Building Resilience in Fragile States: Experiences from Sub Saharan Africa. Mumtaz Hussain International Monetary Fund October 2017

Transcription

1 Building Resilience in Fragile States: Experiences from Sub Saharan Africa Mumtaz Hussain International Monetary Fund October 2017

2 How Fragility has Changed since the 1990s? In early 1990s, 20 sub-saharan African countries were fragile Since then, 7 countries are becoming resilient But 6 countries regressed- and, by 2014, 19 countries remained fragile 2

3 Fragility in Sub Saharan African Low-income Countries: As of 2014 Classification of SSA Low-income Countries during Remained or became fragile Fragile, but progress made Became resilient Remained stable Burundi + Angola + Cameroon + Benin Central African Rep. + Congo, Dem. Rep. of + Ethiopia + Burkina Faso + Chad + Congo, Republic of + Mozambique Cabo Verde Comoros + Liberia + Niger + Gambia, The Côte d'ivoire + Nigeria + Ghana Eritrea + Rwanda Kenya + Guinea + Uganda + Lesotho Guinea-Bissau + Senegal Madagascar + Tanzania Malawi + Zambia Mali + São Tomé & Príncipe Sierra Leone + Togo + Zimbabwe + 3

4 Characteristics of Fragility? A country is considered fragile if the state is seriously impaired to: Provide stability and security Deliver basic public goods and services Promote economic and human development 4

5 Five Dimensions of Progress Conflict reduction and political stabilization Institutional improvements Fiscal space and institutions Economic performance Social outcomes 5

6 1. Conflict Reduction and Political Stabilization Since the 1990s, both the severity and incidence of conflicts and instability in general have declined But progress can be jeopardized or reversed: recent threats pose new risks, e.g., in CAR, Mali, and South Sudan 6

7 2. Institutional Improvements Institutions have improved significantly in resilient and, on average, in resource-rich countries Average Change in CPIA Scores by Country Groups Fragile non resource-rich Fragile resource-rich Resilient Other fragile countries have made little or no progress -0.4 Economic Management Structural Policies Policies for Social Inclusion/Equity Public Sector Management and Institutions 7

8 3. Fiscal Space and Institutions Average index score Quality of Budget Institutions Index, Number of countries Fiscal Policy Space Index, 2012 Low Medium and high Fragile nonresource-rich Fragile resource-rich Resilient 0 Fragile nonresource-rich Fragile resource-rich Resilient Resilient countries have better fiscal and budget institutions Resilient countries also expanded their fiscal policy space (financial position, revenue collection, expenditure flexibility), while results were mixed in the fragile group. 8

9 4. Economic Performance Countries that became resilient and resource-rich countries experienced strong growth and declining inflation In resilient countries these gains were supported by strong policies and a favorable regulatory and institutional environment Constant 2005 U.S. dollars 1,600 1,400 1,200 1, Gross Domestic Product per Capita 400 Fragile nonresource-rich 200 Fragile resource-rich 0 Resilient In resource-rich countries, they largely reflected a huge improvement in terms of trade 9

10 5. Social Outcomes Deaths per 1,000 live births Infant Mortality Rate (under age five) Percent School Enrollment, Primary Fragile nonresource-rich Fragile resource-rich Resilient Health and education levels have improved, especially in resilient countries but in all country groups more than half of the people are still poor 10

11 Lessons from 4 Case Studies: Mozambique, Rwanda, Central African Rep., and Dem. Rep. Congo Factors that set apart the successful countries: Political inclusion and the rule of law Fiscal management and revenue mobilization External support and debt relief Reforms to foster private sector growth (relevant in long-term) 11

12 Political Inclusion and Rule of Law Successful countries have pursued an inclusive political approach backed up by better governance 75 Political Stability Percentile rank Central African Rep. Congo, Dem. Rep. of Mozambique Rwanda 50 Rule of Law Percentile rank Central African Rep. Congo, Dem. Rep. of Mozambique Rwanda Source: World Bank. Source: World Bank. 12

13 Fiscal Management and Revenue Mobilization Fiscal institutions, particularly budget institutions, and domestic revenue mobilization played a key role 4.00 CPIA Public Sector Management & Institutions Cluster 3-year moving average Central African Rep. Congo, Dem. Rep. of Mozambique Rwanda 30 Government Revenue Percent of GDP 3-year moving average Central African Rep. Congo, Dem. Rep. Of Mozambique Rwanda Source: World Bank. Sources: WEO; IMF Staff Calculations. 13

14 Case Studies: Summary Mozambique, Rwanda, Central African Rep., and Dem. Rep. Congo Stabilization Political inclusion Central African Republic Democratic Republic of the Congo Mozambique Rwanda Capacity and institutions (including budget institution) Restoration of macrostability and growth Delivering to the Population Creating Policy Space Mobilizing domestic revenue Donor support Debt relief Spending Priority spending Public investment International Support Continued IMF programs Donor coordination Private Sector Private domestic investment Foreign direct investment Outcomes Security, political stability, governance Economic growth and stability Social Factor developed negatively, likely to have contributed to fragility. Factor did not develop decisively and impact unclear, or too early to tell. Factor developed positively, likely to have contributed to building resilience. 14

15 How can the IMF help? The Fund s engagement depends on country conditions and needs. In general, 4 types of help: Capacity building Policy advice Financial assistance no grants, but zero interest rate Facilitating the mobilization of aid and investment, including sometimes coordinating international support 15

16 For more information, see Online IMF Book 16

17 Building Resilience in Fragile States Questions/Comments 17