GDP. MDG. MVP. Human beings love acronyms. UNICEF. PEPFAR. OPEC. We love them even more when they just roll off our tongues. Thus, naturally, BRIC is a favorite, as the four emerging market giants, Brazil, Russia, India and China occupy an increasingly important role in the global economy.
Ngozi Okonjo-Iweala, Managing Director of the World Bank and former Finance Minister and Foreign Ministers of Nigeria, spoke at the Harvard Kennedy School about Africa’s impending BRIC-hood. However, she emphasized, Africa will require initiatives on three fronts in order to catalyze the upgrade.
Firstly, it needs a “big push” in infrastructure, which is the primary constraint to doing business in Africa. In order to close the net funding gap, estimated at $93 billion per year, Okonjo-Iweala suggests replacing aid disbursements with African Development Bonds. Allowing African nations to securitize a portion of their aid would not only free up funds for infrastructure development, but it would also elevate the perception of Africa.
Secondly, it needs instruments to manage volatility. A vast 89 percent of volatility originates within the country as a result of economic mismanagement, political instability or violent conflict. In order to mitigate external volatility, Okonjo-Iweala advocates implementing instruments that mitigate aid volatility and utilize donor funds as countercyclical instruments.
Thirdly, Africa should place education at the forefront of its development agenda.
In response, Aleksandr Shkolnikov at the Center for International Private Enterprise blog claims that the three propositions are not enough to act as a springboard for BRIC-level economic activity, underlining the importance of institutional reform and good governance, especially considering that for every dollar of ODA, two dollars is looted by government officials.
On the other hand, Shanta Devarajan, World Bank Chief Economist for Africa, called the speech “inspiring.” She did, however, criticize Okonjo-Iweala’s tendency to characterize Africa as one unit; Africa is comprised of 47 countries that lack the largeness and middle-income population of BRIC countries. Furthermore, noting the inequality prevalent in BRIC countries, Shanta insists that Africa should aspire to balance growth and equity.
Okonjo-Iweala began her speech with a question: “What trillion dollar economy has grown faster than Brazil and India between 2000 and 2010 and is projected to grow faster than Brazil between 2010 and 2015?” The answer, of course, is Africa, and it truly is an attention-grabbing factoid. It remains to be seen, however, whether factoids and statistics are harbingers of BRIC-like growth.