In a landmark development, the African Development Bank (AfDB) Group unveiled its inaugural report titled “Benchmark Macroeconomic Models for Effective Policy Management in Africa.” Prof. Kevin Urama, the Chief Economist and Vice-President of Economic Governance and Knowledge Management at AfDB, introduced the report during the African Economic Conference (AEC) held in Addis Ababa, Ethiopia.
According to Urama, the report emerged from a collaborative effort between AfDB’s Institute and the African Economic Research Consortium (AERC). He emphasised its significance as an implementation milestone of the Bank’s Capacity Development Strategy, greenlit by its Board of Directors in 2021.
Expressing gratitude to all involved in the report’s development, Urama reaffirmed AfDB’s unwavering dedication to fortifying Africa’s proficiency in efficient macroeconomic governance, policymaking, and execution. He highlighted key initiatives within the Bank’s Capacity Development Strategy aimed at fostering growth, sustainable development, and realising Africa’s Agenda 2063.
“The study informing today’s report aimed to comprehend existing macroeconomic modelling capabilities across African nations. It seeks to enrich the curriculum and capacity development initiatives such as the Executive Training Programme on Macro-Economic Policy Management in Africa (MEMA), addressing countries’ developmental needs,” explained Urama.
He underscored the critical role of macroeconomic models in enabling countries to comprehend their economies, analyse policy options, forecast outcomes, and guide their implementation and evaluation. The report serves as an inventory of current models and modelling capabilities in African countries, extrapolated from an extensive Africa-wide survey conducted by the Bank Group.
“Given the vast economic diversity across the 54 African countries, policymakers must simplify their decision-making processes and grasp their economic landscapes,” emphasised Urama.
While acknowledging strides in African macroeconomic management, Urama highlighted the persistently low capacity in macroeconomic modelling. Many countries rely on rudimentary models, failing to capture the complexities of their economies in a globalised context.
“To address this gap, policymakers often resort to external models, hindering contextual relevance. Strengthening domestic capacity in macroeconomic modelling is crucial for informed policy responses and effective implementation,” stressed the AfDB vice president.
Dr. Eric Ogunleye, the Division Manager of Policy Management at AfDB, emphasised the bank’s commitment to tailoring capacity development initiatives to the realities faced by member countries.
Meanwhile, Dominique Njinkeu, Interim Executive Director of the African Economic Research Consortium (AERC), stressed the importance of aligning models with their intended purpose. He emphasized the need to invest in enhancing modelling capacity for future success, acknowledging the report’s identification of critical capacity gaps.