Promoting the Contribution of Economics Knowledge to African Development

Opening Address by Mr. Abdoulie Janneh, UN Under-Secretary General and Executive Secretary of the ECA

Addis Ababa
15-17 November 2007

His Excellency HE. Ato Mekonnen Manyazewal, Minister of Finance of the Federal Democratic Republic of Ethiopia

Mr. Louis Kasekende representing the Dr Donald Kaberuka, President of the African Development Bank

Professor William Lyakurwa, Executive Director, African Economic Research Consortium (AERC)

Distinguished Guests,

Ladies and Gentlemen:

Good morning.

I am delighted to welcome you all to this second in the series Africa Economics Conference jointly sponsored by the United Nations Economic Commission for Africa (ECA), the African Development Bank (AfDB) and the African Economic Research Consortium (ECA). I am very impressed by this large turnout and would like to thank you all very much for being part of this effort to create a community of and for African economists and non-African economists working on Africa. I would also like to welcome you to the HQ of the UNECA – an institution that many of you I am sure have heard of, but never quite knew where it was – and to Addis Ababa our home for the nearly fifty years of our existence as the regional arm of the United Nations in Africa.

I would like to recognize the presence of the State Minister of Finance of the Federal Democratic Republic of Ethiopia HE. Ato Mekonnen Manyazewal, Dr. Maxwell Mkwezalamba, African Union Commissioner for Economic Affairs, my good friend and partner in African development Dr. Donald Kaberuka, the President of the African Development Bank and Prof. William Lyakurwa, Executive Director, African Economic Research Consortium (AERC). ECA is blessed to have these institutions as our partners in the effort to diffuse informed economic knowledge into the management of our economies.

I have been advised that there are many African economists from the Diaspora attending this Conference. I am elated by this and would like to extend a special welcome to them. The presence of “Diaspora economists” – if I may refer to them as such - at this Conference is an example of the kind of collaboration that we have been aiming to promote between our intellectuals and researchers at home and those residing and working abroad. As you economists will say, it is quite clear that the social marginal product of your ideas and intellectual contributions is higher here at home in Africa than in the countries that you currently call home. I welcome you home and invite you come again and again and again.

I will be brief in this opening Statement. My purpose in this statement is to place before you, leading African economists, intellectuals and non-African economists working on Africa, a simple idea – the idea that enhancing the contribution of economics knowledge to African development is critical for securing Africa's growth resurgence and that we need to be more active contributors to this knowledge. As your colleague Nobel Laureate Joseph Stiglitz with whom I met here in Addis Ababa a few months ago noted in his 1998 paper Knowledge for Development: Economic Science, Economic Policy, Economic Advice “economic ideas have had a profound effect on the lives of billions of people, making it essential that we do our best to try to understand the scientific basis of (economic) theories and evidence”. There is no region, in my view, where the need for home-grown economics ideas and knowledge is most urgently needed than ours. A people who abdicate responsibility for thinking on their circumstances and the generation of new knowledge to address their needs forfeit their autonomy and circumscribe their future.

At ECA we fully understand that successful development requires us not only to close the gap in physical and human capital but also close the gap in knowledge. It is for this reason that we see our remit as advancing the frontiers of knowledge on issues that are of critical importance to our region and making that knowledge readily available to policy makers for improved decision-making.

In many respects, knowledge is a textbook example of a pure public good, replete with free riders and undersupply. But it is a very essential ingredient for growth and development, for sustained improvements in the human condition of all. Societies that lag in this respect, history has thought us, pay a heavy price. “History”, former Soviet President Mikhail Gorbachev once said, “punishes the late comer”.

Recent African economic performance

Why is enhancing the contribution of knowledge to Africa's economic development critical at this time, some might ask. The reason in my view is simple. Our continent is growing at a steady and fast pace and the explanations that I hear for the resurgence do not appear to me be sufficiently grounded in an in-depth knowledge and understanding of what is happening. This presents a number of risks. I will state just two. First, economic policy advice may not be appropriate. Second, the lessons of this experience might not be well learned and future growth could be jeopardized as a consequence.

Africa is growing as recent work undertaken by ECA and a number of institutions show. Indeed, our forthcoming 2008 Economic Report shows the continent growing at a rate of about 6% per annum. The World Bank's 2007 African Development Indicators (ADI) released just yesterday concurs with our analysis. Indeed the ADI also concurs with a view that we have been canvassing since last year - that Africa is learning to manage its economy better, it is learning how to engage with the world better and as noted in the Issues Paper of our 2007 Conference of Ministers, it is learning and mastering how to manage growth episodes better in order to prevent the re-occurrence of the growth collapses of the past. It is using its newly expanded fiscal space better. So, unlike in the past, Conferences such as this are pretty unlikely to resonate when and if it is convened to bemoan Africa's underperformance relative to other regions, or what I would call “African economic exceptionalism”. Today, in terms of economic growth, our region is no longer exceptional. It is part of the crowd. It is growing at the fast and steady pace required to reduce – perhaps not by half – the incidence of poverty by 2015.

The question then arises – what is it really that we are doing differently today that we did not do in the past? What are the sources of growth in Africa? To many there is a default response - commodity boom, high oil prices. But many of you know that there is always a lag, that it takes time for the impact of high revenue receipts to be felt across the economy. Let us assume for a moment that this view is correct. Then it is easy to conclude that African countries are growing not so much because of high revenue receipts from commodities exports but because its economic managers are today better able to deploy those receipts to promote economic growth. This is knowledge at work. Take for example, the Economist magazine's November 7 th review of the Nigerian economy – “Not Just Oil” . The article opens as follows....” Nigeria is the somewhat surprising source of evidence that there is more to Africa's economic resurgence than just commodity prices. … non-oil sector growth averaged 8.5% annually .. as growth continues to be constrained by underperformance in the oil sector, with oil revenues some 40% lower than projected …”

But what do we read in many recent assessments of Africa's growth resurgence? Oil and high commodity prices are driving the region's growth. I believe this to be a very narrow and incomplete explanation and policy recommendations and action derived from this analysis is not likely to fit our new reality. Let me illustrate with recent calls in the economics literature for African countries to establish stabilization funds. But if the source of growth is much more than the boom in commodities exports, will the establishment of stabilization fund be an appropriate policy response on how to deploy rising receipts from commodity and minerals exports? Would it not be better to deploy those resources to reinforcing the sources of growth and enhancing their contribution to growth? Do not get me wrong. I understand and appreciate the importance of stabilization for ensuring inter-generational equity. Surely, there is more than one way to ensure inter-generational equity and more than one to insure growth against reversals in commodities prices. Unfortunately there is little if any debate on these issues. The view that our region's growth resurgence is driven by high commodity prices persists because we - policy makers and scholars— have not done enough to advance the intellectual discourse beyond the conventional wisdom of the day. Herd behaviour rules and being very risk averse, we lack the gumption to deviate for fear of being punished by our colleagues even though we know that our explanation is superior to the conventional wisdom. This type of behaviour results in the sub-optimal contribution of economics knowledge to growth and development.

Let us take as another example the ongoing debate on the magnitude of financial resources required to achieve the Millennium Development Goals (MDGs) in Africa. The debate is about aid, official development assistance (ODA) and its scaling up. At one end are those led by our good friend Jeffrey Sachs who argue that what Africa needs is a Big Push, a “step” increase in ODA, to enable the continent to escape its poverty trap. At the other end is William Easterly, Robert Calderisi who argue that scaling up ODA to Africa will have a worthless consequence because the limit where aid can contribute to Africa's development has long been passed. In the middle are Paul Collier and Roger Riddell who argue that aid can still do a lot of good if its architecture is reformed. The leading intellectuals in this debate are all non-Africans. I have nothing against that. Indeed I welcome and applaud their fervent and devoted engagement with our issues. But the debate in my view would be richer, more complete, if the African intelligentsia is engaged in it. The challenges that our region is facing require our intellectuals not to be in the woodwork, not to be timid and compel us to think innovatively, to be bold. And there is more than ample evidence of profit in innovative thinking. China, for example, demonstrated that a country can focus on competition before privatization.

The urgency for pushing out the frontier is more compelling today than in years past since we are now also confronted with “new issues” such as climate change, new global actors such as China, Brazil and India, a pending demographic transition and aging, to mention a few. A knowledge forum for African economists such as this one can help in my view to attenuate the timidity, to energise you, to articulate an African perspective on the major development debates of the day. At the moment, our governments are in the vanguard of this effort. But they need to be supported by you, the economists, the intellectuals.

This Conference is thus very important. I see it as the kindle to a vigorous production of Africa-relevant economic knowledge by leading African economists. We are all here because we share that view. We are here because we agree that economic policy formulation required to deal with the serious challenges that Africa still faces in spite of the resurgence of growth or perhaps because of it, is still hampered by the dearth of, and lack of access to, research and information on economic issues of interest to the continent.

This conference therefore presents us with the forum to exchange ideas as policymakers, academic economists and researchers and to also contribute new ideas. The conference should facilitate improvement in access to information and research on economic issues, and as consequence, the quality of economic policy-making in Africa. Ultimately, the conference I believe will help us anchor knowledge management as an important component of good policy design and implementation in the region.

As I indicated earlier, for ECA knowledge generation and management have been the main anchors and undergirds of our efforts to promote the economic and social development of Africa. We are reinforcing our work in this area. Applying modern technology, we have forged into the area of Knowledge Management, launching Communities of Practice (CoP) in a broad array of areas, including health and education, the MDGs, macroeconomic management, regional integration and trade in addition to the very successful African Learning Group on the Poverty Reduction Strategies and the Millennium Development Goals (PRS./MDGs-LG) established in 2001 to promote experience sharing on poverty reduction strategies among African countries (see We intend to sustain the focus on generating new knowledge by tackling contemporary issues facing Africa. At the same time, we will endeavor to have this knowledge critiqued by our peers and shared while ensuring effective and timely dissemination of the final product to stakeholders in African development. I invite you to become members of these communities of practice.

Incentives are important for sustaining efforts to promote the creation of economics knowledge and for enhancing the contribution of that knowledge to Africa's development. In this context, I would like to salute our partners the AfDB and AERC as well as the African Union Commission for joining with us to lay the foundation of what I believe will be a strong knowledge community in service to our continent – the African Economics Association (AfEA). I would also like to applaud the launching of the Journal for African Economic Studies and the creation of two prizes to encourage and promote the generation of new and Africa-relevant economics knowledge —African Economist of the Year and Best Economics PhD Thesis of the Year. I assure you that ECA will do its best to ensure that these incentives are sustained.

With these brief remarks on an issue that deserves greater attention, I must conclude with one point – leadership. In their book – a book that I love to quote -, “Plowing the Sea: Nurturing the Hidden Sources of Growth in the Developing World” , Fairbanks and Lindsay advised that “leaders need to think about developing more sophisticated knowledge assets.” Your Conference will be a resounding success if it provides the leadership for enhanced contribution of economics knowledge to African development. Working together and with others, you can contribute in important ways to assisting countries in our region to develop the sophisticated economics knowledge assets needed to combat poverty, reduce inequality and improve labour market outcomes for our people; to in short, promote the contribution of economics knowledge to our region's development.

While looking forward to reading the outcome of your Conference, I thank you for listening and wish you fruitful deliberations.