The Monterrey Consensus and development in Africa : progress, challenges and way forward

Abstract

The paper finds that Africa’s recent economic growth performance has improved relative to the situation before the adoption of the Monterrey Consensus. Average annual growth of real GDP increased from 3.3 percent in the pre-Monterrey period (1998-2001) to 4 percent in the post-Monterrey period (2002-2005). But it is still below the average 7 percent growth deemed necessary to meet the MDGs. Furthermore, the improvement in growth has not been translated into progress in the ultimate objective of poverty reduction. Consequently, more effort is needed to accelerate growth in the region and ensure that it is pro-poor. In the area of domestic resource mobilization, the paper finds that there has been a modest increase in the ratio of domestic savings to GDP, although it has not led to an increase in investment ratios. Capital market development, strengthening micro-finance institutions, better governance, elimination of capital flight and measures to reduce the impact of trade liberalization on government revenue are identified as critical to boosting domestic savings in the region. An international environment that supports a gradual approach to trade liberalization in the region would be welcome.