Research AreasAfrican Development Policy

PERI’s African Development Policy program combines applied research and capacity building to help understand the challenges and opportunities for accelerated economic development in Africa. In collaboration with selected African universities and research networks, PERI provides training for African policy makers on structural and emerging issues in African development.

African Development Institute and PERI Capacity Building Workshop for African Policy Makers

Nairobi, Kenya, May 2-6, 2016

Theme: Domestic Resource Mobilization for Sustainable Development

African countries’ ability to achieve and sustain high growth rates and reduce poverty is constrained by the lack of stable and reliable financial resources. Thus far, African countries have substantially relied on external financing that remains volatile and quantitatively inadequate relative to their development needs. At the same time, most African countries operate below their potential in terms of domestic resource mobilization. This is especially the case for natural resource rich countries, which have often been outperformed by their resource-scarce counterparts in terms of tax incidence.

It is therefore imperative for African countries to design and implement strategies aimed at enhancing effectiveness in domestic resource mobilization (DRM). This will enable African countries to reap important benefits from enhanced DRM, notably: i) reduced dependence on external resources, resulting in reduced vulnerability to external shocks; ii) increased policy space, enabling African countries to ‘own’ their development agenda and embark on a more sustained growth path; iii) strengthened international financial position, thus positioning African countries to attract higher volumes of external resources that complement enhanced domestic resources; iv) strengthened international bargaining position and credibility, enabling African countries to advance their strategic interests in the global arena. 

The African Development Bank and the Political Economy Research Institute (PERI) joined hands to organize a workshop in Nairobi, Kenya on May 2-6, 2016, where senior government officials from African countries discussed challenges faced by African countries in mobilizing domestic resource mobilization. The workshop provided an opportunity for policy makers to share their experiences with regard to best practices in harnessing African countries’ potential to raise government revenue and meet their development financing needs.

The discussion in the workshop was organized around the following themes: 

  • Why tax revenue mobilization remains below potential in the majority of African countries: An inquiry into the structural, institutional and political economy factors of domestic revenue mobilization.
  • Fiscality as a state-citizen contract and the critical role of institutions for effective domestic resource mobilization: what institutional environment makes it possible to maximize government revenue?
  • Challenges and opportunities for domestic resource mobilization in natural resource-rich countries: How can African resource-rich countries avoid the ‘resource curse’ and harness their resource endowment?
  • Aid and taxation: Does foreign aid crowd-in or crowd-out domestic resource mobilization?
  • Taxation in economies with a large informal sector: Is there a trade-off between supporting growth of the informal sector that constitutes a source of livelihood for large segments of the African populations, on the one hand, and broadening the tax base through formalization of informal activities?
  • Taxation of the private sector and the special case of tax evasion by multinational corporations.
  • Illicit financial flows, a severe constraint to domestic resource mobilization and development financing in African countries: The problem and what to do about it.

Effective Aid for Clean Water and Sanitation in sub-Saharan Africa

Sub-Saharan Africa has not made adequate progress towards achieving one of the Millennium Development Goals: to halve, by 2015, the proportion of the population without access to clean water and basic sanitation. Progress on this goal is crucial, since access to safe drinking water and sanitation is directly linked to health outcomes, and also has implications for gender equity. This paper examines the evidence on the impact of foreign aid on access to water and sanitation, and finds that in order to meet these goals, donors should specifically allocate aid to these areas.

>> Read “The Impact of Foreign Aid Allocation on Access to Social Services in sub-Saharan Africa: The Case of Water and Sanitation”

PERI Welcomes the First AAAWE-PERI Fellow

PERI is pleased to welcome Elizabeth Luanga Nanziri as the first AAAWE-PERI Fellow, arriving for Fall 2015.

This Fellowship is a joint collaborative initiative of the Association for the Advancement of African Women Economists (AAAWE) and PERI. Under the Fellowship program, African women economists will be hosted as visiting scholars at PERI. The key objective of the fellowship is to enhance the capacity of African women economists to produce high quality research, and to increase the visibility of their research. Fellows will have the opportunity to be among scholars conducting research and analysis regarding Africa in various fields.

Elizabeth Luanga Nanziri is a doctoral candidate at the School of Economics, University of Cape Town. She is also the Director of Communications at AAAWE, and Director of AAAWE-South Africa. Her bio and CV can be found here.

Political Economy of Reforms in Post-Conflict and Fragile States

Several African countries continue to witness violent and recurrent conflicts, while others struggle to recover and rebuild their economies in the post-conflict era. The African continent also hosts countries that face other forms of vulnerability and instability that undermine their growth and development prospects. While poverty, inequality, weak institutions, and low development in general are the outcomes of fragility, they also undermine efforts to accelerate economic development in these countries. Policy making therefore poses daunting challenges in countries emerging from conflict and facing fragility. To discuss these issues, the Political Economy Research Institute and the African Development Institute of the African Development Bank jointly organized a training workshop on the theme “Political Economy of Reforms in Post-Conflict and Fragile State” in Dakar, Senegal. The workshop was attended by senior government officials from Burundi, the Central African Republic, Chad, Comoros, Côte d’Ivoire, Guinea-Bissau, Madagascar, Mali, South Sudan, Togo, and Zimbabwe.

This workshop offered a political economy perspective to institutional reforms required to build peace, alleviate fragility, and accelerate economic development. Discussions centered on the role of fiscal policy, international aid, employment and redistribution policies, natural resource management, and a strategy for building productive capacities in post-conflict and fragile states.

The workshop discussed the following them

  • The importance of the political economy dimensions of institutional reforms in fragile states;
  • The role of fiscal policy as an instrument for state building;
  • The opportunities and challenges faced by international development assistance in fragile states;
  • The need for effective employment and redistribution policies to address the problems of youth unemployment, marginalization and deprivation in post-conflict settings;
  • The challenges and opportunities associated with natural resource management in fragile states, including issues of tax evasion, transfer pricing, corruption, and the regulation of multinational corporations operating in the natural resource sector;
  • The need to mainstream productive capacity building in post-conflict and fragile states to foster economic transformation

The Workshop examined progress made and remaining challenges, with illustrations of some country experiences.

PERI was represented by James Boyce, James Heintz and Léonce Ndikumana.

Capital Flight from Africa: Causes, Effects and Policy Issues

Capital flight is a critical challenge to economic development in African countries. While Africa receives a substantial amount of capital inflows in the form of official development assistance, external borrowing and foreign direct investment, it also suffers a heavy financial hemorrhage through capital flight.

S. Ibi Ajayi (University of Ibadan) and Léonce Ndikumana (Director of PERI’s Africa Policy Program) have edited a new collection of analysis of capital flight from Africa with Oxford University Press. The book will be available in January 2015. Select chapters are available now as PERI Working Papers. Read them here:

>>“Capital Flight and Monetary Policy in African Countries,” by Hippolyte Fofack and Léonce Ndikumana 

>>“Capital Flight: Measurement and Drivers,” by Léonce Ndikumana, James K. Boyce and Ameth Saloum Ndiyae

>>“Governance and Illicit Financial Flows,” by Melvin D. Ayogu and Folarin Gbadebo-Smith

>>“Illicit Financial Flows and Stolen Assets Value Recovery,” by Melvin D. Ayogu and Julius Arbor

>>“Capital Flight and Poverty Reduction in Africa,” by Janvier D. Nkurunziza

>>“Strategies for Addressing Capital Flight,” by James K. Boyce and Léonce Ndikumana

Savings, Capital Flight, and African Development

Historically, countries that have achieved and sustained high growth rates maintained high domestic saving rates, enabling domestic investment and job creation. But saving in African countries has remained low, leading to high investment-savings gaps, and increased dependence on external capital. This analysis by Léonce Ndikumana, Director of PERI’s African Development Policy Program, suggests that strategies to address domestic savings should include policies to curb and prevent further capital flight (the leakage of financial resources) from Africa, the levels of which have exploded over the past decade. This paper is forthcoming as a chapter in Handbook of Africa and Economics, edited by Celestin Monga and Justin Y. Lin (Oxford University Press).

>> Read Savings, Capital Flight, and African Development

Sustaining Growth in African Countries

May 2014 -- Since the turn of the century, African countries have experienced growth acceleration, which is a welcome turnaround from the past decades of stagnation. However, the ability to sustain this growth momentum hinges significantly on the capacity to fill the large financing gaps faced by the majority of the countries in the region. In this context, while African countries need to strengthen measures aimed at stimulating domestic saving and investment, they also need to design strategies to stem the steady leakage of resources in the form of capital flight and generally illicit financial flows.

The African Development Institute of the African Development Bank, in collaboration with PERI, held a regional workshop on “Capital flight reversal and development financing in Africa” in Nairobi, Kenya, on May 12-15, 2014. Since last year, PERI and the African Development Bank established a partnership in building capacity for African policy makers in relation to emerging areas in economic development in Africa.

This course offers policy makers an opportunity to examine the nature, magnitude, causes and impact of capital flight, and to assess the potential gains from capital flight reversal in African countries. The participants shared experiences from their respective countries on the various dimensions of the problem of capital flight, as well as policies and institutional reforms that are under way to both curb capital flight and encourage capital flight reversal and repatriation. The discussions highlighted the importance of a coordinated strategy involving actions at the national, regional and international level given that capital flight is, indeed, a global problem.

The workshop was attended by policy makers from countries from Eastern and Southern Africa.

East African Policy Workshop

May 2013 -- The African Development Bank, in partnership with PERI, delivered a capacity building workshop for African policy makers in Eastern and Southern Africa on “Macroeconomic Policy for Inclusive Growth, Employment Creation and Poverty Reduction” in Nairobi, Kenya.

While African countries are witnessing growth resurgence since the turn of the century, they have not achieved commensurate progress in poverty reduction. A key reason is that growth has not generated proportionate job creation and that growth has not been broad based. Strategies to accelerate poverty reduction must therefore involve a refocusing of macroeconomic policy on ‘real’ development goals, notably employment creation and inclusive growth, over and beyond the traditional short-term objective of macroeconomic stability. In this context, this course discussed innovative policies for generating growth that is inclusive and accompanied by employment creation and poverty reduction. This is the second workshop under the AfDB-PERI partnership.

>> Read more about this series of workshops

Training Course on Capital Flight and Development Financing

April 2013 -- The African Development Institute of the African Development Bank, in collaboration with PERI, held a regional workshop on “Capital flight reversal and development financing in Africa” in Dakar, Senegal, from April 15 to April 18 2013. The workshop marks a beginning of a partnership between PERI and the African Development Bank in capacity building for African policy makers. It is expected that this partnership will grow to include other premier knowledge institutions in Africa.

Over the past four decades, African countries have lost over $1.3 trillion due to capital flight, while they face large and growing financing gaps. This is a major obstacle to the continent’s efforts to achieve sustained high growth and poverty reduction. The capacity building workshop offers an opportunity for policy makers to discuss the nature and magnitude of capital flight from African countries. The objective is to propose strategies to curb capital flight, enhance its reversal and repatriation, and maximize the gains in terms of economic development.

The workshop was attended by policy makers from sixteen countries from West and North Africa.

French Edition of Africa’s Odious Debts

April 2013 -- The French edition of Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent was officially launched in Dakar, Senegal on April 19, 2013. In Africa's Odious Debts, James Boyce and Léonce Ndikumana reveal the shocking fact that, contrary to the popular perception of Africa being a drain on the financial resources of the West, the continent is actually a ‘net creditor’ to the rest of the world. The extent of capital flight from sub-Saharan Africa is remarkable: more than $700 billion over 1970-2008. But Africa’s foreign assets remain private and hidden, while its foreign debts are public, owed by the people of Africa through their governments. The French edition – La dette odieuse de l’Afrique : Comment la dette et la fuite des capitaux ont saigné un continent – is published by Editions Amalion.

Léonce Ndikumana, Program Director
Andrew Glyn Professor of Economics
Tel: +1-413-545-1340
Judy Fogg, PERI Administrative Director: