In Five Charts: Understanding the Africa Country Policy and Institutional Assessment (CPIA) Report for 2017

The Country Policy and Institutional Assessment (CPIA) for Africa is an annual diagnostic tool which measures the quality of policies and institutional frameworks, and their ability to support sustainable growth and poverty reduction. The report provides scores for 16 criteria for each country and an overall regional score, which informs governments of the impact of the country’s efforts to support favorable growth and poverty reduction. It also helps determine the size of the World Bank’s concessional lending and grants to low-income Sub-Saharan African countries.  

Here are the top five highlights from the 2017 Africa CPIA:

Rwanda continues to be the top performer

Countries are rated on a scale of one (low) to six (high) for 16 dimensions reflecting four areas: economic management, structural policies, policies for social inclusion and equity, and public-sector management and institutions. In 2017, the regional Country Policy and Institutional Assessment (CPIA) score was 3.1.  However, policy and institutional quality varied widely across the 38 International Development Association (IDA) borrowers in the region in 2017 (figure 1). Rwanda continued to lead at the regional level and globally, with a CPIA score of 4.0. Other countries at the high end of the regional score range were Senegal, with a score of 3.8, closely followed by Cabo Verde, Kenya, and Tanzania, all with scores of 3.7.

Overall CPIA Scores of Sub-Saharan African Countries (IDA), 2017

Source: CPIA Database

Countries with better policy frameworks exhibit higher efficiency of investment

The efficiency of investment measure is positively associated with policy and institutional quality, and this association is stronger with respect to quality of government effectiveness (cluster D). While correlation does not establish causality, a country’s institutions may create incentives for investment and technology adoption and the opportunity for workers to accumulate human capital, thereby facilitating higher growth over the longer term. Weak institutions, by contrast, may encourage rent-seeking activities and corruption, leading to less productive activities; discourage firm investment and human capital accumulation; and lead to worse growth outcomes.

Efficiency of Investment and Quality of Policies and Institutions, 2011-17

Note: Efficiency of investment is calculated as the ratio of GDP per capita growth to gross capital foramtion (% of GDP). Sources: World Economic Outlook database; CPIA database, June 2018.

The decline in the average quality of polices and institutions observed in the previous years halted in 2017

The average quality of policies and institutions in Sub-Saharan Africa was broadly unchanged in 2017. This is a shift from the decline observed in the previous years. The flattening trend in the region’s overall CPIA score in 2017 is mirrored in that of economic management (cluster A).

Trends in CPIA Clusters, 2008-17

Source: CPIA Database

African countries need to pay attention to the rising public debt relative to gross domestic product (GDP)

The regional score in the debt policy area fell to 3.1 in 2017, the second consecutive year of decline. The worsening performance in this component of the CPIA reflects the rising burden of public debt across African countries. Rising debt burdens are translating into heightened risks to debt sustainability. The composition of debt has changed, with countries shifting away from traditional concessional sources of financing and towards more market-based ones. In March 2018, nearly half of the region’s low-income countries were classified at high-risk of debt distress or in debt distress, more than twice as many as in 2013.

Public Debt Trends

Source: Africa's Pulse (Spring 2018)

Harnessing the potential of new technologies will be key to Africa’s development

The share of adults with mobile money accounts jumped from 12 to 21% between 2014 and 2017, and it is by far the highest among all the regions. The gradual implementation at the individual country level of regional credit registries offers prospects for gains in financial inclusion during the next few years. Harnessing the potential of new technologies and fully embracing innovation perhaps represents the biggest opportunity of all for Africa.

Mobile Money Accounts in Sub-Saharan African Countries

Source: Global Findex Database, 2017, World Bank