Economic Diversification in Africa: How and Why It Matters

The objective of this Public Expenditure
\n and Financial Accountability (PEFA) assessment is to review
\n the current performance of the public financial management
\n (PFM) systems, processes, and institutions of the Amhara
\n regional government since the last assessment in 2015. The
\n assessment is aimed at assisting the government in
\n identifying PFM weaknesses that may inhibit effective
\n delivery of services to its citizens and the realization of
\n its development objectives in general. Furthermore, the
\n findings of the PEFA assessment will assist the government
\n in developing a PFM reform strategy and provide the basis
\n for a coherent PFM reform program that can be supported by
\n development partners (DPs), as well as through the
\n government’s own initiatives. The Amhara regional assessment
\n covered regional government budgeted units, extra-budgetary
\n units (EBUs), the Office of the Regional Auditor General
\n (ORAG), the regional council, Amhara Chamber of Commerce,
\n and public enterprises.

Purpose This study aims to investigate how colonial fiscal legacies shape contemporary public financial management (PFM) performance across Anglophone and Francophone ECOWAS member states. It assesses the influence of British and French administrative traditions on budget reliability, fiscal transparency, policy-based budgeting and audit performance using the Public Expenditure and Financial Accountability (PEFA) 2016 Framework. Design/methodology/approach A comparative cross-sectional design is employed, drawing on PEFA 2016 assessments for 12 ECOWAS countries. Letter grades were converted to numerical scores, aggregated into seven pillars and used to construct a composite PFM index. A weighted recency adjustment normalised scores across assessments conducted between 2017 and 2024. Heat maps visualised intra- and inter-bloc differences, supported by theoretical insights from public choice theory, new institutional economics and historical institutionalism. Findings Both blocs demonstrate moderate PFM performance, but with apparent structural variations. Francophone countries exhibit greater budgetary reliability and policy-based fiscal management, reflecting the West African Economic and Monetary Union (WAEMU)’s harmonised directives and CFA Zone discipline. Anglophone countries perform better on transparency but show weaknesses in execution control and external audit. Practical implications The study highlights the need for ECOWAS to strengthen budget credibility, audit independence and regional fiscal coordination. It proposes establishing a regional audit peer support network, adopting commitment control systems, publishing budget credibility statements and creating a regional fiscal risk register. These measures can support fiscal convergence, enhance accountability and improve the overall effectiveness of PFM reforms across the region. Originality/value This study provides the first comparative analysis of Anglophone and Francophone ECOWAS countries using normalised PEFA 2016 data. It integrates historical, institutional and political-economy perspectives to explain why similar reforms produce divergent outcomes across linguistic blocs. The study contributes a methodological innovation, the weighted recency adjustment, to improve the comparability of PEFA assessments conducted in different years.

The article considers the main directions of solving the problem of food security through ensuring the diversification of the rural economy and the implementation of the principle of a multi-sectoral structure of the rural economy. Based on the analysis of current scientific and methodological literature, the definition of a number of concepts has been clarified and formulated: among them: rural territory, local economy, diversification of the rural economy, multi-sectoral structure of the rural economy, strategic sustainability of rural territories, etc. Based on the analysis of factual materials, the article defines the main directions of diversification of the rural economy, identifies the main industries and areas of activity of the multi-sectoral structure of the rural economy, both related to the agro-industrial complex and rural life, and having an indirect relation to them. It is noted that support and development of entrepreneurship in rural areas, as well as industries that allow small-scale production in rural areas, are essential for ensuring the diversifi cation of the rural economy. The work also indicates the essential importance for diversification of the rural economy of such a factor as the preservation, development and provision of a rural way of life, rural social structure, rural life, support of traditional spiritual and moral values and traditional rural economic activity. The article formulates a number of recommendations for ensuring the diversification of the rural economy and the implementation of appropriate measures of state support for the Russian village. In particular, it concludes that from the point of view of ensuring food security and strategic sustainability of rural areas, it is extremely important for the state to resolve the main issues of employment and diversification of the rural economy with the creation of new jobs and new rural industries based on the principle of a multi-sectoral structure of the rural economy.

Do Financial Markets Value Quality of Fiscal Governance?

This chapter surveys the revenue forecasting landscape in middle- and low-income countries, with a focus on examining the existence of forecast bias and potential remedial reforms. After reviewing the scarce literature on revenue forecast bias, we construct a new dataset of ex-ante revenue forecasts and ex-post realizations for 26 countries using the information from the Public Expenditure and Financial Accountability (PEFA) reports. An analysis of forecast errors reveals that most of these countries tend to overestimate their revenues. Also, the magnitude of forecast errors is significantly large and appears to be correlated with the measures of income and administrative capacity. The chapter then reviews the experience of two institutional innovations for improving the budget process and forecasts: semi-autonomous revenue authorities (SARAs) and independent fiscal councils. The evidence on the effectiveness of the former in increasing tax-to-GDP ratios remains mixed, whereas the latter is a relatively new institution whose future trajectory is still unknown in most of the low-income countries. Although neither of these institutions has been explicitly tasked with providing independent revenue forecasts that could address the bias observed in our sample, both of them could directly and indirectly contribute. Lastly, the chapter highlights the lack of research and data on revenue forecasting in low- and middle-income countries and identifies avenues for future research.

We examine the link between the quality of fiscal governance and access to market-based external finance. Stronger fiscal governance is associated with improvements in several indicators of market access, including a higher likelihood of issuing sovereign bonds and having a sovereign credit rating, receiving stronger ratings, and obtaining lower spreads. Using the more granular information on quality of fiscal governance from Public Expenditure and Financial Accountability (PEFA) assessments for 89 emerging and developing economies, we find that similar indicators of market access are correlated with sound public financial management practices, especially those that improve budget transparency and reporting, debt management, and fiscal strategy.

We examine the link between the quality of fiscal governance and access to market-based external finance. Stronger fiscal governance is associated with improvements in several indicators of market access, including a higher likelihood of issuing sovereign bonds and having a sovereign credit rating, receiving stronger ratings, and obtaining lower spreads. Using the more granular information on quality of fiscal governance from Public Expenditure and Financial Accountability (PEFA) assessments for 89 emerging and developing economies, we find that similar indicators of market access are correlated with sound public financial management practices, especially those that improve budget transparency and reporting, debt management, and fiscal strategy.

We examine the link between the quality of fiscal governance and access to market-based external finance. Stronger fiscal governance is associated with improvements in several indicators of market access, including a higher likelihood of issuing sovereign bonds and having a sovereign credit rating, receiving stronger ratings, and obtaining lower spreads. Using the more granular information on quality of fiscal governance from Public Expenditure and Financial Accountability (PEFA) assessments for 89 emerging and developing economies, we find that similar indicators of market access are correlated with sound public financial management practices, especially those that improve budget transparency and reporting, debt management, and fiscal strategy.

This paper defines and explains key stages of the government expenditure chain and describes the controls applied at each stage, including their objectives and key features as well as centralized vs. decentralized approaches in application of those controls. The paper also examines the influence of different administrative traditions on types of expenditure controls, including the authority and responsibility of various institutional actors. Finally, it discusses typical weaknesses/problems associated with different traditions of expenditure control and suggests specific measures for strengthening the control framework. While providing examples of expenditure control practices from more than 32 countries, the paper points out that more than two-thirds of the 85 low and middle income countries covered by the publicly available Public Expenditure and Financial Accountability (PEFA) assessments have weak systems of expenditure control that are also associated with higher levels of expenditure arrears and a lack of budget credibility. This paper will help public financial management practitioners to evaluate budget execution systems and identify priorities for strengthening expenditure controls. It will also usefully guide technical assistance work related to modernization of government budget execution and expenditure control systems, including the design and implementation of IT-based financial management information systems.

Many countries have followed economic reform policies as a result of the debt problem in 1982. Many countries have shifted from a planned economy towards a free economy by following economic reform programs with the help of the International Monetary Fund and the World Bank. Iraq introduced some aspects of economic reform in the nineties of the last century. But without the intervention of any of the two international institutions, and these reforms were very simple, but the political change in (2003) and the rise in foreign debts on Iraq as a result of wars and economic siege led Iraq to follow economic reform programs with the help of the two international organizations in (2004), now and after ( 18) years to follow these policies, Iraq still did not achieve the desired goals of these reforms, especially with regard to economic diversification, so the study’s goal came to show the reasons that led to the failure of economic reforms to achieve their goals with regard to diversifying the Iraqi economy and what are the measures that must be taken to solve this is the problem. The study assumed that the main reason for not achieving economic diversification is the incorrect application of economic reform policies and the failure to benefit from its returns in improving the structure of the economy. The study used the analytical method by analyzing the data of the oil and non-oil economic sectors and the extent of their contribution to the gross domestic product (GDP), public revenues and exports. The study reached conclusions, the most important of which is that one of the reasons for the lack of economic diversification is the weakness of internal security and the lack of attention to infrastructure, especially in the agricultural sector, which led to high production costs and thus the exit of many producers from the production cycle and their search for government jobs with high returns for them if compared to the returns of their products of high cost. As for the most important proposals, they are concerned with providing internal security in Iraq by providing opportunities for workers in the private sector by encouraging the private sector to produce by creating a spirit of competition between private sector companies by licensing the public sector to carry out privatization processes and leaving the private sector to produce with higher efficiency. These measures are enough to achieve economic diversification and work to reduce prices and improve production technology.

Africa's economy, an emerging economy is gradually being re-positioned in the global economy as a focus of investment. Multinational Enterprises (MNEs) have helped to shape the economy of Africa. An overview of Africa's economy was examined; top 20 Africa's largest economies were highlighted; major sectors perceived as paths to growth of Africa's economy were examined – Agriculture, Banking, Consumer goods, infrastructure, mining, oil and gas, and telecommunications. The chapter also enunciated the concept, ‘diversified economy' in relation to oil exporters, the transition economies and the pre-transition economies. It is therefore concluded that Multinational Enterprises will continue to contribute to the growth of Africa's economy, especially as more indigenous enterprises are being launched by African countries. It is therefore recommended that African countries should continue to diversify her economy to take advantage of large labor potential and natural resources endowment.

This study aims to track the course of fiscal policy and highlight its role in achieving economic diversification in Algeria during the period 2020-2022, in light of its reliance on the hydrocarbon sector, and given the importance of the relationship between the independent variables represented by fiscal policy tools, both expenditures and public revenues, on the dependent variable represented by economic diversification. The analytical and inductive approaches were used to measure the role of fiscal policy in achieving economic diversification, through the Autoregressive Distributed Lag (ARDL) model. The study concluded that there is a positive relationship between the tools of fiscal policy represented by (public expenditures) and economic diversification, meaning that the expansionary spending policy followed by the Algerian authorities had a positive impact on diversifying the economic base in Algeria. On the other hand, it became clear that hydrocarbon revenues and non-hydrocarbon revenues, especially tax revenues, have witnessed a noticeable increase in recent years, but public revenues do not translate the regressive relationship with economic diversification, as they are statistically insignificant due to the fluctuation of oil revenues and prices and their role in causing structural imbalance in the economy. Therefore, fiscal policy tools contribute relatively to achieving economic diversification.

Stocktaking the Reforms in Public Financial Management

HIV and AIDS continue to have a calamitous effect on individuals living on the continent of Africa. U.S. President George W. Bush implemented the President's Emergency Plan for AIDS Relief (PEPFAR) with the objective of committing approximately $15 billion from 2004 through 2008 to assist with the reduction of the HIV pandemic worldwide. The majority of the PEPFAR policy and funding focused on 12 countries in sub-Saharan Africa: Botswana, Cote d'Ivoire, Ethiopia, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia. The policy question this research paper seeks to analyze is whether the PEPFAR funding (as a % of Gross Domestic Product (GDP)) allocated to the 12 countries in Africa had any effect on the decrease of HIV infection rates of males and females between the ages of 15 and 49. A fixed-effects panel regression analysis was conducted to determine if this association exists. This study examined the 12 African countries that received PEPFAR funding over the years 2002 to 2010; even though PEPFAR was only active from 2004 through 2008, this research included two years prior and two years after this timeframe in order to better estimate the effect of PEPFAR funding on HIV reduction. The results illustrate that on average, ceteris paribus, for every 1 percentage point increase in PEPFAR funding per GDP a country received, the country's HIV infection rate decreased by 0.355 percentage points. While the empirical findings in this study suggested that the correlation between PEPFAR funding and HIV reduction is statistically significant, the practical significance is perhaps less obvious. Arguably, the reduction rate should be higher given the extent of funding targeted to this project. The conclusion of this research provides suggestions on future research and the policy implications of PEPFAR.

Nigeria is the most populous country in Africa, it maintains the second largest oil reserve in the continent. The question on whether the oil natural resource endowment is a blessing or a curse is still not adequately answered in the literature. This study therefore examines the interrelationships between petroleum revenue and gross domestic product in Nigeria from 1985-2020. The data used for the analysis of the study was obtained from World Bank and Central Bank of Nigeria data base. Augmented Dickey Fuller (ADF) unit root test was used to test for the presence of stationarity in the variables, autoregressive distributed Lag (ARDL) co-integration test was employed to test for long run relationship and error correction model (ECM) was employed to test the short-run relationship among variables. The variables used for the research work are Gross Domestic Product (GDP), Oil Revenue (OIR), Inflation (INF), Effective Exchange Rate (EEXR), Labour (LAB) and Gross Capital Formation (GCFC). The study showed that oil revenue and labour force exhibit significant positive impacts on gross domestic product (economic growth). This study recommends that government should establish annual spending limits in order to reduce inflation, the government should engage in the rehabilitation of the old refineries and construction of new ones in order to stop the age long practice of exporting crude oil at a low price and purchasing the refined oil at a high price. Measures to reduce the high exchange rate of naira with other countries’ currencies should be put in place. Various government policies should be put in place and diligently enforced to ensure that the diversion of revenue gotten from the oil sector are duly handled to further meet the economic growth objective in the country.