African tourists emerge as powerhouse for tourism on the continent, says UNCTAD report

Four out of 10 international tourists in Africa come from the continent itself, according to the new UNCTAD Economic Development in Africa Report 2017: Tourism for Transformative and Inclusive Growth.

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Pic Credit: Travel Noire

In sub-Saharan Africa, this number increases to two out of every three tourists whose travels originate on the continent. Data backing this key finding show that, contrary to perception, Africans themselves are increasingly driving tourism demand in Africa.

Tourism in Africa is a flourishing industry that supports more than 21 million jobs, or 1 in 14 jobs, on the continent. Over the last two decades, Africa has recorded robust growth, with international tourist arrivals and tourism revenues growing at 6 per cent and 9 per cent, respectively, each year between 1995 and 2014.

Focusing on tourism for transformative and inclusive growth, this year’s report encourages African countries to harness the dynamism of the tourism sector.

By collecting and comparing data from two different periods, 1995-1998 and 2011-2014, the report reveals that international tourist arrivals to Africa increased from 24 million to 56 million. Tourism export revenues more than tripled, increasing from $14 billion to approximately $47 billion. As a result, tourism now contributes about 8.5 per cent to the continent’s gross domestic product (GDP).

The First Ten-Year Implementation Plan of the African Union’s Agenda 2063 aims at doubling the contribution of tourism to the continent’s GDP. To meet this target, tourism needs to grow at a faster and stronger pace.

“Tourism is a dynamic sector with phenomenal potential in Africa. Properly managed, it can contribute immensely to diversification and inclusion for vulnerable communities,” said Mukhisa Kituyi, the Secretary-General of UNCTAD.

To realize the potential of intraregional tourism for the continent’s economic growth, African Governments should take steps to liberalize air transport, promote the free movement of persons, ensure currency convertibility and, crucially, recognize the value of African tourism and plan for it. These strategic measures can have relatively fast and tangible impacts. In Rwanda, the abolition of visa requirements for fellow members of the East African Community in 2011 helped increase intraregional tourists from 283,000 in 2010, to 478,000 in 2013.

Another important theme highlighted in the report is the mutually beneficial relationship between peace and tourism. Peace is of course fundamental for tourism. The mere appearance of instability in a region can deter tourists, leading to devastating, long-lasting economic consequences. However, the perception of danger does not always correspond with reality.

The 2014 Ebola outbreak in Western Africa had a very high cost in terms of tourism numbers and revenue lost across the entire continent. Despite being limited to relatively few countries in the western part of the continent, tourist arrivals and bookings fell in countries as far from the outbreak as South Africa and the United Republic of Tanzania.

The report notes that the economic impacts of political instability can be quite significant and long-lasting. For example, following political instability in Tunisia, total tourism receipts in 2009-2011 declined by 27 per cent on average, from $3.5 billion in 2009 to $2.5 billion in 2011.

Addressing safety and security concerns and swift responses to crises by African Governments and regional institutions are paramount to the growth of tourism in Africa. Promoting strategies aimed at improving Africa’s image in the global media are also critical in ensuring the sector’s recovery after conflict or political unrest.

During the next decade, tourism’s continued growth is expected to generate an additional 11.7 million jobs in Africa. Furthermore, where tourism thrives, women thrive. In Africa, more than 30 per cent of tourism businesses are run by women; and 36 per cent of its tourism ministers are women, which is the highest share in the world.

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Pic Credit: UN Multimedia

Creating firm links between tourism, the agriculture and infrastructure sectors, ecotourism and the medical and cultural tourism market segments can foster diversification into higher value activities and distribute incomes more broadly. To unlock this potential, African Governments should adopt measures that support local sourcing, encourage local entities’ participation in the tourism value chain and boost infrastructure development. This continued investment into the tourism sector in Africa could lift millions out of poverty, while also contributing to peace and security in the region.

See full article here

See UNCTAD report here

Source: TRALAC

Investment policy reforms in Africa: How can they be synchronized?

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African countries are increasingly implementing investment policy reforms as part of their efforts to build policy frameworks that are development-oriented and that balance investor and state rights and obligations. Such reforms are currently being adopted at continental, regional, bilateral and national levels, and include the negotiation of new investment treaties or policies and improving the existing investment policies or laws. However, the United Nations Conference on Trade and Development (UNCTAD) World Investment Report (2017), notes that, if not carefully managed, the reforms ‘risk overlapping with one another, potentially diluting the impact of regional reform efforts and creating a more complex regime instead of harmonizing and consolidating it.’ This will result in unfavorable treaty multiplication as well as policy uncertainty and unpredictability and, ultimately, reduce investor confidence. Promoting investor confidence and policy certainty is key to Africa considering the continent’s desire to stimulate and expedite investment.

This Discussion Note briefly examines current examples of investment reforms in Africa and how they can be synchronized to bring about the intended reform without posing new challenges and jeopardizing investment promotion and protection. The Note significantly draws on insights from the 2017 UNCTAD World Investment (ibid).

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Investment policy reforms in Africa

At the continental level, the fifty-five African Union member states anticipate to launch a continental free trade area (CFTA) by December this year which is expected to include an investment chapter. The chapter is scheduled to be negotiated in the second phase of the CFTA negotiations together with competition and intellectual property issues. Though too early to project, the investment chapter is to be aligned with the overall objective of the CFTA – to create a single continental market for goods and services, with free movement of business persons and investments. Considering that the CFTA will bring together all the AU countries, it is critical for African leaders to start thinking how to effect investment reforms within the CFTA in such a manner that will not cause the above mentioned challenges.

At the regional level, the South African Development Community (SADC) member states at the 36th SADC Summit in August 2016 adopted an agreement amending Annex 1 of the SADC Protocol on Finance and Investment (2006). The Annex was amended to remove fair and equitable treatment as well as investor-state dispute settlement provisions, to refine the definitions of investment and investors, and include public policy measures exceptions to expropriation as well as to include regulatory autonomy of host states and investor obligations. However, the amendments will come into effect upon ratification by three-quarters of the SADC member states.

Also important to mention here is investment issues in the Tripartite Free Trade Area (TFTA), which are scheduled to be negotiated in the second phase of the negotiations together with trade in services, competition policy and intellectual property rights.

At national levels, many countries including Botswana, Egypt, Nigeria, South Africa and Morocco are reforming their investment policies with a view to adopting ones that carve out policy space and are aligned to their national development objectives.

Moreover, African countries continue to conclude and negotiate bilateral investment treaties (BITs) or treaties with investment provisions with countries within and outside the continent. In 2016, for instance, Nigeria concluded BITs with Singapore and United Arab Emirates; Morocco concluded a BIT with Russia; and Rwanda concluded a BIT with Turkey.

In addition, six SADC member states (Botswana, Lesotho, Mozambique, Namibia, Swaziland and South Africa) concluded, with the European Union (EU), the Economic Partnership Agreement in 2016 which contains provisions relevant to investment including market access, national treatment (NT) and most favoured nation (MFN) with respect to commercial presence, free movement of capital. The EU is negotiating similar agreements with Central African, East African, West Africa as well as Eastern and Southern African countries.

Furthermore, African countries are developing guiding principles for investment policy making with Caribbean and Pacific Group of States, and the EU.[5] These principles are developed in line with the ongoing relations between Africa and the EU, Caribbean and Pacific states and will be used to inform their investment relations and policies in the future.

Synchronizing the investment policy reforms

In investment policy reform processes, African countries must cooperate at continental, regional, bilateral and national (as well as multilateral) to avoid undesirable treaty disintegration, overlaps and multiplication. The UNCTAD (2017) has provided ten policy options to serve as important reference for countries reforming their investment policies, particularly those negotiating new treaties or adopting new laws.

Image result for fdi aFRICA Among these options include: joint interpretation of treaty provisions; amending treaty provisions; replacing outdated treaties; consolidating treaties; managing relationships between co-existing treaties; referencing global standards; engaging multilaterally; abandoning unratified old treaties; terminating existing old treaties; withdrawing from multilateral treaties. Important to note is that each option has pros and cons, therefore determining the best option requires ‘a careful and facts- based cost-benefit analysis, while addressing many of broader challenges’. It is submitted that the best option is one which is balanced, predictable and suitable for sustainable development.

Joint interpretation of treaties includes shared government action of interpreting treaties without amending or re-negotiating (re-signing or re-ratifying) the treaty. This is probably the fastest and simplest way of treaty reform; and it brings clarity to treaty obligations or provisions for investors, host states and tribunals. Recent treaties including, for example, the EU-Canada Comprehensive Economic and Trade Agreement (2016), Trans-Pacific Partnership (TPP) Agreement, ASEAN Comprehensive Investment Agreement (2009) and even the Morocco-Nigeria BIT (2016) expressly address joint interpretations. However, this policy option may be difficult to negotiate in situation where there are pending disputes involving the application of provisions in question. It is also restricted in its effect in that it cannot wholly create a new meaning to the provision being interpreted.

Amending treaty provisions involves making changes or improvements to specific clauses of existing treaties. It allows states to expressly carve out their intended policy objectives and priorities. However, amendments of treaty provisions require agreement among and subsequent ratification by contracting parties, and this may be difficult to achieve if they are multiple contracting parties with contrasting views. For instance, the SADC member states amended Annex I of the SADC FIP in August 2016 and the amendments are yet to be ratified.

Replacing or substituting outdated treaties with new ones is another policy option and has been used by Morocco recently. Per UNCTAD (2017), ‘approaching the treaty afresh enables the parties to achieve a higher degree of change (vis-à-vis selective amendments) and to be more rigorous and conceptual in designing an IIA that reflects their contemporary shared vision’. However, this process ‘can be cost- and time-intensive, as it involves the negotiation of the treaty from scratch, does not guarantee inclusion of reform-oriented elements (depends on the negotiated outcome), and requires effective transition between the old and the new treaties’. To safeguard smooth transition, it is important to include explicit transition clauses clearly defining the time-period for applying old BITs.

Consolidating the investment treaty network means replacing pre-existing treaties by signing a regional/plurilateral agreement. For example, Australia agreed to terminate its BITs with Mexico, Peru and Vietnam on entry into force of the TPP. This is a holistic and comprehensive approach to investment reform and can reduce the risk of fragmentation and overlaps. But, this can be more difficult to achieve particularly in plurilateral negotiations and requires the consent of all contracting parties. As TFTA and CFTA have the potential to replace existing BITs between the contracting parties (intra-African investment agreements), the question is will the African countries agree to terminate their existing intra-Africa investment treaties? To overcome these challenges, it may be appealing to grant flexibility to the parties to decide their preferences.

Another policy option is to manage the relationships of co-existing (old and new) treaties. This is mostly possible when the new treaties are plurilateral or regional free trade agreements with an investment chapter and the old treaties are BITs. However, this policy option is not conducive for investment reform specifically in cases where the treaties differ in content and scope. To overcome these challenges, countries need to include specific provisions clarifying how the treaties will interact – for instance, in situations of conflict, the new treaties will override the old ones.

Referencing global standards relates to mentioning globally agreed best practices or instruments (e.g. UN Sustainable Development Goals, UNCTAD Investment Policy Framework for Sustainable Development, the ILO Tripartite MNE Declaration and the UN Guiding Principles on Business and Human Rights). In the African context, it may also be important to mention relevant continental initiatives (e.g. Agenda 2063, Accelerated Industrial Development for Africa and Programme for Infrastructure Development in Africa). This is cost-effective and time-efficient in that countries will make use of previously agreed instruments. However, this option provides wide interpretive discretion for the arbitrators, and parties will not have control over future developments of the agreed instruments.

Engaging multilaterally is the most effective way to address the inconsistencies, overlaps arising from individual countries’ reforms and it is more likely to result in uniform, binding and comprehensive investment standards at global level. But is also the most difficult as obtaining the consensus of many countries is hard to achieve. The failure of the multilateral agreement on investment in 1995 is a point of reference here.

Abandoning unratified old treaties is another way of synchronising investment reform. A country can simply abandon unratified treaties (not ratifying them) or expressly take a decision not to be bound in order to negotiate new treaties – for instance, the US publicly announced its intention not to be party to the TPP early this year. As of December 2016, 165 intra-African BITs have been signed and only 38 are in force, according to UNCTAD.

Another option available for countries is to unilaterally or mutually terminate existing old treaties. For instance, South Africa unilaterally terminated its old BITs with nine EU member states between 2013 and 2014 with a view to signing new ones preserving regulatory autonomy. Quite often rules for the termination of treaties are set out in the treaty. The termination of old treaties could result in situations where investors of one party no longer have legal protection in the host state.

Lastly, withdrawal from multilateral treaties is another policy option for countries to consolidate investment reforms. According to UNCTAD, the ‘unilateral withdrawal from an investment-related multilateral treaty releases the withdrawing party from the instrument’s obligations and – depending on the treaty at issue – can help minimise a country’s exposure to investor claims. Unilateral withdrawal can also signal the country’s apparent loss of faith in the system and a desire to exit from it (rather than reform it)’. However, withdrawal from could negatively affect the country’s cooperation with other countries.

Conclusion

While African countries are (individually or cooperatively) transforming their investment laws and engaging in new investment policy making negotiations, it is crucial for policymakers to consider harmonizing or consolidating these reforms at all (continental, regional and national) levels to avoid undesirable fragmentation and overlaps of investment regimes. It is also important to consider the countries’ investment agreements with external partners. More importantly, policymakers should carefully consider facts-based cost-benefit analysis of a particular policy choice that will reflect the aspired reforms, while addressing many of broader challenges.

Source: TRALAC

Dance of the lions and dragons – How are Africa and China engaging, and how will the partnership evolve?

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Pic Credit: Mckinsey & Co.

In a mere two decades, China has become Africa’s biggest economic partner. Across trade, investment, infrastructure financing, and aid, there is no other country with such depth and breadth of engagement in Africa. The Chinese “dragons”—firms of all sizes and sectors—are bringing capital investment, management know-how, and entrepreneurial energy to every corner of the continent—and in so doing, they are helping to accelerate the progress of Africa’s “lions,” as its economies are often referred to. Yet to date, it has been challenging to understand the full extent of the Africa-China economic relationship due to a paucity of data. This report aims to provide a fact-based picture of the Africa-China economic relationship. Its foundation is a large-scale data set about the economic relationship between Africa and China, including on-site interviews with more than 100 senior African business and government leaders, as well as the owners or managers of more than 1,000 Chinese firms and factories spread across eight African countries that together make up approximately two-thirds of SubSaharan Africa’s gross domestic product (GDP).

1) THE DRAGON HAS LANDED: AFRICA’S BIGGEST ECONOMIC PARTNER Since the turn of the 21st century, China has catapulted from being a relatively small investor in the continent to becoming Africa’s largest economic partner. And since the turn of the millennium, Africa-China trade has been growing at approximately 20 percent per year. Foreign direct investment (FDI) has grown even faster over the past decade, with a breakneck annual growth rate of 40 percent.1 Yet even this number understates the true picture: we found that China’s financial flows to Africa are around 15 percent larger than official figures suggest when nontraditional flows are included. China is also a large and fastgrowing source of aid and the largest source of construction financing; these contributions have supported many of Africa’s most ambitious infrastructure developments in recent years. We evaluated Africa’s economic partnerships with the rest of the world across five dimensions: trade, investment stock, investment growth, infrastructure financing, and aid. China is in the top four partners for Africa in all these dimensions. No other country matches this depth and breadth of engagement.

2) TEN THOUSAND BUSINESS BUILDERS: CHINESE FIRMS’ DIVERSITY, SCALE, AND AMBITION Behind these macro numbers are thousands of previously uncounted Chinese firms operating across Africa. In the eight African countries we focused on, the number of Chinese-owned firms we identified was between double and nine times the number registered by China’s Ministry of Commerce (MOFCOM), until now the largest database of Chinese firms in Africa. Extrapolated across the continent, these findings suggest there are more than 10,000 Chinese-owned firms operating in Africa today. Around 90 percent of these firms are privately owned—calling into question the notion of a monolithic, state-coordinated investment drive by “China, Inc.” Although state-owned enterprises (SOEs) tend to be bigger, particularly in specific sectors such as energy and infrastructure, the sheer multitude of private Chinese firms working toward their own profit motives make Chinese investment in Africa a more market-driven phenomenon than is commonly understood.

Chinese firms operate across many sectors of the African economy. Nearly a third are involved in manufacturing, a quarter in services, and around a fifth in trade and in construction and real estate. In manufacturing, we estimate that 12 percent of Africa’s industrial production—valued at some $500 billion a year in total—is already handled by Chinese firms. In infrastructure, Chinese firms’ dominance is even more pronounced, and they claim nearly 50 percent of Africa’s internationally contracted construction market. The firms we talked to are profitable; nearly one-third of them reported 2015 profit margins of more than 20 percent. They are also agile and quick to adapt to new opportunities. Except in a few countries such as Ethiopia, they are primarily focused on serving the needs of Africa’s fast-growing markets rather than on exports.
What of the years ahead? An overwhelming 74 percent of Chinese firms said they feel optimistic about the future. Reflecting this, most Chinese firms have made investments that represent a long-term commitment to Africa rather than shallower trading or contracting activities.
3) BIG BENEFITS, BUT REAL ISSUES: WEIGHING THE IMPACT OF CHINESE INVESTMENT IN AFRICA

Our research points to three main economic benefits to Africa from Chinese investment and business activity: job creation and skills development, transfer of new technology and knowledge, and financing and development of infrastructure:
• At the more than 1,000 companies we talked to, 89 percent of employees were African, adding up to more than 300,000 jobs for African workers. Scaled up across all 10,000 Chinese firms in Africa, these numbers suggest that Chinese-owned business already employ several million Africans.

• Nearly two-thirds of Chinese employers provide some kind of skills training. In companies engaged in construction and manufacturing where skilled labor is a necessity, half offer apprenticeship training.

• Half of Chinese firms have introduced a new product or service to the local market, and one-third have introduced a new technology. In some cases, Chinese firms have lowered prices for existing products and services by as much as 40 percent through improved technology and efficiencies of scale.

• Chinese construction contractors command around 50 percent of Africa’s international engineering, procurement, and construction (EPC) market. African government officials overseeing infrastructure development for their countries cited Chinese firms’ efficient cost structures and speedy delivery as major value-adds.

On balance, we believe that China’s growing involvement is a strong net positive for Africa’s economies, governments, and workers. But there are areas that need significant improvement:
• By value, only 47 percent of the Chinese firms’ sourcing was from local African firms, representing a lost opportunity for local firms to benefit from Chinese investment.

• Only 44 percent of local managers at the Chinese-owned companies we surveyed were African, though some Chinese firms have driven their local managerial employment above 80 percent. Other firms could follow suit.

• There have been instances of major labor and environmental violations by Chinese owned businesses. These range from in inhumane working conditions to illegal extraction of natural resources including timber and fish.

4) DIFFERENT DANCES: FOUR WAYS AFRICAN COUNTRIES ARE ENGAGING WITH CHINA

We focused our research on eight large African economies, and we found four distinct archetypes of the Africa-China partnership:

Robust partners. Ethiopia and South Africa have a clear strategic posture toward China, along with a high degree of economic engagement in the form of investment, trade, loans, and aid. For example, both countries have translated their national economic development strategies into specific initiatives related to China, and they have also developed important relationships with Chinese provinces in addition to with Beijing. As a result, China sees these African countries as true partners: reliably engaged and strategic for China’s economic and political interests. These countries have also created a strong platform for continued Chinese engagement through prominent participation in such forums as the Belt and Road initiative (previously known as One Belt, One Road), and they can therefore expect to see ongoing rapid growth in Chinese investment.

Solid partners. Kenya, Nigeria, and Tanzania do not yet have the same level of engagement with China as Ethiopia and South Africa, but government relations and Chinese business and investment activity are meaningful and growing. These three governments recognize China’s importance, but they have yet to translate this recognition into an explicit China strategy. Each has several hundred Chinese firms across a diverse set of sectors, but this presence has largely been the result of a passive posture relying on large markets or historical ties; much more is possible with true strategic engagement.

Unbalanced partners. In the case of Angola and Zambia, the engagement with China has been quite narrowly focused. In Angola’s case, the government has supplied oil to China in exchange for Chinese financing and construction of major infrastructure projects—but market-driven private investment by Chinese firms has been limited compared with other African countries; only 70 to 75 percent of the Chinese companies in Angola are private, compared with around 90 percent in other countries. Zambia’s case is the opposite: there has been major private-sector investment but not enough oversight from regulatory authorities to avoid labor and corruption scandals.

Nascent partners. Côte d’Ivoire is at the very beginning of developing a partnership with China, and so the partnership model has yet to become clear. The country’s relatively small number of Chinese investors are focused on low-commitment sectors such as trade.

5) THE $440 BILLION OPPORTUNITY: UNLOCKING THE FULL POTENTIAL OF THE AFRICA-CHINA PARTNERSHIP
One thing is clear to those who are closest to the Africa-China relationship: it will grow. We interviewed more than 100 senior African business and government leaders, and nearly all of them said the Africa-China opportunity is larger than that presented by any other foreign partner—including Brazil, the European Union, India, the United Kingdom, and the United States.

But exactly how quickly will the Africa-China relationship grow in the decade ahead? We see two potential scenarios. In the first, the revenues of Chinese firms in Africa grow at a healthy clip to reach around $250 billion in 2025, from $180 billion today. This scenario would simply entail “business as usual,” with Chinese firms growing in line with the market, holding their current market shares steady as African economies expand. Under this scenario, the same three industries that dominate Chinese business in Africa today— manufacturing, resources, and infrastructure—would dominate in 2025 as well.

We believe much more is possible: in a second scenario, Chinese firms in Africa could dramatically accelerate their growth. By expanding aggressively in both existing and new sectors, these firms could reach revenues of $440 billion in 2025. In this accelerated growth scenario, not only do the three established industries of Chinese investment grow faster than the economy, but Chinese firms also make significant forays into five new sectors: agriculture, banking and insurance, housing, information communications technology (ICT) and telecommunications, and transport and logistics. This expansion could start with Chinese firms moving into sectors related to the ones they currently dominate—for example, from construction into real estate and housing. Another part of this accelerated growth could come from Chinese firms more fully adapting their formulas that have proved successful in China to markets in Africa, including business models in consumer technology, agriculture, and digital finance.

There is considerable upside for Africa if Chinese investment and business activity accelerate. At the macroeconomic level, African economies could gain greater capital investment to boost productivity, competitiveness, and technological readiness, and tens of millions more African workers could gain stable employment. At the microeconomic level, however, there will be winners and losers. Particularly in sectors such as manufacturing, where African firms lag behind global productivity levels, African incumbents will need to dramatically improve their productivity and efficiency to compete—or partner effectively— with the new dragons on their turf.

For the foreseeable future, the dragons are here to stay. And with continued and likely growing Chinese involvement, it will become ever more urgent to address the gaps in the partnership, including a greater role for African managers and partners in the growth of Chinese-owned businesses. Moreover, both Chinese and African actors will need to address three major pain points: corruption in some countries, concerns about personal safety, and language and cultural barriers. In five of the eight countries in which we conducted fieldwork, 60 to 87 percent of Chinese firms said they paid a “tip” or bribe to obtain a license. After corruption, the second-largest concern among Chinese firms is personal safety. For their part, our African interviewees described language and cultural barriers that lead to misunderstanding and ignorance of local regulations. If these problems are left unaddressed, the misunderstandings and potentially serious long-term social issues could weaken the overall sustainability of the Africa-China relationship.
Everyone—African or Chinese, government or private sector—has a role to play in realizing the promise of the Africa-China partnership. We suggest ten recommendations, consisting of actions to be taken by African and Chinese businesses and governments, to ensure the Africa-China relationship grows sustainably and delivers strong economic and social outcomes (see Exhibit E1).

In the words of one of the many Chinese entrepreneurs we interviewed across Africa, “There is a wise saying in Yoruba: should I wash my left hand or my right hand? The answer is that the right hand should wash the left, and the left hand should wash the right. That is the way to do things. Africa is one hand; China is the other. Working together is the way to do things.”

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Source: Mckinsey & Co. 

See full Report here

 

 

Foresight Africa: Top priorities for Africa in 2016

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Photo: Mutua Matheka Photography

Africa is at a tipping point in 2016. Despite all the success the continent has achieved in recent years, new and old dangers—economic, political, and security-related—threaten to derail its progress. With sound policymaking, effective leadership, and enough foresight, however—Africa can meet and defeat these challenges as well as the many more to come.

In this year’s Foresight Africa, the Africa Growth Initiative and its colleagues discuss six overarching themes that place Africa at this tipping point and give their view on what they perceive to be key areas for intervention to keep Africa on its current rising trajectory. This year’s format is different from years past, encompassing viewpoints from high-level policymakers, academics, and practitioners, as well as utilizing visuals to better illustrate the paths behind and now in front of Africa.

 Explore the full report »
Managing Economic Shocks: African Prospects in the Evolving External Environment

In this chapter, Amadou Sy explores the recent external economic shocks to African economies—including the economic slowdown in China, declines in commodity prices, and the likely continued U.S. Federal Reserve interest rate hikes—that have affected and will continue to affect growth trajectories in the region. With growth slowing across the continent in 2016, policymakers must take this opportunity to discuss and enact economic policy reform for both the short and long terms.

 Read chapter 1 »
Sustaining Domestic Growth: Structural Transformation Depends on Jobs, Industry, and SMEs

Growth in Asia and elsewhere has shown that industrialization is crucial to job creation, a value that is enshrined in the new Sustainable Development Goals. In this chapter, John Page provides recommendations on how African governments and their international partners can revitalize the region’s stagnating industrial development and spur structural transformation.

 Read chapter 2 »
Supporting Human Development: Triumphs and Challenges on the Continent

The region has witnessed remarkable improvements in poverty reduction in recent years, but persistent challenges in inequality, education, health, and violence, among others, still plague it. As the first year of the Sustainable Development Goals, 2016 provides the opportunity to be a jumping-off point for strong policies and efforts to accomplish these goals. In this chapter, Kathleen G. Beegle and Luc Christiaensen cover the assortment of opportunities 2016 provides for supporting human development efforts and argues for the central role that better data plays in addressing them.

 Read chapter 3 »
Capitalizing on Urbanization: The Importance of Planning, Infrastructure, and Finance for Africa's Growing Cities

With Habitat III in 2016, Jérôme Chenal takes the opportunity in this chapter to explore the consequences of Africa’s rapid urbanization. Africa is the second-fastest urbanizing region in the world, which historically has facilitated other regions’ transition from a reliance on agriculture to industry and jobs. However, without strong policies to deliver services, finance and build infrastructure, and support the urban poor, Africa’s rapidly growing megacities and intermediate cities cannot deliver on their potential.

 Read chapter 4 »
Maintaining Governance Gains: The National and Regional Agendas

2016 sees a number of governance milestones and obstacles, including elections across the continent (particularly in Uganda, in the Democratic Republic of the Congo, and for the African Union chairperson), as well as increasing regional integration and a seemingly stalled march towards good governance. In this chapter, Richard Joseph reflects on the region’s growth-governance puzzle and the complex institutional changes necessary to move from economic growth to economic transformation.

 Read chapter 5 »
Expanding African Trade: Creating a Comparative Advantage and Strengthening Regional Partnerships

In this chapter, Joshua P. Meltzer explores the impacts on Africa of the changing global trade environment. In particular, the Trans-Pacific Partnership Agreement will transform global trade architecture, likely to the disadvantage of Africa. However, our viewpoint contributors believe that, if African countries can successfully leverage regional integration and better utilize the African Growth and Opportunity Act, they might be able to maintain global competitiveness.

 Read chapter 6 »

Article Source: Brookings Africa Growth Initiative

About Foresight Africa

The Foresight Africa project is a series of reports, commentaries and events that aim to help policymakers and Africa watchers stay ahead of the trends and developments impacting the continent. Since 2011, the Brookings Africa Growth Initiative has used the occasion of the new year to assess Africa’s top priorities for the year.

 

 

Book Reviews

Credit: Columbia University Press

Columbia University Press is pleased to announce the publication of Industrial Policy and Economic Transformation in Africa, edited by Akbar Noman and Joseph E. Stiglitz.

•       Makes the case that governments should expand their thinking about industrial policy to include learning, technology, supervision, climate change, global trade, and other aspects.
•       Highlights successful African countries that have improved their economic performance and the lessons to be learned.
•       Shows how Africa’s recent economic revival is built on a fragile foundation and gives solutions to strengthen the continents growth going forward.

“This impressive book is about how to generate decent jobs, reduce poverty, and achieve inclusive and sustainable structural transformation through industrialization in Africa. It should be read by anyone who hopes to transform or help transform Africa from a land of poverty to a land of prosperity.”
—Justin Yifu Lin, Peking University and former chief economist of the World Bank

The revival of economic growth in Sub-Saharan Africa is all the more welcome for having followed one of the worst economic disasters—a quarter century of economic malaise for most of the region—since the industrial revolution. Six of the world’s fastest-growing economies in the first decade of this century were African. Yet only in Ethiopia and Rwanda was growth not based on resources and the rising price of oil. Deindustrialization has yet to be reversed, and progress toward creating a modern economy remains limited.

This book explores the vital role that active government policies can play in transforming African economies. Such policies pertain not just to industry. They traverse all economic sectors, including finance, information technology, and agriculture. These packages of learning, industrial, and technology (LIT) policies aim to bring vigorous and lasting growth to the region. This collection features case studies of LIT policies in action in many parts of the world, examining their risks and rewards and what they mean for Sub-Saharan Africa.

Akbar Noman teaches at Columbia University, where he is a senior fellow at the Initiative for Policy Dialogue, co-chair of its Africa Task Force, and adjunct associate professor at the School of International and Public Affairs.

Joseph E. Stiglitz is University Professor at Columbia University, former chief economist and senior vice president of the World Bank, and former chair of the Council of Economic Advisers under President Clinton. In 2001, he was awarded the Nobel Prize in economics.

To find out more about this book, see here.

Credit: Goodreads

Fifty Five Shades of Political Economy….
“Economists are not all evil, few might have had good intentions. Most of recent economists’ bibles don’t bring anything new to the table other than beautiful tables. Instead of reviving the neglected debate around socio-economic inequality, their misfires add to the cacophony that already existed and their childish solutions to socio-economic injustice, either Robin Hood or Give a dog a bone approaches, make their books as useful as a paperweight.
Do we need an Economic Jihad? What can you say about the boring cock-fights between Capitalism deities of our time? You should be as disgusted as I am of these clown shows that chip away the substance of economic disparity dialogues. I have left to the class of economist sloppy cerebral sloths, to tiptoeing around of serious issues. Instead, you, the reader, and I will be swimming against the torrent current. Chapter one through six are exhibits of the case against the current status quo, Capitalism. And if I see you on the other side of chapter seven, please hold my hand tightly from chapter eight through ten. Take your time to digest chapter eleven and get yourself prepared for a big slap to your face. On the closing argument, chapter twelve follows through James Tobin’s recommendation: “Good papers in economics contain surprises and stimulate further work.” Jo Sekimonyo

See the book here and here.

I will be reviewing these two books in due course.

I too hold the mantle: International Day of Democracy

Today, 15th September 2015, little or not so little fifteen year old Muteteli from Rwanda aspires to one day be Member of Parliament. She aspires to represent constituents from her region, help young children grow up to be the best they could possibly be; to live to their full potential. Young Muteteli aspires to assist farmers to produce more food for internal use and export, teachers be well qualified, hospitals to have well run facilities and to overall harness the energies and innovation of the promising Rwandan youth.

“I will one day be Member of Parliament, I will make good decisions and I will make Rwanda proud,” she muses amidst a smile. Are her dreams valid? Very much so.

(The Bring Back Our Girls Movement)

If one asks Muteteli whether she is aware of what a civil society organization is, she will quickly respond with a resounding yes. “They are the people who hold my Member of Parliament representative accountable and raise issues on what needs to be done more of.” If one probes further on whether she would want a civil society during her parliamentary tenure, the answer is also a resounding yes. “Just as my mother holds me to account on my wrongs, I too want people to tell me where I should focus my energies.”

Ban Ki moon rightly put it when he stated that civil society is the oxygen of democracy. It acts as a catalyst for social progress and economic growth and plays a critical role in keeping Government accountable; helps represent the diverse interests of the population, including its most vulnerable groups; that being the women and youth.

Article 29 of the African Charter on Democracy, Elections and Governance stipulates that, ‘State Parties shall recognize the crucial role of women in development and strengthening of democracy.’

What does this mean?

In the words of Rwandan President Paul Kagame, “No one benefits if women are held back; we have to change mind sets, not just laws. In Rwanda, more women than ever before are serving in positions of responsibility and leadership in government and in the work place. These role models, in turn, shape the expectations and the missions of the next generations”.

Pic Credit: Huffington Post

Democracy and its ideals as defined by the United Nations is a universal value based on the freely expressed will of people to determine their own political, economic, social and cultural systems and their full participation in all aspects of their lives. This means that there is rule of law whereby constitutions are upheld, term limits are respected, civil society groups can exercise their freedoms whilst holding government to account, elections are free and fair and the institutions within the state are free to deliver on public services equitably without interference from bureaucratic red tape and corruption.

This year’s International Day of Democracy theme is on creating spaces for civil society and a study by Civicus indicates a nexus between democracy, civil society engagement and women’s leadership.

Beginning with its leadership, it is reported Rwanda claimed the world’s highest percentage of women in parliament in 2003 and today, its women hold 64% of the country’s legislative seats. Rwanda is arguably run efficiently and effectively with a fast rising private sector and civil society which is steered by pragmatic sound policies and legislation from its political institutions. The study indicates that Rwandan civil society’s greatest strengths is its relatively positive values; that its civil society, to a great extent, nurtures and upholds positive values such as anti-corruption practices, gender equity, poverty eradication, tolerance and democracy promotion. This is a country that survived genocide in the 90’s and more or less built its economy from scratch.

The African Union came to the succinct realization that women hold the mantle in promoting democracy and good governance and as such, during its 24th Heads of State Summit in January 2015, ended with a strong call for women’s empowerment in Africa as a step towards achieving the goals of Agenda 2063, its blueprint development strategy for the next 50 years.

 

Pic Credit: Afronline.org

It cannot be overemphasized how crucial the role of civil society and more so women’s participation in democracy building is.  Ban Ki moon also rightly put it when he stated as follows:

Women hold up more than half the sky and represent much of the world’s unrealized potential. They are the educators. They raise the children. They hold families together and increasingly drive economies. They are natural leaders. We need their full engagement… in government, business and civil society.

What does a Data Revolution in Africa look like?

(Pic credit: Onthinktanks.org)

The Heads of State and Government at the 23rd AU Summit within the Common Africa Position on the Post 2015 agenda were convinced of the need for structural transformation for inclusive and people centered development in Africa. They tersely came to an agreement on how such a developmental approach requires the creation and enhancement of adequate policy space and productive capacities, notably through infrastructure development; science and technology; transfer and innovation; value addition to primary commodities; youth development and women’s empowerment. They also agreed that this approach requires addressing the challenges posed by climate change; desertification and land degradation; drought, loss of bio diversity; sustainable natural resource management; and the promotion of a responsive and accountable global governance architecture.

Critical to this discussion therefore is: how can data assist in mitigating these challenges and existing gaps whilst offering new insights on how to accelerate development across the continent?

During the two day National Forum on harnessing the data revolution for sustainable development held in Nairobi Kenya between 28th and 29th August 2015, multi stakeholders from government, private sector, academia, nonprofit organizations, local communities and development partnerships convened a midst whetted ambition to begin addressing the informational aspects of development decision making in a coordinated way.

“Where will the locus for disaggregated data be situated with the shift in development trends? Will it be open data sources, national statistics offices or will it be with philanthropy organizations that are increasingly shifting to partnerships with the private sector? ODA is decreasing in countries such as Kenya which have shifted to middle income status. Will it be in conjunction with private sector organizations? How will this revolution look like?” asked a keen participant in the audience.

These are fundamentals questions reeling in everyone’s mind as crucial conversations on the data revolution embark in Africa ahead of the Sustainable Development Goals being acceded to in September 2015 and the convening of the World Data Forum scheduled to be held in 2016.

Without high-quality data providing the right information on the right things at the right time to the right people; designing, monitoring and evaluating effective policies becomes almost impossible. Institutions require bolstering to manage and steer this new shift in development with adequate resources and political will being the key priorities to making this a reality. How will this happen amidst the current challenges facing the continent? Below is an info graphic highlighting some of them.

(Pic Credit: APHRC)

The sparking of  a conversation on harnessing the data revolution for sustainable development marks Kenya’s first step in working towards a global partnership for a data revolution, establishing the country as a leader on the African continent and globally.

Nonetheless, a common challenge facing majority countries in Africa today, Kenya not excluded,  is the lack or inadequacy of fundamental statistics measuring the quality and quantity of taxes and trade, births and deaths, or even growth and poverty.  Add on to this the mis-match in priorities between governments in Africa and the donor community. Governments alike require sub-national data to help guide budgetary and policy decisions while on the other hand external donors often want national level data to make allocation decisions across countries; this priorities have often been misaligned further exacerbating the already existing data gap.

As the deputy president of the Republic of Kenya Hon. William Ruto rightly put it, “the data revolution must not become a struggle between an ancient regime of traditional official statistics and a new big data republique. A worthwhile revolution should develop greater capacity for national statistics offices while fostering integrated and harmonious relations with other data producers. “

As espoused in the Africa Data Consensus, a sustained data revolution is needed to drive social, economic and structural transformation in every African country. Such a revolution will also make it easier to track our countries’ progress towards meeting national and globally agreed sustainable development goals, with a view to leave no one behind. The building blocks for an African data revolution are already in place. National Statistical Offices have long been the backbone of data production and management, producing official statistics and supporting data activities to create accurate and timely data for decision making. However, today’s development challenges and prospects call for a broad data ecosystem that spans the entire value chain driven by national priorities and underpinned by the Fundamental Principles of Official Statistics. This ecosystem must be inclusive of all forms of data – including official and other data – and involve all stakeholders.

*This article by the author was originally posted on www.dataforum.or.ke

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