Alternatives to HIPC for African Debt-Distressed Countries: Lessons from Myanmar, Nigeria, and Zimbabwe
Despite the success of the Heavily Indebted Poor Countries (HIPC) in reducing the debt burdens of low-income countries, at least eleven Sub-Saharan African countries are currently in, or face a high risk of, debt distress. A few of those currently at risk include countries that have been excluded from traditional debt relief frameworks. For countries outside the HIPC process, this paper lays out the (formidable) steps for retroactive HIPC inclusion, concluding with lessons for countries seeking exceptional debt relief treatment.
As late as 1930, only 1 in 10 rural Americans had access to electricity. In subsequent years, rapidly increasing power generation and growing the electrical grid across the country became major pillars of the American battle against domestic poverty and a foundation for decades of economic growth and wealth creation. Today, energy access is universal in the United States. Reliable and affordable electricity is considered a basic necessity of life, an indispensable input to almost every aspect of modern living.
That same transformation is possible today in large parts of the developing world, where lack of access to modern energy harms quality of life and constrains economic growth. A concerted policy effort by the United States could help unleash tremendous human and market potential around the world. Pushing to promote electricity generation and access could significantly contribute to doing good in developing countries — and doing well for the United States.
Todd Moss, Caroline Lambert, and Stephanie Majerowicz offer a well-argued explanation of how oil-to-cash transfers could help countries overcome the corruption, economic volatility, and lack of government accountability that too often plague countries with rich resources but weak institutions.
Balancing Energy Access and Environmental Goals in Development Finance: The Case of the OPIC Carbon Cap
The international community has ambitious goals for responding to climate change and increasing global access to energy services. To date, these agendas have been viewed to be largely complementary. However, policy makers are now facing more explicit interactions between environment, energy, and economic and social development objectives and associated trade-offs.
Maximizing Access to Energy: Estimates of Access and Generation for the Overseas Private Investment Corporation’s Portfolio
We conservatively estimate that more than 60 million additional people in poor nations could gain access to electricity if the Overseas Private Investment Corporation were allowed to invest in natural gas projects, not just renewables.
A strengthened OPIC—more efficiently deploying existing tools at no additional budget cost—would (1) increase US commercial access in emerging economies, (2) reflect economic, social, and political priorities in developing countries, (3) promote flagship US initiatives during austere budget conditions, and (4) support stability in fragile or frontline states.
This paper lists—and attempts to address—the most serious objections to Oil-to-Cash. The response to many objections is to ask about a plausible counterfactual (how do cash transfers compare to the alternative policy options?). Others warrant a clearer articulation of available evidence or ways to mitigate real worries through smart program design.
Nowhere Left to Hide? Stock Market Correlation, Regional Diversification, and the Case for Investing in Africa - Working Paper 316
Overall, regional indices have become increasingly correlated with the S&P 500 index. Africa lags behind this trend some, and that lag could present opportunities for investors and policymakers.
Reliance on natural resource revenues, particularly oil, is often associated with bad governance, corruption, and poverty. Worried about the effect of oil on Alaska, Governor Jay Hammond had a simple yet revolutionary idea: let citizens have a direct stake. Thirty years later, Hammond’s vision is still influencing oil policies throughout the world.
No Longer Poor: Ghana’s New Income Status and Implications of Graduation from IDA - Working Paper 300
Ghana’s rapid economic growth and the recent GDP rebasing exercise put Ghana suddenly above the income limit for IDA eligibility. This paper considers the implications of the country’s new middle-income status.
Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal - Working Paper 281
To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues accruing directly to the government—is more likely to be scrutinized by citizens and hence subject to greater efficiency.
By 2025, the number of IDA client countries will likely shrink substantially and primarily be smaller in size and overwhelmingly African. This working paper predicts how these changes will impact IDA's operational and financial models and recommends the World Bank begin addressing the implications of these developments sooner rather than later.
Todd Moss proposes that countries seeking to manage new natural resource wealth should consider distributing income directly to citizens as cash transfers. Beyond serving as a powerful and proven policy intervention, cash transfers may also mitigate the corrosive effect natural resource revenue often has on governance.
CGD vice president and senior fellow Todd Moss and reasearch assistant Lauren Young propose direct cash distribution of Ghana's oil profits to help the country avoid the natural resource curse. One positive effect of the plan would be to strenghten democratic pressure on the government to be good stewards of the resource.
Senior fellow Todd Moss investigates how the aftershocks of the global economic downturn are affecting Africa. African countries that take the right steps to mitigate the pain will be poised to benefit from the eventual recovery; those that don't will be left behind.
Bill Easterly calls Moss's new introduction to Africa "compulsively readable and accessible" and "a masterpiece of clear thinking." Each chapter is organized around three fundamental questions: Where are we now? How did we get to this point? What are the current debates?
Why Doesn't Africa Get More Equity Investment? Frontier Stock Markets, Firm Size and Asset Allocations of Global Emerging Market Funds - Working Paper 112
Africa receives only a tiny fraction of global investments in emerging markets. But the problem is not that fund managers are scared away by a seemingly steady stream of bad news out of Africa, nor is a general marketing of Africa to global investors the solution. Instead the authors of this new CGD working paper find that the small size of African markets and low levels of liquidity are a binding deterrent for foreign institutional investors. Drawing on firm surveys to explore why African firms remain small, the authors offer practical recommendations for increasing portfolio investment in Africa. Learn more