Risks and Opportunity: Managing Risks for Development

The newest World Development Report by the World Bank Group focuses on the risk and its management, as well as its impact on development issues. Opportunities are concomitant with risks and their mismanagement can lead to a reverse of hard-won progress as well as an endangering of the social and economic structure that was at its base. The consequences of mismanaged risks may destroy lives, assets, trust, and social stability. And more often than not, the poorest are hit the hardest.

Risk management can be a powerful instrument for development

Defining risk management as the process of confronting risks, preparing for them and establishing coping strategies with their effects, the report declines two goals for it:

•          the resilience, the ability of people, societies and countries to recover from negative shocks
•          And the prosperity, derived from the successful management of positive shocks that paves way for opportunities for development.

Acquiring knowledge, building protection and obtaining insurance are the prerequisites for preparing to risks and negative shocks.

Why preparing for risks is important

World Development Report 2014 from WB_Research

According to the report, evidence suggests that the benefits of risk managements overwhelmingly outweigh the cost of not to.  Mismanagement of risks create crises. 

• During 2011–12, the famine in Somalia claimed 258,000 lives, despite 11 months of repeated warnings; opportunities for early intervention were missed by the donor community to avoid political and security risks.

 Managing risks means also to assess, evaluate various risks and to take proactive action to counter them. Defining the priorities is thus crucial in developing countries, due to the limited resources. “For instance, a small country prone to torrential rains and also exposed to international financial shocks must decide how much to spend on flood prevention and how much to save to cushion against financial volatility”.

Managing risks must be systemic

Having addressed the benefits of the management of risks, the report calls for a systemic approach to counter exogenous shocks. Risk management requires shared action and responsibility at different levels of society (from the household to the international community). Their complementarity can be broken down this way:

•  At the household level, by pooling resources, protecting its members—especially the vulnerable— and allowing them to invest in their future.
• Communities can provide informal networks of insurance and protection by helping people deal with idiosyncratic risks and pooling resources to confront common risks.
• Enterprises can help absorb shocks and exploit the opportunity side of risk and by extension, contributing to more stable employment, growing income, and greater innovation and productivity.
• The financial system through savings, insurance, and credit can provide useful risk management tools, while managing its own risks responsibly.
• The state has the scale to manage systemic risks at the national and regional levels, to provide an enabling environment for the other systems to function, and to provide direct support to vulnerable people. Social protection (insurance and assistance), public goods (national defense, infrastructure, law and order), and public policy (regulation, macroeconomic management) will be its main mediums.
• The international community, by enabling policy coordination, and giving support to states when they cannot absorb the impact of the risks they face.

In conclusion, the report calls for a mainstreaming risk management into development programs by national government through the creation of national risk board. Such an institution will require a change in approach (a coordinated and systematic assessment of risks at the national and international levels) for more positive outcomes.  The report recognizes that a susbstantial change in the way of doing might be required in the implementation of this recommendation. Five key principles to states are thus put forward:

• Governments should not generate uncertainty or unnecessary risks
• Governments should provide the right incentives for people and institutions to do their own planning and preparation, while avoiding imposing risks or losses on others
• Governments should keep a long-run perspective for risk management by building institutional mechanisms that transcend political cycles
• Governments should promote flexibility within a clear and predictable institutional framework
• Governments should protect the vulnerable, while encouraging self-reliance and preserving fiscal sustainability

The report is available on this link

Reflecting the Realities, Needs and Priorities in Monitoring Human and Social Development in Africa Beyond 2015

This blog, by Wikiprogress Africa Co-ordinator Ousmane Aly DIALLO, is part of the Wikiprogress Series on the Wikiprogress Africa Network and on the Post-2015. This post provides a summary of UNECA’s working paper on the Post-2015  “Working Document on the New Development Indicators Reflecting the Realities, Needs and Priorities in Monitoring Human and Social Development in Africa Beyond 2015” .

With the deadline of the Millennium Development Goals coming fast ahead, most of the stakeholders are already thinking on what needs to be done after 2015 and how the MDG framework can be improved.  As one of the continent most concerned about the challenges of poverty and the well-being of its citizens, Africa is still working on a framework that will encompass all aspects of human and social development. This Working Document on the New Development Indicators Reflecting the Realities, Needs and Priorities in Monitoring Human and Social Development in Africa Beyond 2015, is part of this process.

The limited and modest progress made by African countries towards the achievement of  the MDGs is problematic. Were all the countries on the same footing at the start? Were the goals ever meant to be monitored at the national level? Besides, it somewhat conceals disparities between the different social groups and subnational regions. Considering only the national scope hides from us local and regional inequalities that must be progressively eradicated. It is to be noted in particular that the results obtained from the overall indicators are distorted as they only relate to certain categories of the population.

Progress towards the Millennium Development Goals in Africa

Inequalities and disparities within countries didn’t appear on the MDG framework which gave a distorted view of the reality. Social (ethnicities, castes) and regional (urban/rural) factors all had an impact of the social and human development of people but they weren’t necessarily captured with the national MDG progress ranking. Any new framework has to take into consideration these factors, and since the high-level panel of Eminent Persons has pledged that no one should be left behind, the African concerns are in concordance with the overall direction of the post-2015 framework.

Among the limits put forward, there’s the insufficient place given to the economy in the current MDG framework. The paper stresses the need to start from a strong and competitive economy to improve the well-being and quality of life of citizens through job creation and other targets. This vision is evident in the pyramid of “balanced development” below:

Besides this limit, there is the problem of the poor performance of Africa in regard to the Millennium Development Goals. Most of Sub-Saharan Africa is still lagging behind while the North of the continent is doing much better. This overall modest progress is attributed to several factors in this document, among other the very ambitious goals and the shortcomings in the budgetary policy choices and inefficiency in public expenditures. Despite these limits, the MDGs constitute a big step towards the well-being of people by setting different and complementary targets and pushing all states to achieve them by the end of  a specific date. With less than 1000 days remaining now, some are pushing for an extension of the MDGs while the majority suggest a slight adjustment or more radically a whole rethinking of the MDG framework.

UNECA’s African Centre for Statistics fall in the middle of this debate through their proposals for a new post-2015 framework. Indicators must be based on the development needs of countries according to the report which stresses that all African countries are working on their national development strategies and / or fight against poverty. Yet, there is insufficient convergence between African countries in the choice of indicators and that’s one of the main reasons of the indicators put forward in this document.

Development targets relevant to the African countries were thus identified and to monitor the progress into their achievements, they need to be classified depending on dimensions and the levels of government.

• International stakeholders should deal only with a “very restrictive list of basic indicators that each country should monitor to ensure a decent living for the whole population”. Giving every citizen of the world a basic quality of life should be the aim and that was at the root of the MDGs before their expansion with uneven indicators. The current MDGs still remain relevant although some targets and indicators needs to be improved.

• Secondary indicators that will speed up the transition to a pre-emergent stage (MDGs+) are to be monitored at the sub-regional and regional level. The current eight MDGs remain relevant as a whole but their associated targets and indicators should be better selected. Among the indicators, relevant to this level, are secondary, technical and higher education, infrastructure, macroeconomic framework, regional financial markets, regional integration policies, good governance, transfer of technology and development of internally generated knowledge.

• Policies targeting growth and employment should be at the national level. Emergence indicators (MDGs ++) must be monitored by the states with efficient regional organizations such as ECOWAS providing backup and integrating these policies into their monitoring systems.

The different development goals were broken down into several dimensions:

• Human dimension with indicators such as (a) access to knowledge by all; (b) gender development
• Infrastructure dimension:  with universal access to potable water, sewerage facilities, electric­ity, ICT, housing and good transport system.
•  Environmental dimension where the fight against pollution and the preservation of the biodi­versity can be included.

At the subregional and regional integration, an

• Institutional dimension should be put forward with the strengthening of public institutions as  the indicator,
• Economic dimension with  (a) a stable macroeconomic framework; (b) strong and regular growth; (c) capacity for diversification and transformation and a
•  Social dimension with indicators such as  a) a well-fed population; (b) good health for all; (c) good social se­curity for all the vulnerable groups; (d) employment and income for all; (e) child protec­tion; (f) preservation and development of the cultural heritage.

                       

To have a broader view of all the development indicators, please go to the annex of the document (click here).

The development indicators put forward constitute a significant contribution towards the post-2015 development framework. The scope of the indicators and the different levels of government involved in their monitoring are proof enough of the ambitions of its authors. Furthermore, they echo the HLP’s call to leave no one behind in the post-2015 framework. Economic growth occupies an integral place in this proposal although other quality of life dimensions are not neglected. 

There's a clear distinction on what should be of what should be monitored at the national level and how  the international level could stimulate the progress towards development.

Ousmane Aly DIALLO

Putting Green Growth at the Heart of Development

Jan Corfee-Morlot, Senior Policy Analyst and Environment and Development Team Leader, OECD Development Co-operation Directorate, shares her insights on the OECD's recent publication "Putting Green Growth at the Heart ofDevelopment. This post is part of Wikiprogress's focus on Environment.

The rapid pace of development in many developing countries raises the stakes for investments in development, but also begs reflection on the patterns or types of growth that are appropriate for a particular country context. Putting Green Growth at the Heart of Development is a new OECD publication. It explains why green growth is vital to secure a more sustainable future for developing countries and outlines how national and international action can help achieve this.

Green growth does not replace sustainable development, but is a key means to achieving it. Developing economies are highly dependent on natural resources and also highly vulnerable to resource scarcity and environmental risk. By integrating the value of natural assets into the growth model, green growth policies can deliver a range of developmental and environmental benefits. If policies are designed to respond to the needs of the poorest, green growth also can contribute to poverty reduction and social equity.

Based on in-depth consultations and engagement with a range of developing countries, this book brings to light 74 policies and measures from 37 countries as well as 5 regional initiatives that target green growth. Examples range from Cambodia to Ethiopia’s efforts to integrate green growth in national development plans, to China and Cameroon’s use of taxation policies to sustain the use of natural resources, or Indonesia and Ghana’s efforts to  boost government resources for priority issues and improve the incentives for clean energy investment through reform of fossil fuel subsidies. The large number of examples demonstrate growing interest and experience in developing countries with green growth policies. 

The report responds to many of the concerns and questions we often hear about green growth, for instance:  How do we manage the costs of implementing green growth? How do we make green growth and trade work together?

I’m sure that choosing a greener pathway for economic growth will generate up-front costs for some developing economies in the short term, whether to build better infrastructure or to put in place a system to limit over-harvesting of forests or fisheries. Balancing difficult short-term trade-offs with longer-term benefits will be challenging as countries make choices to deliver a more stable and sustainable future. Despite these challenges, the many examples described in the report present a clear and hopeful message: green growth can generate both wealth and well-being for citizens of current and future generations.

Developing countries will need leadership to integrate environmental concerns into development plans and to take bold actions to reform policies. It will be important to secure and publicise some immediate gains, but also to educate and inform people about the risks of non-green development pathways and the need to manage these. Lasting institutional reforms will need to build engagement, be step-wise and emphasise the need to learn and adjust to achieve green growth over time.

Beyond the national policy agenda, international cooperation can provide essential support to developing countries in managing a transition to green growth. Financing green infrastructure, strengthening access to international markets, boosting trade in green products and services, and promoting technological transfer and cooperation are key.

Highlighting both the opportunities and challenges, the OECD Secretary General Gurría said: “Putting green growth at the heart of the development agenda requires real political leadership to instil change at international, national and local levels. Our report shows that green growth can offer new opportunities for developing countries. We are looking forward to working with governments and the development co-operation community to reap the benefits of a greener growth path for the well-being of the people in our partner countries.”

Green growth can help countries to benefit from greater efficiency and productivity in natural resource use, and from innovation and new markets. More importantly, if we do not green our act today, the development achieved so far could be significantly eroded and future growth potential seriously compromised. Green growth is not an option – it is a must-do for delivering sustainable development and global security for all.

For more information on OECD work on green growth and development, see here:

www.oecd.org/DAC/greengrowth 

For more information on Wikiprogress's work on environment, see here:http://wikiprogress.org/index.php/Category:Environment

Jan Corfee-Morlot, 
Senior Policy Analyst and Environment and Development Team Leader, 
OECD Development Co-operation Directorate

Rapport final du panel de haut-niveau des Nations-Unies pour l'agenda de développement post-2015

Le Panel de Haut-Niveau pour l’Agenda de développement post-2015 a récemment publié son rapport final, “A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development,” qui prône le rassemblement autour d’un partenariat mondial qui offrirait de l’espoir et un rôle à chaque personne dans ce monde.

Ce panel a été créé par le secrétaire général des Nations-Unies, Ban Ki-Moon et coprésidés par le président indonésien Susilo Bambang Yudhoyono, la présidente du Liberia Ellen Johnson Sirleaf et par le premier ministre du Royaume-Uni David Cameron. Le rapport final établit un agenda universel pour éradiquer la pauvreté extrême d’ici 2030- à travers douze objectifs et 54 cibles- et aussi pour le passage vers un développement durable du monde.

Parmi les objectifs généraux on note l’élimination définitive de l'extrême pauvreté, l’accès  accès à la nourriture et à  l'eau pour tous, la promotion de la bonne gouvernance et la stimulation de l'emploi et de la croissance.

Les objectifs individuels comprennent la promotion de la liberté d'expression et la primauté du droit, mettre fin au mariage des enfants, la protection des droits de propriété, la promotion de l'entrepreneuriat et l'éducation de tous les enfants au moins jusqu’au niveau primaire.

Des consultations avec des ONGs, les sociétés civiles et les différentes parties prenantes ont permis au Panel d'établir 5 priorités pour l'agenda de développement post-2015:

• "Ne laisser personne de côté.Nous devons nous assurer que chacun d’entre nous – indépendamment de l’origine ethnique, du sexe, de la situation géographique, du handicap, de la race ou d’autres critères – bénéficie des opportunités économiques de base et jouisse pleinement des droits de l’Homme.
• Placer le développement durable au cœur des débats.Nous devons procéder à des changements rapides et adopter des modèles de production et de consommation durables, avec les pays développés montrant l’exemple. En outre, nous devons agir maintenant si nous voulons ralentir le rythme alarmant du changement climatique et limiter la détérioration de l’environnement, qui constitue une menace sans précédent pour l’humanité.
• Transformer les économies pour les emplois et la croissance sans exclusion. Une transformation économique profonde peut éradiquer à l’extrême pauvreté et promouvoir le développement durable, en améliorant les moyens de subsistance, en valorisant l’innovation, les technologies et le potentiel des entreprises. Des économies plus diversifiées, offrant les mêmes chances pour tous, peuvent favoriser l’intégration sociale, notamment chez les jeunes, et promouvoir le respect de l’environnement.
• Construire la paix et créer des institutions efficaces, transparentes et responsables pour tous. Un monde sans violence, ni conflit, ni oppression, est essentiel à l’existence humaine, et ces éléments sont le fondement des collectivités pacifiques et prospères. Nous appelons à un changement fondamental, à savoir reconnaître la paix et la bonne gouvernance comme étant des éléments essentiels du bien-être et non pas comme de simples options.
• Créer un nouveau partenariat mondial. Un nouvel esprit de solidarité, de coopération et de responsabilité mutuelle doit être à la base du programme pour l’après-2015. Ce nouveau partenariat doit être fondé sur notre humanité partagée, en soutenant le respect et les bénéfices mutuels."

Téléchargez le rapport en cliquant ici

Ousmane Aly DIALLO

Coordonnateur Wikiprogress Africa

A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development

The High Level Panel on the Post-2015 Development Agenda has released “A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development,”  which calls upon the world to rally around a new Global Partnership that offers hope and a role to every person in the world.

The Panel was established by United Nations Secretary-General Ban Ki-moon and co-chaired by Indonesian President Susilo Bambang Yudhoyono, Liberian President Ellen Johnson Sirleaf and United Kingdom Prime Minister David Cameron.

The report sets out a universal agenda to eradicate extreme poverty from the face of the earth by 2030- through 12 illustrative goals and 54 targets- and deliver on the promise of sustainable development.

The overarching goals include ending extreme poverty for good, making sure everyone has access to food and water, promoting good government and boosting jobs and growth.

The individual targets include promoting free speech and the rule of law, ending child marriage, protecting property rights, encouraging entrepreneurship and educating all children to at least primary school level.

5 Priorities were cleared by the Panel after a series of consultations during 8 months, with NGOs, citizens and different stakeholders around the world:

• Leave no one behind. We must keep faith with the original promise of the MDGs, and now finish the job. After 2015 we should move from reducing to ending extreme poverty, in all its forms. We should ensure that no person – regardless of ethnicity, gender, geography, disability, race or other status – is denied universal human rights and basic economic opportunities.
• Put sustainable development at the core. For twenty years, the international community has aspired to integrate the social, economic, and environmental dimensions of sustainability, but no country has yet achieved this. We must act now to halt the alarming pace of climate change and environmental degradation, which pose unprecedented threats to humanity.

• Transform economies for jobs and inclusive growth. We call for a quantum leap forward in economic opportunities and a profound economic transformation to end extreme poverty and improve livelihoods.

• Build peace and effective, open and accountable institutions for all. Freedom from fear, conflict and violence is the most fundamental human right, and the essential foundation for building peaceful and prosperous societies.
• Forge a new global partnership. Perhaps the most important transformative shift is towards a new spirit of solidarity, cooperation, and mutual accountability that must underpin the post-2015 agenda.

Download the full report here

Ousmane Aly DIALLO

Wikiprogress Africa Coordinator