. In many African countries a lot of people are still obsessed with going to university, even if they’re studying courses that eventually turn out to be economically ineffectual.

This is not to say that tertiary education is not vital, or necessary—only this year, our administration in Lagos State established two new universities; the Lagos State University of Science and Technology, and the Lagos State University of Education, to expand access to tertiary education for our teeming youth population. However, the point I am making is that we must acknowledge and come to terms with the fact that we have to focus on multiple alternatives and avenues to get our young people educated and skilled.

This is where Technical and Vocational Education (TVET) comes in. As we have seen from experience, technology is a necessary ingredient for creating opportunities for leapfrogging old models of learning and for making a living. Today, a growing proportion of our young people earn a living from e-commerce, selling goods and services on the internet, to customers not only in Nigeria, but globally. Any government serious about creating such jobs, must therefore be serious about creating an enabling environment, by making the following happen: Bringing down the cost of internet access; providing and facilitating financing support for entrepreneurs and startups; and building school curriculums that introduce young people to innovative thinking and technology early.

I’m pleased to say that we are doing all of this in Lagos State. We are at the forefront of supporting the deployment of cutting-edge technology to give our young people an edge in the world of the 21st century. Our Eko Excel initiative is putting digital tablets in the hands of teachers and pupils. Our School Modernization Program is delivering schools with interactive learning facilities.

Lagos State Research and Innovation Council (LASRIC) is providing seed-funding to student innovators with startup ideas. The Lagos State Employment Trust Fund (LSETF) supports individuals and micro-, small and medium-sized enterprises (MSMEs), including technology-focused ones. We are rolling out a network of 6,000km of fibre-optic infrastructure that will increase access and reduce cost.

“We cannot depend on the traditional modes of thinking about jobs and skills—trying to educate everyone to tertiary level and focusing on academic certificates as proof of education.”

Second, after jobs and skills, is the issue of climate change. Lagos is especially vulnerable to climate change, as a city on the Atlantic Ocean, and barely two meters above sea level for the most part. Also, about 30 percent of our land mass is composed of water—lagoons, creeks, swamps, and marshes.

Rising sea levels are therefore a constant challenge, complicating the potentials of flash flooding. One ambitious solution we have embarked upon in Lagos State has been the Great Sea Wall of Lagos, designed as an engineering solution which seeks to protect Victoria Island and environs from the rising Atlantic, while at the same time also enabling us the opportunity to eke out a brand-new city called the Eko Atlantic City. This new city is setting new national standards in terms of clean energy deployment, energy efficiency, and environmentally friendly practices.

Let me now highlight some of the challenges that we face as administrators of cities and subnational governments, particularly in the context of Lagos. I would list the following: High rates of inbound immigration, data collection for planning, revenue generation, the tensions between sub-national and national governments, literacy levels, and the constraints of the political cycle.

Every day, Lagos receives an estimated 2,000 new migrants, from other parts of Nigeria, and possibly even West Africa. These people are coming in search of jobs and better economic conditions, understandably. However, this also constitutes increased pressure on available infrastructure, and on our planning capabilities, which we must continually respond to.

Which leads to my third issue: Data collection. To guide effective service delivery, we need to know: Who are the residents of Lagos? How many are they? What do they do for a living? And so on. No city can develop optimally without the presence of credible data and evidence to inform budgeting, planning, and the allocation of resources.

One solution in Lagos has been to establish the Lagos State Residents Registration Agency (LASSRA), which proved useful when we were delivering relief materials to the indigent at the height of the COVID-19 lockdown. Our goal is to have a comprehensive and updated database of all our people.

Finding the fiscal revenue to deliver on our electoral promises is another significant challenge. Nigeria’s tax-to-GDP ratio is one of the lowest in the world, for various reasons.[OECD. 2022. “Revenue Statistics in Africa 2022.” Organization for Economic Cooperation and Development.] This means that governments at all levels must keep finding creative ways to improve tax revenues, without necessarily raising taxes.

“We must acknowledge and come to terms with the fact that we have to focus on multiple alternatives and avenues to get our young people educated and skilled.”

The only way to do this is by expanding the tax net, the number of people who are regularly paying their taxes. This will only happen if we simplify the tax filing system, given that many of our city residents are employed in the informal sector and may not be able to fill lengthy forms considering literacy levels.

Literacy also affects how well we as local leaders can communicate government policies and information and get the buy-in of critical stakeholders. It means that, in addition to adult literacy initiatives, efforts must also be focused on how to communicate in targeted ways that allow the population to better understand some of the complexities of policymaking.

Finally, in a federal system like ours in Nigeria, there exists long-standing tensions between the national government and the sub-nationals, or states, regarding areas of responsibility. Often, the only way to gain clarity is to seek judicial interpretation, which means long journeys through the court system. This certainly affects the abilities of municipal administrations to take certain decisions or craft certain policies. One of the lessons we have tried to apply in Lagos is to constantly push for increased cooperation and engagement with the federal government. We always strive to minimize the space for antagonism as much as possible.

None of these challenges I have outlined are insurmountable. We must continue to work hard at tackling them, while also carrying the people along through effective communication and stakeholder engagements. And we must always be realistic. Real and lasting change takes time; there are no shortcuts or silver bullets.

Kisumu: A secondary city with grand ambition Peter Anyang’ Nyong’o

Governor, Kisumu County, Kenya

As an economic hub and transport intersection for the greater western region of Kenya, Kisumu was heavily exposed to the vulnerability occasioned by stress factors emanating from the COVID-19 pandemic. The high concentration of people from diverse backgrounds attracted to economic activities within the city was a recipe for high infection rates.

The county administration had to quickly innovate and find solutions to the challenges posed by the COVID-19 pandemic.
The biggest hurdle was how to balance supporting and safeguarding livelihoods, and implementing health measures to address the spread, including lockdowns and closures of business premises.

To mitigate the effects of the pandemic, the city was re-planned to improve infrastructure within the city; for example: We built new modern markets, rehabilitated the city’s green spaces, and improved the green cover, while also ensuring better sanitation by expanding water networks.

Implementing these strategies had the net effect of saving lives and making the city attractive for investments and trade.

This is a clear manifestation that even in the face of adversities, we can still build resilient and inclusive cities, where the citizens enjoy quality livelihood.

“Building smart cities and urban areas for the future is compromised by the weak capacity of local governments to address financing of urban investments, as well as other infrastructural needs. This is due to inefficient own-source revenue collection and underfunding from the national treasuries.”

This resilience is further exhibited as Kisumu hosted the 9th edition of Africities Summit in May 2022, the most successful summit in the history of Africities. Not to mention that this was the first time the event was held in an intermediary city. Records show that the Summit was attended by 11,000 delegates from 100 countries across the world.[Odiwuor. 2022. “Africities Summit Kisumu Breaks Record with 11,000 Attendees & More.” Kisumu Everyday.]

The theme of the Summit “The Role of Intermediary Cities in Implementing the United Nations Agenda 2030 and the African Union Agenda 2063,” was very much in line with the quest for smart and resilient cities and towns in which over 50 percent of African population will live within the next 30 years.

Kisumu’s success in hosting this event has opened the doors to other secondary cities to also venture out and seek opportunities to host similar events. It is also a message to national governments to support other emerging cities on the continent to host such seminal events, as they offer massive investment opportunities that may easily open doors for the growth and development of such cities.

The effects of hosting this summit will be felt long into the future just as the economic gains made in the short-term. Some of those short-term gains are already being seen in the county’s infrastructure development such as the expansion of the airport, the construction of the Africities Convention Centre (the only convention center currently outside Nairobi), and the improvement of road networks within and around the city.

However, the demand for building smart cities and urban areas for the future is compromised by the weak capacity of local governments to address financing of urban investments, as well as other infrastructural needs. This is due to inefficient own-source revenue collection and underfunding from the national treasuries.

Local governments must therefore become innovative in finding avenues to raise resources for development, in order to supplement revenues from the central governments—which by and large only finance recurrent expenditures.

It is against this backdrop, that in the framework for the United Cities and Local Governments of Africa (UCLG Africa), Africa’s local governments have mandated the umbrella continental body to develop a special purpose vehicle for local governments to access funding from capital markets and international financial institutions. This tripartite initiative by the UCLG Africa, the Africa Development Bank (AfDB), and Afreximbank is called “Africa Territorial Trade and Investment Agency (ATIA).”

“It is against this backdrop, that in the framework for the United Cities and Local Governments of Africa (UCLG Africa), Africa’s local governments have mandated the umbrella continental body to develop a special purpose vehicle for local governments to access funding from capital markets and international financial institutions.”

This financial vehicle, based on a pooling system, will enable local governments to provide much-needed service delivery.

This will be a game changer for local governments in the face of mounting economic difficulties, exacerbated by the serious impacts of climate change on every country in the world today.
The effects of climate change, ranging from prolonged droughts to extreme flooding, and rising water levels, are rendering families homeless, destroying crops, and killing livestock, as well as having devastating effects on the economies of local authorities.

As such, there is need to adopt interventions and responses based on implementable frameworks to urgently address impacts of climate change. Some of these, as in the case of Kisumu, include mainstreaming of climate change in local government policy and programs such as the “County Integrated Development Plans and Sector plans”; formation of County Climate Change Working Groups bringing together civil society, technical staff, the private sector, and research institutions; as well as building the capacity and awareness of citizens at the local level to prioritize actions that promote climate change resilience and adaptation.

Climate resilience working groups at the local level are also critical in identifying climate change related vulnerabilities and risks for the populations, livelihoods, investments, and the environment. These groups can also provide information on current and possible future climate scenarios, thereby helping to identify potential adaptation and coping responses for climate risks.

Fostering digital transformation for climate resilience is important in helping generate accurate and decision-relevant climate information or evidence and to plan for and minimize the negative impacts of climate change on livelihoods and the economy. For example, agronomic information for farmers to monitor and predict current environmental situations and get them ahead of the game.

In the final analysis, the biggest lessons from the pandemic were that there is urgent need for a “re-think” on Africa’s cities, especially with regards to planning for smart cities, environmental management, and improvement of air quality. As we look to 2023, several adversities remain, no doubt, but we must be prepared to seize opportunities that will help create livable, smart, and resilient cities for the future.

Endnotes

1. 1. United Nations. 2022. World Population Prospects 2022. Department of Economic and Social Affairs Population Division.
2. 2. OECD. 2022. “Revenue Statistics in Africa 2022.” Organization for Economic Cooperation and Development.
3. 3. Odiwuor. 2022. “Africities Summit Kisumu Breaks Record with 11,000 Attendees & More.” Kisumu Everyday.

Related Foresight Africa: Top Priorities for the Continent in 2023

On January 30, AGI will host a Foresight Africa launch featuring a high-level panel of leading Africa experts to offer insights on regional trends along with recommendations for national governments, regional organizations, multilateral institutions, the private sector, and civil society actors as they forge ahead in 2022.

What should be the top priority for Africa in 2023?

BY ALOYSIUS UCHE ORDU

Aloysius Uche Ordu introduces Foresight Africa 2023, which outlines top priorities for the year ahead and offers recommendations for supporting Africa at a time of heightened global turbulence.

Foresight Africa Podcast

The Foresight Africa podcast celebrates Africa’s dynamism and explores strategies for broadening the benefits of growth to all people of Africa.

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By Jeannine Ajello

Amna Qayyum is a historian of global development, decolonization, and U.S. foreign relations, with a regional specialization in South Asia. As a fellow at the Brookings Institution, Qayyum leads the Echidna Global Scholars Fellowship and contributes to the Center for Universal Education’s research portfolio on gender equality in and through education.

Qayyum’s current research foregrounds gender in the study of political economy and global governance. Her book manuscript, “Authoritarian Body Politics in Muslim South Asia,” demonstrates how reproductive health and education programs have crucially shaped gender norms, development politics, and U.S. foreign relations in Pakistan and Bangladesh. Focusing both on policymaking and praxis, it links a diverse set of stakeholders from across the Global South and North and reveals the multi-scalar centrality of reproductive politics to everyday life, governance, and global geopolitics.

Prior to joining Brookings, Qayyum was a Henry A. Kissinger postdoctoral fellow in international security studies at Yale University’s Jackson School of Global Affairs. For the past decade, she has also worked with a variety of government and educational partners in Pakistan. She has advised the government on COVID-19-related human security, collaborated with the Lahore University of Management Sciences (LUMS) on a research project focusing on population and governance, and conducted educational advising and outreach for the Fulbright Commission in Islamabad. In Washington, D.C., Qayyum has developed research on gender and nuclear security in South Asia as part of the Nuclear Futures Working Group (NFWG) convened by the New America Foundation. As an educator, she has also worked with university and refugee learners through Princeton University’s Global History Lab.

Qayyum’s scholarship has been awarded the 2021 Pirzada Prize in Pakistan Studies by the University of California, Berkeley. Her research has also been supported by fellowships from the American Council of Learned Societies, the American Institute of Pakistan Studies, the Lyndon B. Johnson Presidential Foundation, the Society of Historians of American Foreign Relations, and the Joint Center for Economics and History at Harvard University, among other institutions. Her writing has appeared in The Washington Post and her scholarly research is forthcoming in Cold War History.

She holds a doctoral degree from Princeton University.

      

2022 was another difficult year for the global economy—and not least for Africa, which was already burdened with rising public debt levels, poor infrastructure, jobless growth, and high inequality—even before the COVID-19 pandemic hit.

As 2023 begins, Africa’s recovery is further threatened by multiple crises and a precarious external environment. The war in Ukraine and global surge in inflation have ripped open the scars of the pandemic—putting historic pressure on food, fuel, and fertilizer prices. Meanwhile, the uneven recovery from the COVID-19 pandemic continues to feature in headlines across Africa and elsewhere. Fragility in parts of the continent and adverse weather conditions are also key concerns. With these challenges, it is easy to be pessimistic about Africa’s prospects, and yet, Africa has proved resilient—time and time again.

On January 30th, the Brookings Institution’s Africa Growth Initiative will launch its flagship report, “Foresight Africa: Top priorities for Africa in 2023”, that examines pressing policy issues on the continent in a time of heightened global turbulence. This year’s launch will feature a high-level panel of leading Africa experts, who will offer insights and recommendations on the following questions:

• Will 2023 be the year Africa recoups lost ground and returns to its pre-pandemic growth trend?
• What should the top priorities for the region in the year ahead be in order to safeguard the health and socio-economic wellbeing of the continent as well as ensure an inclusive and equitable post-pandemic recovery?
• How can policymakers effectively address the unprecedented external and internal headwinds facing the continent?

After the panel, the panelists will take audience questions.

This event will be available for in-person attendance or to watch online. Viewers can submit questions for the panel by emailing events@brookings.edu or via Twitter @BrookingsGlobal by using
#ForesightAfrica

Brookings requires all staff and visitors to show proof that they are fully vaccinated against COVID-19 via vaccines approved by the FDA or WHO. After submitting your registration, please proceed to the provided link on the confirmation page to complete the registration process by verifying your vaccination information.

      

By Izzy Taylor

In 2022, experts at Brookings Global studied myriad issues affecting the global economy and development. In our first ever Global Lookback, I sat down with and recorded 14 fellows as they discussed the research, events, and publications that had the most impact—as well as their insight on the most meaningful work to come in the new year.  

Vice President and Director Brahima S. Coulibaly kicked us off with an overview of the challenges Global scholars sought to address in 2022—from guiding post-pandemic economic recovery and avoiding a sovereign debt crisis to achieving the Sustainable Development Goals and transforming education. 

As we count down to 2023, Brookings Global is looking back on our accomplishments.

Vice President @bsangafowacoul kicks off our #GlobalLookback2022—join us in the coming weeks as our scholars recap their proudest moments in 2022. pic.twitter.com/ZpRyMFfq4C

— Brookings Global (@BrookingsGlobal) December 19, 2022

Africa Growth Initiative

This past year, scholars from the Africa Growth Initiative emphasized the importance of including African voices in global debates. Director Aloysius Uche Ordu reflected on convening with senior policymakers from select African countries on the sidelines of the World Bank and IMF’s annual meetings, while Landry Signe lent his expertise on trade policy to the United States Congress and the World Trade Organization, among others. Keep an eye out for the upcoming 2023 edition of Foresight Africa, which will provide more insight from these scholars and more concerning the most pressing policy considerations on the continent. 

The Africa Growth Initiative at Brookings had a remarkable 2022. @Aloysiusordu looks back on a high-profile convening, speaks about the importance of featuring diverse African voices, and teases the new edition of #ForesightAfrica coming in 2023. #GlobalLookback2022 pic.twitter.com/0NoAia4jvA

— Brookings Global (@BrookingsGlobal) December 20, 2022

Center for Sustainable Development

In 2022, the Center for Sustainable Development saw major success in Tony Pipa’s work on rural communities in the United States and the Reimagine Rural podcast. Climate change also took a prominent place this year—both Homi Kharas and Amar Bhattacharya focused their research efforts on climate policy, particularly the central role of developing countries and the urgent need for climate finance. Their upcoming edited volume, releasing this year, will shed more light on this increasingly vital subject. Center Director John McArthur discussed furthering progress on the Sustainable Development Goals (SDGs) through the 17 Rooms initiative. With 2023 marking the midpoint of the SDG timeline, many of our scholars pointed to the necessity of a renewed, global focus on the SDGs in 2023. McArthur also highlighted the center’s deepened focus on gender equality as a core task of sustainable development. 

.@mcarthur—director of the Center for Sustainable Development at Brookings—reflects on the #17Rooms initiative, the importance of gender equity in sustainable development, and looks ahead to 2023. #GlobalLookback2022 pic.twitter.com/KX3rb0PuWz

— Brookings Global (@BrookingsGlobal) December 22, 2022

Center for Universal Education

As the Center for Universal Education celebrated its 20th anniversary, Deputy Director Jennifer O’Donoghue stressed the value of collaboration with stakeholders of all levels and localities in transforming education systems. The year’s successes reflect this holistic view: Helen Hadani worked to make cities worldwide centers for accessible learning, while Omar Qargha’s work on financial literacy in Jordan emphasized local involvement for sustainable scaling to the national level. In 2023, Emily Morris looks forward to the conclusion of a 15-year study following students in Zanzibar, Tanzania, to identify sources of and barriers to their success. 

Last year, the Center for Universal Education at Brookings celebrated its 20th anniversary.

As part of our #GlobalLookback2022, @jennodjod recaps the important lessons learned from two decades of work that the center is bringing into 2023. pic.twitter.com/DEgO7UOSIr

— Brookings Global (@BrookingsGlobal) December 21, 2022

Elsewhere in Global, fellows narrowed in on specific areas of interest. Danielle Resnick continued her work on food systems transformation in Africa. Zia Qureshi analyzed how technological change is shaping economies and policies. And Carol Graham delved into the benefits of investing in brain capital for public health and economic growth. 

Our scholars collaborated across policy areas to produce over 350 works in 2022 focused on enhancing global development. We’re looking forward to an even better 2023. 

Find the full set of interviews on Twitter using #GlobalLookback2022. 

      

By Landry Signé

      

As global crises mount—from the social and economic fallout of COVID-19 to the deepening climate crisis to food insecurity compounded by the Russian invasion of Ukraine—development finance institutions (DFIs) are being called upon to address these issues.  Resources increasingly are being funneled through DFIs but the ability to know what investments are being made and the impact of those investments is a challenge.   

Publish What You Fund (PWYF) has undertaken the DFI Transparency Initiative, a consultative, multistakeholder research and advocacy effort to advance the transparency of DFIs. Its goal is to improve the effectiveness and accountability of DFI investments. The culmination of this work will be the launch of a “DFI Transparency Index” that measures disclosure by 30 multilateral and bilateral DFI portfolios, both sovereign and non-sovereign. This inaugural edition of the “DFI Transparency Index” will allow stakeholders—for the first time—to compare the relative transparency of these institutions, as well as establish a credible baseline of performance against which future progress can be measured. 

On January 25, the Center for Sustainable Development at the Brookings Institution and Publish What You Fund will co-host an event to discuss the inaugural edition of the “DFI Transparency Index.” The event will begin with a presentation of the Index by PWYF CEO Gary Forster. George Ingram, senior fellow at Brookings’ Center for Sustainable Development, will moderate a panel with representatives from public and private sectors to discuss the findings of the Index. The discussion will focus on measurement of development impact and mobilization as well as assurance of community disclosure for project-affected communities for higher-risk projects.

Online viewers can submit questions for speakers by emailing events@brookings.edu or via Twitter by using #DFITransparency. 

If you are attending in person, Brookings requires all staff and visitors to show proof that they are fully vaccinated against COVID-19 via vaccines approved by the FDA or WHO. After submitting your registration, please proceed to the provided link on the confirmation page to complete the registration process by verifying your vaccination information. 

      

By Homi Kharas, Charlotte Rivard

Strong headwinds suggest that 2023 will be a difficult year for global economic development. Avoiding setbacks will be at least as important as making renewed progress. Developing countries will continue to face overlapping crises with little to no fiscal space for addressing them. In the short term, debt and humanitarian distress are pressing threats, while in the longer term, climate action and spending on sustainable development goals (SDGs) remain priorities. If ignored, any one of these areas could have serious consequences for millions of people. If a critical mass of countries were to be adversely affected, it could create systemic failure in the global capacity to provide safety nets for people and resilience for economies.

Plans to avoid the worst outcomes will require some common features. At the country level, there need to be better policies, stronger institutions, and sound economic governance. At the international level, there need to be larger flows of official finance.

It will not be feasible to protect all countries from all types of risk. The human and financial resources to respond to crises are limited. The global community—major international organizations and large donors—needs a plan to avoid systemic risk and a watchlist of systemically important countries. Such a plan must triage and focus on those countries where the number of affected people is the largest. This does not imply that small countries should be ignored, simply that they have smaller spillover consequences for the rest of the world, and from a financial viewpoint, their issues are more manageable, so they can be dealt with as and when the need arises.

Which countries should be on a watchlist of those who could trigger a systemic failure, and what are the resource gaps involved? We consider below four priority areas in economic development where there are major gaps: (1) SDGs, (2) climate, (3) debt vulnerability, and (4) fragility, conflict, and violence.

1. SDGs

This year marks the mid-point of the SDG time horizon (2015-2030). Heads of state will gather in September at the United Nations to take stock of progress. They will find that all the SDG targets for 2030 are off track and some indicators are even going backward. Early findings from forthcoming work (see sources under Figure 1) suggest that 10 countries account for roughly half the number of people left behind on a cross-section of key SDG targets. For example, there are about 600 million people still living in extreme poverty and millions more without adequate food, education, healthcare, or access to modern energy. Previous work on “building the SDG economy” estimated that roughly $1 trillion in additional spending is needed for developing countries to achieve the sustainable development goals. The 10 countries with the most “people being left behind” account for about half the financial gap. Without tangible progress on SDG financing this year, or at least a plan for an acceleration, there is a risk of a “lost generation.” Confidence in global programs and solutions will also inevitably fall further.

2. Climate

Developing countries (excluding China) comprise 38 percent of current global greenhouse gas emissions and are expected to emit about half of annual emissions by 2030. While a “green transition” is underway in many developing countries, it is limited by inadequate financing. Less than 20 percent of installed global solar capacity is in developing countries (excluding China), even though these countries have some of the most favorable climatic conditions in the world. The reason is simple: the higher cost of financing in developing countries. An estimated $500 billion is needed this year, in addition to current funds, to finance climate mitigation and adaptation efforts in developing countries—sustainable infrastructure projects and natural climate solutions in agriculture, forestry, and land use. (Note this is far more than the oft-referenced $100 billion of climate finance promised by developed countries, a pledge that has still not been met.) Further, with the collapse of private financing in 2022, many sustainable infrastructure projects have been put on the back burner. The 10 countries with the largest climate financing gaps need around two-thirds of the total climate financing gap, or $350 billion. These 10 countries emit roughly half of developing country emissions (excluding China). If they do not act more aggressively on climate, prospects for keeping temperature increases below 1.5 degrees, or even 2 degrees, will dim.

3. Debt

In 2023, developing countries owe an estimated $381 billion in debt service on medium- and long-term external debt according to the World Bank International Debt Statistics. 53 countries have credit rating classifications estimated to be “highly speculative” or worse. This subset of developing countries owes $166 billion in debt service in 2023. The top 10 debtors alone owe almost 60 percent of this debt service, or a quarter of total debt service due by developing countries. The current debt resolution system would struggle to handle more countries. Only three countries are currently renegotiating their debt under the G-20-led Common Framework, and most large debtors are ineligible to participate. The inefficiency of approaching the issue on a case-by-case basis raises the likelihood that more developing countries will lose their hard-earned access to private capital markets and that 2023 will see a return to systemic debt crises.

4. Fragility, conflict, and violence

While the war in Ukraine consistently occupied the headlines in 2022, many other countries faced urgent humanitarian concerns—from natural disasters, to armed conflict, food crises, and political instability. The IRC publishes an Emergency Watchlist of 10 countries most at risk of a humanitarian crisis. The latest watchlist countries accounted for nearly 60 percent of people displaced due to conflict, violence, or disaster across all countries in 2021. In the most recent past, only about 50 percent of the humanitarian appeals for these countries (excluding Ukraine) was met according to the U.N. Office for the Coordination of Humanitarian Affairs (OCHA). They only received $17 billion in 2021 according to OECD statistics but had costs and losses estimated at $32 billion. In addition, the Kiel Institute for the World Economy estimates that Ukraine received $17.8 billion in humanitarian aid between January 24 to November 20, 2022. If these 10 countries have the same order of magnitude of losses in 2023 as they did in 2021, costs and losses will amount to $50 billion.

Key Takeaways

Figure 1 below provides an overview of the top 10 countries in each risk category. In all, there are 30 different countries that need to be watched (ten countries are on two lists). The aggregate resource gap in those countries amounts to $903 billion in 2023. Most of this will need to come from domestic sources, but a substantial amount will surely be needed in external assistance. Donors and official financing agencies should make contingency plans. (The World Bank already announced a “surge” financing program that will last through June.)

The financing needs are not simply concentrated in a handful of countries that have multiple overlapping crises. Rather, quite different sets of countries are affected by each vulnerability, resulting in many different countries requiring funds. The current system is not fit for this scale of financing needs or concurrent crises.

There are early-stage discussions on what to do next. Discussions at the G-20 and other forums on expanding the multilateral development banks are ongoing. Some funds, notably the Green Climate Fund is up for replenishment this year. But there is little indication that rich country governments are willing to support a huge step-up in official finance. There need to be new and innovative mechanisms for channeling resources to developing countries. Ideas abound: new issuance of special drawing rights (SDRs), credits for carbon offset sales in voluntary carbon markets, ecoservice payments, taxes on fossil fuels, state-contingent clauses in financial instruments. These ideas are still at a formative stage. It is time for more brainstorming in 2023 to see where the possibilities lie, else global development will continue to lurch from crisis to crisis.

Figure 1: Estimated developing country vulnerabilities and financing needs for 2023

Note: Excludes Russia and China from analysis. The ordering of countries is by SDG performance, climate financing gaps, debt service payments, and emergency watch list countries according to the order by IRC (with the exception of countries in the overlaps).

Sources: International Rescue Committee; OECD Statistics; and Internal Displacement Monitoring Centre for fragility, violence, and conflict; EDGAR; World Emissions Clock; and Bhattacharya et al (2021) for climate; International Debt Statistics for debt; and preliminary results from Kharas, McArthur, and Onyechi (forthcoming) for SDGs.

      

By George Ingram, Susan Reichle

The U.S. Agency for International Development (USAID) has launched a package of internal reforms to modernize its engagement with the private sector. The Agency has a long history of working with the private sector—on both sides of the development continuum, from partnering with American businesses in delivering development solutions to building up the local private sector. An example is USAID’s work with an Egyptian exporter association that strengthened agricultural exports and increased revenue by including smallholder farmers and exporters in the high-value horticultural value chains. Seeing the benefits of a more inclusive export sector, major Egyptian exporter associations began to increasingly seek smallholder farmer contracts.

The most concerted effort, the Global Development Alliance (GDA), was launched more than 20 years ago as a means to advance USAID’s engagement with the private sector and has resulted in more than 1,900 public-private partnerships over the past two decades. Despite, or maybe because of, being the bilateral donor that has gone the furthest in partnering with the private sector, USAID recognizes that new tools are needed to meet today’s unprecedented development challenges that require a more forward-leaning approach to scaling up public-private partnerships.

The timing is propitious. The G-7, major reports by independent experts, and U.S. Treasury Secretary Yellen have publicly prioritized the mobilization of private finance. Billions and trillions will be needed to address climate change, the loss of progress in advancing the Sustainable Development Goals (SDGs), COVID and conflict-induced poverty, and the astronomical cost of rebuilding Ukraine when Putin’s war is over. It is therefore essential that USAID have the tools to enlist the resources and capabilities of the private sector to meet these monumental demands.

With many corporations aligning their business strategies with the SDGs, the time is ripe for partnership with USAID. In 2021 USAID articulated how the private sector is integral to its work in a “Private Sector Engagement Policy” and highlighted the importance of public-private partnerships to achieve the global goals by 2030.

PSE Modernize

On November 17, 2022, USAID Administrator announced Private Sector Engagement (PSE) Modernize containing the following nine changes to its business model:

Mission Capacity Index

Relationship Management Data & Reporting

Community of Practice

Future Workforce

Consultation Desk

Innovation Incubator Learning Lab Flexible Fund

Although each component is an important step, several are especially critical to USAID’s engagement with the private sector and require further strengthening to ensure the announcement of this initiative endures and leads to greater development impact.

Staffing and Resources

One of the greatest challenges USAID faces is the lack of staff and resources to deliver on the promise of engaging the private sector. The Mission Capacity Index is a new data system that will provide USAID country missions and Washington bureaus with information on their staffing capability to scale PSE programming. Rather than long technical documents, engaging the private sector requires unique communication skills based on slide decks and a deep understanding of the drivers for corporate partners, as well as the agility to respond quickly. While some USAID officers have these skills or could rapidly adopt them, the agency must invest and reward its staff to ensure these skills endure beyond this administration. Creating agency awards around PSE and incorporating objectives and targets into employee performance plans are just a few ways to incentivize staff.

The PSE Future Workforce Program will provide a needed focus on attracting and retaining private-sector talents in the agency. A step further would be to make PSE expertise a separate cone within the USAID personnel system to ensure those employees that their expertise is valued, and that they have a path for career advancement.

USAID has had staff members assigned to maintain the relationship with certain private sector partners. But this has been on top of other responsibilities and seldom rewarded. Under “Relationship Management” those positions will be prioritized and become more structured and formalized in the workforce plan.

The Consultation Desk, Innovation Incubator, and Learning Lab can be seen as a trio of knowledge units to provide missions and Washington bureaus access to PSE expertise, PSE innovative tools and authorities, and a repository of PSE resources. Due to a lack of resources, these endeavors are slated to be placed on the back burner. But they are critical tools for staff to perform their responsibilities in a smart and coherent manner, so priority should be placed on finding the modest resources needed to launch them.

A community of practice is a proven instrument for sharing experiences and learning. The PSE Community of Practice is designed to be internal to USAID. To be truly impactful, it should also encompass private-sector participation.

Flexible Fund

The Flexible Fund takes further an underused authority in the FY 2022 foreign operations appropriations act that allows $50 million in development assistance and economic support funds used for private-sector partnerships to be available for use for three years (rather than the usual two years). If approved by Congress, the Flexible Fund, at a suggested $80 million for fiscal year 2023, would be the first time USAID had a discrete pot of money just for partnering with the private sector.

A model for this fund could be the Complex Crisis Fund (CCF) which enables USAID missions to access resources quickly per a short application to USAID/Washington. Like the CCF’s ability to act rapidly to prevent or respond to a crisis, the PSE Flexible Fund would enable missions to quickly respond to an opportunity with the private sector. Often, USAID staff and partners in-country are unable to capitalize on unique opportunities to create private-sector partnerships because USAID’s current procurement options, including the Global Development Alliance, just do not move fast enough, often requiring many months of endless meetings to reach closure. An agile fund enabling missions to rapidly draft a concept note to USAID’s PSE hub would not only provide funding but also technical assistance to missions that could significantly leverage USAID’s partnerships with the private sector.

Additional Recommendations

Beyond these practical initiatives, several additional steps the authors have proposed in earlier writings (here, here, and here) would further advance “PSE Modernize.”

A particularly important element in upping USAID’s game with the private sector is enhanced collaboration with the Development Finance Corporation (DFC). USAID has a deep understanding of development, experience providing technical assistance, and a wide array of activities that can benefit from private-sector partnerships. The DFC has the tools of finance (debt, equity, and guarantees) and insurance.  Joining their respective capabilities, the two agencies can enhance their engagement with the private sector through deploying blended finance and technical assistance that will derisk private investment to build more sustainable activities.

A second area for action is the need to revise USAID procurement rules and processes to make them timelier and more amenable to how the private sector functions. A constant mantra from the private sector is the need to quickly get to “yes” or “no”.  We hear of too many instances in which corporations have just walked away because trying to work with USAID was too complex and time-consuming. The agency should join together to mandate the exigencies of three initiatives that require the simplification of agency procedures. On November 28 Administrator Power announced the Burden Reduction Program to “reduce bureaucratic burdens and so-called time taxes imposed and/or experienced by the Agency.” Similarly, a critical part of the heightened agenda on locally-led development is to make USAID rules and regulations simpler in order to be more accessible to local organizations in partner countries. Incorporating PSE Modernize into these efforts to simplify USAID requirements and procedures would make it easier for the private sector, both local and international, to comply with the agency’s procedures for procurement, reporting, and accountability.

Thirdly, just as it is recognized that USAID lacks sufficient numbers of contracting officers to handle current procurement actions, much less the greater number that will result from partnering with local organizations, the agency also lacks sufficient contracting officers experienced in dealing with private companies. One example of where this will be absolutely critical is the rebuilding of Ukraine. The private sector will play a pivotal role in Ukraine’s reconstruction efforts. USAID would be wise to staff up now with needed contract and PSE experts, as well as bolster its Europe and Eurasia bureau which is chronically understaffed to manage billions of dollars in assistance.

Today’s development challenges require new and enhanced tools to engage the private sector. Administrator Power’s announcement in November is a good start. The proof will be in whether USAID can move more quickly to form meaningful private-sector partnerships that will endure beyond the headline.

      

By Emily Gustafsson-Wright, Elyse Painter

While 2022 saw a return to pre-pandemic normalcy in many regards, the economic and social upheavals around the world due to the pandemic continue to reverberate. The ongoing Russian invasion of Ukraine, as well other political crises and environmental shocks, have only exacerbated these effects. The IMF estimates that global growth will be just 3.2 percent in 2022, down from 6 percent in 2021. Over the past year at Brookings, we have continued to track innovative funding mechanisms–global impact bonds–and have published research and participated in events on the topic around the globe. Additionally, our research this past year has continued to focus on data for achieving outcomes in education and early childhood development. Below, we summarize the highlights from the impact bonds market and our work this past year and take a look forward to 2023.

The impact bonds market

As of January 1, 2023, our Brookings database shows there are 239 social and development income bonds in 39 countries around the world that meet our definition of an impact bond. This includes 27 in low- and middle-income countries (LMICs). Overall, we continue to see that impact bonds in social welfare (76) and employment (69) lead the field, while the majority of impact bonds in LMICs are in the employment (8), education (7), and health (8) sectors (Figure 1).

Figure 1.

We have also found that the average number of beneficiaries served by impact bonds has increased significantly over the past year. At the start of 2022, the average was 11,893. Our January 1, 2023 snapshot shows that the average increased by nearly 7,000 people to 18,642 (Figure 2). As successful initiatives scale up and new projects expand beyond limited pilot formats, we expect this number to continue to rise.

Figure 2.

Source: Brookings Global Impact Bonds Database, January 2023

There were significant developments within the education sector in impact bonds. Indeed, we found that education was the fastest growing impact bond sector, with 12 new impact bonds implemented in 2022 alone. In September, the Education Outcomes Fund (EOF) launched the Sierra Leone Education Innovation Challenge, an $18 million program supporting 325 public primary schools over three years to improve literacy and numeracy for approximately 130,000 children. The five projects within this outcomes fund are partnerships between impact investor Bridges Outcomes Partnership, and providers EducAid, Save the Children, Rising Academy Network, National Youth Awareness Forum, and Street Child. The outcome payers include the government of Sierra Leone; the Foreign, Commonwealth & Development Office of the United Kingdom; Korea International Cooperation Agency; Bank of America; and Hempel Foundation.

On the margins of the U.N. General Assembly, we hosted a discussion on the future of outcomes-based financing (OBF). This event, focusing on how OBF can improve children’s lives, also featured the international launch of the EOF Sierra Leone program and results from two of the largest impact bonds in the world that completed in 2022  The first impact bond, the Quality Education India Development Impact Bond (QEI DIB), focused on improving the core competencies of literacy and numeracy for 200,000 Indian students, while the Utkrisht Development Impact Bond aimed to improve maternal and newborn health in Rajasthan, India. As the knowledge partner for the QEI DIB, we interviewed stakeholders from the project to determine key takeaways and lessons learned over the course of the project, culminating in the “From evidence to scale: Lessons learned from the Quality Education India Development Impact Bond” report. This report highlighted how a focus on outcomes impacted every stakeholder in the project, from the top down to individual service providers.

This was one of several in-person events that we engaged in this year as the world began to open up. Notably, OBF was prominent in many of the global conversations addressing the multiple crises reverberating across the globe. In April, we held our first hybrid event at Brookings, featuring the results from the recently concluded Village Enterprise Development Impact Bond, which targeted first-time entrepreneurs living in extreme poverty in Kenya and Uganda aiming to increase consumption levels and assets. The speakers shared that partnership strengthening and the centering of the end-user experience were some of the key benefits of the impact bond financing structure, which were similar points to those highlighted by the stakeholders of the QEI and Utkrisht DIBs.

With the pandemic’s exacerbation of the global learning crisis, some of the most important organizations in education and early childhood development sectors emphasized the need for innovative solutions to increase both the volume and effectiveness of funding. In fact, major education sector fora have dedicated full days to exploring a variety of innovative financing mechanisms focused on expanding and enhancing domestic and donor spending on education, including outcomes-based contracts. Financing was also featured at the Annual Meeting of the Global Schools Forum, a member organization bringing together non-state providers from around the globe. We had the pleasure of engaging in a fascinating debate on financing and service delivery partnerships with Pankaj Jain who shared the experience of Gyan Shala, the service provider in the QEI DIB, and Harry Patrinos of the World Bank who spoke on his seminal research on public-private partnerships. Additionally, at the UNESCO World Conference on Early Childhood Care and Education in Tashkent in November, we co-hosted a session on financing and partnerships with EOF, UNICEF, and the Global Partnership for Education in which impact bonds and outcomes funds were an important part of the conversation. In summary, spanning all these events, as well as the numerous online events in which we participated, there is more momentum than ever to identify creative solutions such as OBF to outcome achievement for children and vulnerable populations around the world.

Work on data for outcomes

In addition to our research and convening around the broader OBF market, we dedicated time this past year to digging into some deeper sub-branches on the topic. One in particular encompasses the data needed to understand if outcomes are being achieved before it is too late to achieve the goals of the program or project. In November, we launched our “Digital tools for real-time data collection in education” report highlighting the importance of real-time data to track progress and inform course adjustments in education. In the report, we provide a framework to analyze these tools, looking at specific factors like tool usability, functions, and context to help education decisionmakers select or create fit-for-purpose tools. In conjunction with the report, we launched an interactive database of existing digital tools for real-time education data being used in low- and middle-income countries which, through crowdsourcing, we will continue to populate on a quarterly basis (so let us know if you have a tool that we should include).

Additionally, over the past year, we have continued our work on cost data for education and early childhood development, another critical piece of OBF. Our Childhood Cost Calculator (C3) was piloted in three countries, with the aim to provide a user-friendly, online tool that can help answer a host of questions related to costing. Through exercises in Cambodia, Ghana, and Honduras, we saw how C3 can provide useful cost data and analysis across multiple education sectors. This includes, but is not limited to, cost feasibility analysis, cost comparisons of different interventions, cost distributions across categories or resource types, and scale-up costs. As more programs complete costing with the C3, a database of education and early childhood development costs will be created, informing future developments in the field. In September, we co-hosted a webinar with the World Bank, International Labor Organization, UNICEF, and ECDAN on costing for early learning and ECD programs. The webinar introduced three resources for costing and explored how each tool can be used effectively.

What’s next?

We are looking forward to 2023, which is shaping up to be a promising year. The pipeline of projects, while having slowed during the pandemic, has grown rapidly in the past year and we are likely to see the launch of a number of impact bond projects before the end of 2023. Among LMIC countries, based on our Brookings database and the Outcome Accelerator’s Pipeline Database, the dominant sectors of projects in the pipeline are education and employment initiatives, and we are observing the growth of less common intervention areas such as energy and water, sanitation, and hygiene (WASH) and anticipating projects in new countries such as Vietnam, Namibia, and Lebanon. A notable rising trend is the use of outcomes funds bringing together a multitude of projects as stakeholders seek to achieve greater scale. For example, EOF, following their recent launch in Sierra Leone, will launch in Ghana this month. The $30 million program, supported by the government of Ghana and the World Bank, will aim to reach approximately 175,000 children by helping to assimilate out-of-school children back into the classroom and improve learning outcomes through assistance to teachers in 600 primary schools around the nation. Furthermore, with the development of several local and global initiatives aimed at expanding OBF this past year, we expect to see the fruits of these efforts in 2023. For example, globally, we hope to see growth of projects and research with the launch of the Outcomes Accelerator, which brings together disparate stakeholders with a goal of realizing the Sustainable Development Goals through increased and effective use of OBF.

As for us, over the next year, in addition to following the global market and diving deeper into particular projects, we will continue exploring what is needed to engage in OBF effectively and efficiently. Keep an eye out for further research on data for outcomes including real-time and cost data and the launch of the C3.

As always, please stay in touch. We’d love to hear about your work as well as share the insights from our research. Wishing you all a fruitful and joyful 2023!

      

By Brahima Coulibaly, Wafa Abedin