The importance of building the capacity of local governments
Over the last ten years aid and development have been treated as synonymous, with aid being seen as the dominant force for social progress in the developing world. And aid has worked, delivering lasting results. Access to anti-retroviral treatments for HIV/AIDS has more than tripled from 14 percent in 2005 to 43 percent in 2008. Deaths from malaria in Africa have been cut by a third annually. And 75,000 peacekeepers helped bring stability to war-torn regions.
But when I talk to the new generation of leaders, especially in Africa, they tell me they want to get beyond aid, to take their countries' destiny into their own hands, using growth and the power of government to create social change. Over the next ten years, economic growth will be the most disruptive force driving social progress. The challenge for leaders is how to seize that opportunity so it benefits their citizens.
The economic disruption has already begun. Globally, the 20th century misalignment where a country's economic strength and its population fell out of kilter is unravelling. Population and economic might are reconverging as India and China rise. One statistic puts it all in perspective: in a few decades, China has lifted 660 million people out of poverty. That is almost twice the population of the United States. This is an achievement of historic proportions.
Economic progress is reaching the regions that we worried were left behind. Take Africa, often associated with poverty and stagnation. Africa is now on the move. Its GDP growth averaged between five percent and eight percent for the last five years, while the global economic crisis battered other economies. Global FDI to Africa was $84 billion in 2010, which will almost double to $150 billion by 2015. Private infrastructure investment in Africa has tripled since 2000. And the pace of technological change on the continent is mind-boggling: In some markets, it is cheaper to buy a day of mobile internet access than to buy a banana. The creation of jobs, rising wages, and the establishment of a middle class are critical to allowing Africa to build up its domestic economy and de-couple itself from aid. The World Bank estimates that Africa's middle class now numbers 326 million people and rising.
But there is a risk that the benefits of this progress aren't felt widely enough. Recent World Bank statistics show that Africa's economic progress is not translating into sufficient reductions in poverty. This is where governance comes in. For the disruptive power of growth to be used properly, developing countries need good governance. This is partially about issues of transparency and accountability; governments must be held to account by their people, so a small elite cannot capture the economy and use it in their own interests.