Minilik.Demissie's blog

Book Review of: “Innovation Africa: Emerging Hubs of Excellence”

Minilik.Demissie — Thu, 11 Aug 2016 07:51:42 +0000

12 August 2016

At a time when Africa has bold aspirations, through Agenda 2063, to confront large scale challenges like the ascendant demographic curve, green industrialization and domestic resource mobilization, it is imperative that innovation be inclusive in order to facilitate the creation of decent jobs, generate investments, and contribute to the continent’s structural transformation. As a late comer, Africa has the advantage to leapfrog technologies, learn from others mistakes and reinvent things differently in a way that promotes sustainability as well as inclusiveness. But to succeed, deliberate policies are badly needed.

With this backdrop, the book “Innovation Africa: Emerging Hubs of Excellence” is a must read. Authors, Olugbenga Adesida, Geci Karuri-Sebina and João Resende-Santos not only illustrate Africa’s experience with innovation to date but also point to its power for transformation. From the very onset, one is reminded that “Africa is no longer the place it was in the past … the technological innovations taking place on the continent today offer the promise of transforming African countries from trading mainly in materials and commodities to trading in knowledge-intensive products.”

The book posits that the popular “Africa rising” narrative originates from external (non-African) perspectives vis a vis what economic development and innovation systems means for the continent. By default, this perspective ignores many of the realities and opportunities that actually exist on the continent. The book however offers a refreshing alternative; a Pan-African narrative and prospective framework to address the challenges of development as well as underdevelopment to match the African context. For instance, the authors advocate for the development of inclusive innovation systems; the practice of self-reliance as opposed to dependency; and the importance for strengthened human and institutional capacity which includes the richness of the African culture and its endogenous potential.

Through a medley of nine case studies, from Nollywood’s rise to Algeria’s steel industry, sizeable innovations from hubs across different regions of the continent, are showcased. The success factors as well as lessons learned are analysed and concrete policy recommendations offered on what must be done differently going forward. It becomes clear to the reader that Africa has the ability as well as potential to innovate and that there are a multiplicity of the players driving innovation. For example, the study of Cape Verde’s successful electronic government led by public sector, illustrates how policy driven innovation has reduced the costs and time of doing business and worked-well in the context of a small island developing country. An analysis of the mobile technology innovation ecosystem in Kenya demonstrates how a combination of deliberate policies, infrastructure development as well as having the government in the lead, have been instrumental in providing the enabling institutional and macroeconomic environment needed for the innovation to thrive. The story of Ghana’s Suame Magazine illustrates how the informal sector and its artisans have been key in the emergence of one of the country’s most important industrial zones specialising in engineering and manufacturing. While a study on the Palm Residue Industry in Egypt showcases how innovation has transformed agricultural by-products into a local treasure with social and economic benefits spearheaded by the academic sector in cooperation with the private sector and local community.

A clear take away is that for innovation to mature, thrive and be valued, it must be supported by a conducive ecosystem. More must be done if Africa is to fully harness innovation systems and compete in the new world economy. In turn the book offers a menu of the deliberate policies needed in order to step up the pace of innovation in Africa, making it a treasure trove for policy makers, academics, business leaders and the public at large.

There is an exciting opportunity just around the corner to make Africa the continent of the future if we just pay attention to the messages of this book.

Migration debates are becoming illogical*

Minilik.Demissie — Fri, 15 Jul 2016 06:04:48 +0000

15 July 2016

So far this year, the Italian coast guard has rescued more than 30,000 people from the Mediterranean Sea, acting with courage, compassion and efficiency. They deserve recognition from Africa because many of those souls are from the continent. Last year, more than 1 million people crossed the Mediterranean to reach Europe, many through Italy. This is a much larger number than in previous years. Of that number, about 68 per cent were from Syria, Afghanistan, Iraq and Pakistan. Of the top ten nationalities represented, only one in ten was African. The European agency dealing with the issue, Frontex, acknowledges that the number of irregular migrants from Africa pales in comparison with regular arrivals.

The humanitarian dimension associated with these latest developments has unfortunate similarities with boat people phenomena in the direction of South America, Australia, South China, Adaman, Aegean or Red Sea. Throughout history, ships were not only used for exploring new territories or to trade. Migration is a very old user of ships.

Stocks of migrants are normally accounted for in terms of nationalities and ID papers. But the phenomena precedes the modern territorial boundaries; indeed, many migration movements helped shaped them. A sense of history is therefore essential to understand the complexity of people’s mobility.

According to official statistics 250 million people currently live outside their countries of origin. However, between 1846 and 1940 alone, about 50 million Europeans moved to the Americas. More Europeans have moved to other parts of the world since. It is therefore interesting to place in perspective just how many Africans are associated with the current perception of a tidal wave. According to data from the United Nations, the stock of Africans in those 250 million is 8.5 per cent. In Europe, that stock is slightly above 9 million people. For a population of around 1 billion that means the equivalent of 0.9 per cent of the continent’s population.

In fact, most Africans who migrate do so to other African countries. The continent has the highest intra-continent migration levels in the entire world. Human mobility, despite the many limitations that impede regional integration, is progressing well in Africa. In the light of new demographic shifts, young Africans communicate, have better access to transport and feel less of a sense of territorial rigidity then their parents. This is a universal trend. In the United Kingdom’s recent “Brexit” vote, like in many other industrialized countries where populists push for anti-migrant positions, young people voted massively for diversity and integration. Unfortunately in those countries older people have been convinced that their lifestyles are under threat by migrants. Any specialist or well-informed citizen knows the opposite is true.

Let me focus first on why people leave Africa, before turning to an assessment of the benefits of migration.

Every successful experience of industrialization has provoked movements of population. Mostly in the direction of the new production centres, but not always. Many factors influence human behaviour and a sociological context can determine parts of the population looking for exchange and interaction beyond their borders.

China has produced close to 10 million migrants in the recent economic boom period. According to the 9^th July edition of The Economist, “the extraordinary outflow of people from China is one of the most striking trends of recent decades”. They have left for a variety of reasons, like others did before them. Like Africans will certainly continue to do, despite high growth. Indians moving to the United Arab Emirates are no different. Mexicans go the United States of America, Indonesians to Australia, also despite high growth. Why would Africa be any different?

Not all seek migration due to ambition alone. Many are compelled to leave because they are in a situation of desperation. Conflicts provoking heavy casualties have risen significantly in the last six years on the continent. They are mostly associated with terrorism. Attacks by radical religious movements have increased 300 per cent since 2009. Exclusion of social groups has become the most pervasive governance problem Africa has to confront. Pastoralist societies are particularly hard hit as they struggle to adapt to fast urbanization and growth of services in the economy. UNHCR has around 14 million Africans listed as “people of concern”, the highest number since statistics started being kept.

Opportunities in Africa itself have also proven elusive for some, as they got expelled by other fellow Africans. Since independence African countries have expelled other Africans 35 times. This lack of acceptance makes the journey elsewhere, across the waters, hazardous but potentially more attractive.

There are also educated Africans, who take planes, rather than pick-ups in the desert or small rafts in the sea. One in every six university graduates finds a way out of their country of origin, making Africa’s migrants surprisingly educated. The highly skilled account for only 3 per cent of Africa’s labour force but 35 per cent of the new migrants leaving the continent. That partly explains why remittances continue to rise, last year attaining US$ 71 billion, or over 4 per cent of the continent’s combined GDP.

In general Africans do not look at migration negatively. In the collective psyche the 12 million slaves forcibly moved to the Americas, as well as the less known but also significant movements of slaves to Arabia and India, have not been forgotten. In comparison they expect current flows to be handled with the solidarity promised in the human rights proclamations. Given that the current number of African migrants is relatively small, how to explain the growing concern, almost hysteria, around it?

World demographics are changing so fast that it is not possible to maintain the wealth distribution patterns we have become familiar with. It is difficult to demonstrate to the polity that austerity is not going to solve the twin problems of large debts and population ageing. The majority of countries with high debt have also a structural challenge of population ageing.

In about two months, on 21 September, Japan will hold its “Respect for the Aged Day”, when over 30,000 citizens will be applauded for their 100^th birthday. They will join a further 31,000 centenarians fêted before them. The acceleration of the age curve is so dramatic in Japan that by 2025 health-care spending will rise 70 per cent, home nursing by 160 per cent, pensions by 40 per cent. Currently one in every four Japanese is over 65. The labour force – despite the increase in the age of retirement – will diminish in the next 40 years to the levels of 1950. However, a bigger challenge looms on the horizon: the national debt is already 240 per cent of GDP.

Country after country in Europe is confronted with a similar deficit of labour, and therefore of potential contributors to social security and consumption. In Europe the average debt to GDP ratio is way above 100 per cent. This amount of debt confronts a population that will have an excess of deaths in relation to births of 63 million between now and 2050. Even if the net projection of migrants going to Europe is maintained at 31 million during the said period, the population will still shrink by 32 million. As in Japan, a quarter of the population is already over 65. In 2050, if trends are maintained, the number of people over 65 years will be precisely 65 per cent. Who believes austerity on its own will diminish with current crisis?

In the Republic of Korea, the most robotized society in the world, the demonstration that robots will not resolve ageing has sunk in. The mentality of “one blood” is giving way to the embrace of migration. After all, robots do not contribute to social security. Jasmine Lee, born in the Philippines, is the first non-ethnic Korean member of parliament elected to the Korean National Assembly, breaking barriers that lasted for a very long time. China will also have to deal with the challenge of an ageing population. China’s wealth per capita is equivalent of that of Japan in the early 1970s, yet its labour force is already declining.

In contrast to many of their partners, Africa and India will be the repository of youth. The Malthusian pessimists have to look into the future with the characteristics it is likely to have, not the ones they are familiar with today. The demographic boom in Africa should be seen as part of its potential. African leaders should, nevertheless, be warned that the faith of Africans will depend on investments on human capital. There is no promised land anywhere without work and strategy.

To say international migration is to say cross-border connections: the ties linking sending and receiving countries are a significant aspect of the migration experience, appearing during present as well as past eras of migration. Once called “the uprooted”, migrants are now often called “transnationals”. This sensitivity is a result of studies underscoring the ways in which international migration cuts across national borders to produce a range of dynamic cross-border connections. No walls being erected in many parts of the world will deter such a trend.

Improvements in literacy rates, transport, ICT and public infrastructure in the last century have significantly influenced migration and transnational social connectivity and vice-versa.

Remittances sent by migrants to developing countries are large (second largest source of development finance after foreign direct investment); rising (increase of almost 100 per cent between 1999 and 2004), stable (with less volatility than capital market flows or development assistance), and do not require interest or capital payments. However, remittances alone cannot remove the structural constraints to economic growth.

A more hopeful view sees migrants serving as bridges or connectors, providing access to markets, sources of investment and expertise, while also helping to shape public debate, articulate reform plans and help implement reforms and new projects. The model of the migrants that would lose the links with their original identity is being replaced by the new reality of individuals aggregating new identities to their original ones. Migrants are acquiring cosmopolitan competences. They live in the era of Skype, Viber and WhatsApp.

The overwhelming majority of the global population get their citizenship by virtue of having been born in one particular place. There is no doubt that, in today’s unequal world, having one particular citizenship offers privileges and opportunities for some that are denied to others. Gaining privilege with such a strange arbitrary criteria runs against the practice in almost any other form of organized social life. There are many examples of legislation being implemented across the world to ensure equal opportunity. Are birthrights a sort of entitlement like inheritance, or rather a lottery?

From the arguments above, one can see that migration seems to be boxed in a category that does not respond to logic, rights, or even decency. There is a need to get out of this conundrum.

Should African institutions lead the way? Can Africa lead the way?

*Based on my speech at the 27^th session of the Executive Council of the African Union held in Kigali on 13 July 2016

Africa’s Blue Economy: An opportunity not to be missed*

Minilik.Demissie — Mon, 20 Jun 2016 06:24:05 +0000

20 June 2016

Africa's "Blue world" is made of vast lakes and rivers and an extensive ocean resource base. Thirty-eight of the fifty-four African States are coastal States. More than 90 percent of Africa’s imports and exports are conducted by sea and some of the most strategic gateways for international trade are in Africa, underscoring the geopolitical importance of the region. Maritime zones under Africa’s jurisdiction total about 13 million square kilometres including territorial seas and approximately 6.5 million square kilometres of the continental shelf. Mauritius with its 1850 square kilometres is one of the smallest countries in Africa and in the world. However, with its territorial waters, it becomes a country with 1.9 million square kilometres, the size of South Africa. Therefore, we have another Africa under the sea. Quite rightly, the African Union call the Blue Economy the "New Frontier of African Renaissance".

Africa’s aquatic and marine spaces are an increasingly common topic of political discourse; its natural resources have remained largely underexploited but are now being recognized for their potential contribution to inclusive and sustainable development. This "Blue world" is more than just an economic space— it is part of Africa’s rich geographical, social, and cultural canvas. Through a better understanding of the enormous opportunities emerging from investing and reinvesting in Africa’s aquatic and marine spaces, the balance can be tipped away from illegal harvesting, degradation, and depletion to a sustainable Blue development paradigm, serving Africa today and tomorrow. If fully exploited and well managed, Africa’s Blue Economy can constitute a major source of wealth and catapult the continent’s fortunes.

Africa’s economies continue to grow at remarkable rates, including through the exploitation of the rich endowment of land-based natural resources and commodity exports. Converting this growth into quality growth, through the generation of inclusive wealth, within environmental limits and respecting the highest social considerations, requires bold new thinking. It also involves the creation of jobs for a population on the rise. The Blue Economy offers that opportunity. For example, the International Energy Agency estimates that ocean renewable energy has a power potential sufficient to provide up to 400% of global current energy demand. Other estimates indicate that in 2010 the total annual economic value of maritime related activities reached 1.5 trillion euro. It is forecasted that by 2020, this figure will reach 2.5 trillion euro per year. Surely, Africa needs holistic and coherent strategies to harness this potential.

All water bodies, including lakes, rivers, and underground water, in addition to seas and the coast are unique resources, yet neglected and often forgotten. The largest sectors of the current African aquatic and ocean-based economy are fisheries, aquaculture, tourism, transport, ports, coastal mining, and energy. Additionally, the Blue Economy approach emphasizes interconnectedness with other sectors, is responsive to emerging and frontier sectors, and supports important social considerations, such as gender mainstreaming, food and water security, poverty alleviation, wealth retention, and jobs creation. The Blue Economy can play a major role in Africa’s structural transformation.

The approach advocated in ECA’s new Policy Handbook* is premised in the sustainable use, management and conservation of aquatic and marine ecosystems and associated resources. It builds on principles of equity, low carbon footprint, resource efficiency, social inclusion and broad-based development, with the jobs agenda at the centre of it all. It is anchored on strong regional cooperation and integration, considers structural transformation as an imperative for Africa's development and advocates for a complete departure from enclave development models. Instead, through better linkages to other sectors of the economy, it situates the aquatic and marine economies as part of integrated ecosystem services based on the harvesting of living and non-living resources, benefitting both costal, island states and landlocked countries.

Biotic resources allow Africa to expand its fishing, aquaculture, mariculture sectors and foster the emergency of vibrant pharmaceutical, chemical and cosmetics industries. The extraction of mineral resources and the generation of new energy resources provide the feedstock to resource-based industrialisation and places Africa at the centre of global trade in value-added products, no longer a supplier of unprocessed raw materials. Central to this agenda, is the need to modernise Africa's maritime transport and logistics services, its port and railway infrastructure, improve its reliability and efficiency with the view to seamless link the continent's economies to national, regional and global value chains as well facilitate tourism and recreation activities, just to name a few.

Africa has salutary examples of maritime, riparian and river-based cooperation and dispute settlement. This includes examples of maritime and transnational aquatic boundary delimitation and demarcation. A collaborative approach for the development of the Blue Economy will create the foundation for the formulation of shared visions for transformation. The Blue Economy development approach is an integral part of African Agenda 2063. Building on the experience with implementing Green Economy principles for a transition to low-carbon development, we are seeing an increasing number of African member States formulating Blue Economy strategies to diversify their economic base and catalyze socioeconomic transformation.

*Based on the foreword of Africa’s blue Economy; a policy handbook . An abridged version of this post has been published by the OECD Development Centre: https://oecd-development-matters.org/2016/06/07/africas-blue-economy-an-opportunity-not-to-be-missed/

We Cannot Afford to Fail on the Continental Free Trade Area

Minilik.Demissie — Tue, 24 May 2016 05:51:06 +0000

24 May 2016

The launch of the Continental Free Trade Area (CFTA) negotiations by the AU leaders in June 2015 in Johannesburgwas a milestone. Once in place, the free trade area will cover more than a billion people with a continental GDP of over US$ 3 trillion.

Successful implementation of the CFTA will enable members to realize their potential to expand and accelerate the dynamism of intra-African trade, including the declared objective of increasing trade by 50 percent among African countries, by 2022. Intra-African trade today averages 16 percent, compared to 70 percent for Europe, 50 percent for Asia or 21 percent for Latin America.

It is true that the composition of intra-African trade is much more diversified than extra-African trade, with manufacturing representing 67 percent of exports compared to 32 percent for exports to Europe, 18 percent to the United States and 14 percent to China. Boosting intra-African trade is therefore critical to ensuring structural transformation, productive jobs and inclusive growth for Africa.

Harnessing this potential has been constrained by current tariff structures which make it cheaper for African countries to export to an external trading partner than to an African counterpart. Tariff protection within Africa averages about 8.7 percent but only 2.5 percent to the rest of the world. This problem will be exacerbated with the move to reciprocal but asymmetrical trade agreements, as implied by the full implementation of the recently concluded Economic Partnership Agreements (EPAs). If the EPAs are fully implemented before the CFTA, it will continue to be relatively more attractive for African countries to export to Europe than to one another reinforcing a trade regime with Europe that has hardly changed in the six decades following independence.

In addition, according to economic modelling undertaken at ECA, the Mega Regional Trade Agreements (MRTAs) - i.e. the Trans-Pacific Partnership of the Pacific Rim countries, the Regional Comprehensive Economic Partnership of Asian countries and the Trans-Atlantic Trade and Investment Partnership between Europe and the United States - will potentially result in loss of market share by African countries through preference erosion and competitive pressures. The expected decline in Africa’s trade in these regions will only be mitigated if Africa implements its own MRTA in the form of the CFTA . Let us be realistic: it has become clear that the global trade reforms through the WTO’s Doha Round are not forthcoming. This is why Africa needs to make its own move and it needs to do it now. So the question is: are we moving fast enough?

The indicative date for the finalization of the CFTA is October 2017. Although much progress has been made to prepare the ground for negotiations, there is need for a well thought-out strategy for the management of the CFTA negotiations if this deadline is to be met. Taking into account that 54 countries are participating in the negotiations, each with differing capacities and interests, this is not easy. The expected scope of the agreements is wide and covers trade in goods, trade in services, investment, intellectual property rights and competition policy. It is a high ambition. No less than the goal is the creation of a single pan-African trade regime out of today’s multiple and overlapping regimes, looking at the eventual formation of an Africa-wide customs union.

If Africa is to succeed, indeed it needs a strategy. What form should this strategy take?

First, there is a need for a draft template agreement to be used as the basis for negotiations. This would help to save an enormous amount of time since the member states would not be required to prepare and exchange draft negotiating texts but rather work from a pan-African template that embodies the aspirations of the Abuja Treaty. Given the current significant differences in the technical negotiating capacity, a draft template agreement would level the playing field by ensuring that each country is given the opportunity to study and review such template agreement and formulate better-informed negotiating positions. It will help build consensus and achieve a level of ambition greater than what has been observed recently.

Second, the draft template agreement should include the eight main landing zones that can be feasibly achieved by October 2017: (i) agreement on trade in goods, which is required before any free trade area can technically exist; (ii) a framework agreement on trade in services, given the importance of services to trade in goods and its growing weight in continental GDP, with a built-in agenda for progressive liberalization of the various service sectors; (iii) special agreement on agriculture (iv) an industrial pillar to ensure that special provisions are built into the agreement, consistent with the imperative of industrial development; (v) front-loaded rules for a common investment area to complement an Africa-wide free trade area, prioritize forward and backward linkages spanning both agriculture and industry, and avoid the race to the bottom as African countries compete to offer investment incentives; (vi) trade remedies and dispute settlement arrangements including a frontloaded competition policy framework to regulate unfair trade practices (vii) provisions on trade facilitation and customs cooperation to improve border efficiency; and (viii) institutional arrangements for implementation, which will require creation of a CFTA Secretariat to oversee the implementation of the agreement.

This is doable. Bringing the CFTA into effect will not be easy. But utilizing a draft template agreement in the negotiations will make success more likely and achieved more quickly. However, to ensure political credibility, such an approach requires high level institutional endorsement.

A political decision is required calling for the CFTA negotiations to be prioritized over all other intra-African and extra-African trade negotiations. This would ease capacity and financial pressures, but more importantly ensure that the CFTA provides a pan-African outcome with a single economic space and common trade and investment rules.

Africa is running out of time. If the first flagship programme of Agenda 2063 is set to fail then we will be in trouble.

They don’t believe in the future!

Minilik.Demissie — Thu, 25 Feb 2016 13:13:25 +0000

25 February 2016

The domino effect of five central banks - Denmark, Switzerland, the European Central bank, the bank of Japan and more recently Sweden, slashing interest rates to sub – zero levels has certainly given many the chills. Viewed as a desperate move to stimulate growth by rewarding spending and penalizing savings – it is in fact more related to the unsustainability of public expenditure modelled for a demographic curve that is no longer there. An ageing population whose workforce is weak and has low productivity is coming to surface. The world seems to be gripped with the psychological fear of another looming global debt crisis. This is hardly surprising. Analysts and political leaders refuse to discuss population trends because the reality is very difficult to reconcile with populism and short term expediency.

In the last decade growth seem to be shifting to emerging economies, but all of the sudden the BRICS, with one exception, India, got engulfed in the same patterns as those they rivalled. It is no coincidence they too, with precisely the Indian exception are facing a diminishing of their labour force in the near future.

Yet in this whirlwind, growth will have to come from somewhere. Africa’s growth has been driven by investors seeking high returns and opportunities rooted in a number of mega trends. These include a sizeable number of consumers, that will be almost as large as the Americas and Europe population combined by 2025; a rising middle class coupled with a rapid urbanization with eager consumers expected to spend about USD1 trillion by 2020; and a young population that will constitute over a quarter of the world’s labour force by 2050.

In addition to reforms, Africa’s financial sector has also matured wetting the appetite for sovereign bonds – now at the center of the continent’s debt sustainability discussion. This trend in particular has created the buzz about another debt crisis looming in Africa. When we talk of debt sustainability, the agreed definition is whether a country can meet its current and future debt service obligations in full, without recourse to debt relief, rescheduling or accumulation of arrears.

It is important to give some context with regards to Africa’s past indebtedness. Contrary to common perception, Africa's past over-indebtedness was not solely attributable to the continent’s poor governance, corruption or conflict, as most would have you believe. Other contributing factors include cold war geopolitics; relatively poor fiscal policies and negative real interest rates in industrial countries, which in turn encouraged developing countries to go on a borrowing spree; as well as easy credit access, particularly to oil-exporting countries, that in hindsight seemed to be helping industrial countries adjust to the two oil-shocks of the 1970’s. A long drawn global recession caused commodity markets and prices to collapse. Volatile exchange rate movements saw Africa's debts appreciated against the US dollar. Adding to this potent cocktail, protectionist policies in the world's markets stood in Africa’s way to escape the debt trap. With onerous debt service burdens, a vicious cycle began: African countries taking on new loans to repay old ones. More was actually being spent on servicing debt than any other expenditure or investment category. By 2012, African countries were still spending about 10 percent of their export earnings on servicing external debt, an improvement from the 40 per cent plus of the 1990s.

Interestingly, the continent’s total external debt as a percentage of GDP has actually been declining in Africa since the Monterrey consensus of 2002 that launched debt relief through the Heavily Indebted Poor Country (HIPC) scheme, and the Multilateral Debt Relief Initiative (MDRI). Together they helped 35 African countries cancel USD100 billion of external debt.

Africa's total foreign debt has been higher than 30 percent of GDP since 2010 and it was projected to have risen to 37.1 percent by the end of 2015. However, net foreign debt as a share of GDP is only 1 per cent, having been negative since 2006 because of Africa’s international reserves¹. For example, net foreign debt as a share of GDP in Algeria has averaged -82.3 percent since 2010.

With regards toAfrica’s total public debt-to-GDP, figures have hovered above 30 percent of GDP since 2006 and with gradual increases taking place between 2010 and 2014. Even then, it is still lower than recorded in previous decades standing at 38 percent as of 2014² . This debt level is also comparable to other developing countries and is well below that of advanced economies. For example, the total debt for OECD countries was nearly 80 percent of the OECD GDP in 2008 and was expected to grow to 111.2 percent in 2015³. The champion of debt is Japan with GDP/debt ratio of 230 percent.

So why is the talk of debt pressure coming from?

Prior to 2009 sovereign bonds issued by African countries were negligible. The current stock is over USD18 billion. This amount actually is not reflective of incompetent governments building up unsustainable levels of debt but rather reasonable borrowers taking advantage of low interest rates to finance growth. The bad move was to not take into account the volatility of the exchange rates and currency markets. African governments are expected to experience up to USD10.8 billion in losses or the equivalent to 1.1 percent of the region’s GDP on sovereign bonds that they issued in 2013 and 2014, due largely to exchange rate risks.

Changes in macroeconomic fundamentals, such as a collapse in commodity prices, can also affect sovereign debt significantly⁴. Sovereign debt is driven by advanced and powerful economies asynchronous monetary policies. Defaulting is always risky – while governments may forgive debt, private investors certainly don’t; conditions are more stringent to meet maturity deadlines. There is no coherent mechanism to govern any future sovereign debt crises. Creditor specific mechanisms used to facilitate past debt restructurings are no longer available. Although a sovereign debt restructuring mechanism was proposed by the IMF more than a decade ago, there is still no international agreement on the topic to date. There is a general consensus that the existing rules are too creditor-friendly, but that a push for an international agreement that is too borrower friendly might not be the best way forward. Any global agreement should therefore strike the right balance⁵.

The bottom line is that debt will be exacerbated in countries with weak fiscal discipline and for those who over borrow and pay little attention to repayments. Individual governments must build debt management capacity and be held accountable for the effective use of borrowed funds. This includesassessing any expansion in borrowing within the context of a comprehensive medium-term strategy for sovereign debt management.

Finally there is need for flexibility in placing debt ceilings and assessing debt. African countries should not be over-constrained or unduly deprived. The issue of debt sustainability will essentially depend on a comprehensive treatment of all components of debt in a debt restructuring, and the provision of clear mechanism to engage all stakeholders to build up consensus on how to close the gaps in financial architecture. This is going to be difficult for rich countries to accept. It requires facing the real structural problems they have through ageing.

If the answer is to pay the banks to keep the money, OECD countries will show they don’t believe in the future. Africa does not have that luxury.

This article was published in French online in NotreAfrik magazine of 23 February 2016

http://www.notreafrik.com/tribune-ils-ne-croient-pas-en-lavenir/

1 Economic Commission for Africa (2015). Industrializing through trade. Addis Ababa, UNECA.

2 Data set from EIU, 2016

3 Global finance magazine-
https://www.gfmag.com/global-data/economic-data/public-debt-percentage-gdp?page=2

4 Hilscher, J. and Y. Nosbusch (2010). Determinants of Sovereign Risk: Macroeconomic Fundamentals andthe Pricing of Sovereign Debt, London School of Economics, UK.

5 Ibid

Conflict grows out of inequality and exclusion

Minilik.Demissie — Mon, 01 Feb 2016 06:26:29 +0000

1 February 2016

CONFLICT GROWS OUT OF INEQUALITY AND EXCLUSION[1]

For a while Africans enthusiasm with the good economic performance of the continent has had a contagious lazy effect in many minds. It was as if the road to a new continental status was a given, even though we were all too busy approving many frameworks and strategies, centered on the need for real structural transformation. Unfortunately the time for a wake-up call is passed. A combination of renewed conflict, drop on commodities demand and prices, including oil, high currency volatility, rising interest rates, choking of key economic locomotives and another devastating visit of our hated El Niño, are dominating yet again the African story line. Let us get the story straight.

The fundamentals for Africa’s economic prospects are there and intact. Africa continues to register the highest growth within a global slump, our international reserves took a beaten, but this is to be put in contrast with still internationally low debt levels, public deficits are still under control, and steady increase in investments from many , although not all, sources. Recent Summits with India and China, the two demographically equivalents, demonstrated trust in the future. Infra-structure projects have mostly not been affected by the downturn, from a new Suez Canal, to the largest ever dam in Ethiopia or world size solar farms in three countries. As far as the economy is concerned the news are actually better than most could afford. So, where are then the key factors that shift the mainstream narrative back to the past?

Squarely it is a combination of two factors: fragility perception and lack of deeper structural transformation, seen as the need to combine higher agricultural productivity, adding value to natural resources, modernized services associated with urban and youth bulges, powered by strong industrialization. African Agenda 2063 approved by the continent’s leaders is all about that.

If Africa is going to sustain a different narrative it has to be based in real changes. It is therefore opportune to focus on the part of the continental narrative less strategically assessed by Africans themselves: the causes of conflicts.

Between the early hours of April 11^th and the late afternoon of May 14^th 1994, fifty thousand Rwandese where killed with machetes by their neighbors in the Nyamata Hill. This was a very small part of what is now considered the largest genocide since World War II. A genocide that took the lives of hundreds of thousands of Rwandese. This shocking reality requires for us to understand why was this possible? One participant in the brutal killings said: “Rule number one was to kill. Rule number two, didn’t exist.”[2]

Is it possible to recognize amongst those we call terrorists, be it Al Shabbab, Boko Haram or those who perpetrate the carnages in Central African Republic or South Sudan, a similar rule book? Killing without remorse? Doing it like a job, better than planting or surviving in the periphery, and then have a good drink and laugh at the panic provoked and media attention. How can this happen? How can this continue to happen?

Huge differences in the distribution and exercise of political and economic power result in violent conflicts, in absence or failure of a political mechanism to address inequality. Inequality between groups rather than individuals is probably the foremost cause of conflict in Africa. It exists on three mutually reinforcing levels: economic, social and political. Relatively deprived groups seek or are persuaded by their leaders to seek redress. Privileged groups may also be motivated to fight to protect privileges. Horizontal inequalities are most likely to lead to conflict where they are substantial, consistent, and increasing over time. Exclusion, the extreme manifestation of inequality, is a major factor igniting conflicts. Of particular attention is the exclusion of youth. Uneducated and unemployed youth is a common characteristic to countries experienced conflicts. This marginalized and excluded fraction of the population has been more prominent in the conflict as combatants and least visible during peace.

Very often the richest regions in minerals, oil and gas and which contribute most of national revenue are the poorest in terms of social development and general wellbeing. The collapse of State institutions translated by its inability and ineffectiveness to provide basic services or security has proven to be an important trigger to conflicts. Social stability is based on a hypothetical social contract between citizens and government. People accept state authority so long as the state delivers services and provides reasonable economic conditions. With economic stagnation, decline, or worsening state services, the social contract breaks down, and violence is likely to occur. The collapse of infrastructure completes the erosion of state authority. The combination of a breakdown of institutions and physical infrastructure coupled with the use of ethnic violence creates the conditions in which violence becomes self-sustaining. Evidence suggests a higher incidence of conflict among countries with low per capita incomes, life expectancy, and meagre economic opportunities.

Of the 54 African states only 8 have not experienced armed or violent conflict since independence.

War confers benefits on individuals as well as costs which can motivate people to fight. Young uneducated men, in particular, may gain employment as soldiers. War also generates opportunities to loot, profiteer from shortages and from aid, trade arms, and carry out illicit production and trade in oil, drugs, diamonds, timber, and other commodities. Where alternative opportunities are few, because of low incomes and poor employment, and the possibilities of enrichment by war are considerable, the incidence and duration of wars are likely to be greater. This “greed hypothesis” has its base in rational choice economics. Very often, political leaders deliberately “rework historical memories” to engender or strengthen cultural identities in the competition for power and resources and justify the recourse to violence because of economic interest.

Environmental stress can be a serious catalyst for violence too, especially when people seek alternatives to desperate situations, while resource riches give strong motivation to particular groups to gain control over such resources. This reality is maximized by illegal trade and financial transactions that are depriving the continent of over fifty to sixty billion USD every year.

Results show that the economic performance of conflict areas is on average 10% below that of conflict-free areas in most GDP performance categories. A study estimated a loss of 284 billion USD (in constant 2000 rates) for 23 African countries, from 1990 to 2005. This figure represented then an average annual loss of 15% of their GDP. Regression analysis indicates a loss of about 2.2% GDP growth due to conflict. The interrelated nature of African economies also means that the costs of war within a sub-region generally result in economic costs for neighboring countries. These include production losses through loss of opportunities deriving from migration, trade losses, increased costs of security and policing and the costs of supporting refugees.

In Niger’s real GDP growth reduced to 3.6% in 2013 after expanding by 11.1% in 2012. In Mali, the series of events triggered by the 2012 outbreak of conflict and insecurity led to falls in government resources and expenditures by at least 30%. In DRC internal investment as a percentage of GDP dropped from 31.6% in 1997 to 17.7% in 1998; and reached its lowest level of 2% in 2000. Libya oil output has shrunk to less than 400,000 barrels per day (bpd), from about 1.7 million bpd before the outbreak of conflict. As a result, GDP contracted by an estimated 24% in 2014. The government accounts are expected to post a deficit of about 80 % of GDP in 2015, with the current account deficit exceeding 60% of GDP.

The message is clear. African priorities either deal upfront with the causes of conflict, or everybody will pay the price for the fragility perception. It is true that countries in Europe, Asia or the Americas were stabilized after prolonged wars that were fomented by the same ingredients of exclusion. They evolved to create better institutions, regulated markets and stabilized security. But it is also true that when it happened there, there was no universal telephony coverage or global media. A continent with more conflicts and affected people than Africa right now, continues to be associated with progress and change. I am talking about Asia. If Africa wants to follow suit there is a need for boldness, a common security framework and squarely accept the challenges of exclusion and managing diversity. That is the only way on deals with die hard perceptions.

Rule number one -to kill- with no rule number two, is still mobilizing far too many in the continent. We need Africa to focus on the “why”, and not allow this pervasive virus mentality to rotten past decade and a half achievements.

The why in fact can take inspiration from a virus’s metaphor. Any virus is basically a micro infectious agent that replicates only inside the living cells of other organisms. Viruses can infect all types of life forms. Even if they are not inside an infected cell or in the process of infecting a cell, viruses exist in the form of independent particles. Virus spread in many different ways, but they do have a pattern. It is known that virus can come from far away.

The good news is that viral infections in humans provoke an immune response that usually eliminates the infecting virus. Immune responses can also be produced by vaccines, which confer an artificially acquired immunity to the specific viral infection.

Africa either has strong immunity to deal with these terror groups viral effects, because of the strength of its institutions and capabilities, or has to develop, fast, a vaccine that will rid us of its damage. Such a vaccine could be labeled “antidote to exclusion”.

[1] Based on my speech delivered at the 26th African Union Executive Council January 25th 2016, Addis Ababa

[2] Reference to Jean Hatzfeld, Une saison de machettes, Seuil, 2003.

Is the Commodities super cycle slowdown a shock for Africa?

Minilik.Demissie — Mon, 28 Dec 2015 14:03:17 +0000

28 December 2015

Tumbling commodity prices have refocused attention to sustainability of growth in Africa. For over a decade, high demand and rising prices for Africa’s commodities have contributed significantly to growth on the continent. However, since 2011, continued fall in the price of oil and natural gas, and, more recently other minerals, are threatening to turn tailwinds into headwinds. Declining demand in major emerging economies coupled with continuous fragility in developed economies, as well as volatility in the currency and shrinking confidence all call for a reality check.

The global commodity price index slid from 125-150 between August and December 2014 to less than 103 in October 2015. Crude oil prices slowed down from over 100 USD/barrel in September 2014 to less than 50 USD/barrel in September 2015. Metal prices continues to decrease, falling below 125 in August 2015. In fact some stipulate that the prices of minerals and metals are now at their lowest since August 2002. Mining companies are trying to abate fears of profit losses by reducing production. Some estimates suggest cuts in capital expenditures by up to 20 billion USD for 2015.

From Nigeria to Angola, South Africa or Zambia, decline in commodity prices is deflating growth and the ripple effect is affecting the reality of lives on the ground. September 2015 estimates suggest that African currencies were down more than 20% against the USD. In an effort to curtail its 30 billion USD debt pile and restore investor’s confidence, Glencore, the Anglo–Swiss multinational commodity trading and mining company, has cut 500,000 tons of zinc production and suspended copper production at its Katanga Mining unit in Democratic Republic of Congo and Mopani Copper Mines in Zambia. These actions have led to the removal of 400,000 tons of copper from the market. The slowdown in China is seen as the main culprit of these dramatic changes in demand. But the picture is certainly more complex.

African countries are not the only ones subjected to bad weather. Traditional and emerging economies are also on the receiving end of the deepening malaise. Brazil is facing trade deficits estimated at 40 billion USD, from a trade surplus of 20 billion USD in 2010. Russia has similar challenges, with growth of only 0.5% in 2014, compounded by geopolitical tensions and associated sanctions. Colombia, Turkey, Mexico and Chile have all seen their currencies fall between 20% and 50% against the dollar. Stock markets have responded to declining prices with continued drop in prices, some often strong. But by far the most impactful is the slowing down of growth in China, the lowest in a quarter century.

African countries remain resilient. Despite weakening commodity prices, growth momentum is set to continue, estimated to be above world and developing countries average, close to 4% in 2015. Analysis show that the impact of recent oil prices decline on Africa’s growth has been less than expected. The decline in oil prices had a marginal impact. In fact Africa's growth is more attributable to internal demand as well as improved macroeconomic management. Progress in economic growth and rising wealth are contributing to the estimated 1 trillion USD projected rise in Africa’s assets by 2020. This is a nearly a three-fold increase from a total of 293 billion USD in 2008, according to latest research by PricewaterhouseCoopers across 12 African markets. Indeed, Africa's traditional assets under management (AuM) is expanding aggressively, supported by megatrends such as demographic surge, fast growing middle class, increased use of technology, and rapid urbanization.

But the fact remains that many of Africa's fortunes are still driven by the commodity sector. Over 80% of total African exports are still linked to commodities, with extractive industries taking the lion’ share. The amount of value addition is estimated at just over 10%. The formal employment generated by mining is 1% on the continent. These two elements are obviously related, Africa is exporting its commodities and jobs, simultaneously. It has done little to reverse such an appalling performance. It needs to catch up with its expanding labor force, and do it fast.

Awakened by the commodities super cycle downfall, time is right for Africa to accelerate its commodity-based industrialization, as promoted by the Economic Commission for Africa. It promotes an industrialization policy that leverages the continent’s abundant resources and changing organization of global production process. This entails adding value to commodities, improving its backward integration, and expanding global value chain linkages to other areas of the economy. Apart from providing employment, income, price and non-price benefits, African countries, by adding value to their raw materials locally, could also bring about diversification of technological capabilities, an expanded skills base, and deepening of individual countries’ industrial structures.

In the short run it would be necessary to have a commodity index that truly reflects the weight of African commodities in its GDP and projects impacts based on African realities rather than approximations. This is important so bad weather does not necessarily become associated with storms. Africans know how important that distinction is.

Africa needs inclusive development

Minilik.Demissie — Mon, 02 Nov 2015 06:26:21 +0000

2 November 2015

Africa's much trumpeted growth is real. It is a significant historical achievement to be able to almost triple GDP in one and half decade. The business of attribution is always a risky undertaking and it would be no different in this case. To say this achievement was provoked by the Millennium Development Goals (MDGs) is very partial. To say it was despite the MDGs would be nonsense. Africa's growth has been possible by a combination of factors, some internal, some external. Megatrends such as demographic, technological and environmental changes have been crucial for the transformation of the continent's future. The policy space allowed by the transition from a prescriptive structural adjustment era to a goal targeting 'do-it-your-way' mode helped a great deal too. Significant debt reduction, more than ODA per se, changed the macroeconomic fundamentals. Africa's agency benefitted from the confidence given by new partnerships with rising developing countries' economies, contributing to attitudinal change.

However, growth without quality is what we got so far. Africans are celebrating a potential more than the results. The latter would require a focus on employment creation, inclusiveness and poverty reduction. Even though MDGs remain unfinished business for Africa; there is no denying that the continent has accelerated progress on a number of goals and targets despite unfavourable initial conditions. Significant achievements, include increasing women’s representation in national parliaments, enrolling more children in primary schools, bridging the gender gap in primary enrolment, reducing child and maternal deaths as well as the prevalence of HIV/AIDS or malaria related deaths. In addition, notable progress in technology indicators have been witnessed with mobile telephone subscriptions that surpass the global average as well as the fastest annual average growth of internet users. Africa is also leading many of the world's women representation indicators.

Growing inequalities are in part attributable to the lack of attention to economic and social inequalities in the MDG-related interventions. Global experience to date indicates that inequalities do not self-correct, instead, they perpetuate and reproduce over generations, therefore, efforts aimed at addressing extreme poverty, promoting socio-economic development and safeguarding the interests of future generations have to squarely address inequalities. Inequalities diminish the productive capacities of those who suffer, depriving societies of their needed contributions.

Income inequalities may be the most pronounced form of inequalities. Africa is no exception, with a number of countries showing sharper increases in income inequalities. With an average Gini coefficient of 43.9% over the period 2000–2009, income inequality in Africa is second only to Latin America, which averaged 52.2% over the same period. In 2010, six out of the ten most unequal countries worldwide were in Africa, and more specifically in Southern Africa, which appears as the most unequal sub-region of the continent.

But notwithstanding the high levels of inequality in Africa there has been a decline over time even though substantial country variations are observed. Out of a total of 35 African countries with data, 13 (37.1%) experienced an increase in income inequality while 19 (54.3%) experienced a decline over the period 1990–2012. In contrast 58% of countries in Asia experienced rising inequality versus 32.3% which experienced falling inequality. Latin American countries also experienced net reductions in inequality during this period; inequality rose in 20% (4 out of 20) of the countries in this region and fell in 70% (14 out of 20) of the same.

For Africa to reverse its record there is a need to do business unusual. More of the same policies and practices is not an option. What is now widely recognized is the need for the continent to pursue aggressive industrial policies, the only investment capable of simultaneously pulling agricultural productivity, benefit from the urban and demographic dividends and modernize economies that have been anchored too much on informal sector survival. We will then be able to celebrate growth….with quality!

This article was published in French in Libération on 30 September 2015:

http://www.liberation.fr/evenements-libe/2015/09/30/les-africains-celebrent-des-potentialites-plus-que-des-resultats_1394153

The role of big data in Africa’s regional integration

Minilik.Demissie — Mon, 03 Aug 2015 13:10:21 +0000

3 August 2015

The ambitions of a young Ugandan entrepreneur to expand his coffee processing business will soon be within reach. East Africa’s accelerated integration process is opening up possibilities that were unthinkable not long ago. In a couple of years he may be able to tap into West Africa’s 350 million people without having to pay the high tariffs and transport costs that currently make it easier to export to Europe than to other parts of the continent.

Initiatives to accelerate the speed of Africa’s regional integration are gaining momentum. They include the establishment of a Continental Free Trade Area by 2017, an action plan to boost intra-African trade and the dismantling of trade barriers through establishment of sub-regional free trade areas and customs unions. Measures to simplify customs procedures, the free movement of people and the development of regional infrastructure are also being put in place. The spirit of the 1991 Abuja Treaty, which has served as the blueprint for such an ambitious goal, is finally being taken seriously.

With trade pegged as a means to implement the post-2015 development agenda, as well as Africa’s own Agenda 2063, the role of trade as a vehicle for development has become more obvious.

Formal and informal trade

On average, formal intra-African trade accounts for about 14% of total African trade. This is low compared to other regions. Intra-regional trade as a share of trade is 17% in South and Central America, 42 % in North America, 62% in the European Union and 64% in Asia. Key to such a figure is the word ‘formal.’ A significant portion of economic exchanges taking place along various African borders are informal.

The good news, though, is that manufactured products represent about 46% of intra-African formal trade. This indicates the huge potential for the development of supply chains across the continent.
Africa’s predominately monocultural economic base can be changed by adding value to goods produced on the continent. Along with productivity gains and a boost in competiveness, enough jobs can be created for the continent’s young and rapidly urbanizing population.

In perhaps the boldest attempt to date to collect data on the impact of regional integration, the Economic Commission for Africa (ECA), the African Union and the African Development Bank have jointly developed a Regional Integration Index. The tool will be a barometer for governments and the general public, enabling them to check the performance of countries and their regional economic communities.

Summarizing information from more than 70 indicators, the index tracks progress and identifies bottlenecks to be addressed, informs policy decisions and helps with future trade negotiations. In support of its implementation, the ECA is training countries and sub-regional entities in Africa on data collection and supervision.

From flight data to tariff data

Given the novelty of some of the indicators being used, efforts are also being made to standardize databases. The use of ‘big data’ techniques has offered opportunities for the index to be a frontrunner of innovative methodologies. For instance, collection of airline data to provide datasets on flight patterns between airports is used to calculate an aggregate of intra-African flights; or trade tariff data is employed to calculate averages of trade-weighted intra-African tariffs.

In light of the advances made in the telecommunications industry, there is potential to leapfrog technology and leverage sources of big data generated from online content, social media or satellites to mobile-phone technology to support refined policy choices. With more than 629 million mobile-phone users, phone data is proving to be a gold mine for decision-makers. This data is already making a difference in numerous areas, from humanitarian assistance to tracking the transmission of diseases and helping compensate farmers in real time for weather -related crop failures. Africa’s mobile banking systems have not only changed the way financial transactions are carried out on the continent, but are becoming a reference for the rest of the world.

Notwithstanding these successes, further investments are required to take full advantage of big data’s potential. Data-user communities are being designed that will help validate data entries generated by others rather than from official statistical entities. Being able to update the Regional Integration Index with big data will encourage the type of scrutiny and accountability that can catalyse greater government action.

With data enablers in place, entrepreneurs will be able to assess which markets are worth plugging into. This will be as crucial for the young Ugandan waiting to export coffee as it will be for the Malian business thriving on cotton production or the assemblers of BMW automobiles in South Africa. Making the right decisions can only be accomplished through having the right knowledge.

Published in International Trade Forum Magazine in July 2015. See more:

http://www.tradeforum.org/news/The-role-of-big-data-in-Africas-regional-integration/

Financing for Africa’s Transformation

Minilik.Demissie — Tue, 14 Jul 2015 14:33:04 +0000

14 July 2015

By Carlos Lopes and Amina J. Mohammed

As the race to achieve the Millennium Development Goals (MDGs) draws to a close, the momentum will only intensify as the baton passes to the post-2015 development agenda, including global goals for people and planet to be adopted by world leaders in September at the Headquarters of the United Nations. How ready is Africa to embrace this ground-breaking universal development agenda?

The past 15 years have been a journey of change for the continent. Despite starting at the lowest point on the MDG targets, African countries have done exceptionally well thanks to political determination and tremendous efforts. While not all of the Goals have been met, Africa can celebrate achieving some significant targets, such as halving the prevalence of underweight children under the age of 5 and considerably reducing the number of AIDS and malaria-related deaths. Africa has also experienced strong economic growth averaging 5% per annum, consistently outperforming global economic trends.

Notwithstanding these gains, many hurdles remain to be overcome if the continent is to get ahead and stay ahead. One of the most pressing is harnessing the energy and talent of its people, particularly its youth and women, as well as closingthe growing inequality gap and reducing income poverty and unemployment. Challenges such as these are holding back the continent’s productive potential.

Indeed, 8 of the world’s top 10 best performing countries are in Africa. But growth on its own is simply not enough. A compelling change is required – one that will transform the continent and put it on a path of transformative growth, in line with the vision set out in Agenda 2063. Africa needs a policy paradigm that will generate jobs and livelihoods, empower its women, and equip its youth with essential skills. This is vital for poverty reduction, social cohesion, political stability and productive growth. Sustainable development will depend on economic structural transformation, with a strong industrial and agricultural base supported by infrastructure, investment in people and protection of the planet. The impact of unsustainable practices is often felt most by women, youth and the most vulnerable, who are at the forefront of the water, food and energy nexus. Economic growthwill only help to further social progress if the environment is protected. Only then can the continent compete fairly in the global market, increase its share of the world’s wealth and deliver tangible benefits for its people.

The continent’s priorities in the African common position on the post-2015 development agenda and in Agenda 2063 have found congruence with the proposed sustainable development goals. These instruments will remain mere rhetoric, however, if the continent does not foresee the necessary means to turnthis vision into reality.The real change required is to rise to the challenge with adequate, predictable and sustainable financing to drive this opportunity for powerful transformation.

The financing requirements for sustainable development in Africa are high but a policy paradigm will allow us to shift and unlock resources to finance this transformation. With declining development aid and the changing ecology of global development finance, there is consensus that aid must complement rather than be a substitute for Africa’s development aspirations, as was the case in the past. The solution lies in exploring innovative sources of financing. These can be leveraged from new partnerships, innovative instruments for domestic resource mobilization, the private sector and sources of climate finance.

Measures to unlock money at the national level include devising financing instruments that enable the integration of Africa into international financial markets and that facilitate intra-African trade, such as private equity; strengthening the role of bond markets, pension funds and sovereign wealth funds to boost investments; improving the policy base and regulatory environment, from tax administration to legal reforms, including those governing the investment of public funds and international reserves of central and reserve banks; and building the requisite human, technological and institutional capacities. At the global level, financial and economic governance must also be reformed to improve the conditions of access to capital markets; to intensify international cooperation for transparency in Africa’s extractive industries; to tackle illicit capital flight, which deprives the continent of at least $50 billion a year; and to expand Africa’s fiscal space.

The upcoming third International Conference on Financing for Development in July, the adoption of the post-2015 development agenda, including the sustainable development goals, in September, and a meaningful climate change agreement due in December are pivotal. Together they offer a chance to renew the universal commitment on eradicating poverty irreversibly, addressing inequalities and protecting the planet, including through climate action that will put the world on an ambitious path of sustainable development.

Africa is ready. It already has the means; what it needs now is the leadership, ambition and will to deliver transformation to the people of Africa.

Published in Le Monde on 13 July 2015