In research, ACET seeks to investigate the drivers of economic transformation; examine the progress, platform, and prospects for transformation for African countries; and identify each country’s most promising pathways to transformation. Occasionally, we conduct special studies on current topics with impending impact on Africa’s transformation prospects, such as China’s activities on the continent. We draw our insights from existing knowledge and, where gaps exist, from our own investigations. Our African Transformation Index is meant to provide a common quantitative tool to measure the progress of countries. In our effort to foster intra-African learning, most of our research aims to map the African landscape on key policy issues, to identify best practice in Africa and around the world.
Country Case Studies
Country case studies are in-depth analyses of the economic environment in selected countries and their prospects for transformation. These studies will inform our flagship publication, the African Transformation Report (ATR). They will also guide our national Transformation Dialogues with those countries. The ATR and Transformation Dialogues are detailed below.
We have selected an initial group of 15 countries: Botswana, Burkina Faso, Cameroon, Ghana, Ethiopia, Kenya, Mauritius, Mozambique, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Uganda and Zambia.
In collaboration with domestic think tanks, ACET analyzes the countries’ economic transformation performances, based on the key attributes and drivers of transformation. The studies describe the institutional environment for economic transformation, including the state’s capability for economic management, the private sector environment, and the nature of public-private consultation and collaboration on economic issues. They also explore the prospects for diversifying exports or increasing competitiveness in existing exports (or import substitutes). Based on the analyses, ACET offers policy recommendations on the most pertinent levers for transformation for each country.
By using a shared methodology and in-country expertise our country studies provide a unique balance of analytical rigor and local nuance. We will examine other countries in subsequent phases.
The Drivers of Transformation
Having identified what we consider to be the fundamental drivers of transformation, we focus on four of them: foreign direct investment (FDI) inflows, export promotion policies and strategies, education and skills development, and infrastructure. The next round will cover the other main drivers: private sector and business environment, labor and employment policies and institutions, and state capacity for economic development.
- FDI inflows. This research examines the trends, sources, and sectoral distribution of FDI flows to Africa as a whole and to specific countries, with Ghana as our pilot country. The inflows will be benchmarked against those of fast developing regions of the world, especially those in East Asia.
- Export promotion policies and strategies. Here we explore the export-led growth model of successful East Asian countries and how it could be adapted to Africa. We also take a critical look at special economic zones (SEZs), also called export processing zones and industrial parks. These zones require a substantial initial investment and high maintenance cost. With more than 90 zones across Africa, the study examines their true impacts on Africa, by answering questions such as: How have SEZ programs contributed to the rise in exports? What are the multiplier effects on the local economy—on development of local private sector, domestic employment, transfer of technology and so on? What impact, if any, does the new wave of Chinese-sponsored SEZs in Africa have on transformation?
- Education and skills development. This group of studies delves into how high-performing Asian countries created institutional mechanisms to ensure education and skills development matched shifts in the demands of the economy. We also gauge the commitment of African countries to design and implement education systems that would provide the workforce with the skills proven to drive competitiveness and economic transformation.
Industry studies explore the prospects for introducing new exports and examine opportunities for increasing competitiveness in existing exports or import substitutes. These studies provide insights for policymakers as well as suggestions for how businesses can take advantage of the opportunities.
Our first two industry studies focus on textiles and agro-processing. These studies take a comprehensive view of the global market and value chain. In that context, we review those African countries that have used these industries to spur transformation, and analyze the prospects for those that have been facing big challenges in that effort.
When policy issues emerge outside our core research areas but have a high potential for impact on transformation, we undertake special studies to lend our insights to the public discussion and choices for policymakers. To date, ACET has published two such studies:
- Agriculture. The global food crisis of 2008 underscored the vulnerability of Africa’s food supply. For the majority of African countries, agriculture still provides a large share of GDP and employment, but productivity in the sector has lagged considerably behind that of other continents and Africa’s own potential. Meanwhile, evidence from around the world strongly suggests that not only can agricultural transformation improve food security, but also it can be an engine of growth early in the development process and an important force for poverty reduction. Our agriculture study analyzes the major policy issues that affect agricultural transformation and how sectoral reforms, macroeconomic reforms, and technological change influence farmers’ incentives to make the investments necessary for agricultural and food system transformation.
- Economic integration in ECOWAS. In 2010 the AfDB asked us to conduct a number of background studies and to help draft a Regional Assistance Strategy to guide the Bank’s support for economic integration among the 15 nations of the Economic Community of West African States (ECOWAS). The studies covered macroeconomic developments and prospects; trade and regional integration; private sector development and regional integration; transport (i.e. roads and railways) corridors; energy and power infrastructure; review of ports; facilitation of regional integration through Information and Communication Technologies (ICT); and cooperative management and development of trans-boundary water basins. Each report proposes specific interventions for the AfDB in that area. We delivered our final reports in August 2011.
- China-Africa. It’s hard to keep up with China’s activities in Africa, but the choices that policymakers make today will have immense consequences for their people’s economic, social and environmental future. ACET therefore thought it exigent to conduct a comprehensive two-part study on China’s economic activities with African countries to provide insights into how countries might engage China to maximize the benefits and manage the challenges. The report synthesizes China’s trade, investment, and economic and technical assistance in seven sectors: oil and gas, mining, agriculture, infrastructure, manufacturing, forestry, and services, with a detailed review of its undertakings in Ghana, Liberia, and Rwanda.
African Transformation Report
All our research informs our flagship publication, the African Transformation Report, with the inaugural edition to be published in 2014.
The Report captures the progress of African countries toward economic transformation, using our new African Transformation Index (ATI). The ATI covers seven main attributes. Each attribute is developed into an index, and the seven are combined to form a composite index—an index of outcomes. The main objective is to provide a common quantitative tool to measure progress among countries on economic transformation and to serve as a point of departure for seeking explanations in terms of policies, institutions, natural endowments, and so on.
The Report will also recommend policies that can drive transformation and will also explore pathways to export diversification and competitiveness, with the initial Report emphasizing the prospects in agribusiness and light manufacturing. And it will assess how African countries are performing in some important areas, and draw lessons from the most successful countries.
Most important, the ATR will present the totality of ACET’s research in a form that engages the general public, offers analysis and data to inform debate, and spurs action by policy makers and private actors on economic transformation in Africa.