africa

Africa at a Fork in the Road: Taking Off or Disappointment Once Again?
21.3 Lessons learnt and the “right way” forward
Clearly, Africa is rising because something has changed. The recent record is good
evidence of a significant departure from the past and from policy failures.
Sound economic management in a stable growing economy is increasingly the
norm across Africa. The policy framework that has developed in Africa over the last
decade has established what could be called a “new normal,” quite different and
more conducive to growth. We see a new landscape in which, overall, economic
performance looks strong and quite robust, the macro policy framework is much
sounder, robust and investor friendly; and there is a good degree of macro stability
and the economies are more resilient.
This is the result of reforms and getting policies generally right. It means that African
countries have been able to cope with recent shocks and have managed well
the vulnerabilities that we know stem from dependence on commodities, be these
cocoa, copper, oil, or diamonds.
The monetary policy regimes implemented by central banks, as well as fiscal policies,
have become prudent, using hard-won policy space for counter-cyclical rather
than pro-cyclical policies. A look at the indicators shows there has been reasonably
consistent fiscal consolidation with good debt indicators and relatively low inflation
rates and build-up of some policy buffers against shocks.
This good policy record suggests that the macroeconomic risks associated with
exchange-rate and terms-of-trade shocks, volatility in commodity prices, and large
movements in natural resource revenues could be fairly well managed in future.
A lot of progress has also been made on the governance front. Looking at the work
that has been done on governance in resource management, Ghana’s experience
is a good illustration. The announcement that oil had been discovered was marked
by a national celebration, followed by a series of conferences to educate the public
about the prospects for rapid growth, pointing to the prospective inflow of resources
that would help the country consolidate its progress towards an emerging market
economy. The downside to this was real, in the sense of fomenting high expectations
that might prove difficult to manage. But in that public education process, many
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