See Preface

The Mutual Review of Development Effectiveness is an exercise in mutual accountability undertaken jointly by the UN Economic Commission for Africa and the OECD following a request of NEPAD Heads of State and Government in 2003. Its purpose is to assess what has been done by Africa and its development partners to deliver commitments in relation to development in Africa, what results have been achieved, and what the key future priorities are. It complements the self-assessments produced by each side to the partnership, and is in line with the shift in emphasis from aid effectiveness to development effectiveness, and the emphasis on mutual accountability at Busan. The meetings of NEPAD Heads of State and Government in January 2012 and AU/ECA Finance Ministers in March 2012 reaffirmed the value of this exercise.

 The 2012 report follows the same structure as the interim and previous reports, divided into 4 main ‘clusters’ of issues covering: sustainable economic growth, investing in people, good governance and financing for development. Its main findings are:

Sustainable economic growth

(i)  Africa is emerging as a new pole of global growth: the continent is recovering from the global crisis of 2009 and this should be sustained even though a new global slowdown is constraining Africa’s growth. Africa’s economy should see a rebound in 2012 after popular uprisings and political unrest brought overall economic growth down to 2.7% in 2011. With the gradual recovery of North African economies, Africa´s average growth is expected to rebound to 5.6% in 2012 and to 5.3% in 2013. There has been a similar recovery in trade performance, driven by demand pressures which have  led to a reversal in the long declining trend of real commodity prices. Sub-Saharan Africa now exports as much to emerging markets as to its traditional trading partners, which partly shelter the continent from global economic slowdown;

(ii)  But there continue to be significant challenges: growth prospects continue to depend significantly on a more volatile global economic and financial environment, which is likely to remain difficult in the near term. The business environment has improved but more needs to be done. Poor infrastructure remains a major constraint to attracting investment, increasing regional trade, and improving social welfare. And climate change presents a major threat to achieving long-term sustainable growth;

(iii) Pointing to the key priorities for both Africa and its international partners including: to sustain global recovery and address issues which could put this at risk; to achieve successful outcomes in global negotiations on trade and climate change and the Rio+20 coference on Sustainable Development in June 2012; to accelerate regional integration; to continue to improve the environment for both domestic and foreign investment; and to accelerate action to overcome infrastructure constraints at both the national and regional levels.

Investing in people

(iv) The acceleration of growth since 2000 has contributed to some progress towards the MDGs: this varies by sub-region, country and goal, but the latest 2011 MDG Report confirms that it is still broadly moving in the right direction. According to the Global Monitoring Report 2012, the region has achieved more than 60 percent of the progress required to reach, by 2015, goals such as gender parity, primary completion, and stemming the HIV/AIDS pandemic; and access to safe water;

(v)  But the pace is further behind for achieving the goals by 2015: in child and maternal mortality, and access to sanitation. There are major disparities by gender, income group and location in access to education and health services, and increased concerns on food security connected to multiple factors including more extreme weather conditions, regional instability and vulnerability to food price volatility;

(vi)  Pointing again to key priorities: increasing public expenditure on social spending, including social protection of vulnerable populations; responding effectively to current food crises and tackling the multiple underlying causes of food insecurity; tackling the unequal opportunities due to gender, income and location biases; addressing issues of governance particularly in post conflict states where progress is lagging; and providing increased and more effective support from international partners.

Good governance

(vii)  There have been positive developments including: a general improvement in the quality of elections, the successful reversal of unconstitutional changes of government, political change in North Africa and the achievement of independence in South Sudan. The  African Charter on Democracy, Elections and Governance has now come into force, representing a major commitment to improving and monitoring governance in Africa. The AU and regional organisations have taken a strong lead in rejecting unconstitutional action and promoting a return to democratic government, with support from the international community; 

(viii)  However there are also problems: there are fresh risks of conflict and instability, resulting in some cases from regional spill-over effects; much still needs to be done to ensure that elections are universally free and fair, and to improve other indicators of political governance including checks and balances, tools of accountability, the rule of law, and civil liberties;

(ix) At a global level the engagement of the G-20 on development issues in 2010 deepened in 2011, alongside the continued engagement of the G-8, marking an important shift in the international development architecture. The commitments made by the G-20, whilst not specific to Africa, are profoundly important for its development;
 
(x) Pointing again to key priorities: the AU and regional organisations should continue to promote free and fair elections and broader improvements in political governance, and to maintain the ‘zero-tolerance’ approach to unconstitutional change, and to actions putting peace and stability at risk; the wider international community should support this and tackle the international dimension of better economic governance; the G-20 process should continue to be used to promote development in Africa.

Financing for development

(xi) Domestic revenue rebounded in 2011 to reach an all-time high: Domestic revenue is by far the major source of financing for development. It increased four-fold between 2002 and 2008 to US$513 billion, fell sharply to US$394 billion in 2009 with the bulk of the decline occurring in oil-exporters, and partly recovered to US$469 billion in 2010, with a further recovery to reach an all-time high of US$520 billion in 2011 (driven by strong revenue performance in sub-Saharan Africa). There has been a significant reduction in the number of countries (now reduced to 8) collecting less than 15% of GDP in domestic public revenue. Issues of budgetary allocation and expenditure effectiveness, however, still need to be addressed;

(xii)  Total net private inflows recovered to precrisis levels in sub-Saharan Africa in 2011 but declined further in North Africa in response to political events: The estimated 2011 total of US$59 billion is around 90% of the record US$65 billion in 2007. Remittances proved unexpectedly resilient in 2009 and rose again to over US$39 billion in 2010 and to US$41.6 billion in 2011, a three-fold increase over the decade. In addition to legal capital outflows, Africa has however also experienced large illicit outflows estimated to average US$50 billion a year over the last decade though all figures must be treated with great caution;

(xiii)  Official Development Assistance to Africa increased in 2011 but the 2005 commitments have still not been met:  Progress towards 2015 targets needs to be accelerated and monitored. ODA to Africa is estimated to have risen to around US$50 billion in 2011. This is still significantly below the 2010 target implied by commitments in 2005. ODA to Africa should rise to US$81 billion  in 2015 if 2005 commitments are met in full. Progress in delivering the Paris and Accra commitments on aid effectiveness has been slow – though where this has happened it has led to improved development results. Busan marked a key shift from aid effectiveness to wider development effectiveness;

(xiv)  Some significant progress was made on climate finance at the last two UNFCCC COP meetings both in terms of finance and, more importantly for Africa, the strong support for REDD+. However efforts to rationalise and simplify funding to climate change and to improve on their reporting require concerted actions, and Africa’s access to carbon finance, although improving, remains marginal;

(xv) Key  priorities include: continued action by African governments to increase domestic revenue, improve its utilisation and attract both domestic and foreign investment; support from the wider international community in tackling the loss of tax revenues through offshore non-compliance and transfer pricing practices, and illicit financial flows; action by development partners to increase ODA to Africa over 2012-2015 in line with commitments made in relation to 2015, to deliver their Busan commitments on development effectiveness, and to accelerate development of innovative sources of finance including delivery of the fast-start and longer-term climate finance agreed in the Copenhagen Accord and the Cancun Agreements.