A F R I C A N J O U R N A L O F GOVERNANCE A F R IC A N & DEVELOPMENT J O U R N A L O F G O V E R N A N C E & D E V E L O P M E N T • V o lu m e 2 • N u m b e r 1 • J u n e 2 0 1 3 A F R I C A N J O U R N A L O F GOVERNANCE & DEVELOPMENT Vol 2 No 1 • June 2013 AfricAn JournAl of GovernAnce And development Vol 2 No 1 • June 2013 editors EDITOR-IN-CHIEF Vernon Damani Johnson Western Washington University (USA) ASSISTANT-EDITOR-IN-CHIEF Thenjiwe Meyiwa Human Sciences Research Council (HSRC) MANAGING EDITOR Simão Nhambi University of St Thomas of Mozambique REVIEW EDITOR Betty Mubangizi University of KwaZulu-Natal, RSA Babafemi Akinrinade Western Washington University Honorary Editor Joaquim Alberto Chissano Fundação Joaquim Chissano Copyright © USTM, 2013. Publisher Centro de Investigação Científica (CIC) University of St Thomas of Mozambique (USTM) Avenida Ahmed Sekou Toure, 610, Maputo, Mozambique Tel: +258 21 49 11 35 Fax: +258 21 49 11 34 Email: [email protected] Número de Registo: 7152/RLIND/2011 ISSN: 2218-5615 production Proofreader – Gaylene Jablonkay, Artworks Communications Portuguese proofreader: Luis Edgar F. Huamusse Designed and typeset – Artworks Communications, Durban, South Africa The views outlined in individual contributions are not necessarily those of the University of St Thomas of Mozambique. Disclaimer: While every care has been taken in the compilation of this publication, no liability can be accepted by the publishers or editor for any errors or omissions that may have occurred. Contents Policy challenge and development in Africa ...........................................................................................................................v Betty muBAnGizi An econometric analysis of the investment climate and growth potential in Nigeria .....................................................1 KAlu u christopher And frAncis o nwAiGwe Prospects for creating global justice consensually: suggestions from models of indigenous African governance .......15 helen lAuer The effectiveness of the Expanded Public Works Programme on job creation: a look at a South African metropolitan municipality .........................................................................................................................................................28 Betty clAire muBAnGizi And nozipho florence mKhize Institutional dynamics and health service delivery in regional referral hospitals in Uganda: What lessons from a case of Jinja Regional Hospital? ....................................................................................................40 christine J ondoA, Benon c BAsheKA And muhendA m BAsAAsA Boundaries of community engagement in enhancing performance of government programmes at the local level: a lesson drawing from National Agricultural Advisory Services (NAADS), Uganda ...................57 stellA B KyohAirwe And Benet tiBAiJuKA Is performance management measurement a panacea for effective accountability and transparency in public service delivery in a developing country? Insights from Uganda ....................................................................................71 GAd ruzAAzA, dAvis mAlowA And mAude muGishA Contributors’ biographies ........................................................................................................................................................89 Guide for authors ......................................................................................................................................................................92 Referencing ................................................................................................................................................................................93 Editors Editor-in-Chief Vernon Damani Johnson, Western Washington University (USA) Assistant-Editor-in-Chief Thenjiwe Meyiwa, Human Sciences Research Council (HSRC) Managing Editor Simão Nhambi, University of St Thomas of Mozambique Review Editors Betty Mubangizi, University of KwaZulu-Natal, RSA • Babafemi Akinrinade of Western Washington University Honorary Editor Joaquim Alberto Chissano, Fundação Joaquim Chissano Editorial board Ahmed Jazbhay University of South Africa David Moore University of Johannesburg, RSA Elisio Macamo Basel University, Switzerland Lawrence Hamilton University of Johannesburg, RSA Lisa Aubrey Arizona State University, USA Maleshoane Mathonsi-Rapeane National University of Lesotho Margaret Lee University of North Carolina, USA Mario Cumbe Universidade Eduardo Mondlane, Mozambique Pearl Sithole University of KwaZulu-Natal, RSA Pierre Matungul University of St Thomas of Mozambique Regis Chireshe University of South Africa Romain Francis University of South Africa Sergio Inácio Chichava Instituto de Estudos Sociais e Económicos, Mozambique Stephan Meyer Basel University, Switzerland Ushotanefe Useh North West University, RSA José Chichava Universidade Eduardo Mondlane, Mozambique Policy challenge and development in Africa Betty muBAnGizi Introduction We present this issue of African Journal of Governance and Development against the backdrop of the recently released MDG Report of 2013: Assessing progress in Africa toward the Millennium Development Goals. The forward to this Report states that: “Africa must commit to inclusive, transformative development that reduces income poverty, creates decent jobs, enhances access to social services, reduces inequality and promotes resilience to climate-related hazards”. The Report notes that while Africa has made great strides towards reaching the Millennium Development Goals (MDGs) the continent’s low development has required more effort to make meaningful progress and that while Africa is the world’s second fastest growing region, its rate of poverty reduction is insufficient to reach the target of halving extreme poverty by 2015. For this reason, Africa must thus put structures in place to sustain its development well beyond the MDG timeline. It is not that Africa is poor on policies that would progressively lead to these ideals. Indeed, it is often said that government departments, while awash with good policy intentions, are always hamstrung by weak implementation of these policies leading to incessant policy failures. This issue of the African Journal of Governance and Development presents reflections on pertinent issues relating to how good policy intentions can, through the public service, be translated into reality and the challenges thereof. Kalu and Nwaigwe report on a study on improving the Nigerian investment climate for enhanced economic growth using data sourced from the Central Bank of Nigeria (CBN) Bulletin and the National Bureau of Statistics. The authors observed many reasons for the poor economic performance of the Nigerian economy, among which was the decline in investment rates. Given the central role of investment in the Nigerian development process, the authors suggest that steps must be taken to create a stable macro-economic framework, ensuring a favourable fiscal regime, strengthening the capacity and integrity of institutions, developing human resources, deepening and diversifying the economic base, as well as enhancing competitiveness, among other policy options, to boost investment. Lauer looks at Africa’s challenges from a global and structural perspective, arguing that African presence is essential in forming any agency to express the contemporary effort to develop distributive and retributive principles of global justice. On this basis, her article explores the possibility of creating a forum to develop global justice consensually as the outcome of deliberation and compromise through cultural diversity and the lessons carried within post-colonial efforts at democratic governance indigenous to Africa. One of concerns raised in The MDG Report 2013 is that of the need to address inequality. In Introduction v this regard, the report recommends that countries should develop social protection mechanisms which include health insurance to improve access to high-impact interventions for children, targeting the poorest and most marginalised children and families. South Africa’s Expanded Public Works Programme (EPWP) is a case in point. Mubangizi and Mkhize report on a study that examined how the eThekwini Municipality’s EPWP has been conceptualised with particular regard to job creation. It attempts to establish the extent to which the beneficiaries of the EPWP have been able to obtain and sustain decent jobs beyond their involvement in the Municipality’s EPWP. The study indicates how public officials and beneficiaries seem to have varying perceptions of what the EPWP aims to achieve. In this regard, Mubangizi and Mkhize make recommendations on how to reconcile these divergent views to yield sustainable benefits for both public officials and project beneficiaries. Ondoa, Basheka, Muhenda and Basaasa’s article lends an organisational perspective to policy implementation. They examine the institutional dynamics affecting health service delivery using a regional referral hospital in eastern Uganda. The overall findings confirm that while a referral system in healthcare is indeed welcome policy intervention, institutional factors of inadequate infrastructure and equipment were the dominant factors causing the unacceptably low level of health service delivery. The study attributes this finding to an inadequate procurement process within the healthcare facility. Implicit in The MDG Report 2013 is a recommendation that Africa invests in rural infrastructure to promote agricultural transformation, boost rural incomes and address rural-urban income disparities. The National Agricultural Advisory Services (NAADS) programme of Uganda was launched as one of the seven pillars of a grand plan to modernise agriculture through improved agricultural service delivery. The programme hinges on farmer groups and their participation in a range of NAADS activities and processes. Kyohairwe and Tibaijuka observed that the subjection of the less technical ordinary citizen to highly technical administrators of the local governments and the NAADS coordinators was a blow to accountability in the programme. Kyohairwe and Tibaijuka recommend that actual engagement should involve establishing relationships, building trust, working with the formal and informal leadership, and seeking commitment from community organisations and leaders to create processes for mobilising the community. Lastly, Ruzaaza, Malowa and Mugisha attempt to understand how policy implementation in the public sector should be monitored by observation of how public sector performance can be improved. Using insights from Uganda, they question whether performance management, as advanced by the managerial model of public administration, is indeed a panacea for effective accountability and transparency in the public service delivery system of a developing country. Their observations bring the inequitable distribution of service delivery to the surface, within the key priority areas of health and education – despite the implementation of the managerial model. Ruzaaza, Malowa and Mugisha conclude that performance measurement cannot be a panacea to accountability problems and that a new comprehensive strategy be adopted to ensure equitable service delivery. vi African Journal of Governance and Development | Vol 2 No 1 • June 2013 An econometric analysis of the investment climate and growth potential in Nigeria KAlu u christopher And frAncis o nwAiGwe Abstract The slow economic growth rate experienced by most developing countries, including Nigeria in the late 1970s and the early 1980s, has now manifested itself in the form of macro-economic imbalances, a wide saving/investment disparity, a steep inflationary spiral, and a high debt overhang. Hence, the study examines improving the Nigerian investment climate for enhanced economic growth. The data was sourced from the Central Bank of Nigeria (CBN) Bulletin and National Bureau of Statistics. The level testing results reveal that none of the variables were stationary at its levels. However, the absolute values of the variables in the first-difference is greater than the Mackinnon Critical value as provided by EVIEWS Package, which means that we do not reject the null hypotheses for the non-stationary series. It was observed that there were many reasons for the poor economic performance of the Nigerian economy, among which was the decline in investment rates. It is thus recommended that polices which will improve and encourage investment should be institutionalised, a stable macro-economic framework should be pursued, a favourable fiscal regime should be promoted, and the financial sector strengthened by diversification to achieve investment objectives. Keywords: Investment, economic growth, co integration, Nigeria Sumário A taxa de crescimento econômico lento vivida pela maioria dos países em desenvolvimento, incluindo a Nigéria no final dos anos de 1970s e início de 1980s, já se manifestava na forma de desequilíbrios macroeconómicos, uma grande poupança/disparidade de investimentos, uma espiral inflacionária íngreme, e um alto excesso da dívida. Assim, o estudo analisa a melhoria do clima de investimento nigeriano para um maior crescimento econômico. Os dados são provenientes do Banco Central da Nigéria (CBN) Bulletin and National Bureau of Statistics. Os resultados dos testes revelam que nenhum nível das variáveis é estacionário. No entanto, os valores absolutos das variáveis na primeira diferença é maior do que o valor crítico de Mackinnon, tal como previsto pelo pacote EVIEWS, o que significa que não rejeitam as hipóteses nulas para a série de não-estacionária. Observou-se que havia muitas razões para o fraco desempenho econômico da economia nigeriana, entre os quais o declínio nas taxas de investimento. Portanto, recomenda-se que as políticas que irão melhorar e incentivar o investimento devem ser institucionalizada, um quadro macroeconómico estável deve ser desenvolvido, um regime fiscal favorável deve ser promovido, e o sector financeiro fortalecido pela diversificação dos seus produtos para alcançar os objetivos dos investimentos. Palavras chave: investimento, o crescimento econômico, a integração económica, Nigéria Kalu U Christopher and Francis O Nwaigwe 1 Introduction It is the desire to attract investment, particularly foreign direct investment, that has brought about economic reform in Nigeria. The economic rationale for offering special incentives to attract foreign direct investment frequently derives from the fact that it promotes growth, not only directly, by augmenting capital formation in the recipient countries, but also indirectly by improving human capital development, helping technology transfers and strengthening competition (Qi, 2007). The desire to improve the Nigerian investment climate stems from the acknowledged advantages (Akinlo, 2004). In fact, the New Partnership for Africa Development (NEPAD), a programme floated by Africa’s statesmen to address the downward spiral of poverty and to set Africa on the road to globalisation, was launched to increase capital in the sub-region to US$ 64 billion through a combination of reforms and resource mobilisation, as well as enabling the economies for investment (Funke and Nsouli, 2003). From the current International Finance Corporation and World Bank report, Nigeria is ranked 133 out of 183 nations for doing business. For starting a new business, Nigeria is ranked 116, obtaining a construction permit 84, setting electricity for a local firm 176, registering property 180, getting credit 78, protecting investors 65, paying taxes 138, trading across borders 149, enforcing contracts 97 and resolving insolvency 99. In the regional ranking, Mauritius is the best country for doing business in Africa, while Nigeria (the ‘giant of Africa’) is ranked as the 15th. By comparison South Africa is ranked 1st, Rwanda (a former war-torn country) 2nd, Botswana 3rd and Ghana 5th (Ohura, 2012). Other economic indicators of low growth rates in Nigeria (out of 142 countries) include infrastructure 135, ease of access to loans 125, soundness of banks 136, regulation of securities exchange 81, business sophistication 64, capacity for innovation 54, state of the environment 119. For power generation, a critically important factor for growth, Nigeria’s per capita energy consumption is one of the lowest in the world – about 12 watts, against that of South Africa 478 watts, Mauritius 198 watts, Gabon 124 watts, Cameroon 29 watts, and Ghana 27 watts. It is notable that a statistical increase of a country’s GDP, income per capita, external reserve and trade/revenue surplus does not necessarily constitute meaningful economic growth and development. It is about material improvement in the lives of the citizenry in terms of meeting and satisfying their basic needs and necessities of life, while enhancing the creation and equitable distribution of wealth, to minimise social disparity. The Nigerian development experience since independence in 1960 has been characterised by despair, frustration, disappointment, poverty and hunger (caused mainly by corruption in all levels of governance), changes in government from a military administration to a civilian regime, autocratic leadership and a lack of infrastructural facilities. Furthermore, despite the various economic policies and structural reform programmes by successive Nigerian governments, the macro-economic problems of falling industrial output, rising inflation, a high level of unemployment, huge budget and balance of payments deficits, infrastructural decay and other economic difficulties, continue to linger. Therefore, for Nigeria to be able to meet the Millennium Development Goals and achieve the desired economic growth rate of 7.36% and reduce the inflation rate of 12.9%, there is a need for increased emphasis on 2 African Journal of Governance and Development | Vol 2 No 1 • June 2013 improving and sustaining the Nigerian investment environment to make it more conducive for both domestic and foreign investment. The broad objective of this study is to examine the Nigerian investment climate and to proffer policy options aimed at enhancing economic growth. Following the introduction is the investment climate in Nigeria – an overview. Next are the theoretical and empirical issues as it relates to investment, then methodology, a discussion of econometric estimating results, and finally, policy implications of the findings, as well as a conclusion. Investment climate in Nigeria: A brief overview At independence, in addition to being a leading exporter of groundnuts, Nigeria accounted for 16% and 43% of world cocoa and palm oil production respectively. The country was largely self- sufficient in terms of domestic food production (85%) and Nigerian agriculture contributed over 60% of the GDP and 90% of exports. Conversely, manufacturing was less than 3% of the GDP and 1% of exports, while the oil sector represented only 0.2% of the GDP. Okigbo (1989) stated that the First National Development Plan of Nigeria (1962-1968) sought to broaden the base of the economy and limit the risk of over-dependence on foreign trade. In keeping with the developmental question of that period, the tariff structure was formulated with industrialisation and import substitution in mind. The Second National Development Plan (1970-1974) accelerated indigenisation of resource and productive ownership on the grounds that it was vital for government to acquire, by law if necessary, the greater proportion of the productive assets of the economy (NIPC, 2011). Restrictions were therefore imposed on the activities of foreign investors with the first indigenisation decree. Relaxation of these restrictions began in 1989. The Nigerian Enterprise Promotion Decree (NEPD) was amended so as to leave a single group of 40 business activities in which foreign participation was completely prohibited, unless the value of the enterprise exceeded N20 million (US$2.7 million) in 1989. In 1995, the Nigerian Investment Promotion Commission Act opened all sectors to foreign participation, except for a short list (including drugs and arms) and allowed for 100% foreign ownership in all sectors, with the exception of the petroleum sector (where foreign direct investment is limited to joint ventures or production sharing). Following the major decline of oil prices in the early 1980s, the shortcomings of past economic planning were exposed. Agriculture accounted for less than 10% of exports and the country had become a net food importer. Manufacturing output started falling at about 2% per annum between 1982 and 1986, while the GDP stagnated, with less than 1% growth annually. Furthermore, by 1986, there were about 1 500 state-owned enterprises, of which 600 were under the control of the federal government and the remainder under state and local governments. The evidence suggested that many enterprises made no contribution to Nigeria’s productive capacities and were not financially viable (Mahmud, 2004). Between 1970 and the mid-1990s, Nigeria as the primary destination for foreign direct investment inflows to Africa, accounted for more than 30% of all foreign direct investment inflows to the continent. This is largely as a result of its oil attractiveness. However, in 2007, notwithstanding Kalu U Christopher and Francis O Nwaigwe 3