African Center for Gender and Development

14 September 2004

AD HOC EXPERT GROUP MEETING ON A GENDER-AWARE
MACROECONOMIC MODEL TO EVALUATE IMPACTS OF POLICIES ON
POVERTY REDUCTION

Opening Statement

Josephine Ouedraogo
Director of the African Centre for Gender and Development
Economic Commission for Africa

Addis Ababa, Ethiopia
14 September 2004

Distinguished Experts,
Dear Colleagues and Friends

It is my pleasure to welcome you all to Addis Ababa on behalf of Mr. K.Y. Amoako, the Executive Secretary of the Economic Commission for Africa for this important Meeting of Experts, to review a gender-aware macroeconomic model that ECA developed in collaboration with the Statistics South Africa of the Republic of South Africa, and technical support of the University of Laval, Canada.
Mr. Amoako would have loved to be present, but due to a last minute- engagement he asked me to express his sincere apologies. I can assure you that he is not only following our programme with a lot of interest, but has shown serious commitment to it.
I would like first of all to sincerely thank all ECA partners present at this meeting – the Advisory Expert Group, which was constituted two years ago to advise the Commission on the development and dissemination of the gender-aware model in African countries. This Group as you may know comprises senior microeconomic and macroeconomic modelers, policy analysts and statisticians, who today include independent experts from Australia, Canada, India and six African countries.
Special welcome and thanks go to the experts from the Laval University, Canada, especially, Prof. John Cockburn (who is unable to attend this meeting), Prof. Bernard Decaluwe and Mr. Ismael Fofana who diligently provided high quality technical support in developing the model in collaboration with ECA team.
I would also like to recognize my own team, especially, Mr. Alfred Latigo, Senior Economic Affairs Officer, assisted by Mr. Omar Abdourahaman, Economic Affairs Officer under whose coordination, this model was developed and the report on the model was prepared in collaboration with the experts from the University of Laval.
Last but not least, I wish to thank all members of ECA’s Interdivisional Working Group who one way or the other contributed at the conceptual stages of the development of the model. Special thanks go to Mr. Kwabia Boateng, Miss Maite Lopez and Mr. Patrick Osakwe who participated in the first Ad hoc Expert Group Meeting to consider the proposed model.

Colleagues,
The objectives of this meeting are highly relevant for current development efforts in Africa. As you may know this model is intended to evaluate impacts of policies on the household economy, market economy and poverty reduction. Its focus is particularly relevant to the objectives of New Partnership for Africa’s Development (NEPAD) and the Millennium Development Goals (MDGs), given that it is now a requirement for African Governments to evaluate impacts of their policies on the welfare of their people for sound policy formulation.

As you may know, mainstreaming gender perspectives in macroeconomics is relatively a new area, still on probation. As a first step, it is important to consider activities that would carefully establish its credibility and credentials, which would consolidate value added to growth and poverty reduction. One-way of thinking systematically about developing an agenda of activities in this challenging area is to start with critical questions and to see where the answers are synergistic. “What are the current challenges in developing, implementing and evaluating national development policies that take into account the contribution of all players in the economy”?
To me, this is the fundamental question that needs an urgent attention and can be answered by appreciating the following facts.

First of all, the production of services for own consumption by households is a continuing large and growing part of the total economic system. It is most usefully considered as a separate economy, which is on an equal footing with the market economy. Our well-known Household Economist, Prof. Duncan Ironmonger who is with us today, describes “the total economy as a two-legged animal, with a market leg and a household leg. Both are necessary for the economy to stand up, to walk and to run”. Unfortunately, existing macroeconomic frameworks including national accounts, budgets and policies are based on only market economy, which is known now to constitute just 50% of the total economy.

Secondly, we also know that the household economy provides most of the human capital to the public sector economy and the private sector economy. Thirdly, according to the International Food Policy Research Institute (IFPRI), from the household economy, women are known to comprise 60% of the informal sector (including informal trade), provide about 70% of the total agricultural labour, and produce about 90% of the food in Africa. Thus, ignoring the value added from the household economy through the “care” work, subsistence production and informal sector production, indeed means that this large economy is of no consequence.

The next question I wish to pose is, how we who are gathered here can ensure that African Governments integrate household production and services into national planning instruments and policies as a matter of urgency? Again this is a pertinent question given that currently, macroeconomic analysis and modeling is carried out as if no differences existed between women and men.

To illustrate this point, I would take you thirty years back when developing countries, especially, in Sub-Saharan Africa faced major macroeconomic shocks associated with among others, fluctuations in the world price of raw materials and agricultural exports or economic policy reforms such as structural adjustment programmes (SAPs) and the liberalization of commercial trade. These shocks have had significant repercussions on the economies of these countries in particular, in terms of income distribution and poverty levels. For example, from empirical analysis and the recognition of the World Bank, it became apparent that these economic reforms have reduced women’s output, restricted access to education, and have hindered women’s ability to develop their human resources.
Although such gender-related development issues prompted serious debate, the absence of appropriate gender-aware macroeconomic analytical tools penalized quantitative analyses. More generally, it must be recognized that there are few instruments, which can relate macroeconomic policy and microeconomic behaviour. In this context, a computable general equilibrium model is one such a tool that can address these concerns. Such models have been applied to a range of policy questions in a number of economic fields over the last ten or so years. They include public finance and taxation issues, international trade policy questions, evaluations of alternative development strategies and the implications of macroeconomic policies.

However, the application of computable general equilibrium (CGE) models in developing countries, especially, in Africa is still very limited. Moreover, these models have almost entirely neglected the gender dimension, making gender-aware simulation research into models still very rare and often rudimentary. Thus, no operationalizable economic model has been developed for African economies to provide clues as to how integration of household economy and gender perspectives into national accounts, budgets and policies can impact on women and influence macroeconomic outcomes, hence, the impetus for ECA to develop a gender-aware model.

The Draft Report on the model seems to have generated exciting results. The National Satellite Accounts prepared in this work attempted for the first time in Africa to bring together market economy and household economy in a common framework to measure the contribution of household production to the national economy.
Furthermore, the gender-aware social accounting matrix was able to demonstrate numerically that women’s contribution in non-market production in South Africa is almost double that of men and that women have 30-50% less time for personal care and the leisure than men at the household level.
The development of national satellite accounts of household production and gender-aware social accounting matrix further show how we can now mainstream gender perspectives and household production in national accounts, budget and policies. This is a direct contribution to the implementation of the strategic objectives and action plans of the Beijing Platform for Action and UN 1993 System of National Accounts.

Without going into the specific results of the policy simulations, it can be seen that trade liberalization would lead to reduced labour market participation by women while increasing that for men. It would also increase time burden on women in that they will spend roughly three times as much time in household production as men. These results in particular, may help finding alternative investments to compensate losses on the part of women for example, arising from economic reforms. All these strong predictive results would not be noticed if the social accounting matrix and the model were not gender-disaggregated, and if household economy in macroeconomic framework were excluded.
I therefore consider this work as timely especially today when African governments are reviewing the achievements made in the implementation of the Beijing Platform for Action.
We therefore can count on this internationally acclaimed Group to be constructive in reviewing the report on this model. This gives me pleasure for associating with you and confidence that we shall continue to work together. And that is why I used this opportunity to speak candidly about what I believe are the challenges and opportunities to make poverty reduction strategies work in Africa.

You have been selected and invited to contribute to the implementation of our work programme as each of you, individually, bears confirmed knowledge and experience of the issues to be discussed.
Once again, ECA, as a knowledge-based institution is very honored by your presence and I am most grateful to all of you for the efforts you made to make yourself available for this meeting.
One message I wish to conclude with is that the gender-aware model is by no means without problems. Like many other models, it can pose challenges for users of existing models. But done in an intelligent and focused way and in the context of contemporary debates on policy issues, the rewards can be large as we can see in the examples of the results generated from this model. In particular, a good understanding of the underlying structure of this type of model and the degree of simulation results is specifically needed if we are to assess how well a specific model captures the underlying economy.

I end as I began: grateful for your collaboration and guidance, thankful for your commendable dedication to make ECA serve Africa better, and appreciative of the insights and wisdom you will continue to bring to solve the unique development problems of Africa.
I therefore look forward to collaborating closely with you to ensure operationalization of gender-responsive tools, so that this continent does not leave out its crucial partners in development – the women and the household actors - and may soon begin to truly fulfill its great promise.

Thank you.





14 September 2004 AD HOC EXPERT GROUP MEETING ON A GENDER-AWARE MACROECONOMIC MODEL TO EVALUATE IMPACTS OF POLICIES ON POVERTY REDUCTION Opening Statement By Josephine Ouedraogo Director of the African Centre for Gender and Development Economic Commission for Africa Addis Ababa, Ethiopia 14 September 2004 Distinguished Experts, Dear Colleagues and Friends It is my pleasure to welcome you all to Addis Ababa on behalf of Mr. K.Y. Amoako, the Executive Secretary of the Economic Commission for Africa for this important Meeting of Experts, to review a gender-aware macroeconomic model that ECA developed in collaboration with the Statistics South Africa of the Republic of South Africa, and technical support of the University of Laval, Canada. Mr. Amoako would have loved to be present, but due to a last minute- engagement he asked me to express his sincere apologies. I can assure you that he is not only following our programme with a lot of interest, but has shown serious commitment to it. I would like first of all to sincerely thank all ECA partners present at this meeting – the Advisory Expert Group, which was constituted two years ago to advise the Commission on the development and dissemination of the gender-aware model in African countries. This Group as you may know comprises senior microeconomic and macroeconomic modelers, policy analysts and statisticians, who today include independent experts from Australia, Canada, India and six African countries. Special welcome and thanks go to the experts from the Laval University, Canada, especially, Prof. John Cockburn (who is unable to attend this meeting), Prof. Bernard Decaluwe and Mr. Ismael Fofana who diligently provided high quality technical support in developing the model in collaboration with ECA team. I would also like to recognize my own team, especially, Mr. Alfred Latigo, Senior Economic Affairs Officer, assisted by Mr. Omar Abdourahaman, Economic Affairs Officer under whose coordination, this model was developed and the report on the model was prepared in collaboration with the experts from the University of Laval. Last but not least, I wish to thank all members of ECA’s Interdivisional Working Group who one way or the other contributed at the conceptual stages of the development of the model. Special thanks go to Mr. Kwabia Boateng, Miss Maite Lopez and Mr. Patrick Osakwe who participated in the first Ad hoc Expert Group Meeting to consider the proposed model. Colleagues, The objectives of this meeting are highly relevant for current development efforts in Africa. As you may know this model is intended to evaluate impacts of policies on the household economy, market economy and poverty reduction. Its focus is particularly relevant to the objectives of New Partnership for Africa’s Development (NEPAD) and the Millennium Development Goals (MDGs), given that it is now a requirement for African Governments to evaluate impacts of their policies on the welfare of their people for sound policy formulation. As you may know, mainstreaming gender perspectives in macroeconomics is relatively a new area, still on probation. As a first step, it is important to consider activities that would carefully establish its credibility and credentials, which would consolidate value added to growth and poverty reduction. One-way of thinking systematically about developing an agenda of activities in this challenging area is to start with critical questions and to see where the answers are synergistic. “What are the current challenges in developing, implementing and evaluating national development policies that take into account the contribution of all players in the economy”? To me, this is the fundamental question that needs an urgent attention and can be answered by appreciating the following facts. First of all, the production of services for own consumption by households is a continuing large and growing part of the total economic system. It is most usefully considered as a separate economy, which is on an equal footing with the market economy. Our well-known Household Economist, Prof. Duncan Ironmonger who is with us today, describes “the total economy as a two-legged animal, with a market leg and a household leg. Both are necessary for the economy to stand up, to walk and to run”. Unfortunately, existing macroeconomic frameworks including national accounts, budgets and policies are based on only market economy, which is known now to constitute just 50% of the total economy. Secondly, we also know that the household economy provides most of the human capital to the public sector economy and the private sector economy. Thirdly, according to the International Food Policy Research Institute (IFPRI), from the household economy, women are known to comprise 60% of the informal sector (including informal trade), provide about 70% of the total agricultural labour, and produce about 90% of the food in Africa. Thus, ignoring the value added from the household economy through the “care” work, subsistence production and informal sector production, indeed means that this large economy is of no consequence. The next question I wish to pose is, how we who are gathered here can ensure that African Governments integrate household production and services into national planning instruments and policies as a matter of urgency? Again this is a pertinent question given that currently, macroeconomic analysis and modeling is carried out as if no differences existed between women and men. To illustrate this point, I would take you thirty years back when developing countries, especially, in Sub-Saharan Africa faced major macroeconomic shocks associated with among others, fluctuations in the world price of raw materials and agricultural exports or economic policy reforms such as structural adjustment programmes (SAPs) and the liberalization of commercial trade. These shocks have had significant repercussions on the economies of these countries in particular, in terms of income distribution and poverty levels. For example, from empirical analysis and the recognition of the World Bank, it became apparent that these economic reforms have reduced women’s output, restricted access to education, and have hindered women’s ability to develop their human resources. Although such gender-related development issues prompted serious debate, the absence of appropriate gender-aware macroeconomic analytical tools penalized quantitative analyses. More generally, it must be recognized that there are few instruments, which can relate macroeconomic policy and microeconomic behaviour. In this context, a computable general equilibrium model is one such a tool that can address these concerns. Such models have been applied to a range of policy questions in a number of economic fields over the last ten or so years. They include public finance and taxation issues, international trade policy questions, evaluations of alternative development strategies and the implications of macroeconomic policies. However, the application of computable general equilibrium (CGE) models in developing countries, especially, in Africa is still very limited. Moreover, these models have almost entirely neglected the gender dimension, making gender-aware simulation research into models still very rare and often rudimentary. Thus, no operationalizable economic model has been developed for African economies to provide clues as to how integration of household economy and gender perspectives into national accounts, budgets and policies can impact on women and influence macroeconomic outcomes, hence, the impetus for ECA to develop a gender-aware model. The Draft Report on the model seems to have generated exciting results. The National Satellite Accounts prepared in this work attempted for the first time in Africa to bring together market economy and household economy in a common framework to measure the contribution of household production to the national economy. Furthermore, the gender-aware social accounting matrix was able to demonstrate numerically that women’s contribution in non-market production in South Africa is almost double that of men and that women have 30-50% less time for personal care and the leisure than men at the household level. The development of national satellite accounts of household production and gender-aware social accounting matrix further show how we can now mainstream gender perspectives and household production in national accounts, budget and policies. This is a direct contribution to the implementation of the strategic objectives and action plans of the Beijing Platform for Action and UN 1993 System of National Accounts. Without going into the specific results of the policy simulations, it can be seen that trade liberalization would lead to reduced labour market participation by women while increasing that for men. It would also increase time burden on women in that they will spend roughly three times as much time in household production as men. These results in particular, may help finding alternative investments to compensate losses on the part of women for example, arising from economic reforms. All these strong predictive results would not be noticed if the social accounting matrix and the model were not gender-disaggregated, and if household economy in macroeconomic framework were excluded. I therefore consider this work as timely especially today when African governments are reviewing the achievements made in the implementation of the Beijing Platform for Action. We therefore can count on this internationally acclaimed Group to be constructive in reviewing the report on this model. This gives me pleasure for associating with you and confidence that we shall continue to work together. And that is why I used this opportunity to speak candidly about what I believe are the challenges and opportunities to make poverty reduction strategies work in Africa. You have been selected and invited to contribute to the implementation of our work programme as each of you, individually, bears confirmed knowledge and experience of the issues to be discussed. Once again, ECA, as a knowledge-based institution is very honored by your presence and I am most grateful to all of you for the efforts you made to make yourself available for this meeting. One message I wish to conclude with is that the gender-aware model is by no means without problems. Like many other models, it can pose challenges for users of existing models. But done in an intelligent and focused way and in the context of contemporary debates on policy issues, the rewards can be large as we can see in the examples of the results generated from this model. In particular, a good understanding of the underlying structure of this type of model and the degree of simulation results is specifically needed if we are to assess how well a specific model captures the underlying economy. I end as I began: grateful for your collaboration and guidance, thankful for your commendable dedication to make ECA serve Africa better, and appreciative of the insights and wisdom you will continue to bring to solve the unique development problems of Africa. I therefore look forward to collaborating closely with you to ensure operationalization of gender-responsive tools, so that this continent does not leave out its crucial partners in development – the women and the household actors - and may soon begin to truly fulfill its great promise. Thank you.