Suchergebnisse

Evidence illustrates that investment in infrastructure is essential to accelerate inclusive growth. Indeed, a number of Sub-Saharan African (SSA) countries have begun to devote greater resources to large-scale public investment projects. Nevertheless, while massive projects can potentially generate large benefits there are considerable risks. Cost overruns, poor implementation quality, inadequate operational and maintenance capacity, and negative social or environmental impacts can severely undercut a project's anticipated social and economic returns. Moreover, projects, which are expensive to develop and maintain can impact on debt dynamics and in some cases macroeconomic stability. Yet, given the complex nature of such projects it is often difficult to ascertain whether it is worthwhile to proceed with a project and if so, how should it be financed and implemented. Historically, computable general equilibrium (CGE) models have been used to assess the prospective impacts of large public investment projects. However, such models are a complex and time-consuming process and are often too broad to precisely capture the localized impact of specific projects. This paper proposes a simple, but more user-friendly model. By inputting information on the project's construction, operation, and anticipated returns, the user is able to assess the project's net impact on the economy and weigh up the costs and benefits of different approaches. The model was developed in response to a request from the Nigerien authorities to assess the macroeconomic impact of Niger's Kandaji Dam project. It found that while costs would equal more than 10 percent of 2013 GDP during 2014-48, the expansion of domestic production spurred by increased demand during the construction phase will increase GDP by 0.25 percent above the baseline projection and boost fiscal revenues by an additional 0.45 percentage points of GDP.

The three countries covered in this first report, Mali, Chad and Niger, share a number of common characteristics and face a similar set of challenges, which provides the foundation for this joint-review approach. All three are low-income landlocked economies. Each relies heavily on the agricultural sector as its primary source of income and livelihoods, and each has a large livestock subsector that is based in part on traditional nomadic pastoralism. All countries have important natural resource industries, gold for Mali, uranium and oil for Niger, and oil for Chad, which represent the bulk of export earnings and public revenue. This dependence on the primary sector renders these economies highly vulnerable to weather-related shocks and volatile commodity prices. Each is struggling to overcome a legacy of instability and violence, which is complicated both by the fragility of domestic socio-political conditions and the severity of regional security challenges. Finally, all three countries are members of a monetary union that uses a regional currency pegged to the euro and exercises significant influence over the macroeconomic policies of its member states. At the center of the trade-off between stabilization and development lies public investment management, at macroeconomic and financial management levels. Faced with repeated negative shocks, countries tend to cut ongoing and planned public investment projects which are often designed to reduce drivers of fragility and strengthen the resilience of economies, thus perpetuating risks of falling into fragility traps. Hence, Section three discusses the impact of public investment volatility on its quality in Chad, Mali and Niger, and explores possible options in terms of macroeconomic and public financial management to smooth public investment budget execution.