POLICY AND INSTITUTIONAL DIMENSIONS OF AFRICA’S POLITICAL ECONOMY IN AN AGE OF GLOBALIZATION Occasional Paper No. 27, 2016 THE A FRICAN C AP ACITY BUILDING F OUNDA TION © 2017 The Arican Capacity Building Foundation Fairbairn Dive Mount easant Harare Zimbabwe Produced by the Knowledge and Learning Department The Arican Capacity Building Foundation Frst printing April 2017 A rights reserved Thi Occasional r stablishe th African ountrie nee to ursue conomic iversification d structural ansformation vigorousl usin appropriate olicie an institution th addre inclusive owth rioritie In dition goo governance an committe national eadership ith developmental sion are rucial ngredien An capacity uildin intervention have e crafted taking these priorities into account as well as the contextual factors that determine a particular country’s economic direction. The African Capacity uildin Foundation ACBF) e no guarantee e recision f the nclude in i work The oundaries, color other nformation own n map n i work o impl an judgmen on e ar of e Foundation oncernin e legal of territor or e ndorsemen or eptance f h oundarie e findings interpretation conclusions expresse in i volume o necessaril reflec the iew of e ACBF Executive oard r oar of Governors. For ditional information n ur nowledge roduc rojec program peration well ther ACBF ivitie lease sit our ebsite http://www.acbf-pact.org. ISBN: 978-1-77937-058-7 POLIC ND NSTITUTIONA DIMENSIONS OF AFRICA’S POLITICA CONOMY I GE LOBALIZATION PREFACE Sinc taining litical ndependenc ound h 60s h lk African countries ave been onstantly ooking r ays o hi socioeconomic evelopment As esult hey h mplemented ious licies nd reforms. oday globalization s een as ay o facilitat African conomic evelopment Estimate show hat nce 000, Sub-Saharan countries h sted mproved rowth ates. Even o ag real apit ncom s still barely igher han n 70 d Sub-Saharan Afric l ind all ther egions n os developmen dicators. With globalization, Africa’s traditional partners such as western countries have accordingly adapted their policies and nterventions n h continent o t heir ew trategies d nterests h ergence China nd India s ew artners f African ountries ith ew conditionalities nd engagement strategies has so changed h nternational onomic rder hat h Africa’s institutional and policy responses to these new developments? Th esponses , nd utcomes f e ecen ternationa conomic nd eopolitical landsc r Afric biguous hough ountries uch otswan appear o on well n h ew orld rder any ther African ountries h ot ed hat ell he debate holds lessons for Africa in whether the continent has “a challenge understanding its own reality.” So what policies should African countries embrace to “seize the day” in a revised lobal orld rder? The Africa Agenda 2063 illustrates the continent’s constant search ts own ay o hieve sustainable development. In fact, the Agenda 2063 seeks to ensure Africa’s economic and technologica ansformation hile ontinuing e an-African ri r elf-determination freedom ogress d collective prosperity ut can h ontinent hi his ? I gains is ackground a e African Capacity uilding Foundation ACBF) as produce his Occasional ape nde ts Strategi Studies roup. A ey nding om his s hat om Sub-Saharan ountries av tarted ealizing impressi rowth rends eploying acroeconomic licies d nstitutions opriate to their own context, thereby demonstrating that the continent’s economic renaissance is a big ossibility. Notably, ACBF as been mportant ayer n hes hievements hrough ts capacity ilding nvestments n licy alysis d conomic anagement ross ide spectrum African countries The ACBF elieves at, esides s suppor stablishing hink nks nd olicy stitutes and trengthening heir apacity hroughout h ontinent oducing nowledg an elp enhanc dence-based licymaking. Building h capacity r licy alysis d onomic anagement emains Foundation priority Our ho s hat the takeholders nd developmen artners join s ontinue strengthening uman nd stitutiona apacity or ustainable African development. Professor Emmanuel Nnadozie Executi Secretary The African Capacity uilding Foundation iii iv ACKNOWLEDGEMENTS This Occasional aper was prepared under the supervision of the nowledge and Learning (K&L) epartment guided by its irector, r. Thomas hataghalala Munthali. ithin the K&L epartment, this paper was ably coordinated by r. obert antchouang, Senior nowledge Management xpert, and r. arassou iawara, Knowledge anagement xpert. The paper is produced within the African Capacity uilding oundation ACBF) Strategic Studies roject aimed at provoking discussions and raising awareness on important strategic issues to the African development agenda. The strategic studies topics were selected in consultation with members of the olicy Institutes ommittee and the Strategic Studies roup SSG). Special thanks to members of both networks. e thank SSG members for their guidance on selecting topics to be commissioned and their critical review of the manuscripts. The ACBF wishes to acknowledge the efforts of the researchers who conducted the studies that generated this paper r. laudious hikozho and harles hemachena. The oundation also wishes to express its appreciation to all the many agencies and individuals in the countries and the ACBF partner institutions that provided valuable data and information that made the paper’s completion possible. This paper benefited from the insightful comments from rof. ike badan, rof. ictor . Ayeni, and rof. Timothy T. Shaw who served as external peer reviewers. It also benefited from internal reviews by ACBF staff. About the African Capacity Building Foundation The African Capacity Building Foundation (ACBF) is Africa’s premier institution in capacity building. stablished in ebruary 991, ACBF builds human and institutional capacity for good governance and economic development in Africa. The oundation has empowered governments, parliaments, civil society, private sector, and higher education institutions in more than countries and six regional economic communities. It supports capacity development by way of grants, technical assistance, and knowledge generation across the continent. ACBF’s vision is that of an Africa capable of achieving its own development. About the Strategic Studies Group The Strategic Studies roup SSG) is an ACBF network of global development experts and practitioners made up of the ACBF olicy Institutes ommittee, selected development partners, international development specialists, and the ACBF-supported training programs and university partners. The SSG assists the oundation in identifying key policy and emerging issues requiring the attention of the oundation and its stakeholders. The SS works with the ACBF to identify research themes and advises the oundation on strategic and pertinent issues that need special attention. It also serves as a “review panel” that shapes, examines, and evaluates the high-level studies undertaken by the oundation. v vi COTNT PREFACE III ACKNOWLEDGEMENTS V CONTENTS VII ABBREVIATIONS IX EXECUTIVE SUMMARY 1 CHAPTER 1. GENERAL OVERVIEW 3 Background to the study 4 rganiation of the paper 7 CHAPTER 2. SUB-SAHARAN DEVELOPMENT PLANNING TRENDS 9 Sub-aharan macroeconomic development planning trends 9 Role of public policy and institutions in national economic growth 13 CHAPTER 3. BOTSWANA 15 The economy 15 Institutional structures 17 overnance and political stability 17 Challenges 18 CHAPTER 4. SOUTH AFRICA 20 ocioeconomic development 20 ational economic growth policies and the transformation agenda 21 The Blac conomic mpowerment program 23 ocial welfare and public services 23 CHAPTER 5. GHANA 25 The economy 25 overnance and political stability 27 Challenges 28 Conclusion 30 CHAPTER 6. NIGERIA 31 The economy 31 overnance and political stability 34 Challenges 34 Conclusion 36 vii CHAPTER 7. ETHIOPIA 37 The economy 37 Key thiopian growth drivers 39 overnance and political stability 41 Challenges 42 CHAPTER 8. TANZANIA 44 The economy 44 Key Tananian economic growth drivers 46 overnance and political stability 48 Challenges 48 CHAPTER 9. EGYPT 52 The economy 52 overnance and political stability 56 Challenges 57 Conclusion 58 CHAPTER 10. THE SCOURGE OF FRAGILE STATES IN SUB-SAHARAN AFRICA 59 emocratic epublic of the Congo 59 CHAPTER 11. SOUTHEAST ASIAN EXPERIENCES 62 Theoretical underpinnings of a developmental state 62 Revisiting ast Asian eperiences 63 CHAPTER 12. IMPLICATIONS AND OPPORTUNITIES 66 Main drivers for growth 66 ther ub-aharan development priorities for consideration 69 pportunities for capacity building 81 Conclusion 82 BIBLIOGRAPHY 84 viii ABBREVIATIONS ACBF The African Capacity Building Foundation ACET African Center for conomic Transformation AfB African evelopment Bank AC African ational Congress B Black conomic mpowerment BIDA Botswana Institute for evelopment olicy Analysis BRICS Brail ussia India China and outh Africa CSO Civil ociety rganiation AP Economic tructural Adustment rogram FDI Foreign irect Investment HI/AIS Human Immunodeficiency irus and Acuired Immune eficiency yndrome IF International Monetary Fund GDP Gross omestic roduct GEA rowth mployment and edistribution MDG Millennium evelopment oal OECD Organisation for conomic Co-operation and evelopment UNCTAD United ations Conference on Trade and evelopment UNECA The nited Nations conomic Commission for Africa UN-DESA United ations epartment of conomic and ocial Affairs UNDP United ations evelopment rogramme UNIO United ations Industrial evelopment rganization All dollar amounts are .S. dollars unless otherwise indicated.