The Country Policy and Institutional Assessment (CPIA) for Africa is an annual diagnostic tool for Sub-Saharan African (SSA) countries eligible for financing from the International Development Association (IDA), a part of the World Bank that assists low-income countries by providing grants and low to zero-interest loans. The CPIA Report aims to capture the quality of each country’s policies and institutional arrangements, focusing on elements within the country’s control. The scores assess sustainable growth and poverty reduction supported through existing frameworks.
The CPIA provides scores for each country, and an overall regional score, on a scale of 1 (lowest) to 6 (highest) in four clusters: economic management, structural policies, social inclusion and equity policies, and public sector management and institutions. These scores inform governments about the impact of their efforts to support inclusive growth and poverty reduction. The overall score helps determine the size of the World Bank’s concessional lending and grants to low-income SSA countries. The report includes scores for IDA-eligible countries and serves as a touchstone for country monitoring and regional best practices.
Robust reforms and improvements in technical capacity are reflected in changes in the 2024 CPIA for Africa. Measures of central bank independence have increased, while fiscal deficits are decreasing as governments prioritize economic stability. The region has advanced in creating an inclusive marketplace with a strong social foundation, driven by climate change mobilizing governments to develop national adaptation plans aimed at attracting investments in green growth.
However, prospects for continued growth fueled by public sector investments are narrowing. The region is looking to mobilize resources from the nascent private sector, which will be central to creating employment opportunities across the region. The 2024 CPIA report focuses on reforms supporting private sector growth and identifies trends that supported private sector development in 2023.
Regional trends around digitization and integration provide reasons for optimism. The African Continental Free Trade Area (AfCTA) is expected to show results in 2024, potentially transforming trade and financial sectors, leading to increased private investment. Trade integration through one-stop border crossings has grown considerably, leveraging digital technologies for rapid processing of trade administration. Digital transformation also holds potential for unlocking capital through digital financial services while facilitating formal sector growth via electronic platforms for business registration and tax payment.
Nevertheless, deep structural challenges remain. AfCFTA's success will depend on political support amid concerns over monopolies undermining new business growth potential. Digital technology could strengthen public sector performance but political capture remains a concern.
Among IDA countries, SSA has made progress over recent years. The gap between regional averages has shrunk due to successful reforms undertaken by countries in the region. Sub-Saharan Africa has progressed in three out of four major categories since 2015, surpassing global IDA averages in economic management (Cluster A) and policies for social inclusion (Cluster C). In 2023, inflation declined while fiscal balances improved in several African countries pursuing prudent macroeconomic policies.
Yet slower improvement in governance (Cluster D) undermines these gains. Differences between SSA scores and overall IDA averages highlight issues with rule-based governance transparency and financial oversight.
Following years of global economic volatility, macroeconomic policy benefits from reforms increasing resilience to international shocks. SSA leads measures of central bank independence with many central banks improving transparency while separating fiscal deficits from monetary activities despite pressure on exchange rates complicating active management efforts.
Debt service obligations spiked in 2023 as debt replaced international shocks as a key threat to economic stability. High-risk external debt distress affected twenty-one countries by June 2023 with high interest rates limiting government investment capacity due to elevated debt service costs increasing vulnerability to shocks especially among those accessing international bond markets or non-concessional financing sources.
Public sector investment cannot continue driving growth under fiscal constraints necessitating accelerated private capital flows despite decreases over past decades contrasting doubling public fixed capital formation since 2000 with constrained private sector growth particularly under active debt distress conditions involving severe financial volatility.
Digital technology expansion alongside increased intraregional trade offers optimism by allowing significant structural changes across economic activity enhancing employment probabilities output per worker growth reducing poverty potentials exemplified by AfCFTA's transformative prospects toward diversified higher value export compositions promoting competition FDI inflows economies scale knowledge transfer productivity diversification opportunities amid historically lower unchanged intraregional trade shares posing substantial competitive advantages.
In 2023 average CPIA scores remained similar at 3.1 compared with more improvements than downgrades fewer declines relative previous assessments indicating positive shifts within broader contexts reflecting evolving policy environments throughout Sub-Saharan Africa.