The African Development Bank Group (AfDB), through its comprehensive study, has brought to light the existence of substantial gaps in macroeconomic modelling capacity across African nations.
The report titled “Benchmark Macroeconomic Models for Effective Policy Management in Africa” was officially unveiled during the African Economic Conference 2023 held in Addis Ababa.
The Bank Group’s African Development Institute conducted a survey encompassing 31 out of 54 African countries.
Collaborating closely with central banks and ministries of finance and planning, the study, supported by the African Economic Research Consortium, delved into the status and efficacy of existing macroeconomic models.
Kevin Chika Urama (Prof), Chief Economist and Vice President for Economic Governance and Knowledge Management at the African Development Bank, highlighted the pivotal role of macroeconomic models in understanding and predicting economic trends.
Urama said that while these models simplify realities, their effectiveness hinges on their alignment with real-world scenarios to guide decision-making.
“But models are only attempts to simplify realities in a logical manner to inform decision-making under specific assumptions, contexts, and realities,” he said. “Models are therefore as relevant as the extent to which they approximate realities and can inform appropriate decision-making in specific contexts.”
Shalom Gebredingel, Chief of Staff and Special Advisor to Ethiopia’s Minister for Planning and Development, underscored the report’s significance as a catalyst for transformative change.
Gebredingel noted that amidst challenges like the COVID-19 pandemic, geopolitical tensions, and climate change impacts, policymakers must comprehend global, regional, and local dynamics.
“It represents a shared commitment to transformative change. It is a call to action, urging us to rethink our approach, question assumptions, and embrace innovation in our policy endeavours,” she said.
Africa has grappled with formidable challenges, including the COVID-19 pandemic, Russia’s invasion of Ukraine, and climate change and its impacts in the form of droughts and flooding, Gebredingel said.
Eric Ogunleye, Division Manager for the Policy Management Division at the African Development Institute, presented the study’s findings.
Ogunleye said the study aimed to assess the available models in African countries and their suitability for decision-making.
The African Development Bank Group is dedicated to tailoring capacity development initiatives to align with the realities of member countries, ensuring demand-driven strategies.
The African Economic Conference, themed “Imperatives for Sustainable Industrial Development in Africa,” convened experts, the private sector, researchers, and youth to deliberate on the challenges and potentials of industrialization across the continent.
Organised by the African Development Bank, the United Nations Economic Commission for Africa, and the United Nations Development Programme, the conference addressed pivotal issues crucial for Africa’s economic advancement.