Introduction

Welcome to the UN website of the online discussion on the theme “ Pro-poor macroeconomic policies in Africa ”, which is being organized by the Economic Commission for Africa (ECA) in cooperation with the United Nations Development Programme (UNDP). [to be given by UNDP]

The discussion will run for five weeks from 29 October to 30 November 2007. The purpose of the online discussion is to contribute to a better understanding of macroeconomic policies in Africa, especially how they are designed and implemented; what objectives are persued and achieved; and the appropriateness of macroeconomic frameworks. The discussion should identify good practices and lessons learned and highlight gaps and challenges requiring further action. The results of the online discussion will be used for an overview of macroeconomic policy making in Africa and a policy brief on challenges for pro-poor macroeconomic policies in Africa. In addition, the online discussion is expected to help identify needs for technical capacity for macroeconomic policy analysis.

Registration for the online discussion

To register, please click here to fill out an online registration form .

We encourage you to register by 26 October 2007 . After successful registration, you will receive an email with your online discussion username and password in 2 to 3 working days.

If you have any questions or experience problems when registering, please contact Mr. Moctar Diouf (Email: moctard@uneca.org, Tel: +251-11-544 30 09) or Ms. Lauréline Pla (Email: lpla@uneca.org , Tel:+251-11-544 31 53)

Background

In the last five years, African countries as a whole have experienced robust GDP growth rates, registering on average between five and six percent annual growth rates, while at the same time maintaining relatively low inflation levels, stable exchange rates and, in many countries, positive current account balances. But, steady economic growth and improved macroeconomic management have not translated in employment creation or in major improvements in social indicators. In fact, the number of people living below one USD a day in sub-Saharan Africa has actually increased since the 1990s, while the proportion of people living in poverty has only decreased by half a percentage point. Furthermore, while unemployment levels remain high across the continent, the labor force continues to grow by about 9 million a year, and is expected to increase on average to 10 million a year until 2015.

If the African continent is to reach the Millennium Development Goals (MDGs) by 2015, the quality of growth has to be improved to ensure that economic growth translates in employment creation and significant poverty reduction. Indeed, the United Nations Economic Commission for Africa (UNECA) estimates that Africa needs to grow on average by a minimum of 7 percent annually in order to cut poverty by half. And, the International Labor Organization (ILO) estimates that an increase in employment of 11 million a year is needed for Africa to achieve an unemployment rate equal to the world average of 6 percent by 2015.

So far, macroeconomic strategies have generally been characterized by lack of focus on employment creation and on long-term sustainable growth, as well as inflexibility with regards to country specific economic conditions. Therefore, a major re-thinking of macroeconomic growth strategies, and better policies and institutions are needed.

The overall objectives of this e-discussion are to stimulate a dialogue between development practitioners, researchers, and African policymakers on the types of macroeconomic policies that would promote pro-poor growth and employment creation, as well as to exchange ideas on how to implement such policies. Participants are encouraged to draw on macro-economic reform experiences across the developing world, looking specifically at the types of reforms that have led to poverty reduction, and conversely, those that have either had no impact on the poverty situation or have made it worse.

Core issues to be addressed

A. Devising macro-economic policies that are sensitive to local conditions

The experiences of many developing countries during the 1980s and 1990s have shown that the “one-size fits all” approach to macro-economic reform has not produced substantial reduction in poverty. In order to successfully achieve pro-poor growth, policymakers in each country need to devise policies that would take into account the internal economic realities. Nevertheless, in many African countries, the following minimum targets need to be incorporated within the macro-economic framework:

• Diversifying the economic activity . The recent growth in Africa has been driven in part by a strong increase in the demand for African export commodities such as crude oil, metals and minerals, as well as by improvements in agricultural production and the recovery of world prices for key agricultural commodities such as coffee and cacao. In effect, African countries still remain very dependent on primary commodities, making them vulnerable to price shocks and fluctuations on the world market. Thus, diversification of economic activity is necessary for Africa to embark on sustainable growth. And, considering the current high unemployment levels across the continent, it is important that economies diversify into labor-intensive sectors and for governments to implement policies that encourage employment-generating investments. Private-sector investment, in particular in small-scale enterprises, which tend to be the most labor-intensive, should be encouraged.

• Incorporating informal sectors into the mainstream economy. While many African countries' economies are characterized by the proliferation of informal markets, the current macro-economic framework does not take these sectors into consideration. Indeed, only about 10 percent of the labor force is employed in the formal sector, while the majority is involved in smallholder/ subsistence agriculture or is employed in the urban informal economy. As such, the macro-economic framework is poorly aligned with the internal economic realities. It is therefore necessary to devise ways to integrate informal sectors into the mainstream economy.

• Mobilizing resources for social development. If economic growth is to translate into poverty reduction, it is necessary to devise targeted compensatory mechanisms for populations that might be negatively affected in the short-run by economic reforms. Furthermore, in order to attract investments, policymakers need to improve the level of human capital through better access to education and health services. These social activities require substantial funds, which entails that policymakers think of creative ways (through taxation reform for instance) to mobilize the required resources.

B. Building capacity to formulate pro-poor macro-economic policies

Themes of the online discussion

First week:

What should be the goals or targets of macroeconomic policy in African countries?

Second week:

What is your overall assessment of macro policy relative to its expected conventional objectives like macroeconomic stability, sustainable growth, and low unemployment?

Third week:

Assess the relevance and role of macroeconomic policy relative to key development goals and challenges in Africa, namely poverty reduction, global and regional integration, and employment creation?

Fourth week:

Are macroeconomic frameworks in Africa appropriate? Is there a need for alternative approaches? If, so, which alternatives are there vis a vis goals and tools?

Fifth week:

Designing macroeconomic frameworks and the conduct of macroeconomic policies: What are the capacity constraints at local level and the degree of freedom relative to domestic and external pressure?

Ground rules for the online discussion

The ground rules for the online discussion are the following. Messages should:

• Be identifiable. Please include your name and organization at the end of your message. Messages without this information will not be posted;

• Focus your intervention on the subject of the week;

• Be limited to 500 words;

• Use a courteous language.

If you have material related to the topics of the discussion you would like to have posted please send it as a document or a link.

At the end of each week we will send a summary of the contributions to participants.