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South Africa remains an attractive and lucrative investment destination, says Alvin Botes, deputy minister of international relations and cooperation. This was highlighted in the recent South African Reserve Bank Quarterly Bulletin, foreign direct investment (FDI) inflow from across the globe was R27.2 billion in the first quarter of 2022. This comes after an inflow of R22.7 billion in the fourth quarter of 2021, marking an uptick as a result of non-resident parent entities increasing equity investments and granting loans to domestic subsidiaries, said the Reserve Bank.
The Reserve Bank added that other investment liabilities switched from a revised outflow of R29.6 billion in the final quarter of 2021 to a significant inflow of R81.2 billion at the beginning of 2022.
Botes said the upward revision of foreign investment could be attributed to the decisive steps taken by the government toward more predictable and transparent policies. “This signals that South Africa’s macroeconomic and political fundamentals are in place, reinforcing our position as a credible investment destination.”
The deputy minister, speaking at an investment seminar in Portugal on Monday, said that South Africa offers a high return on investment and vast opportunities for investors.
From 2012 to 2021, total trade between South Africa and Portugal increased from approximately R2 billion in 2012 to approximately R7.5 billion in 2021. However, the trade balance is currently skewed in favour of Portugal, added Botes. “South Africa has embarked on an ambitious investment drive, which aims to raise $100 billion in new investment over five years,” said the deputy minister.
South Africa in a position to export energy – Anglo American Platinum (Engineering News)
South Africa is one of only four countries that has more renewable energy available to it than what it needs for itself, which places the country in a very strong position to be able to export energy, with hydrogen in the form of ammonia, hydrogen gas or liquid hydrogen among the best ways of doing so, Anglo American Platinum CEO Natascha Viljoen said on Tuesday. “If you look at the northern hemisphere broadly, they just don’t have enough renewables for their own need, which puts us, as a country and as a platinum group metals (PGMs) sector, in a very good position,” Viljoen told a media breakfast in which Mining Weekly participated.
KRA records 55pc rise in border post revenue (Business Daily)
The Kenya Revenue Authority (KRA) has registered a 55 percent growth in revenue due to increased efficiencies at the Lunga Lunga one-stop border post (OSBP).The authority collected Sh810 million by April 2022 from September 2021 against Sh553 million obtained in the same period previously. The state is seeking to grow trade after officially commissioning the border post next month following the completion of a key border infrastructure. According to KRA, traffic at Lunga Lunga one-stop border post grew by 166 percent from September 2021 to January 2022 compared to the same period the preceding year as the economy recovers from the effects of Covi-19. Incoming traffic represents over 65 percent of the OSBP traffic flow. “There has been a smooth flow of cargo, vehicles and passengers through the border where time to clear was reduced by more than a half. For instance, cargo which used to be cleared for about 45 minutes, due to enhanced efficiency, now takes less than 15 minutes,” said Mr Changole.
The government has embarked on a sensitization campaign countrywide to create awareness amongst the business community on the opportunities offered by the African Continental Free-Trade (AfCFTA) and how to exploit the openings offered. Industrialisation, Trade and Enterprise Development Cabinet Secretary Betty Maina said Kenya has prepared a national implementation strategy that provides a framework for the implementation of the AfCFTA to facilitate an expansion of the country’s trade and investment in Africa and support structural transformation. She said the strategy, which is also aimed at fostering economic growth and sustainable development, is envisioned to secure markets for goods and services within the African region, promote value addition and diversification of products in the AfCFTA markets.
SGR seeks to reap from rising demand for freight services (Business Daily)
The ramping up of Kenya’s cargo operations on the standard gauge railway line between Mombasa, Nairobi and Naivasha has pushed the government to increase haulage on the freight service. The Kenya Railways Corporation (KRC) has begun the process of buying 500 wagons for freight services to meet rising demand. KRC coast operations manager Thomas Ojijo told Shipping & Logistics that purchase approval has been made. Currently, KRC is operating 10 freight trains from Mombasa to Nairobi and Naivasha Inland Container Depots.
“We are only carrying 40 percent of containerised cargo and 10 percent of the conventional cargo. The remaining cargo is still being transported on the roads,” said Mr Ojijo.
The government has suspended all taxes on maize imported into the country in a bid to boost food security. The move will come as a relief to Kenyans as the price of flour is set to go down. Currently the price of a 2kg packet of maize flour retails at a cost of Sh210 up from Sh140 last month. Agriculture Cabinet Secretary Mr. Peter Munya said the abolishment of taxes levied on maize imports will ensure there is enough maize supply in the country lowering the cost of flour production. Speaking at the Namanga border Tuesday after meeting several stakeholders to address the maize shortage crisis, Munya said all maize imported into the country from Tanzania and other COMESA countries will be exempted from taxation effective July1. “We have suspended all levies and charges on maize coming into the country from all border points. The move is aimed at averting the maize shortage crisis and ensuring cost of maize flour comes down,” said Munya.
Impact of soaring fuel price keeps transport sector on edge (Addis Standard)
The soaring fuel prices have greatly impacted the transportation services, Addis Ababa City public transport users and taxi drivers told Addis Standard. According to various economists and international reports, oil prices have risen sharply as a result of the Russia-Ukraine war to the extent that the price of a single barrel of crude oil has risen to $140, which is a significant increase since mid-2008. The oil price hikes at the international level have put Ethiopia, which has already been languishing in high inflation due to civil war, drought, and other factors, placing the country in a difficult position.
Due to the price increment in the international market, the Ethiopian government announced last month that oil prices would be augmented too. Addis Ababa Transport Bureau, on its part, subsequently stated an increment of transportation fees for taxis ranging from 0.50 cents to 3.50 ETB. The government warned that it would take action against those who raise prices on utilities or consumer goods following its oil price adjustment.
Following the oil price adjustment in the country, Addis Abeba City Administration Transport Bureau announced its decision of revising the tariffs for mid-bus and mini-bus transport vehicles to be implemented from June 8th of 2022 in accordance with its assessment.
Oxford Business Group signs MoU with LCCI for 2023 economic analysis (The Sun Nigeria)
Nigeria’s plans to put the private sector at the heart of the next phase of its economic development will be explored in a forthcoming report by the global research and advisory company Oxford Business Group (OBG). The Report: Nigeria 2023 will look in detail at the key sectors of the country’s economy with high growth potential, which include agriculture, energy, ICT and industry. It will also consider the important role earmarked for public-private partnerships in supporting Nigeria’s infrastructure development, with major projects such as the Lekki Free Zone and the Lekki-Epe road among those in the spotlight.
Kaduna dry port plans domestic export warehouse operation (The Sun Nigeria)
The Kaduna Inland Dry Port (KIDP) is set to commence operation as Nigeria’s first Domestic Export Warehouse (DEW) to promote export of made in Nigeria goods and agricultural produce. Rotimi Raimi-Hassan, the Port General Manager told newsmen in Lagos that the facility is ready to be launched while listing support infrastructures already put in place for seamless and efficient operation. According to him, KIDP is set for commissioning to pilot the DEW services as the most equipped facility in Nigeria with modern laboratory to check quality of exports that would be processed through the dry port.
Speaking at the launch of the Business Resource Centers (BRCs) on Monday, 27th June, 2022 at the Accra International Conference Centre (AICC), the Minister of Trade and Industry, Alan K. Kyerematen, challenged individuals to start up their own business ventures in order not to be found wanting after retirement. He indicated that, many countries, especially in the Europe, Asia, and North America, developed their economies by critically looking into the building of strong MSMEs from family-owned businesses into multinational companies we see today. Noting that, while these countries have experienced significant economic transformation by paying critical attention to the development of the MSMEs sector, our entrepreneurs and private sector operators continue to face serious challenges which successive Governments have made attempts to overcome.
Mr. Alan Kyerematen, emphasized that, “the great nations of this world are not where they are because of their natural resource endowments. If that were the case, countries like Singapore and South Korea would be the poorest countries in the world and Africa would be the richest. They are great because of their commitment to the development of entrepreneurs.
He stressed that, “If the only answer to export revenue mobilisation is proceeds from the export of cocoa, then we may have a problem in this country. We have been depending on the export revenues of cocoa and gold for over a century now. It must occur to us that we have to move beyond cocoa. We should mobilize MSMEs to produce for export.”
Prices of imported food products jumped 15.3% YoY in Douala in May 2022 (Business in Cameroon)
May 2022 was marked by an increase in the prices of imported food items in Douala. According to data just published by the National Institute of Statistics (INS), compared to the same period in 2021, “final household consumption prices have risen by 6%” in Cameroon’s economic capital. This is well above the tolerance threshold of 3% allowed in the CEMAC.”
“This development in May 2022 is linked to the surge in food prices,” which rose by 12.4% year-on-year, with a peak of 15.3% for imported food products (compared with 11.4% for local products).
Minister of Trade and Industry Nevine Gamea stated that industry contributes 11.7% to the country’s GDP and employs about 28.2% of the total Egyptian workforce, and that its investments amounted to approximately EGP 49bn in FY2020/21, representing about 6% of total public investments.She also said that the industry and trade sectors have achieved tangible development over the past eight years since President Abdel Fattah Al-Sisi took office in 2014.Moreover, the Egyptian government has paid unprecedented attention to developing industrial sectors and increasing export rates, as they are among the mainstays of the national economy and the engine of comprehensive economic development in Egypt. They also play a pivotal role in achieving social stability by providing job opportunities for young people and improving citizens’ living standards.
African trade and integration news
Babajide Sanwo-Olu, governor of Lagos, has urged micro, small and medium enterprises (MSMEs) to embrace digitalisation to maximise the advantages of the African Continental Free Trade Area (AfCFTA) agreement. Sanwo-Olu said at the opening ceremony of the 7th edition of MSME Exclusive Fair on Tuesday in Lagos. “The theme of this fair, Sustainability of MSMEs on AFCFTA Opportunities for Global and Digitalised Economy is apt because the AFCFTA is expected to bring huge gains to MSMEs in Nigeria,” he added. “AFCFTA agreement can play the role of unlocking innovation, growth and productivity across the continent but significantly for its MSMEs segment by translating spending power to economic development.
EAC boss says new common external tariff to benefit citizens (The New Times)
For over a month now, tension has heightened in the east of the Democratic Republic of Congo, and the region, after the resurgence of the M23 rebellion even after the country made a big step forward in joining the East African Community (EAC). Besides the difficulties in the bloc’s new member, in May, EAC Ministers in charge of trade and finance adopted 35 per cent as the 4th band of the region’s Common External Tariff (CET). Implementation of the reviewed EAC CET commences on July 1. In an exclusive interview with The New Times’ James Karuhanga, EAC Secretary General, Peter Mathuki, maintained a positive outlook while discussing the Congolese issue, among other prevalent challenges. Mathuki insists that however difficult the situation may look, there is always a way out. Mathuki also talked, at length, about the region’s revised Common External Tariff, stressing that it is, eventually meant to benefit the region’s common man.
The Southern African Development Community (SADC) is developing the Regional Gas Masterplan to enable the utilisation of the abundant gas reserves in the Region to reduce its reliance on coal in the wake of the global commitment, including the Paris Agreement’s ambition to decrease carbon emissions and maintain global temperatures below 1.5° Celsius. This was said by Dr. Thembinkosi Mhlongo, the SADC Deputy Secretary for Regional Integration, on June 23, 2022, in Gaborone, Botswana, during a meeting with Ms. Yuka Fujino, the Chargé d’affaires of the Japanese Embassy in Botswana. The purpose of the meeting was to discuss the Eighth Tokyo International Conference on African Development (TICAD-8), as well as other issues of mutual interest to the two parties.
Dr Mhlongo highlighted SADC’s efforts to expand solar energy generation output in order to increase its power generation capacity, corridor involvement, and economic prosperity while also reducing the Region’s carbon footprint. He said that in light of the recent increase in the number and severity of disasters, there was a need for increased collaborative efforts with partners to put in place mechanisms, including the operationalisation of the SADC Humanitarian and Emergency Operations Centre that will aid the Region in mitigating disasters and monitoring all disaster risk factors.
Regional lobby makes case for women cross border traders (The New Times)
The East African Business Council (EABC), the regional body for private sector associations has called for more efforts and enforcement in easing cross-border trade for women, especially those in the informal sector. The request was made on Monday June 27, during a public-private dialogue that convened representatives from trade facilitation agencies, importers, exporters, transporters, East African Grain Council members, Private Sector Foundation Uganda and women cross-border traders to chart out solutions to ease the free movement of persons and cargo at Gatuna One Stop Border Post (OSBP). The border links Rwanda to Uganda, but officials said that many of the challenges here are shared across other common borders connecting member states.
The meeting was aimed analyzing the efficiency and implementation of the EAC Simplified Trade Regime (STR) at the border posts, the efficiency and implementation of the Regional Electronic Cargo, Trucks and Drivers System (RECTDS) tracking system and the EAC Single Customs Territory (SCT) framework among other initiatives.
Miria Akaukwasa, the Chairperson of Katuna Women Cross Border Traders appreciated that a trade information desk had been set up at the border to ease trade for informal traders. However, she stated that women need to be sensitized about the EAC Simplified Trade Regime and small cross border traders should be allowed to do business at the Gatuna OSBP.
African economies see reasons for optimism despite crises (Eyewitness News)
From COVID-19 to the war in Ukraine, external crises have put pressure on African economies, but many on the continent see opportunities to undertake radical reforms. Africa already showed some resilience during the pandemic as its economic contraction was less severe than in the rest of the world, shrinking by 2% compared to 3.3% globally in 2020.While Russia’s invasion of Ukraine is weighing on the world economy, Africa faces a better outlook again in 2022.”Africa is headed towards growth of around 3.7%, while in North America and Europe there is a real risk of recession”, said economist Lionel Zinsou, formerly prime minister of Benin.
“We haven’t been the biggest victims of the pandemic, and we won’t be the biggest victims of the collateral consequences of the war in Ukraine”, added Zinsou. Another positive signal is that investor confidence in Africa is up to a higher level than that before the pandemic.
IATA backs air transport liberalisation for Africa (New Telegraph)
The Director-General of the International Air Transport Association (IATA), Willie Walsh has urged Africa to take a cue from Europe in its air transport deregulation process, adding that the Single Africa Air Transport Market (SAATM) would give a massive increase in connectivity, increase in the number of flights, increase in the number of activities, much better competition. He noted that this would benefit the African consumers, the connectivity which has a huge benefit for the industry and the economies; stressing that it is the right way to go.
The Single African Air Transport Market (“SAATM”) was launched in 2018 with the aim of developing air services and harmonising associated regulations in Africa and stimulating the flow of private capital in the industry. The full implementation of SAATM by all countries in Africa could reap enormous economic benefits. However, in the absence of a clear implementation framework, the open skies treaty is facing significant challenges. Alternatives to full liberalisation are being explored as existing carriers seek other routes to gain market access.
Aviation has the potential to make a significant contribution to economic growth and development in Africa. An IATA survey suggests that if just 12 key African countries opened their markets and increased connectivity, an extra 155,000 jobs would be created and approximately US$1.3 billion in annual GDP generated in those countries He further stated that liberalisation of air space creates new routes and greater connectivity on the continent leading to shorter travel times, greater convenience, and fare savings for customers.
Mobile phone technology enabled Africa to leapfrog fixed-line telephones and revolutionise communication on the continent. Now, hydrogen may do the same, freeing African countries from the imported energy that drains many of their economies. For sub-Saharan Africa, which is almost entirely dependent on imported petrol and diesel, hydrogen could be the path to energy independence. Currently, even oil producers such as Angola and Nigeria are reliant on imported refined fuels. “Africa can leapfrog some of the legacy technologies of the West, such as fossil energy,” says Benedikt Sobotka, chief executive of global mining company Eurasian Resources Group.
AU to extend insurance to agriculture, green energy sectors (ETEnergyWorld)
The African Risk Capacity, a specialised agency of the African Union, has said that it will extend insurance covers to the continent’s agriculture and green energy sectors. Lesley Ndlovu, CEO of African Risk Capacity told a continental forum in Nairobi, the capital of Kenya, that it will provide insurance to cover losses for farmers against common weather-related areas of drought, floods, and tropical cyclones, Xinhua news agency reported.
“We cover staple crops such as wheat and maize, cash crops including cocoa and livestock products to boost food security in Africa,” Ndlovu said during the 48th Africa Insurance Organization Conference. Currently, 35 African Union member states have joined the African Risk Capacity.
Sub-Saharan Africa’s agricultural sector is widely recognized to have vast, under-utilized potential. Land and labor productivity are low compared to other regions and have barely increased over the last 20 years. Low productivity has created widespread rural poverty and food insecurity, so the potential for productivity increases represents an opportunity to boost inclusive growth.
In a recent report, we use new data and trends in output and employment, review the main productivity issues that are preventing transformation in the African agricultural sector, and ask how Fourth Industrial Revolution (4IR) technologies might address them and unlock better job opportunities. The optimistic narratives around African farmers’ adoption of technology often overlook the more long-standing challenges they face that are preventing the adoption of much older productivity-increasing technology, such as fertilizers and conventionally produced hybrid seeds. For digital agriculture to be effective and transformational in Africa, a concerted effort to address Africa’s long-standing agricultural productivity challenges is needed.
The World Bank Board of Directors approved $327.5 million to cushion pastoralists in Djibouti, Ethiopia, Kenya, and Somalia from the impacts of drought and better connect them to markets. The De-risking, Inclusion and Value Enhancement of Pastoral Economies in the Horn of Africa (DRIVE), will enable the region to adapt to the impacts of climate change, commercialize livestock production in pastoralist communities, and ensure inclusion of the marginalized and vulnerable groups such as women in the sector.
The project will enable $572 million in private capital to help pastoralists tap into drought insurance and savings, get access to digital accounts, and attract more private investment in pastoral areas. About 2,500 pastoralists groups will be connected to markets so that they get better value from their livestock rearing activities, as currently, they are at the bottom of the value chain.
Crypto market meltdown rattles 12 million East African investors (The East African)
A painful financial journey has ensued for at least 12 million East Africans who are now counting, in billions of dollars, losses both from the cryptocurrency market crash and a series of related Ponzi ‘get-rich-quick’ schemes that have unfolded in the wake of the crisis. As extreme market conditions force legitimate crypto-exchanges to close shop with many laying off employees, reports of some crypto-investment schemes disappearing with investors’ funds have started to surface. This raises questions about the future of unconventional assets.
In general, total global market value for all crypto assets has fallen to about $890 billion from $2.8 trillion last November, which has plunged several East Africans holding cryptocurrencies into financial turmoil. Also, there are growing cases of fraudulent schemes around cryptocurrency investments, which, according to American consumer protection agency Federal Trade Commission, led some 26,000 people to lose over $1 billion since 2021 in the US alone.
Just two weeks ago, some cryptocurrency founders disappeared after defrauding Kenyan would-be investors of at least $8.5 million, barely six months after it surfaced on the internet, and this week, four young men were brutally murdered over alleged crypto-scamming.
A new platform to promote economic and trade cooperation between China and Africa was established in Beijing on Tuesday. The Asia-Africa Innovation Cooperation Center was set up following President Xi Jinping’s proposal made at the Beijing Summit of the Forum on China-Africa Cooperation in 2018 to set up a China-Africa center on innovation cooperation to promote innovation and entrepreneurship among young people in China and Africa, according to the Administrative Committee of Beijing Daxing International Airport Economic Zone. The center was jointly set up by the committee, the embassies of a number of African nations in China and Chinese companies including Asia-Africa Silk Road International Business Co.
It is set to become an important channel through which Chinese and African entrepreneurs can set up and develop business more efficiently, the zone’s administrative committee said.
The committee said it will intensify cooperation with African countries and improve the business environment and services, with the center facilitating China-Africa cooperation in areas such as trade, investment, science and technology, environmental protection, culture, tourism and talent cultivation.
UAE to increase exports to countries in West Africa (AI-Monitor)
An Emirati exports arm has announced a new agreement to boost trade with several West African states. The Abu Dhabi Exports Office signed today a financing agreement with the ECOWAS Bank for Investment and Development. The deal establishes a $20 million credit line between the two entities for the purpose of boosting trade between the United Arab Emirates and the 15 ECOWAS member states in West Africa, the Abu Dhabi Exports Office said in a press release. The ECOWAS Bank for Investment and Development is the financial arm of the Economic Community of West African States (ECOWAS).
The European Parliament has passed a motion calling on the EU to elevate tech transfers and trade with Africa so the developing continent can move beyond the paradigm of mostly supplying cheap raw materials. Backing a report that advocates redressing imbalances left over from the colonial era, the multinational legislature signalled it wants to better equalize trade relations to enable Africa to move up the development and digital scale. Kathleen Van Brempt, a Belgian Member of the European Parliament (MEP), says “For too long, Africa has been reduced to a supplier of raw materials, with the result that the continent’s immense economic potential remains untapped”. Fellow Belgian MEP Saskia Bricmont says the EU should emphasize improvements and funding for infrastructure, food security, civil society, free trade agreements and sustainable economic development.
Global economy news
The report highlights how the EIF partnership has catalysed support for LDCs, helping them to improve their trading capacity and to generate over USD 200 million in new exports in 2021. “LDCs took a lead role in improving their economic situation in 2021, working closely with the EIF partnership to build their institutional and productive capacities,” said EIF’s Executive Director, Ratnakar Adhikari.
Trade in ocean-based goods showed remarkable resilience during the recession induced by COVID-19 in 2020, according to the latest available data from a new UNCTAD database. Such goods include resources either sourced from the ocean, made from marine resources or manufactured for marine activities. UNCTAD’s ocean trade database, released in April 2022, draws on official statistics from all UN member states. It shows that trade in ocean-related goods fell by 3.2% in 2020 compared to 2019, faring better than both world trade in goods, which dropped by 5.3%, and trade in ocean-related services, which collapsed – for example, international tourist arrivals declined by 74% in 2020.
“The resilience of trade in ocean goods helped sustain millions of livelihoods amid the slowdown caused by the pandemic,” said David Vivas, an UNCTAD legal officer working on ocean economy issues.
Exports of ocean-based goods were worth at least $678 billion in 2020 in these sectors: high technology and other manufactured goods ($268 billion), ships, port equipment and parts ($257 billion), marine fisheries and aquaculture ($87 billion), seafood processing ($65 billion) and sea minerals ($1.4 billion). UNCTAD’s analysis shows that the manufacturing sector represented 77% of exported ocean economy goods, reflecting its higher added value compared to the primary sector.
More and more trade measures are related to the environment, DDG Paugam noted. Since 2009, WTO members have notified around 14,600 trade-related environmental measures, with one in six measures now being environmentally related compared to one in 12 measures in 1997. “Most of these measures are the kind of policies that will require direct or indirect action from customs officials, such as environmental requirements, conformity, risk assessment procedures, import and export licences, bans, quotas, and so on,” he said. “This means a lot of added challenges and work for customs officials. And trade negotiators absolutely need to be aware of these challenges if they want their measure to be efficient in practice in having a concrete impact for the environment.” Customs officials need to be engaged early in the process to ensure these policies are coherent, fit-for-purpose and implementable.
South Africa among countries where debt collection is most difficult (The Mail & Guardian)
Out of 49 countries, South Africa is the 43rd most difficult for debt collection, according to a ranking by international insurer Allianz Trade. The Allianz Trade Collection Complexity Score, which measures how difficult it is to collect debt in a given country, found that South Africa has a severe level of collection complexity. The ranking measures the level of complexity relating to international debt collection procedures from zero (least complex) to 100 (most complex). South Africa has a score of 67. Sweden and Germany top the ranking as having the least complex debt collection, both with scores of 30, with global collection complexity at 49.
Leaders of the world’s most advanced economies have agreed to start a Climate Club where members agree on joint rules and standards in the fight against global warming with the hope that it will avoid spats over green tariffs. The Group of Seven nations reached a deal on the issue at a three-day summit in Bavaria, Germany, that ended on Tuesday. It’s a significant achievement for German Chancellor Olaf Scholz, who has made better coordination on climate protection measures a key theme of his G-7 presidency. “We note with concern that currently neither global climate ambition nor implementation are sufficient to achieve the goals of the Paris Agreement,” the final G-7 leaders said in a statement. The Climate Club will address that by “accelerating climate action and increasing ambition, with a particular focus on the industry sector.”
Scholz has argued that the Climate Club would help eliminate a chaotic patchwork of national regulations that could increase the risk of new trade conflicts as countries slap levies or tariffs on imports deemed less sustainable. It will also potentially help mitigate disadvantages faced by companies doing business in regions with more ambitious carbon-reduction goals, and put pressure on non-members to adopt stricter climate protection measures.
Members considered the Preferential Trade Agreement between Namibia and Zimbabwe on goods, which entered into force in April 1993. The parties noted that this agreement is based on the Southern African Development Community Protocol on Trade, which seeks to promote trade as an engine for economic development and poverty eradication in the region.
Nearly two decades ago, many low- and middle-income countries began a transformation in health care financing. Centralized budgets and low levels of autonomy for facilities and workers were replaced with frontline autonomy, performance pay, and greater transparency and accountability for results, all through a package of reforms that came to be known as performance-based financing. Unfortunately, while health coverage did expand dramatically over the past two decades, this expansion was not accompanied by the expected improvements in health outcomes. A new World Bank Policy Research Report, Improving Effective Coverage in Health: Do Financial Incentives Work?, draws on research from 15 years and 40 countries to better understand the gap between health coverage and outcomes and point a way forward.