Learning and Leadership: Two Main Ingredients for Africa’s Development

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Government, civil society and international organisations met in Tunis this month to discuss the priorities for aid and development effectiveness ahead of the High Level Forum on Aid Effectiveness in Busan, Korea in November 2011. Misaki Kruger of the OECD Development Co-operation Directorate reports.

What Africa needs is not only cash, but practical and innovative ideas to “put Africa to work”. Kenyan Minister of State for Public Service, Dalmas Anyango Otieno, set the tone of the meeting – looking for ways to build capable and effective states that can maximise all resources and knowledge.

So what are the main ingredients needed to make this happen?

Aid, currently at $120 billion per year globally will continue to be an important source of finance for African countries. However, as African Development Bank  (ADB) President Kaberuka says, “aid is only part of the solution for Africa’s problem”.

The priority ahead of Busan coming out of this meeting is to see how aid can be leveraged to build good financial governance, credible public services and generate internal resources through tax and investments. It is about using aid as a catalyst to build capable states and reduce aid dependency.

This also applies to the increasing engagement of the so-called BRICS countries. With China in mind, Aloysium Ordu from ADB argued that the so-called “Beijing Consensus” is an opportunity for Africa and also complementary to traditional donors, both in terms of increased resources as well as lessons, for example on speed of delivery and flexibility.

One might question the developmental relevance of building “friendship stadiums” or the often cited “no-strings-attached” approach. But participants agreed that the responsibility to manage Africa’s development lies squarely with Africans themselves.  (more…)

Corruption – a question of perceptions

 A few recent headlines: “Denmark, New Zealand and Singapore top list of least corrupt countries” , “The 10 Most (and 10 Least) Corrupt Countries in the World”, “Israel stalls in rot ranking” . In case you’re wondering, the stories were all about Transparency International, which ranks countries on a scale from zero to ten. Low scores, for example Somalia’s 1.1, indicate severe corruption; high scores, such as Denmark or Singapore’s 9.3, suggest public and commercial life are squeaky clean.

Now 15 years old, the Transparency International (TI) index is probably regarded as the leading tool for measuring corruption worldwide. Which is interesting, because it doesn’t actually measure corruption. Instead, it measures perceptions of corruption. The distinction is crystal clear in the name of the index – it’s the Corruption Perceptions Index, not the Corruption Index – but it’s often blurred in media coverage. Does it matter? In some ways, not really.

Corruption is, by its nature, secretive and can’t be measured directly. (Even detecting it is difficult, not least for tax officials.) So, instead, corruption has to be “measured” through surveys. These usually involves asking businesspeople, international officials and others questions, such as the extent to which they’ve encountered corrupt practices. TI pulls together 13 of the most reputable surveys from around the world, does a lot of number crunching, and produces its index. But, in other ways, the tendency of the media and investors to ignore the “Perceptions” bit of the Corruptions Perceptions Index may matter a great deal.

At the very least, we need to ask whose perceptions are being measured. In many cases, “it’s ‘experts’ or business managers, many of whom live outside the countries they are rating”, argue Charles Oman and Christiane Arndt in a new paper  from the OECD Development Centre . By contrast, it’s rare to hear of the experiences of the man or woman in the street, in part because compiling such data is expensive and time consuming. The paper argues that there are other issues, too, that need to kept in mind when it comes to “governance” indicators, such as the Corruption Perceptions Index and the World Governance Indicators . One is the use of a single “point score”, e.g., Somalia’s corruption rating of 1.1. What does that number actually represent? First, it reflects realities – or at least perceived realities – on the ground. But, of course, reality is complex, and can’t always be represented by a single number.

Nevertheless, says the paper, because of “the well documented tendency of people to believe that numbers are facts” the number can come to be seen as the reality, and may shape important decisions on a country’s future, such as foreign investment. Second, the number represents the output from some tricky statistical calculations. Like most such outputs, it comes with a health warning – in this case a “confidence interval”. In effect, that’s a statistician’s way of indicating that the difference between, say, Somalia’s 1.1 and Myanmar’s 1.4 may – or may not – be significant.

Like any reputable agency, TI clearly indicates the survey’s confidence indicators. However, journalists and investors may be less discriminating: As Oman and Arndt write, “Users tend widely to use countries’ governance scores as if they were accurate to a degree they are not.” So, should we ignore Corruption Perceptions Index? Not at all, but like any survey it has limits. Understanding these can ensure it’s not misused, and so ultimately make it more useful.

Useful links:

Measuring Governance, by Charles P. Oman and Christiane Arndt

Policy Brief No. 39 from the OECD Development Centre

The best books in the world (of government and international organisations)

Security consultant

You don’t see many Zapolets these days, except outside the Vatican. The Swiss Guards are the last vestige of a mercenary tradition Thomas More satirised in Utopia under this name as “a rude, wild, and fierce nation… made, as it were, only for war”.

The rise of the modern state and the constitution of standing armies largely put an end to the outsourcing of war to the private sector, but equivalents of the “free lance” still exist. However, in much the same way as pesticides companies now refer to themselves as the “plant protection industry”, we now have a “stability operations industry”.

Some of these firms became famous, or infamous, in Iraq and Afghanistan, but they’re present in practically every conflict and post-conflict zone and in many post-disaster areas too, providing a range of military and other services. Indeed, the ground in Haiti had hardly stopped trembling before one of their trade organisations was setting up a forum on business opportunities in the earthquake zone. Should governments be hiring them?

The OECD’s Partnership for Democratic Governance debates the question in Contracting Out Government Functions and Services: Emerging Lessons from Post-Conflict and Fragile Situations. Paul Collier, author of The Bottom Billion, uses the analogy of how mobile phone technology enabled many developing countries to bypass analogue technology to argue that fragile states needed to look past the 1950s European model for ministry-based service delivery.

If you don’t agree, you can contribute to the discussion on the PDG website.

Contracting Out was named as one of 2009’s “Notable Government Documents” by the American Library Association and the Government Documents Round Table. The ALA/GODORT Panel singled out another OECD publication too. In Innovation and Growth: Chasing a Moving Frontier, the OECD and World Bank discuss “options for national and global policy initiatives that can foster technological innovation in the pursuit of faster and sustainable growth”.

They argue that the competitiveness and prosperity of high income economies has come to rely increasingly on their innovative capability, but that developing countries’ competitiveness and prosperity remain largely tied to their natural resources.

Countries like Korea that shifted quickly from “developing” to “developed” support this. Today, we all know world leaders like Samsung or LG, but as the Insights book on international trade points out, fifty years ago, Korea was poorer than the Sudan and its main export was wigs made from human hair.

OECD Forum 2010: Road to Recovery: Innovation, Jobs & Clean Growth

Welcome to the OECD FORUM 2010. The theme this year is “The Road to recovery”, and we’ll be covering the sessions here on the Insights blog.

The opening session on “Innovation, jobs & clean growth” had OECD Secretary-General Angel Gurría and Italy’s Finance Minister Giulio Tremonti on the podium.

The session opened with Angel Gurría revealing that when he was Finance minister in Mexico, he earned himself the nickname Gurría Scissorhands for overseeing six rounds of budget cuts, following the collapse in oil prices. As he pointed out, he’s now in good company, with cuts the order of the day in a number of countries seeking to tackle the legacy of the financial crisis and the Great Recession, not least Italy, which yesterday announced an emergency austerity budget.

Gurría praised the courage of the Italian decision, which includes a public sector wage freeze, a six-month deferment of new state pensions, and raising the retirement age of women to 65. The budget is designed to reassure markets that Italy can support its public debt, which stands at 115.8 percent of GDP.

This desire, or need, to please the markets was the subject of the only intervention from the floor that was applauded. A speaker from Germany echoed the feelings of many, not just in the room, that all the talk last year about taming the markets had come to nothing and that it was back to business as usual. Financial markets were, he said, no longer there to provide a service to actors in the real economy seeking investment capital, but had taken on a life of their own.

Speaking to people after the meeting, none of them were convinced by Giulio Tremonti’s reply about the origins of the problems being accountancy standards and over-reliance on the use of net present value, a measure of cash flows, although there was widespread approval for reforming financial market regulation.

Another theme emerging from the floor was the to give developing countries a greater role in international affairs. One speaker from an unidentified African country said she thought the OECD concentrated too much on South Africa and should be more involved with other nations on the continent.

A speaker from Egypt echoed the concerns that nothing had changed since last year and the same old rules were still being applied despite the promises.

Angel Gurría described how the OECD is engaged with practically every country in Africa through a number of means, not least the African Economic Outlook, and that the Organisation is actively pursuing a programme of enhanced engagement with several emerging economies.

He also pointed out that the World bank had changed the weighting it uses for votes and that the chair of the IMF’s policy steering committee is an Egyptian – Youssef Boutros Ghali.

So, not much about innovation and clean growth so far, but that will no doubt change as the Forum gets in to the sessions on specific aspects such as energy, ethics and what green jobs actually are.

Again the phantom city burns

This post contributed by John Mutter, Professor of Earth and Environmental Sciences/Professor of International and Public Affairs and Director of PhD in Sustainable Development, Columbia University, NY and Elisabeth King, a political scientist researching conflict, peacebuilding and development in Sub-Saharan Africa and postdoctoral fellow at Columbia University’s Earth Institute.

How much do the tent cities forming around Port-au-Prince remind us of the camps set up to shelter those who have fled the violence of civil war?  How much do the ruins in the streets of that city remind us of the destruction of violence?  The scope of the casualties, perhaps more than 200,000 (we’ll never know the true figure), certainly echoes numbers we hear from war zones. To the Haitian President René Préval the similarities are stark.  A few days after the earthquake he said “The damage I have seen here can be compared to the damage you would see if the country was bombed for 15 days. It is like in a war.”   Such similarities between disasters and violent conflict are often noted superficially, especially by the news media in the immediate aftermath, and this has certainly been the case in reports about Haiti’s earthquake.

Perhaps we might expect remarks of this sort in reference to places like Haiti that have a history of conflict but such analogies are common, even in places that do not have a history of violent conflict.  In the aftermath of Hurricane Katrina, many reporters commented on how that scene appeared like a war zone.  When the National Guard arrived in New Orleans, the disaster relief operation transformed into the military operation of restoring and maintaining order and images of soldiers in armored vehicles with weapons at the “ready” position were indistinguishable from those we commonly associate with peacekeeping in conflict situations.

The analogy ought not to be taken too far and certainly, there are very important differences between disasters and violent conflicts.  Natural disasters are generally portrayed as the result of a capricious act of nature, perhaps made worse by human agency, while conflicts are usually thought of as acts of one group of people against another.  Nature is rarely invoked as a cause of conflict despite a growing recognition that environmentally driven scarcity could enhance social stresses and raise tensions.  With the exception perhaps of extended periods of drought, most natural disasters are shorter duration events than conflicts and none match the extended civil conflicts in Sudan or Colombia.   There are no obvious analogies to war crimes or war crime trials and no equivalents to truth and reconciliation efforts though there is little doubt that there is opportunistic criminal behavior during disasters and legal actions sometimes follow.  Nor is there an equivalent to a negotiated ceasefire or victory by one party over another.

Yet there is more at work here than the somewhat gratuitous media comparisons between disasters and conflicts might suggest.   (more…)

Getting to the bottom of things

What – or who – caused the crisis? Slate offers not one but 15 answers to that question here. But if you’d like a more official response, you might like to keep an eye on the Financial Crisis Inquiry Commission (FCIC) in the United States, which is due to begin public hearings this week. The ten-member commission was set up by Congress with a sweeping mandate to investigate the causes of the crisis – everything from the possible role of fraud and abuse in the financial sector to the way bankers are paid.

There are precedents for this sort of probe. In the early 1930s, the U.S. Senate’s Pecora Commission investigated the causes of the Great Depression, and “unearthed a secret financial history of the 1920s, demystifying the assorted frauds, scams and abuses that culminated in the 1929 crash”, according to Ron Chernow. That investigation had a long-term impact on the U.S. financial sector, leading to the establishment of the Securities and Exchange Commission (SEC) and the separation of commercial and investigation banking.

Whether the FCIC will have the same impact remains to be seen, but its chairman, Phil Angelides, has made it clear that he wants the commission to ask – and answer – some tough questions. “You have millions of people unemployed, millions have lost their homes, and Wall Street is having a record year with record profits and record bonuses,” he told ABC News. “People want to understand why.” What questions should the commission ask? The New York Times and The Huffington Post have some suggestions.

The Commission is due to report by mid-December 2010, but members have indicated they plan to post important findings on their website (under construction) before then.

Cannon Law

What’s the link between how far you could fire a gun in the 17th century, the 2009 Nobel Prize for economics, and the forthcoming Insights book on Fisheries? The answer is: governance.

The last chapter of the Insights looks at how fish stocks could be managed sustainably. One of the issues is that the oceans are a global commons, with every nation having the right to travel on them and exploit what is in or under them.

It’s not an unlimited right though, being governed by the Law of the Sea. That’s where the guns come in. In the 17th century, certain aspects of territorial integrity and sovereignty were decided on the basis of the “cannon shot rule” – how far you could fire a cannon. The three-mile limit around a coast is based on this. This has now been extended to 200 miles, but that still leaves out most of the world’s oceans. (more…)