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Finance policy

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Climbing the inclusion ladder: artisanal gold mining in Tanzania

22 Jun 2017 10:21:12 GMT

Tanzania faces significant development challenges. While gross domestic product growth remains relatively impressive, many sectors are growing off a small base. Both the longevity of the acceleration and the quality of the growth are in question. Tanzania’s educational outcomes remain poor, and young people are less likely to find good quality employment. A fast-growing population requires an expansion of employment opportunities, and it is not clear that these are being created. A handful of companies provide the majority of tax revenue, rendering the government reliant on foreign aid in addition to taxation. President John Magufuli’s government therefore needs to broaden the tax base and diversify the economy without undermining current foreign exchange and tax earnings. Tanzania is endowed with extensive mineral resources (and recently discovered natural gas), which could mobilise resources for development, provided the sector is well governed.

This paper examines the artisanal gold mining sector as an important employer and potential revenue generator. It also explores the negative social and environmental externalities associated with the sector. The barriers to entry for artisanal miners to formalise should be lowered, although this will not guarantee development. Most importantly, the government – in partnership with development organisations and the private sector – should roll out and ensure the uptake of inexpensive technologies (such as retorts) that will reduce negative externalities and increase potential positive economic spillover effects.

IBCIM economic corridor: facilitating sub-regional development

19 Jun 2017 12:42:24 GMT

The Bangladesh-China-India-Myanmar Forum for Regional Cooperation’s (BCIM) Economic Corridor (EC) initiative, a complex entanglement between security, economic and national interest, exemplifies Foreign Secretary Jaishankar's statement.

This paper attempts to analyse the economic aspect of this cooperation, focusing on the reasons for stalling of the BCIM EC’s progress, and explores measures to take the initiative forward. Despite all four countries having agreed to implement the EC in principle, admittedly, there has been a lull in its progress. The EC’s route has been put in place and is almost completely motorable. However, an analysis of the trade intensities and patterns among the four countries demonstrates that potential trade volumes are inadequat e to justify its implementation. Nonetheless, the EC continues to emphasise cooperation on the “Zone 3” pillars of Trade, Transport and Energy, which avoid addressing the existing realities of the BCIM countries’ underdevelopment.

Fighting BEPS in Africa: a review of Country-By-Country Reporting

19 Jun 2017 12:24:47 GMT

Following the Panama Papers leak and numerous press reports of aggressive tax planning by Multinational enterprises (MNEs) around the world, there has been a concerted effort, notably in developed countries, to combat MNE tax avoidance and increase international cooperation in tax matters. As MNEs operate across borders they can use multi-jurisdictional tax planning, in combination with transfer pricing, to limit their tax obligations. Unfortunately, some MNEs aggressively plan an operation around these tax structures to avoid paying their fair share of tax. This is mostly legal, as MNEs generally do not breach any single tax jurisdiction’s laws. However, such practices have a negative impact on the countries in which they are operating, regardless of whether they are legal or not.

A key responsive measure to address aggressive MNE tax planning has been the OECD/G20 Base Erosion and Profit Shifting (BEPS) Package. Its aim is to close loopholes between various national tax authorities that allow MNEs to unjustifiably shift profits across borders. Within this, a key component, and part of the minimum BEPS action requirements, is Action 13: Transfer Pricing Documentation and Country by Country Reporting (CbCR).

Policy recommendations made by this brief:

  • by the time of the 2020 review MNEs will be more aware of this process, and it is possible that the idea of lowering the EUR 750 million revenue threshold will find a more receptive audience
  • given the trust barriers to lowering exchange of information requirements it is not clear that this issue can be resolved in favour of those African states currently not able to comply. Consequently, African countries need to upgrade their institutional capacities and legal frameworks. Official development assistance could be targeted at this area
  • as Action 13 reports are submitted over the next two years a much more informed assessment of the strengths and limitations of CbCR should emerge. This should enable the refinement, and possibly the extension, of the system
  • the application of CbCR to include other taxes paid by MNEs, beyond corporate income tax, could also be considered
  • the transparency of CbC reports will, no doubt, feature in the 2020 review and African revenue authorities will need to engage with the issue, as it could bridge a lot of their constraints


Africa’s youth employment challenge: new perspectives | IDS Bulletin Vol 48, No 3

16 Jun 2017 12:12:13 GMT

Youth and employment concepts are not new to development discourse in sub-Saharan Africa but over the last decade interest has increased dramatically, becoming a much more important focus for policy, intervention and research throughout the continent (and globally).

This IDS Bulletin reflects challenges in Africa and demonstrates how political context shapes youth-related policy.The articles in the Bulletin consider the evidence on youth employment policy and interventions, the politics of youth policy, the changing nature of young people’s work, and the promotion of entrepreneurship. They are authored by the ten members of the first cohort of the Matasa Fellows Network (a joint initiative by the MasterCard Foundation and IDS), which has a particular focus on the youth employment challenge in Africa.


  • Introduction: New Perspectives on Africa’s Youth Employment Challenge: Seife Ayele, Samir Khan and James Sumberg
  • Youth Employment in Developing Economies: Evidence on Policies and Interventions: Nicholas Kilimani
  • The Politics of Youth Employment and Policy Processes in Ethiopia: Eyob Balcha Gebremariam
  • The Side-Hustle: Diversified Livelihoods of Kenyan Educated Young Farmers: Grace Muthoni Mwaura
  • Gambling, Dancing, Sex Work: Notions of Youth Employment in Uganda: Victoria Flavia Namuggala
  • Navigating Precarious Employment: Social Networks Among Migrant Youth in Ghana: Thomas Yeboah
  • Youth Participation in Smallholder Livestock Production and Marketing: Edna Mutua, Salome Bukachi, Bernard Bett, Benson Estambale and Isaac Nyamongo
  • Non-Farm Enterprises and the Rural Youth Employment Challenge in Ghana: Monica Lambon-Quayefio
  • Does Kenya’s Youth Enterprise Development Fund Serve Young People?: Maurice Sikenyi
  • Promoting Youth Entrepreneurship: The Role of Mentoring: Ayodele Ibrahim Shittu
  • Programme-Induced Entrepreneurship and Young People’s Aspirations: Jacqueline Halima Mgumia



Village savings and loans associations: an approach adapted to the poorest households?

13 Jun 2017 10:39:32 GMT

To improve preparedness and prevention of drought risks in the agricultural and pastoral communities around Lake Fitri in Chad, Solidarités International implemented a project between 2013 and 2016 that endeavoured to strengthen their capacities for resilience. One of the activities more specifically concerned women and addressed their need to access credit in order for them to launch merchant activities: Solidarités International supported the creation of 15 Village Savings and Loans Associations (VSLA), based on the existing tontine model and inspired by VSL Associates’ methodology. The associations are made up of between 15 and 30 members, are presided over by internal regulations drawn up by its members and run for a cycle of 9 to 12 months. Members buy shares  on a weekly basis and are able to take out a loan with interest for up to three times their individual total savings.

This case study presents the VSLA methodology in more details, and attempts to shed light on the socio-economic profile of the members (does the activity incorporate the poorest households?), on how the latter use the loans granted, on whether participation in a VSLA can improve the resilience of member households, and on the determinants of success.

Pension funds in Chile: bringing the state back in

06 Jun 2017 01:50:55 GMT

The Chilean reform pioneered a shift in old-age security systems away from public pension schemes on the pay-as-you-go (PAYG) basis towards individual pension schemes on capital basis and found followers in the 1990s, mostly among other Latin American countries and in Central and Eastern Europe. However, nowhere was the change so embracing as in Chile. The early 21st century saw retreat from the pension funds created on mandatory basis. Also in Chile the 2008 crisis echoed with reforms of 2008 and 2015 under the socialist president, Michelle Bachelet, which extend the social safety net as well as re-introduce publicly-administered programmes. The change seems to be internationally meaningful, also for Poland being one of the follower-countries.
This article reviews the performance of the system up to the most recent reform and presents results of pension engineering in a systematic way in attempt to estimate the scope of change.

Bringing the state back into Chile 's pension system can be viewed as a plan to subsidise total retirement benefits in order to improve the distressing rates of replacement and, in such indirect way, to support the longevity of privately-managed pension funds.

The education motive for migrant remittances: theory and evidence from India

30 May 2017 12:50:20 GMT

This paper analyses the impact of anticipated old age support, provided by children to parents, on intra-family transfers and education. The authors highlight an education motive for remittances, according to which migrants have an incentive to invest in their siblings’ education via transfers to parents, in order to better share the burden of old age support.

The authors theory shows that in rich families, selfish parents invest optimally in children education, while in poor families, liquidity constraints are binding and education is fostered by migrant remittances. The authors test these hypotheses on Indian panel data. Identification is based on within variation in household composition.

The research finds that remittances received from migrants significantly increase with the number of school age children in the household. Retrieving the effects of household characteristics shows that more remittances tend to be sent to poorer and older household heads, confirming the old age support hypothesis.

Demographic changes in Latin America: the good, the bad and ...

30 May 2017 12:27:27 GMT

The paper develops a simple, integrated methodology to project public pension cash flows and healthcare spending over the long term. The authors illustrate its features by applying it to the LAC5 (Argentina, Brazil, Chile, Colombia and Mexico), where public spending pressures are expected to increase significantly over 2015-50 due to demographic trends and rising healthcare costs. The paper simulates alternative pension reforms, including the transition from a defined benefit to a defined contribution pension system and the fiscal burden of a minimum guaranteed pension under the latter. We also analyse public healthcare outlays in the LAC5, which is likewise expected to increase significantly over 2015-50 due to ageing and the so-called excess cost growth factor of healthcare services, showing that curbing the evolution of the latter (e.g., through enhanced competition in the healthcare sector) could aid in containing spending pressures. Despite its simplicity, the methodology yields projections that compare well with other approaches. It therefore provides a good benchmark for assessing alternative reform scenarios, particularly in data-constrained countries.

All in all, to tackle the negative impact of societies’ ageing on these economies’ fiscal balance, some reforms appear necessary. Argentina and Brazil might consider an increase in the retirement age and a reduction in the indexation of benefits, which appear to be very effective reforms to address the rising level of pension spending in the authors  estimations, or a shift to a Defined Contribution (DC) system (either total or partial), following other Latin-American examples. More generally, governments will also have to deal with healthcare expenditure pressures associated with ageing and the rapid growth in healthcare costs stemming from technological innovation (as reflected in the so-called excess cost growth factor), requiring careful but expedient evaluation of alternative reform options.

Fiscal challenges of population aging in Brazil

23 May 2017 11:26:55 GMT

In recent decades, population has been aging fast in Brazil while old age pensions and healthrelated spending have increased. As the population ages, the spending trend threaten to reach unsustainable levels absent reforms. Increasing the retirement age is key, but by itself will not provide sufficient savings to close the pension system financing gap, and reforms reducing replacement rates are necessary. In the area of health, there is scope for improving expenditure efficiency by strengthening outpatient care and regional networks, and developing clinical guidelines for cost-effective treatments and drugs. Reforms are urgent, so that they can be gradual.

Explaining low employment rates among older women in urban China

11 May 2017 11:21:45 GMT

In China, the employment rate among middle-aged and older urban residents is exceptionally low. For example, 27% of 55-64-year-old urban women were in work in 2013, compared to more than 50% in UK, Thailand and Philippines.

This paper investigates potential explanations of this low level of employment in urban China. The author documents the stylised fact that a majority of individuals stop working as soon as they qualify for a public pension, which most often happens at age 50 for women. The paper also highlights the presence of significant amounts of financial and time transfers between generations. The paper offer descriptive evidence that transfers from children are responsive to parental incomes, and that mother’s labour supply is affected by the expectation of transfers from her children. The authors builds and   and calibrates a life-cycle model of labour supply and saving. The paper concludes that both the pension system and transfers from children have large effects on female labour supply. Increasing the female pension age from the status-quo to 60 would raise the employment rate of 50-59 year old women by 28 percentage points.

South Africa’s local content policies: challenges and lessons to consider

04 Apr 2017 11:03:59 GMT

South Africa’s Industrial Policy Action Plan (IPAP) identifies local content as a strategic industrial policy instrument to leverage the power of public procurement; reduce the country’s trade deficit; address market failures; foster infant industries; and increase the
government’s tax base (the dti, 2016). Although local content is a commonly used industrial policy lever, there is no formally agreed definition of what local or content means, and this makes implementing the policy difficult.

The main problem with local content policies in South Africa is they are not leading to the desired level of procurement from local manufacturers. This problem persists for several reasons. Local producers often fail to compete against foreign suppliers on both quality and price, unless they are given more time to increase, improve and modify their capacity and capabilities to suit specifications. However, procurement regulations allow no space for negotiations between procurers and suppliers, leading to non-compliance by many local suppliers or total exclusion from the process. Moreover, transaction costs of locally manufactured goods are usually higher than foreign-sourced goods. The relevant systems required to measure and monitor imports and compliance on local content and procurement are inadequate, compounding the difficulty of monitoring and evaluating the policy.

Key findings from the research suggest no overarching cost and quality data on local content exists. Therefore, programmes should be established to provide suppliers with timely information on specifications, price, and quality, so that local producers can comply, and have sufficient forewarning and upgrading support. Systems to monitor imports and compliance need to be put in place, including providing a clear regulatory and legislative framework that provides a simple and concise definition of local content.

This policy brief assesses the key challenges and lessons that determine the success and failure of local content policies in South Africa. In particular, it analyses the economic rationale for using local content policies. Furthermore, the brief highlights the reasons
local content policies are not effecting the desired level of local procurement and why the problem persists, and suggests possible solutions.

Economic integration and development partnerships: Southern perspectives

28 Mar 2017 12:16:17 GMT

As part of its work programme on capacity-building among developing countries on global and regional economic issues RIS has been conducting its flaghship Capacity-Building Programme on International Economic Issues and Development Policy (IEIDP) under the ITEC/SCAAP programme of the Ministry of External Affairs.
The programme is aimed to inculcate in participants enhanced understanding on challenges and opportunities associated with the processes of globalization and development. It is also designed to expose the participants to the growing complexities of global economic issues and negotiations and to build their analytical skills to deal with them. In this year’s programme, conducted from 13 February-10 March 2017, 33 participants from 25 countries took part.
The participants enthusiastically engaged in technical sessions and group discussions. They identified critical areas to deliberate upon and eventually come up with status papers highlighting regional and global contexts and country experiences.
Based on individual areas of expertise and inclination, they formed five thematic groups. This report comprises of contributions from each group:
  • Drivers and Experience of Regional Integration in Asia and Africa
  • South-South Cooperation: Select Country Experiences
  • Financing for Development: Developing Countries’ Perspectives
  • Economic Growth of Developing Countries in the Globalization Context:  Lessons from some Developing Countries
  • SDGs in Post-Truth: Do SDGs Matter for Developing Countries?

South African banks footprint in SADC mining projects: environmental, social and governance principles

23 Mar 2017 10:58:34 GMT

Environmental,  social  and  governance  (ESG)  concerns  are  an  increasingly  important  factor worldwide for banks when they invest in large projects. In the Southern African region with its rich mineral deposits, this trend has added importance. Mining companies extract minerals from the ground, and their activities routinely give rise to public concerns about the pollution of water sources, adequate land for agriculture, and fair community participation in mining projects. South African law accepts that the directors of corporations such as banks have fiduciary obligations to act in the best interests of shareholders.

Given the importance of mining activity to economies in Southern Africa an important question aligned to this fiduciary duty is this: Are banks when conducting business obliged to act in the best interests of stakeholders affected by the activities of the mining companies they fund? The trite response is that banks have recognised their obligations to communities through their commitment to SRI (socially responsible investment) practices and internal ESG processes that ensure that their funding decisions result in no harm to communities.

This paper sets out to critically consider the effectiveness of ESG principles implemented by South Africa’s banks when they fund mining projects in the SADC region. There are internal differences  in  ESG  principles  between  banks,  and  a  variety  of  funding  methods  to  which  the principles  are  applied. The study evaluates the ESG frameworks used by each bank and, given the significant market share, aggregates this information to present a picture of the effectiveness of  these  frameworks. The approach taken is a critical one, meaning that what is presented in bank annual reports and sustainability reports is not merely accepted, but (to the extent possible) internal ESG risk frameworks are interrogated for adequacy of application by banks when funding mining  projects. The effectiveness of the implementation of internal ESG  procedures  by banks is then measured against available evidence. This evidence includes the effects of mine project  funding  decisions  of  banks  on  ESG  categories  as  ascertained  from  public  information.  

After consideration of the evidence, observations and conclusions are provided on the analysis. In the closing section, recommendations are provided on areas for possible focus to improve the effectiveness of ESG principles used by banks in the SADC region.

A practical agenda to reducing technical barriers to trade in SADC

14 Mar 2017 02:19:31 GMT

Technical regulations refer to product and process specifications, whether voluntary (standards) or legally required (compulsory specifications).

This policy brief provides context for technical regulation in the Southern African Development Community (SADC) region. It then offers some cross-cutting solutions for developing monitoring mechanisms that can allow policymakers to identify problem areas, and some specific interventions for the Standards, Accreditation and Metrology functions that can build capacity at low cost. It provides some recommendations for a practical agenda on reducing Technical Barriers to Trade (TBTs) in the SADC – ones that can be executed with minimal cost, and that improve the institutional capacity of regional organisations to grapple with the complexity inherent to the field. Above all, these regulations will need to be carefully attuned to assure that they provide the maximum protection for the region from dangerous substandard imports, while still allowing for a dynamic, mutually beneficial trading relationship.

Technical regulation cannot create jobs, but it is a vital underpinning for the type of policies that drive regional integration and create industrial jobs. As it stands, Southern Africa’s technical regulation is developing too fast, with too few controls to ensure that it is directed towards developmental purposes. Capacity expansion that simply results in ever more standards being churned out increases complexity,
but not quality. Practical interventions that create supporting mechanisms – such as monitoring systems, or assistance for firms seeking accreditation – are essential to creating a development-focused regional technical infrastructure.

Living arrangements and conditions of older persons in Namibia

21 Feb 2017 10:58:11 GMT

In Africa, ageing is a phenomenon that is just beginning to reveal its shape; at present, it is a family concern. Although sub-Saharan Africa’s older population is not as large in size as in other regions of the world, it must still be considered as a potential cause for concern since Africa is ageing at a time when its resources are being depleted.

In Africa, ageing is a phenomenon that is just beginning to reveal its shape. Most governments, including the Namibian government, recognize the fact that the number of older persons is on the increase, however, discussing it is still a distant phenomenon and family matter. This paper examines the living arrangements of older adults in Namibia, identifying the existing structure of living arrangements and the nature of family relationships of older people, as well as provides some basic descriptive information on the housing conditions in which older persons live and how they are associated with their socioeconomic and demographic factors. The analysis is based on 1991, 2001 and 2011 Namibia Population and Housing Censuses. The study concluded that living arrangements is constantly changing from extended family pattern to western nuclear family, mainly due to urbanisation and decreased fertility rate. Housing conditions had notably improved in rural areas while in urban areas the conditions are affected by the mushrooming of informal settlements. There is need to encourage or conduct focused research on ageing to help coin policies based on evidence and make communities sensitive towards ageing. The study further recommends Government to encourage old people to form organisations that would in turn focus on sensitising and help championing issues of ageing and aged persons.

Repositioning Chinese development finance in Latin America: opportunities for green finance

21 Feb 2017 02:46:19 GMT

China is one of the largest creditors of Latin American and the Caribbean and has loaned the region more than $125 billion since 2005. However, the  composition of China’s financing in the region has been concentrated in commodity related sectors that are currently on the decline.

This policy brief notes the extent to which Chinese finance is concentrated in new green economy sectors, and finds that China is not taking full opportunity of the potential in this sector. Moreover, as the global commodity boom has declined, much of China’s investments in the region have been exposed to significant risk, including prominent environmental and social risks. Despite great strides whereby the Chinese government has established a series of guidelines on greening overseas investment over the last few years, China’s development banks and companies are lacking the policies and staffing to identify and fully mitigate such risks.

This policy brief reviews the green profile of Chinese development finance in LAC and analyses environment related risks and policies for Chinese overseas investment. It also outlines the opportunities of green finance in LAC and how blending instruments can mobilise green financial flows that are beneficial for both China and LAC.

The political economy of social protection policy uptake in Nigeria

21 Feb 2017 02:22:22 GMT

None of the recent efforts to study social protection in Nigeria have provided a detailed description of the political economy factors that enhance and prevent the uptake of social protection policies.

This study used qualitative and quantitative strategies within a political economy framework to explore the emergence and trajectory of these policies. Primary data were derived from field interviews and a survey of beneficiaries in six states selected from the six geopolitical zones in the country.

There is no overarching policy on social protection in Nigeria currently. There are pilot programmes led by the federal government and other programmes implemented in an ad hoc manner at state level. Political differences and competition between the state and federal governments have partly accounted for the slow pace in adoption of social assistance programmes. An uptake in social protection may occur only if the political leadership is convinced that it is sustainable and would enhance their political fortune.

Social assistance needs to be carried out within the context of a larger social policy framework, and knowledge about social assistance programmes needs to be diffused across all sectors. The federal government and international organisations have to promote a policy
network community and support meaningful evaluation of the existing programmes to make citizens and policy stakeholders appreciate social assistance as an effective instrument of poverty alleviation and social transformation.

Conditional cash transfers in Africa: limitations and potentials

21 Feb 2017 01:52:11 GMT

Conditional Cash Transfers (CCTs) are currently amongst the most popular social protection programmes for addressing
poverty, vulnerabilities, and risks of poor individuals, households and communities in developing Latin American, African, and Asian countries.
However, the increasing popularity and adoption of CCTs in Africa have remained highly understudied in comparison to CCTs in Latin America where they originated in the late 1990s and early 2000s. For this reason, this policy brief discusses some of the current limitations and potentials of CCTs as social protection programmes for reducing poverty and developing the human capital of poor individuals, households, and communities in African countries.

The brief begins with an overview of CCTs in general with special reference to Africa in particular. It then examines some of the limitations and potentials of CCTs on the continent.
  • African countries seeking to adopt CCTs should design, implement, and adapt such programmes with due consideration to the propriety and much needed institutional training for state and non-state officials
  • provision of adequate supply-side facilities such as quality schools and healthcare centres should be a condition for implementing CCTs and no community should be excluded from participation for lack of such facilities
  • the eligibility period for participating individuals, communities and households in CCTs should reflect the amount of time needed to fulfil basic education and healthcare needs as appropriate. Universal coverage of all those in need within each community must also supersede limited coverage
  • adequate planning and institutionalisation of programmes should be done to ensure ownership and sustainability of CCT programmes, especially in countries where programmes are funded mainly by donors. But appropriate partnership agreements for overall developmental and social protection purposes should be explored as necessary

Work, family and social protection: old age income security in Bangladesh, Nepal, the Philippines, Thailand and Vietnam

17 Feb 2017 12:45:16 GMT

How does growing older affect a person’s income security in Asia? This question is becoming increasingly urgent in the context of rapid population ageing in the region, yet relatively limited comparative analysis has tried to answer it. This report aims to fill the gap by providing a comparative investigation of the income security of older people in five Asian countries that have diverse contexts; namely, Bangladesh, Nepal, the Philippines, Thailand and Vietnam.

The report paints a picture of the multiple sources of income that contribute to income security in old age and how they interact. This has been done by mining existing survey data in each country to explore three key sources of income for older people: work, transfers from family and social protection. This marks a departure from most previous analysis of old age income security which has focused on age-disaggregated poverty data – which can only provide a relatively superficial picture of the issue. As well as providing new insights, this study highlights many weaknesses of existing data on ageing and points out opportunities for improvements in data collection and analysis.

Egypt’s new IMF deal comes with a huge price tag for human rights

17 Feb 2017 03:14:27 GMT

The government of Egypt has sealed a loan deal with the IMF following four years of negotiations. The impacts of the structural adjustment reforms associated with the loan raise strong human rights concerns, particularly for the status of economic and social rights in the country; aggravating employment conditions, the right to education, healthcare and to social protection.
The aim of the extended fund facility programme with Egypt is to restore stability and confidence in the economy. To do this, the programme supports the "government's home-grown comprehensive economic reform plan". This plan includes a range of monetary and fiscal reforms that first seek to reduce public spending, including by reforming the civil service and by reducing the public sector's role in the provision of subsidised social services. The second aim of these reforms is to increase state revenue, including by introducing a value-added tax (VAT) and by liberalising the exchange rate to shore up the country's foreign reserves and encourage foreign investment.
There are a number of alternative policy choices the Egyptian government can make with the support of the IMF to help address the country's economic crisis. These would avoid such huge social cost and meet international human rights obligations, offering a blueprint for a fair and equitable economic model, as has been affirmed by various UN bodies in recent years.
Actions to implement these recommendations could include public efforts to reform and revive the productive capacity of the state, so as to provide the foundation for a development model based on decent work and fair wages. A human rights approach to subsidy reform can also guide the government towards building a social protection model that would effectively contribute to the eradication of extreme poverty.

Population aging in India: facts, issues, and options

10 Feb 2017 10:58:43 GMT

India, one of the world’s two population superpowers, is undergoing unprecedented demographic changes. Increasing longevity and falling fertility have resulted in a dramatic increase in the population of adults aged 60 and up, in both absolute and relative terms. This change presents wide-ranging and complex health, social, and economic challenges, both current and future, to which this diverse and heterogeneous country must rapidly adapt.
This chapter first lays out the context, scope, and magnitude of India’s demographic changes. It then details the major challenges these shifts pose in the interconnected areas of health, especially the massive challenges of a growing burden of noncommunicable diseases; gender, particularly the needs and vulnerabilities of an increasingly female older adult population; and income security.
This chapter also presents an overview of India’s recent and ongoing initiatives to adapt to population aging and provide support to older adults and their families. It concludes with policy recommendations that may serve as a productive next step forward, keeping in mind the need for urgent and timely action on the part of government, private companies, researchers, and general population.

Parental background and child human capital development throughout childhood and adolescence: evidence from four low- and middle-income countries

09 Feb 2017 01:29:47 GMT

Although there are a vast number of empirical studies documenting a strong positive link between parental socio-economic status (SES) and child outcomes, we do not know whether these associations remain robust when other parental background dimensions are controlled.

This working paper investigates the association of child human capital indicators with a wide range of parental background dimensions across four low- and middle-income countries, and at different stages of childhood and adolescence, using data from the Young Lives cohort study in Ethiopia, India, Peru, and Vietnam.

The key finding is that parental income is strongly and positively associated with child nutritional status and cognitive achievement across all countries and at all stages of childhood and adolescence, even after controlling for other background dimensions, but the same does not hold for parental education. Child non-cognitive skills across all countries and at different ages, however, are mostly predicted by the mother’s personality traits reflected in her non-cognitive skills, social capital, and aspirations for the child’s education. Associations of parental background factors with child human capital measures do not change systematically with child age, except that mother’s aspirations for child education exhibits a positive association with child cognitive and non-cognitive skills that is increasing in child age across countries.

Overall, the results suggest that policies that seek to improve the material circumstances of the household and mother’s education and socioemotional competencies may be effective in promoting child cognitive and socioemotional development in low- and middle-income countries.

Russian BRICS Presidency: models of engagement with international institutions

07 Feb 2017 04:24:37 GMT

Six years after the first summit in 2009 in Yekaterinburg, the BRICS grouping of Brazil, Russia, India, China and South Africa has established its identity as an informal global governance forum. The members have consistently consolidated their cooperation, expanded and deepened their agenda, coordinated their efforts aimed at the recovery and growth of their economies, and developed their engagement with other international organizations. This work continued during the Russian presidency in 2015.

This article focuses on one dimension of BRICS performance: its engagement with international organizations. There are at least three reasons defining the relevance of this analysis:
  • from its launch, the BRICS collectively pledged to build a multipolar, fair and democratic world order, which cannot be attained without cooperation with the key international organizations
  • the objective of enhancing sustainability, legitimacy and effectiveness of the global governance architecture defines the need for the summit institution to rely on a flexible combination of models of engagement with other international institutions
  • according to the concept note published by Russia on its BRICS presidency, one of its priorities was a transition to a qualitatively new level of engagement with international organizations.
The analytical framework for the study builds on the theory of rational choice institutionalism. The calculus approach fits the analysis of summit institutions bringing together states from a wide range of cultures, continents and economic development. Its distinctive features clearly apply to the analysis of the origin and performance of the BRICS. First, members act in a highly strategic manner to maximize the attainment of their priorities. Second, summitry presents an arrangement for strategic interaction among leaders to determine the political outcomes. Third, rational choice institutionalism offers the greatest analytical leverage to settings where consensus among actors accustomed to strategic action and of roughly equal standing is necessary to secure institutional changes – the features typical of summit institutions. Fourth, the institutions are created by the voluntary agreement of the respective countries’ leaders to perform specific functions and missions.

In order to maximize benefits from the new arrangement, the founders may choose to engage voluntarily with
existing institutions in a mode they regard as most efficient. The summit institution members’ choice of partners, modes and intensity of engagement is accepted to be strategic, intentional and voluntary, aiming to compensate for efficiency in their performance. The models of engagement are not mutually exclusive but coexist, with their choice dependent on the policy area and type of organization. The models of engagement with the other international organizations reflected in the leaders’ discourse indicate their place and role in the global governance architecture, imputed to them at their launch and subsequent evolution.

The study applies qualitative and quantitative methods. Drawing on the content analysis of the BRICS documents, the author tracks dynamics of BRICS engagement with multilateral organizations and main models of engagement, comparing them with the previous summits.

Fostering inclusive growth in Malaysia

07 Feb 2017 04:10:17 GMT

Malaysia has followed a comparatively equitable development path, largely eliminating absolute poverty and greatly reduced ethnic inequality. Income and wealth inequality have gradually declined since the mid-1970s. With the “people economy” at the centre of Malaysia’s ambition to become a high-income country by 2020, the focus is shifting to the challenges of relative poverty and achieving sustainable improvements in individual and societal well-being through inclusive growth. This shift would be aided by reforms in several policy areas where Malaysia may compare favourably within its region but less so relative to OECD countries. This includes reforms to increase access to quality education, provide comprehensive social protection, raise the labour force participation of women and older persons, maintain universal access to quality public healthcare, improve pension system sustainability and adequacy and
move towards a tax and transfer system that does more for inclusiveness.

Own ways of doing: national pride, power and China’s political calculus in Ethiopia

27 Jan 2017 04:09:04 GMT

China’s evolving position as a key economic actor in Africa, a diplomatic heavyweight in local conflict resolution and a new entrant into peacekeeping, security co-operation and capacity building, illustrates significant policy changes with potentially profound implications for the continent. Mostly unencumbered by Western normative agendas and a concomitant need to reconcile these with its commercial interests, the Chinese government (along with Chinese enterprises) had pursued a mercantilist agenda that seemingly only required local elite compliance to succeed. However, as a result of China’s failure to sufficiently grapple with the intricacies of various political contexts, the early blush of success in places such as Sudan quickly devolved into situations of great complexity, potentially threatening the commercial viability of investments, the lives of Chinese citizens and the country’s international reputation. Against this increasingly volatile backdrop, the pressure on China to devise an approach that mitigates these challenges without unnecessarily exposing the country to greater risks in the process, has become a formidable policy imperative. By embracing multilateralism while cautiously expanding its co-operation with and capacity building of African regional initiatives, Beijing hopes to have devised a winning strategy for securing future engagements across the continent and elsewhere. Yet the African terrain remains complex and unfamiliar, forcing China to pragmatically engage with specific contexts and learn by doing. This opens up a space for a broader conversation with other external partners of the continent (at both a national and a multilateral level) to explore avenues of engagement. In this broader scheme of shifting dynamics, China’s quickly expanding links with Ethiopia offer a contextualised portrait of activities that extend beyond purely economic interests and outcomes. While neither resource rich nor an economic powerhouse at the scale of Nigeria or South Africa, Ethiopia is among the top Chinese foreign direct investment (FDI) and loan recipients in Africa. Given its strategic position within a vast geographical zone of conflicts and its increasingly active role in regional peacekeeping missions, Ethiopia plays an important part in the foreign policies of the EU, the US and, more recently, China. By focusing on peace and security, human security and governance capacity building, this paper explores the nature of political culture and concepts of power in Ethiopia, while examining the ways in which China, as a foreign partner, navigates this complex political landscape (both domestically and regionally) as it seeks to expand both its foothold and bargaining power. The first part unpacks the complexity of domestic politics in Ethiopia, as this provides the basis for the country’s unfolding relationship with China and Chinese actors. The second part outlines the key areas of Chinese economic involvement while critically engaging with the idea of ‘infrastructure for diplomatic support’. The last part looks at China’s political influence, both at a domestic level through regular exchanges with the ruling party and, increasingly, at a regional level via engagements with the AU and other regional institutions.[...]

Indian economy and demonetisation: way forward

20 Jan 2017 02:51:40 GMT

The delegalisation of the two highest value currency notes announced by Indian government on November 8th 2016 has created an impact on the economy at a scale which no other piece of policy has rivalled for a long time.
This brief tlooks at the rationale of the measure and scans it for lessons learnt. The analysis will also pay particular attention to the role of digital money and corresponding role of paper money.

There are also two more concerns which are touched upon in this study:
  • globally the subject of cash as a physical currency versus its arrival as an electronic medium has become very relevant in the 21st century. One of the first large scale application of the principle was through the launch of Bitcoin. More such, are in the offing. Those create a vast and undefined region for economic analysis to venture into
  • at a more basic level as economies of Asia and, particularly Africa find themselves rising up the growth path, they have been assailed by the impact of inequality and corruption that a growing economy without sufficient regulatory control are subjected to. The medium for such deviant practices are often based on manipulation of the cash economy.
Does the Indian demonetisation experiment have any lessons to offer in this context?

Financing Universal Access to Electricity

11 Jan 2017 05:21:27 GMT

The recent emphasis on the provision of modern energy services as an important ingredient for development has improved finance availability for the goal of Sustainable Energy for All (SE4ALL).

However, existing financial flows are still insufficient to meet the target of universal access of sustainable energy by 2030 and often ignore poor people, who cannot afford the service, or those renewable energy technologies that cannot offer high rates of return.

Drawing on a large dataset of official development assistance and private investment for electrification between 1990 and 2012, our research has looked at the factors that explain donor and private finance in the electricity sector of developing countries. What lessons can be taken and shared with policymakers to avoid past mistakes and target countries and technologies that have been neglected in previous efforts?

South Africa's trade and investment relationship with the United States post-AGOA

06 Jan 2017 04:12:54 GMT

The African Growth and Opportunity Act (AGOA) has been recognised as the  cornerstone of America’s engagement with Sub-Saharan Africa for the past 14 years. It is therefore central to an  understanding of the South Africa-US trade relationship. The recent extension of AGOA by  a further 10 years presents many  opportunities for improving that trade relationship and expanding economic ties. There are, however, areas for  caution, as was seen in the debates around the extension of AGOA and the terms of the inclusion of South Africa as a beneficiary of AGOA.

This policy brief considers the three main options available to South Africa in a post-AGOA trade and investment relationship with the United States: to stay in AGOA, negotiate a Free Trade Agreement, or fall back on Most Favoured Nation terms and the Generalized System of Preferences.  

Partnering with the New Development Bank: what improved services can it offer Middle-Income Countries?

06 Jan 2017 03:15:42 GMT

Multilateral development banks increasingly struggle to respond effectively to the needs of middle-income countries, influencing not only their potential development impact but also their own financial stability. This challenge has been driven by a changing external environment, including additional competition from other financiers, the changing needs of middle income countries and institutional constraints. Business processes that deter greater borrowing by countries, especially in the presence of other financiers with less strenuous requirements, also contribute to this situation. These include lengthy loan approval processes, limited use of in-country management systems and sensitivities around environmental and social safeguards. There is also a need for greater responsiveness and an emphasis on the importance of knowledge services. This paper highlights some of these challenges and offers some alternative solutions. The New Development Bank, as a new entrant to the development finance milieu, will do well to draw on the experiences of existing multilateral development banks to improve its offerings to countries.

Illicit financial flows estimating trade mispricing and trade-based money laundering for five African countries

06 Jan 2017 03:05:49 GMT

Illicit financial flows (IFFs) are garnered through the proceeds of illicit trade, trade mispricing, transfer pricing and other forms of organised profit-motivated crime. This paper focuses on the commercial tax evasion component of illicit financial flows (IFFs), clarifying concepts often used interchangeably, namely transfer pricing, abusive transfer pricing, trade mispricing (or trade mis-invoicing), trade-based money laundering (TBML), tax evasion and tax avoidance. It also shows how they link to IFFs. It estimates the extent of trade mispricing by enhancing the model currently used by Global Financial Integrity, and by developing a TBML model as a means of quantifying IFFs between two developing countries. There are data challenges with this methodology, as it is an estimation of illegal or hidden activities, using the International Monetary Funds Direction of Trade methodology.

The research points to declining trade mispricing in South Africa and Zambia for the period 2013-2015, and Nigeria for the period 2013-2014. Morocco and Egypt exhibit increasing trade mispricing from 2013 to 2014. The TBML model, which addresses the criticism regarding flows between two developing countries, points to increasing financial outflows for all five countries. These flows mean less revenue is available to the fiscus to invest in socio-economic infrastructure and pro-poor growth strategies, which would benefit women and the poor. Policy recommendations address commercial tax evasion as well as proposals to remedy the data anomalies.

Improving infrastructure finance for Low-Income Countries: recommendations for the ADF

06 Jan 2017 02:48:36 GMT

Low-income countries (LICs) in sub-Saharan Africa face a substantial infrastructure-financing gap. multi-lateral development banks (MLDBs) have traditionally played an important role in mobilising finance for infrastructure in LIcs, but their funding alone cannot match demand. the african development Bank’s (AfDB) concessional window, the african development fund (ADF), is a key infrastructure financier for african LICs, and comprises 37 regional member countries (RMCs), including emerging markets and fragile states. however, in recent years the ADF has faced funding and technical constraints.

This policy brief, based on a discussion paper, outlines the ADF’s role in providing infrastructure financing to LIcs and the challenges that countries face in accessing these funds. It also examines the changing context confronting LIcs as they weigh their infrastructure demands against the requirement to maintain sustainable debt levels. Lastly, the brief explores the challenges and opportunities of mobilising additional finance for LICs.

Policy recommendations:

  • in order to target growing international concerns around debt sustainability, the ADF should increase its efforts to work with countries in understanding and managing their debt levels
  • the ADF should continue to streamline its approval and implementation processes, targeting national capacity bottlenecks as early as possible and ensuring the continuity of AfDB officials from the appraisal to monitoring stages
  • the ADF should direct efforts towards increasing LIC awareness and understanding of its private finance mobilisation tools through greater promotion and dissemination of information, and should increase technical support and training for PPPs. It should place greater focus on measuring the developmental impacts of projects, especially where the private sector is involved
  • project preparation requires more ADF funding, and the ADF’s PPF should explore cost recovery mechanisms to ensure sustainability. LIC governments should create better co-ordination and unified support around proposed projects to decrease risks
  • LICs should be assisted in accessing the non-concessional ADB funds available to them

Recommendations of the Task Force on Climate-related Financial Disclosures

03 Jan 2017 10:11:21 GMT

One of the most significant, and perhaps most misunderstood, risks that organisations face today relates to climate change. While it is widely recognized that continued emission of greenhouse gases will cause further warming of the planet and this warming could lead to damaging economic and social consequences, the exact timing and severity of physical effects are difficult to estimate. The large-scale and long-term nature of the problem makes it uniquely challenging, especially in the context of economic decision making. Accordingly, many organizations incorrectly perceive the implications of climate change to be long term and, therefore, not necessarily relevant to decisions made today. The potential impacts of climate change on organizations, however, are not only physical and do not manifest only in the long term. To stem the disastrous effects of climate change within this century, nearly 200 countries agreed in December 2015 to reduce greenhouse gas emissions and accelerate the transition to a lower-carbon economy. The reduction in greenhouse gas emissions implies movement away from fossil fuel energy and related physical assets. This coupled with rapidly declining costs and increased deployment of clean and energy-efficient technologies could have significant, near-term financial implications for organizations dependent on extracting, producing, and using coal, oil, and natural gas. While such organizations may face significant climate- related risks, they are not alone. In fact, climate- related risks and the expected transition to a lower-carbon economy affect most economic sectors and industries. While changes associated with a transition to a lower-carbon economy present significant risks, they also create significant opportunities for a broad range of organizations focused on climate change mitigation and adaptation solutions. Because this transition to a lower-carbon economy requires significant and, in some cases, disruptive changes across economic sectors and industries in the near term, financial policymakers are interested in the implications for the global financial system, especially in terms of avoiding severe financial shocks and sudden losses in asset values. Potential shocks and losses in value include the economic impact of precipitous changes in energy use and the revaluation of carbon-intensive assets—real and financial assets whose value depends on the extraction or use of fossil fuels. Given such concerns, and the potential impact on financial intermediaries and investors, the G20 Finance Ministers and Central Bank Governors asked the Financial Stability Board to review how the financial sector can take account of climate- related Recommendations of the Task Force on Climate-related Financial Disclosures iiiissues. As part of its review, the Financial Stability Board identified the need for better information to support informed investment, lending, and insurance underwriting decisions to improve understanding and analysis of climate-related risks and opportunities, and over time, to help promote a smooth rather than an abrupt transition to a lower-carbon economy.[...]

Foreign investment promotion and domestic protection: a balancing act

16 Dec 2016 10:00:00 GMT

South Africa has experienced sluggish economic growth over the last four years. Real gross domestic product (GDP) growth has fallen steadily since 2011, and was down to 1.4% in 2015 and was predicted to drop by another 0.1% in 2016. This depressed economic performance is heavily influenced by the global economic recession and exacerbated by falling demand from China for raw materials such as coal and minerals, the destination of roughly 40% of South Africa’s total exports. Skyrocketing energy costs and shortages due to an aging electricity infrastructure as well as labour market rigidity and instability have also contributed to this low growth trend.
Given South Africa’s high levels of unemployment and inequality, the country can ill afford such low levels of growth. South Africa has a historically low savings rate and external financing needs of above 10% of total public expenditure; as such foreign direct investment (FDI) can be an important vehicle to help reverse this trend and bring future economic growth.
This paper analyses south africa’s relationship with sustainable inward foreign direct investment (FDi). it examines south africa’s balancing act of promoting FDi that brings inclusive economic development while remaining an attractive FDi destination for investors. it first gives a brief overview of south africa’s current FDi context, with particular focus on the dynamics of international mergers and acquisitions and how south africa’s competition and domestic policy frameworks affect these types of investments. Walmart’s acquisition of Massmart is employed to demonstrate the challenge of ensuring that FDi has positive spillover effects for south africans within the context of increasingly globalised production chains. Ultimately, the paper focuses on south africa’s future path towards more sustainable FDi, and the last section therefore analyses the government’s current efforts to create a domestic FDi regulatory framework. it then explores additional efforts to promote sustainable FDi such as the one-stop shop for investors and new public interest guidelines for competition, as well as prospects for a mechanism to support small, medium and micro-sized enterprise suppliers.

The BRICS initiatives towards a new financial architecture: an assessment with some proposals

25 Nov 2016 04:11:53 GMT

It is heartening, the author of this paper argues, to observe that developing countries, led by China and other BRICS members have been successful to organise alternative sources of credit flows . aiming for financial stability, growth and development. Setting a goal to avoid the IMF type of loan conditionalities and the dominance of US dollar in global finance, these new institutions provide a much needed turn in the global financial architecture, especially in the background of the on-going demands for austerity as are currently imposed on Greece by the troika of IMF, the ECB and the EU. It is rather ironic that the Western financial institutions as well as the EU are not in a mood to provide any option to Greece short of complying with the disciplinary measures as a pre-condition for Greece to continue with the Eurozone and its common currency, the Euro.

Limitations of the on-going global financial architecture at command of the IMF and its member nations in the OECD brings to the fore the need for new institutions which can provide alternative solutions. The launch of the financial institutions by the BRICS seem to chart out an alternative route which may turn out as superior in achieving a superior global financial order.

The BRICS financial institutions, along with the proposed clearing account will herald a new set of financial architecture which has the potential to be beneficial, not just for the BRICS but for global financial system at large. Since those settlements will not rely on dollar or other major currencies as unit of account, exchange rate fluctuations across such currencies will not impact the cross rates between the individual BRICS currencies as long as kept frozen with forward contracts renewed over time.

Arrangements to use the trade surpluses of individual BRICS members, by those in deficit would add to demand within the BRICS by creating new channels for intra-BRICS trade. The transfer of surpluses to meet deficits can even be treated as a loan , to be adjusted to similar other transactions of the NDB.

Moreover, trade surpluses earned by individual members (say China) will remain within the Brics as investment and will not be used as assets in US dollar , avoiding sources of vulnerability. Finally the Brics may devise ways and means to channelize the capital flows in a manner which strengthens the Brics institutions and generate real demand, say with infrastructures, rather than spurious activities of a speculative nature.


Population aging in India: facts, issues and options

24 Nov 2016 10:29:28 GMT

India, one of the world’s two population superpowers, is undergoing unprecedented demographic changes. Increasing longevity and falling fertility have resulted in a dramatic increase in the population of adults aged 60 and up, in both absolute and relative terms. This change presents wide-ranging and complex health, social, and economic challenges, both current and future, to which this diverse and heterogeneous country must rapidly adapt.

This paper first lays out the context, scope, and magnitude of India’s demographic changes. It then details the major challenges these shifts pose in the interconnected areas of health, especially the massive challenges of a growing burden of noncommunicable diseases; gender, particularly the needs and vulnerabilities of an increasingly female older adult population; and income security.

The paper also presents an overview of India’s recent and ongoing initiatives to adapt to population aging and provide support to older adults and their families. It concludes with policy recommendations that may serve as a productive next step forward, keeping in mind the need for urgent and timely action on the part of government, private companies, researchers, and general population.

The New Development Bank: towards greater efficiency

18 Nov 2016 01:53:20 GMT

Multilateral development banks (MDBs) increasingly struggle to respond effectively to the needs of middle-income countries (MICs). This has influenced not only their potential development impact but also their own financial stability. Part of the challenge has been internal business processes that deter greater borrowing by countries, especially in the presence of other financiers with less strenuous requirements. These processes include lengthy loan approval processes, limited use of in-country management systems and sensitivities around environmental and social safeguards. There is also a need for greater responsiveness and an emphasis on the importance of knowledge services.

This policy briefing (drawing on a more in-depth discussion paper) highlights some of these challenges and offers some alternative solutions. The New Development Bank (NDB), as a new entrant to the development finance milieu, will do well to draw on the experiences of existing MDBs to improve its offerings to countries.


  • by simplifying and decentralising loan approval processes or creating simplified and standardised procedures for loans, MDBs can be more efficient, making their services more attractive to borrowing countries
  • the NDB cannot divorce its operations from global discourse and pressures (from countries and non-state actors alike) related to environmental and social safeguards and should ensure adherence to international best practices
  • there is a clear preference for the use of country systems from borrowing countries and thus the UCS approach should be prioritised. Where countries lack capacity, the NDB should provide the additional capacity-building support
  • technical knowledge sharing should be a priority focus area of the NDB, as such services are greatly valued by borrowers, more so than ‘soft’ knowledge services such as reports or databanks
  • to ensure greater inclusive development, the NDB needs to ensure gender considerations are included throughout the lifecycle of infrastructure financing and in institutional arrangements

Fiscal policies for diet and the prevention of noncommunicable diseases

11 Oct 2016 04:29:29 GMT

The Global Action Plan for the Prevention and Control of Noncommunicable Diseases 2013–2020, endorsed by the World Health Organization, provides a roadmap and a menu of policy options for Member States and other stakeholders to take coordinated and coherent action to reduce mortality from noncommunicable diseases (NCDs) and exposure to risk factors.To address the increasing number of requests from Member States for guidance on how to design fiscal policies on diet, WHO convened a technical meeting of global experts in fiscal policies on 5–6 May 2015 in Geneva. The main objectives of the meeting were to review evidence and existing guidance, discuss country case studies and provide considerations with regards to the scope, design and implementation of effective fiscal policies on diet. The meeting consisted of presentations and discussions during plenary and in working groups on the evidence, country experiences and technical aspects of policy design and implementation.It was concluded that there is reasonable and increasing evidence that appropriately designed taxes on sugar-sweetened beverages would result in proportional reductions in consumption, especially if aimed at raising the retail price by 20% or more. There is similar strong evidence that subsidies for fresh fruits and vegetables that reduce prices by 10–30% are effective in increasing fruit and vegetable consumption. Greater effects on the net energy intake and weight may be accomplished by combining subsidies on fruit and vegetables and taxation of target foods and beverages. Vulnerable populations, including low-income consumers, are most price-responsive and, in terms of health, benefit most from changes in the relative prices of foods and beverages.Consistent with the evidence on tobacco taxes, specific excise taxes – as opposed to sales or other taxes – based on a percentage of retail price, are likely to be most effective. In countries with strong tax administration, taxes that are calculated based on nutrient content can have greater impact. A proper situation analysis, good political advocacy, appropriate objective setting and evaluation, should be part of the multidisciplinary development and implementation of such policies. There are evidence gaps that could be addressed, with more countries developing and implementing such fiscal policies. Lack of standards or criteria for determining exactly what to tax is a challenge experienced by countries and the development of a nutrient profile model for designing and implementing fiscal policies was recommended. In addition, there was a call for a manual on developing and implementing fiscal policies for diet.It is recommended that:the report of the meeting be disseminated for use by countries as information to assist in the development and implementation of fiscal policies as appropriatethe current evidence gap – including the impact of SSB tax on improving weight and health outcomes, and ultimately the prevention of NCDs – be addressed through research and evaluation in countriesa nutrient-profiling tool be developed for use b[...]

The State of African Cities 2014: re-imagining sustainable urban transitions urban transitions

07 Oct 2016 03:42:44 GMT

The overarching challenge for Africa in the decades to come is massive population growth in a context of wide-spread poverty that, in combination, generate complex and inter-related threats to the human habitat. The main premise of this report is that successfully and effectively addressing the vulnerabilities and risks to which the African populations are increasingly being exposed may, perhaps, require a complete re-thinking of current urban development trajectories if sustainable transitions are to be achieved. This report is the third in The State of African Cities series.
It is not only Africa’s largest urban population concentrations that are becoming more prone to vulnerabilities and risks; these are actually increasing for all African settlements. This will add to the already significant social, economic and political hazards associated with Africa’s still pervasive urban poverty. The
combination of demographic pressures, rapid urbanization, environmental and climate change now appear to reinforce a host of negative urban externalities.
Ubiquitous urban poverty and urban slum proliferation, so characteristic of Africa’s large cities, is likely to become an even more widespread phenomenon under current urban development trajectories, especially given the continuing and significant shortfalls in urban institutional capacities. Since the bulk of the urban population increases are now being absorbed by Africa’s secondary and smaller cities, the sheer lack of urban governance capacities in these settlements is likely to cause slum proliferation processes that replicate those of Africa’s larger cities.
This report argues for a radical re-imagination of African approaches to urbanism, both to strengthen the positive impacts of Africa’s current multiple transitions and to improve urban living and working conditions. Africa’s population is still well below the 50 per cent urban threshold. This implies that a major  reconceptualization of its approaches to urban development can still be undertaken. Given the rapidly changing global conditions, especially those associated with environmental and climate change, looming resources scarcity and the dire need to move towards greener and more sustainable development options, Africa has the opportunity to take a global lead in innovations towards greener, healthier and more sustainable urban societies

Scoping Report: current status of index-based insurance in Bangladesh

07 Oct 2016 01:19:41 GMT

With current and anticipated increases in magnitude of extreme weather events and a declining consistency in weather patterns, particularly challenging for agriculture, there has been a growing interest in weather index-based insurance (IBI) schemes in Bangladesh. A number of weather index-based insurance products have already been tested and applied across Asia and Africa, with varying degrees of success, as a mechanism to improve livelihood security by enabling vulnerable populations to transfer risk associated with climate change, extreme weather events and other hazards. In the process, these efforts have generated important new knowledge on how these schemes can be designed and implemented for optimal results.

However, the practice of index-based insurance is still limited in Bangladesh, and the experience and knowledge generated by the different stakeholders involved needs to be better communicated.

To identify and facilitate the diffusion of knowledge and best practices in this unique field, Worldfish will hold a two-day workshop for experts and practitioners who are working on this issue in Bangladesh. This event aims to map past and present index-based insurance schemes that have been undertaken in Bangladesh, and to facilitate knowledge sharing and capacity building among relevant organizations. Prior to this event, the International Centre for Climate Change and Development (ICCCAD) has conducted this scoping study to inform the design and objectives of the two-day workshop.

China’s African infrastructure projects: a tool in reshaping global norms

06 Oct 2016 11:33:41 GMT

The resilience of China’s investments in African infrastructure has been called into question in the light of its own economic slowdown. The substantial reduction in Chinese demand for African commodities has resulted in a significant drop in commodity prices, causing an adverse economic outlook in many commodity-dependent African economies and potentially decoupling the African growth story from China’s influence and economic engagement.
This policy insights paper argues that China’s infrastructure-based economic statecraft in Africa has shown and will continue to show resilience in the face of new economic realities in the China–Africa relationship, as these projects fit into China’s broader goals of reshaping global norms.

Costs of non-cooperation in South Asia: an illustration and way forward

06 Oct 2016 01:37:17 GMT

The South Asian economic integration has remained afflicted with a narrative that is more often than not a negative one. As a part of this, the arguments put forth include the assertion that the region lacks in trade complementarities due to similarities in production structures. Therefore, the region can only compete in
products and there is limited scope for intra-regional trade.
The effect of such an argument is enormous. It has apparently led to a tendency to neglect trade integration in South Asia let alone adopting a comprehensive approach towards it, whereby trade in goods, trade in services and investment are sought to be regionally integrated simultaneously. Pakistan’s consistent postponement of Most Favoured Nations (MFN) status to India and Sri Lanka’s ever evasive approach towards Comprehensive Economic Partnership Agreement (CEPA) are but two glaring examples. The examples of Pakistan and Sri Lanka are deliberate as they both are the only two non-LDCs (Least Developed Countries) apart from India in the region.

Realising income security in old age: A study into the feasibility of a universal old age pension in Malawi

04 Oct 2016 12:15:51 GMT

Many governments in developing countries are setting up non-contributory programs to assist older people, most of whom are not covered by formal pension schemes. Malawi is no stranger to the international advancement of social security and social protection. That said, further analysis on the implementation and the role of social pensions in tackling old-age poverty was needed to inform government policy and practice.

The aim of the study was to address the knowledge gap of social pension reforms in Malawi. The study examined what has been learned from the programs operating in different African countries, and highlights the key policy and budgetary issues that arise. The study has concluded that social pensions represent an important component of an institutional foundation for old-age social protection.

There are affordable options for Malawi to begin expanding a universal pension in the coming years. Various scenarios exist for universal pensions costing a fraction of GDP, which could be financed through wider efforts to increase revenue for social protection spending. Malawi could then seek to
increase the coverage and adequacy of a universal pension as more revenue can be secured, and as the economy grows.

The path chosen will depend on the political will of the government, but a potential option would be:


  • make a start but introducing a relatively low cost scheme, such as benefit of MWK 3,720 to over 70s (a cost of 0.4 per cent of GDP). This would be in line with current levels of fiscal space, and would also allow for administrative systems to be developed gradually before rolling out to national level
  • as soon as possible, expand the scheme to all older people aged 60 years and over. This would recognise the relatively short life expectancy in Malawi, and that many of the challenges of old age can kick in relatively early
  • in the longer run, move towards a benefit level at the level of the national poverty line (approximately MWK 8,750 in 2016 prices), to ensure that no older person lives in poverty. This higher level of adequacy can be achieved both through growth of the economy, and also by devoting increased revenue to the scheme

Gone with the wind: demographic transitions and domestic saving

30 Sep 2016 09:26:57 GMT

Demographic factors are important determinants of a country’s saving behaviour. In Asia, for example, a favourable demographic transition over the last half century has supported high saving and investment rates.This study explores the relationship between demographic factors and saving rates using a panel dataset covering 110 countries between 1963 and 2012. In line with predictions from theory, this paper finds that lower dependency rates and greater longevity increase domestic saving rates. However, these effects are statistically robust only in Asia. In particular, Latin America, which is a region that has undergone a remarkably similar demographic transition, did not experience the same boost in saving rates as Asia. The paper highlights that the potential dividends arising from a favorable demographic transition are not automatically accrued. This is a sobering message at a time when the demographic tide is shifting in the world.

Deepening trade and investment relations post-AGOA: three options for South Africa

30 Sep 2016 02:39:29 GMT

As the US and Africa look to engage at the 2016 annual African Growth and Opportunity Act (AGOA) Forum under the theme of ‘Maximizing AGOA Now While Preparing for the Future beyond AGOA’, two pertinent issues come to the fore: leveraging AGOA until this programme of trade benefits expires in 2025, and considering the nature of trade relations post-AGOA.

The US is an increasingly important economic partner for South Africa: total trade has nearly doubled since the inception of AGOA in 2001, as has US foreign direct investment (FDI) into South Africa. Considering the changing global conditions over this period, such as the stalemate in World Trade Organization (WTO) negotiations, the slump in global commodity demand and prices, domestic economic stagnation and priorities of promoting export-led growth, South Africa needs to consider its future relations with the US.

This briefing highlights key measures South Africa can take to maximise the benefits extended under AGOA until its expiration. At the same time, three options are offered towards a more formalised trading arrangement with the US post-AGOA: a ‘simple’, ‘moderate’, and more comprehensive approach. These options are discussed in a prescriptive manner, highlighting the strengths and weaknesses of each approach, in the hopes of facilitating further research and discussion.

Private investment in clean energy, inclusive agribusiness and financial inclusion: evidence of impact

29 Sep 2016 12:41:17 GMT

This report, commissioned by DFID, seeks to identify what evidence exists that private investments made in clean energy, inclusive agribusiness and financial services lead to good development outcomes for the poor, especially women – with a particular focus on Asia. This paper is a rapid literature review, before deciding on whether or not to commission more detailed work. DFID is particularly interested in (a) specific suggestions that are made for how to strengthen the investments – for example, through complementary TA – so as to improve the likelihood of strong outcomes for the poor, especially women (b) gaps in the evidence base. The evidence of links between clean energy and good development outcomes for the poor was strong, although the review identified only very few rigorous impact studies. The literature highlighted the need for certain conditions to be met in order for those positive outcomes to be achieved. Financial sustainability was cited as a primary driver of development outcomes. Several studies indicated the importance of public sector intervention in clean energy investment alongside the private sector, to increase provision in poorer and rural areas and to ensure that proper standards are followed in the construction and operation of plants. For small-scale clean energy projects, the evidence indicated the importance of activities to promote their uptake, including financial services. Clean energy was seen to be of particular benefit to women but women are not properly represented in the design and implementation of small-scale clean energy projects. The evidence of links between inclusive agribusiness and good development outcomes for the poor was largely case study-based and anecdotal. The literature identifies many factors affecting the impact of inclusive agribusiness on the poor, including the assets available to the poor in value chains (including land and water) and the process of land acquisition. The literature identified elements of the design of successful inclusive agribusiness including the presence of producer organisations; innovative partnerships to help link producers to markets; pre-commercial investment to transfer assets and building capacity; and giving producers (especially women) a voice in governance and investment. Given the need for careful design, several sources emphasised the importance of ‘patient’ investment in this sector. The evidence for the impact of financial inclusion on the poor was considerably more robust than in the other two sectors, and many more rigorous impact evaluations were available. The evidence is strong for positive impacts for the poor through several different channels for private investment including savings products, improved banking technology and access to credit. In terms of barriers to successful financial inclusion, there is evidencethat[...]

The Funded Pension Scheme and economic growth in Nigeria

27 Sep 2016 04:57:12 GMT

In Nigeria however, life after retirement is dreaded by most workers. The fears of facing the future after retirement create an ambiance of disturbance among employees. Retirement is seen by workers as a transition that could lead to psychological, physiological and economic problems.

This study provided evidence on the effect of the operation of the funded pension scheme since its inception in 2004 on economic growth in Nigeria using error correction mechanism (ECM) and Ordinary Least Square (OLS) methodologies.

Findings revealed that the pension fund contributions from both private and public sectors in Nigeria increased greatly and constituted a huge investment fund in the capital and money markets. This increased liquidity in the economy and created employment opportunities as well as improvement in the investment climate.

The study concluded that with good risk and portfolio management by pension fund administrators and custodians, the contributory pension has the capacity to boost the Gross Domestic Product (GDP) in Nigeria and very convenient to retirees compared to the previous defined benefit scheme.

The study however recommended the removal of delay payment, administrative bottlenecks and corruption in the management of the pension fund in order to boost economic growth in Nigeria.

Bridging the risk modeling gap: expanding climate-related risk insurance through global risk assessment

27 Sep 2016 03:18:13 GMT

In 2015, more than 1,000 natural disasters inflicted some $100 billion worth of economic damages around the world. These natural disasters included severe storms, flooding, extreme temperatures, droughts, and wildfires—all of which are expected to increase in frequency for years to come as a result of climate change. The annual number of such extreme weather events has been increasing, with almost three times as many occurring worldwide from 2000 to 2009 as in the 1980s. Of the total economic losses endured last year from natural disasters, insurance covered only 30 percent. The majority of uninsured losses occurred in developing countries across Africa, Asia, and South America. In Asia, only 8 percent of losses from natural disasters were insured in 2015, and in Africa, only 1 percent of such losses were insured. Without such risk management tools, governments and individuals are less able to prepare for, respond to, cope with, and recover from climate-change-fueled weather events and natural disasters. While insurance can take many forms, risk management in particular includes a lack of access to innovative insurance instruments - such as parametric risk insurance, which is specifically designed to pay out quickly in the aftermath of a natural disaster. This gives countries a rapid injection of capital that can be vital in the early window before overseas assistance is effectively ramped up and delivered. To help address this shortfall, the private sector, national governments, and international financial institutions and organizations are working to build new partnerships aimed at enabling countries that are particularly vulnerable to climate change and related natural disasters to gain access to climate-related risk insurance. These efforts were given a boost in 2015, when at its annual meeting, the G7 announced a goal of expanding access to climate-related risk insurance to 400 million additional people in the most vulnerable developing nations by 2020. This would quintuple the current level of coverage throughout the developing world from 100 million people to half a billion people. In order to meet this goal of making innovative insurance and climate risk-management tools available to so many millions of new people, a critical gap in high-resolution data and cutting-edge modeling needs to be bridged. [...]

Macroeconomic policy in times of slow growth and crisis

27 Sep 2016 02:36:34 GMT

South Africa faces a series of macroeconomic challenges in the coming months that will strain its ability to address its most pressing need – more jobs. The macroeconomic policy approach taken in the recent time period largely adheres to mainstream tenets, emphasising low inflation and fiscal restraint. Since the Great Recession of 2008, however, those tenets have come under scrutiny, even by organisations such as the IMF.

High global levels of unemployment persist seven years after the onset of the crisis, underscoring the relevance of an alternative macroeconomic framework for both developed and developing countries in which the jobs deficit is the utmost priority. Among policymakers and scholars, the urgent need to stimulate employment coupled with multiple additional macro-level challenges has resuscitated attention to the importance of identifying a wider array of macroeconomic tools beyond the standard ones used in the past 25 years.

This policy brief discusses the recent macroeconomic approaches employed by the South African government with an emphasis on examination of the monetary policies adopted by the South African Reserve Bank. Their impact on the goals of employment creation and growth will be discussed. This will be followed by a review of alternative strategies potentially available to the South African government to address these challenges.

The year that shook the rich: a review of natural disasters in 2011

22 Sep 2016 10:56:57 GMT

From the earthquake and tsunami in Japan to fourteen disasters causing over a billion dollars each in damage in the United States, 2011 was particularly damaging for developed countries. Reviewing 2011’s natural disasters, this report analyses the range of disasters and lessons to be learned from those that occurred in developed countries.Key lessons:2011 was the most expensive year in terms of disaster losses in history, mostly because of a spate of disasters affecting developed countries. Globally, the economic cost of disasters in 2011 was $380 billion, of which $210 billion were the result of the earthquake and tsunami in Japan. This was 72 percent higher than the losses in 2005, the second costliest year in history of disaster-related lossesdeveloped countries were particularly hard-hit by disasters in 2011 as evidenced by floods in Australia, earthquakes in New Zealand, an earthquake/tsunami in Japan and a series of disasters in the United States. While natural disasters result in higher economic losses in rich countries, fewer people tend to be affected and loss of life is less than in developing countriesthe post-tsunami Fukushima nuclear accident in Japan poses serious questions about preparedness for technological and industrial accidents caused by natural hazards as well as questions about the safety of nuclear technologyseveral positive trends in international humanitarian response were evident in the course of 2011, including promising developments in international disaster law, greater emphasis on disaster risk reduction and preparedness, and better communications during crises, including the use of social media in disaster responsethe first famine in twenty years was declared in Somalia in mid-2011, demonstrating the deadly interaction of conflict, political instability and drought that can result in a catastrophe with high human casualtiesthe interconnections between disasters (especially mega-disasters), media coverage and humanitarian funding means that humanitarian funding tends to be directed toward disasters that have higher media coverage rather than to those with disaster-affected populations in greater need of assistanceglobal population is ageing at an unprecedented scale and yet the special needs of older people in emergencies are often neglected. In disasters such as the earthquake/tsunami in Japan and Hurricane Katrina, older people made up a disproportionate percentage of casualties. Given the fact that developing countries are also experiencing an increase in the percentage of elderly people, it is likely that a lack of focus on older persons in all phases, from planning to emergency management to post-disaster reconstruction, can result in higher fatalities among older people, long-term chronic health i[...]

Emergence of LoCs as a modality in India’s development cooperation: evolving policy context and new challenges

20 Sep 2016 03:15:10 GMT

Development cooperation is an integral part of India’s foreign policy and India has been extending cooperation to its fellow developing countries even before its independence in 1947. In present times, India’s development cooperation is manifested through its 'development compact' comprising five components, namely, capacity building and skill transfer, technology and related partnerships, development finance (which includes concessional loans and lines of credit), grants, and trade and investment. Off late, Indian extension of Lines of Credit (LoCs) through EXIM Bank of India have also become a prominent modality of Development Cooperation. However, in many a cases it has been seen that the projects faced a number of challenges for effective delivery.

This discussion paper explores these challenges and other issues related to quality and timely delivery of the projects. It also explains evolution of the scheme IDEAS and discusses new guidelines by EXIM Bank.