With rigorous economic research and practical policy solutions, we focus on the issues and institutions that are critical to global development. Explore our core themes and topics to learn more about our work.
In timely and incisive analysis, our experts parse the latest development news and devise practical solutions to new and emerging challenges. Our events convene the top thinkers and doers in global development.
Africa, debt relief, international financial institutions, private investment, aid selectivity
Ben Leo is a visiting fellow at the Center for Global Development (CGD) and a member of the Center’s Advisory Group. He currently serves as the Chief Executive Officer of Copernicus.io, an Africa data analytics firm. Copernicus is a proprietary geospatial platform that provides reliable and representative data on almost any customizable geographic area across the African continent.
Until October 2016, Leo served as a CGD senior fellow. His research focused on the rapidly changing development finance environment, with a particular emphasis on private capital flows, infrastructure, and debt dynamics. In addition, he tested a range of new technological methods for collecting high-frequency information about citizens’ development priorities. His research has been cited in leading international and regional media outlets, including the New York Times, Wall Street Journal, Washington Post, Financial Times, Forbes, USA Today, Mail and Guardian, CNBC Africa, This Day, and Daily Nation.
Prior to CGD, Leo held a number of senior roles at the White House, US Treasury Department, the ONE Campaign, African Union, and Cisco Systems.
Today the Senate Foreign Relations Committee (SFRC), led by Chairman Bob Corker (R-TN) and Ranking Member Ben Cardin (D-MD), dropped its long awaited Electrify Africa Act of 2015. This follows a House companion version, which was introduced in June. Both actions are good news for US development, foreign, and commercial policy in Sub-Saharan Africa. Whereas the last Congress was unable to get similar legislation over the finish line, we are hoping that this one will get the job done. There are three key reasons why this is so important.
First, it would provide a long-term authorization for President Obama’s Power Africa initiative. This is absolutely essential given the time required to overhaul and expand complex power systems. Put differently, this is a long-term initiative that requires long-term bipartisan support. Absent conclusive congressional action, Power Africa has a real risk of fizzling out after the current administration leaves office.
Second, the Electrify Africa Act would require that the President outline a comprehensive "all of the above" strategy for boosting energy access. This doesn’t just pertain to power generation sources. It also means focusing on other critical components of the energy sector chain – including transmission and distribution – and regulatory frameworks. Naturally this leads to questions that extend beyond the increasingly stale debate over “on-grid” and “off-grid” solutions, including those about how to provide access to the roughly 31 million Nigerians living ‘under the grid’ but without a grid connection for any number of reasons. While Power Africa has pursued an "all of the above" strategy, it is unclear how some of the initiative’s individual projects and programs fit together. This requirement of the legislation will help address this challenge as well as formalize some of Power Africa’s more opportunistic efforts.
Third, this bill is chock full of reforms to US development agencies. In some ways, it actually could be called the OPIC Reform Act of 2015. Many of these reforms are limited solely to the African power sector, such as simplifying the approval process for smaller energy projects or allowing for local currency guarantees to facilitate local lending.
Others would affect OPIC’s overall governance structure and all of its financing activities, making the agency more efficient, effective, and accountable to US taxpayers. This includes requiring that OPIC publicly disclose detailed information on all of its sponsored projects; making OPIC’s Board of Directors bipartisan; and establishing the agency’s own Inspector General position that reports directly to OPIC’s Board of Directors.
There is still a long path to climb before this bill becomes law. But today was a big milestone. And it is heartening that there continues to be strong, bipartisan support for helping to address African energy poverty.
President Obama has concluded what may be his last official trip to Africa. While it was relatively brief, with visits to just two countries, the messages delivered were loud and they were powerful. There were countless formal gatherings, events, and site visits. But it was his 47-minute speech to the African Union that best encapsulates the Obama Administration’s rhetorical approach to the continent. Here were his key points:
(1) Investment-led development models are the future. Backed by references to Power Africa and the New Alliance for Food Security, President Obama emphasized private sector- and investment-led approaches to confronting development challenges. This shift will be one of the Administration’s most lasting US-Africa policy legacies, even if it remains a work in progress.
(3) Security means confronting extremism, improving governance, and providing opportunities for all. Obama spoke at length about confronting extremist groups – like Boko Haram, Al Shabaab, and the Lord’s Resistance Army – as well as violent conflicts in Sudan, South Sudan, and the Central African Republic. In doing so, he stressed America’s support for strengthening regional armies and peacekeeping missions as well as the need to address underlying drivers of instability, such as poor governance and lack of economic opportunities.
(4) The United States, unlike China, is a reliable partner focused on real economic partnerships. China was actually never cited by name. But Obama, as with Secretary Clinton before, called out countries that are building infrastructure with foreign labor or extracting Africa’s natural resources. Although, it’s unclear how that latter part applies to US extractive firms. In contrast, he emphasized that America is focused on creating jobs and capacity for Africans. This message may play well in a number of countries, where the importation of Chinese labor has become an increasingly hot button issue.
As always, there were a few areas of disappointment, especially on the economic engagement front. While President Obama spoke at length about promoting trade and investment, there was no mention of pursuing bilateral investment treaties (BITs) or free trade agreements in the region. He had a perfect opportunity during his Kenya visit to breathe life into the US-East African Community BIT negotiations, which by all accounts haven’t gone anywhere. Or even launch new BIT negotiations with Ethiopia, which currently has agreements in force with 20 countries including China, France, Germany, and the Netherlands. This is a major gap for this Administration, which could leave office without signing a singlenew investment-promotion agreement anywhere in the world.
President Obama also failed to mention long-term congressional authorization of his signature initiatives, Power Africa and Feed the Future. This is critical to ensuring these programs outlast his administration. Moreover, Congress is considering both programs now, which makes the omission striking. Especially when there were 20 congressional members on the trip, whom he publicly thanked for reauthorizing the African Growth and Opportunity Act. Maybe there were private conversations. But, President Obama should have publicly raised the need for timely, bipartisan action on these two legacy items.
The Obama Administration’s Africa policy clearly has significant policy gaps and a lot of unfinished business, which likely won’t be addressed during its final 18 months in office. However, for this particular trip, the rhetoric definitely struck the right tone.
Last week, Nigerian President Buhari and President Obama spoke at length in the Oval Office. Much of the discussion focused on defeating Boko Haram and rooting out corruption in Nigeria. Yet, President Obama’s Power Africa Initiative, which aims to help provide access to 60 million households and businesses across Africa, was also high on the agenda. That is no surprise. Over 80 million Nigerians currently live without electricity and the general public is becoming increasingly negative about the pace of power sector improvements. So, where should Power Africa and other partners focus their efforts in Nigeria? One place is the millions of Nigerians – 31 million according to our latest findings – who may live in an area where electricity is available, yet do not have access.
A recent bottom-up study suggests that 98 percent of unconnected Nigerians could access the national grid by 2030. Yet others have challenged the fundamental premise of expanding centralized power generation and distribution. Instead, they emphasize the importance of mini-grid and off-grid solutions, arguing that national grids cannot reach large segments of the population anytime soon. Not to mention, they perpetuate dependence on fossil fuel-based power plants.
We recently tried to shed some further light on the debate by estimating an often-ignored category of people – those who live “under the grid.” These people live in an area where electricity is available, but do not have access to it for any number of reasons. At the time, our back-of-the-envelope estimates suggested that up to 36 percent of Nigerians could actually live under the grid.
Based on constructive feedback, we have now recalculated these estimates using a more rigorous approach. In short, we analyzed Demographic and Health Survey GPS data and then directly mapped it onto the national transmission grid (see methodological note here). Here’s what we found:
Top-Line Estimate: There could be roughly 31 million Nigerians living under the grid. This represents almost 40 percent of all Nigerians without electricity.
Wealth Distribution: Over half (56 percent) of these people fall into either the fourth or fifth wealth quintiles (e.g., poorest or poorer categories). Only 14 percent are in the top two wealth quintiles. In other words, living under the grid is disproportionately skewed toward poor households.
Urban/Rural Divide: Contrary to popular perceptions, nearly three-quarters of under-the-grid Nigerians (72 percent) live in rural areas. Almost 9 million under-the-grid Nigerians live in urban areas.
Distance from Transmission Lines: Many under-the-grid Nigerians live relatively close to the central grid (see figures 1 and 2 below). For instance, nearly 30 percent (9 million) live within 10km of a high-voltage transmission line (or just over 6 miles). Almost 80 percent live within 50km (roughly 30 miles).
Figure 1: "Under the Grid" Population, Distance From Transmission Line (km)
Figure 2 – DHS Enumeration Areas and National Power Grid
While our revised methodology is considerably more robust than the previous effort, there are still at least two methodological challenges that must be considered.
Lack of Transmission Voltage Data:There is no publicly available data on low voltage distribution lines (under 132 kV) in Nigeria, which limits our ability to measure unconnected households’ true distance from the grid. In practical terms, this means that our distance measures are upwardly biased (and likely significantly so).
Non-Specific DHS Electricity Data:The DHS does not explicitly differentiate whether households receive electricity from a generator or the national grid. For this reason, we used a more conservative definition of "under the grid."
Overall, this exploratory analysis illustrates that the existing all-or-nothing debate about “on-grid” and “off-grid” solutions is far too simplistic. There are millions of people who live in areas without any access to the national power grid. There are millions more who live in areas with near universal connections, but who suffer from notoriously unreliable power services. And then, there are yet millions more who live under the grid but for some reason – such as high connection costs or unresponsive utilities – do not have a connection. And many of these people – over 20 million according to our latest estimates – are located in rural areas.
There are unique challenges, plus many overlapping ones, for providing and improving the reliability of power for each of these groups. Fundamentally, this will require a nuanced all-of-the-above strategy, which includes new grid extension, distributed power solutions, targeted efforts for connecting under-the-grid households, and systemic regulatory reforms. Absent this, Nigeria and other African countries will never reach their lofty ambitions of achieving universal access.
0in">My guest on this week’s Global Prosperity Wonkcast is CGD senior fellow and director of the Rethinking US Development Policy program Ben Leo, here to discuss his new CGD working paper, Is Anyone Listening? in which he examines how well US foreign assistance aligns with the priorities of people in recipient countries. Answer: not so much or, as Ben puts it more diplomatically: “the alignment is modest at best.”
0in">“It depends on the country, it depends on the region, but there are some major African and Latin American countries where very little of US assistance focuses on what people care most about,” Ben says. Like I said, not so much.
0in">“This project has been kicking around in my mind for quite a while,” Ben explains. It began with discussions about the appropriate post-2015 development goals to follow on the Millennium Development Goals.
0in">“I’d be asked, ‘what do you think the next MDGs should be?’ And I’d always say, ‘it doesn’t matter what I think. Ask ordinary people what they care most about and let’s have that be the working basis for the new goals.’”
0in">“And whenever I’d say that people would respond, ‘well, they’re going to say health and education.’”
0in">Ben thought this might not be the case. Using public attitude survey data from Afrobarometer and Latinobarometer he analyzed what people identify as their top priorities by country and region. Surprise: overwhelmingly the top concerns of people in both Africa and Latin America are jobs and the economy, along with infrastructure in Africa and crime in Latin America. US assistance, meanwhile, goes mostly for health and education, issues that rarely score as top priorities (see chart in Ben’s blog post.
0in">So I ask Ben: “Why doesn’t US assistance align better with what people in Africa and Latin America say they want?”
0in">After noting that the answer is complex, Ben offers a couple of possible explanations that focus on US politics and constituencies rather than the needs in recipient countries. We go on to explore a range of related issues, including whether or not recipient citizen concerns should influence US foreign assistance allocations and even whether or not aid actually does any good. We end with Ben’s common sense recommendations about how to shift US foreign aid so that it is better aligned with the priorities of citizens in recipient countries.
0in">To learn more, read his paper or tune into our conversation.
0in">You can follow Ben Leo on Twitter at @Leo_Benjamin. You can follow me at @LMacDonaldDC and CGD at @CGDev.
President Obama delivered his 2014 State of the Union speech Tuesday, January 28. Before the speech, we polled CGD experts to find out what they hoped to hear from from the president's address. Check out their oratorical contributions below and read about the development-related decisions and policies they would like to emerge in support of the rhetoric.
You may not be surprised that development didn’t feature prominently in the president’s speech. However, we were pleased to hear references to inequality, the economic benefits of immigration, climate, and trade, if not necessarily with the development lens offered by CGDers below. We were also thrilled to hear the shout-out to Power Africa (oh, and to Mad Men).
President Obama will deliver his 2014 State of the Union speech Tuesday, January 28. We polled CGD experts to find out what they’re hoping to hear when the president addresses Congress and the nation. Check out their oratorical contributions below and read about the development-related decisions and policies they would like to emerge in support of the rhetoric.
“Last year I called for an end to extreme poverty in the world by 2030. That end is in our sights. But inequality is rising not only here in the United States, but in China and India, in Europe and in Africa. To achieve real progress in tackling this pernicious challenge, we need to put the fight against inequality on our global agenda, as well as our domestic one.”
The president is justifiably concerned with growing inequality and declining social mobility in the United States. In the developing world, inequality remains a serious problem and one increasingly associated with a worrying cycle in which high concentrations of economic wealth corrupt political systems, and in turn feed rent-seeking by privileged insiders. Protests this year in Turkey, and in Brazil and Chile (countries where inequality is falling but remains very high), and the rise of resurgent extreme right parties in Greece and Spain signal citizens' growing frustration with economic policies that seem to sustain rather than fight that cycle— whether intentionally or not. The president can send a critical message, at no cost in budget terms, about American democratic values and commitment to inclusive growth around the world -- simply by referring to inequality as a global political as well as economic challenge. Follow-up should include revisiting the position of the United States on the framing of a post-2015 development agenda, as well as revitalizing support at the upcoming G20 summit for toughening up measures on tax cooperation and reduction of cross-border tax abuses already agreed to by the G-8 last year.
“The US economy was built by the hard work of immigrants and today immigration is more important than ever. But Silicon Valley does not run on engineers alone. It also runs on nannies, janitors, farm workers, and dish washers. Immigration reform that creates safe, legal pathways for low-skill migration will contribute to the recovery and continued sustained growth of our economy, prevent future crises of unauthorized immigration, and foster global development in ways that go beyond traditional aid.”
Over the next decade the US economy will need more than 5 million new low-skill workers for jobs like health aids, nannies, food services workers, and landscapers—jobs that require less than a high-school education, and can’t be off-shored or mechanized. Over this same period, just 1.7 million Americans will enter the labor force, only a small fraction of them without a high school diploma. The country needs a way for economically essential migration to take place legally. Filling those essential jobs is critical for our economic recovery and continued economic growth, because they directly complement higher-skill workers and make all of us more productive. This is why immigration reform that includes a robust temporary low-skill worker program, like the W-Visa program in the immigration bill passed by the Senate last year, is good for the American middle class. Meeting American firms’ demand for these low-skill workers will prevent future flows of unauthorized immigration, and expanding opportunities for temporary work in the US will have development benefits that far out size what traditional aid can offer—and at no fiscal cost to US taxpayers.
“I am calling on Congress to pass legislation that will ensure continued US leadership in the IMF, a vital partner to America’s economic interests. Congressional inaction undermines US interests in an institution that plays a critical role in combatting deeply damaging financial crises globally, helps to ensure a level playing field for US workers and companies around the world, and works with us to root out the financial seeds of terrorism.”
The United States badly needs a win on the international economic stage. In a year when the global community decided to go big in support of IDA, the World Bank’s fund for the poorest, the United States decided instead to go big on the Global Fund to Fight Aids, Tuberculosis, and Malaria. As a result, a substantial chunk of the United States’ NPR-style matching pledge to the Global Fund went unmatched, and the champions of IDA this time around were countries like the UK and China (China!). But nowhere in the international economic sphere is the United States more visibly out of step with the rest of the world than on IMF reform, where the US is singlehandedly holding up a hard-won agreement due to congressional inaction. Just a few months ago, President Obama weighed in personally on behalf of the Global Fund, making a direct appeal to other donors. It’s time for him to put his voice to the need for Congress to act on the IMF.
“American taxpayers deserve to know the government spends their hard-earned money. My Administration has taken steps to make accessing data on government spending faster and easier, but we can do more. I will instruct the Office of Management and Budget to publish the full text of all government contracts and task orders online at USAspending.gov, in a fully searchable database, and to develop new guidelines consistent with the Freedom of Information Act that will provide specific guidance on commercial and national secret exceptions.”
US taxpayers fund government contracts with the private sector that are worth hundreds of billions a year. They have a right to know what they are paying for, and there is plentiful evidence that greater transparency in the contracting process can lead to better outcomes in terms of price and quality. A number of other countries from Colombia to Slovakia to the UK already publish government contracts online. In the United States, you can access government contracts using a Freedom of Information Act request, but it can be a long, painful process and the rules governing what counts as ‘commercial secrets’ within a contract are vague enough that the released, redacted document is sometimes more black marker than text. The US should join a growing global movement towards contracting transparency-–and an Executive Order could make it happen.
“Stopping the loss of tropical forests is one of the most urgent, affordable, and feasible actions the international community can take to avert catastrophic climate change. The United States will provide meaningful rewards to those countries and companies that demonstrate success in reducing deforestation.”
Greenhouse gas emissions from tropical deforestation are our emissions too: forests are being cleared to make way for production of the food, fuel, and fiber that US citizens consume. But there are practical solutions to decouple production from deforestation, including policies being put into place by the governments of forest countries to improve law enforcement and forest management, and commitments from private companies to rid their supply chains of deforestation. The United States should join Norway and Germany in allocating aid funding to reward governments that successfully reduce deforestation with “Cash on Delivery.” As part of its contribution to the Tropical Forest Alliance, the US should ensure that the Lacey Act--designed to prevent the import of illegally-produced forest products-- is fully funded and aggressively implemented, and that federal procurement standards are “greened” to create markets for products certified as deforestation-free.
“We will ensure that our anti-tobacco policies are supported—not subverted—by our trade policies, and strengthened by our investments in aid.”
The United States invests billions each year to address some of the most pressing health challenges around the world, but more can be done to ensure that US policies on international trade back up this commitment to global health. Globally, deaths from tobacco use each year exceed the number of deaths from HIV/AIDs, TB, and malaria combined. At home, the United States has enacted smart policies and made tremendous progress against tobacco-related deaths--efforts that should be ‘exported’ and replicated around the world. Failure to stand up to the big tobacco bullies will make it more difficult for these countries to enforce anti-tobacco policies like package warnings and advertising restrictions, and will undermine the United States standing as a leader in global health. Further, the United States should do more to ensure that organizations like the World Bank and the IMF that have a mandate to modify taxes and subsidies, support countries in increasing tobacco taxes and cutting tobacco subsidies, saving both lives and money.
“We know trade is vitally important to our economy, but it is also a critical tool to reduce global poverty. As the United States continues to make progress negotiating with our trade partners across the Pacific and the Atlantic, we must ensure that these agreements benefit US workers and consumers but do not undermine our efforts to promote development in low-income countries or weaken the multilateral trade system that is so crucial to global prosperity.”
Negotiations across the Pacific and with the European Union will no doubt dominate the US trade agenda this year. The greatest risk for smaller, poorer countries is that these “mega-regional” deals will weaken the World Trade Organization and leave those countries with no refuge from discrimination and bullying by more powerful trader partners. Some poor countries, particularly Bangladesh and Cambodia, could also see their exports fall as a result of more favorable market access granted to competitors that are included in these deals, such as Vietnam.
To guard against the risk of undermining multilateralism, President Obama needs to be equally committed to ensuring that ongoing negotiations and development of a work program at the WTO are successful. In particular, US negotiators should push for a food security package that reduces or eliminates rich country agricultural subsidies, reforms food aid, and develops new rules that give developing countries the tools they need to pursue food security goals without distorting global markets. And, to mitigate the potential for trade diversion, President Obama should work with Congress to reduce barriers to trade with the world's poorest and most vulnerable countries.
“My Administration will work closely with Congress to extend trade legislation with Sub-Saharan Africa, negotiate new investment treaties, and significantly expand our efforts to promote more US investment in this important region, particularly in the power sector. Increasing our engagement will yield benefits to US businesses and put more Americans to work. And I look forward to finding additional opportunities for partnership this coming August, when I will host the first ever US-Africa Summit with leaders from 47 African nations.”
This past week, the White House formally announced that President Obama will host leaders from 47 African nations in early August. The summit agenda will focus heavily on promoting trade and investment ties with the region. These interests reflect the continent’s rapid economic growth over the last decade and widespread improvements in macroeconomic management and governance (despite pockets of instability and ongoing challenges in places like South Sudan and the Central African Republic). In the interim, the Administration and Congress will be considering a number of important programs and policies. First, both branches will be determining whether (and how) to extend the African Growth and Opportunities Act, which provides preferential US market access for qualifying countries. Second, the Administration will continue efforts to conclude bilateral investment treaty negotiations with the East African Community. Third, the Administration will continue implementation of its Power Africa Initiative, which seeks to expand electricity access for 20 million households. A presidential reference to these three efforts will be important for either getting them over the finish line (in the case of AGOA and the US-EAC BIT) or putting pressure for early and concrete results (for the Power Africa Initiative).
Beyond this, the US government should also take further steps to promote greater trade and investment ties with Sub-Saharan Africa, including: (1) unleashing the Overseas Private Investment Corporation; (2) expanding select USAID programs focused on unlocking private capital for development, such as the Development Credit Authority; and (3) announcing a new strategy for improving the impact and coherence of US trade capacity building programs.
Jubilee essays by David Roodman and Ben Leo
Working group report: Preventing Odious Obligations
This year marks the 10th anniversary of 2000 Jubilee debt relief movement, in which religious organizations, development NGOs, and policymakers pressed successfully for deeper, faster debt relief for the world's poorest countries. What did the movement achieve? What pitfalls and policy opportunities lie ahead?
CGD fellow David Roodman discusses the beginning of the Jubilee movement. On Wednesday, September 29, 2010, CGD experts were joined by key actors in the movement to assess the legacy of the Jubilee. The event featured presentations by CGD Senior Fellow David Roodman and Todd Moss. The chair of CGD'd board, Ed Scott, and Minister Counselor Lars Petter Henie of Norway provided opening remarks. The morning and afternoon panels were moderated by CGD's Lawrence MacDonald, vice president of communications and policy outreach, and Nancy Birdsall, CGD's president.
The morning panel focused primarily on the evolution of the Jubilee movement and its growing impact in the last decade. CGD fellow David Roodman explains in his essay The Arc of Jubilee that the Jubilee 2000 movement, which called for the cancellation of the foreign debts of the poorest nations, reached its zenith in the late 1990s and 2000—and then, by design, shut down. In the space of a few years, it became one of the most successful international, non-governmental movements in history.
For complete videos, visit the CGD youtube channel.Jamie Drummond on why the Jubilee movement gained support from both secular and religious institutions.Roodman concludes that nongovernmental groups have shown that they can exercise power by educating members of the public and engaging them in the policymaking process. The success of Jubilee 2000 led directly to creation of new, high-profile NGOs in the 2000’s such as DATA and the ONE Campaign (now merged). It advanced an advocacy style that exploits the power of stars such as Bono; uses media old and new with savvy; strikes a strongly centrist stance (in the U.S. context, bipartisan); and subtly melds secular and religious appeals. In particular, Jubilee progeny unlocked more than $50 billion in U.S. government funding for global health in the 2000s, mainly for HIV/AIDS treatment in Africa. This aid flow dwarfs the new funds generated for debt relief. See David's full speech here, view the handout, or read his full paper here.
Masood Ahmed explains the importance of the process of engaging heavily indebted poor countries in the Jubilee movement.In transition between the morning and afternoon panels Masood Ahmed, director of the Middle East and Central Asia Department at the IMF, offered a first-hand perspective of how international financial institutions are approaching the issue of odious debt and what obstacles remain for the process of debt cancellation. Ahmed explained that in the World Bank there was always the sense that debt relief was a "crazy idea". In fact there was never any concern about where the money for debt relief would come from, but rather people within the World Bank were concerned that these efforts had short-term benefits and long-term consequences.
Speaking to these concerns, Todd Moss followed by arguing that the International Monetary Fund is partially at fault due to its proven systematic overestimates of growth for heavily indebted poor countries. Additionally, even as past debt was relieved, the sustainability of low-income countries' debt was eroded by new, even greater official lending—primarily by IFIs. Between 1989 and 2003, new nominal lending to HIPCs was twice as large as the amount of nominal debt relief provided. In the early 2000s, several donor governments, think tanks, and civil society organizations began to realize that the HIPC Initiative did not provide a lasting solution to the problem of unsustainable debt in poor countries.
Todd Moss outlines some of the crucial elements of the evolution of the Jubilee movement.However, despite sound academic support for debt relief, the reality of instituting any kind of debt cancellation policy for the heavily indebted poor countries still remains grounded in a quagmire of bureaucracy both on the scale of governments and international finance institutions. Some members of the afternoon panel raised doubts about whether there was any statistically significant evidence that debt relief was an effective tool for aid of the heavily indebted poor countries.
Clay Lowery discusses the difficulties of instituting policy changes in the face of governmental bureaucratic gridlock.The panel ultimately offered conflicting assessments of how to proceed with the future of the Jubilee movement. Panelist Seema Jayachandran posited that the status quo had to be changed in order to give poor countries better opportunities to avoid the burden of illegitimate lending. The idea of debt relief in itself can be a powerful tool in spurring economic growth for the HIPCs, but it is by no means a sweeping solution regarding the issue of odious debt.
Another approach, set forth in a recent CGD working group report, is to prevent odious debt from forming in the first place. The report, Preventing Odious Obligations: A New Tool for Protecting Citizens from Illegitimate Regimes, proposes an agreement that could declare that successor governments to a (named) illegitimate regime would not be bound by contracts that the illegitimate regime signs after the declaration. Some rogue investors might operate in defiance of the system, but this new approach would still help free successor governments from concerns about repudiating illegitimate contracts.
Attention presidential transition teams: the Rethinking US Development Policy team at the Center for Global Development strongly urges you to include these three big ideas in your first year budget submission to Congress and pursue these three smart reforms during your first year.
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.