Accra, Ghana//—The annual World Bank’s Country Policy and Institutional Assessment (CPIA) for Africa has praised African countries for implementing best practices to support businesses on the continent.
The report launched in Accra noted that countries in Sub-Saharan Africa (SSA) weathered 2023 relatively well thanks to credible economic and social policy reforms.
The report said the region’s governments and central banks have started shifting attention from weathering global shocks to building credibility, capacity, and transparency.
“One reflection of this is the region’s strong performance across multiple measures of Central Bank independence – an institutional provision that improves countries’ ability to reduce inflation and can improve investors’ perception of risks”, the report emphasised.
It however noted that countries were held back by low transparency and inadequate judicial oversight.
Moreover, the improvements are not universal. The report explained that governments facing budget constraints linked to high debt service costs will need to work harder to attract private sector investments to stimulate economic growth.
Speaking at the launch, the World Bank Chief Economist for Africa, Andrew Dabalen said although the countries fared well, there is a need for improvement in the public sector across the continent.
“The CPIA review offers a chance to identify areas of relative weakness and engage in a dialogue around policy reforms that can produce better development outcomes”, he said.
The need to attract and sustain greater private sector investments comes out strongly from the 2024 report.
For the CPIA report’s main author, Nicholas Woolley: “Private sector investments will need to pick up after years of investment growth coming from the public sector. High interest rates and public debt mean that the public sector can’t continue to do the heavy lifting, but there are huge opportunities around trade and the digital economy”.
Acting World Bank Country Director for Ghana, Patrick Mullen noted Ghana’s authorities committed to policy reforms to strengthen the central bank’s independence, which contributed to reducing year-over-year inflation from 54 per cent in December 2022 to 23 per cent in December 2023.
“The government also adopted a medium-term revenue mobilization strategy and recently committed to reinstating its fiscal rule in the medium term, while strengthening the independence of its Fiscal Council”.
These macroeconomic reforms are reflected in upgrades in the areas of “Monetary and Exchange rate policy” and “Fiscal Policy”, he said.
These measures to support macroeconomic stability are central to creating conditions supportive of the private sector.
Ghana has also made some strong reforms in improving private sector access, including the Office of the Registrar of Companies Act, which entered into force last year, and increased efforts to support access to finance for small and medium-sized enterprises.
As host of the AfCFTA secretariat and participant in the AfCFTA Guided Trade Initiative, Ghana represents the possibilities of increased regional trade.
Mr Dabalen with a panel discussion on policies to promote private sector growth moderated by Bernard Avle of Citi FM, the panellists comprising Dramani Bukari of Ghana Climate Innovation Centre (GCIC); David Ofosu-Dorte of AB & David Africa; Cordie Aziz, Founder and CEO of Envronment360; and Professor Abdoulaye Ndiaye, and economist discussed the report.
They spoke on almost all areas of the CPIA, including the importance of macroeconomic stability for the private sector, low-cost regulatory solutions to support trade and investment, and how education, health, and social inclusion boost local firm growth.
The CPIA is an annual diagnostic tool for countries eligible for financing from the International Development Association (IDA), the part of the World Bank that helps the world’s poorest countries.
The 2024 report provides an assessment of the quality of policies and institutions in all 39 IDA–eligible countries in SSA for the calendar year 2023. Countries are rated on a scale of 1 (low) to 6 (high) across 16 dimensions reflecting four areas: economic management, structural policies, policies for social inclusion and equity, and public sector management and institutions.
The average overall CPIA scores in SSA remained stable at 3.1 – the same aggregate score as the two previous years. A more detailed look at country assessments reveals that SSA has caught up with the average overall score for IDA countries in the rest of the world thanks to social policy reform, credible fiscal policy improvement, and institutional provisions to promote economic stability and transparency.
In that respect, CPIA scores could guide international investors and businesses on the quality of institutions and efficacy of recent reforms – something that sometimes prevents interested partners from starting new activity in the region. Detailed scores for all 39 SSA countries are available online at https://www.worldbank.org/en/data/datatopics/cpia.
