Week 8 Parts 1 & 2: Poverty Reduction Strategies, SSA Economies and More Moyo

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On page 270, Sachs points out the poverty reduction strategy plans of Ghana, Ethiopia, Kenya, Senegal and Uganda. I wanted to look at Ghana and Kenya’s plans in more details.

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http://www.worldbank.org/en/country/ghana

Ghana: Ghana’s poverty reduction strategy plan is called Ghana’s Poverty Reduction Strategy (GPRS). This plan stresses to reduce poverty through agriculture and rural development, focusing on agriculture, fisheries, small and medium-sized businesses and sanitation. This article notes other important aspects to look at:

  • Food security and emergency preparedness
  • Improved growth in incomes
  • Increased economic competitiveness and enhanced integration into domestic and international markets
  • Sustainable management of land and the environment
  • Applied sciences and technology in food and agriculture development
  • Enhanced institutional coordination.

Specifically, the plan points out how important it is to invest in:

  • Enhancing the competitiveness of Ghana’s private sector
  • Accelerating agricultural development and natural resource management
  • Improving infrastructure, human resource development and job creation
  • Consolidating transparent, accountable and efficient governance.

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Kenya Map

 Kenya: According to the World Bank, Kenya’s economy saw a growth rate of 5.7 percent in 2013, solid number that “is attributed to a stable macroeconomic environment, the peaceful elections in March 2013 and smooth transition of political power. Still, Kenya does face issues that the Bank urges the country to fix. For example, Kenya’s poverty issue, in which the World Bank suggests the government to focus on job creations, enhanced productivity in agriculture and targeted public spending programs in order to improve education, water, sanitation and access to electricity for the poor in rural areas.

Kenya’s specific poverty reduction strategy, called Kenya Economic Recovery Strategy Support Credit (ERSSC), is summed up in this article:

The Kenya Economic Recovery Strategy Support Credit (ERSSC) aims to:
1. Expand fiscal space for public infrastructure and health. Towards that end, reform budgeting and execution to ensure that public expenditure is well aligned with explicitly stated national priorities and is efficient;
2. Further improve economic governance by strengthening financial management, procurement and audit institutions and ERS monitoring and evaluation;
3. Improve agricultural productivity and food security; and
4. Lower the cost of private business and barriers to investment.

The project has three components:
Component 1. Budgetary and financial management;
Component 2. Rural Development; and
Component 3. Private sector competitiveness.

The World Bank (WB) estimates the total project cost at US$ 75 million.

The IFC’s website discusses the financial strategy of SSA as a whole by explaining the role they have played there. The IFC made $4 billion in investments in 2012 for projects across the region. They center their efforts on the ideas of improving the investment climate, encouraging entrepreneurship and transforming key markets and industries.

The World Bank’s Africa’s Pulse reported that, “the regions’ economy grew at 4.5 percent per year on average between 1995 and 2013. Its medium-term prospects are positive, with GDP growth projected to rise from 4.7 percent in 2013 to 5.2 percent in 2014, strengthening further to 5.4 percent in both 2015 and 2016.”

In 2013, net foreign direct investment in SSA grew by 16 percent to add up to $43 billion.

On page 82 of Moyo’s book, she referred to the J.P. Morgan Emerging Market Bond Index, so I wanted to take a look at it myself. This links to a table showing SSA’s Bond Index growth.

I wish I knew how to understand the data better, but there is a definite, noticeable increase from where the table begins in 1993 at 100, to 2014 at 564.995.

On another website I looked at GDP growth rates. The only SSA countries it listed were Kenya, Tunisia, Ghana, Angola and Nigeria. Luckily, both of my countries were listed, presumably due to their natural resources. Nigeria’s GDP growth rate was 4.18 percent and Angola’s was 7.4 percent.

Moyo discusses that African countries could benefit from FDI, and in order to receive it, they must “woo” investors. They also need to build a regulatory and legal structure that supports businesses (99-102).

She also talks about the fact China needs natural resources that are in Africa in order to continue achieving their industrial success. Moyo does critique China’s approach to invest with no strings attached. By doing this, African leaders can keep ruling with their own, corrupt, motives, rather than trying to compromise with Western policy makers. Chinese investment is making an impact in the minds of African civilizations though. Moyo says how many Africans have a more positive view toward China than they do toward the U.S.

References:

“Rural poverty approaches, policies & strategies in Ghana”, Rural Poverty Portal, http://www.ruralpovertyportal.org/en/country/approaches/tags/ghana

“Time for Kenya to Shift Gears to Accelerate Growth and Reduce Poverty,” The World Bank, http://www.worldbank.org/en/news/press-release/2013/06/17/time-for-kenya-to-shift-gears-to-accelerate-growth-and-reduce-poverty

“Kenya Economic Recovery Strategy Support Credit (ERSSC)”, devex, https://www.devex.com/projects/pipelines/43569/16737

“Strategy”, IFC, http://www.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa/strategy

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