Working Paper 41 - Informal Finance for Private Sector Development in Africa

More than a decade after substantial macroeconomic reforms were initiated in many Africancountries, aggregate growth, has at best remained inconsistent in many of those reforming countries.While the reasons for poor aggregate performance vary across countries, there is substantial evidencethat in many countries, poor private sector investment response in the medium-to-long term has delayedlong term growth. The poor response of the private sector might generally be attributed to varyingfactors in different countries. Indeed, various surveys suggest that a more vigorous response from theprivate sector in many countries has been impeded by a number of institutional, structural, and financialconstraints. (See Box 1).The apparent dearth of medium-term financing, the rudimentary nature of capital markets and theweaknesses in financial intermediation in general have made it difficult for private businesses to find themeans of financing other than short term bank credit. On the other hand, the generally low profitabilityof many private firms and the low overall level of domestic savings limit the prospects for investmentfinancing from their own resources.While the obstacles to private sector development are many, the financial constraints have receivedthe most attention from both governments and donors. Throughout the 1980s, it was fashionable toblame the financing constraints of the private sector on the inadequacies of banking systems and theirpoor perceptions of the creditworthiness of the small ventures that dominate African economies.Increasingly, however, possible solutions to the underlying factors behind the reluctance of commercialand other banks to lend to small enterprises are being sought, as more and more people begin tounderstand the problems of banks in relation to their structures and policy bottlenecks.In view of the continuing problems with finance, it is not surprising that reform of the financialsector became a major component of economic reform programmes in many countries. Reforms werenecessitated by the observation that various policy regimes shifted the allocation of investible fundsfrom the market to the government. In many countries, banking institutions simply became institutionsfor financing the budget deficit or covering operating losses incurred by parastatals. Reforms were alsomade necessary by the fact that financial repression generally hindered the development of the institutionalcapacity of financial institutions in their development of the commercial viability of their operations. As banks failed to develop the capacity for risk assessment and monitoring of optimal management of theirloan portfolio, they became uninterested in investing in information capital which is crucial for thedevelopment of financial systems.The reform of financial markets has taken the form of significant liberalization as countries shiftedfrom the ‘repressive’ regimes, characteristic of the pre-adjustment era. Governments are no longerrequired to play major roles in determining credit flows through a system of subsidies, interest rateceilings, credit allocation and direct intervention.

Institutional Analysis of Financial Market Fragmentation in Sub-Saharan Africa: A Risk-Cost Configuration Approach

financial markets, institutions, risk-cost analysis, sub-Saharan Africa

Saving in Sub-Saharan Africa

Gross domestic savings in Africa averaged only 8 percent of GDP in the 1980s, compared to 23 percent for Southeast Asia and 35 percent in the Newly Industrialized Economies. Aside from being generally low, saving rates in most of Africa have shown consistent decline over the last thirty years. These savings figures must be considered tentative, because they are derived as a residual in the national accounts from expenditure and production data that are themselves quite unreliable. Notwithstanding the problems of measurement, it is clear that savings are dominated by household savings. Survey evidence in turn shows that household savings are primarily in the form of non-financial assets. Financial savings are predominantly directed to informal markets and institutions. The paper documents these trends and provides a simple model of portfolio allocation to guide future research. It is suggested that an array of transaction costs associated with formal financial markets, coupled with the risk management strategies and production activities of households in Africa account for the patterns of saving and portfolio allocation observed in the data.saving, Africa, household savings, transactions costs, risk management

Ghana’s Economy at Half Century: An Overview of Stability, Growth and Poverty

WP 2006-04 January 2006As Ghana enters its second half century, we are faced with a paradox. Despite a solid transition to democracy in the political situation, despite recorded recovery in the last fifteen years from the economic malaise of the two decades preceding, and despite reductions in measured poverty, there is widespread perception of failure of the economic and political system in delivering improving living standards to the population. This essay introduces a volume of papers that call for a deeper examination of the macro level data on growth and on poverty. A sectoral and regional disaggregation reveals weaknesses in the levels and composition of private investment, in the generation of employment, in sectoral diversification, and in the distribution of the benefits of growth. At the same time, the push for decentralization and for better allocation, monitoring and implementation of public expenditure has raised more questions than it has answered. These are the challenges that Ghana faces if it is to fulfill the bright promise of its independence in 1957. The papers in this volume set out an analytical agenda that we hope will help in laying the ground work for the path that the nation’s policy makers will have to steer on the road to 2057

Scoping review of diet-related health outcomes and associated risk factors in Ghana

As part of a process to develop food-based dietary guidelines (FBDGs), the national Multi-sectoral Technical Task Team coordinating FBDGs development in Ghana has commissioned a desk review of the nutrition and health situation, and trends for all persons living in Ghana, across the entire life cycle. Using a rapid scoping review method, multiple electronic databases were systematically searched using keywords related to nutrition and health outcomes, as well as potential drivers of nutrition and health in Ghana. The review included evidence from peer-reviewed articles, unpublished manuscripts, dissertations, reports of nationally representative surveys, and other grey literature (reports of nutrition situation evaluations commissioned by international and local agencies), spanning the decade starting from 2010. A total of 48 documents were included in this review: 15 for infants and young children, 14 for adolescents, 19 for adults and women of reproductive age, and five for the elderly. Among children under five, anemia and stunting were the most prevalent nutritionrelated outcomes, 62% and 19%, respectively. Underweight prevalence of 11% was observed among young children; wasting rates have remained below 10%, but registered about 20% prevalence in northern Ghana. Different levels of micronutrient deficiencies, particularly iron deficiency were reported across all age groups. Nutrient deficiency rates were higher among adolescent girls and women of reproductive age. Vitamin A deficiency was also high (21%) among under-fives. Overweight and obesity rates were high among women of reproductive age (40%) and adolescents (11% to 18% between 2013 and 2017), and still increasing. Underweight and overweight coexists among the elderly (50 years and above), at a rate of 10% and 20%, respectively. An increasing prevalence of central adiposity has also been reported among women of reproductive age (high waist circumference of 80.6%) and persons older than 60 years (67% in 2015). Rates of hypertension and cancers have also increased within the study period. Hypertension rates have been increasing with age, particularly among urban dwellers. Majority of persons with hypertension are not receiving treatment . Incidence of breast, cervical, and liver cancers were 20%, 14%, and 12% in 2018. Ghana is experiencing a double burden of malnutrition characterized by co-existing high levels of undernutrition and overnutrition. The national FBDGs for Ghana should prioritize recommendations and actions that address the dual burden of undernutrition and overnutrition

Implementing nutrition interventions in Ghana at district level: Gaps and opportunities

Malnutrition among women and children is an underlying cause of high morbidity and mortality in the developing world. Ghana is one of 36 countries with a high prevalence (> 20%) of chronic stunting in childhood. Although proven and inexpensive technologies and interventions exist to address maternal and child malnutrition, their implementation remains at a low scale in many developing countries, including Ghana. In Ghana,  barriers to scaling up nutrition actions have been identified at the national level, yet little is known about the situation at the district and sub-district levels where nutrition interventions are directly delivered. The current study assessed district-level capacity and commitment for accelerating implementation of effective nutrition interventions to address the high burden of maternal and child malnutrition. In June 2010, key informant interviews involving technical officers, clinicians, nurses, and administrative staff, and a desk review of program and administrative reports were  conducted in the Omanye District (pseudonym). Using the framework from the WHO landscape analysis of readiness to scale up nutrition actions, interviews explored questions of commitment (financial, planning,  collaborations) and capacity (human resources, job aids, skills) to implement nutrition actions in the district. Most key nutrition interventions were being implemented in the Omanye District including growth  promotion, micronutrient supplementation, behavior change  communication on infant and young child feeding, and a pilot project for community management of severe acute malnutrition. Interventions are challenged, however, by barriers including inadequate financial  commitment, low prioritization of nutrition, inadequate personnel, and insufficient job aids. Because nutrition was relatively underfunded in the district, nutrition technical officers had been shifted to perform other or additional tasks. Insufficient investment and inadequate capacity prevents delivery of quality nutrition services in the Omanye District. Interventions that prioritize and improve investment in nutrition actions are needed to optimize nutrition services at the district level in Ghana. Key words: Nutrition, Capacity, Commitment, District, Ghan

A review of food and nutrition communication and promotion in Ghana

Dietary perception, behavior, and nutritional status can all be influenced by exposure to information. Behavior change communication that is appropriately designed and implemented is critical for motivating optimal dietary behavior. On the other hand, inadvertent or deliberate misinformation can drive unhealthy dietary behaviors. As part of the process to develop food-based dietary guidelines (FBDGs) for Ghana, this rapidevidence review examined the nature, extent, sources, and medium of food and nutrition information dissemination and promotion in Ghana.  PubMed, Cochrane, Google Scholar, and Open Access Theses Dissertations (OATD) databases were searched systematically using keywords to  identify relevant peer-reviewed and grey literature. The review included 31 documents, after excluding 1,302 documents for ineligibility (based on  irrelevant title, abstract, and duplicates). Limited reporting of undernutrition was found in print and electronic media. Unhealthy foods, including sugar-sweetened beverages, snacks, yogurt, instant noodles, candy/chocolate, and ice cream were frequently advertised through various  communication media. Children are highly exposed to food advertisements, which target them. Promotional characters, animation, billboards, and  front-of-store displays; product-branded books, and toys are common strategies for food marketing and advertisement in Ghana. The most frequently reported sources of health and nutrition information were television, radio, social media, health professionals, families, and friends.  Children and adults experienced changes in food preferences and choices as a result of exposure to food advertised on television. The commonly  used traditional media were radio and television; printed newspaper use has declined tremendously in the past decade. Social media use  (particularly WhatsApp, Facebook, and YouTube) is highest in urban areas, and is growing rapidly; young adults are the most active users of social  media platforms. Experts recommend regulation as a mitigation for nutrition miscommunication and inaccurate promotion. The current review  highlights the need for regulation of food marketing, and advertisement to safeguard a healthy food environment in Ghana. &nbsp

A review of food and nutrition communication and promotion in Ghana

Dietary perception, behavior, and nutritional status can all be influenced by exposure to information. Behavior change communication that is appropriately designed and implemented is critical for motivating optimal dietary behavior. On the other hand, inadvertent or deliberate misinformation can drive unhealthy dietary behaviors. As part of the process to develop food-based dietary guidelines (FBDGs) for Ghana, this rapid evidence review examined the nature, extent, sources, and medium of food and nutrition information dissemination and promotion in Ghana. PubMed, Cochrane, Google Scholar, and Open Access Theses Dissertations (OATD) databases were searched systematically using keywords to identify relevant peer-reviewed and grey literature. The review included 31 documents, after excluding 1,302 documents for ineligibility (based on irrelevant title, abstract, and duplicates). Limited reporting of undernutrition was found in print and electronic media. Unhealthy foods, including sugar-sweetened beverages, snacks, yogurt, instant noodles, candy/chocolate, and ice cream were frequently advertised through various communication media. Children are highly exposed to food advertisements, which target them. Promotional characters, animation, billboards, and front-of-store displays; product-branded books, and toys are common strategies for food marketing and advertisement in Ghana. The most frequently reported sources of health and nutrition information were television, radio, social media, health professionals, families, and friends. Children and adults experienced changes in food preferences and choices as a result of exposure to food advertised on television. The commonly used traditional media were radio and television; printed newspaper use has declined tremendously in the past decade. Social media use (particularly WhatsApp, Facebook, and YouTube) is highest in urban areas, and is growing rapidly; young adults are the most active users of social media platforms. Experts recommend regulation as a mitigation for nutrition miscommunication and inaccurate promotion. The current review highlights the need for regulation of food marketing, and advertisement to safeguard a healthy food environment in Ghana