The annual Country Policy and Institutional Assessment (CPIA) for Africa confirms that countries in Sub-Saharan Africa (SSA) weathered 2023 relatively well thanks to credible economic and social policy reforms.
In particular, governments and central banks have started to shift 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.
However, countries were held back by low transparency and inadequate judicial oversight.
Moreover, the improvements are not universal, as governments facing budget constraints linked to high debt service costs will need to work harder to attract private sector investments to stimulate economic 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 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, and credible fiscal policy improvement, and institutional provisions to promote economic stability.
“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,” said Andrew Dabalen, World Bank Chief Economist for Africa.
The need to attract and sustain greater private sector investments comes out strongly from the 2024 report. “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,” said Nicholas Woolley, the CPIA report’s main author.
In that respect, CPIA scores could provide guidance to 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.
The report will be launched today in Accra, Ghana by Mr. Dabalen, with a panel discussion on policies to promote private sector growth moderated by Bernard Avle of Citi FM.
The discussion is expected to cover 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 role of government transparency and accountability to avoid captured markets is also on the agenda.