Support to Regional Knowledge Capacity on Economic Transformation, Resilience, and Recovery

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Regional ContextThe African continent, home to nearly 1.4 billion people in 54 countries, is a diverse continent with both tremendous potential and challenges to achieving poverty reduction and inclusive growth. The region is composed of low, lower-middle, upper-middle, and high-income countries, with populations that range from under 100,000 (Seychelles) to over 200 million (Nigeria) and per capita GDPs that range from less than USD 300 (Burundi) to over USD 11,000 (Seychelles). Africa’s economic growth and transformation in the last two decades has included gains and reversals. African growth acceleration in the first decade of the 2000s was driven mostly by external demand of primary commodities and foreign direct investment. Some gains were also made in transformation outcomes such as diversification of production and exports, export competitiveness, productivity, technological upgrading, and human well-being. However, many of these gains have proven unsustainable, in part, due to the impact of global economic shocks, including the financial crisis and recession in the late 2000s, the collapse in 2014-15 of the commodity super-cycle, and most recently the onset of the COVID-19 pandemic. Due to deceleration in growth, macroeconomic imbalances, socio-economic impacts of climate change, population growth, urbanization, political instability and violence, the COVID-19 pandemic found Africa unprepared to withstand further shock. As African economies look toward post-COVID-19 recovery, they are also faced with the challenge of extracting an economic dividend from the continent’s ongoing demographic transition. To succeed, countries need to focus on policies that promote better jobs and skills development, as well as improvements in education, health, infrastructure, technology, and climate adaptation. This points to a need for the deepening of the country-level economic analysis, policy formulation, and advocacy that can ensure increased national and local ownership, and promote focus, persistence, and learning in implementation. Achieving this will require strengthened local intellectual and institutional capacity, which is critical to effective economic management.Knowledge is a central instrument of the World Bank Africa Strategy in promoting structural and economic transformation in the region, while meeting objectives of supporting macro stability, resilience to shocks, and improved competitiveness. In 2017, the World Bank established the “Think Africa Partnership” (TAP) Program with the objective of building a knowledge to policy action pipeline. TAP was established with the objective of further strengthening production and uptake of knowledge and research to enhance the formulation and implementation of evidence-based policy. This challenge still largely persists, but in the wake of COVID-19 is even more relevant. ACET has been a strategic partner in the Think Africa Partnership since its inception. As one of the leading pan-African Economic Policy think tanks, ACET was chosen in 2017 by the African Ministers of Finance group to act as coordinator for knowledge support and peer learning to the Compact with Africa, an initiative of the G20. TAP and ACET continue to receive numerous requests to support African governments on their economic transformation agenda. Given significant uncertainty over the length of the economic crisis and the shape of recovery, the TAP secretariat has proposed a three-year scaled up vision for the Multi-donor Trust Fund (MDTF) focusing its new activities on the support to governments in their economic recovery from COVID-19. This proposed project with the Africa Centre for Economic Transformation (ACET) is a critical part of this expanded support and builds on the successful implementation of a past project, Support to Regional Knowledge Capacity (TAP1, P167357).Sectoral and Institutional ContextMany think-tanks on the continent are faced with challenges such as limited or no access to policy makers, inadequate analytical capacity and availability of funds that directly impacts their capacity to generate national discussions regarding priorities and recommendations at the highest levels of government. With the rapidly evolving needs from policy makers, the competition for scarce resources in the research space, as well as the limited involvement of the private sector, there is a need to rethink ways to secure the core services in the knowledge to policy chain. The range of African home-grown think-tanks and local universities which are currently incubators for relevant debate and discussion could build better bridges between research and policymakers. The Think Africa Partnership (TAP) is a multi-donor Trust Fund for the Africa Regions and is the Africa Regions’ flagship trust fund translating knowledge into economic policy action to promote economic transformation across the continent. TAP is an African-centered initiative to better equip African scholars, institutions, and chief economic advisors with the tools, knowledge, and networks to address local development challenges with home grown solutions. Since its inception in 2018, the governments of Germany and Norway have contributed over USD 20 million to the trust fund, of which a large proportion of disbursements have been dedicated to support the African Centre for Economic Transformation (ACET) and to strengthening regional and domestic knowledge capacity. The work carried out by ACET has included promoting dialogue between researchers, think tanks and policymakers, a critical component for enhancing effectiveness and sustainability of economic reform efforts and building a bridge from knowledge generation to economic policy design and implementation. ACET’s work therefore plays a central role in TAP program’s objectives to promote economic growth and economic transformation by ensuring policy makers have access to cutting edge knowledge, evidence, and economic advice.TAP is a strategic partner to scale-up and mainstream CwA, acting as an intermediary between donors and African stakeholders and partners, such as the Chief Economists of Government (CEoG) network, providing an opportunity for deeper country-level engagement. The Compact with Africa (CwA) is a G20 initiative started by the German G20 Presidency in 2017 to promote private investment in Africa. The CwA’s primary objective is to increase attractiveness of private investment through substantial improvements of the macro, business and financing frameworks. It brings together African countries, international organizations and bilateral partners from G20 and beyond to coordinate country-specific reform agendas, support respective policy measures and advertise investment opportunities to private investors. CwA is open to all African countries. Since its launch in 2017 and so far, twelve African countries have joined the initiative: Benin, Burkina Faso, Cote d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo, and Tunisia. In TAP1, ACET has provided support to CwA by providing technical assistance and convening peer-learning platforms as well as conducting regular evaluations of CwAs strategies. Thematic areas for technical support which are growing in demand include Country Platforms/Reform Delivery Units and effective PPP deployment. Given the results of ACET’s activities under TAP1 and its critical position as a knowledge broker in the Africa region, the World Bank is reaffirming its strategic partnership with ACET through proposed the financing of the Support to Regional Knowledge Capacity for Economic Transformation, Resilience, and Recovery Project (TAP2). In the coming years, through this project, the partnership will seek to broaden and deepen ACET’s proven policy engagement model to focus on economic transformation, resilience, and recovery in a post-COVID-19 context. ACET will continue to draw upon best practices to enhance its role in designing and supporting implementat