The African Development Bank (AfDB) Group has launched programmes to enhance institutional capacity for effective macro-economic and public policy management to accelerate inclusive growth, sustainable development and achievement of the Agenda 2063.
The tailored programme is part of the bank’s implementation activities of its capacity development strategy as well as its commitment to strengthening Africa’s capacity for effective macro-economic governance, policy-making and implementation.
Chief Economist and Vice President, Economic Governance and Knowledge Management, African Development Bank Group, Prof. Kevin Chika Urama, disclosed this at the launch of the Benchmark Macroeconomic Models for Effective Policy Management in Africa Report at Addis Ababa, Ethiopia, at the weekend.
He said the report is a product of collaboration between the AfDB, the African Development Institute and the African Economic Research Consortium (AERC) as an implementation activity of the Bank’s Capacity Development Strategy approved by the AfDB Group Board of Directors in 2021.
According to him, this report provides an inventory of existing models and modeling capacity in African countries based on an Africa-wide survey implemented by the Bank Group.
He said it also examines the relevance of the existing models to African development realities in the face of recurrent and dynamic challenges, considering the significant heterogeneity in economic structures across the 54 African countries.
Urama said another key implementation programme of the Capacity Development Strategy is the Executive Training Programme on Macro-Economic Policy Management in Africa (MEMA).
He said the study that informed the report was commissioned to better understand the existing macro-economic modelling capabilities and tools in all African countries to inform the curriculum and capacity development programmes of MEMA that address the capacity development needs of countries.
Urama explained that macroeconomic models provide the tools for countries to effectively understand and predict the behaviour of their economies, analyse policy response options, evaluate possible outcomes, and guide their implementation, monitoring and evaluation.
He said the models are only attempts to simplify realities logically to inform decision-making under specific assumptions, contexts and realities.
Urama added that models are therefore as relevant as the extent to which they approximate realities and can inform appropriate decision-making in specific contexts.
“In the face of increased global uncertainties, particularly the challenges posed by the Covid-19 pandemic, climate change and other challenges that continue to inflict blows on African economies, it is important for policymakers to undertake policy decisions with a clearer and better understanding of their economic environment and anticipation of what the impact of their policy options would be on inclusive growth and sustainable development,” he state.
He said, although there have been positive strides in macroeconomic management on the continent, macroeconomic modelling capacity in Africa has remained low, as some countries continue to rely on simple models, which do not capture the complex intricacies and realities of the operation of their economies in a globalised world.
Urama said to bridge the capacity gap, policymakers in many African countries rely on external models and tools that do not necessarily take into consideration the contexts and realities of their economies.
He said while there exists a plethora of policy recommendations on key policy challenges facing countries, policy implementation faces significant headwinds.
“While some argue that economic development is often a gamble, it has become evident that having sound models that are embedded in national realities improves the probability of winning the gamble.
“Strengthening capacity in macroeconomic modelling is therefore critical to inform a better understanding of the dynamics of economies, formulation of good policy responses and prioritisation, and shape effective policy implementation, monitoring and evaluation,” he stated.
Urama concluded that the report elicits an understanding of the situation and maps the macroeconomic modelling capacity needs of African countries as well as develops protocols for cooperation in macroeconomic policy management in Africa.