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Moss served as Deputy Assistant Secretary in the Bureau of African Affairs at the U.S. Department of State 2007-2008 while on leave from CGD. Previously, he has been a Lecturer at the London School of Economics (LSE) and worked at the World Bank, the Economist Intelligence Unit (EIU) and the Overseas Development Council. Moss is the author of numerous articles and books, including African Development: Making Sense of the Issues and Actors (2018) and Oil to Cash: Fighting the Resource Curse with Cash Transfers (2015). He holds a PhD from the University of London’s SOAS and a BA from Tufts University.
“An Aid-Institutions Paradox? Aid dependency and state building in sub-Saharan Africa,” with Nicolas van de Walle and Gunilla Pettersson, in William Easterly (ed.) Reinventing Aid, MIT Press, Cambridge, 2008.
“The Ghost of 0.7%: Origins and Relevance of the International Aid Target,” with Michael Clemens, International Journal of Development Issues, Vol. 6, No. 1, 2007.
“Compassionate Conservatives of Conservative Compassionates? US political parties and bilateral foreign assistance to Africa”, with Markus Goldstein, Journal of Development Studies, Vol. 24, No. 1, October 2005.
“Is Africa’s Skepticism of Foreign Capital Justified? Preliminary Evidence from Firm Survey Data in East Africa”, with Vijaya Ramachandran and Manju Kedia Shah, in Magnus Blomstrom, Edward Graham, and Theodore Moran (eds), Does a Foreign Direct Investment Promote Development?, Institute of International Economics, Washington DC, May 2005.
“Irrational Exuberance or Financial Foresight? The Political Logic of Stock Markets in Africa”, in Sam Mensah & Todd Moss (eds), African Emerging Markets: Contemporary Issues, Volume II, African Capital Markets Forum, Accra, 2004.
“Stock Markets in Africa: Emerging Lions or White Elephants?” with Charles Kenny, World Development, Vol. 26, No. 5, May 1998.
“Africa Policy Adrift,” with David Gordon, Mediterranean Quarterly, Vol. 7, No. 3, Summer 1996.
“US Policy and Democratisation in Africa: The Limits of Liberal Universalism,” The Journal of Modern African Studies, Vol. 33, No. 2, June 1995.
Last week CGD hosted an event on advancing women’s political leadership, featuring Malawi’s first female president and Africa’s second, President Joyce Banda. President Banda didn’t just join us for the afternoon; she will soon become a colleague too – as a CGD distinguished visiting fellow, jointly with the Woodrow Wilson Center.
At the event, President Banda discussed her own experiences as a woman in African politics and her current work to encourage other women to become political leaders, giving us a snapshot into how she’ll be spending her considerable energies. In her remarks and conversation with the Wilson Center’s Gwen Young, she argued forcefully for leveling the political playing field for women. She also made the case for ensuring that girls have an equal opportunity to go to school, for women to have equal access to productive assets, and for working to prevent maternal mortality and gender-based violence.
President Banda’s words match actions she took while in government; as Minister of Gender and Child Welfare, she championed Malawi’s 2006 Prevention of Domestic Violence Bill, which provided the legal framework to support the prevention and elimination of all forms of violence against women and girls.
Since leaving the state house, President Banda has continued her work to promote gender equality and advance women’s political leadership, through initiatives such as Elect Her Into Office, a new campaign launched by Madeleine Albright and the National Democratic Institute, and the Joyce Banda Foundation. While at CGD and the Wilson Center, she will build on this work by focusing on the issue of women’s political leadership and joining Charles Kenny and Mayra Buvinic to promote other areas of gender and development.
As a distinguished visiting fellow, President Banda brings with her decades of experience not only in politics but also in advocacy on behalf of women and girls, and we are excited to have her on board. Welcome President Banda!
Lobbyists. They’re everything that’s wrong about Washington DC. Plying the hallways of power, these operators cut backroom deals and arm-twist politicians. Instead of strengthening democracy, they undercut it by securing favors for corporate clients and foreign dictator paymasters. If that’s your perspective, then veteran lobbyist K. Riva Levinson’s new book will rock your world.
Choosing the Hero: My Improbable Journey and the Rise of Africa's First Woman President is an engaging blend of personal memoir, Washington exposé, and, most of all, a tribute to a beautiful friendship. Levinson’s writing is raw and revealing. The story, like the author, jumps easily from a convoy in Baghdad to the halls of Capitol Hill. The book opens in 2011, in the dead of an Oslo winter, at a royal affair where the King of Norway is bestowing the Nobel Peace Prize on three remarkable women.
Cut to Mogadishu, 1989. Levinson is a rookie lobbyist trying to prove herself within a notorious mercenary firm headed by Paul Manafort (yes, thatPaul Manafort). After landing on a claptrap Boeing 707, she dodges insect hordes, eats bug-infested bread, and most of all struggles with her conscience. Her client is Siad “Mighty Mouth” Barre, the warlord-president of Somalia who would be toppled two years later, creating a vacuum that eventually led to US military intervention and the Blackhawk Down disaster. Nothing goes right on the trip and Levinson leaves wondering, not for the last time, why am I here?
The story flashes forward to 1996. Levinson is sitting in a posh Manhattan hotel trying to help her client, President Teodoro Obiang of Equatorial Guinea, persuade a senior UN official that he is serious about democracy. The UN official, Ellen Johnson Sirleaf, is having none of it.
The meeting leads nowhere for Obiang, but it is the beginning of a long and fruitful relationship between Levinson and Sirleaf. A year later, a heavily pregnant Levinson sits in a northern Virginia diner, scarfing down donuts and hash browns as she pitches her services to Sirleaf. The then 57-year-old Harvard-trained economist is ready to leave the UN and run for president back home in Liberia against the notorious Charles Taylor. Shortly after, the “Warlord versus the Grandmother” campaign is launched.
Their adventures together, through many ups and downs, eventually lead to victory in 2005, when Sirleaf is elected Africa’s first female president. The bad news is that Liberia has been destroyed—physically, economically, and psychologically—by a long and brutal civil war that ended just two years earlier. Sirleaf is rebuilding her homeland almost from scratch. She needs help. And that’s when Levinson’s work really begins.
Levinson fights a recurring battle against Washington indifference and “lack of imagination.” Liberia, founded by freed American slaves in 1821, is a special place with a uniquely intimate relationship with the United States. The capital is named after James Monroe. One of its 15 counties is called Maryland. American influence in Liberia is immense, and Liberians often look to the United States for security, partnership, and reassurance. But sometimes America forgets about its African cousin. Throughout the story, Sirleaf keeps asking Levinson: “Is Washington listening???”
Choosing the Hero is for anyone interested in political history and the inside story of the rise of President Sirleaf, who also wrote the foreword where she calls Levinson her “secret weapon.” The book will appeal to readers who love memoirs about smart ambitious women navigating a dangerous world and finding a calling. “I have to believe in something. I have to believe it’s something for the good,” Levinson writes.
Paul Manafort predicts that her idealism will be her downfall. Levinson convinces us of the exact opposite.
Above all, Choosing the Hero shines by showing how Washington DC can work. Levinson writes, “History can be made in different ways—not only by the generals or the elected (and unelected) officials, but sometimes by the efforts of anonymous people who work, plan, scheme, manipulate, even horse-trade behind the scenes in order to achieve our goals.”
That’s exactly what she did repeatedly for Liberia, greasing the wheels of a creaky US foreign policy machine. With appropriate humility, she shows how calling the right person, making the right argument, haranguing the right staffer can help to get things done. In 2005, US officials were passive during Liberia’s election in part because they had already decided that Sirleaf had no chance of winning. So Levinson worked contacts at the CIA to share new information from the field about Sirleaf’s growing support base. She hoped, correctly as it turned out, that a small nudge could break the perception that her candidate couldn’t win, and force the US to get more engaged. In 2014, when the US dragged its feet in response to the Ebola outbreak, Levinson arranged for Sirleaf to call 10 congressional leaders in a frenzied 48 hours. This proved critical to finally getting White House action.
If I have one gripe about the book it’s that Levinson is too easy on American officials for mistakes and overly generous with credit to some who were, in reality, less than helpful. This is especially true for certain legislators and Clinton administration officials who were far too quick to accept Charles Taylor in 1997 and were willing to turn a blind eye to his atrocities. In 2012, a UN Special Court convicted Taylor on 11 counts of crimes against humanity and he’s currently serving a 50-year sentence in a British prison. Of course, Levinson is too gracious to point out the hypocrisy of those who had once championed this war criminal.
That fits Levinson’s approach and character. As her extraordinary book and personal story reveal, she’s made her life not about settling scores, but about bringing people along on shared missions to get things done. She’s a lobbyist making peace with her past and devoting her skills to a better world. In so doing, Levinson helped herself find purpose, helped the Liberian people, and, ironically, repeatedly helped the United States achieve its own policy goals.
I know something about Levinson’s passion and tactics because I have occasionally been on the receiving end. I was a senior State Department official when, one day in 2007, a woman I didn’t know showed up in my office unannounced. “So where are we with the budget for vetting and training the Liberian armed forces?” I had in fact been struggling to secure the money for promised reforms of the security sector—a critical pillar of the peace and reconstruction plan—but I wasn’t about to say anything to a lobbyist. I gave a vague answer hinting that there might be a hang-up. “I’m on it,” Levinson said confidently. And she was.
America’s development finance agency is constantly being pulled in three directions. The primary mandate of the Overseas Private Investment Corporation (OPIC) is to promote development by catalyzing private capital from US firms in emerging and frontier markets. OPIC is also supposed to support US foreign policy by making commercial investments aligned with diplomatic, security, or democracy objectives. Lastly, OPIC must operate on a commercial basis so projects are both sustainable over the long-term and cost nothing to US taxpayers.
Sometimes individual projects will check all three boxes: a commercially-viable project in a poor country that’s an important strategic ally. But often these three objectives are in tension and over time, the incentives can be distorted. That’s why OPIC’s overall portfolio matters more than any one project. Our analysis of OPIC’s portfolio since 2000 has found that the agency has done a good job of moving into sectors like infrastructure and financial services that are the biggest constraints to growth in most countries. But we’ve also found that OPIC’s overall portfolio has drifted lately into wealthier markets, where the development needs are less acute and where the necessity of government-backed finance may be far less obvious.
To get a better picture of how OPIC is balancing its portfolio, we have a new paper out that recommends two steps that could bring additional clarity to the tradeoffs for OPIC management, its board, and outsiders.
(1) OPIC should go much further in public disclosure, including the release of:
Development Matrix Scores, which it already assigns to prospective proposals;
Co-financing data to illuminate its catalytic effect (or not);
Project-level data on commitments, to give Congress and the general public a clearer picture of how well the agency is balancing pressures among its competing objectives.
(2) Utilize Stoplight Screens to track prospective projects’ development impact and market additionality. Green-lit projects could be fast tracked, yellow-lit projects would require more board scrutiny and a higher approval bar, while red-lit projects would be approved only in rare exceptions. The portfolio as a whole could then be reported on its balance of green-yellow-red over time.
Development Impact Screen
Market Additionality Screen
OPIC is a high-performing, if still little-known, agency. These modest steps could help it better balance its competing objectives—and make it even more effective in supporting US policy. Read the full paper here.
Please join us for a special event marking the release of Choosing the Hero: My Improbable Journey and the Rise of Africaʼs First Woman President by K. Riva Levinson. The book is an insider’s account of Riva’s longtime relationship with Liberia’s Ellen Johnson Sirleaf, two women warriors in battle to help a nation recover from war, and a window into the strange policy trenches of Washington DC.
After several starts and stops, the Nigerian government has finally removed fuel subsidies, resulting in an overnight price hike of 67 percent. The economic logic of subsidy reform is clear. Fuel subsidies were costing the government about $5 billion per year while the benefits accrued mostly to the non-poor. Nigeria’s particular scheme was also riven with corruption; a 2012 parliamentary inquiry found that the government was paying daily subsides on 59 million liters even when consumption was only 35 million liters. In recent weeks, the country was further hit by debilitating fuel shortages.
Politically, however, the subsidy was generally popular, in part because many citizens saw cheap fuel as one of the only tangible benefits from the state. For that reason, the January 2012 attempt at subsidy reform sparked riots and a partial policy reversal. This time, there are some indications that labor unions may protest again, but we’ll have to see whether opposition gains momentum and how President Buhari responds.
What’s notable, and potentially problematic, is that the government is planning to use any savings from lifting the fuel subsidy in the regular budget. Nigeria could have instead learned lessons from places like India and Iran, which each replaced a costly, poorly-targeted subsidy with a targeted cash payment. In Iran, fuel subsidy removal was preceded by deposits into tens of millions of bank accounts, some of them created especially for this purpose, which created pro-reform political momentum.
India suffered from the same market failures in cooking gas canister distribution as Nigeria’s petroleum sector, leading to gross misallocation and mistargeting of subsidies for decades. After a few false starts, the government rolled out the subsidy reform in 2015 as part of a broader policy to move towards direct benefit transfer, leveraging universal biometric ID and financial inclusion as the new pipeline for delivery. India’s LPG gas canister reform is now the world’s largest cash transfer scheme at 150 million beneficiaries, and has had an estimated 24 percent budget savings.
Could Nigeria launch a national cash transfer scheme in lieu of fuel subsidies? Back in 2012, Todd proposed a 20-20-20 scheme to provide the equivalent of US$0.20 per day to all Nigerians under the age of 20 using a set-aside of 20 percent of government revenue. In Nigeria’s current fiscal environment, this might be tougher to achieve. But using subsidy reform to build a national ID and transfer system would have lots of knock-on benefits, including on other public services, voting, and eventually taxation. Moreover, for a President who has prided himself on anti-corruption, such a system could weed out scams and bolster the integrity of the state.
India’s experience replacing an in-kind subsidy with a cash transfer shows that energy subsidy reform is very much possible, and that efficiencies can even be popular. And that sometimes it’s better to build a new pipeline than to constantly try to fix the leaks.
The Bank claims “by showcasing success stories of effective competition advocacy, the contest aims to raise awareness of the key role played by competition agencies in promoting competition.” Okay, but the implication of the announcement is that Zimbabwe is somehow a global leader in promoting competition. Really?
Elsewhere within the World Bank we discovered some countervailing evidence:
The World Development Indicators report that the average Zimbabwean is poorer today than they were in 1990.
On the World Bank’s policy scores, Zimbabwe ranks dead last globally in average rating over the past ten years since the data has been publicly released.
The World Bank’s most recent survey of private enterprises in Zimbabwe is equally grim: 44 percent of businesses were expected to give gifts to get a construction permit; businesses averaged over 70 electricity outages a year and over half required a generator; capacity utilization languished at just 45 percent.
Almost all economic activity in the country is informal; according to the national statistical agency, only 606,000 people out of a population of 14 million were employed in the formal sector.
The IMF reports that real GDP growth slowed to just 1.5 percent last year.
Meanwhile, one in four Zimbabweans may require food aid this year.
None of this paints a picture of an economy that’s competitive, fast-growing, or innovative. So what’s going on?
The weird thing is that you can’t really tell from the press release. But if you click through to the contest webpage, you see that “Zimbabwe” didn’t win anything. Rather, the World Bank and the International Competition Network are recognizing the work of three agencies (Zimbabwe’s Competition and Tariff Commission, the Telecommunications Regulator, and the Central Bank of Zimbabwe) for reducing mobile money transfer transaction costs, which according to the Bank, has helped to increase access to mobile payment systems.
Cheaper and broader access to mobile money is surely good news—especially in an economy in turmoil where many families are reliant on overseas remittances.
And it's probably useful for organizations like the World Bank to try to recognize technocrats toiling away in little-known agencies that are making modest headway, even if the rest of the economy is collapsing around them.
While one minor award and a silly press release may not be a big deal, Zimbabwe’s government has a history of using propaganda to mask its own malgovernance and a long record of allowing state efforts at “competition” to be easily captured by predatory elites. Without this context, praising Zimbabwe as a global leader in promoting competition is—like an empty stadium Worker’s Day rally—a hollow gesture.
As the U.S. government’s development finance institution, the Overseas Private Investment Corporation (OPIC) provides investors with financing, political risk insurance, and support for private equity investment funds when commercial funding cannot be obtained elsewhere. Its mandate is to mobilize private capital to help address critical development challenges and to advance U.S. foreign policy and national security priorities. However, balancing risks, financial needs, and development benefits comes with tradeoffs.
America is uniquely positioned to advance a private sector-based development agenda due to our unparalleled entrepreneurial tradition, deep capital markets, and unmatched technological and innovation capabilities. Yet, existing US government policies fail to fully leverage these strengths. Even among policymakers and stakeholders, there is plenty of misunderstanding around how the US government’s premier agency charged with promoting these efforts, the Overseas Private Investment Corporation (OPIC), actually operates.
To help address this, we launched a major new research project focused on analyzing OPIC’s operations over the last fifteen years. Last week, we summarized our findings on one specific issue – whether OPIC is a boon for big American businesses. The broader agenda includes unpacking the agency’s portfolio based upon geographic regions; sectors; and the income level, financial sector depth, and risk profile of the recipient countries. However, pursuing this in-depth investigation requires access to comprehensive project-level data. That’s where we ran into a brick wall. When we searched for a database with key OPIC project-level information, we couldn’t find one. It seemingly didn’t exist.
OPIC clearly has made great strides at improving its public reporting over time. Most importantly, in 2009, the agency began releasing project-level information prior to formal Board consideration. These project summaries contain a wealth of information about the planned investment activities, expected development outcomes, and any social, labor, and environmental implications. OPIC also has an online database of active projects and releases annual reports and policy reports. The agency should be commended for these dramatic improvements in transparency.
The biggest problem with OPIC’s current reporting is that it’s piecemeal. Different information is available in different places and different formats. So, outsiders have to dig through reams of disparate data sources, making portfolio-level analysis almost impossible. Put differently, the lack of a comprehensive database prevents people interested in OPIC – including policymakers, researchers, businesses and investors, and others – from engaging with the agency in a rigorous, data-driven manner.
Well, the days of digging through thousands of pages of documents are over. We spent months manually entering all of the publicly available information on OPIC projects into a single location, the OPIC Scraped Portfolio dataset. The dataset also includes supplementary country-level data, like domestic private credit depth and commercial and political risk ratings. For more information on how we put the dataset together, please see our methodological note. The dataset is downloadable in Excel or Stata files, and we plan to keep it updated as additional information becomes available. Alternatively, you can explore the agency’s portfolio using the filters in the table below.
We’d welcome your suggestions for how to improve this data table. Our hope is that the dataset becomes a go-to resource and contributes to a much deeper and more informed understanding of OPIC’s activities.
Even with this newly accessible resource, there are still some big reporting gaps. Critical project-level information remains locked up, especially on development effects. The agency scores each prospective project on its expected development impact. However, this information is not disclosed publicly. In our new CGD paper, we did our best to create a proxy for development rating categories. But, this data is unofficial and incomplete. Moreover, OPIC does not release project-level information on actual development benefits over time, even though the agency collects this information and reports aggregated results each year.
We hear that OPIC is working hard to address these remaining deficiencies. There are still nine months before the existing management team leaves office, which is a lot of time to make significant progress. Let’s hope that the agency prioritizes progress on what matters the most – projected and actual development results. Watch this space for more. In the meantime, we encourage you to explore the new OPIC Scraped Portfolio dataset.
Donald Kaberuka, the new president of the African Development Bank, leads an institution whose financial standing has been restored from the near collapse of 1995, but whose operational credibility remains a work-in-progress. This CGD working group report offers external, independent advice to Kaberuka and the Bank's board of directors on broad principles to guide the Bank’s renewal. The report contains six bold yet achievable recommendations for management and shareholders as they address the urgent task of reforming Africa's development bank. Prominent among the recommendations is a strong focus on infrastructure.
We are one week away from the first ever US-Africa Summit. As some fifty heads of state prepare to descend on Washington DC on Aug 4, the only certainties are that the hotels will be packed and downtown traffic will be a snarl. But what to expect from the Summit itself?
Blog: An AGOA Deliverable for the US-Africa Leaders Summit
CGD Note: AGOA’s Final Frontier: Removing US Farm Trade Barriers
What I hope to see:
Substance on peace & security cooperation. Hard national security issues will always rise to the top of foreign policy, so it’s essential that the Summit address our mutual concerns about instability (in places like DRC, CAR, Mali), terrorism (Sahel, Kenya, Somalia), and other transnational threats (Ebola, narcotics trafficking). Since the U.S. can’t fight these alone, we need to be more creative in figuring out what we should be doing together with African partners. This must go beyond more of the same.
Real progress on energy & infrastructure investment. Nearly every African leader has prioritized private investment. By no coincidence, the administration’s signature initiative for the second term is Power Africa. So far, so good. But the Summit should provide a signal of intentions to accelerate and expand the electricity effort and to revitalize efforts to mobilize American business.
African leaders gain a sense that America is finally taking them seriously. Beyond specific deliverables, summits are mainly opportunities to set a tone for future relations. With buoyant economies and huge new interest from the BRICs and other players, African leaders are feeling confident about themselves yet also anxious about the degree of attention from the world’s sole remaining superpower. This comes just at the time that Africa is more important than ever before to the United States. I hope Summit participants will depart Washington with a renewed sense of respect and significance from the United States.
What I hope I won’t see:
A Distracted President. There’s been some complaining about the lack of bilateral meetings. (Fifteen-minute speed-dating is arguably even less than zero meetings.) But I really hope that events in Gaza, Ukraine, or who-knows-where don’t reduce President Obama’s attentions or even force him to back out of any Summit events.
Old-think, finger-wagging, political theater. We’ve had enough of that already.
Too much about “African youth”. Yes, Africa has a demographic youth bulge and, yes, unemployment and marginalization of young people is an important issue and, yes, the administration has a nice Young African Leaders Initiative. But none of this is worthy of very scarce POTUS-capital. It’s unthinkable that President Obama would highlight youth in a summit with Asian or Latin American presidents. African heads of state know this too.
Extravagant luxury shopping. I hope the visitors will also show some discretion and not do anything embarrassing like we’ve sometimes seen at summits in the past, such as indefensible displays of champagne, shopping, and luxury hotel bills. Vast entourages traipsing through Jimmy Choo, Gucci, and Tiffany’s in Friendship Heights would send all the wrong messages back home.
Of the many outcomes in the FY2014 Omnibus Appropriations legislation, one that stood out was buried in section 7081. This provision now allows the Overseas Private Investment Corporation (OPIC) to invest in fossil fuel power projects in IDA and IDA-blend countries. In other words, OPIC’s carbon cap has been lifted at least until the end of September.
The debate now shifts to what OPIC will be able to do over the medium- to long-term to help close the huge energy access gap. Attention will now turn to the Electrify Africa Act first introduced by Representatives Royce (R-CA), Engel (D-NY), Smith (R-NJ) and Bass (D-CA) and currently has 41 additional cosponsors from both parties. A similar bill is in the works on the Senate side. Will OPIC be allowed to continue investing in natural gas projects? Or will it again be forced to focus almost exclusively on renewables? And, what does this all mean for the six Power Africa countries (and other poor, low emitting countries too)?
To help clarify what’s at stake, we estimated how different OPIC energy portfolios would impact electricity access levels and additional generation capacity. Here’s a taste of what we find:
In short, we estimate that more than 60 million additional people in poor nations could gain access to electricity if OPIC is allowed to invest in natural gas projects and not just renewables.* The difference in generation is 38,000 MW, or more than three times the current combined capacity of the six Power Africa countries. Read the full paper, with our methodology, here.
* This simulation is based on OPIC commitments totaling $10 billion.
The imperative for US development finance has increased significantly due to a number of factors over the last decade. There is growing demand for private investment and finance from businesses, citizens, and governments in developing countries. Given the scale of challenges and opportunities, especially in promoting infrastructure investments and expanding productive sectors, there is an increasingly recognized need to promote private sector-based solutions.
Senior fellow Todd Moss investigates how the aftershocks of the global economic downturn are affecting Africa. African countries that take the right steps to mitigate the pain will be poised to benefit from the eventual recovery; those that don't will be left behind.
Ghana’s recent recalculation of its GDP led to an overnight $500 per capita jump, putting in motion unexpectedly rapid graduation from the International Development Association (IDA) and ultimately a new relationship with the World Bank. In this week’s Wonkcast, I speak with Todd Moss, vice president for programs and senior fellow at CGD, about his recent trip to the newly categorized lower-middle income country, the implications of IDA graduation, and a sudden influx of oil wealth.
Why Ghana? Todd explains that the country was the first country in Sub-Saharan Africa to gain independence from colonial rulers after World War II and a pioneer in making the transition to a stable democracy. Many in Africa and elsewhere therefore look to Ghana as a harbinger of things to come for the region. Graduation from IDA may be similar in this way, since many African countries are enjoying moderate-to-high sustained growth and will soon breach the IDA income ceiling of $1,175 GDP per capita.
As an IDA graduate, Ghana will soon lose access to the highly concessional IDA loans, with their long grace periods and extremely low interest rates. Instead, Ghana will rely more on international markets and the IBRD, the bank’s hard loan window, which offers terms that are closer to internationally available commercial credit. And, Todd adds, Ghana will need to pay back outstanding IDA loans at an accelerated rate.
“I don’t think Ghana has realized the implications of this yet,” Todd says. “I was surprised when I was in Accra that people had not discussed this with the World Bank and the bank hadn’t raised this with finance officials. So, one of the things I hoped would be an outcome of my visit is that this would start to be discussed so that the government could understand the implications.”
I ask Todd if accelerated loan re-payment and higher interest rates on IDRB loans will place Ghana in a financial bind. He replies that Ghana’s new influx of oil revenues will cushion these effects. While Ghana does not rank among Africa’s top ten oil producers, starting in 2013 oil revenue will be about 1.5 billion dollars per year– the equivalent of what the country receives annually in aid.
Oil rich countries often suffer from high poverty and endemic corruption—the so-called “oil curse.” To combat this trend, Todd and others are urging direct distribution of some or all of the oil proceeds, with the government then taxing back part of it. This Oil2Cash approach is designed to encourage accountability and transparency. Todd had hoped that Ghana might try the new approach. Instead the government has opted to spend most of the funds on roads, ports and other infrastructure.
"Spending most of the oil money on big infrastructure makes sense in one way,” explains Todd, since there are genuine needs. “But if there was one sector you wanted to spend a lot of money in if you were trying to fuel corruption and waste, it would probably be large construction projects. It's a little bit worrying. “
On the bright side, Todd says, people in Ghana are engaged in a wide-ranging debate on public policy. NGOs, civil society, and government have been participating in a lively circle of discussion. Todd has special praise for the Institute of Economic Affairs, his host while he was in Accra, which during the last election hosted a debate by the four candidates running for president.
We conclude with discussion of the impact on the World Bank of the large number of countries poised to graduate from IDA, a topic Todd and co-author Ben Leo explored in a recent CGD working paper and the focus of a CGD working group that recently had its first meeting. Want to know more? Listen to the Wonkcast!