Policy News
Anti-Corruption Views – The world must do a better job of tracking investments and results: Both now and for the next global development goals
Later this week, a group of 26 people will meet in Liberia to discuss how the world should tackle global development challenges over the next decade or two. It’s essential they thrust transparency, accountability and better open data into the heart of the debate and act on it. The so-called High-Level Panel of Eminent Persons (HLP) has an amazing opportunity to shape the fight against poverty and preventable disease; and a very heavy responsibility to accurately channel the desires and concerns of billions of people around the globe. In May, this small collection of current and past politicians, technocrats, and businesspeople will deliver their recommendations for how to take this fight forward. What comes out of this process, and the formal UN General Assembly deliberations this September, will frame the development landscape at least until 2030. To state the obvious, this is a high stakes game where policy, politics and pragmatism must all intersect in a complex and challenging way.
While this task is daunting, we are not starting from scratch. The current Millennium Development Goals (MDGs), which were adopted unanimously by 189 UN member states in 2000, provide some helpful signposts. Arguably, the MDGs’ greatest strength is that they are meaningful, measurable, and message-able. By rallying the world around a set of concrete goals, the MDGs have helped to deliver some of the most awe-inspiring progress in human history. Since their adoption, roughly 600 million people have been lifted out of extreme poverty; more than 6 million Africans have started receiving AIDS treatment; over 5 million lives have been saved because of vaccines; and nearly 51 million more African children are in school.
Despite the MDGs’ many strengths, they also have a number of shortcomings that must be addressed in the post-2015 framework. First, the goals were developed by technical experts in donor capitals, the OECD, and the UN, with little input from ordinary citizens in developing countries. This top-down process made it difficult to ensure that the goals properly responded to citizens’ most pressing concerns – even if they mobilized unprecedented global action. Early signs suggest that the UN has learned from its past mistakes. They are going to great lengths to solicit input from the poor, marginalized, and vulnerable – as well as politicians, development experts, and civil society organizations. This is an excellent first step (see ONE’s report calling for this last fall). Now the HLP, and the UN powers that be, need to digest the boiled down takeaways from the reams of ‘stakeholder’ input and use them as the starting point for the next set of goals.
Second, the lack of reliable, timely, and accessible data on MDG-related investments and outcomes has been a major challenge to both tracking progress and ensuring that interventions are effective. After decades of effort, we still do not know enough about how much money is available (both domestically and externally), where it is going, and what results it is achieving. This is one of the biggest scandals of the development field. For example, over 40 developing countries lack enough data on extreme poverty levels – arguably the most important MDG – to actually track progress. Let me say that again. Insufficient data makes it impossible to know, for nearly a third of developing countries, whether their MDG poverty goal has been met.
Moreover, time lags for data on MDG-related outcomes remain unacceptably high (when they are even available). On average, extreme poverty data is nearly five years old. Data on hunger (e.g., malnutrition) is four years old; followed by data on gender equality, education, and HIV/AIDS, which is at least three years old, on average. This must change. Only with timely and accessible data on investments and outcomes, can we deliver real accountability for the trillions of Naira, Pounds, Pesos, Euros, Rupees, and Dollars being spent and to ensure that we are constantly learning and adjusting our actions as we go along.
Together with thirteen organizations from Africa, Asia, Latin America, Europe, and the United States, the ONE Campaign has released a report today that outlines a series of recommendations to address these critical issues. First, we are calling for an open and transparent design process, ensuring that input from citizens in developing countries forms the core of the new global development goals. Second, we are calling on all developing and developed countries to provide consistent and timely reporting on investments and outcomes related to achieving the new goals. Third, we are calling for new investments in statistical capacity and open data systems to give citizens and policy-makers ways to use relevant information to hold governments and other stakeholders accountable.
The existing MDGs demonstrate the power of purpose. By channelling the world’s attention and fire-power, they have helped catalyse some of the most important development advancements in history. Yet, we are only halfway home on this front. More, much more, must be done over the next three years. As we sprint to the finish line, and start to consider the next race, we must also seize the opportunity to fix the faults of the present. By implementing these proposed enhancements, the world can further maximize the impact of scarce development resources and accelerate progress in the fight against extreme poverty and other pressing priorities in the future.
This blog post originally appeared on Trust Law
Results of the 2012 Open Budget Survey and Index
Click here to view the full infographic
Today, the International Budget Partnership (IBP) – ONE’s key partner for efforts to promote open and transparent budgets in developing countries – released their 2012 Open Budget Survey. The 2012 Survey assesses 100 countries on 125 questions; 95 about the availability to the public of documents related to the budget cycle, and 30 about how citizens may participate in their country’s budget process. The Survey was carried out in 2006, 2008 and 2010, but has evolved over time. This year, IBP has partnered with the Open Knowledge Foundation on a Data Explorer, where you can see maps and rankings of Open Budget Index scores, sort questions by topic, or look at how the rankings have changed over time. Check out the data – the results may surprise you!
Click the infographic to make it larger
Participation in Focus
New for this year’s Survey is a series of questions on participation, something which IBP and ONE agree is essential if budget transparency is to pay dividends in terms of accountability and improved development results. The average score for the 100 countries surveyed in the 2012 survey is just 19 out of 100 on the 30 questions that measure participation. We’re excited that IBP is focusing on improving participation, and about the innovative ways the survey shows countries are getting citizens involved – including South Korea’s finance ministry field trips, Trinidad and Tobago’s public forums, and New Zealand’s tax hotlines – which allow citizens to report tax evasion or fraud anonymously. Sharing these stories helps to show that not all participatory budget processes have to look the same.
The Open Budget Index
The Survey includes the 2012 Open Budget Index, where countries are ranked on a scale of 0 to 100 based on the 95 budget questions. Countries score zero by making no budget documents public, or 100 by being completely transparent and making public all documents.
For 40 countries, data illustrates that progress has been made since 2006; those countries’ average Index scores increased from 47 in 2006 to 57 in 2012. The Index also shows that countries that start from a low baseline of transparency improve faster than those whose scores are nearer the middle of the ranking. Similarly, it’s even harder for countries that score well to improve significantly. Since the 2010 Index, countries that had been the least transparent, with scores of 40 or less, improved from 19 in 2010 to 26 in 2012, a 36 percent increase. Otherwise, however, progress was limited between 2010 and 2012.
How is Africa Doing?
Among African countries, South Africa leads the way with a score of 90 on the Index. This score is 2nd overall, behind only New Zealand, and ahead of the United Kingdom. Uganda also scores well, with 65, in the “significantly” transparent category. Unfortunately, 14 of the 26 countries in the index that provide “scant or no information” on budget documents are African. However, bad Index scores are relatively cheap and easy to fix. By simply making public budget documents that countries already produce, Index scores would improve significantly. And making those documents public is crucial for citizens in those countries to see how their governments are spending money.
There are seven countries where transparency has improved significantly (by more than 15 points) since 2010: Afghanistan, Burkina Faso, the Dominican Republic, Honduras, Mozambique, Pakistan and São Tomé e Príncipe. However, in Egypt, Zambia, Sri Lanka and Serbia, scores decreased by more than 15 points since 2010. So while improving budget transparency can be easy in the short term, institutionalizing participatory budget processes is more difficult, but necessary to ensure that progress is maintained and built upon by civil society.
South Africa: Africa’s Star Achiever
South Africa maintained very high levels of budget transparency in the 2012 Index, and while their rank dropped from 1st to 2nd in this year’s Index, their very high level of budget transparency – higher than that of the UK, France, Norway, Sweden and the United States – is very impressive. And the information that the South African government makes available has been used in successful budget advocacy. IBP’s website has multiple cases studies of local organizations using information about the budget to execute effective campaigns. One, by the Treatment Action Campaign, resulted in a National Treatment Plan for HIV/AIDS, putting 1.6 million HIV+ South Africans on ARV treatment. Another campaign focused on improving access of a social security grant to poor children increased access from 2 million in 2001 to nearly 11 million in 2012.
The IBP’s Open Budget Survey and Index are incredibly important to us, and to citizens around the world who need information in order to hold their leaders to account for the money they spend. We commend IBP on another job well done, and look forward to hearing more stories about how transparency is helping civil society around the world make the changes they want. Open Budgets, Transform Lives.
Join the conversation on Twitter: @OpenBudgets and #OpenBudgetIndex
Resource Revenue Management 101
Say that your country is blessed with natural resources. Oil, gas, minerals – it has it all. The future looks good. But deep down you worry that the bonanza could turn into a bust – maybe you live in Africa and have seen how windfalls have been wasted before. How do you know that’s not going to happen now? Are there any tell-tale signs of sound management of “commodity wealth”?
Marcelo Giugale, the World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa, recently asked these questions and, in response, offers us a combination of measures that every government should have in place to help citizens get a good deal from their resources.
We’ve looked at four of these measures and how they’re playing out in Africa.
First Measure: Governments publish their extractives contracts
Extractive resources are public assets and decisions about their use should be subject to public oversight. But many African governments are keeping their oil, gas and mining contracts firmly under wraps. This is a problem because confidential contracts prevent citizens from holding political and corporate leaders to account for the deals they’ve struck. Closed contracts may contain unreasonable tax breaks, terms that contravene national legislation or clauses that allow companies to ignore changes in national law. By contrast open contracts help maximize gains for citizens, and are a deterrent to self-serving actions on the part of government leaders. They also increase investment stability for companies by securing balanced deals from the outset.
Contrary to warnings that contract disclosure turns investors away, the countries that have elected to go the transparency route have watched investor interest in their resources grow. After Liberia and Nigeria signed up to the Extractive Industries Transparency Initiative (EITI) – a voluntary global standard that promotes revenue transparency and open extractives governance – their credit ratings improved and foreign investment increased. Both countries have passed national EITI laws that make independently audited reporting of resource revenue payments and receipts legally binding. Sierra Leone, with its devastating history of mineral wars, is now publishing all its mining contracts online. Guinea’s new mining code mandates the same. Ghana has made its most important petroleum agreements publicly available and has established a Public Interest and Accountability Committee made up of government, corporate and civil society representatives to oversee oil revenue flows. It is also an EITI member, with a national EITI law in the legislative pipeline. Zambia’s parliament is set to enact its EITI law this year. In fact, the majority of member countries of the EITI are African (22 of 37 members), although some key extractives producers – notably South Africa – have yet to sign up.
Second Measure: Rent from the exploitation of extractive resources is saved for bad times and for future generations
Massive offshore oil and gas discoveries in East Africa, from Tanzania to Mozambique, are catapulting countries in the region into global energy players, and will bring in billions in windfall revenues that could transform entire economies. Planned investments exceed the current GDP of some host countries. Barely a month goes by without new discoveries of extractive resources across the continent. These provide unprecedented opportunities for countries to tackle poverty and to ensure more prosperous futures for their citizens. But for this to happen, a substantial share of revenues need to be invested in assets, with a sense of responsibility to future generations, rather than used for immediate consumption. Too many countries have made the mistake of depleting their resources, allowing revenues to disappear through unsustainable spending and consumption, and finding their coffers quickly exhausted.
Although there are mixed views on whether current African producers – even those with relatively strong governance records – are investing revenues adequately or distributing them equitably, there is no doubt that issues of rent beneficiation and the importance of long-term saving is now high on the African radar. Governments are recognizing that beating the resource curse requires prudent fiscal policies with long-term expenditure frameworks that prioritize investment in human capital and infrastructure.
Sovereign wealth funds can help countries smooth the volatility of resource-driven revenues by lowering the effect of boom and bust cycles resulting from fluctuating commodity prices. They can also help a country diversify its wealth. The continent is currently witnessing a scramble for sovereign funds, reflecting a healthy interest by African governments in saving for future generations and in buffering their economies against financial shocks. As long as these funds are transparently managed and well-structured, they can help keep a country’s economic trajectory firmly on the upswing. Botswana’s long-standing Pula Fund, financed for the most part by diamond revenues, has been a strong source of growth for a country that was one of Africa’s poorest in the 1970s and now finances the university education of over 90% of its students. As oil revenue starts to flow into Ghana’s coffers from newly discovered offshore reserves, the government is eager to reap the profits and pressure to spend is high. But the rapid development of the oil industry and the associated challenges for the government have made it critical to assure investors that a framework is in place to save oil money when energy prices are high. In response, Ghana launched its sovereign wealth fund last year. Africa now accounts for 14 sovereign wealth funds – Angola, Botswana, Nigeria, Libya and Algeria have them in place, and Tanzania will soon follow.
Third Measure: Governments pay off their debt
Debt dynamics have been driving global economic change over the last decade, not least in Africa. Overall, the benefits of debt relief and sustainable debt management are persisting. African governments are servicing their debt and borrowing responsibly. Debt stock ratios – which fell dramatically with debt relief – have risen only slightly since, and “debt-distress” risk ratings prepared by the World Bank and the IMF have improved markedly. The number of African countries rated as high-risk has halved since 2006 (from 18 to 9) and low-risk ratings are becoming the norm (from 5 to 13). Nigeria, South Africa, Namibia, Senegal, Cote d’Ivoire, Gabon, Ghana and Zambia are all issuing sovereign bonds on international markets and getting high levels of international investor interest as bond buyers seek higher yields than in the US and less default risk than in some Asian economies. Last year, Senegal issued its second sovereign bond, breaking new ground by successfully concluding a joint bond issue and exchange.
But risks remain high, especially for fragile states. Some emerging African economies have exceeded the globally acceptable benchmark of a no higher than 30% debt to GDP ratio, over which debt burdens become over-bearing. The IMF has warned that the build-up of public debt levels in South Africa since the global financial crisis is now a constraint on the government’s fiscal space as additional debt accumulation will likely raise funding costs. South Africa’s debt to GDP ratio for 2012-13 is 40%. Ghana’s ratio stands at 41%. Nigeria‘s ratio of 18% is relatively low, but, in contrast to South Africa and Ghana, a large portion of this debt has been used to plug holes in its budget rather than on capital projects. Kenya continues to be one of Africa’s debt success stories: in 2003, the debt ratio stood at 60%, declining to 40% by 2008 through prudent fiscal policies, economic reforms and sound budget management. Its debt currently stands at 45%, but is on track to return to 40% by 2014.
Fourth Measure: An audit of the government’s budget execution is done on time and made available to the public
The budget audit closes the accountability loop by giving an authoritative account of whether the government’s reporting of how it raised taxes and spent public funds during the budget year is accurate and whether it has complied with financial management laws and regulations. Budget audits are a key deterrent to corruption as they provide a means for public scrutiny during budget evaluation phases and, when published, promote a sense of trust in elected representatives.
The Open Budget Survey rates South Africa one of the world’s top performers, both on audit reporting and broader budget transparency. The government gives citizens a full picture of its plans for taxing and spending, publishing all key budget documents and an understandable citizen-friendly version of the official budget. Budget audits are published on time and online. The country’s budget framework creates disincentives for misappropriation of public funds and formalizes the participation of citizens in the budgeting process, developing a sense of ownership of outcomes through collective decision-making and helping ensure that expenditures are better directed towards pro-poor programs.
Uganda and Ghana – East and West Africa’s top performers – are also producing and publishing comprehensive audit reports, although their timeliness is problematic. Liberia’s audit institutions have been exceptionally active in promoting budget accountability, publishing audit reports on time and issuing press releases to signal their submission to parliament. The audits are discussed with citizens in public hearings and open forums all over the country, and are made available in schools and public libraries. Liberia’s legislature has also enacted a Public Finance Management Law that lays down the budget system to be followed by the government, and approved a law that limits the amount of funds the executive can transfer from one administrative unit to another at its own discretion. But Liberia’s story is not common. An ongoing problem across the continent is the limited time given to parliaments to look over budget proposals and audits, and limited powers to amend or challenge them.
Conclusion
Strong accountability institutions – parliaments, audit institutions, civil society organizations and the media – are essential to maintaining a connection between citizens and the public purse, and to ensuring that resource revenues are invested in social sectors that help secure better development outcomes. A broken connection enables diversion of public revenue from the policies they’re intended to finance and the services they’re supposed to deliver. This diversion, whether through misappropriation, embezzlement or plain inefficiencies, thrives when transparency and accountability are weak.
On a positive note, we’re seeing an emerging trend in Africa toward the adoption of practices that make it easier for citizens to follow public money and track spending results. South Africa, Ghana, Liberia, Tanzania and Kenya are all members of the new Open Government Partnership – a multilateral global initiative to promote compliance with open governance standards – and they’re showing commitment to strengthening their systems and opening up their practices to public oversight. But many African governments are still resistant to this trend. Whether they can remain so, in the face of citizen pressure to reform and in the wake of mass protests against corruption and the persistent lack of economic opportunities, is the question. As owners of their countries’ extractive resources, citizens are demanding their rights to profit from them. Public information and government accountability for what resources are available, how they’re spent and what results they achieve are the best guarantee that a country’s resource wealth will translate into lasting benefits for its citizens.
An Extractives Transparency Milestone for Tanzania
3.5 billion people live in resource-rich countries but many are not profiting from these resources. Weak governance is leaving countries “cursed” by conflict and corruption. The Extractives Industry Transparency Initiative (EITI) was created to help change this. The EITI’s globally developed standard promotes extractives revenue transparency by calling for the full publication and verification of company payments and government revenues from oil, gas and mining.
Tanzania has just reached an extractives transparency milestone. On 12 December, the EITI declared Tanzania compliant with its standard. Tanzania joins 9 other African countries with EITI compliance status. The Tanzanian government is now obliged to produce annual EITI reports that disclose and reconcile all revenues from the extractives sector. Independent audits will indicate payments made to governments by companies and payments received by governments from companies.
A gold miner in Shinyanga, Tanzania
Regular monitoring of government and company performance will beam a spotlight on a sector that is traditionally opaque, opening its operations to the public and empowering citizens and oversight institutions with information about extractives financial flows that will enable them to hold governments and companies to account. Tanzanian citizens, journalists and parliamentarians will be able to play their part in monitoring government and company performance and preventing corruption, misuse of public resources and illicit capital flight. Compliance with the EITI is an essential step towards opening the entire extractives supply chain – from how access to those resources is granted, to monitoring operations, to collecting taxes, to sound macroeconomic management and distribution of revenues, and to spending resources effectively for sustainable growth and poverty reduction.
This milestone is timely. 79% of Tanzania’s population lives below the poverty line. The current commodity price boom represents a unique opportunity for the government to mobilize home-generated wealth from its natural resources to tackle the country’s socio-economic development challenges. Improved transparency in the management of revenue from these resources will be critical to Tanzania’s growth trajectory.
The EITI’s endorsement will also be sending a clear signal to investors that the Tanzanian government is committed to open management of its extractives sector and to making itself more accountable for the use of revenue that it manages on behalf of its citizens. The Tanzanian EITI multi-stakeholder working group of government, civil society and company representatives, which is overseeing the country’s EITI reporting, will continue to help build partnership and trust between different stakeholders, and to give civil society a critical voice in the extractives resource management process.
The EITI and Tanzania’s compliance with its standard is not a cure-all for the massive problems and leakages plaguing the extractives sector. It is, however, an important starting point for progress.
The Beginning of the End? Why the World is Off-Track on AIDS but 2013 Gives Us Hope
I still remember how I felt on World AIDS Day one year ago: filled with hope. I spent the morning listening to celebrities, CEOs, faith leaders, members of Congress, and three US presidents do something rare: agree with one another. What was even more inspiring was that the bold vision they all touted in their remarks —“the beginning of the end of AIDS”— for the first time no longer felt impossible, coming off a year filled with new scientific data suggesting that we had the tools to finally begin breaking the back of the pandemic.
I also remember how I felt after the International AIDS Conference just seven months later: deflated. The Conference was full of dignitaries and speeches, but at the end of the week, I felt a sense of rhetoric fatigue. There was so much talk of turning the tide on AIDS, and yet it still felt challenging to point to what world leaders were doing differently, and how they were moving the ball forward.
So this year to commemorate World AIDS Day, ONE took a hard look at how much progress the world has actually made on AIDS and analyzed which countries had been leaders and laggards in the fight. Our new report, “The Beginning of the End? Tracking Global Commitments on AIDS”, shows that although significant progress has been made, if we maintain the status quo on treatment and prevention, we won’t see the beginning of the end of AIDS until 2022. Not exactly a message of hope.
Some of the largest hurdles to achieving accelerated progress on this vision are a lack of resources and coordination. Set against a $6 to 8 billion annual AIDS financing gap, the report finds huge variance among donors’ contributions. Countries like the United States have led the way in funding, political rhetoric and strategy development; others, including many in Europe, are contributing significant resources, but could contribute more financially and politically. Many donors still do not have strong global AIDS strategies to focus their investments, and this has led to gaps in the global response, with no clear sense of responsibility for achieving the broader UN political targets on AIDS agreed in 2011.
Encouragingly, low- and middle-income countries are for the first time contributing more than half of the global resources for AIDS, but there, too, is still much room for growth. In particular, as of 2010, only four African countries have met their Abuja commitment of spending 15 percent of their national budgets on health, and 13 countries would need to double, triple or quadruple their spending to achieve the commitment by 2015.
Yet I still have cause for hope on World AIDS Day 2012, because 2013 will provide a number of key moments at which stakeholders can signal how serious they are about achieving the beginning of the end of AIDS. The Global Fund’s fourth replenishment meeting in 2013 offers donors, both traditional and new, the opportunity to reinvest in the Global Fund’s critical work. Strong support will signal confidence in the Global Fund’s new funding model, designed to more consistently target resources towards countries with the highest burden and the greatest need. With sufficient new resources, the Global Fund will be well positioned to deliver significant results toward the beginning of the end of AIDS.
In 2013, global leaders will also discuss a new post-2015 global development framework. As leaders debate this framework, they must not lose sight of the current set of Millennium Development Goals (including MDG 6 focused on AIDS and other infectious diseases), and should adopt more of a “war room” mentality in getting the job they’ve already committed to done by 2015.
Without scaled-up financing, more targeted programming and expanded political will, the beginning of the end of AIDS will remain a distant ambition. But with concerted action, the world can chart a course towards ending this pandemic.
To help make this transformation real, we need your help in creating a sense of urgency and asking leaders from around the world to step up. Please sign ONE’s AIDS petition, post a surprising fact you learned from this report on Twitter or Facebook, or download the e-reader version for your favorite global health-loving family member this holiday season.
Lough Erne G8 agenda: will it pass the test?
British Prime Minister David Cameron has announced that the UK-chaired G8 summit next June will be held in Lough Erne, Northern Ireland. In a blog earlier this month, ONE’s Adrian Lovett set five tests for Cameron in 2013, the third of which was using the UK’s G8 presidency to help ensure that ours is the generation that eradicates extreme poverty.
In his announcement, Cameron lay out three G8 development strands, building on his ‘golden thread’ narrative: advancing trade; ensuring tax compliance; and promoting greater transparency. As you may have read elsewhere on the ONE Blog, the golden thread is a distinct approach to poverty reduction which argues that if societies are to move from poverty to prosperity, they need to have the right institutions and governance arrangements in place, with people empowered to face the challenges and seize the opportunities that they face in their daily lives.
Cameron expanded on this in an op-ed on Wednesday, in which he said that “as more and more countries attract investment, exploit their natural resources and expand their tax base, Africa’s development prospects increasingly rest on its ability to harness domestic resources for the benefit of all”, and that “there are several ways the G8 can uniquely support this process, advancing transparency in order to empower citizens to take charge of their own destiny.” We couldn’t agree more. Greater transparency – of aid flows from donors, of government budgets, of tax and illicit finance, and within the extractives industry – is central to this. And what’s more, we expect G8 leaders to put their own houses in order, including looking at tax havens and the recovery of stolen assets within their own countries.
In addition to the golden thread focus, Cameron will host a high-level food and nutrition event just ahead of the G8, building on this year’s Olympic hunger summit. The New Alliance, launched at the 2012 G8 in Camp David, committed to lifting 50 million out of poverty through investment in agriculture. Next June, leaders must enhance and expand the New Alliance if we are to make progress towards this goal. Donors must also commit to backing African governments’ agriculture plans with the necessary resources, as well as enhancing nutrition.
We are hopeful that making real progress on trade, tax and transparency could pass the third test that Adrian has set. There is certainly real potential. Northern Ireland’s recent history has demonstrated how bleak prospects and endemic pessimism can be overcome within a generation with the right combination of time, resources and political will. For the goal of ending extreme poverty, we need the same ingredients. This is Adrian’s fifth test: whether Cameron – and other G8 leaders – are prepared to invest the necessary time, resources and political will.
Revealing Africa’s ‘Hidden Growth’
Strong economic growth in Africa is no longer a new or unexpected story. Between 2000 and 2010, Africa was home to six of the world’s ten fastest-growing economies. Last year, growth across sub-Saharan Africa was almost 5% and total GDP was $1.27 trillion. What’s more, these trends are set to continue, with regional growth predicted to average 5.4% per year in 2012 and 2013, outpacing almost everywhere else in the world. With many rich countries struggling to escape recession, this impressive fact is not lost on investors.
Edwina Assan, owner of EdTek Batiks in Accra, Ghana
However, while national growth figures are important, they are not the whole picture. They don’t tell us whether that growth has translated into improved living standards and rising real consumption among ordinary families. However, the data that could tell us is often dubious or missing entirely, especially for Africa. For example, one widely-used estimate of purchasing power parity – the Penn World Tables – does not provide benchmark studies for 24 African countries. Instead, expatriate allowance indices were used to extrapolate price studies to the missing countries (now supplemented using a worldwide study of prices from 2005). When Mozambique conducted its first ever national survey of the informal sector in 2004, this led to a doubling of previous estimates of household consumer spending, revealing just how wide the margins of error can be in such estimates.
An innovative new study—The African Growth Miracle – by Professor Alwyn Young draws on information not normally used in this type of analysis. These findings reveal that growth of real household consumption in sub-Saharan Africa since 1990 could be as much as 3.7% per year – four times previous estimates. What this study does differently is to use direct, simple and obvious measures of real consumption at a household level – ownership of goods such as televisions, refrigerators, cars and bicycles; as well as the quality of housing, education of young people, health and mortality of children, and allocation of women’s time in the family – rather than estimating total nominal consumption and setting it against price indices. It draws on two decades’ worth of data from the international Demographic and Health Survey, focusing on 29 sub-Saharan African countries and 27 other developing countries, covering a total of 1.6 million households. Even accounting for big variations in different countries, the study uncovered a pattern of surprisingly high growth across sub-Saharan Africa.
The overall health and mortality of children is improving, school attendance is rising, and family consumption of a variety of material goods is growing at a rapid rate. According to the study’s author, these achievements should be seen as a hidden growth miracle. Nevertheless, heartening as these trends are, the study also showed that consumption levels in Africa fall far below those in other developing countries. Continuing high levels of poverty and inequality remind us not to be complacent about Africa’s ‘miraculous’ growth.
The Golden Thread Development Narrative: What’s hot, what’s not and how it can be improved
The coming year is going to a big one in the UK for global development, with the UK Government able not only to consolidate its impressive record on aid, but also to move the agenda decisively beyond aid. On aid, the UK will meet its commitment to invest 0.7% of GNI in the fight against global poverty (the equivalent of just 1.6p in every pound of government spending). Beyond aid, the UK will hold the Presidency of the G8 and will be senior co-chair of the Open Government Partnership, with Prime Minister David Cameron also playing a key role on the UN High Level Panel to design the framework to replace the Millennium Development Goals after 2015.
In the run-up to 2013, picking up a theme he first used several years ago, David Cameron has talked a lot about what he refers to as the “Golden Thread” of development – see this excellent piece by the Center for Global Development’s Owen Barder. In this post, we provide a guide to the “Golden thread” narrative: what does it say; what’s good about it; what’s not so good about; and, how it can be improved.
What is the “Golden Thread”?
The key message of the Golden Thread is simple: if societies are to move from poverty to prosperity, they need to have the right institutions and governance arrangements in place. For David Cameron, these include property rights, human rights, the rule of law, transparency, accountability, free markets, a vibrant private sector, stable government, free media, fair elections and an effective civil society. Quite a collection of things that most people in Europe and North America might take for granted, but which fewer people in Africa enjoy.
What’s good about the Golden Thread?
The best thing about the Golden Thread narrative is that, while recognising the important role that aid can play, there is an explicit acknowledgement that long-term development will not be achieved simply by spending more money. This seems obvious, but it’s a point that bears repeating. With domestic resources ten times the volume of aid across Africa as a whole, what matters most are institutions, governance arrangements and the ability of African citizens to hold their governments to account for the effective use of resources, including but going far beyond aid. The Golden Thread narrative has the potential to put these issues firmly at the centre of policy and practice on global development.
What’s not so good about the Golden Thread narrative?
As others have pointed out, the Golden Thread narrative is not without its problems. It says too little about inequality and inclusive growth and it risks being seen as overly individualistic. Most problematically in my view, it risks being seen as just another one-size fits-all, west-knows-best, story about the wonders of “Good Governance”. This is not to say that effective governance arrangements are unimportant, but it is to emphasise three points. First, governance arrangements that work in one place may not work in another. Second, to be effective, governance arrangements need to be ones that local people embrace. And third, lecturing countries about how they should be governed is not a good idea. In short, a preachy “Good Governance” agenda is outdated, inappropriate and ineffective. It would be a big mistake for David Cameron to give it a new lease of life.
How can the potential of the Golden Thread narrative be realised?
Despite its downsides, the narrative of the Golden Thread has considerable potential. To realise its potential, David Cameron and the UK government should do four key things. First, emphasise that the Golden Thread is about empowering people – including women and other marginalised groups – with the information and resources that they need to exercise their rights and to take greater control of their own destinies, individually and collectively, in ways that are appropriate to their contexts. Second, acknowledge that while the Golden Thread can help to lift people out of poverty, the most marginalised will continue to need safety nets and social protection. Third, weave the Golden Thread through the G8, the Open Government Partnership and the High Level Panel, focusing in these fora on coming up with solutions, together, rather than telling others what to do. Finally, pass all ideas about what the G8 should do through a filter that asks: “will implementing this idea put the G8’s own house in order in ways that enable people in developing countries to take charge of their own development and hold their governments to account?”
Making 2013 a Golden Moment for Global Development
There is some scepticism within the development community about “the Golden Thread” and about the Prime Minister’s commitment to a development agenda which is about giving people in developing countries greater control of the agenda. This is partly because the policy changes are still to come, so there remain more questions than answers about what this agenda will mean in practice. But the opportunity to realise the potential of the Golden Thread and to ensure that the UK government delivers on the promise of 2013, makes engaging with the Government the right option. That is what ONE will be doing as the UK Government firms up its plans for weaving a Golden Thread of openness, transparency and accountability through the global development agenda and as we firm up our plans for campaigning to enable African citizens to follow the money and hold their governments to account. Watch this space and get involved.
Improving infrastructure spending to fight poverty!
The provision of a $2 vaccine to save a child’s life for many is an important and obvious thing to support. But sometimes what is less obvious in saving that child’s life is how important the road is that was used to deliver the vaccine, or the electricity that powered the fridge to store the vaccine at a cool temperature. These were also essential for that vaccine to be able to save the child’s life.
In the developing world living without access to roads or electricity can mean living without decent education, evening lighting, or medical supplies. It can mean the difference between life and death.
Infrastructure is vital for development. However in Sub-Saharan Africa the infrastructure deficit is huge: 70% of the population has no access to electricity, 95% of agriculture is without irrigation and the majority of the rural population are not served by roads to market and hospitals that are passable year round. However infrastructure doesn’t come cheap and the sector is notoriously complex; this can lead to mismanagement and increase the potential for corruption.
In a 2010 report “Africa’s Infrastructure” the World Bank predicts that the cost of addressing the basic infrastructure deficit in Africa would require an additional $45billion a year in infrastructure investments. However in the same report the Bank notes that mismanagement, inefficiencies and corruption increase this cost, and $17-15 billion could be saved by addressing these problems. Elsewhere Global Construction Perspectives estimate that loses through mismanagement, corruption and inefficiencies range between 10 – 30% in the construction sector.
Recognising: (1) the immediate need for significant investment in African infrastructure and (2) the potential for mismanagement of public finances in this sector; ONE’s Executive Director Jamie Drummond spoke at the international launch of the Construction Sector Transparency (CoST) Initiative this morning.
The CoST Initiative seeks to increase transparency in the construction sector to ensure better use of public resources. There are 8 national level CoST initiatives that work with governments, civil society and construction companies to develop systems and procedures to enable the public disclosure of project information, thereby making construction projects more transparent and open to scrutiny. This transparency and accountability can help ensure money is well spent and can decrease the opportunities for corruption.
For example in CoST’s pilot stage following the public scrutiny an intervention by CoST Ethiopia led to the redesign of a road project which is expected to lead to a cost saving of $2.3 million. This $2.3 million is now available to invest elsewhere to achieve development goals. It means $2.3 million out of the hands of corrupt individuals but instead being used to train more teachers, build more schools or buy more medicine.
“The Construction Sector Transparency Initiative (CoST) is a fantastic initiative that ONE is proud to support. Transparency in the construction sector, from the financing to the decision making stage, is crucial in allowing the public to hold decision makers to account. Thereby ensuring water pipes, electricity lines and roads, reach and improve lives as they were designed to do.” Jamie Drummond
Over the coming year the CoST Initiative will be expanding out to more countries. Working with local civil society, companies and governments ensure the best use of public finance in the construction sector. ONE will be continuing to support this work and you can find out more about the Construction Sector Transparency Initiative here.
UK government a key to ensuring open governments around the world
We were pleased to hear UK Cabinet Office Minister Frances Maude, a major champion in the fight for good governance in the UK, support the efforts of the Open Government Partnership (OGP) this week in London. As of September 26, the United Kingdom became the leading co-chair of the OGP, an organization that aims to promote transparency, increase civic participation, fight corruption, and harness new technologies to strengthen governance through increased citizen participation.
The open government movement is a key part of what ONE sees as the future of development. It allows citizens around the world to have the ability to participate in their own development and hold their leaders to account.
ONE Executive Director Jamie Drummond participated at an event called “The Future is Open,” where Mr. Maude gave a keynote speech about the UK’s role in the OGP. In a Telegraph article published yesterday, Mr. Maude called on the world’s media to hold governments’ feet to the fire with the fruits of open government.
He writes, “Transparency is risky, difficult and uncomfortable for governments – it also sticks. Once you start, you can’t go back. This government has put transparency at the heart of its agenda. As the new lead chairman of the Open Government Partnership, we will promote transparency all over the world.”
OGP is a fairly young partnership (initiated in September 2011) that now has 57 member countries covering one-third of the world’s population. The UK’s co-chairmanship comes at a critical time. With the presidency of the G8 in 2013 and the Prime Minister’s role on the UN High Level Panel, the UK has a unique opportunity to put openness, transparency and accountability at the heart of the global development agenda.
The wave of support for open data and transparency resulted in support for a broader concept of open government, and later, OGP. The UK government has shared its vision of open government, but it should go beyond open data and transparency to include citizen participation and accountability. The UK OGP Civil Society Network is currently discussing how to ensure that UK engagement goes beyond data.
Broadly, the UK should articulate that open government is a vision incorporating many elements, from access to information and citizen participation in policy making, to anti-corruption initiatives and work on corporate transparency and accountability.
And open government needs to be about democracy as well as about prosperity. Participation isn’t just a way of promoting prosperity, it’s also a means to deepen democracy and improve service delivery. The public should have access to information that is useful, with freedom of information loopholes closed and robust protection for whistle-blowers.
These tools will enable citizens to participate in the fight against corruption, at home and overseas, and efforts to ensure greater accountability – around aid, around budget processes and around the extraction of natural resources.
The success of OGP will be judged by what happens on the ground, but the energy and enthusiasm that both governments and civil society have shown in the first year of OGP is testimony to the initiative’s potential. As leading co-chair, UK has important responsibility to ensure that OGP realises its potential – and to be transparent about the progress that is being made against the UK’s own commitments.
ONE is keen to ensure that the UK takes advantage of the amazing opportunities that 2013 offers (OGP, G8, HLP) to put openness, transparency and accountability at the heart of the global development agenda, so that people in developing countries are empowered to hold their governments to account for the effective use of public resources – following the money, tracking results and holding governments to account.
With ONE’s focus on poverty reduction in Africa, we are excited to see the UK harness the energy of OGP for poverty reduction as well as prosperity, and to see the UK work with African members of OGP to bring more African countries into the conversation.
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About the Blog
The International ONE Blog is a daily log of the anti-poverty movement. The site is operated by ONE staff, with guest contributions from ONE volunteers, members and allies.
The content of each post and each comment represents the views of that author and does not necessarily reflect the views of ONE. ONE does not support or oppose any candidate for elected office, and any post expressing support or opposition for a candidate is not endorsed by ONE.
TAGS: Millennium Development Goals, Policy News, Transparency