1. The Governance Deficit and
Institutions for Inclusive
Development in Africa
Adam B. Elhiraika, PhD
Chief, Macroeconomic Analysis,
Economic Development and NEPAD Division,
UNECA
JICA-SOAS workshop, London, 15-16 March
2012

2. Outline
• Kay messages
• Governance deficits and institutional drivers of
exclusion in Africa
• The APRM Governance framework and
Institutional Foundations for Inclusive
Development
• A new development model for inclusive
development in Africa
- Promoting democratic/inclusive developmental
states
- Developmental state institutions and policies
• Concluding remarks and way forward
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3. Key messages
• Recent economic and social development in Africa
has not been inclusive due to heavy dependence
on enclave commodity sectors, limited economic
transformation and high inequality, lack of social
protection, governance deficits and ineffective
institutional foundations.
• Inclusive growth can only be achieved by
addressing the governance deficit, and promoting
democratic developmental states and
comprehensive development plans that focus on
building human capabilities and welfare.

4. Africa’s recent economic and
social development
• Africa’s growth record has been
impressive since the start of the 21st
century.
• Growth factors include not just the
commodity boom but also improved
economic management, increased capital
inflows, and a hospitable external
environment.
• Thus optimism on Africa’s rise is growing.
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5. Africa’s recent economic and
social development (cont’d)
• However, growth has been largely jobless and less
conducive to inclusion and social development because of:
- Heavy dependence on primary commodity production, low
productivity growth and low investment in labour intensive
sectors.
- High inequality rates and ineffective social protection
mechanisms.
- A dominant informal economy and vulnerable employment
that account for over 60% of output and 75% of total
employment, respectively, in many African countries.
• Therefore, African countries must enhance social welfare
through economic growth and pursue inclusive growth as a
matter of political, economic and social priority.
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6. Governance deficits and
exclusion
• Exclusive elite-dominated political, economic and
corporate governance structures constrained
freedoms and weakened state capacity and
accountability.
• Weak societal empowerment and inequitable
distribution of opportunities and income.
• The above call for (see UNECA and AUC, 2011 &
UNDP. 2011):
- Legitimate and elected leadership
- Responsive policies for inclusion
- Effective anti-corruption and monitoring mechanisms
- Independent judiciary, effective government and rule of law
and equity among rural-urban groups
- Creating constituencies for inclusion and social change

7. Drivers of exclusion
• Rent-seeking behavior and weak tax base
• Weak subnational governments
• Legal disempowerment of civic
organizations that could engender change
and inclusion, not just charities.
• Weak labour movements and middle class
• Opportunistic business class that does not
care about democracy and fair processes.
• Security and oppression that perpetuate
exclusion, but only protect the interests of
ruling elites

8. Drivers of exclusion cont’d
• Non-representative and ineffective governance
reforms and failure to fight corruption
• Weak rule of law
• Weak judiciary that lacks independence and
capacity to enforce the law
• Participation crisis and political exclusion
• Lack of freedom of information and empowerment
of stakeholders
• Weak local governance and limited fiscal
decentralization

9. Which institutions are conducive to
inclusive development in Africa?
• Institutions that support a well-functioning
market economy by lowering transaction costs,
building human capabilities ….and providing
adequate incentives to investors.
• Five types of market institutions that matter for
quality growth and development (Rodrik 2000;
Nnadozie, 2009)
- Property rights
- Regulatory institutions
- Institutions for macroeconomic stabilization
- Institutions for social insurance/protection
- Institutions for conflict management

10. How can African countries acquire or
harmonize, rationalize and strengthen
institutions for inclusive growth?
• Institutions need to be developed locally
within a participatory and coalition-
building process that strengthens state
capacity and human capability.
• Will the APRM help African countries
create and/or strengthen institutions for
inclusive development?

11. APRM and institutions for inclusive
development cont’d
• Overall, the mandate of the African Peer Review Mechanism
(APRM) is to ensure that the policies and practices of
member States conform to agreed political, economic and
corporate governance values and standards, contained in
the declaration on Democracy, that are critical for promoting
adequate institutional foundations for inclusive development
(Nnadozie, 2009).
• APRM should lead to effective institutional frameworks
through the adoption of appropriate policies, standards and
codes, sharing of experiences, reinforcement of successful
best practices (identify deficiencies and assess capacity
needs) based on good political, economic and corporate
governance that should lead to higher economic growth,
sustainable socio-economic development and accelerate
subregional and regional integration.

12. APRM and institutions for inclusive
development
• APRM’s political, economic and corporate governance
frameworks deal directly with institutions for shared growth
and development.
• These include:
- Institutions for representative and accountable political,
economic and corporate governance, and
- a guaranteed framework for equal citizen rights
including access to justice, respect for the rule of law,
freedom of expression, association and assembly . . .
- Call for visionary leadership, vibrant civil society and
broad stakeholders participation in governance and
development management processes.
• APRM corporate governance’s key objectives relate to
standards and codes necessary for creating an enabling
business environment and effective regulatory framework.

13. APRM and institutions for inclusive
development cont’d
• APRM economic governance framework facilitates
creating institutions that adhere to international
codes and standards and promote sustainable
and inclusive growth through:
- Promotion of macroeconomic policies that
support sustainable development
- Implementation of transparent, predictable
and credible government policies
- Promotion of sound public finance
management
- Combating corruption and money laundering
- Acceleration of regional integration through
harmonization of monetary trade and
investment policies among participating states.

14. APRM and institutions for
inclusive development cont’d
• Economic Governance Evaluation criteria
- Compliance with relevant international standards and
codes
- The soundness of macroeconomic management
- The extent to which sectoral policies promote
sustainable development
- Resource mobilization efforts
- The extent of vulnerability to internal and external
shocks
- Effectiveness and transparency of public administration
- Soundness of public finance management and
institutional capacity
- Fiscal decentralization
- Measures to fight corruption and money laundering
- Measures for strengthening regional integration and
monetary cooperation

15. How does APRM assist African
countries in practice?
• Conceptual good governance framework
• Voluntary participation in peer review and broad
stakeholders participation in the review process, and the
preparation and implementation of national programme of
action (NPoA) and its monitoring.
• Encouraging dialogue, transparency, stakeholder
engagement and empowerment and the emergence of
stronger institutions
• Thus a multi-stage structure had to be put in place,
strategic alliances and peer pressure – these start with a
conceptual common understanding of the APRM framework,
country self-assessment, APR review, NPoA
• Notwithstanding APRM limitations – e.g multiplicity of
programmes and information gaps -, many African
countries are implementing APRM institutional reforms and
good governance process on their own.

16. Developmental states as a new institutional
model for inclusive development in Africa
within the APRM framework
• ECA and AUC call for democratic
developmental states within the NEPAD
and its APRM framework (ERA 2011, AGR,
2009 and 2012)
• Similar calls by UNDP and member States
(UNDP-Aarb Region, 2011; UNCTAD 2010)

17. Building accountable capable states and democratic
institutional foundations for inclusive development
• Deepening democratic governance in the context of the
APRM
• Building an accountable and capable state and empowering
society through inclusive participation
• Democratic developmental states as a new development
model for inclusive political and economic systems
• Participatory development frameworks, effective policy
design and implementation with the active engagement of
various stakeholders – a new social contract.
• Building institutions – political parties and business and
labor organizations and civil society – to manage conflicts.
• Empowering local communities through decentralization as
an institution for inclusive development
• Empowering the judiciary
• Designing a new development vision and anchor the
developmental role of the state in constitutions

18. Inclusive political and economic institutions
as foundations for inclusive development –
role of the developmental state
• Institutions and policies to promote balanced development
through macroeconomic policies that generate productive
decent jobs.
• Instead of rent-seeking, direct state interventions to
correcting market failures.
• Place priority on an inclusive market provides opportunities
for productive life and dignity.
• Supporting economic development through various support
mechanisms, technology transfer, R&D, skills development,
strategic investments . . Etc
• Creating institution to check rent-seeking behaviour and
prevent state capture
• Legal empowerment of the poor and the informal sector to
have equitable access to economic and social services and
opportunities, justice, participation etc.

19. Developmental state strategies and policies
• Comprehensive and inclusive development planning &
budgetary frameworks led by visionary leadership
• Focus on employment-centered growth with special
attention to the poor, the vulnerable groups and informal
actors
• Macroeconomic policies to promote growth and inclusion
• Participatory and accountable processes for use of public
resources
• Creating fiscal space through productive public expenditure,
effective management of resources and institutional
reforms etc
• Inclusive and competitive markets with special support to
SMEs, entrepreneurship promotion, training, NGOs. . etc
• Supportive sectoral and local level initiatives
• Social protection system and social inclusion (ECA and AUC,
2012)

20. Role of government and other stakeholders
• Establishment of democratic deliberative
institutions and their empowerment to
promote stakeholder ownership of
development programmes is critical.
• A active participation of the full range of
all stakeholders in the development:
– Private sector and civil society organizations
• Need to address other key elements
– Leadership
– Regional and continental integration and
development
– International economic arrangements and
partnerships

21. Conclusions
• Addressing governance deficits and constructing
developmental States is essential for African
countries to lay effective institutional foundations
for inclusive development.
• Inclusive planning and effective non-market
institutions should complement market
institutions to promote employment-focused
growth, equity and social protection as basis for
accelerated economic transformation.
• Further country-specific research essential for
defining the role of the State and relevant
strategies and policies for inclusive development

22. Thank you for your
attention