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Development Account Projects

Strengthening capacity for policy analysis, forecasting and development planning in selected African countries

Background:

Over the years, the formulation and implementation of economic policy in many African countries have been hampered by weak capacity to use quantitative tools in general and forecasting methods in particular, and/or the inability to develop and maintain those tools for applications in the formulation, implementation and monitoring of policy. Yet most of these countries are seeking appropriate development planning frameworks and policies to restructure their economies in order to promote sustainable growth and development in the face of continuous exogenous shocks. Previous attempts to develop and sustain policy-modelling capacity in Africa did not prove satisfactory, owing to a number of reasons. Most of the models developed were stylized and highly aggregated regional models or prototype individual country models, which by their nature had little relevance to individual African country policy and analytical needs. In many countries, the relevant know-how could not be transferred to local/national experts, given the reliance on foreign experts on short mission assignments for the maintenance and sustained development and application of these tools, as well as the lack of the capacity required to manage and maintain these models.

ECA has long recognized the difficulty that many African countries face in building full-fledged macroeconomic models and in training qualified modellers and forecasters to provide Governments with concise and timely forecasts. In order to assist African countries in this respect, ECA will build a simple but consistent generic macroeconomic forecasting model that will be used to train modellers from Member States, who can then easily adapt it to the needs of their individual countries. The models will support Member States in generating credible forecasts, as well as conducting dynamic, forward-looking policy analysis, through the application of a system comprising a customized and structurally relevant suite of economic and econometric tools.

The building and updating of macroeconometric models require forecasting and planning experts, particularly in ministries of finance, planning and economic development at the national level and in regional economic communities and institutions at the subregional and regional levels. The project will build on existing United Nations projects in the area.

With a view to ensuring continuity, the project proposes the establishment of an African network for the development and integration of national economic forecasting capacities, with focus placed on evidence-based, statistically sound, timely and relevant forecasting and policy analysis within the framework of national development visions and plans.

The African network for forecasting and economic analysis will improve policy coordination among national agencies at the regional level, allowing policymakers to evaluate the impact of world economic conditions on the regional economy and on their own countries. The network will include modellers from the selected six countries as well as participants from other countries who will benefit from training, and will contribute to the review of models. The stakeholders will come from ministries of finance and development planning.

Objective:

 To improve the capacity of selected African Member States and regional economic communities for economic modelling and forecasting for rigorous policy analysis and formulation in the context of national development plans.

Expected accomplishments:

  • Increased knowledge and skills on the part of experts in participating Member States and regional economic communities in economic modelling and forecasting for policy analysis and planning
  • Strengthened capacity of decision makers in Member States and regional economic communities in using economic models and forecasts for policymaking and monitoring the achievement of Millennium Development Goal 1.
  • Continental network of modellers created and input solicited from them to refine and finalize the prototype model with a standard data template for its application to individual African countries

Implementation status:

In progress.