About a billion people, a majority in Africa, live in fragile states—countries in which the government is impaired to deliver basic public services to the population and promote security and development. These states have an elevated risk of both political and economic instability. Some countries have escaped from these conditions and built resilience. What are the lessons for others?
Africa has become more stable over the past two decades
In early 1990s, nearly half of sub-Saharan African countries—20 out of 44 countries—could be considered “fragile”. Today, the continent looks quite different. Democratic institutions have emerged in many countries; conflicts have diminished; and a combination of debt relief and stronger economic policies has lifted living standards across the region. But while some countries would appear to have made decisive strides and exited fragility, others remain vulnerable or have indeed fallen back.
A recent analysis by the IMF examines the experience of four countries, all of which emerged from conflicts in the 1990s or the early 2000s, and highlights those factors that help building resilience. Rwanda and Mozambique, using a roughly similar approach, became resilient in the early 2000s, whereas the Democratic Republic of Congo (DRC) and the Central African Republic (CAR) experienced relapses manifested in political instability and renewed conflicts.
Rwanda and Mozambique: examples of a successful exit from fragility
Both Rwanda and Mozambique strived for inclusive political settlements following their conflicts. The interests of previously unrepresented groups were progressively reflected in the political process and institutional provisions were introduced to hold the governments accountable. Political stability was bolstered by economic stability, which then set off a strong post-conflict growth rebound.
Progress in mobilizing domestic revenue was matched by strong support from international community in forms of aid and debt relief as well as capacity building, together with increases in public investment and a threefold increase in social spending as share of GDP.
To reap maximum gains from added fiscal space and donor assistance, both countries also made strong efforts to build economic institutions. In particular, public financial management was given top priority which in turn helped channel aid through national budgets and increase transparency in budget execution. And both countries also made significant progress in reducing poverty, notably in Rwan
But others continue to face challenges
In contrast, the DRC and CAR have had far more difficulties in building resilience and suffered from relapse to political instability and even conflict, which erased much of the progress made in earlier years. In CAR, the return to conflict in 2012 highlights the feeble implementation of the power-sharing agreements. While the CAR made some progress towards establishing economic stability, the DRC struggled to achieve this goal. In addition, the CAR, and to some extent the DRC, had difficulties building sufficient policy space as they could not make needed progress in revenue mobilization and reforms. Recurrent conflicts also prevented donors from engaging fully with the CAR and the DRC, resulting in much lower aid levels for the CAR and much delayed debt relief for the DRC. Fiscal space limitations resulted in low pro-poor spending and investment, which contributed to political instability and recurrent armed conflicts. Both countries also had limited progress in reducing poverty and improving the delivery of public goods.
Lessons for the future
Looking ahead, and while paying due attention to local conditions and priorities, our analysis suggests that the following steps are critical to build resilience in fragile states in Sub-Saharan Africa:
- Political inclusion and leadership are prerequisites to sustaining peace and political stability. Effective leadership plays a crucial role in driving a manageable set of policies and reforms that deliver tangible benefits to the population.
- Sound policies to establish economic stability and lay the basis for growth are critical. In particular, mobilizing domestic revenue and making enough room for both public and private investment are key to generating economic growth, creating jobs, and reducing poverty.
- Finally, establishing economic and political institutions that expand state capacity are possibly the most important of all. Data from the past two decades reveal that resilient countries have achieved periods of sustained GDP growth and successfully avoided growth breakdowns. Delivering on that requires institutions that can effectively manage economic reforms. Transparency and accountability are crucial to the process.
None of this is easy. Fragility is a persistent condition for many countries, and recurrent economic crises and political instability or conflicts are often concomitant features of this condition. Experience from successful exits from fragility suggests that building effective political and economic institutions is an important prerequisite. For example, the establishment of professional and accountable revenue authorities has allowed countries to establish a viable tax base capable of financing critical public expenditures.
Consequently, development partners need to engage with fragile countries on a long-term basis and provide financial assistance in ways that can improve the effectiveness of the state. They need to coordinate their efforts closely and focus their capacity development efforts on economic institutions, including technical assistance to build administrative and governance capacity; policy advice to design a long-term growth strategy; and financial assistance to address pressing financing needs. The private sector is often reluctant to engage in the early stages, concerned about the high level of risk. But experience suggests that once the groundwork has been laid, private investment both domestic and foreign can fuel long-term growth and employment creation.