Importance of Monitoring the Quality of Policies and Institutions in Africa

African economies are continuing to weather challenging economic conditions that include weaker terms of trade, sluggish global growth, and difficult domestic conditions.

Regional growth in 2016 was insufficient to raise GDP per capita and poverty remains painfully prevalent, affecting 41 percent of the region’s population.

However, some countries are showing economic resilience, notably Côte d’Ivoire, Ethiopia, Kenya, Rwanda, Senegal, and Tanzania. Resilient countries tend to have better quality policies and institutions that foster sustainable growth and poverty reduction than other countries, allowing them greater flexibility when it comes to formulating a policy response to economic shocks.

According to the World Bank, while there continues to be stand out countries that maintain high scores such as Rwanda, Senegal, and Kenya, there is an undeniable pull downwards indicating that policy and institutional reforms are not happening quickly enough.

This remains especially true for fragile countries, which continue to face a myriad of challenges that are hindering effective policy reform and the strengthening of national institutions. Africa’s fragile countries continue to lag fragile countries elsewhere, particularly in regards to the quality of institutions and social inclusion (specifically gender equality).

The World Bank further noted that African countries should take advantage of monitoring tools such as their CPIA report to bolster their countries’ performance when it comes to government policies, transparency, effective public services, social inclusion, and economic management.

Its scoring system and methodology of the report allow countries to compare their progress to themselves over the years, but also to neighboring countries or countries with similar economies or socio-political situations. Such a comparison can allow for further exploration and implementation of policies and reforms that bring about positive sustainable change.

Since 1980, the CPIA ratings have been used to determine the allocation of zero-interest financing and grants for countries that are eligible for support from the International Development Association (IDA), the concessional financing arm of the World Bank Group. They are also a barometer that can impact investor confidence and perceived risk.

Strong institutions and transparent government operations working in the service of the people are critical to enabling the continent to fully capitalize on the business and development opportunities presented by initiatives such as the World Bank’s IDA 18 financing envelope, the G20 Compact with Africa, and the recently launched Sahel Alliance just to name a few.

By empowering the continent with evidence-based research and analytical works like the CPIA, the hope is that together we can help the region achieve measurable gains in policy performance and improve the quality of its institutions that will lead to better development outcomes and prosperity for all Africans.