The African Institute of Economic Modeling

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The African Institute of Economic Modeling

• Jacques Kibambe

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Uses of macroeconomic modelling (forecasting)

• Ability of Africa to produce insightful
  forecasting models is determined by the expertise
  of African Macroeconomic Modellers to make use of
  update forecasting techniques
• Existing models need to be periodically
  revitalised since they constitute guidance
  instruments for policy makers

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Uses of macroeconomic modelling (forecasting)
cont1

• Macromodels provide useful information for policy
  makers regarding the past as well as the future
  of the continent using dynamic equations
• Scarcity of sound forecasting frameworks weakens
  budgeting and planning processes in the continent

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Uses of macroeconomic modelling (forecasting)
cont2

• Lack of required expertise is combined with the
  inexistence of a nurtured centralised database
  warehousing system
• That is associated with massive financial
  requirements it constitutes an obstacle to the
  development of forecasting frameworks in Africa

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Uses of macroeconomic modelling (forecasting)
cont3

• Many challenges faced by several African
  governments in their modelling exercises
• Several African countries remain far behind in
  building full-fledged macroeconomic models and in
  providing accelerated training for qualified
  modellers and forecasters

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Uses of macroeconomic modelling (forecasting)
cont4

• Macroeconomic forecasting in Africa has been
  highly dependent on the developed world economic
  pattern.
• Due to the delay it had in modelling practices,
  Africa had to borrow westernised models, which
  were not true representation of local realities

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Uses of macroeconomic modelling (forecasting)
cont5

• Interest in proper African models has increased
  over the past years since thinkers as well as
  officials came to realise how forecasting models
  could be crucial for planning purposes
• With the MDGs, governments have been alerted to
  pursue and attain their macroeconomic objectives
  that are achievable through efficient
  macroeconomic models

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Uses of macroeconomic modelling (forecasting)
cont6

• Forecasting is meant to guide any policy-making
  unit to achieve its long-term goals.
• African government have set different goals
  aligned with the MDGs such as long term economic
  growth (6 7) poverty eradication etc only
  achievable by sound macromodelling.
• Good projections are linked to sustainability of
  socio-economic policies

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Origin of AFRINEM

• Execution of a UN funded project
• Need for capacity building
• in modeling
• In policy analysis
• Capacity enhancement of policy making in 15
  African countries
• Highly positive response from policy makers

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Results of the first UN project I

• Interaction/cooperation between modelers and
  policy makers
• Creation/improvement of an independent network
  with expertise in African Modeling
• Higher demand for technical and stylized training

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Results of the first UN project II

• First move toward ownership of economic modeling
  in Africa
• New supportive body for NEPAD

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Objectives of AFRINEM I

• Strengthening capacity building for policy makers
• Building capacity for econometric modeling
• Encourage the establishment of a reliable data
  warehousing system (Statistics offices)

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Objectives of AFRINEM II

• Utilisation of experts in African modeling
• Support establishment of an African Network
• Acquisition of timely support from international
  agencies
• Production of periodic publications

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Methodology of AFRINEM I

• Use of hands-on and holistic approach
• Application of macroeconomic models to generate
  forecasts
• Macroeconomic models are designed to capture
  individual characteristics
• Training policy makers (2 years programs)

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Methodology of AFRINEM II

• Africa to Africa network
• Building of a Marshallian Macroeconomic model for
  Africa (33 African countries)

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Capacity building programs I

• Modeling workshops
• Introduction to Macroeconomic Modeling and
  Forecasting
• Core Modeling program
• Advanced Modeling Program

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Capacity building programs II

• Short courses in Econometrics
• Econometrics for the Practitioner
• Econometrics in depth Theory and Practice
• Econometrics in depth Using Cointegration
• Panel data Econometrics for the Practitioner.

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Capacity building programs III

• Short course in Economic Analysis
• Economic indicators Monitoring the SA economy
• Economic indicators Monitoring African economy
  (to be included)

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AFRINEM research link prospects

• Hosting bi-annual African link meetings
• Assisting development of individual/regional
  country models
• Developing/operating a multi-country African
  model (African link model)

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Community involvement

• Poverty and Growth Program
• the Economics of Social Development (South
  African Department of Social Development)

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Challenges faced

• Limitation in term of other countries
  participation
• Small network compared to the research size of
  the continent
• Higher interest by policy makers more from South
  Africa

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Contact details

• Charlotte Du Toit DIRECTOR
• Email charlotte.dutoit_at_up.ac.za
• Tel [phone]
• Jacques Kibambe AFRICAN DESK
• Email jacques.kibambe_at_up.ac.za
• Tel [phone]

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Other type of traditional macromodels

• the IMF financial programming framework
• the World Bank RMSM models (Revised Minimum
  Standard Model which is a development of the
  two/three-gap models)
• the three-gap models or the two-gap models
  for Africa
• the Computable General Equilibrium Models

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Other type of traditional macromodels cont

• the Dynamic, Large-Scale models
• the Structural VAR model (policy evaluation)
• the AR (3) models including lagged leading
  indicators have been successfully used in point
  forecasting frameworks
• etc.

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Thank you very much