unecasetup's blog

Mandela is the new African

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

10 December 2013

In every century there are a few names and events that mark history. When I attended the first public speech by Nelson Mandela after he was released from prison I could not have imagined that this man was going to be the absolute rallying personality of the century. The reason why, in that square in front of Cape Town City Council, I could not have thought so, was not because I doubted one inch how special and unique Mandela was, rather, it was because I doubted an African could be recognized the world over. After all, he had spent 27 years in prison and did not create during that period, the commotion that followed. While in prison, mainstream media should have crowned him ‘Personality of the Year’ many times over, but that never happened. While the Mandela that was liberated remained the same man at his core, he had surprises to reveal that nobody could have imagined.

Mandela had time to prepare for what he believed was inevitable: the end of the most outrageous institution of the century; and the official coexistence of a regime proclaiming racial separation with an international community that had approved a Universal Declaration of Human Rights. This paradox was only one of many that created a platform for Nelson Mandela to demonstrate that he was different. He espoused complexity. He was no common hero. He emerged as the epitome of human dignity.

Mandela was one of the last African leaders who dedicated their lives to the fight for the liberation of the continent from the shackles of colonialism. He is counted among the men and women who lived, fought and died for the principle that Africa could manage its own affairs. Kwame Nkrumah, Julius Nyerere, Amilcar Cabral, Patrice Lumumba, Oliver Thambo, Nelson Mandela and many others fought the intellectual, political, social, cultural, and, sometimes, the military battles that now enable Africans to live a life they can claim to better control. The various stages of the life of this great man offer us many lessons and points of reflection. As Africa turns the century, and as we look into developing a new vision for the continent by 2063, we must take inspiration from his "long walk to freedom".

As a leader, Mandela was father to all, and led his people through a period of truth and reconciliation. He personified passion, inspired us with his actions, and taught by example. He had a strong sense of character and stood by his convictions even when it was dangerous to do so.

Mandela has been a great inspiration to me and my generation. He embodied the unification and integration of the continent. The struggle for the total liberation Africa did not end when Mandela was released from prison as he said in that speech in Cape Town. I would like to add humbly that it cannot end with his death either, especially now as we develop the narrative for an African renaissance. Mandela’s legacy, values and truths will act as a strong foundation for a united and prosperous Africa.

How can African countries capitalize on the current geopolitical changes?

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

18 October 2013

This year Africa celebrates fifty years since the founding of the Organization of African Unity (OAU); never before has the continent been so poised to reap the benefit of its enormous resources. Sweeping political and economic changes over half a century have reformed global power structures, reconfigured international relations and led to serious rethinking of development paradigms.

It is only befitting to recognize the significance of the African Union’s role in this transition. The OAU established in 1963, laid the foundation for the unity of the African continent. It aimed to rid the continent of remnants of colonialism and restore Africa’s dignity and pride after centuries under domination; promote the integration of the continent; and defend its interest in a Cold War arena. As the continent evolved, the OAU, heralded as the most notable result of Pan –Africanism, was replaced by the Africa Union in 2002. The African Union symbolized a new era for the continent aiming at accelerating the process of economic integration, resolving socio-political problems and intensifying continental unity, to enable Africa to play a more meaningful role in the global economy.

In just over a decade, Africa has experienced growth from only 2.1% in the 1990’s to 5% in the past decade. The future outlook remains promising as Africa’s economy is projected to continue growing, despite global financial market turmoil. Investor confidence has also been revived, brought about by drivers such as an increased prevalence of peace, democratic elections and improved governance. As a result, Africa has attracted more Foreign Direct Investment (FDI). Africa has been experiencing an upward FDI trend, with US$ 47 billion mark in 2011. In 2012, this upward trend has continued, with FDI registered at US$ 50 billion. Outward FDI flows from Africa nearly tripled in 2012, from US$ 5 billion in the previous year to an estimated US$ 14 billion.

How then can Africa capitalize on the current trends?

Africans can take control of their natural resources.

Africa’s industrial potential had been stifled by the legacies of Africa’s colonialism which left behind weak institutions and an infrastructure designed to enhance extraction of its resources. Structural adjustment Programmes had particularly negative effects on technological accumulation, human capital development and export performance. However, Africa’s resources wealth, account for approximately three quarters of the world’s platinum supply; half of its diamonds and chromium; one fifth of gold and uranium supplies; just over half of the world’s uncultivated arable land, with the potential to become the breadbasket for the world; and it is home to gas and oil production in over thirty countries. With the abundance of resources and the rising global demand for them, Africa must manage its resources carefully.

Currently, there are far too many economies in Africa that are dependent on the production and export of primary commodities. These are generating prosperity and development in other regions instead of in Africa, exporting jobs and opportunities. The continent runs the risk of marginalizing its own role in international trade if it does not add value to its commodities. Commodity-based industrialization therefore offers the scope for value addition as well as forward and backward linkages. Ethiopia’s leather industry and Nigeria’s oil supply industry provide good yet random examples of linkages that are not only developing, but also deepening into high value added activities. Such initiatives must become the norm.

Africa’s economic future will be determined by how it designs and implements effective policies to promote industrialization. There is an urgent need to address infrastructure constraints and bottlenecks; facilitate the development of the commodity sector and linkages, boost availability of unskilled and semiskilled jobs, provide job training in higher artisanal skills and deploy data driven evidence to inform planning. These all present opportunities for Africa and its partners to better collaborate without depriving Africa of the benefits of its resource boom.

Africa’s demographic dividend

Africa’s population is projected to double attaining close to 2.3 billion people over the next forty years. This will represent about half of the globe’s total population growth. Africa is also the only continent with a significantly growing youth population. Projections suggest that in less than three generations, 41% of the world’s youth will be African. By 2050, Africa’s youth will constitute over a quarter of the world’s labor force. By the end of the century, the continent will have the lowest dependency ratio in the world.

In addition, Africa is experiencing an unprecedented rate of urban growth. Projections indicate that between 2010 and 2025, some African cities will account for up to 85% of the population. This will mean a transition from a rural to a predominantly urban society, with the largest cities on the continent, Lagos and Kinshasa, growing to 15 million people by 2025, and others such as Dar es Salaam reaching 7 million. Cities in Africa generate approximately 55% of the continent’s total GDP relative to developed countries cities that generate approximately 90% of their GDP. Being cognizant of the related challenges, such as the need to ensure essential services to cater for this phenomenon, the opportunities for economic growth, poverty reduction and human development are profound. Approximately 54% of Africa’s youth is currently unemployed and more than three-quarter live on less than 2 dollar (US$) a day. A correlation and lessons to learn can be drawn from Asian emerging markets, where 40% of its rapid economic growth between 1965 and 1990 was attributable to an increase in the working age population.

However, a youth population of such magnitude also indicates that the real challenge of the 21^st century is the ability to address this demographic imbalance in a manner that will preserve the interests of future generations. A demographic dividend is needed. Inspired by Jean-Jacques Rousseau’s seminal work on the Social Contract, there is need for a new intergenerational social contract that is driven by the necessity to balance the needs of the current and future generations; between a young Africa and an aging population elsewhere in the world.

African partnerships with new emerging economies

The once dominant influence of the West is diminishing and it will have to metamorphose a new relationship with Africa. India, China and new players, have increased their engagement in Africa in rather dramatic ways transforming Africa’s traditional trade and investment relations. The largest increases in foreign direct investment to Africa in recent years have come from the BRICS, targeting Africa’s natural resources, from oil in Angola, Algeria, Nigeria and Sudan to mining in Niger, Mauritania, Zambia and Liberia. It is however a very partial view of what is going on. There is significant diversification of investments. For example, India is investing in social services, textiles and medium sized enterprises as well as technology and China is investing heavily in Africa’s infrastructure and services. Ways of doing business have been revolutionized accompanied by advances in technology.

This new paradigm of engagement reflects cooperation in which partners see themselves as peers in mutually beneficial relationships. Interest in Africa from a larger pool of partners is favorable to the continent and is creating choice. Africa in turn, is well positioned to be a more assertive player in the global arena and to capitalize from the different development models and comparative advantages offered by the array of partners. To benefit fully, Africa must strengthen its institutions, take the lead in negotiating, designing and implementing strategies with partners to leverage their comparative advantages as well as broker good deals. Africa must transform from being perceived as a price taker to a price maker.

The Africa –EU future

Europe and Africa have been important to each other with ties stemming from their history and geography and the fact that their relationship connects two continents. Europe has been more of a trade, development and investment partner while Africa has been a crucial source of hard and soft commodities for Europe, such as strategic metals and minerals and captive market. Having said this, perhaps the most successful area in its long partnership has been in the thematic area of peace and security.

The EU-Africa partnership over the last decade has evolved under framework of the Joint Africa-EU Strategy from one that was criticized for being an unbalanced donor-recipient relationship to one that promised a profound change in its approach to Africa. In 2007, the Joint Africa-EU Strategy was premised on principles of equal participation and representation, as well as to treat Africa as one. However, development and political cooperation between the two continents has not resulted in any fundamental transformation; instead the gap has only become wider. This is attributable to factors such as dwindling development budgets that have been impacted by the Euro zone’s sovereign debt crisis; in turn the financial expectations under the Joint Strategy have not been delivered. The emergence of new economies, rivals Europe’s historic role and style of development aid cooperation in Africa. Several partnership agreements have also mushroomed since such as the Cotonou Agreement, fragmenting the strategy.

The 4th Africa – EU summit therefore comes at an opportune time for both continents to develop consensus on what they want and how to transform the Africa –EU relationship. In the new landscape of multipolar partnerships, Africa needs a coherent strategy so that its development is not compromised by competition amongst potential partners. In doing so, mutual accountability, mechanisms of enforcement, mechanisms that foster compliance of multinational firms to international norms and standards should be indispensable features for the future partnerships. It is time for Africa to capitalize on the geopolitical changes but by driving and owning the process.

Article published in GREAT Insights, Volume 2, Issue 6. September 2013

Africa must benefit from its mineral resources

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

7 October 2013

Africa’s political economy is deeply ingrained with its history of the exploitation and (mis)management of its mineral and natural resources. More than 500 years after commercial exploitation of Africa’s resources, Africa continues to host many of the large and unexploited deposits of minerals globally. For example, Africa accounts for three-quarters of the world’s platinum supply, and half of its diamonds and chromium. It has up to one-fifth of gold and uranium supplies and it is increasingly home to oil and gas production with over thirty countries now in this category.

Yet, with minor exceptions, Africa does not consume or add significant value to these and other mineral products which it has in abundance. Rather, we are net exporters of raw materials that fuel prosperity and development in other regions. Africa is largely seen as a price taker rather than a price-maker, with a marginal role in international trade.

The question that arises therefore is why the continent continues to struggle with limited economic transformation, low or no resource rents and scarce employment. In the last ten years commodity prices have hit a super-cycle, yet Africa’s share of windfall earnings have been miniscule, compared to what mining companies have realized. Average net profits for the top 40 mining companies grew by 156% in 2010 whereas the take for governments grew by only 60%, most of which was accounted for by Australia and Canada, two countries that graciously want to share their experience with Africa. Indeed, most African countries got much less than this due to generous tax holidays given to mining companies!

Looking at the issue from another dimension, the profit made by the same set of mining companies in 2010 was $110 billion which was equivalent to the merchandise exports of all African LDCs in the same year. It is fair to say therefore that the resource-to-development model puts raw materials suppliers at a significant disadvantage. The conclusion that can then be drawn from this situation is that the current resource-for-development model is not working to bring about equity or boost development.

The African Mining Vision, jointly developed by the AU, ECA, ADB and other UN agencies was adopted by the African Union Heads of States in 2009. The Vision advocates for “transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development”.

At the core of the African Mining Vision is the realization that Africa’s mineral resources can be better utilized to address the continents social and economic needs; the focus on environmental and social sustainability, the advantages of regional and international integration with attendance hard and soft infrastructure challenges, the emphasis of building of backward, forward and sideward linkages from the core mining sector and equitable principles of fairness in benefit sharing and use of resource revenues.

To achieve the high aspirations of this vision, Africa needs to get back to the fundamentals and rectify some of the initial problems that have continued to plague the management of the continent’s natural resources.

At the fore of this endeavor is the capacity of governments to get the best deals for their countries during contract negotiations. Capacity deficits have also been identified in critical areas of auditing, monitoring, regulation and improving resource exploitation regimes. In DRC, a government committee reviewed 61 mining deals over a decade up to 2006 and found none acceptable. It recommended renegotiating 39 and canceling 22.

Zambia, in the wake of increased international Copper prices and after years of subsidizing large multi national companies working in its copper belt, successfully raised taxes for mining companies from 25 to 30% and introduced a windfall tax for exceptional profits. This earned it an extra $415 million in supplementary revenues. Other African countries have initiated similar cancellation or review of resource contract such as Guinea, Zambia, Tanzania, Liberia and Nigeria in order to increase their resource revenue base. This trend will continue to grow as civil society organizations and states increasingly realize the loss of revenue from their resources.

International processes such as the Kimberly Process for diamonds and the Extractive Industries Transparency Initiatives (EITI) for other minerals, though with their won weaknesses, have contributed to improving transparency and accountability in contract negotiation processes from the production side whilst the Dodd-Frank Wall Street Reform and Consumer Protection Act and other similar acts have also created avenues for fair play within the international circles.

On the other hand, the reducing policy space available for Africa within international trade negotiation processes must also be checked. Unfair trade treaties and rules set out by international bodies that penalize Africa’s value addition process to its primary commodities need to be reviewed in light of the increased demand and competition for Africa’s minerals from the rising south especially China and the Far East.

Secondly, in geological terms, Africa is still the ‘unknown continent’ with vastly unexplored quantities of extractive potential. Geological mapping and mineral inventory has not covered the entire continent thus masking the true geological potential of the continent. African governments do not have the capacity to take stock of their mineral resources relying on trans-national companies to access commercial capacities of newly found discoveries especially oil and gas. This lack of verified data severely compromises negotiation capacity and the continents bargaining power. New technologies abound that will make it easy for Africa to have a better appreciation of its natural resource base but this is held back by a lack of sustained and well-financial commitments with exploration largely left in the hands of the private sector.

A third and important structural measure is a better integration of Africa’s development policies. Africa needs to embed long term development objectives firmly into the processes for extracting natural resources. For mining to benefit Africa’s people, strong backward and forward linkages in the local economy should allow local entrepreneurs and industrialists to take advantage of service provision and technology transfer opportunities as a result of proximity to the mining industry. This means investment in infrastructure, research and human capital development, through conditionality for local content. This is what other regions have done; this is what Africa needs to do.

Within this paradigm of development-led mining, the potential of small-scale mining should also be harnessed and improved to improve rural livelihoods and integration into the rural and national economy. Other factors such as the building of human and institutional capacities towards a knowledge economy that supports innovation, research and development and the promotion of good governance of the mineral sector in which communities and citizens participate in decision making and in mineral assets, and in which there is equity in the distribution of benefits are also necessary pre requisites.

In conclusion, Africa’s natural resource is a blessing and not a curse and can and will be used as a precursor for the continent’s continuous rise and in the face of the insatiable appetite for natural resources on the world stage. To make this possible, frameworks such as the AMV must be implemented and used as a template at country and regional level.

African Youth: the custodians of a new social contract

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

20 September 2013

History has shown the tenacity of African youth. Some of the most renowned figures of Africa’s independence struggle started their political engagements as young adults. By the time he turned 37, Kwame Nkrumah was deeply involved in the planning of the 1945 Pan-African Congress in Manchester. Abdul Gamel Nasser, at 35, was a colonel in the Egyptian army and became President at 38. Frantz Fanon at age 27 wrote his first book to worldwide critical acclaim. Other leaders such as Nelson Mandela, Patrice Lumumba and Modibo Keita were all, in their youth, thinkers and change makers, recognized for their contributions. Indeed, my own mentor, Amilcar Cabral, by age 26, had founded several student movements dedicated to promoting the cause of liberation of Portuguese colonies in Africa. When he died at the age of 46, he had achieved more than many people do in several lifetimes. These are only a few examples of 20th century African leaders who, during their youth, were and continue to be a source of inspiration to Africans and the world at large.

By comparison, how well are today’s African youth leaders supporting Africa’s transformation process? Our youth is still struggling to make their voices heard in all spheres of influence. For example, the current median age of African leaders is 3 times the median age of the African population. African leaders seem to be less willing today to open up space for political engagements. In North Africa for example, over a period of more than 40 years, failed to develop open and pluralistic political systems giving little scope for citizens’ participation, especially the youth’s participation in civil or political life. Analysts see this as one of the systemic failures that spurred the swathe of political uprisings, mostly led by unemployed young men and women.

Approximately 54% of Africa’s youth is currently unemployed and more than three-quarters is considered poor. In many African countries, the informal economy is the largest provider of jobs for youth. For instance, in the Democratic Republic of the Congo 96.2 % of young workers are claimed to be informally employed; in Cameroon the percentage would be 88.6 and in Zambia, it is said that no less than 99 % of working teenagers work in the informal economy. In Africa, the tendency is that youth unemployment tends to increase with higher education levels. In Morocco, for example, ILO estimated that the unemployment rate for youths age 15-24 in 2004 was 7.7 percent for workers without a diploma, 28.1 percent for those with a baccalaureate, and 61.2 percent for those with a university diploma or higher. Although educational attainment levels are on the rise, Africa, compared to the rest of the world tends to lag behind.

This situation is worrisome. When we look at the current demographic mega trends, it is even an anachronism. Africa’s population is growing at a faster rate than any other region. Not only is it increasing in numbers but, more importantly, the population is growing younger. In 2010, 20.4% of Africa’s population was between 15 to 24 years. Further projections show that by 2020, 3 out of 4 Africans will be on average 20 years old. It is also estimated that by 2100, 10 out of the top 20 most populous nations will be in Africa- these are Ethiopia, the Democratic Republic of Congo, Malawi, Niger, Nigeria, Sudan Tanzania, and Uganda.

Whilst Africa’s population is growing younger, the irony is that other parts of the world are growing older. The European Union, Japan, China and many other countries in the Americas are recording extremely low levels of fertility with severe repercussions on current labour supply. For instance, China and the EU’s labour supply are in a decline - after peaking in 2010 - and the Japanese population is expected to fall by up to a third in the next fifty years; with almost 40% of the population being 65 years old or older. Most of Latin America will also follow the same trend.

The glaring reality shows that there is increasingly an imbalance in the world’s demographic system and this has consequential effects on markets and social structures. A younger Africa with excess labour versus an aging world with manpower shortage. A younger Africa with a creative, resourceful and increasingly educated youth versus an aging world with demands for innovation and new thinking.

How do Europe, Japan, China and others aim to fill the void that is emerging in their societies as the skills, strength, labour and creativity gap left by their aging societies grow and affect their lifestyle? Today’s elderly generations in developed countries are able to enjoy a relatively prosperous retirement mainly because of their strong social welfare system, built on the shoulders of a large younger working population. To what extent can these countries sustain their social welfare contract with the old without re-negotiating a new contract with the places in the world where a large workforce will be able to sustain future generations?

This demographic and geographic asymmetry needs to be corrected by calling for a new global social order that takes into consideration the interest of intergenerational and intercontinental equity. Given that Africa will be the custodian of a younger generation, how can Africans “cut a deal” with the rest of the world, in order to harness the considerable potential that this demographic dividend represents?

Three hundred years ago, Jean-Jacques Rousseau, considered one of the most original philosophers of the Enlightenment, was born. His seminal work, ‘The Social Contract’ gives us a starting place for this discussion. Rousseau considered the possibility of balancing the relationship between humans and nature. He also looked at creating a society based on the principles of equality, freedom and participatory governance. The concept of a Social Contract was important in breaking the entrenched structural inequalities that existed in the 18th century and the promotion of the ideals of equality and human rights.

The 21st century is different from the Enlightenment era. Different challenges exist such as the paralyzing breakdown and collapse of an economic system that makes us question current economic models, the increase in the number, intensity and impact of environmental and social crises transcending national and continental borders and requiring collective global actions. These new challenges call for, now more than ever, a need for alternative development thinking and a new intergenerational justice, where the needs of future generations inform the activities of the current generation.

Just as Rousseau’s Social Contract did, we need to create a new Social Contract that is based on the original principles but goes beyond them. It needs to address current challenges, such as creating a redistributive system that is “solidaristic” and helps to enhance both intra-generational and inter-generational equity as well as create new institutions that can lift people out of poverty.

This is the real challenge of the 21st century and Africa’s youthfulness potential cannot be taken out of the equation. African youth seem to be up to the challenge. Current change makers such as Ashish Thakkar, the youngest African billionaire, highly acclaimed Angolan writer Ondjaki, Ethiopian CEO of Sole Rebels shoe company Bethlehem Tilahuan, Saheed Adepoju, inventor of Nigeria’s first Android tablet and renown Ivorian footballer Didier Drogba continue to raise the bar in their areas of expertise. Other African youth accomplishers like Kenyan Ory Okolloh inventor of the Ushahidi software, South African Fred Swaniker, who unearths and grooms young talents, Ghanaian investigative journalist Anas Aremeyaw Anas whose undercover work on corruption and human rights abuse has led to policy change across the continent, or Moroccan Hip Hop Group H-Kayne are all making a difference. Indeed the role of Tunisian youth Mohammed Bouazizi in the North African Revolution has been labeled by Academic Larbi Sadiki as an event that has ‘changed the course of Arab political history’. These young people, just like their forefathers, continue to break new frontiers in science and technology, entrepreneurship and business, the arts and music, and change the political landscape of their times, using enablers such as social media or civil movements.

Is a new Social Contract utopian? Our collective interest is strongly rooted in our ability to institute the behavioral response that will ensure that, whilst cognisant of a risk sharing approach, we are also willing to spread opportunities that will provide safety nets to this and future generations. Africa has been described as the continent on the rise. It is gradually becoming an economic powerhouse, registering significant increases in GDP rates. A new Social Contract that will keep growth rates steady and equitable, and inspire new found confidence in the youth will enable the continent to actively pursue its “sprint” to transformational development.

Moving from early Pan-Africanism towards an African Renaissance

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

23 August 2013

The celebration of fifty years of Pan-African institutional history is a time for reflection. Like the famous mythical Sankofa bird symbol, Africans must look into their past to create their future; acknowledging our previous mistakes and learning from them but also celebrating our successes and building on them.

This is aptly captured in the theme for this year’s celebration, ‘Pan-Africanism and African Renaissance’. A focus on African Renaissance gives an opportunity to reflect on Africa’s self-reliance trajectory and the need to demystify, appropriate and popularize our history, our shared values, and our narrative about the state of Africa today, in honor of the generations that went before us and to inspire current and future generations.

Pan-Africanism at its inception was more than just a search for racial or geographic identity. Initially led and popularized by Africans in the Diaspora such as Marcus Garvey and W.E.B. DuBois, it was a clear rejection of the laughable fallacy that Africans did not have a history. It was also a strong refutation of the mindset that defined Africa and Africans from the perspective of the historical experience of slavery, colonialism and racial discrimination. Rather it was the affirmation of the rich cultural heritage of African societies and the importance of achieving freedom and continental unity.

Since then the concept of Pan-Africanism has continued to evolve, measured by the challenges and aspirations of the African continent. During the independence period, this ideology enabled Africans to overcome domination and oppression by ending colonialism and apartheid in the continent. The possibility of rapid socio-economic transformation of the continent was another goal promoted from early days. As noted by Emperor Hailé Selassié during the launch of the OAU, “Unless the political liberty for which Africans have for long struggled is complemented and bolstered by a corresponding economic and social growth, the breath of life which sustains our freedom may flicker out.” This statement still rings true. [1]

Despite strong political mobilisation for the liberation from oppression, Africa has failed to fulfil its full potential. It is well known that in the early 1960s, at the time of the establishment of the OAU, there was high optimism that the continent will perform well. Several African countries were at par or had even higher GDP rates than their counterparts in Asia. It is now common place to mention that, the GDP per capita of Ghana and South Korea were at the same level in 1960. Up until 1975, the fastest growing developing country in the world was Gabon. Botswana’s growth rate exceeded that of Hong Kong, Taiwan, Malaysia, and Thailand. Despite the optimism of the time, Africa failed to complete the transformation journey which Asia has to a large degree now traversed. While East Asia’s share in world global exports grew from 2.25 % to 17.8% over a period of 40 years (1970 to 2010), Africa’s share in world global exports drastically reduced from 4.99% to the current 3.33%. This led to Africa being called the ‘hopeless continent’, ‘a scar on the conscience of humanity’ and many other Hegelian fallacies.

As we entered the 21st century, Pan-Africanism reflected Africa’s conscious need for not only political independence, regional integration and the improvements of its living standards, but also the throwing of the shackles of economic bondage and democratic stagnation that had seen it reverse the short lived prosperity of the independence era. This meant devising a new economic positioning and new forms of partnership in which Africa, as an equal partner, would negotiate with the rest of the world, with fierce defense of its own defined priorities. Without losing the key elements of unity, cultural heritage and freedom, the reinterpretation of Pan-Africanism in the form of an African Renaissance is very relevant. It is a new phase that requires popular participation and mobilization of the African people behind the goals of structural transformation and improved governance. Indeed, Africa’s Renaissance can only be complete when the African voice will be heard and taken into account.

The relevance of the Pan-Africanism ideal, and its continuous attraction to intellectuals both on the continent and in the Diaspora, will be measured by the ability to adjust to new demands and new generations. Indeed, the ability to continue to provide inspiration and conviction to Africans across ages is the trade mark of Pan-Africanism. Thankfully, things have changed for the better since the turn of the century. Six out of the ten fastest growing economies are in Africa, there is a marked reduction in the number and size of conflicts in the continent, democratic governance and the respect of human dignity are on the rise. Africa is therefore ripe for change. It must seize this moment for re-strategizing.

The AU’s proclaimed vision is for ‘an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena’. Laudable in its aspirations, what guarantees do we have that it will not remain rhetoric? We must ask ourselves how we reach these goals. A framework being jointly developed by the AU, AfDB and the ECA as part of the fifty years celebrations should identify the prerequisites for Africa’s sustained transformation in clear and unambiguous terms. Dubbed ‘vision 2063’, it should offer a reinterpretation of the continent’s trajectory and claim the 21st century as Africa’s!

What might draw Africa back from achieving its objectives?

In pursuing any bold transformation, there are a few risks that must be appreciated and tackled head on. Current challenges facing any developing countries are very different from past two decades. These include addressing borderless problems such as the impact of climate change, creating jobs while building an educated and innovative workforce, tackling the scourge of disease, famine and conflicts, as well as ensuring that Africa’s vast natural resource wealth benefits its people. Economic inequality, expanding opportunities for all, reducing illiteracy and creating the enabling conditions for the growth development and protection of nascent local industries are just a few examples of a myriad of tasks that will certainly continue to drag Africa down in the world scales.

Towards an African Renaissance.

One thing is sure; Africa must act very differently, if it is going to take advantage of the current momentum. African leaders need a paradigm shift in their thinking. This transformation has already begun and it shows itself in diverse ways. For example, the perceptible change in the orientation of current African leaders from a dependence on external aid and external actors to an Afro-centric and internal support system. Issa Diallo, one of my predecessors, in an interview he granted in 1993, questioned the rationale behind Africans expecting foreigners to build their countries for them[2]. An aid dependence mentality is slowly giving a space to a more assertive leadership.

Starting from the original OAU Charter, there already existed a myriad of resolutions, treaties, accords and inter-governmental agreements to sustain Africa’s ambitions. What is needed now is for African leaders to move their agenda forward. The advantages of regional integration were recognised by Africans through the Pan-African ideology long before others and even longer before the term ‘globalisation’ was coined. The OAU’s creation simply reflected this awareness. The benefits of regional cooperation - increased investment, sustainability, consolidation of economic and political reforms, increased global competitiveness, prevention of conflict- are accepted, but sometimes just that: accepted.

If Africa is going to own its narrative, it has to preserve its policy space and try out its own development approaches. Renaissance means ‘revival’ or ‘rebirth’ and in the context of its usage now, not only offers an opportunity to awaken the spirit of Africa in the 21st century, but also a rallying call to rid the continent of poverty, instability, corruption and neglect. This new mindset means the need to rethink the traditional models of growth and development. In conclusion, the spirit of African unity is alive. It still lives amongst Africans and this year’s celebrations are a unique opportunity to rethink, restrategise and replan. As Patrice Lumumba said so long ago, ‘The day will come when History will speak... Africa will write its own history… It will be a history of glory and dignity. Long live Africa!![3]

[1] ECA, AU. 2013. Celebrating success: Africa’s voice over 50 Years 1963-2013. Speech of Emperor Haile Selassie during the inauguration of the OAU in 1963
[2] Interview with Issa Diallo in ‘The Courier’ Jan 1992. http://collections.infocollections.org/ukedu/uk/d/Jec131e/1.1.html
[3] Patrice Lumumba, 1961. Letter from Thysville Prison to Mrs. Lumumba. http://www.marxists.org/subject/africa/lumumba/1961/xx/letter.htm

Based on my interventions during the 50th anniversary of the OAU/AU in Addis Ababa, 24-25th May 2013

Africa can invent: Leapfrogging in unsuspected areas

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

6 September 2013

One only needs to pick up a magazine or leading newspaper to read about innovations that are sweeping across Africa. From M-Pesa, a mobile money transfer service invented in Kenya that has revolutionized African banking practices, to South Africa hosting the Square Kilometer Array, the world’s largest and most powerful radio telescope ever constructed. This is quite different from common perception. Should Africa’s attainments come as a surprise? Not really! Leading science and innovation has run in African veins since ancient times. Its accomplishments however have seldom been attributed or publicized. They range from algebraic equations born some 35,000 years ago to the engineering genius of the pyramids; from the astronomical brilliance of the Dogon people, to architectural masterpieces of Timbuktu or Great Zimbabwe.

Advancing Africa’s Science, Technology and Innovation (STI) and its effective application to economic transformation is the new challenge. According to UNESCO’s Science report 2010, Research and Development (R&D) in Africa still attracts less public funding than military, heath or education sectors. A survey of 19 Africa countries by the AU-NEPAD in 2012 revealed that only Malawi, Uganda and South Africa had invested more than 1% of their GDP in R&D, while the rest spent between 0.2 and 0.5%. UNESCO’s science report 2010, estimates that only 0.3% of GDP is dedicated to R&D on average across the continent. This is 7 times less than the investment made in industrialized countries.

The continent has also only registered 0.6% of worldwide patent applications, compared to 51% in Asia. Africa recorded 0.4% of gross domestic R&D expenditure compared to 1.6% for Asia. Although innovation is pervasive, the value of innovations made, their quality, relevance and impact are overshadowed by limited investment in knowledge generation and commercialization.The situation is further compounded by the shortage of highly trained scientists and engineers. In 2007, one could count only 164 researchers per million Africans against a world average of 1,081. Despite lagging behind globally, there is an air of excitement brought about by the rapid adoption of new technologies and the explosion of frugal innovation hubs which are helping drive the continent’s transformational agenda.

African countries such as Kenya, Rwanda, Morocco, Nigeria or South Africa, have the ingredients to take-off the same way as technology leaders such as China, the Republic of Korea or Brazil did during previous technological revolutions. China’s rise for example, took place over a period of just three decades under reforms introduced by Deng Xiaoping lifting more than 400 million people out of poverty. Its most successful ingredient was the establishment of numerous Special Economic Zones (SEZ) and their industrial clusters. In just fifteen years of their formation, the clusters accounted for half of China’s high-tech gross industrial output and one third of its high-tech exports. Today China is the second largest economy in the world. If other nations made it, Africa should have the same ambition. The continent is already showcasing potential and favorable opportunities.

Why now?

In terms of economic growth, Africa is doing well. An increased prevalence of peace, improved governance and strong internal demand has revived investor confidence. Foreign Direct Investment (FDI) is growing faster than in any other regions in the world. Dividends are also to be reaped from the Euro zone crisis or Chinese increasing unit costs, for example, in export competitiveness and diversification to new markets like the BRICS. This coupled with the increase in revenues from commodity exports mean African governments have the opportunity to allocate more funds to STI and start stepping out of the low value trap. Some countries are already investing in innovative renewable and clean energy sectors; with the abundance of unexploited renewable energy, Africa has the potential to leap to a new clean techno-economic paradigm. Growing awareness of the impact of environmental degradation and climate change is giving rise to new R&D priorities like clean energy technologies or bio-agriculture. The European Commission's Institute for Energy suggests that 0.3 % of the sunlight that shines on the Sahara and Middle East deserts could supply all of Europe's energy needs.

Africa’s demographic trends, including rapid urbanization, offer opportunities if a proper demographic dividend is introduced in development strategies. Projections suggest that in less than three generations, 41% of the world’s youth will be African. By 2050, Africa’s youth will constitute over a quarter of the world’s labor force. A correlation can be drawn from Asian emerging markets, where 40% of its rapid economic growth between 1965 and 1990 was attributable to an increase in the working age population. Africa’s digitally savvy youth can be positioned to help push for industrialization. Projections indicate that by 2030, 50% of Africans will be living in cities. Larger groups of population living in close proximity allow for economies of scale and closer interaction of skilled and qualified people sharing their knowledge and innovations. Cities in Africa already generate approximately 55% of the continents total GDP. With more growth they could match developed countries where cities generate approximately 90% of their GDP. The opportunities for economic growth, poverty reduction, human development and innovation are profound.

Africa’s often criticized informal sector happens to also be one of the most inventive environments. It is a breeding ground for frugal innovation and resilient entrepreneurs who can literally make treasure out of trash, from tools to grass cutting machines to water pumps to anything one may need in that environment. Technologists of this informal economy represent a huge pool of indigenous talent that Africa must engage in its industrialization process. The informal sector constitutes a very important size in the economy. Traditionally, it was associated with increasing poverty and weak employment conditions. It includes now investment by entrepreneurs seeking to reduce costs related to wages, retirement pensions and other social benefits. Organising the informal sector and recognizing its role as a profitable activity will contribute further to harnessing Africa’s STI potential as well as formally recognizing and recording it.

The advent of the ICT democratization is offering Africa’s polity opportunities to leapfrog the industrialization stage and bridge technological divides. Africa is already bypassing traditional means with technologies such as wireless, satellite bandwidth and frugal mobile technologies that have relatively lower physical infrastructure requirements and investment costs. Ecobank has built a financial transactions platform now covering thirty five countries while Airtel is the worldwide number one in introducing common rates for voice and data use in 18 countries. The continent is well positioned to absorb, adapt and build on the vast quantities of scientific and technical knowledge already available worldwide to solve its local socio-economic challenges from agriculture to health and environment. Regional economic integration could create more. Without strong integration the narrow market size of most countries will act as a liability. Africa needs to embrace the concept of locomotives where key hubs act as pullers for the rest.

Africa’s STI hopes

Africa is the current second biggest mobile market in the world. Mobile penetration rose from 1% in 2000 to 54% in 2012, surpassing the number of mobile users in the US, India or Europe. Africa applied its own genius and adapted the use of mobile phones to new areas. Mobile and e- initiatives are revolutionizing a range of sectors. They help such as in healthcare agents target out-of-reach beneficiaries; farmers’ access to real time market information; virtual class rooms in education or monitoring elections. The development of apps tailored by Africans continues to flourish with innovations such as Mafuta-go, Afritab to the VMK elika smart phone driven by the desire to balance price and quality to match the limited purchasing power in the continent.

To boost innovation, entrepreneurship and R&D infrastructures, there are currently 90 specially supported projects called Hubs. It includes Innovation Hubs, Technology Labs, Science & Technology Parks, incubators and accelerator, in over 20 African countries. An additional incubator is mushrooming every fortnight. Examples include Liberia’s iLab, Nigeria’s Co-Creation Hub, concentrating on the use of social capital and technology and Senegal’s ICT incubators. Soon Africa will also be host to technology cities such as in Konzo, Kenya, now ably termed the Silicon Savannah. Major IT companies such as IBM, Samsung, Google, PwC, Nokia/Siemens, Huawei, amongst others have hosted labs or African Headquarters in Kenya.

South Africa’s Science and Technology Park is covering sectors that include IT, Biosciences, Green Technologies. Industrial mining is one of the many focus areas of the Botswana’s Innovation Hub. Another example is agricultural research and biosciences, the focus areas of the Biosciences Eastern and Central Africa-International Livestock Research Institute (BecA-ILRI) Hub. There is also investment in nanotechnology, pharmaceuticals and new materials.

The continent is also testing sophisticated technologies. Examples include, Joule, an electric car; the Ahrlac, the first defense orientated aircraft to be made and assembled in Africa; LifanX-60 a sports car designed for Africa being assembled in Ethiopia; as well as a growing aerospace industry in Morocco and Tunisia. Like Toyota in its foundation some of these ambitions are not being taken note of. But it is a beginning that can be essential for mastering the innovation curve.

Creating high-tech, scientific and innovative industries attract skilled human capital. There are indications that many of Africa's growing economies such as Nigeria, South Africa and Ghana, have significantly increased the retention of educated workers. The next step is to drive skilled Diasporas back. Similarities can be drawn with the creation of science parks in several countries in Asia, including India, which triggered the return of former migrant engineers and researchers trained abroad because of the story of market growth.

Why are African’s still having to go abroad for research and training when sophisticated innovations are emerging on the continent? A strong relationship exists between the strength of a country’s higher education system and its overall ability to innovate. Secondary education in Africa has expanded considerably in recent years, according to UNESCO’s Global Education Digest 2011, but is still behind all other regions in the world. A large gap remains in the quality of the education provided. Few African Universities offer advanced degrees and research programmes responsive to the knowledge needs of the economy not to mention that the overall cost of higher education is prohibitive.

What’s next?

First, measures such as improving human resource training to offer technical skills for example, as well as promoting linkages between businesses and educational institutes are valuable for inserting Africa into the higher end of global value chains. Lessons can be drawn from Brazil’s success over the last four decades. Approximately 80% of the top Brazilian universities have at least one incubator, and many are involved in the establishment of science & technology parks, creating closer linkages across the academic world with industry.

Second, Africa’s STI advances have to face a more regulated space than others had when they made their jump. Intellectual property rights have evolved so much that today they are anything but friendly to new entrants. Protecting indigenous knowledge systems, practices, innovations and technologies, is no longer enough. A much higher ambition is necessary to insert Africa in the global value chains and propel the continent to acquire new technologies.

Third, a number of conditions will determine whether Africa can lead a technological revolution. These include, adequate financing, strengthening linkages with research and academic institutions; access to qualified human resources; and access to reliable infrastructure such as communications, energy and transport. Without adequate infrastructure, further technological and scientific developments are simply not possible.

Fourth, Africa's problems are not unique. To compete, participate and be recognized in the global economy, STI in Africa must be made a prominent focus of national development plans across the continent and progress must be made to improve R&D investment, efficiency and policy coherence. Global financial institutions and bilateral development agencies must also devise more comprehensive strategies to integrate STI into their development efforts. The success of China can be attributed to the priority given by its national development strategy to policies aimed at enhancing long-term growth prospects, including policies on technology, human capital and institutional development.

Finally, to fully harness the opportunities before it and to build on its remarkable achievements so far, it is essential for Africa to go beyond the sum total of individual capacities. It must build on existing capacities, assets and the ability of its people and institutions, sure, but above all it will only make it if it integrates.

Can trade make a difference in Africa?

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

5 August 2013

It is unquestionable that Africa is on a major ascendance path, a trend shared by the rest of the rising ‘South’. Despite the global economic downturn of recent years, the continent has experienced unprecedented growth. While erratic at times, there has been progress in the reduction of poverty, and the improved quality of life has brought economic opportunities for many Africans.

Trade has significant potential to help achieve sustainable development and has increasingly played an important role in the strong economic performance of African economies during the past decade. Indeed, trade performance has shown great resilience even in the face of the ongoing economic crisis.Still, Africa needs to look at its continuous economic growth in light of the three pillars of sustainable development – economic, environmental and social – and assess whether its ‘development meets the needs of the present without compromising the ability of future generations to meet their own needs’, as set out by the Brundtland Commission in its report Our Common Future. Last year’s United Nations Conference on Sustainable Development, Rio+20, unleashed the momentum for the facilitation of a green economy in Africa, and it remains critical that the continent direct its transformational agenda onto a sustainable development path.

How to enhance Africa’s competitiveness?

Intra-regional formal trade in Africa has historically hovered around 10% to 12%, although this could be much higher. These figures do not take into account statistical deficiencies and informal trade. Still, trade within regional economic communities is growing faster than African exports to the rest of Africa, and to the rest of the world. The Common Market for Eastern and Southern Africa alone has increased its intra-African trade almost fivefold since it launched its free-trade agreement in 2000. Southern African Development Community trade grew more than threefold and East African Community trade grew more than twofold.

Regional value chains, if properly exploited, can help Africa gain the critical capacity needed to compete as the continent moves up the global value chain, promoting cross-border opportunities that allow countries to contribute with different inputs to the production of intermediate and finalized products. This could lead to a multitude of positive outcomes, such as employment creation, productivity gains, income generation and the creation of backward linkages into the economy that could lift millions of people out of poverty. Trade has yet to serve a transformational process for the benefit of human development in Africa as it has done in many other developing economies, and it is through positive linkage to development that trade can play a pivotal role.

Developing the capacity and improving the quality of its human resources is another way for Africa to enhance its competitiveness. According to the Africa Progress Panel led by Kofi Annan, the former Secretary-General of the United Nations, Africa is on the brink of a demographic dividend with the current median age on the continent at 18. Over the past 10 years the number of youths aged 15 to 24 in Africa has increased from 133 million to 172 million. By 2020, that figure is expected to rise to 246 million. This ‘youth bulge’, could significantly tilt the current social dynamics – either in a positive or in a negative direction – as shown in the recent North African uprisings. Investment in skills development, technical and vocational training, as well as in higher university education is necessary to transform this natural resource into a profit for the entire continent. Neither should we lose sight of the benefits of commodities-based industrialization, nor the benefits of improving the performance of the agricultural sector, which still employs a majority of Africans. Governments have to play a better role through proper regulation of production, and put in place the right mix of trade and industrial policies needed to support local manufacturing industries that provide employment and create jobs.

Social and environmental constraints

Moreover, African leaders must implement policies that ensure access to capital, technology and labour. Measures must be put in place that create equity in global trade negotiations, ensuring fair trade and import tariff regimes for the continent’s growing industries. Up to 90% of Africa’s total income from coffee, calculated as the average retail price of a pound of roasted and ground coffee, goes to consuming countries. This clearly underscores the benefit to be realized and enjoyed by African countries if they were to increase value-addition processes.The provision of regular, affordable and reliable energy to industries must also be assured. And there must be adherence to minimum standards of sustainability in the exploration of mineral and natural resources.

What sustainable options are available?

Africa’s minerals sector has experienced the commodities boom of recent years but, sadly, this has not translated into greater returns on investment for African countries. A clear vision on the inclusive use and management of resources for Africa’s development and transformation is needed. As part of the Institutional Sustainable Development Framework set out in Rio, Africa must make better use of its natural resources and at the same time ensure that the benefits are passed on to future generations. The Africa Mining Vision endorsed by African Heads of State in 2009 seeks to do exactly this through a framework that integrates the triple goals of economic, social and environmental sustainability.

The possibility of simultaneous infrastructure and mining investments, for example by establishing natural resource-driven development corridors, offers a pragmatic approach to unlocking not only mining and infrastructure projects, but also other collateral economic and social opportunities – beyond national borders. This concept has worked well in Botswana, which has developed a policy of beneficiation, and South Africa, which has developed mining policies to establish backward linkages into its economy with a sustainable and equitable development dimension. Many opportunities also exist for the growth of the green economy through several ongoing initiatives at regional and national levels focused on mitigating the adverse impacts of climate change. In addition, efforts are on the way to develop sub-regional strategies for low-carbon economic growth. These efforts, when finalized, could help the continent make giant leaps towards sustainable energy solutions.

Better trade

For many years, Africa, has been a mere pricetaker in global trade relations, having little to no influence on markets. It now has an opportunity to transform itself into a price-maker. The expanded avenues for South-South cooperation, notably intra-African trade through the proposed continental free-trade area, break the monopoly held by developed countries by providing a better environment for African policymaking and choice in terms of trade partnerships. The fundamentals of policymaking, infrastructure, capital financing and ensuring linkages between trade and other parts of the economy must be worked upon to make this a sustainable reality.

Previously published in International Trade Forum Magazine http://www.tradeforum.org/article/can-trade-make-a-difference-in-Africa/

Cape Verde development trajectory; a lesson for Africa

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

17 July 2013

Cape Verde is a real African success story. In the space of 30 years, from 1982 to 2012, per capita income in Cape Verde has increased by a factor of 3.5 in real terms. This gives an idea of the formidable achievements of this small nation, which have been eloquently mentioned by other authors. Instead of reiterating these considerations, allow me to broaden a bit the debate and draw from the Cape Verde experience some elements of reflection for other African countries.

There are, in my view, a number of important lessons that support the Cape Verdean development trajectory. Firstly, the importance of development enablers. A key element of Cape Verde success has been the ability to maintain fundamental pre-conditions for economic development, namely securing peace and stability, building sound institutions (and striving to continuously improve them), realizing good governance and maintaining macroeconomic stability. Economic literature has taught us that growth accelerations are a relatively frequent phenomenon, including in Africa; but the key difference between a boom-and-bust cycle and a sustainable development trajectory is preventing a subsequent growth collapse from offsetting the growth acceleration, and ensuring that the latter is long-lived. Now, developing countries – especially African ones – should keep in mind that paying attention to development enablers is precisely a way to avoid fatal mistakes, and make continuous efforts to realize the pre-conditions for growth to be sustainable.

A second lesson in my view is the fundamental importance of forging a clear and consistent development strategy, which is shared amongst the various stakeholders and coherently spelt out in the various policy documents (Poverty Reduction Strategy Papers, Diagnostic Trade Integrated Study, Vision 2030, and the like). As ECA has argued in the past, forging a similar vision and building consensus around it is one of the primary roles of a developmental state.

Also, one can underscore insightful elements of Cape Verde’s developmental vision:

- The attention to all the three dimension of sustainability, namely the economic one – as emphasized by the effort to maintain macroeconomic stability and spur new engines of growth – the social one (as evident by the emphasis on the inclusiveness of growth), and the environmental one, epitomized by the commendable objective of achieving a 100% renewable energy use.

-The fact that it pursues economic integration not as an end in itself, but as a deliberate strategy to harness its geographical advantage of potentially becoming a hub located within easy reach of some of the world biggest markets such as the EU, USA and South America as well as an expanding market in Africa in order to mitigate the risks stemming from its heightened vulnerability.

-The fact of taking into account a sound and forward-looking assessment of the country’s advantages and disadvantages, which permits it to anticipate risk factors such as the challenges arising from Least Developed Countries (LDCs) graduation, and take appropriate mitigating measures to ensure a “smooth transition” while innovating. A good example is the role given to the creative economy.

-Sizeable long-term investments in economic infrastructures and continuous efforts to improve the business environment, as key measures through which economic integration can become operational and bring economic gains.

In this context, the Enhanced Integrated Framework (EIF) has been instrumental in providing a platform for development partners, recipient countries, and agencies to work together towards a more cohesive in-country trade integration strategy. Much like the ECA, the EIF has supported the mainstreaming of trade and regional integration strategies, in the conviction that Cape Verdean ownership of trade policy had to be a key principle.

A third important element of reflection I gather from Cape Verde’s development trajectory is the importance of engaging strategically a broad array of development partners and catalyzing their support. Over time Cape Verde has established close partnerships not only with traditional donors, but also with emerging actors including notably Brazil (whose development cooperation is particularly active in Lusophone countries). With respect to traditional donors, being in the context of the 4^th Global review of Aid for Trade we cannot fail to mention the fact that Cape Verde is one of the world largest recipient of Aid for Trade, having received between 2009 and 2011 an average yearly disbursement of over USD 222 per capita. To have an idea of the massive investment in Cape Verde’s infrastructures suffices to mention that the sector has received as much as 83% of these funds; that is over USD 184 per capita, per year.

Moreover, the country has retained close ties with its Diaspora community, which continues playing a significant role for the country’s development through remittances, investment and knowledge networks.

It would also be important to mention some of the challenges the lie ahead for Cape Verde, and try once again to link the lessons to the broader African experience.

A first challenge consists in redressing some of the imbalances emerging in Cape Verde’s structure of production and in the composition of exports. If the boom of tourism and transport services are but a confirmation of the potential role high-value-added services can play as engines of growth, it is hard to imagine poverty eradication being achieved in a country of half a million inhabitants without boosting the productivity of the primary sector, notably agriculture and fisheries. Even in the context of a fairly small island economy, this issue echoes the challenges confronting a number of bigger African economies, where the agricultural sector still employs the majority of the labor force, and hence plays a fundamental role for poverty reduction and food security purposes.

A related point, which is to some extent addressed in Cape Verde’s Agenda for Transformation, attains to the need of fostering the emergence of industrial clusters. Given the small size of the domestic market, Cape Verde in this respect has no other alternative than to look at the world market. Therefore, spurring the emergence of firms capable of connecting to global value chains is all the more important to diversify the economy and generate more jobs. Similarly, it is important to promote stronger linkages between tourism and other activities, transforming the former into a more transversal industry. Once again, despite different context-specific conditions, the challenge of promoting industrialization and connecting domestic firms to regional and global supply chains is common to all African countries, not just to Cape Verde.

A third challenge for Cape Verde’s economy is the structural deficit of the current account, which on average exceeded 12 % of GDP in the 2002-2011 period. Far from being a problem of Cape Verde alone, this development challenge is fairly common across resource-poor African states, and even more so across Small Island Developing States (SIDS). Indeed one may argue that it represents one dimension of SIDS structural vulnerability. In so far as economic diversification is accompanied by the expansion of export revenues (or the relative decline in imports), it can contribute to mitigating external imbalances. Yet it seems unlikely that the structural external deficit will reverse completely, regardless of any smooth transition from the LDC status.

Cape Verde’s heightened vulnerability is also reminiscent of the so-called “island paradox”, meaning the structural feature of SIDS which make them extremely vulnerable to a wide range of economic shocks such as instability of production, terms of trade fluctuations, adverse weather events despite their relatively high income per capita. In this respect, Cape Verde confirms SIDS’ specific needs for special support measures aiming at mitigating economic vulnerability.

Against all odds, Cape Verde has made it possible to confirm that hard work does pay off.

I share wth you a beautiful video on Cape Verde
http://www.youtube.com/watch?v=35ziUDsMrWc&feature=c4-overview&list=UUt9ODDKWOuM8qn6Sq3xIc0g

Global Value Chains: Africa, the factory floor of the world?

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

28 June 2013

In order to significantly transform the economies of Africa from the current low-income level to middle-income status, value must be added to Africa's large reservoir of natural and agricultural resources through processing and manufacturing activities - implicit in the transition process from predominantly agrarian to industrial economies. It is a fact that Africa’s recent relatively good growth performance has not been inclusive regarding its impact on poverty, due largely to the lack of diversification of its growth sources and an over-reliance on primary commodity exports. Also, growth has not necessarily led to job creation, and in some countries, has rather resulted in a rise in inequality!

The absence of significant industrialization in much of Africa is a missed opportunity for more robust, diversified and sustainable economic development. The Asian industrialization experiences are the most successful among the developing countries, and there is therefore good reason for Africa to look at this model as a basis for its own industrial development. Specific industrial policies and programmes worked in Asia and can be replicated in Africa. Among these are a sophisticated use of Global Value Chains (GVC) and the Special Economic Zones (SEZ).

Global Value Chain operations concern the global division of labour in production processes and its concurrent effect on the distribution of income and profits between participating countries. Involvement in GVCs presents an opportunity for African economies to move beyond producing raw materials and build dynamic and competitive manufacturing sectors capable of processing the continent's abundant minerals and agricultural products. It also provides an opportunity to create sustainable jobs and stimulate inclusive growth, as new markets for value-added products evolve both in the continent and in the industrialized and emerging economies.

Special Economic Zones are designated areas possessing special regulations and economic incentives for organising production around processing and manufacturing activities. China's SEZs were key features of its early reforms, transforming coastal towns like Shenzhen or Zuhai into industrial centres within a generation. In the context of its development cooperation with Africa, China has initiated and supported the operation of SEZs in Algeria, Botswana, Egypt, Ethiopia, Nigeria, Mauritius, Tanzania, and Zambia.

African governments have been granting favourable conditions to foreign investors in the SEZs, which they believe will create jobs and boost export earnings. With China graduating to higher-value industrial production, Africa stands to benefit from the outsourcing of lighter manufacturing businesses from China to African SEZs. It is estimated that China has 85 million light manufacturing jobs to export, and GVCs and SEZs could improve Africa's chances to win a fair share of this number and reverse its declining share on manufacturing.

Long-term strategy for industrialization

The success of Global Value Chains, SEZs and other industrialization initiatives requires the creation of an enabling environment that enhances requisite domestic capacity and capability, particularly in respect of physical and social infrastructure, human capital, technological innovation, financial systems, and governance.

In addition, governments need to put regulatory frameworks in place for tackling market failures as part of a wider and all inclusive industrial policy. The creation of such an enabling environment will help realize the full potential of the African private sector.

Africa's vast unexploited resources and abundance of labour provide opportunities for development of the private sector and attracting private investments for economic diversification and value-addition. The phosphate industry in Morocco has positioned itself in all parts of the value chain from the production of fertilizer to that of phosphoric acid as well as derivative products. Its industrial strategy has led to continued growth and leadership, as it has been punctuated by the steady strengthening of the production tools and a policy of ambitious sustainable partnerships, supported by a prudent financial policy. The Office Chérifien des Phosphates has grown from several hundred people at its creation and revenues of three million USD to revenues of 43.5 billion MAD (2010), and nearly 20,000 employees.

It should also be recognized that entrepreneurs in Africa continue to face greater regulatory and administrative obstacles and high transaction costs, which make doing business harder; these obstacles and constraints must be addressed in any industrial policy. Last but not least, deepening regional integration also offers the potential for Africa to tackle some of the challenges it faces in pursuing meaningful and beneficial industrial development.

The strategic importance of manufacturing (including agro-processing) in industrial policy

The creation of food-processing agro-industries can contribute to lifting a significant number of African rural dwellers out of poverty through the additional wage earning employment opportunities created. In terms of an appropriate industrial policy, the high forward and backward linkages that can evolve from manufacturing and agro processing will contribute to boosting domestic investment, employment and output in the transformation process.

For instance, policies pushing local production processes in Egypt's textile industry have led to increases in value-addition, contributing, in 2011, 5.6% of the Egyptian GDP, 27% of industrial production, and 18% of total commodity non-oil GD. Also, Ethiopia’s coffee industry supports 15 million people and contributes about 10% to its GPD with only washing, sorting and grading activities mostly taking place in-country. Imagine the returns should more value addition activities be undertaken in-country?

It is important to add that this strategic role of manufacturing in industrial policy in Africa should be supported by technology and innovation, which are crucial for economic transformation and development. Manufacturing, on the back of the prevailing Information and Communication Technology (ICT) revolution in the region, can be an important source of technological innovation in African economies as well as a conduit for the diffusion of new technologies to other sectors. Examples from Kenya, Tunisia, Rwanda and others show that investment in ICT and its enablers help create synergy and share information faster and more consistently. Tunisia’s Elghazala Technopark, Kenya’s iHub are home to more than 200 companies including subsidiaries of international ICT companies such as Microsoft and Google.

Despite the critical role of manufacturing per se in the transformation and development processes of African economies, it is important that African policy-makers do not seek to achieve industrialization at the expense of the agricultural sector.

Industrial policy has to address the integration of the rural sectors with the rest of the economy as well as the contribution that these could make to industrial development. This can be done by advancing agro-industry value-addition and the supply of wage goods that enhances the competitiveness of domestic enterprises in global value chains and export markets.

The olive oil sector in North Africa is a good example for opportunities to integrate the rural world with the rest of the economy through GVCs. Development of new competencies in the last steps of the supply chain will allow the sub-region to create sustainable competitive advantages. Ongoing efforts on brand management, development of new products in the medical and cosmetic sectors as well as control of the supply chain are being explored by North African countries. It is hoped that the implementation of these strategies will deepen sub regional integration efforts and build coherent national strategies.

The promotion of GVCs should be based on the complementarities between agriculture and industry, taking into account the potential of agricultural development to contribute to the creation of competitive advantage industry. In many African countries, given the dominance of agriculture in their economic structure, the sector will continue to be an important source of foreign exchange needed to import intermediate inputs for domestic industries. A major challenge in industrial policy, including its implementation through the establishment SEZs, is how to create mutually supportive linkages between the industrial and non-industrial sectors of the economy.

Economic diversification and industrialization

Africa's significant agricultural and natural resources are being exploited and exported mostly in their raw form, with little or no value added to commodity exports. Some of these natural resources represent irreplaceable, non-renewable asset, and their exploitation generally has weak economic linkages to the rest of the economy.

The upsurge in GVCs as a vehicle for economic diversification and the basis for resource-based industrial development is timely, given the increased demand for Africa's natural resources, together with increased urbanization and consumer demand for processed goods within the continent. The domestic and sub regional markets should be a prime target. However, accelerating industrialization through diversification of exports can also potentially contribute to the expansion of trade within Africa and between Africa and the rest of the world.

Job creation

Much has been said about the fact that six of the world's ten fastest-growing economies (DRC, Ethiopia, Ghana, Mozambique, Tanzania and Zambia) are in Africa, recording at least a seven percent growth rate. But the evidence so far suggests that growth in the region has generally not led to massive job creation. As part of the process of structural transformation, African countries should take targeted actions at national and regional levels to establish production and trade links and synergies between different actors along the entire agri-business value chain, through the provision of incentives for bolstering private sector investments and competitiveness. Together with SEZs, which have sprung up all over Africa recently, the shift from primary production towards modern integrated agri-business will undoubtedly be crucial for job creation and poverty reduction.

Preliminary evidence from some SEZs in Africa indicate that they are indeed creating new jobs and that workers in these zones are on average paid more than workers outside of the zones. The macro-impact on jobs is still, nevertheless, limited to only a few countries. Ethiopia may be a good case for what needs to happen. The country is prioritizing light manufacturing growth, particularly the leather industry, as part of its economic transformation programme, and recently landed a large investment by a Chinese firm producing designer shoes for the US and EU markets. Production is based at an industrial SEZ just outside Addis Ababa. It is estimated that over 25,000 jobs have been created through GVC and SEZ- FDI enterprises in the country.

Ghana’s free zone area is another example. It houses companies such as Nestle and L’Oreal and had generated about 30,000 jobs by 2012 of which only 1,000 are held by expatriates. The Tangier Free Zone in Morocco, established a decade ago, had also by the end of 2010, attracted nearly 522 companies, USD 830 million investments, and created more than 50,000 direct jobs.

Conclusion

Major challenges regarding global value chains realizing their potential as a valuable tool of industrial development and economic transformation in Africa relate to overcoming constraints of poor governance linked to weak institutions, lack of infrastructure, and shortage of skilled and disciplined labour. While GVC and SEZ-fuelled industrialization has contributed to export and employment growth in countries such as Malaysia, Thailand, Indonesia and Vietnam, and turned China and South Korea into industrial giants, Africa's experience with industrial policy and its outcomes since independence has been largely disappointing.

Most of Africa's economies are still driven by commodity production and export of agricultural and mining products, and the continent remains the least industrialized region of the world. If GVCs and SEZs in Africa are to be sustainable and successful as showcases of industrial progress and structural transformation - as they have been in Asia, there is a need for forceful policies. Specifically, industrial strategies have to be introduced as a matter of urgency to remove existing constraints on value-addition and economic transformation - weak infrastructure, unreliable energy supply, underdeveloped and inefficient private sector, and shortage of skilled labour.

Africa needs structural transformation not structural adjustment

unecasetup — Thu, 15 Jan 2015 13:30:54 +0000

30 April 2013

The rationale for much of the current discourse of the “African Moment” and “Africa Rising” is clear. Some of the fastest growing economies in the world are African. Africa has shown relative buoyancy in an era of economic crisis. While global growth declined by 2.7% last year, Africa bucked the trend and grew at 5%. Notably, all our sub-regions grew faster than the global average, with the highest rate being 6.3% and lowest one 3.5%. This performance was due to several factors including improved macroeconomic management, increased exports of natural resources and a rising middle class. Lagos now has a larger consumer market than Mumbai and spending in continental households exceeding those of India and Russia.

This growth experience is however not sufficient. It falls short of 7% which is the minimum required to double average incomes in a decade. This is partly due to the fact that far too many of our economies are dependent on the production and export of primary commodities. Far too many are highly unequal. As we celebrate the fact that seven of our countries are in the top ten of global growth we must also bear in mind that a similar number are in the top ten of global inequality. Indeed, far too many of our people remain in the grip of unrelenting hunger and poverty.

Let me take an unconventional excursion through Asia before coming back to the issues before us today. Although we are aware of individual conflicts in Asia we tend to look at them in isolation. Thus in the Philippines we know of the conflicts in Mindanao, in Malaysia there is the Sabah insurgency, there are the border clashes between Thailand and Cambodia, and many others. Even rising India has the Naxalite insurgency and issues of Kashmir to attend to while South Korea sits on the border of a belligerent sister state.

Despite the widespread nature of these conflicts in Asia the region is not branded as unstable but rather seen as a dynamic contributor to global growth. It is true that in Africa we have conflicts such as exist in Mali, the Great Lakes Region, Sudan and Somalia but these are the remnants in a declining trend of conflict in Africa. In other words, though the trend of conflict in Africa is downward and the numbers are smaller than Asia, the global perception of Africa continues in many to be one of a continent beset by crisis and a risky place for making investments.

Let me give just two examples. There were about 29 piracy attacks in 2009 off the coast of Somalia as compared to 150 attacks in the Strait of Malacca in 2005. Yet this did not lead to generalized negative perceptions about Asia’s economic prospects. It should be noted in a similar context that despite its unstable business environment, Pakistan is the second largest textile exporter in the world.

There are many ways in which structural transformation can be defined but the sense in which I am using it here is the ‘large scale transfer of resources from one sector to another due to changes in economic fundamentals and policies’. In an empirical sense, it means a significant change in the sectoral composition of Gross Domestic Product with the share of the primary sector in employment and output shifting to industry and modern services. It also implies a greater use of technology and increased productivity across sectors.

Africa desires structural transformation and not structural adjustment and industrialization is indispensible to this objective. Industrialization will help to generate employment, increase incomes and enable diversification, including their exports. This is evident from the experience of other regions.

Africa has attempted industrialization before. In the 1960s and 1970s, newly independent Africa emulated other regions of the world in undertaking import-substituting industrialization. It did lead to some remarkable progress but ultimately stymied by the limits of the model and global political economy. This is why Africa must today also be mindful of the current global context.

In this regard, one approach with prospects for success is commodity based industrialization. Thus, rather than exerting our energies on trying to diversify away from commodities, we should focus more on using them as effective drivers of industrialization. In addition to the broader benefits of industrialization, a commodity based approach offers immediate scope for value addition and plenty of opportunity for exploiting forward and backward linkages. Given the dominance of global value chains and intense cost competition in the trade in manufactures, Africa can gain entry into the industrial sector using its huge commodity and natural resources base. The fact that agro-processing is already one of the most developed manufacturing sectors in the continent is proof that this approach can work.

However, achieving success in this regard will not be easy. It will require innovation and the determination to overcome infrastructural deficiencies. It will require robust knowledge base of industry structure and global value chains. Indeed, our economies must continuously invest in knowledge, skills, technology and innovation. The trading landscape including barriers and preferences must be well understood. Above all, boosting intra-Africa trade remains imperative for creating the markets needed for successful industrialization.

As we celebrate the 50th anniversary of the establishment of the OAU, we must begin to ponder on the kind of society that we wish to bequeath to our children and grandchildren. Such clarity of vision must also be accompanied by a clear understanding of our historical experience, current context and policies required to attain our objectives in a rapidly changing global environment. It is in this regard that ECA is pleased to be working with the AU Commission and African Development Bank on an “Africa 2063” vision. It is our hope that this process will benefit from the insights of several vital constituencies including our leaders.

What then needs to be done to bring about structural transformation in Africa?

The starting point in my view is for a leadership that provides a clear vision and that mobilizes all sectors of society behind the development imperative. We have to change our approaches, attitudes, and priorities. We have to nurture a highly educated, healthy and skilled population that can imbibe the technology and build the infrastructure which is indispensable for progress. Our states must similarly strengthen bureaucratic capacity to undertake dynamic long-term planning and the coordination of economic activity.

For finance, we must begin to pay more attention to domestic resource mobilization while we accelerate the pace of regional integration to reap greater economies of scale. We will increasingly require more robust data and better statistical systems in order to better measure and monitor progress.

Indeed, the push for structural transformation will require that we make better use of Africa’s economic strengths and enable all sectors of society, particularly women and youth to fulfill their role.

ECA’s objective going forward would be to work closely with member States to achieve Africa’s transformation agenda. ECA will undertake rigorous analytical thinking in areas of research where its research can make a difference. We will support member States in their efforts to implement growth oriented macroeconomic policies, and to restore development planning. This will be underpinned by the generation of high-quality data using latest technologies, including mobile and GIS.

ECA’s mantra going forward will be ‘Africa First’. By this we mean that we will put the interests of this continent first in all that we do. It also means that we will address emerging and other issues from the lens of their impact on Africa. We must drive the process of structural transformation on the basis of our own vision and priorities. We must tell our own story and for this we must generate our own data and statistics. This approach will define our partnerships across board as we seek to promote coherence and deepen the impact of our work. The time for action is now and if we do not take immediate steps, this window of opportunity may be lost for another generation.