Read H.E. Abdoulie Janneh's Address at the Third Capital Market Committee Retreat

It is a great honour for me to address the 3rd Capital Market Committee Retreat, organised by the Securities and Exchange Commission (SEC), on the topic ‘sustaining economic development through measurable governance’. It is indeed important to highlight the role of the SEC as regulator. In this context,mthis central institution needs reliable and robust data on governance to assure its oversight functions in a capital market as big as the Nigeria one.

Ladies and Gentlemen, Recent decades have registered major shifts in global economic trends and balances. Africa is now leading on economic growth. Africa’s annual GDP growth rate over the period 2004-2012 has averaged at 5.4%.

This amount is almost 4 times higher than the European Union (EU) average that is estimated at 1.4% for the same period. The dynamic trend of Africa’s annual GDP is expected to continue and even improve as the forecast for the next ten years are 6.1%. Traditional donors’ aid is giving way to emerging countries’ direct investment.

Some African countries are becoming creditors. Some are even beginning to buy debt off European countries and welcome their jobless youth. However, there are still major hurdles to overcome: low impact of growth on human development in most countries (no effective reduction of poverty, unemployment of young people, lack of inclusiveness), persistence of corruption, precarious business environment, weak regional integration, deficiencies in infrastructure, environmental damage in many cases, problem of illicit financial flows….

With these shortcomings and limitations, Africa’s economies are experiencing the risk of growth without sustainable development, which can cause instability, sociopolitical tensions or violent crisis.

Ladies and Gentlemen, The time has come to translate the momentum of growth into real socio-economic transformation in our countries so as to ensure inclusive and sustainable development. To reach these goals, our regulators (like the SEC) must use robust and reliable data on governance. Governance requires relevant data, just as driving requires a dashboard. Data are an essential policy tool for leaders to make informed choices and define strategies.

Moreover, specific attention should be given to the measurement of the following key priorities: poverty, inequality, and employment. The Ibrahim Index of African Governance is the central pillar among the tools that we have at our disposal. Established in 2007 with the most comprehensive set of quantitative data, the Index provides an annual assessment of the state of governance in 52 African countries.

The IIAG provides an annual assessment of governance performance in Africa. Funded and led by an African institution, and consisting of 94 indicators drawn from 32 independent international data providers, the IIAG is the most comprehensive collection of data on African governance. The IIAG is a composite index, constructed by combining underlying variables in a standardised way to provide a statistical measure of governance performance in African countries.

The IIAG was created in recognition of the need for a quantifiable tool to accurately measure and monitor African governance performance – and its progress over time and across countries – and as a means of supporting the development of effective and responsive solutions to complex public policy challenges. The broad aim of the IIAG is to better inform and sustain the governance debate by providing governments, private sector, citizens and stakeholders with a practical measurement instrument which is transparent and user-friendly, and to encourage data-driven narratives on governance and development issues in Africa.

Governance, as defined by the Mo Ibrahim Foundation, is considered from the viewpoint of the citizen. The definition is intentionally broad so as to capture all of the political, social and economic goods and services that any citizen has the right to expect from his or her government, and that any government has the responsibility to deliver to its citizens. The four main categories of the IIAG are themselves composed of 14 sub-categories:

• Safety and Rule of Law (Rule of law, accountability, personal safety, national security);
• Participation and human rights (participation, rights, gender);
• Sustainable economic opportunity (public management, business environment, infrastructure, rural sector);
• Human development (welfare, education, health).

The IIAG is now made of 94 indicators which are themselves comprised of 133 variables. It will certainly interest you this year that we added 12 new indicators: we have included under nourishment in the Human Development category and the data comes from the World Bank and the other 11 indicators which I am sure is of great relevance to you are provided by the World Economic Forum Global Competitiveness Executive Opinion Survey. These indicators range from judicial independence to reliability of police services to quality of the education system. Ladies and Gentlemen, The importance of effective tools for the measurement of progress in governance cannot be overemphasized. It is only through effective measurement that areas of weakness can be identified and remedial actions taken. It is in this context that the IIAG is so important. Analytical assessments of progress in governance often include measurements related to the soundness of macroeconomic reforms, public financial management outcomes, improvements in the quality of the business enabling environment, adherence to the rule of law, transparency and anti-corruption, and citizens’ participation in the public dialogue space. Ladies and Gentlemen, Let me share with you some of the key findings of the 2013 IIAG.

1. There is still a general positive trend at the continental level.
   • Actually countries that have experienced overall governance improvement since 2000 are today home to 94% of people living on the continent.
   • The remaining 6% live in: Madagascar, Eritrea, Guinea-Bissau, Somalia, Libya and Mali.
2. However, the largely positive trends at the overall governance level mask the differing performances between and within categories, and between countries.
3. At the category level, the African average score change in each of the 4 Index categories.
   • Most improvement has been seen in Human Development since 2000 – perhaps a trend linked to the MDGs and donor community commitments.
   • Sustainable Economic Opportunity and, to a lesser extent, Participation & Human Rights have also improved since 2000.
   • But Safety & Rule of Law has also seen average deterioration since 2000. And this is a concern.
4. Positively, all the countries have improved in Human Development since 2000.
5. Less positively, only 20 countries improved in Safety & Rule of Law in that time period.
   • The challenge is how to secure sustainable progress. More than ever, equitable allocation of resources must be a priority for policy and decision making. Commitment to, and balance in, each of the four governance categories – Safety & Rule of Law, Participation & Human Rights, Sustainable Economic Opportunity and Human Development, are critical to secure improvement in the long-term.
6. In the same ways as the overall governance score can shield varying performance at the category level; the category scores can mask differences at the sub-category level.
   • Whilst National Security scores are relatively high, and improving, Personal Safety scores are relatively low and deteriorating.
   • These findings speak to the importance of drilling down into the Index results and looking at the more granular results.
   • These diverging trends within the Safety & Rule of Law category are concerning. They may sound a warning signal, with the new century seeing fewer regional conflicts but increased domestic social unrest.
7. At the country level, we have also found this year that there is a growing divergence of results on the continent, with the span between the best and worst performers increasing.
   • This, very simply, is seen in the widening range between Mauritius and Somalia – the best and poorest performers on the continent.
   • However, this range increase is also true for each of the 4 categories and for 11 out of the 14 sub-categories of the Index, with the largest increase in the span between best and worst performers in the Business Environment sub-category – a range increase of almost 20 points since 2000.
8. As we are in Nigeria, let me share with you a few Nigeria specific results.
   • Nigeria’s performance in the 2013 IIAG has improved by +0.8 since 2000.
   • Nigeria ranks 13th (out of 16 in West African Region.
   • Nigeria’s ranks its highest in the category of human development (33rd out of 52).
   • Nigeria’s ranks it lowest in the category safety and Rule of law (42nd out of 52).
   • Nigeria’s ranks its highest in the sub-category Public management (14th out of 52) and ranks its lowest in the sub-category PersonalSafety (49th out of 52).

Ladies and Gentlemen, These results reflect the complexity of the African landscape. Neither Afro-pessimism nor Afro-optimism do justice to modern Africa. This is now the age of Afro-realism… an honest outlook on our continent. It’s about celebration of its achievements but also a pragmatic acknowledgement of the challenges that lie ahead. The widening range of the governance results, especially within some sub-regions, stresses the growing need for more cohesion and solidarity. This will be critical to African unity. These are the few things that I wanted to share with you. Thank you for your kind attention.