This project aims to support ACET in coordinating the G20 Compact with Africa
agenda; enhancing its capacity to deliver core policy dialogue activities while helping promote a model for more boosting think tanks in Africa. The project has 3 sub-components Strengthening Country Capacity and Peer Learning is one of the three sub-components. It specifically seeks to provide Technical assistance for CWA implementation. ACET will work organizations such as the UN Economic Commission for Africa, the African Development Bank, the International Monetary Fund and the World Bank to support CWA implementation through consultations, workshops, and analytical studies. This includes advisory services for periodic review of progress where country-led teams will include ACET and the other technical partners, private sector representatives, officials from Compact countries and think tanks or non-governmental organizations from the Compact countries In January 2019, ACET established the CwA Advisory Panel, represented by eminent persons with a deep understanding of Africa. The CwA Advisory Panel will provide technical support to implementation of the CwA, as well as advocate for the initiative in international fora and among Africa’s leaders. Members of the panel joined the two ACET-organized CwA peer to peer learning workshops in February, and then visited Ghana, Rwanda and Benin for due-diligence on how the CwA Compact Teams are operating. Reports from these visits provided important content for the CwA Peer Review note ACET prepared for the G20 Africa Advisory Group. In January 2019, also ACET launched a CwA research program addressing local conditions for blended finance. The program has resulted in two draft research reports based on interviews with development finance institutions and contributed to a panel discussion at the OECD Private Finance for Sustainable Development (PF4SD) Conference in January in Paris. The research will and will serve as a major input to a planned CwA peer to peer learning event planned for July 14 in Abidjan, Cote d’Ivoire. The analysis will be the first comprehensive and comparative review of DFI practices in meeting OECD blended finance principles. In February 2019, ACET organized two CwA peer learning workshops on: the role of Compact Teams in becoming effective and efficient in their operations, and the other on the role of the Compact teams in engagement with the private sector. Present at both workshops were participants from CWA countries, including Ministries of Finance and investment promotion agencies; G20 countries; and the World Bank, IMF and African Development Bank. The workshops aimed at identifying opportunities to advance operation and coordination within Compact Teams as well as enhancing public-private dialogue. During March, ACET also began organizing for the next CwA peer learning event, which will be focused on the fiscal risks of PPPs and will be undertaken in collaboration with the UN Economic Commission for Africa. During the reporting period-Q2, ACET prepared for the next peer-learning event, held in Abidjan the 2nd week of September. The event was co-organised with the Ivoirian Ministry of Finance and invited 2 representatives from each CwA member country, as well as 10 representatives from international organisations. The key theme for the event was Blended finance in G20 compact countries – adopting to local context to boost investments. More information about the event will be shared in the next quarterly report. In July 2019 ACET contributed to and participated in the Workshop on Private Sector Led Diversification and Growth organized by the IMF and hosted by the Government of Ethiopia. The workshop was designed to share experiences among CwA countries and distill lessons to country specific current circumstances and strategies. It also was intended to foster public-private sector dialogue by including the point of view of international investors potentially interested in investing in the continent. ACET, with the OECD, ECDPM and Indiana University completed a ground-breaking study on local conditions for blended finance in August 2019. The report outlined key recommendations for expanding blended finance by considering local development strategies, partnering with local financial institutions and building the capacity of the financial sector in CwA countries. On September 12, 2019 ACET organized a CwA peer learning event, using the recommendations from the recent report to frame the agenda. The Peer Learning Seminar on Blended Finance was designed to bring stakeholders - government, private sector and development partners - together around the topic of strengthening the local dimension of blended finance. The event was designed to provide an opportunity for CwA countries to learn from the good practice of other countries and discuss how blended finance could be further improved. The seminar was attended by 130 participants representing ten of the twelve CwA countries, Germany and Japan from the G20 countries, private sector representatives, the international organizations, and DFIs. Two CwA panel members also participated in the event, serving as moderators for plenary sessions. The blended finance report and the recommendations emanating from the above-mentioned seminar will serve as the basis for a session on development finance at the Annual Conference of the Global Research Consortium on Economic Structural Transformation (GReCEST), which will in particular consider China’s role in supporting blended finance. The UN ECA and ACET are collaborating on the piece of analytical work to inform peer learning. The topic is financial risks of PPPs and will be completed in early 2020 The UN ECA and ACET are collaborating on a piece of analytical work on fiscal risks of PPPs to inform the CwA peer learning event. So far, a draft concept note on the role of PPPs as a vehicles to spur the private sector into the traditionally considered public space, and on the associated fiscal risks of PPPs along with mitigating mechanisms has been produced by ECA and reviewed by ACET. The ACET team has also written a supplementary note on the topic using secondary data including the World Bank’s Private Participation in Infrastructure database. The next step will be to merge the two notes upon receiving feedback from ECA. ACET will also discuss the possibility of organizing the upcoming CwA peer-learning event as a side event to the Finance Ministers’ meeting in Addis in March 2020. In November ACET organized a CwA workshop at the African Investment Forum (AIF). Organized in collaboration with the African Development Bank and utilizing the expertise of the CWA Advisory Panel and ACET Senior Fellows, the workshop focused on identifying private sector challenges to investment in Africa. The approximately 50 participants broke into 4 working groups and thirteen broad areas were identified. ACET will incorporate these challenges into its engagements with CwA countries and other stakeholders CwA representatives from ACET also participated at the GReCEST conference (see ATI section above). During the panel session on Development Financing, ACET held a presentation on “Strengthening the Local Dimension of Blended Finance - a Review of the Local Approaches and Instruments Employed by Development Finance Organizations (DFOs)”. The presentation providing key material and findings from the analytical work on blended finance undertaken in 2019 by ACET, OECD, and ECDPM. In this reporting period, ACET together with the UN ECA worked on finalizing the report on Fiscal Risks of PPP. The report will be presented at a CWA peer learning event planned for the next quarter. On 17 and 18 February, the African Centre for Economic Transformation (ACET) in collaboration with the GIZ Project “Support to the Reform Partnership” (GIZ-RP) and the GIZ Project “Support to the Think Africa Partnership” (GIZ-TAP) organized a workshop in Accra, Ghana. The general objective of the workshop was to establish communication and coordination between ACET and GIZ-RP to harness support to the reform partner countries at the intersection between the Compact Initiative and the Reform Partnership Framework. There are currently six reform partner countries namely Côte D’Ivoire, Ethiopia, Ghana, Senegal, Morocco and Tunisia. More specifically, the workshop sought to: a) exchange information on three levels; (i) current developments of the Compact Initiative, (ii) country specific overview of the reform partnerships and GIZ-RP support, and (iii) ongoing and upcoming ACET activities to support the Compact with Africa, with a particular focus on reform partnership countries. b) identify synergies and potential areas of collaboration between GIZ-RP and ACET, and c) firm up lines of communication and coordination
In q2 2020:
With an objective to address good practices on three development finance institutions in three countries – AFD in Senegal, KfW in Tunisia and AfDB in Ethiopia, ACET commissioned three case studies on blended finance. These case studies will further inform the knowledge product developed for the September 2019 peer learning event on the local conditions of blended finance. Once the case studies are complete, we will organize a follow -up peer learning event and finalize a policy note with OECD.
The report on Fiscal Risks of PPP has been completed and awaits publication by our partner, the UN Economic Commission for Africa. The report will be presented at a CWA peer learning event planned for later this year.
We are also in discussion with partners on two potentially new thematic areas for analysis and peer learning with CwA countries. The first, good governance in the context of the COVID-19 pandemic, and the other is on energy. The energy engagement would include Ghana and Cote d’Ivoire initially but could be scaled to other countries.
The governance topic aligns well with ACET’s ten-point policy recommendations for a stronger re-bound after the pandemic and would in part focus on policy reforms CwA countries may take to enhance transparency and efficiency and build trust.
We are also launching a new initiative for CwA countries focused on supporting industrial innovation to accelerate investment. Initial research will begin in seven CWA countries in the second half of 2020, with the bulk of the work to take place in 2021
Blended Finance Case Studies: Final drafts of the three blended finance case studies for Senegal, Tunisia and Ethiopia were completed this quarter. The study sought to address good practices of three development finance institutions in three countries – Agence Française de Développement (AFD) in Senegal, Kreditanstalt für Wiederaufbau (KfW) in Tunisia and AfDB in Ethiopia. The case studies will be followed by a peer learning event.
Reform Partnership Framework
As an outcome of the February workshop, ACET launched a new split of the work within the CwA under the Reform Partnership Framework. This included studies on good governance and COVID-19; industrial innovation; and investment.
Good Governance: The outline for the COVID-19 Economic response program was developed by ACET, World Bank and GIZ as a prerequisite for accessing a multi-year funding. Two reports on COVID-19 and Governance have been completed to inform a peer learning event on January 28.
Industrial Innovation: In Q4, ACET completed a draft industrial innovation landscape paper for the landscape analysis for Morocco, Tunisia, Senegal, Ethiopia, Togo and Côte d’Ivoire that was initiated in Q3. The next draft is expected in January 2021.
Pathways to Accelerate Investment: We completed and submitted to GIZ the seven-country study (Morocco, Tunisia, Senegal, Ethiopia, Togo, Côte d’Ivoire and Ghana) on Pathways to Accelerate Investment. Below are some key country specific recommendations from the study report.
• Ethiopia: The report recommends the tourism and ICT sectors as possessing significant opportunities for further support and investment. The financial and logistics sectors are also identified as two enabling sectors
• Côte D’Ivoire: The agriculture, crafts and transport sectors are recommended as priority areas for investment and reform support.
• Ghana: The report recommends manufacturing and agriculture/agribusiness as sectors holding high potential for accelerated investment, growth, and employment.
• Morocco: The study on Morocco revealed the food industry, trade and distribution, and renewable energy were the most potential sectors for new investment, and where reforms will have a particularly high chance of improving the business and investment climate.
• Senegal: For Senegal, the report recommends construction and real estate; smallholder agriculture; and agro-food industries as critical sectors for new investment, and where reforms will have a particularly high chance of improving the business environment, creating jobs and boosting economic growth.
• Tunisia: In this report, real estate/business transport and communications, and agriculture are the recommended sectors for new investment, where reforms will have a particularly high chance of improving the business and investment climate.
• Togo: This report recommends four sectors in Togo for their high investment potential and reform commitment: manufacturing; agriculture; infrastructure and mobility; and information and communications technology (ICT) and innovation
A special report on Togo that focused on areas for enhanced investment was also completed.