New World Bank Chief for Africa Ready to Tackle Poverty Head-On

from All Africa

New Vision (Kampala)

By Paul Busharizi and Sylvia Juuko
Kampala

The World Bank has appointed Shantayanan Devarajan the chief economist for Africa region. Paul Busharizi and Sylvia Juuko spoke to him about his new assignment.

Aid has been poured in Uganda for the last two decades but there is a feeling that things are not up to scratch. Does the World Bank think we should continue with the status quo?

Let me first question the premise that the aid has not been productive. Uganda is a case of very highly productive development partnership. You have had 20 years of uninterrupted growth, rapid poverty reduction albeit starting from low base and you have achieved macro-economic stability.

Structural reforms have been put in place making Uganda a very open economy. There is a question of how much that has to do with aid but you can associate that with the fact that there has been a lot of aid coming through.

From the World Bank's side, we have been engaging with the Government on issues of growth, poverty reduction, and macro-economic stabilisation.

I look at the glass as half full when I look at the aid in Uganda relationship.

There is no question that there are huge challenges facing the country now.

So even if aid hadn't been productive in the past, it may not be the case of business as usual regarding what is needed in the future.

Does this mark a shift in aid delivery?

It's not a 180 degree shift but the aid relationship has been shifted because we have gone through the first generation reforms.

Most of these were stroke of the pen type reforms, stabilise exchange rate, devalue currency, deregulate.

Uganda is now facing some important second generation reforms that are much more deeply institutional. Take the example primary education program that delivered on the index of enrolment that doubled. But that's not only what education is about.

We have to worry about quality, completion rates and then secondary education. Getting the education learning outcomes to increase, frankly, I don't think the profession has figured that out. We know more about getting kids into school. We need to be experimenting with things like whether we need to give more autonomy to schools, the curriculum and also giving children opportunity to have choice across schools or whether communities should manage schools.

These are experiments that have been done elsewhere, some have succeeded some have failed and we are beginning to understand why. Uganda is ready for experimental approach for some of these deeper reforms that are needed. Previously when you knew what the policy was like, it was easier to design the aid relationship. We would look at a specific macro economic stabilisation programme, finance it and it delivered. Now we are not entirely sure what to do about learning outcomes, government is also not entirely sure what kind of program it should be.

So in my agenda, this should be seen much more as a knowledge partnership where we are both in this together and we are jointly going to figure out what it takes to get learning outcomes in Uganda and this could vary, by country, region, and district.

We will experiment, we will learn, we will be willing to admit mistakes. And the aid relationship is that we will put money behind this but the money is not necessarily conditional on Uganda delivering results because we know this is a risky process.

The money is our good faith commitment that it's a genuine partnership.

What would you consider as challenges of your assignment?

My main challenge which is also a main opportunity is that Africa as a whole is enjoying unprecedented economic growth.

Three years in a row Africa has grown. There are 18 non-mineral exporters who have been growing at a rate of 4% per year for four years.

My main challenge is making this growth sustainable and make sure it is shared so that it leads to poverty reduction.

It's a challenge but easy to do when there is growth to work with. It's less of an issue in this country but my concern is with the mineral exporters because they have had two other commodity booms in the past that have not generated sustained or shared growth. We need to focus on that because these opportunities don't come by every now and then. There are also several countries in conflict or coming out of conflict so we have to make sure they come out of conflict in way that puts them in a sustainable path.

There have been issues regarding accountability and the feeling is that so much would have been accomplished if aid money was not stolen.

The multilaterals should be accountable for the money they lend. They should also be accountable for results, delivering poverty reduction, because that is our objective.

For example one of the countries in my previous job was Bangladesh which was perceived the most corrupt country in the world by Transparency International.

But during that period, it had its growth rate accelerate by one percentage point every decade to the current 6% a year.

It has reached universal primary education and almost universal secondary, it has a booming garment export sector and we are putting money behind it. To me aid has delivered poverty reduction in Bangladesh. There is no question about deep corruption problems and we are very worried about them. We worked very hard to manage that but I don't see that as a failure of aid. I fully agree that there should be accountability but it should be for results.

We should be held accountable if we put a lot of money in the country and conditions do not improve; there are questions to be asked.

Does the World Bank ask the Government tough questions regarding accountability?

We do ask the Government tough questions about results and about accountability for delivering the services. We also do ask tough questions about whether the money is properly spent for purposes to which it was intended.

But we need to have a sense of proportion there because money about 30% goes to budget support, so there is no way to track World Bank dollars.

What we do is look at government fiduciary and financial management system and we work with the Government to try and make them better.

We should not go to extreme of saying we don't trust the Government so we put in our own project management system and we are going to ensure every penny is spent, but those situations hardly deliver results.

The budget will be delivered this month amidst all the challenges of high inflation and commodity prices; it appears the finance minister has little room to move?

There has been some price increase in Uganda but no where near a shock of high world price increases because Uganda is a net food exporter, its many ways a terms of trade shock. Food prices for matooke didn't go up at the rate of prices for wheat and maize.

While there is world wide concern about food prices, I think effects in this country are muted. World wide some of the wheat prices have started to go down.

There is a maize harvest season coming up soon which may be favorable effect on the prices.

That doesn't deny the fact that poor urban people and to some extent the poor landless farmers who are net food consumers are very hardly hit by a 30% price increase.

The challenge for the finance minister is to make sure those poor people are helped rather than undertaking policies that help everybody which are very costly. Even lowering taxes is not a targeted policy because everybody benefits from that policy whereas the people you want to help are urban poor and landless farmers in rural areas.

I would rather use government scarce resources on targeted cash assistance programs to poor people. There are already programs in place so they can be scaled up.

In the north they are such programs which can be extended allover the country. They are contemplating vouchers on inputs but those are targeted and that important.

This may be the best news for Ugandan farmers in the long run. They finally may be getting decent prices for their out puts. But the challenge is can you help and make sure they increase production because there are constraints to production than just prices like fertilisers, transport, seeds, storage so the programme should be focused on that, and its medium-term programme.

Let's put in place the ingredients that will give us supply response in the medium-term so that could do more for poverty reduction.