Section Four

1996 Regional Perspectives

AFRICA

 Sub-Saharan Africa's gross domestic product (GDP) is estimated to have grown by 4.0 percent in 1995--a significant improvement over the period 1991­94 (1.4 percent on average)--and economists are forecasting an even higher rate of growth in 1996. Aggregate numbers such as these mask wide variations by country, as in the past. Thus, while at least fifteen countries grew by 5 percent or more in 1995 (four--Angola, Lesotho, Malawi, and Uganda--experienced growth rates in excess of 10 percent), others (Burundi, Congo, Seychelles, Sierra Leone, Somalia, Zaire, Zambia, and Zimbabwe) registered declines. Africa's exports also expanded in 1995--by 5.7 percent, or roughly twice as fast as the year before. In this case, too, performance varied widely--from a negative 38 percent (Sierra Leone) to a positive 23 percent (Mauritania)--thereby confirming that "there is no single African reality," the conclusion of "A Continent in Transition--Sub- Saharan African in the Mid-1990s" (World Bank 1995).

 Several trends are clear, nevertheless:

 Africa's recent development experience and current situation are consistent with both the Bank's strategic agenda in the region and its operational approach to it. The strategic agenda aims to accelerate and spread growth dramatically--to achieve a quantum jump--to reduce poverty and to improve the quality of people's lives; the operational approach aims to maximize "results on the ground" by working in partnership with all parties with a stake in the outcomes and who can make a difference. The following sections highlight how the Bank has pursued its strategic agenda over the past twelve months.

A Compact for Poverty Reduction

 Countries must realize income growth of between 6 percent and 7 percent annually if significant progress in reducing poverty is to be achievable. Even then, such progress is not possible, let alone probable, unless poverty reduction is at the center of the development efforts of all stakeholders: multilateral and bilateral donors, international and local nongovernmental organizations (NGOs), and African countries themselves. In addition, all parties must work in true and strong partnership. The Bank's strategy aims to put in place a "compact for poverty reduction in Africa," the main components of which are:

 Clearly, achieving these results requires strong national commitment and efforts. It is encouraging that a number of countries have strengthened the focus on poverty reduction in the formulation of their policies and investment programs.

Working with External Partners

 The Special Program of Assistance for Africa (SPA), established in December 1987, has been the most important forum for the coordination of aid to the subcontinent. Its objectives have been twofold: to mobilize adequate and timely financing in support of African countries that are undertaking economic reforms and to improve the effectiveness of donor assistance. The program is currently in the final year of its third phase. Bilateral and multilateral donors disbursed $16 billion in balance-of-payments finance during the years of the program's first two phases (1988­93). Planned financing for the current phase, 1994­96, totals $13 billion, although current budget pressures in many capitals are expected to affect donors' ability to fulfill these plans. Overall, the SPA has succeeded in providing much needed external financing to recipient countries. Annual net official development assistance (ODA) in real terms to them has been more than two thirds higher, on average, since the onset of the SPA (during 1988­94) than during the preceding seven-year period (1981­87). Just as real net ODA has increased sharply during the SPA period itself, so, too, have real net transfers. These resources, plus debt relief, are aimed at ensuring that the programs of economic reform are adequately funded.

 Over time, the agenda of the SPA has evolved to include the developmental context of economic reform. Various working groups have focused on key subjects such as civil service reform; economic reform in an era of political liberalization; gender, poverty, and social policy; and public expenditure management. The SPA has begun to explore ways to improve the design, sequencing, and implementation of economic reform programs in order to promote greater country "ownership" of them and achieve sharper impact. Concurrently, the Bank initiated a comprehensive review of its policy-based lending instrument, which complemented the discussions in the SPA fora. This review took into consideration the views expressed by a broad range of African partners and donors during consultations on "A Continent in Transition," as well as discussion of policy-based lending in government, academic, and nongovernmental fora in the early 1990s. The aim of the review, and of the subsequent modifications, was to get economic reform programs to achieve quicker, stronger, and longer positive effects on the ground. Progress was also made under the SPA in refining the concept, and addressing the operational aspects, of Sector Investment Programs (SIPS), which are intended to enhance the impact of development lending in Africa by coming to grips with the problems created by the fragmentation of donor-driven projects and overburdened African capacity.

 There are indications that the deep continentwide economic crisis that led to the birth of the SPA has been largely overcome. Many challenges still remain, however. Even the strongest performers among the countries of the region must still aspire to raise income beyond current levels. Debt problems and weak capacity continue to act as significant constraints on development. These and other issues will be discussed as SPA-3 completes its final year and donors agree on an agenda for a fourth phase beginning in 1997.

 Steps were also taken by the Bank to strengthen its collaboration with un agencies. It participated actively in the preparation of the Secretary-General's Special Initiative for Africa, which was launched on March 15, 1996. The initiative defines a program of concrete actions to accelerate African development and a partnership to reduce the fragmentation of development assistance. It seeks to greatly expand basic education and health care, to promote peace and better governance, and to improve water and food security. Up to $25 billion may be required to finance the Special Initiative over a ten-year period (this is an estimate of the cost of all the investments necessary in the sectors covered by the initiative). Funding will come, to a significant extent, from a continuation of the current programs of support for the sectors involved and a reallocation of resources to initiative activities. The World Bank will participate in all areas covered by the initiative and take on particular responsibility for mobilizing resources for basic education and health care on the basis of well-prepared sector programs supported by local stakeholders and donors.

 The Bank also worked closely with the United Nations Economic Commission for Africa (UNECA) in a number of areas such as private sector development. The collaboration with UNECA and other UN agencies has evolved into one among "genuine partners." In addition, the Bank has strengthened its collaboration with multilateral lending institutions such as the Islamic Development Bank and the African Development Bank (AfDB). It responded, for example, to a request from the AfDB to provide extensive technical advice in selected areas (such as portfolio management, treasury operations, and procurement) as part of its major restructuring.

Partnership for Private Sector Development

 Close consultation with the private sector and other stakeholder groups has become an integral part of project design and policy reforms for private sector development. Workshops that bring all stakeholders together to discuss problems and develop an action program are becoming a popular and increasingly effective tool to this end. A private sector workshop in Mali, for example, led to the restructuring of the $12 million Private Sector Assistance Project approved in November 1993. Workshops are sometimes focused on specific issues, such as those held on export strategies in Madagascar and small and micro enterprises in Benin. The Africa Region of the Bank is working with the Bank's Economic Development Institute to develop consultation and training programs in these and other countries to facilitate increased dialogue between the public and private sectors.

 In countries such as Chad, Malawi, Senegal, Uganda, Zambia, and Zimbabwe, partnership among the Bank, governments, and the private sector, established through project-preparation task forces during the past year, has evolved to the creation of joint steering committees or units to oversee project implementation. Positive initiatives taken by countries themselves include the establishment of private sector foundations in Madagascar, Senegal, and Uganda to provide support to private businesses and to improve the dialogue between the government and the private sector. Mozambique and the Central African Republic have established annual private sector conferences.

 In addition to supporting these national efforts, the Bank is encouraging dialogue with the private sector across countries. It joined with UNECA, the United Nations Development Programme, the Global Coalition for Africa (GCA), and other bilateral and international agencies in sponsoring a regionwide Conference on Reviving Private Investment in Africa, held in Ghana in June 1996. More narrowly focused subregional forums were held on "Agribusiness in Southern Africa" (March 1996) and on the "Informal Sector and Micro Finance in Western Africa" (June 1996). A symposium in Johannesburg on Power Sector Reform and Efficiency in December 1995 brought together ministers of finance and ceos of utilities from forty-three African countries to discuss reforms, investment requirements, and greater private sector involvement. These activities also involved cooperation with other international and national agencies and NGOs.

 In a growing number of countries, the Bank is acting as a low-key catalyst to help facilitate and foster improved dialogue between African governments and private sector representatives. Government-private sector competitiveness- review groups and fora have been set up (notably in Ghana, Madagascar, and Senegal) to assess major bottlenecks to private sector competitiveness and to propose solutions for adoption by the authorities. These can be instrumental in building ownership for policy reform.

 Meanwhile, in the area of private investment promotion, strengthened coordination between the Bank, the IFC, and MIGA is enhancing Bank Group efforts to assist client countries to design business-environment reforms--notably through the Bank/IFC-run Foreign Investment Advisory Service--and to execute promotion programs with MIGA assistance. Increasingly, in project finance for private investment, the Bank is finding opportunities to catalyze IFC and MIGA involvement, both for major new projects (in the energy sector, for example) and for postprivatization and postliberalization private investments (in telecommunications, for example).

Partnership with Local Communities and NGOs

 The Bank is strongly committed to going beyond traditional cooperation with member governments to include participation in decisionmaking by NGOs, community groups, cooperatives, women's organizations, the poor and the disadvantaged, as well as the private sector. Using participatory approaches, the Bank is doing more listening than imposing. The Bank has identified nineteen "flagship" participatory operations--including five in Africa--that it is monitoring, and systematic participatory approaches are becoming the normal way of doing business for all major activities. In agriculture, the utility of systematic farmer participation is illustrated by the beneficiary assessment undertaken in Senegal. In addition, in three "gender" pilot projects--in Burkina Faso, Mali, and Mozambique--gender-related concerns are being introduced in policy-based operations in close collaboration with beneficiaries.

 One of the "flagship" operations, the Tanzania Human Resources Development Pilot Project, currently under preparation, is an example of the close partnership being developed among the Bank, governments, and local communities. After three years of participatory consultation with parent associations, community leaders, school teachers, and health workers, the Tanzanian government designed three pilot programs to be financed by the project that aim at making schools and health facilities more accountable to their clients and at promoting a feeling of ownership among beneficiaries, who provide financial support.

 The Mali Pilot Participation Project--a "flagship" operation under advanced preparation--was conceived at the June 1995 Mali Hunger Workshop as a vehicle to experiment with partnership approaches in the fight against hunger and poverty. The steering committee designing the project is composed of representatives of the central government and district authorities, community-based organizations, and NGOs. Two confederations of NGOs are involved, one containing local NGOs only and the other both local and international NGOs. These actions and others are expected to help build a basis for partnership between the government and NGOs in the delivery of social services to the poor.

Table 4-1

 Bank-NGO dialogue on Africa was strengthened in fiscal 1996 through systematic consultation and the appointment of twenty-three NGO liaison officers, who are attached to Bank resident missions to facilitate participatory approaches in Bank-financed projects. The Third African World Bank-NGO Consultation meeting was held in Accra at the Bank's offices in February 1996. This meeting was attended by Bank staff, forty African NGOs, four international NGOs, several African academics, and a representative from the host government.

Partnership for Project Success

 A significant characteristic of the 1990s has been the increasing divergence among African countries in terms of economic performance, completed political and structural reforms, global integration, and domestic capacity for economic management. At the same time, it has become increasingly apparent that the policy-based lending instrument needed modification if it were to continue to be a potent instrument for structural change and meet the emerging needs of such a diverse group of countries. Several innovations were introduced during the year, including the use of standard as well as of floating tranches on loans to minimize resource disruptions and accommodate uncertainties associated with difficult institutional reforms; greater reliance on in-country knowledge at the farm and firm level; a more intensive study of the potential effects of economic reforms on various groups, especially the poor and women; and closer linkages between support for structural reforms and the total package of lending and nonlending assistance given to a country. Clearly, mainstreaming such innovations involves much closer and continuous interaction between African countries and donors, and among the different stakeholders in civil society within the African countries themselves.

 Performance of projects in the Bank's Africa portfolio continues to improve. The proportion of problem projects, based on the development-objectives rating, eased from 17 percent in fiscal 1993 to 16 percent in fiscal 1995. On the basis of the implementation-progress rating, the proportion of problem projects fell from 24 percent to 18 percent over the same period. These improvements reflect the Bank's proactive management of its portfolio in the region, close collaboration with borrowing countries in project implementation, and efforts by the various implementing agencies concerned. Many of the problems of poorly performing projects stem from a lack of government ownership or their low priority in the current policy framework. Projects in the portfolio are being restructured to make them more consistent with the current country and sector priorities, and those elements no longer considered to be of priority are being eliminated. Project restructuring is especially common in the social sectors and in Nigeria, in particular. In addition, a review of completed operations in the agriculture sector has helped identify lessons from experience that are expected to lead to improved project outcomes. The review concluded, among other things, that while sound macroeconomic framework, political stability, and governmental commitment are important, complex project design that does not take into account weaknesses in local capacity can severely affect the results; beneficiary participation during project preparation and implementation is crucial for project success; and pilot projects can be helpful by offering opportunities to minimize implementation problems and to test innovative approaches.

Table 4-2

 New approaches adopted in recent years are expected to contribute to the quality-at-entry of new projects and to project success. Leading the way is the greater emphasis that is being placed on operations patterned on the SIP approach, whose main characteristics are coherent sector policy; sectorwide or subsectorwide scope; preparation by local stakeholders; efficient coordination of all major donors in the sector, including common implementation arrangements; and minimal resort to long-term technical assistance. Fifteen SIP operations were approved in fiscal 1996, compared with five in the previous year.

Partnership for Capacity Building

 Capacity--of human resources as well as of institutions--permits countries to achieve (as well as define) their development goals. For that reason, capacity has long received deserved attention; however, efforts in Africa, where the challenge is the greatest, have been generally ineffective. The need to correct this situation urgently, comprehensively, and effectively was put on the agenda as never before during the past year--this time on the initiative of the African countries themselves. Through their governors in attendance at the annual meetings of the two Bretton Woods institutions, African countries asked the president of the World Bank to work with them to take concrete steps toward improving capacity in Africa.

 Toward that objective, the executive directors for African countries and Bank staff organized a series of consultations, including workshops in Abidjan, Addis Ababa, Johannesburg, Libreville, and Nairobi, to gain a better understanding of the problems and concerns (including the reasons for past successes and failures), and to explore innovative approaches and pragmatic solutions in the realm of capacity building. Participants were drawn from a wide range of experience and expertise: government, private sector, academia, "think tanks," professional associations, and NGOs. Participants were asked to comment, for example, on ways to form better partnerships with the World Bank and donors to build African capacity. In parallel, a nine-member high-level group, of whom six are from Africa, was brought together to review the impact of World Bank policies and operations on capacity building and utilization. Also, in May 1996, a workshop was held in Mauritius, bringing together Africans and East Asians to explore the role of capacity building in the East Asian "miracle" and its implications for Africa.

 The work at all three levels (consultations, evaluation by the high-level group of the Bank's role, national assessments) is well advanced. While the conclusions are not apparent yet, they are likely to reflect the ideas that have emerged to date:

Partnership for Consensus Building and Regional Cooperation

 The Global Coalition for Africa, which was launched following the Maastricht Conference on Africa in 1990, has been a key forum for building consensus on development issues among African countries and their external partners and in generating political validation at the highest levels in Africa on economic reform and governance measures. A key element of the consensus is that regional cooperation/integration should be accelerated while integrating the African countries into the global economy. The Second Maastricht Conference, held in November 1995, agreed that the GCA should continue its catalytic role in focusing attention on critical issues and development priorities in Africa. The Bank has supported the GCA from its inception and remains committed to providing technical and financial support to the coalition, together with other interested partners and donor countries.

Table 4-3

In line with the consensus on the importance of regional cooperation in the development process, the Bank supports a new vision of regional integration in Africa based on the promotion of factor mobility among countries, while, in parallel, integrating African countries into the world economy. Together with the International Monetary Fund, the European Union, and other interested institutions and donors, the Bank is supporting efforts by groups of African countries based on such a vision of integration. These include the Cross-Border Initiative to facilitate private investment, trade, and payments in Eastern and Southern Africa and in the Indian ocean countries; the East African Cooperation among Kenya, Tanzania, and Uganda; the West African Economic and Monetary Union; and the Central African Monetary Union. The countries participating in these arrangements are taking steps to remove the barriers to cross-border flows of goods, factors, and people. The Bank supports these efforts through technical and policy advice, institution building, and financing in the context of country-specific assistance programs.

Partnership Is Necessity, Not Optional: The Case of Water Management

 The view that partnership is a necessity rather than an option applies to nearly all areas in Africa, given the constraint on resources--domestic and external--and the distance that needs to be covered to achieve significant sustainable improvement in well-being. Both these factors put a premium on using available resources (human and financial, internal and external) as judiciously and effectively as possible through partnership. The management of water resources epitomizes the need to view partnership as a necessity, not an option (see Box 4-1). In Africa, fifty-four rivers or lakes are shared by more than one country, and major drainage basins and aquifers are each shared by seven or more countries. Recent developments have demonstrated anew the vulnerability of Africa's food production, health, and economic development to the availability of water.

BOX 4-1. NEW PARTNERSHIP FOR WATER MANAGEMENT

 Recent events in sub-Saharan Africa demonstrate the strategic importance that water plays in the region's food production, health, and economic development. In 1995, drought in Southern and Eastern Africa, as well as localized droughts in the Sahel, led to significant drops in crop production and the risk of price hikes and malnutrition. Increased water pollution and lack of accessibility to clean water and sanitation services throughout the region are having a direct impact on human health. At the same time, water management is an issue of geopolitical importance and hence requires close cooperation among riparian countries. This appreciation has led the Nile Basin states1 to create a forum for continuous dialogue, while in 1995, the states of the Southern African Development Community (SADC)2 signed a Protocol calling for the equitable use and management of shared river basins.
 In an effort to shed some light on this increasingly important area, the Bank put out a report entitled "African Water Resources: Challenges and Opportunities for Sustainable Development." The strategy document provides a counterpoint to the old supply-driven approach in the sector that focused on a single stakeholder (the public sector). The strategy calls upon donors to conduct business in new ways based on (a) the principle that water-resources management needs to be country-driven, with Africans taking the lead in integrated, multisectoral approaches in the development and implementation of national water strategies that involve all stakeholders and (b) a new emphasis on partnership among donors and countries.
 The strategy builds on these two points by identifying five development priorities: enhanced drinking water and sanitation service coverage, with priority for the poor; food security through irrigation and collection of rainfall; water quality and human health; protection of watersheds and wetlands; and intercountry river-basin cooperation. It also calls for more emphasis on rural and peri-urban areas, stakeholder participation, privatization of water utilities (including small-scale irrigation and suppliers of water), and demand-management approaches. The strategy also suggests that the international community needs to develop new instruments to promote international cooperation and river-basin management, including, among other things, multicountry lending programs and projects within countries that create an even playing field between coriparian states.
 The concept of partnership shaped the way in which the strategy itself was prepared. A group of senior advisers from nine African countries was brought together by the Bank, in consultation with other donors, in 1994 to form the African Advisory Group (AAG). The AAG reviewed working drafts of the strategy in 1994 and 1995, gave advice, and provided a crucial Africa voice in the process. Donor agencies, including the Food and Agriculture Organization of the U.N., the United Nations Environment Programme, the United Nations Educational, Scientific, and Cultural Organisation, the International Center for Research in Agroforestry, the United Kingdom's Overseas Development Administration, and the World Bank, authored building-block papers integral to the strategy. The strategy was presented at two stakeholder workshops held in Africa in early 1996 attended by 235 participants from forty-one countries. One immediate result of the workshops was the agreement to form a Pan-African Partnership, to be led initially by the AAG, for fostering intercountry dialogue; sharing knowledge, experience, and best practices; developing consensus on key issues and actions; and reviewing progress on agreed action plans.

1. Burundi, Egypt, Ethiopia, Eritrea, Kenya, Rwanda, Sudan, Tanzania, Uganda, and Zaire.
2. The members of SADC, the former Southern African Development Coordination Conference (SADCC), are Angola, Botswana, Lesotho, Malawi, Mozambique, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe.

1996 Regional Perspectives

East Asia and Pacific
South Asia
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa

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