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Foreign direct investment, financial flows, private-sector development, humanitarian assistance, Africa
Vijaya Ramachandran is a senior fellow at the Center for Global Development. She works on the impact of the business environment on the productivity of firms in developing countries, and is the coauthor of an essay titled "Development as Diffusion: Manufacturing Productivity and Africa's Missing Middle,” published in the Oxford Handbook on Economics and Africa. Vijaya is also studying the unintended consequences of rich countries’ anti-money laundering policies on financial inclusion in poor countries. She has published her research in journals such as World Development, Development Policy Review, Governance, Prism, and AIDS and is the author of a CGD book, Africa’s Private Sector: What’s Wrong with the Business Environment and What to Do About It. Prior to joining CGD, Vijaya worked at the World Bank and in the Executive Office of the Secretary-General of the United Nations. She also served on the faculties of Georgetown University and Duke University. Her work has appeared in several media outlets including the Economist, Financial Times, Guardian, Washington Post, New York Times, National Public Radio, and Vox.
This CGD Brief, based on the book Africa's Private Sector by Vijaya Ramachandran, Alan Gelb, and Manju Kedia Shah, shows how investing in infrastructure and improving access to education can help bring about a broad-based business class in Africa.
Why is the private sector yet to take off in much of sub-Saharan Africa? In Africa's Private Sector, Vijaya Ramachandran and her co-authors identify the biggest obstacles: inadequate infrastructure (especially unreliable electricity and crumbling roads) and burdensome regulations. The authors suggest investing in infrastructure and reforming regulations to lower the cost of doing business, and increasing the access to education for would-be entrepreneurs to help foster the emergence of a broader-based business class that crosses ethnic divides. Join us for a discussion of how foreign donors can help African businesses by supporting better roads and renewable energy systems.
This is joint posting with Owen McCarthy
As word leaks out that the World Bank effectively funded the demolition of homes of the very poor residents of a small village, Jale, in Albania, and then refused to speak about it for more than a year, one can only hope that the Bank will spend as much time thinking through what went wrong as it will doing damage control. The Project Appraisal Document (otherwise known as the PAD) for the Albania Integrated Coastal Zone Management and Clean-Up Project stated that the Albanian government and the Bank had reached an agreement that no demolitions would take place until "procedures and criteria" were in place to assist affected citizens; in fact no such agreement existed. The Bank's Board approved the project.
The authors of this CGD working paper analyze what the principal bodies of global government—the Bretton Woods institutions and the UN, the G-20 and the OECD—would like if a country’s membership and roles were contingent upon objective criteria that would better balance representation and effectiveness. They find major disparities between the results of their analysis and the state of affairs today, and they point to the need for changes far more fundamental than the incremental tweaks now being considered.
This is a joint posting with David Wheeler
The International Finance Corporation, the private sector investment arm of the World Bank, is set to have yet another banner year with profits in the range of $2 billion. As the IFC's equity stakes in services, telecommunications and particularly in oil and gas have grown, so have its profits. In FY07, IFC invested more than $8 billion of its own money and mobilized nearly $4 billion more. In Sub-Saharan Africa, it invested about $1.4 billion, doubling its investments from the previous year. In FY08, these numbers look to be even larger. If the IFC continues on its current path, in five years its portfolio will be larger than that of the World Bank itself.
Yesterday, the African Union chose Equatorial Guinea’s dictator of 31 years, President Obiang Nguema Mbasogo, to serve as their chairman; a move that will undoubtedly undermine the AU’s attempt to bring stability to the African continent and to confront leaders who cling to power./
Obiang has been criticized for violating the basic human rights that the AU swears to uphold and is consideredone of the world’s worst dictators. Having ruled the country since 1979, Obiang claims to have won 97 percent of the vote in 2002 and 95 percent in 2009. And despite their oil wealth, the people of Equatorial Guinea have seen little benefit. Life expectancy is a mere 50 years, half of the children who live in that country do not complete primary school, and about 15 percent die before age of 5. The country ranks 118 out of 182 in the UNDP Human Development Index.
The White House State Dinner for visiting Prime Minister Manmohan Singh tonight is perhaps the biggest social event of the year in the nation's capital. The names of the 400 lucky people who have made it on to the guest list are yet to be released—the list has generated as much buzz as the event itself, both in Washington, DC and in India.
This is a joint posting with Vijaya Ramachandran
The World Bank Group's board appears to be operating under a severe case of cognitive dissonance, supporting efforts to save tigers - threatened in India and Bangladesh by habitat loss due to climate change - while helping build coal-fired power plants that will only speed up this process.
Back in June the Bank launched a campaign to help governments develop and better manage forests inhabited by endangered tigers, including in the Sunderbans. This massive mangrove forest spans the India-Bangladesh border and is home to the Bengal tiger. While the Bank has a less-than-stellar conservation track record in Sunderbans, more important is the fact that this impoverished World Heritage site would be one of the hardest hit by climate change, whether from rising sea levels or the disappearance of the glacier that feeds the Ganges river.
But the Bank's commitment to poverty reduction and biodiversity stands in stark contrast to its bread-and-butter financing choices. As the Bank planned its save-the-tiger campaign, the International Finance Corporation (IFC), the Bank's private sector arm, was putting together a deal to finance $450 million of the misguided $4+ billion Tata Mundra Ultra Mega coal-fired plant in India. Financing 10% of the cost of a plant being built by India's largest company will help propel India's power sector emissions to third highest in the world within a few years, behind China and the U.S. Is this a smart use of scarce international public resources?
The surprise return of ousted dictator Jean-Claude “Baby Doc” Duvalier to Haiti has thrown more uncertainty into a country already struggling with political paralysis from the November election and a painful recovery from last year’s quake. Duvalier returned after nearly 25 years in exile and was arrested in Port au Prince for charges of corruption and embezzlement. The following day, a lawsuit was filed against him for torture and crimes against humanity. Duvalier is blamed, along with his father Francoise “Papa Doc” Duvalier, for the torture and rape of thousands –between 40,000 and 60,000 Haitians are thought to have died under their rule from 1957 – 1986. Despite this horrendous record, some young Haitians are drawn to Baby Doc, believing that he might bring some relief from the desperate conditions in which they find themselves.
Today, UNESCO’s director-general, Irina Bokova, announced that the UNESCO-Obiang Prize would be suspended so that UNESCO’s executive board can study the situation. The Board will take up the issue again in October. Ms. Bokova released a statement saying:
“I have heard the voices of the many intellectuals, scientists, journalists and of course governments and parliamentarians who have appealed to me to protect and preserve the prestige of the organization. I have come to you with a strong message of alarm and anxiety. I am fully aware that the Executive Board made a decision two years ago (to establish the prize), but I believe that given the changing circumstances and the unprecedented developments of the past months, we must be courageous and recognize our responsibilities for it is our organization that is at stake. Therefore I will not set a date for awarding the UNESCO-Obiang Prize for the Life Sciences.”