What’s Africa’s approach to the New Urban Agenda?

by Developed Africa 25. January 2017 11:14

Bolstering urbanisation efforts

  •  In 2016, Africa was the only region to provide a coordinated response to what should go into the United Nations’ New Urban Agenda. The action-oriented document set global standards of achievement in sustainable urban development.
  • Regional leaders must resist parochialism— understanding that collaboration with neighbours is imperative at a time when competition is global, not local.
  • Once proven in one region, innovations in governance and policy must be spread—adapted and tailored for other areas and other cities.
  • Sanitation delivery in Africa continues to be a problem, though urban areas offer much more access to vital services such as water, sanitation and electricity.
  • Without a clear vision for how to grow cities to accommodate half a billion people over the next 20 years, Africa’s cities will continue to sprawl.
  • Africa’s urban future will benefit from better planning, but the risk is that the pendulum swings too far and that cities are over-determined, unable to adapt to change, and lacking in creativity.
  • Many experts—pointing to examples like the Chinese-built city of Kilamba outside Luanda—believe Africa’s cities will be built by foreign interests. The lack of skills, institutional capacity, and finances present a significant challenge to Africa’s urban agenda.
  • Successfully managing Africa’s urbanisation involves finding the balance between getting the basics right in megacities and promoting population and industrial de-concentration into secondary cities.
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How can Africa create supportive environments for important innovations?

by Developed Africa 24. January 2017 10:55

Boosting transformational technology

  • Internet prices in sub-Saharan Africa vary wildly. Geography affects prices – landlocked countries pay more than coastal countries. Much of Africa gets its internet via undersea cables, so coastal countries have easier access. New initiatives to provide internet via low-orbit satellites and high-altitude balloons offer the hope of more accessible, cheaper internet for all, though still have a long way to go when it comes to cost and reach.
  • Tech hubs are popping up in Africa in different forms. These hubs enable Africans to gain skills and network through brainstorming sessions, workshops, and business- and technology-related trainings, among others. South Africa, Kenya and Ghana boast the greatest number of tech hubs.
  • For further progress and increased uptake of transformative innovations in 2017 what is required is further improvement in the regulatory environment.
  • Rules and guidelines should encourage prudent behaviour by both the financial institutions and market participants. Regulators should manage the orderly entry and exit of financial institutions in the market, minimising the potential for major disruptions in the financial system.
  • Digital finance has the potential to provide access to financial services for 1.6 billion people - more than half of whom are women - in emerging and developing economies. 

 

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How can Africa grow and stabilise its job market?

by Developed Africa 22. January 2017 12:47

Increasing employment opportunities

  • Sub-Saharan Africa faces a rise in the share of its working-age population (WAP). Population data indicates that the WAP in the sub-Saharan African region will increase by 70 percent from 466 million in 2013 to 793 million in 2030 (Lam and Leibbrandt, 2013).
  • Farming is the dominant occupation of most young Africans. The agriculture that will allow young farmers to prosper will have to draw on quality modern agricultural science – at present it does not.
  • Lack of access to finance for youth and particularly women entrepreneurs further limits growth and expansion opportunities.
  • A broader vision of high-quality education (one that fosters the full breadth of skills needed in a changing world) should be a priority in 2017.
  • Broadening access to education will ensure a steady supply of skilled workers into the labour market to support the transition to higher value added sectors.
  • it is important to diversify economic activity away from the current high concentration in traditional low value added agriculture, as it is in many African economies, to more productive activities such as agri-processing, manufacturing, and high-value added services.
  • For those young self-employed workers in the informal sector, there should be institutional mechanisms that ensure adequate access to credit, in light of the fact that these individuals are likely to be wealth and asset constrained.
  • Event to watch: African Union Assembly Meeting – January 24-31, 2017

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How can Africa manage the commodity slump and attract investment?

by Developed Africa 21. January 2017 21:40

 

American research group The Brookings Institution has just published its annual Foresight Africa project - a series of reports, commentaries and events aimed at helping policymakers and speculators stay ahead of developments impacting the continent.

Mobilising financial resources

  • By early 2016, oil exporters’ current account surpluses had breached a 10-year low. The price of the commodity fell from $112 per barrel in mid-2014 to less than $39 in early January 2016. In 2017, policymakers will continue to face gloomy prospects.
  • Ghana’s growth rate is projected to rise substantially in 2017 following the opening of a new oil field. This may increase the country’s output by almost 50 percent.
  • Côte d’Ivoire, Ethiopia, Senegal, and Tanzania are expected to remain within the top five African countries with the highest growth rates in 2016 and 2017, based on current estimates.
  • Many social challenges that were once exclusively the domain of government budgets and aid groups can today be tackled with help from business
  • Enhancing agricultural productivity is not an outdated concept. Higher productivity would raise the income of farmers and free up resources for other economic sectors.
  • Fiscally vulnerable commodity-rich countries could reduce fiscal deficit by reducing government spending and increasing efficiency in 2017. They could also increase tax rates.
  • Countries like Nigeria and Angola could quickly mobilise revenues from non-commodity-related activities by increasing their VAT rates with relatively small side effects on economic activity.
  • Event to watch: The African Development Bank Group’s 2017 annual meetings – May 22-26, 2017
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Investor sentiment towards Sub-Saharan Africa to remain soft

by Developed Africa 8. December 2016 18:26

Ernst & Young, the global consulting giant, said that it expects investor sentiment towards Sub-Saharan Africa to remain soft, as foreign direct investment will slow over the next few years.

In the year-end update to its Africa Attractiveness Programme released on 7 December 2016, EY said the weakening investor sentiment towards SSA will be due to heightened geopolitical uncertainty around the world and greater risk aversion rather than the region’s deteriorating economic fundamentals. Beneath the averages and headlines, the growth dynamics across different individual countries and sub-regions are very mixed.

“Companies already doing business in Africa will continue to invest, but will probably exercise a greater degree of caution and be more discerning,” EY said. “Some of them will invest at a slower pace, looking to consolidate operations and drive profitability; while others are likely to double down on their investments, using this period of economic slowdown to further strengthen positions in key markets.”

EY further said that although SSA’s growth forecasts for 2016 have fallen to a two-decade low, the growth dynamics across different individual countries and sub-regions are very mixed. Outside of the sub-continent’s three biggest economies – Nigeria, South Africa, and Angola – many bright spots can be seen in the East, Francophone and North African regions. “Economic recovery in Angola, Nigeria and South Africa is likely to be a tough and gradual process,” EY said. “However, a diverse group of other economies – including Cote d’Ivoire, Senegal, Ethiopia, Kenya, Tanzania, Mozambique and Egypt are expected to sustain high growth rates over the next 5 years.”

The 'heatmap' below provides a snapshot of macroeconomic resilience across some of the key sub-Saharan African economies, and illustrates just how variable economic performance is across different parts of the continent. The color of each block represents the longer-term position for that metric - green being positive and red negative. The color of the circle in the block represents the current trend. 

It is clear from this illustration that the three largest economies in sub-Saharan Africa - Angola, Nigeria and South Africa - remain under pressure. In the six months since March 2016, the position of Angola and Nigeria in particular has deteriorated, with the Nigerian economy entering a recession and Angola forecast to register zero growth this year. Sustained low oil prices, and the subsequent deteriorating terms of trade that both economies have experienced since 2014, have led to a growing current account deficit and rising government debt levels. Although growth in South Africa remains low, there have been some improvements in key macro-economic indicators in the past six months - including the current account deficit and a somewhat stronger currency. This indicates at the very least that the economy has stabilised, and may in fact be a signal of a gradual recovery.

At the same time, and in contrast to challenging economic conditions in the big three, many of the East African and Francophone economies have remained resilient. Kenya, Ethiopia, Tanzania, Cote d'Ivoire and Senegal are among the African economies still expected to grow in the high single digits this year and next (and through 2021).

This partly has to do with the major exports of many of these economies being less impacted by declining terms of trade. In addition, investment in infrastructure, domestic consumer spending and the continued evolution of services and manufacturing, continues to spur growth in these economies.

The key to overcoming weak global demand lies in enhancing diversification policies. Economies that span a broad range of sectors tend to fare stronger in such periods. Nigeria and Angola provide strong evidence of reliance on a single commodity, as both economies either face or are already in recession. The resilience in certain African economies reinforces the need to accelerate the process of diversification in others. Diversification clearly requires structural economic reforms, and each country is at a different point along this path. This provides enormous opportunity for growth across the region, as investors respond to pragmatic policy reforms and seek opportunities across growing consumer, services and industrial sectors.

This article is an abstract from EY’s ‘Africa Attractiveness Program 2016: Year end update’.

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Some More Myths About Africa

by Developed Africa 29. November 2016 18:08

Euler Hermes debunks five more myths about Africa

Myth 6: No-one is going to finance African growth

Once the oil aftershock has worn off, Africa will resume growing at an average +3% a year. Some countries still post record growth rates higher than +5%, despite the hard shock. In addition, the financing and rebalancing of growth, including investments to be made, will be the key to a sustainable takeoff. The mix of funding will be crucial. In addition to external resources, particularly from foreign direct investment (FDI), some countries are already able to finance at least part of their growth with budgetary resources. This is the case in South Africa, Egypt and Senegal where they account for 25% and 30% of GDP in 2016. Household confidence and investor confidence will be indispensable to collect savings.

Nevertheless, the way ahead will be thorny: (i) budgetary revenues make up only 14.5% on average of the African GDP, compared with 30% in developed countries; (ii) FDI is only 2% of GDP, compared with 2.4% in developed countries.

Myth 7: African consumers are not bankable

Consumption growth in Africa is well under way. In 2016, Africa reports the highest consumption growth rates, led by Cote d'Ivoire (+6%), Uganda (+7%) and Nigeria (+5%), compared with +1.4% in OECD countries or +2% in Pacific Asia. Consumption development in Africa is driven by the continent's exploding urbanization: by 2045, African towns will be flooded with 24 million people, compared with only nine million in China and 11 million in India.

But African consumption development should follow a different path from that of developed countries. The wealth effect and internet access add to the volume growth of African consumption.

Consumers in Africa are going to skip some steps and force business sectors to reconsider their approach. This is especially striking in distribution, financial services or transports: for example, 70% of Moroccans have internet access (55% in China), and 14% of Kenyans use contactless payment cards (60% of French are still and always using bank checks).Euler Hermes has worked out a proprietary consumption potential indicator combining these three determinants. The verdict is final: Nigeria, Kenya, Morocco, Egypt and South Africa are the leading pack, followed by Ghana, Ivory Coast, Tanzania, Sudan and DRC.

Myth 8: It's hard to work with African companies

Given the payment terms granted by foreign suppliers to African companies, it is indisputable that stronger confidence would free considerable resources for growth. Out of EUR 800bn of goods imported every year by Africa, approx. 60% are paid cash. If transactions were settled at 30 days, this would free EUR 40bn of working capital requirements, equal to the GDP of Tanzania, or to 1.6% of the GDP of Africa.

This situation engenders a sort of vicious cycle for African companies. Their cash flow suffers from the multiplication of cash payments, and this makes them more exposed to possible economic risks. As for domestic trade, this calculation in a country like Nigeria generates EUR 10bn of additional cash flows: a foot on the ladder for growth-seeking SMEs.

Myth 9: Agriculture is a thing of the past

Agriculture is the driver of econom ic growth in Africa: it remains the first contributor to employment and lifts millions of people out of poverty every year. Nevertheless, what is needed is a true green revolution to accelerate the catalyst role of the farming sector, by focusing productivity, market access and technologic contents.

In terms of growth by value of agricultural exports from 2005 to 2015, Ethiopia and Ivory Coast (+30%), Kenya and Rwanda (+20%) have specialised in high-value cash crops. Other countries, such as Zambia, Senegal and Morocco, have managed to use mechanisation and technology to increase agricultural productivity.

Myth 10: It's hard to find entrepreneurs and talents in Africa 

Education levels are increasing in Africa. In particular, access to university education in Cameroon has grown from 4.6% in 2000 to 13% in 2013. However, even in South Africa, the most proficient student, the percentage of youth entering university is only 20% by age group. Furthermore, official statistics on entrepreneurship are disappointing: in South Africa, just to make an example, only two companies are set up every 1 000 inhabitants.

These low figures mask the rampant informal entrepreneurship that is set to remain the basis for human capital development in the short term. Therefore, attention should be focused just on this entrepreneurial environment, apart from access to education. In Nigeria and Uganda for example, the towns of Lagos and Kampala have only recently reformed their registry system, a big problem for all those wishing to start business.

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Some Myths About Africa

by Developed Africa 27. November 2016 14:50

 Ludovic Subran and Stéphane Colliac of Euler Hermes set the record straight for CNBC Africa

Myth 1: All African countries are the same

Most African countries have a complicated business environment. Nonetheless, there are differences among African economies in the pace of growth and level of diversification. There are three groups of countries in Africa. First, the strong links such as South Africa and Morocco with an attractive business environment, but their growth (+0.5% and +2% respectively in 2016) remains moderate, although stable. Then the change champions, including Ivory Coast and Ethiopia. These economies record strong growth rates (7.5% and 7% respectively in 2016), pushed by their will to diversify and improve their business environment. Finally, lagging behind are countries such as Nigeria or Cameroon where change needs to be fostered.

Myth 2: Africa only relies on raw materials

Africa has tremendous raw-material sources and is often viewed as an indispensable pool of labor for the near future. But the African economy is also a hotbed of innovation. Compared with Singapore and its 2% of GDP spent on R&D, Africa ranks lower. But this gap is going to narrow very rapidly thanks, for example, to hubs and the will to overcome the infrastructure deficit. Each region has its own champion: Kenya (0.9% of GDP) in the west, South Africa (0.75%) in the south, and Morocco (0.8%) in the north. This innovation effort is also reflected in the creation of technologic hubs, whose number is steadily increasing in the African continent. At present there are 24 hubs in South Africa, 11 in Kenya and 7 in Uganda. In Kenya, the technologic incubator iHub has contributed to the development of 150 companies since 2008, an evidence of its role in the growth of African economy.

Myth 3: African infrastructures are non-existent

The infrastructure gap (water, electricity, internet, transport) in Africa remains important. The example of Nigeria is striking: to fill its infrastructural gap, the country must spend USD 1900bn by 2030, that is nearly USD 130bn a year (25% of current GDP). This gap penalises African economies and costs two percent of growth to the region every year, according to the African Development Bank. But the development of African infrastructures is also an economic opportunity, and African countries cannot finance these infrastructural investments themselves. In the long term, this should trigger significant investments in the region, that will contribute to finance the regional economy.

Myth 4: Africa is isolated from the world

African foreign trade continues to grow - well, almost. In 2016, Africa is expected to lose USD 12bn exports by value (totaling USD 560 billion) because of the commodity shock. In 2017, demand to Africa should increase by USD 30bn. This is not only in the short term. Actually, by 2025 African countries should continue to open up and the continent's heavyw'shts, Nigeria (+USD 210bn of additional exports in ten years / + USD 150bn of imports), South Africa (+ USD 140/180bn) and Egypt (+ USD 83/79bn), will see their trade with the rest of the world soar. The favourite destination of African exporters remains China (27% of African exports in 2016). However, the raw material part in African exports to China has decreased from 97% in 2010 to 83% in 2015, in contrast with low-value-added manufactures (3% in 2010 vs. 7% in 2015).

Myth 5: African institutions are non-existent

Next to countries where institutions do not (or have stopped to) evolve, there are countries launching important reforms. Rwanda for example has strengthened its fight against corruption, by setting up a national anticorruption council and an entity supervising the award of public contracts. The purpose of this is to reduce the differential quality between institutions in Rwanda and those in more developed countries such as Brazil or Italy. On the other side, the needs of public-service users are changing and the same occurs with demands for social security. Moreover, institutions have to respond differently: The digital revolution can help African institutions to skip several stages of development. South Africa, Rwanda and Ghana have already developed online public services of relatively good quality, and this is how institutions in these countries are catching up with international standards.

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Developed Africa has joined forces with Riviere Noir

by David Foxman 16. November 2016 16:20

Since setting out to promote African business opportunities we think we’ve learnt quite a lot about the dos and don’ts of investing in African projects – mostly don’ts, unfortunately! One of the dos, however, is the real need for proactivity. It would be nice to think that you can set out your stall of opportunities and that investors and businesses will beat a path to your door, but it doesn’t often happen that way. Absent an obvious arbitrage, political risk and credit risk mean that in most cases projects need a lot of extra selling to US and European prospects. That additional selling isn’t simply promotion per se; it also means structuring, explaining and financing business opportunities optimally.

That’s why Alex Glover of financial consultants Riviere Noir (rivierenoir.com) and I have decided to combine our resources to jointly offer consultancy services that will genuinely help viable African projects get started, and help companies and investors from outside Africa identify and tease out the advantages of opportunities in Africa. Between us we have the insight, hands-on skills, flexibility, experience and – crucially – contacts to do this.

Contact info@developedafrica.com for more information. 

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Youth and Agriculture

by Developed Africa 5. November 2014 09:00

There appears to be a lot of discussion at the moment around trying to get young Africans interested in agriculture as a career.

It would appear that there is a lack of young people wanting to go into the agriculture sector:

half the farmers in the United States are 55 years or older, while in sub-Saharan Africa, the average age of farmers is around 60 years old."

It is thought that this lack of will to go into the agriculture by young people is due to the image they have of it as being a lot of hard, physical work with little economic reward, and no way of advancing a career in the sector.

An article published by the Thomas Reuters Foundation entitled: "Make agriculture a sexy career choice for young Africans, urges AGRA head" is perhaps a telling sign that something needs to be done to get the youth of Africa to view agriculture differently. And according to the head of AGRA,  Jane Karaku, it is the increased need for mechanisation in agriculture that will attract youth to the career.

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Matabeleland Zambezi Water Project Update

by Developed Africa 29. October 2014 09:00
The serious water shortages that have affected the 700,000 inhabitants of Bulawayo in Zimbabwe since late 2013 have improved to an extent in the first half of 2014, but the proposed long-term solution still remains a long way off.
 
 
 
The situation in February of this year can be seen from the table above, but this illustrates an increase of 10% of total combined carrying capacity after a period of extremely heavy rainfall. In fact, in 2013 both Inyankuni and Upper Ncema had to be decommissioned from the supply in 2013 due to lack of water. This situation had made monitored water rationing necessary which has only worsened the business situation in the city, once an industrial hub but now suffering with a 90% unemployment rate. Fortunately, Environment, Water and Climate Minister Saviour Kasukuwere has stated that the short-term situation has significantly improved.
The Matabeleland Zambezi Water Project (MZWP) is still the best option to provide a long-term solution for the inhabitants of Bulawayo." - Minister Kasukuwere
This ambitious US$600 million project was first proposed over a century ago and in its current form was subject of a economic and engineering analysis by the Climate Resilience Infrastructure Development Facility in 2013, which determined that the project was not a viable, cost-effective option. This finding was primarily based on the fact that the energy required to pump water on the uphill sections of the proposed pipelines would lead to a cost of up to US$4 per cubic metre, as compared to the current national average of US$0.30.
 
Despite these problems work continued on the first stage of MZWP, the Gwayi-Shengani Dam, until March 2014 when work was halted due to lack of funds. Minister Kasukuwere has confirmed that this stage needs another US$90 million to bring it to completion, before the pipelines joining the Gwayi-Shengani Dam to the the Zambezi River and Bulawayo itself can be started. It must be hoped that funding can be found so that the water security of Bulawayo can confirmed in the long term. 
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Nigerian economy defies Ebola threat

by Developed Africa 15. October 2014 09:00

The Nigerian Ministry of Health has confirmed 19 cases of the virus, including seven fatalities within the Nigerian borders, however Nigeria’s Finance Minister has stated that the Nigerian economy has not been severely affected by the crisis.

Finance Minister Ngozi Okonjo-Iweala has said in an interview with Bloomberg TV Africa:

We have a team monitoring the economic impact and we don’t feel we are yet at the point where we can say it’s having a huge impact on the economy”.

This comes as welcome news as the country prepares to open the Development Bank of Nigeria in the next six to nine months. The bank will be financed by the Nigerian government, along with assistance from the World Bank, the African Development Bank and the German development bank, KfW Group. The lender will be capitalized with $2 billion to begin with, but the minister has said that it is hoped that this will rise to up to $10 billion, filling a gap in business lending within the country.

Despite warnings from the U.S. Centers for Disease and Control that the crisis could “change the economy of the world”, and Okonjo-Iweala’s concerns of earlier this year of the economy finding itself in a “vulnerable” state, it appears that activity within the country is remaining largely unchanged. The Nigerian Excess Crude Account, where a portion of oil revenue is stored as a safety net to protect the economy in times of volatility, stands at $4.11 billion, the same level as recorded in July.

On September 9th, an investor day planned by the parent of Nigeria’s biggest company, Dangote Cement, was postponed in Lagos due to Ebola fears. Okonjo-Iweala has commented:

There’s been some fall-off in hotel occupancy, in Lagos in particular, some meetings have been postponed, but you still have other businesspeople who are arriving.”

 

The NMH has claimed that the emergence of new Ebola cases within the country’s borders has now ceased, with a small number of contacts still under surveillance. However, with doctors stating that the risk to Nigerians will only end once the disease has been eradicated in neighbouring countries, we are yet to see whether the economy will remain resilient in the longer term.

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Future of Zambia’s Konkola Copper Mine at risk

by Developed Africa 7. October 2014 09:00

Operational challenges and low copper prices are endangering the future of the Konkola Copper Mines, a subsidiary of Vedanta resources and one of the world’s largest copper mines. Despite the KCM generating $1.3 billion in revenues last year, it made an after-tax loss of $89 million, due to what Mines, Energy and Water Development Minister Christopher Yaluma has described as “poor management”, along with exposure to $1.6 billion of liabilities. The Zambia Revenue Authorities’ refusal to hand over VAT refunds, combined with high fuel prices, is also placing the mine under financial strain.

The Zambian mining industry consumed over 50% of the country’s total power supply, and a lack of reliable and sufficient power has been cited as a major limiting factor to the industry’s growth. Deteriorating relations between the KCM and suppliers has further highlighted the importance of this. The KCM recently experienced a week-long power supply restriction after a dispute over an unpaid bill of $44 million with Zambian electricity supplier, Copperbelt Energy Corp. The situation was resolved after Zambia’s energy minister warned that were restrictions to be prolonged there were likely to be serious implications for job security, describing the standoff between the two companies as “economic sabotage”.

While the energy supply has since been restored to previous levels through what has been described as an “act of good faith” by CEC officials, there have been knock-on effects that have proven to deteriorate the situation further. Underground work at the Nchanga mine has been suspended due to flooding, thought to be a result of a lack of pumping during the energy restriction. This has caused the loss of almost 500 tonnes of copper, with a value of $3.3 million, and further costs will accrue as water is drained, damage repaired and normal operations resumed.

As the single most important recipient of large foreign direct investment (FDI) in the country, mining is clearly a vital industry to Zambia, especially as it employs 10% of the overall workforce. The proposed expansion of the Konkola Deep Mining Project was expected to treble the KCM’s yearly output of copper ore to 6 million tons, but with demand remaining low and the mine’s financial situation worsening, the future remains uncertain. Minister of Mines, Energy and Water Development, Christopher Yaluma, has said that the government is closely monitoring the situation to minimise the possibility of job losses, which after the recent energy restriction were thought to be likely.

There are several possible scenarios that have been discussed by the government and parent company which could see the fortunes of the struggling mine reversed. Zambian Vice-President has said in a statement:

Our Government’s view is that KCM needs a fresh capital injection. Our experts, consultants and advisors say there is a requirement to put in more money if KCM is to be more viable.”

Dr Scott has said that Vedanta’s response to the government’s suggestion that KCM be recapitalised was to call for government intervention in the form of a financial injection via ZCCM Investment Holding. Alternatively they requested that they be permitted to borrow money from local banks, a move deemed unacceptable by Dr Scott due to its potential to have a negative impact on the agricultural sector, among others.

The government appears confident that with an injection of new capital, the KCM will again become viable. Whether this will come from Vedanta, governmental investment, or another source is yet to be known.

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Liberia to halt deforestation by 2020

by Developed Africa 25. September 2014 09:00

Norwegian officials have released details of a deal struck with the Liberian government that will see the West African country receiving £150m to stop deforestation by 2020.

 

Liberia, a globally-recognised biodiversity hotspot, contains about 43% of the Upper Guinean forest, a significant part of West Africa’s remaining rainforest. Illegal logging has been a growing problem since the end of the civil war in 2003, prompting the government to introduce regulatory practices such as the electronic tagging of lumber trees.

The Norwegian deal comes at a time when the country’s economy has been weakened as a result of the recent Ebola outbreak, with the logging industry being seen as a possible tool to counteract this. The possibility of this accelerated activity bringing populations into contact with natural reservoirs of the virus may, however, perpetuate the crisis.

Norwegian political adviser Jens Frolich Holte has said in a statement to the BBC:

Our hope is that the situation there now will be contained and resolved. But we also need to give Liberia a long term hope for development and that is what this rainforest money will provide for them, a long term vision for a country with reduced poverty and reduced deforestation”

The change in direction has been praised by environmental campaigners, who successfully protested against the release of licences to companies to cut down 58% of the country’s remaining primary rainforest in 2012.

Under the terms of the new agreement, the country has agreed to place 30% or more of its forest estate under protected area status by 2020, alongside piloting direct payments to communities for protecting the forests. Norway will also be helping Liberia to build capacity to monitor and police the forests in the early days of the deal.

Liberian campaigner and Goldman Environmental laureate Silas Siakor has commented:

This partnership holds promise not only for the forest and climate; but for forest communities that have been marginalised for generations".

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Optimistic outlook for Democratic Republic of Congo’s banking sector

by Developed Africa 24. September 2014 09:00

Despite less than 5% of the Democratic Republic of Congo’s adults estimated to have their own bank accounts (one of the lowest rates of banking penetration worldwide), projections released in September by the ratings agency, Moody’s, have suggested that the DRC’s banking sector can expect to grow over the next two years.

This will be fuelled by accelerating economic growth, an expanding mining sector (the DRC is the world’s sixth-largest producer of copper and the biggest of cobalt) and increased agricultural productivity, infrastructure reconstruction and domestic consumption.

The report predicts that the country’s GDP will grow at around 10% in 2014 and 2015, after growth increased from 7.2% in 2012 to 8.1% in 2013

The projected growth has been put down to the success of a peace accord reached in 2002, since when the DRC’s banking sector has grown steadily, with assets having being seen to increase dramatically from $300 million in 2002 to $4.2 billion in 2013.

Security risks have been considered as potential threats to this growth, with armed rebel groups still present in the mineral-rich east. Heavy fighting seen through the first ten months of 2013 has since been kept under control, however many areas formerly occupied by the rebel groups are yet to be secured and the infrastructure in these areas is yet to be repaired. A resurgence of conflict would impact on public finance sustainability and the business climate, however Moody’s report stated that:

While credit risks will remain elevated and profitability will be modest, we expect a benign operating environment over the next two years to support strong lending growth.”

This has led to Moody’s accrediting the DRC’s largest bank, Rawbank, with a B3 global local-currency deposit rating, declaring its outlook “stable” and making it the first bank in the DRC to receive a credit rating from Moody’s. All of this is likely to open doors to increased future foreign investment, and there are hopes that the strengthening economy will also contribute to human development.

 

 

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Investment required to access Africa’s untapped agricultural potential

by Developed Africa 12. September 2014 09:00

Farmers are being held back by their own inability to invest in products that can improve harvests, such as fertilisers and pesticides. With farming in Kenya accounting for around a quarter of national output (in 2006, 75% of working Kenyans were making their living by farming) and with similar figures being seen across the continent, it’s clear that the benefits by increased public investment would be felt by a large number of people.

Most farms are small, and it is common for those who are unable to support their families through the production of cocoa, cotton, coffee and tea to be driven to growing food staples. These problems were highlighted in by Martin Bwalya, head of the Comprehensive Africa Agriculture Development Programme (CAADP).

Africa has to move away from agriculture for food in the stomach to agriculture for wealth into the economy and into the pockets of farmers,"

It is thought that the solution lies in the production of higher-yielding varieties, improved marketing and through the cultivation of local demand that would add value to the products.

The unlocked potential that would come as a result of investment into crop processing was made clear in a statement from Edward George, head of research for soft commodities at Ecobank, London:

It is possible there is a cotton farmer in Burkina Faso who is wearing a shirt made with the cotton that he grew, but the shirt was made in China".

The potential for expanding local industry is vast. Alongside crop processing, increasing local demand for agricultural products would have a dramatic impact on their value. Most of the recent work in value addition is still in the research stage, but the main strategies recommended are that of improved marketing and new, innovative technologies that allow supply of agricultural products to continue throughout the year, rather than being strongly dictated by harvest times.

There have been many promises to increase agricultural funding; in 2003 a CAADP campaign led to African presidents pledging to increase agricultural funding from around 3% of their budgets to around 10%. Only eight of the African Union’s nations have reached this goal. Others are improving, but in many cases the funding just isn’t sufficient to make a real difference.

For example, in Kenya’s Kirinyaga County, 90% of the 560,000 county residents rely on farming for their livelihood, however only a fraction of the county’s spending resources are spend on agriculture. About a third of the 3.25 billion shilling total ($36.79 million) goes towards development, with most of the money being invested in roads, schools and healthcare centres.

Without the ability to invest in improved farming practices, the most a farmer in this county can expect to earn is 70 shillings per kg of coffee, however, with improved marketing and scientific farming methods, this could more than double, to around 200 shillings. While reflecting on this possibility, Kirinyaga Governor, Joseph Ndathi conluded:

That is the surest and fastest form of development."

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Africa’s richest woman claims that higher education is not compulsory for success

by Developed Africa 11. September 2014 09:00

In a speech given to students at the University of Lagos during the 2014 UN International Youth’s Day, Folorunsho Alakija, chairwoman of Famfa Oil, prized hard work and persistence above the value of a university degree in terms of importance to future success. In a country where competition for university places is fierce, with 1.7 million students competing for half a million available places this year, her words may act as encouragement for the over a million qualified, university-age Nigerians who have been unsuccessful in gaining postsecondary places. She recommended that students avoid depending simply on their degree for their future, stating that “you do not have to have a university education to be able to make it”, but did acknowledge the potential advantage that such a qualification may confer, telling students to:

 count yourselves privileged to have that education as part of the feather in your cap”.

 Alakija began work in the 1970’s as a secretary, going on to create her own fashion line, gaining clients such as former first lady Maryam Babandiga, before moving into the oil industry. Now 63, the mother of four is said to be worth $2.7 billion (£1.7 billion), and has credited perseverance as the key to her success, stating that:

It has not been a rag to riches fairytale”.

 

Alakaji is also the founder of the Rose of Sharon Foundation, an NGO that provides scholarships and business grants to widows and orphans.

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Maseru hospital endangers Lesotho’s health budget, says Oxfam

by Developed Africa 10. September 2014 09:00

Oxfam has warned that the Queen Mamohato Memorial Hospital, run by a private consortium led by South-African healthcare provider, Netcare, threatens to bankrupt the country’s health budget and is jeopardising the care of the poorest people of the country. Oxfam’s health policy adviser, Anna Marriott, has dubbed the public/private partnership (PPC) a “flawed and dangerous plan”, despite the model being recommended by the International Finance Corporation (IFC), the private sector arm of the World Bank.

Lesotho is a country facing enormous health challenges, with the third highest HIV and AIDs prevalence in the world, and with infant and maternal mortality rates on the increase. The new hospital, which was opened in Maseru in 2011, promised to vastly improve the healthcare services on offer for the same annual cost as the old public hospital that it replaced. According to Oxfam this promise has not been fulfilled.

While death rates appear to have dropped by 41%, alongside other dramatic decreases such as that of infant deaths by pneumonia (65%) and stillbirths (22%), Oxfam has highlighted the high cost that has come alongside this. Oxfam has calculated the current cost of running the hospital and associated clinics is more than three times that of the one that it replaced, at $67 million a year, 51% of the country’s entire health budget. This has been attributed to inflation at 7% on repayments, and higher demands for treatment than anticipated. Netcare has stated that the demand has exceeded the contracted volumes of 20,000 inpatients and 310,000 outpatients per year, with additional outpatients costing a further $4.72 each, and inpatients attracting fees of $786 each.

The report claims that the IFC has acted irresponsibly through its role as advisor to the government of Lesotho, and its recommendations of PPP as a successful model for Lesotho and several other African countries, leading to similar projects being proposed in Nigeria and Benin. The PPP model has a history of causing unsustainable financial burdens on governments even in wealthier countries, with public finance initiatives leading to debts that have, in the UK, caused a hospital trust to go into administration and 22 others to claim their clinical and financial futures in danger due to the demands of repayments. Similar concerns have been voiced in Australia. The report from Oxfam states:

The high cost, high risk nature of health PPPs was already clear from international evidence in rich countries and raises serious questions about why the model was pursued by the IFC in such a low-income, low-capacity context. “

With only 24% of the country’s population living in urban areas, and only half of this living in the Maseru area, Oxfam has voiced concerns about the unequal distribution of resources disadvantaging those in rural areas, where most people live. Netcare has disputed the report, claiming that the hospital cost is only 35% of the total budget, and calculating the total catchment of the hospital as around 26% of the total population. It has described the Queen Elizabeth II hospital, which the Queen Mamohato Memorial Hospital replaced, as “decrepit, dirty and unhygienic”, and has highlighted the importance of newly-introduced facilities such as intensive-care and neurosurgery. It has also emphasised the fact that the contract lasts for 18 years, after which point the hospital and clinics will belong entirely to Lesotho.

Geoffrey Keele of the IFC has said in a statement that:

The World Bank group shares Oxfam's concern that the health network in Lesotho is being overburdened as it attempts to fulfil greater-than-anticipated public demand for basic health services. The World Bank group is working with the government of Lesotho to strengthen the country's health system so that everyone in Lesotho, especially the poorest, can access the essential health services they need.”

 

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Booming technology in Africa

by Developed Africa 25. July 2014 09:00

Yesterday's news that Samsung are looking to open a new plant in South Africa as one of the first entrants into one of the country's new special economic zones is just the latest in a growing trend of multinational tech companies investing in Sub-Saharan Africa.

This is not the first time we have covered this, and given that technology is one of the fastest growing sectors for investment in Africa and that the African consumer market for tech is exploding, it will very likely not be the last. To give you a quick run down of some of the things we have discussed in the past:

We have covered the way that technology is becoming more accessible in spite of poverty, Kenya's policy to extend internet access and education, tech companies' motives in investing in Africa, a new educational enterprise operating in Rwanda called the 'technology bus' and Deloitte's proposals to make African technology companies better able to rise up international rankings, among others.

Both Samsung and Google are seeking to extend their influence in Africa. Apple have been slower off the mark.

Tomorrow we'll be taking a look at the big investors in Africa, including these two tech giants, to see who really has the initiative at the start of the African century.

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Samsung look to open plant in South Africa

by Developed Africa 24. July 2014 09:00

Samsung are set to open a plant in South Africa, according to South African officials.

A spokesman for the South African government's Trade and Industry Department has announced that the construction of this new facility will take place in the Dube TradePort, a duty-free area in Durban set up as a special economic zone. The government have set up a number of such special economic zones to encourage greater investment into South Africa. Trade and Industry Director-General, Lionel October said:

We have worked with Samsung and they identified the Dube TradePort as a space to operate from. [President Jacob Zuma] will launch the special economic zone within a month or so and the first investment anchor will be Samsung,”

Samsung are expected to make an announcement in the next two weeks, according to their local spokesman. Samsung is targeting significant increases in revenue through sales in Africa. Its ambitious target of $10bn in revenue from the African market is pinned on hopes of a boom in the African mobile market, which is expected to rise by 43 per cent in terms of number of users by 2017.

Look out for tomorrow's article, where we will be taking a broader look at the competition between tech giants for the African market over the last few years.

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Sierra Leone to Issue Bonds to Foreign Investors

by Developed Africa 18. July 2014 09:00

The government of Sierra Leone has recently announced plans to offer bonds to foreign companies for the first time.

The government will be issuing bonds worth 60 million Leones ($14m) maturing in 2016 and consider selling further three-year bonds. As Bloomberg explains, its objective in doing this is to rebuild much of its power infrastructure which was destroyed during its civil war.

Sahr Jusu, head of the public debt management division in the Ministry of Finance and Economic Development said of the announcement:

We want to do a benchmark bond early August to try to test the market reaction. We are programming the issuance of the bond against the timeline for the payment of contractors.”

Sierra Leone is currently trying to contain the worst Ebola outbreak ever, along with Liberia and Guinea. As this graphic shows, the number of cases in this West African Ebola outbreak is greater than ever recorded in any previous outbreak of the disease. 

In this context, the importance of a sustained post-civil-war recovery and improvements in national infrastructure are clearly paramount. Sierra Leone's current power deficit is about 200 megawatts, more than twice its total power output at present (94 megawatts). The other imperative in issuing two and three-year bonds to international investors is to reduce the pressure currently on the short-term instruments that the government uses to raise money domestically, moving three and six month bonds to longer-term instruments.

If restructuring their debt and issuing new bonds in this way can raise the money required for infrastructure development, then that will be very welcome. 

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Urban Population Rise Worldwide

by Developed Africa 17. July 2014 09:00

A study published last Friday by the UN claims the world's urban population will rise from 3.5 million to 6 million in less than 40 years.

This, according to the UN, is going to prove most challenging to Africa and to Asia in terms of meeting the service needs for swelling populations such as this:

Embedded image permalink

Africa is projected to experience a 16% rise in its urban population by 2050 - making it the most rapidly urbanising region on the plant - as the number of people living it its cities soars to 56%."

To view country profiles, data, and maps, click here. To read the highlights report, click here.

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Economic Inequality

by Developed Africa 15. July 2014 09:00

A report last month from Oxfam announced its proposals for what should be in the new development goals post-2015 once the era of the Millenium Development Goals comes to a close.

High among the proposals was overcoming economic inequality, and the press release from Oxfam that announced the report very strongly urges governments not to cut the goals for reducing inequality, as they claim there is a risk of that happening:

These goals are at risk of being cut from the final draft. They must remain, and include ambitious targets to reduce income inequality so that the income of the top 10 per cent is no more than that of the bottom 40 per cent."

Alongside these proposals from Oxfam, there is a strong will from the world's 48 least developed countries to be involved in the decision process of the post-2015 agenda. Though it remains tricky for them to really have a strong voice as within the Open-ended Working-Group that negotiates the terms of the agenda, there are only 6 LDCs in a group of 30. But despite this the Ambassador for the UN Under-Secretary-General and High Representative of LDCs, Land-locked Developing Countries and Small Island Developing States feels that there is a better chance now than there ever has been:

LDCs are apparently better prepared than in previous U.N. fora, primarily because of "back-stopping" support from the UN-Office of the High Representative (OHRLLS)"

Though others from LDCs remain unconvinced that there is any real difference this time around, and feel instead that the system in place is the problem, as it does seem odd that decisions for an agenda that is aimed at improving the lives of people living in developing nations, that developing nations have very little say on the matter.

Captura de pantalla 2014-07-10 a las 17.05.11

 

An infographic examining the dangers of economic inequality.

 

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DfID Focus on Disability

by Developed Africa 14. July 2014 09:00

It is a topic that has rarely seen a lot of attention from international development organisations, but DfID is starting to commit to greater social inclusion in terms of aid provision.

This news comes after the international development select committee's examination of disability and development, and DfID have responded by committing to ensure that disability becomes a focus of its work, and also to step up its work on disabilities during international crises.

Back in April, Lynne Featherstone commented on the findings of the select committee:

I'm delighted that the International Development Committee has shone a spotlight on the urgent problems faced by people with diabilities in developing countries. For too long, people with disabilities have been treated as an after-thought even though they are often the poorest people and lack access to basic services... I'm determined to increase our focus on disability within DfID, and I'm encouraged by the recommendations the Committee has made."

And already, policies can be seen to have been implemented that confirm DfID's new dedication to this cause. For example the UK has now committed £39 million to support the Surgery, Antiobiotics, Facial Cleanliness and Environmental Improvements strategy, in order to eliminate Trachoma in countries such as Ethiopia, Tanzania and Zambia. Trachoma is an eye infection which can lead to blindness, and is very common in the aforementioned countries. The programme will:

help thousands of people receive surgery to prevent blindness; see millions of doses of antibiotics distributed, and improve cleanliness to stop the spread of the disease, including eliminating the conditions which promote disease carrying flies."

Trachoma is a key example of a disability that sends people already living in poverty into a vicious cycle from which there is often little hope of escape. DfID's new focus on ensuring that people with disabilities are part of all decisions that are made, rather than a second thought will stop them being overlooked, and will hopefully move other international organisations to act in a similar fashion.

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Strong Manufacturing Sector Needed, but not on its own

by Developed Africa 11. July 2014 09:00

 At a high-level panel at the beginning of July, the Executive-Director of the ITC discussed the need for more than just an increase in manufacturing.

There has been a lot of discussion in recent years that in order for African nations to properly develop and grow their economies then manufacturing is absolutely necessary. But this is often the only focus, which Arancha Gonzalez argues is wrong, and that:

It's not just about manufacturing; it's about raw materials, energy, distribution, logistics, financial service and tourism... It's not about choosing; it's about how to blend these components in an intelligent manner."

So in order for industrialisation to really have an impact, manufacturing needs to take influence and roles of services as it grows.

Below is an argument for just how important manufacturing is for the development of the continent's economies:

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BRICS Development Bank

by Developed Africa 10. July 2014 09:00

Its been 2 years in the making, but it is expected for the BRICS countries to announce the launch of their development bank at their summit next week.

An announcement by Russian Finance Minister Anton Siluanov yesterday has confirmed that the BRICS will announce the launch of their "New Development Bank" at their summit in Brazil 16th-17th July. The development bank is planned to open in 2016, and is being created to counteract the move away from investing in developing economies by investors. Plans are for the bank to target projects within the BRICS economies, but may also give help to new members of the UN. The dissatisfaction with the Bretton Woods institutions has been clear from the outset of the BRICS bloc, but is becoming clearer, for aswell as the bank, they are creating a fund to mimic the IMF:

BRICS will also consider creating a fund, which Mr Siluanov dubbed a "mini IMF"...The fund is designed to serve as an emergency coffer for BRICS if a member suffers from capital flight or the risk of currency depreciation."

Last year we were left without solid information on how the bank will be funded and led, we now know that the funding will be divided equally between the bloc's countries, with an inital $10 billion each, with $40 billion in guarantees; and the chairman position will rotate between the nations every 5 years.

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Private Schools in Developing Countries

by Developed Africa 9. July 2014 09:00

The Department for International Development has been taking a look at the impact of Private schools in developing nations. 

Dr Laura Day Ashley, who worked on the review into private schools.

As Dr Ashley mentions in the video above, the finding with the strongest evidence was that:

Teaching is better in private schools than in state schools, in terms of higher levels of teacher presence and teaching activity as well as teaching approaches that are more likely to lead to improved learning outcomes."

However, they found evidence to show that private school teachers are often paid less, have less job security, and are less well qualified, which the researchers feels translates into putting in more effort and working harder in order to maintain their jobs. Such an assumption needs to be investigated further, especially in order to discover the working conditions of these teachers.

Moving towards the difference between learning outcomes in private and public schools it was found under moderate strength evidence that private school children were achieving higher standards of learning than those in government run schools. But again, there is a need to explain the context of these findings, as this piece of evidence did not differentiate between children's home lives and backgrounds which play important roles in how well they learn.

The conclusion of the review does not allow to make definitive policy recommendations, but instead it has managed to highlight knowledge gaps that should be investigated further, as well as cause for concern over private school provision in developing nations.

To read the review in full, click here.

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Healthcare Africa

by Developed Africa 8. July 2014 09:00

From Instagram to a mobile app for Vets, healthcare is developing across the continent.

A new application invented for use by doctors across the globe in order to bridge cultural gaps, called Figure 1, is essentially an instagram for doctors.

As displayed in the image above, medical professionals will be able to photograph and share images of medical ailments to either gain other professional opinions. The app is not just for asking international doctors for help, but can be used to send images to doctors within a hospital to ensure coherent care for a patient, but it does look as thought the app may be targeted towards those working in developing nations and particularly in rural areas to be able to get second opinions on symptoms they are not familiar with.

But it would seem that technology is not only creating apps to help humans, but animals too, as an app is developed specifically for vets and farmers in East Africa to diagnose and correctly treat their livestock. The app, VetAfrica, was produced by a Scottish technology company, Conjengo, alongside Microsoft.

Both these apps show the growing trend to embrace mobile technology in order to improve healthcare as well as many other sectors.

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Employment, Production, and Entrepreneurs

by Developed Africa 7. July 2014 09:00

With UNCTAD's Economic Development in Africa 2014, released last Thursday, employment (or rather unemployment) is a popular focus of debate.

A number of conclusions and claims have come from this report regarding employment alongside how to boost economies across the continent. But most predominantly is the question of how unemployment has managed to remain so low as economic growth is on the rise?

Essentially, the continent hasn't produced enough investment and growth in the domestic economy. Public sector investment has been low, and foreign direct investment has largely been channelled into the sectors where the big returns are- oil, gas, and minerals."

Unfortunately, as the Guardian points out, these "big return" industries do not provide large employment bases, and thus it is economic support for high-employment sectors that is greatly needed to combat the high unemployment rates.

To take a look at the full report, click here.

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Climate Change Impact on Coffee

by Developed Africa 4. July 2014 09:00

Whilst the demand for coffee is increasing, it would appear that production of the beans is under threat from the effects of climate change.

The "Coffee Barometer" Report 2014 was published yesterday and has put forward that the production of coffee is under threat due to being grown in areas that are starting to feel the strain of climate change, which include Kenya, Uganda and Tanzania, alongside a number of South American nations and Vietnam.

The situation is alarming. Erratic temperature and rainfall can affect coffee plants directly, by bringing about sub-optimal growing conditions, and indirectly, by providing favourable conditions for pests and diseases such as coffee rust and the berry borer."

The report notes that in order to meet supply, at the current rate of production decline, then one million extra hectares of land would be need to start cultivating coffee. But this is not the solution that they advise, instead they look to increasing the production on the current land used:

a more sustainable solution is to produce more coffee per unit of land, water, and agrochemicals."

To read the report in full, click here.

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Deloitte to reward Fast-Growing Tech Companies

by Developed Africa 3. July 2014 09:00

Deloitte, the professional service firm, has announced the launch of Technology Fast 50 Africa initiative. 

Deloitte says the ranking will list technology companies that demonstrate consistent growth. The competition is open to companies run and majority-owned by Africans. Entrants also need to have current operating revenues of at lead US$500 000. Those entering must also be headquartered in Africa and have been operational for at least five years."

The initiative will work in conjunction with the firms Technology Fast 500 awards which is open to companies across Europe, Middle East and Africa. But the hope of the Fast 50 Africa is that it will boost the numbers of African based and owned companies that make it into the top 500.

The awards are a celebration and encouragement for tech companies across the continent, and will hopefully encourage not only further growth but investment across the board.

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Rothschild creates fund for Africa

by Developed Africa 2. July 2014 09:00

The investment group Edmond de Rothschild has raised a fund specifically for investment deals across Africa.

The fund, which will focus on making deals in Africa, will be managed by Amethis Finance- a company majority-owned by the Edmond de Rothschild"

The idea for the fund was given to the bank by Ariane de Rothschild, and the focus will be upon high-returns, but that have a social development aspect, so that it will benefit both the stake holders and the continent. The bank has so far raised a fund of $530 that will be focused on small and medium sized companies.

It is reported that Amethis Finance, the group that will manage the fund, has a good record of investment across Africa, including investment in:

Chase Bank, a Kenyan commercial bank, Velogic, a Mauritius-based logistics firm, and Petro Ivoire, an energy distribution company based in Ivory Coast."

Chief Executive of Compagnie Benjamin de Rothschild Conseil, Johnny El Hachem, has posited that longer staying longer in Africa gives better returns. Encouragement for all investors that African companies are worthy investments.

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China's new approach to Africa

by Developed Africa 1. July 2014 09:00

Following on from previous posts regarding China's involvement in Africa, we take a look at recent moves on the continent.

 

It would appear that the Chinese government really has changed its tack when it comes to investing in and being involved with the development of African nations. The video above depicting the decisions by China to send in troops to help with struggles in Sudan could be evidence of a more involved approach to development, rather than just throwing in money for its own gain as it has in the past. However, one could also take from these moves that China is still just protecting its own interests in this region, as sending in troops would help to protect the oil business.

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Unemployment and Agriculture

by Developed Africa 1. July 2014 09:00

Following on from a blog last week regarding the importance of support for farmers and agriculture across Africa, we look at how agriculture could decrease unemployment on the continent.

Somehow, despite the fact their are unprecedented levels of unemployment, and specifically youth unemployment, across the continent of Africa, there currently seems to be a disinclination by the Africa's youth to work in agriculture. Seeing it as dirty, hard work, it is not a sector that gains a lot of attention from the youth population. 

Unless the younger generation ventures more into agribusiness, Africa may not be able to meet up with the demand of feeding its growing population and achieving food security by the year 2025."

 

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Global Partnership for Education

by Developed Africa 30. June 2014 09:00

Last Thursday world leaders had to decide how much they were going to pledge to support the efforts of the Global Partnership for Education.

Malala Yousafzai wrote an empassioned article in the Guardian on Wednesday last week, urging national leaders to pledge support that could change children's lives across the world:

these men and women from rich and poor countries will have the power to either help those children reach their potential, or leave them without the future they deserve."

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"Do Agric, it Pays"

by Developed Africa 26. June 2014 09:00

One Africa launched the campaign "Do Agric, it Pays" in January to encourage people into agriculture, as well as to encourage government spending on the sector.

The group are currently focused on:

lobbying African heads of state and making a case for prioritisation of agriculture and transparency in budgets for small holder farmers across Africa."

This comes as a lot of criticism has started to hit governments across Africa for the amount they spend on importing food products in comparison to the amount they spend supporting small and local farmers to produce such goods.

Appealing to Ghanaian President Mahama, One Africa wanted him to persuade African leaders at the AU meeting in Equatorial Guinea of their case for prioritising funding for agriculture and small farmers. The President's response was to blame the policies brought in in the 1970s, pushed by the World Bank:

They [the World Bank and IMF] came with policies that said that we should allow the farmers to compete. We were made to remove subsidies... while they continued subsidising farmers in the western countries, the African farmer was left to himself."

However, as The Chronicle also argued, all blame cannot be placed on the Bretton Woods organisations, but responsibility was also on the shoulders of African leaders at the time. The focus now should be upon making things right and ensuring that agriculture is given the attention and funding that it deserves.

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Global Multidimensional Poverty Index 2014

by Developed Africa 25. June 2014 09:00

The Oxford Poverty and Human Development Initiative (OPHI) have released their 2014 report which found that 1.6 billion people across the globe are living in multidimensional poverty.

The report was released last week, and an explanation on the OPHI website provides a break down of the topics they used for their analysis, which cover: Destitution, Dynamics, Rural-Urban Comparisons, and Inequality. The final topic named, Inequality, was a new measure for 2014, and is a very important addition to the analysis:

Poverty reduction is not necessarily uniform across all poor people in a country, or across population sub-groups; an improvement overall may yet leave the poorest of the poor behind. In 2014 we used a separate, decomposable measure of inequality – a positive multiple of variance – to analyse inequality among the MPI poor."

As well as these topics, there are 3 main dimensions that are looked into when analysing a countries' poverty levels, and within those there are 10 more indicators that lead the group to their results:

Tenindicators

To take a look at the briefing in full, click here.

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Power Consumption across Africa

by Developed Africa 24. June 2014 09:00

Infographic charting annual power consumption per person across several countries in Africa.

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Changes to Tax Systems

by Developed Africa 23. June 2014 09:00

Dependency of aid is always a topic of much discussion when it comes to African countries, what moves can be made to reduce this dependency?

In 2010...Burundi's tax take was 300 billion Burundian francs ($240m). It has almost doubled since, to 560 billion francs."

This increase in revenue was all thanks to the changes made by the new tax agency Office Burndais des Recettes (OBR) run by Kieran Holmes. And the changes made by this autonomous agency are ones that could be made across the continent in order to increase the amount of revenue countries receive from tax, making them slowly but steadily less dependent upon international aid.

The changes made included the replacing of anyone working in the old revenue division who could not successfully pass finance exams, and who were really in it for the money and corruption; by ensuring that only qualified people worked for the agency, Holmes made the first step towards changing the corrupt systems in the revenue service.

The government has tried to make bills less burdensome, by lowering corporate income tax from 35% to 30% and introducing a value-added tax (VAT) to broaden the tax base."

And it is these simple changes that caused the rise in tax payments in Burundi, with predictions being made that if this pattern were to continue taxes would cover expenses by as early as 2017, removing the need for international aid. And these are changes that other African nations could make, especially the switch to autonomous tax agencies which can hopefully cut out a large chunk of the corruption that is currently stopping the correct level of tax being collected.

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Remittances and how to reduce costs

by Developed Africa 20. June 2014 09:00

Not only has Barclays Bank attempted to close down remittance services, but now Merchants Bank, in the US, is closing its remittance services to Somalia today.

So just how much does it cost Africans to send remittances, and how could those costs be reduced?

Africa is Paying a Huge Price for Money Transfer Fees Infographic

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30 million out-of-school children in Sub-Saharan Africa

by Developed Africa 19. June 2014 09:00

This week UNICEF and UNESCO both published reports which declare that 30 million children in sub-Saharan Africa are not attending school due to poverty and conflict.

About 30 million primary school-aged children in sub-Saharan Africa are not in class, partially because of conflict and poverty, and progress to get them back to school has stalled, two U.N. agencies said."

The reports were released on the "Day of the African Child", with evidence that progress that was being made since the turn of the century to achieve universal primary education (and UN Millenium Development Goal) started to stall from 2008.

There are many aspects to the problem of getting children into school across sub-Saharan Africa: more facilities, teachers, classrooms, and equipment are necessary, but all of this sometimes still doesn't lead to more children at school desks. It is often the fact that impoverished families cannot afford to send their children to school. The UN agencies also pin-pointed certain circumstances that make it even harder for children to attend:

The Global Initiative on Out of School Children reports reveal that opportunities to go to school are significantly reduced if the child is a girl, lives in a poor family, is from a rural area or is head of a household."

There was mention by the Director of UNESCO's East African office that "special efforts" will be needed to lessen the financial pressure on families. A renewed call for donors and governments to focus on providing free education in order for children from all areas to be able to receive an education. 

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GM Bananas

by Developed Africa 18. June 2014 09:00

Following our posts last week about GM products, a GM banana has garnered a lot of attention in the media this week.

The banana in question has been developed in Australia with higher levels of Vitamin A and has been invented in order to combat the effects that a lack of proper nutrients can have on the poor, especially on the continent of Africa. Vitamin A deficiency causes blindness as well as leading to deaths across the world as:

the consequences of Vitamin A deficiency are dire with 650,000-700,000 children world-wide dying.. each year and at least another 300,000 going blind."

The project is funded by the Bill and Melinda Gates foundation and was begun at the Queensland University of Technology, but the bananas will now be sent to the US for human tests to determine if they do in fact dramatically increase the intake of Vitamin A. If all goes well, the researchers and producers say they are hoping to get the product growing in Uganda by 2020, and if it is approved, it could be used in other countries too.

Take a look at this video that discusses how well the banana would go down in Uganda:

 

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Women: In Politics

by Developed Africa 17. June 2014 09:00

Two weeks ago, West African officials came together for a conference on female leadership.

There are a lot of voices joining in the call for more gender equality and representation in politics across the continent of Africa. 

Of the 36 lower houses of parliament worldwide that have reached the 30% threshold considered necessary for women to have an impact on decision-making, 11 are African"

However, a lot of these are down to quotas being utilised in order to get women into positions of authority and power. And even then, there is evidence to show that it takes a long time for women in power to make changes to policy:

Despite law changes in South Africa, the World Economic Forum's gender-gap report shows that women earn 35% less than men doing the same jobs."

But this should not be discouraging, whilst it may take time, there is already evidence of movement towards fair representation.

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Women: In Business

by Developed Africa 16. June 2014 09:00

Female entrepreneurs in Africa are on the rise, and are pulling themselves out of poverty. But there is still a lot to fight through.

Africa now has the highest growth rate of female-run enterprises across the world, according to the World Bank."

However, there is a new gap between the genders that may be making starting a business harder, as it appears that there is a new digital gap:

On average across the developing world, nearly 25 percent fewer women than men have access to the Internet, and the gender gap soars to nearly 45 percent in regions like sub-Saharan Africa."

As with a lot of the gender gap problems that persist in the developing world, the problem is one of accessibility and movement. For instance, men are more likely to have the money to gain access to technology and the internet, and are therefore able to move leaps and bounds ahead in technological skills. By gaining skills in technology, it can often now mean better access to jobs.

Access to Information and Communications Technology (ICT) can be essential for women entrepreneurs in starting and growing a business and overcoming barriers they face."

 

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McKinsey & Company Report on Nigeria

by Developed Africa 13. June 2014 09:00

A recent report from McKinsey & Company claims that the sectors of agriculture, trade, manufacturing, and infrastructure may contribute up to $800bn to Nigerian GDP by 2030.

This prediction, however, is not just going to come naturally without any work. This estimation was made assuming that real focus was put into these sectors; for example for agriculture to reach its potential Nigeria would need to focus on:

boosting yields, shifting more production into high value crops, reducing post-harvest and distribution losses, and increasing scale production. The biggest opportunity in agriculture is improving crop yields, which accounts for 39 per cent of the upside potential."

The report also touched upon infrastructure, and pushed for large scale investment into infrastructure, most notably in transport and energy, in order to see leaps in the countries growth rates.

based on extensive analysis of available data a interviews with stakeholders in the country, it estimated that "there is a potential for the investment of $871bn in core infrastructure through 2030 to support an upside GDP growth scenario."

Furthermore, the report also included assertions that Nigeria remains an attractive investment destination for international investors citing its large youth population and steady growth as particular points of attraction.

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Power and Investment in Nigeria

by Developed Africa 12. June 2014 09:00

Energy and power could create the next big leap in economic growth for Nigeria.

There have been a number of claims that if power is correctly developed then growth rates could reach double figures. The Minister for Power, Professor Chinedu Nebo, has stated that:

if power is corrected and we have enough of it in Nigeria, our growth rate might get to double digits and that is a challenge for all of us. We are now number 26 economy in the world, but power alone can get us, faster than anything else, to one of the top (economies) in the world."

A similar prediction was also made by the Chief Executive of Petroleum Development company SEPLAT, Austin Avuru, who has predicted that if the power situation is addressed correctly then Nigeria could reach growth rates of 15%.

The government is now selling off a second round of generation and distribution companies, bringing in billions of dollars in investment and promising tens of thousands of megawatts of capacity. With as much as 40 per cent of the cost of business in Nigeria related to power supply, this could, in turn, unleash the latent potential in start-ups and small businesses."

This is a long awaited move that will definitely help improve the supply of power across Nigeria, but it is not without its challenges. The issue facing those taking over generation and distribution is reforming and improving the structures in place to allow for a better service.

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GM Debate Continues

by Developed Africa 11. June 2014 09:00

The debate surrounding the use of GM crops continues on, as a new study shows the benefits to poor farmers.

A study recently published by PlosOne has argued that GM crops can help poor farmers to consume more calories and better nutritional foods due to the higher yields that they grow.

GM crops already benefit smallholder farmers in several major ways. For example, they help farmers control pests and disease. This leads to high production and increased income, which in turn provides them with increased ability to consume more nutritious food."

One example used by the study was the use of GM cotton, and whilst this is not even a consumable crop, by using a GM version, farmers and their families' calorie intake increased. The argument to be made therefore, is that whilst there is still debate over widespread usage of GM crops, if it can improve the lives of the farmers growing the products, it shouldn't be dismissed without them having a say.

The authors estimate that if the households that do not currently grow GM cotton switched, "the proportion of food insecure households would drop by 15-20%."

Another argument from the anti-GM activists that is starting to be proven wrong is that the use of GM would benefit large corporations the most and would harm the food security of the farmers and people in developing countries. In fact, it is shown that:

at least 90 per cent of the 18 million farmers who grew biotech crops in 2013 were small-scale resource-poor farmers in developing countries."

However, as previously stated, this does not mean that GM crops should have sudden widespread use, there are a lot of factors that contribute to an argument against their usage.

See Developed Africa's previous posts on the debate: Part One and Part Two.

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Power Cuts Harming Growth

by Developed Africa 10. June 2014 09:00

Energy is an often talked about subject, but looking at it in direct connection to economic growth heightens its importance.

It is necessary more than ever to look properly at the power problem across Africa, rather than just spouting statistics and data about change and development, it is key to look at what direct affects power cuts have upon growth and business.

The economic cost of power shortages can amount to more than 2 percent of gross domestic product. For some countries, it has shaved as much as one-quarter of a percentage point off annual per capita GDP growth rates."

An example of this comes from an article from an American medical student on the experience of running a business throughout power outages in Sierra Leone. The article describes a company that uses machines to produce a paste used to treat malnutrition:

frequent power outages and rolling blackouts forced us to switch between running on a generator and the national grid multiple times each business day, which is expensive and wastes valuable production time. These outages can also damage the machinery, resulting in costly repairs and production downtime that delay the distribution of this life-saving malnutrition treatment."

Examples like this need to be voiced more often as they bring a realness to the statistics, and will create a more urgent need for action.

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Human Capital Strategy

by Developed Africa 9. June 2014 09:00

Last week, the AfDB launched its Human Capital Strategy for Africa. 

Development is often so easily simplified into facts, figures, and statistics that look at the drop and growth in economic patterns, but it is important to ensure that there is always a human element to development strategies. And that is what the AfDB's new strategy aims to do: focus on human capital.

The vision of the Bank's Human Capital Strategy is to harness the potential of one billion Africans by building skills and promoting technologies for better jobs, equal opportunities and workforce competitiveness."

The key focuses of the strategy appear to be in skills and technology, so education is key. And the aim of this approach is to underpin all areas other projects, to work with them and to heighten the human capital element of other development bank projects.

To read the strategy in full, click here.

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IMF in Maputo

by Developed Africa 6. June 2014 09:00

Following yesterday's post we continue to look at how developing economies can rise out of poverty.

Last week saw IMF managing director Christine Lagarde speak out about how African economies may be on the rise, but poverty is not going anywhere. Inequality is what allows the two to live side by side.

The IMF met with finance ministers and governors from sub-Saharan Africa in Maputo, Mozambique last week, discussing the progress the region had made in the past 20 years and took a look at sustainable growth and development for the future. A press release from the IMF pronounced the joint declaration which included "fostering inclusive growth and structural transformation", "overcoming fragility", and "building institutions and human capital".

The press release shows evidence of mutual appreciation between the IMF and the minister and governors of sub-Saharan African nations. The ministers and governors appreciate the efforts of the IMF, notably their Rapid Credit Facility, but both groups agree that there are policy areas that could be improved. The joint declaration puts forward a united front in tackling development into the future.

To read the press release in full click here.

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Aid and Donors

by Developed Africa 5. June 2014 09:00

Since a rising number of African countries are become less dependent on aid, will donors lose their control?

as official development assistance money flowing to Africa declines as a proportion of total flows, donors are talking about how they can adapt their engagement with African countries to make themselves more relevant over the long term."

An article in the Guardian from September reflected upon what changes can be made by donors in order to remain relevant and to be of better help in the changing environment of growth in many African nations. 

leveraging private capital, crowding in investment, and fighting poverty through trade, investment and the private sector."

Making it clear that donors need to find a way to adapt their methods in order to benefit African economies under the changing circumstances. For instance the focus should be on structural transformation, energy, sustainability, and infrastructure. But it is highly important to stress the necessary inclusion of the private sector to fight poverty through investment rather than charity.

But it is significant that the subject of aid has become a peripheral issue in talk about Africa's future"

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Coal Debate

by Developed Africa 4. June 2014 09:00

There appear to be differing opinions among international organisations over the impact of coal funding in Africa.

It is the ongoing struggle on whether or not developing nations should have to use less fossil fuels in order to combat climate change and make the move to renewables, whilst at the same time risking falling behind on development plans. Whilst it is clear that things need to change in order to stop global warming worsening, it seems wrong to tell developing countries that they aren't allowed the same advantages on the road to development as now developed countries once had.

This is the argument coming from the AfDB who refuse to stop coal funding to poor countries, whilst organisations such as the World Bank, European Bank, and a number of European nations have taken steps to cut coal funding in light of climate change targets.

It's very easy for some of our partners sitting in more developed countries to make certain pronouncements without understanding the whole impacts on the developing world of what they're saying."

But it is easy to see the partners from developed nations as the bad guys for wanting to stop coal funding, but it is due to enormous public and political pressure that they themselves has a goal to cut the amount of fossil fuel projects they support and fund. So whilst it may look to be hypocritical and selfish, it is because of targets they have to meet themselves. Having said that, the developed world really should be taking into account the fact that whilst renewable energy should be developed upon and heavily encouraged, there are still millions of people without access to power across the world, and coal may still be needed for at least a while to bring them into the grid.

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EU 2030 Climate Package

by Developed Africa 3. June 2014 09:00

Today saw the release of Oxfam's advice for the Eu on what their targets for their 2030 Energy and Climate plan should include.

Up to 72 percent of the EU's imports come from the developing world and areas that are particularly vulnerable to climate change."

The main crux of the article appears to be highlighting the dependence the Eu actually has upon the rest of the world in terms of imports that allow it to function. A main aim for Europe is to start to step-up the move to reaching higher targets of emission reduction by increasing the efforts made into renewable energy. However, it is important to note that Europe cannot simply now just start to try and become more self-sufficient and leave the rest of the world, upon which it has depended, to shoulder the burden it would leave behind. Oxfam's recommendations are insistent on Europe helping developing nations to cope with climate change and adaptation:

Oxfam believes that a fair offer from the EU for the global talks in Paris in 2015 would be an unconditional pledge to mitigate at least 55 percent of emissions domestically, complemented by financial support for climate action in developing countries, especially the poorest, after 2020."

You can read Oxfam's recommendations in full here:

 

 

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Changing Perspectives

by Developed Africa 2. June 2014 09:00

It would appear that investors perceptions of Africa have changed, and that they are starting to see past the negatives.

Vice President of the World Bank's Multilateral Investment Guarantee Agency, Michel Wormser, has said in an interview that investors in Africa are starting to see beyond negative news. It is important to highlight that this should not be seen as belittling the negative events that happen across the continent, but more that investors are starting to recognise that events in one country do not have an affect (or have little affect) on their project in a country on the other side of the continent.

When something happened in one side of Africa, it seemed to affect perceptions of the whole continent. This is not the case today. Many investors understand the difference between countries and even understand the difference within a country between regions and sectors."

 

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AfDB in Rwanda: Part 2

by Developed Africa 30. May 2014 09:00

The event saw the launch of Africa's Sustainable Energy for All Decade; Sustainable Energy for All that was set up in 2011 by the UN, with the vision of making sustainable energy available to everyone by the year 2030.  

In late 2013, the UN General Assembly officially announced that 2014-2024 would be the Decade of Sustainable Energy for All. The situation is particularly complex in Africa, where 57% of the population is still without access to electricity."

The AfDB organised the launch of the Decade of SE4ALL due to its importance in the continent, especially when it comes to funding energy based programmes. Take a look at the following video to see what was discussed at the conference:

During the week's conference Phumzile Mlambo-Ngcuka, Executive Director of UN Women, wrote a piece depicting the "Africa We Want" in terms of Women's role for the next 50 years.

The young women of Africa want to be considered not just as leaders of tomorrow but leaders today, with the ability to champion innovations in technology, agriculture, industry, and societal welfare."

To read her article in full, click here.

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AfDB in Rwanda: You can't eat GDP

by Developed Africa 29. May 2014 09:00

Last week the AfDB Annual Meetings were held in Rwanda.

The annual meetings were host to many discussions about the "Africa we Want" and there has been a lot of focus on what the AfDB has achieved in the last 50 years, and what more it needs to do.

The meetings opened with a discussion on the importance of encouraging a GDP growth that has real meaning, one that will make a real difference.

what was needed was growth with depth, meaning diversifying production, making exports competitive on the international market, increasing the overall productivity of farms, firms and governments and upgrading the technology that is used throughout the economy, which will result in overall improved human well-being in Africa."

This can perhaps be surmised by AfDB President Donald Kaberuka's statement to the audience that: "You can't eat GDP". This statement is a short one, but one that is laden with meaning; headlines about GDP growth are banded around so easily that it can often appear that they don't really make a lot of difference to people's daily lives, that needs to change, and a GDP growth that has real meaning needs to become the focus.

"The Africa We Want" was a key theme that ran through the course of last week's conference, as you can see from the discussion on Leadership for the Africa we Want, which you can watch here, in which President Kagame highlighted the glaring fact that leaders often say a lot, but do not actually act. And more often than not, they act in the opposite manner to what they say:

We have to make sure that leaders are there for a purpose. They must deliver, work for transformation and better the lives of the people."

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Foreign Investment at All Time High

by Developed Africa 28. May 2014 09:00

A number of reports released recently are all confirming that foreign investment in Africa is reaching a record high.

Both the EY African Attractiveness survey 2014 and the African Economic Outlook 2014 both discuss the new heights that foreign direct investment is reaching on the African continent. 

The African Economic Outlook, complied by the AfDB, OECD, and UNDP released last week, discusses the new heights that investment in the continent will reach this year, predicting that by the end of 2014 $80 billion will have been invested into African nations. However, there it is important to recognise that this investment is not necessarily benefiting the whole continent equally:

the top six recipients, representing one-third of the continent's population, received the same amount of foreign directinvestment as the remaining 48 countries together."

The Attractiveness survey from EY also highlighted that Africa's share in global FDI is at the highest it has been this decade, providing evidence that Africa's attractiveness to the world is on the up. However, within this it is again evident that the whole continent as a whole is not equal in its shares of this investment. 

While FDI projects in North Africa declined by nearly 30%, projects in SSA (Sub-Saharan Africa) increased by 4.7% reversing the decline of 2012."

Take a look at this infographic from EY that sums up some key points of the survey:

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China in Africa Part 2

by Developed Africa 27. May 2014 09:00

Following on from yesterday's post we take a look at a new approach from China.

Last week saw the announcement and confirmation of a multilateral agreement between China and the AfDB. 

China is poised to invest billions of dollars in Africa through a multilateral institution in Beijing's first ever departure from its "cheque book" policy of bilateral deals on the continent."

This "multilateral institution" is going to be called the Africa Growing Together Fund, and can be seen as a reaction to the criticism that China has been receiving, discussed in yesterday's blog, and is an effort to portray their work in Africa in a better light. The Chinese Premier Li Keqiang, has made a statement assuring Africans that China wants to work in conjunction with the continent, and that it does not seek to follow in the footsteps of past colonial powers.

This move follows the criticism discussed in Monday's post, accusing China of only thinking of itself when investing in the continent. However, this is one fund that is relatively small compared to the size of investment transactions still being pursued by China in Africa.

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China in Africa Part 1

by Developed Africa 26. May 2014 09:00

China's interest in Africa has been evident in recent years, but are things starting to change?

Firstly, we will look at the reaction to China's involvement in Africa, and how perceptions have recently begun to change. Whilst it is clear that African nations are greatly in need of the infrastructure that projects from China are providing, the manner in which they are played out is often not beneficial to African countries, with the possibility that some are even detrimental to development. 

And it isn't just international outsiders noticing, recently more African citizens have been picking apart the issues in the Chinese investment projects. There are several key issues with the way in which investment is being conducted: 

China typically favours its state-owned companies for African projects and bypasses open, competitive bidding procedures."

Not only this, but it has been contested that developments such as the East African Railway due to begin work in October could have been better for the African economies involved had it gone through the World Bank for funding, rather than being left with a high amount of debt. 

 

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Climate Change: Hotspots and Collaboration

by Developed Africa 23. May 2014 09:00

 A new study has revealed the regions in Africa that will be most affected by climate change.

Parts of Sudan and Ethiopia, the Central African nations surrounding Lake Victoria and the continent's southwest, including parts of South Africa, Mozambique and Zimbabwe are considered climate change overlap hotspots Müller and his team report.”  

These ‘hotspots’ have been singled out as they have high rates of poverty and population, and therefore the effects of climate change are going to be seen to hit the hardest in these areas. The authors of the study make it clear that this analysis should not b the basis for adaptation plans, but that it could help indicate where best to channel resources.

Elatedly a group has been launched of African and Asian scientists to collaborate on climate change research and adaptation. The Collaborative Adaptation Research in Africa and Asia (CARIAA) was launched at the end of April, funded by Canada’s international development centre as well as the UK’s DfID, the focus of the initiative will be issues common to both areas and to try and find solutions that will work for both as well.

They too will focus on ‘hotspots’ across the two continents namely:

semi-arid regions in Africa and South and Central Asia, major river deltas in Africa and South Asia, and Himalayan river basins.” 

This collaboration is a fantastic way of combining funding to tackle problems that prevail in both continents, saving on work and money, to allow for results that will help a larger area and reach a larger number of people. 

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Africa's Wealthiest

by Developed Africa 22. May 2014 09:00

Developed Africa has previously written about Africa's wealthiest man, Aliko Dagnote, but now take a look at the Top 10.

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Tax Havens Robbing Africa of $60bn over 10 years

by Developed Africa 21. May 2014 09:00

The loss of $60bn was just from 5 African countries, the transparency report from the group Global Financial Integrity tells us. 

After last weeks post about how African nations would have access to more tax revenues if tax systems were to change to stop businesses from avoiding tax, we see a report that highlights just how much the continent is losing. This $60bn figure that is the headline of a lot of stories in the news at the moment, is not even for the whole of the continent, it is the money lost from trade misinvoicing in just 5 African nations: Ghana, Kenya, Mozambique, Tanzania, and Uganda.

Washington-based group Global Financial Integrity said the "enormous amounts of money" drained out of the countries equates to more than double the international aid money they receive and is stymieing efforts to lift millions of people out of poverty."

The prominent notion that needs to come from this information is just how restricting and detrimental it is to the development of African nations, and it is hampering people's escape from poverty. 

Campaigns are underway to encourage rich countries to end tax havens:

 

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New East African Railway Line

by Developed Africa 20. May 2014 09:00

New Chinese investment into railway line in East Africa will increase development in the region.

This new rail project aims to link Mombasa and Nairobi, but in the future it will extend even further to include Burundi, Rwanda, South Sudan, and Uganda. 

China is to finance 90% of the first stage, pit at $3.8bn, with work carried out by a Chinese firm."

It estimated the construction will take 3 and a half years to complete the Mombasa-Nairobi link, with work starting in October. Developed Africa has posted recently on the importance of infrastructure expansion, and transport infrastructure is a key piece in the development puzzle. Once transportation of goods is easier, then costs are cut for businesses, encouraging more development across the continent and between different regions. Not only this, but it allows for public transportation to be quicker and cheaper, which would see an increase in its usage, once again an additional contribution to the economy.

On top of the development that it will bring to the African economy, it is another example of China and Africa's continued close investment relationship. Chinese premier Li Kequiang on the topic of the railway investment has said:

This project demonstrates that there is equal cooperation and mutual benefit between China and the East African countries, and the railway is a very important part of transport infrastructure development."

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Engineering and Infrastructure

by Developed Africa 19. May 2014 09:00

Addressing engineering and lack of infrastructure is one thing that will boost Africa's growth.

Infrastructure, as Developed Africa recently reported, is an extremely important area in terms of Africa's development, there is not adequate infrastructure currently across the continent, but once this changes, it will make a big difference to the development of African nations.

The World Bank projects that Africa will need to invest US$93 billion a year over the next decade to meet its infrastructure shortfalls."

Expansion of broadband, increased training of engineers, and projects should involve some fill some form of education objectives. But what is extremely important is that governments ensure that when securing project agreements they should aim to involve local workers, as well as ensuring an element of education and training as part of the project, to encourage more people into engineering. And in Universities it is incredibly important to supply courses that are relevant to real world needs:

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World Economic Forum for Africa

by Developed Africa 16. May 2014 09:00

Last week saw the World Economic Forum for Africa conference, held in Nigeria, with a fantastic turn-out showing the support for Africa's development. 

The conference saw an incredible promise of $68bn for African development coming from a range of nations present, all starting with a $12bn commitment from the Chinese government. 

Rosler said the amount represented commitments in various critical sectors of the continent like infrastructure, energy, agriculture, education, and health."

The event was also a show of support for the plight of the missing school girls, and the large turn-out showed solidarity in the fight against terrorism. Discussion about agriculture was also high on the agenda, with the Grow Africa initiative doubling their commitments to $72bn.

Watch this video summarising the main discussion points of the conference:

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Lack of Female Entrepreneurs

by Developed Africa 15. May 2014 09:00

At a time when entrepreneurship is being heralded as a good way to get ahead across Africa, that might not be the case for women as much as it is for men.

It appears that there is an inequality in the number of female entrepreneurs compared to male entrepreneurs, which could be due to women being discouraged from such pursuits. But it seems that it is an issue not an issue unique to Africa, but that across the world:

Women still struggle to access the capital they need to spur economic development” 

But at the rate that women do actually push ahead with their business plans and ideas, if the obstacles they face were removed and they were given the correct support then, according to a study from the IMF:

Women could become a driver of global growth. For countries, that would mean increased GDP and greater stability. For companies, it promises the “shared value” of driving the bottom line while creating social good.”

Specifically in Africa though, the evidenjce of the lack of female entrepreneurs is clear from the application statistics for the Anizsha Prize, Africa's foremost award for young entrepreneurs, as less than a third of applications were from women.

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Data Revolution

by Developed Africa 14. May 2014 09:00

The availability of public data has been a big point of discussion for the World Bank recently even holding an event that discussed a data revolution, and what it would mean.

So what do they mean by a “data revolution”? Data and information is not often something that is readily available to the public, especially in developing countries. Talks held by the World Bank are helping to bring this question to the table, and to hopefully slowly solve the problem of the lack of availability of data. 

video platformvideo managementvideo solutionsvideo player

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Possible increase in Tax Revenues

by Developed Africa 13. May 2014 09:00

It was announced last week that the OECD's tax action plans are going to be rewritten to be more developing country friendly.

This is in response to the recognition in a report from Business Among Friends, that has brought attention to the corporate tax dodging techniques that mean developing countries are robbed of a large chunk of potential income. In order to combat this the G20 needs to change global tax rules, and Oxfam argues that a World Tax Authority is needed.

Revenue loss from businesses dodging their tax payments harms poorer economies most, as corporate tax revenues comprise a higher proportion of their national income"

And this is the main reason why something needs to be done about the situation, as for rich economies it isn't too much of a loss, but developing nations are hit hardest by tax dodging, and would reap the best benefit of those extra tax revenues. 

To read the report in full, click here.

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Start Ups and SMEs

by Developed Africa 12. May 2014 09:00

Whilst there are now a lot more methods for start-ups to gain funding, keeping the business going proves difficult for many.

At a time when even medium sized businesses struggle to maintain momentum, it is evident that it is often even harder for start-ups who, even after receiving the funding they need, fail to keep their heads above water. So what is it that is holding them back, and what can be done to resolve the issue?

AFK Insider attributes the difficulty of setting up a new company to "a market dictated by cartels, multinationals, and government interference", but pointed to a method which may help struggling start-ups to see their plans through. Known as "garages" there are specially tailored hubs that impart advice and allow access to equipment and utilities to help entrepreneurs to better their approach to their start-up.

the startups can access free office space, free utilities and a chance to network with other small businesses in various fields and learn from each other even as they interact with mentors hired by the incubation facilities." 

To perhaps help the difficult process of starting up and maintaining a new business, a young entrepreneur from Uganda has created an app that can help. The app was created a couple of years ago, and is a "management app" that aims to help budding entrepreneurs to keep all their records and stats in order.

One of the main challenges he believes limits many SMEs today is keeping adequate financial records. Mawano said those entrepreneurs who do keep records, genreally store them manually in a book. SME managers, therefore, have to do their own calculations to determine profit or loss over a week, a month, or a year.

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Electrification: Part 2

by Developed Africa 9. May 2014 09:00

Continuing from yesterday's post, we look further at the task of electrification, and how it is being achieved in a number of different countries across the continent, with varying levels of success.

South Africa, for example is heralded as being "light years" ahead of the rest of the continent in terms of household electrification.

the 2011 Census put South Africa's access rate at just under 85%, with more connections since likely to have increased the figure closer to government's ultimate goal of 97% access by 2025"

South Africa, until recently, was the largest economy in Africa so it is understandable that it would be the most developed in terms of electricity coverage. However, this is not to say that the rest of the continent is getting nowhere, as it was announced at the end of April that the EU are awarding grants to 16 energy projects in 9 countries in Africa, in order to bring the continent closer to providing energy to its poorest. 

On top of this, an energy report from the Green Alliance, launched by the Labour party in the UK, has reported that:

projections for achieving universal energy access in sub-Saharan Africa...assume that just over half the provision will need to be mini and off-grid solutions"

This is in concurrence with the conclusion of yesterday's post that using off-grid production for rural areas would be not only the best way of reaching areas thus-far unreachable areas across the continent, but would make the most economical sense. 

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Electrification: Part 1

by Developed Africa 8. May 2014 09:00

Electrification involves a lot of work and effort, but the outcomes are extraordinary, we take a look at the process African countries are going through to get there.

There is no doubt that great steps have been made in bringing electricity to more and more people across the continent, as well as a concerted effort to bring it to rural areas, for example, the Energy Minister for Mozambique has reported that:

In 2004, we had 1.3 million people with electricity in their homes, and today 10.2 million people have electricity. 6.5 million obtain electricity from the national grid, while 3.7 million receive power from solar panels"

This is an impressive spike in numbers of people with access to electricity, as well as being a good example of how electricity can be brought to those who cannot access the grid network. But there is still a long way to go, even though this statistic from Mozambique is an impressive one, it still means that 60% of the population are without electricity. Especially in rural areas there is a desperate need for electrification, but a big problem is financing this. It isn't the production that is the problem, but charging people once it is installed appears to be the difficult part. So a solution to the rural electrification problem is localised off-grid generation, because:

micro-generation projects may be able to avoid some of the payment and credit problems, as well as the political interference and corruption, that bedevil large-scale centralised generation and transmission systems."

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Infrastructure

by Developed Africa 7. May 2014 09:00

From a number of reports recently, it has been made clear than an important step in the development of a nation's economy is being overlooked by many countries in Africa.

Roads and railways across Africa are in desperate need of investment, but even the ones that are already in place are significantly less than the proportion in developed nations, thus:

transport costs alone are 63 percent higher in Africa than in developed counties, hampering its competitiveness in the international and local markets."

So without sound transportation infrastructure there will be a lot of complications further down the line, such as access for businesses and transportation of goods, on top of the restrictions it places upon people.

But there is encouraging news that the construction industry is seeing an increase in projects, which can be seen to be due to increased consumer spending. 

previously much of Group Fiver's Nigerian work was focused on power generation, the company is now doing projects in housing, shopping centres, and toll roads"

This is evidence of the rise in construction work, and the inclusion of roads in that work load is an encouraging move. And it is interesting to learn that whilst many of the roads that have been built across the continent were often built by Chinese companies, often using their own workers, but that might all change as the quality is now being questioned. Group Five CEO Mike Upton has noted that:

there is a push-back, based on a couple of things: one is the quality, and two is the culture of the contracts- it's not empowering for the local economy."

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What the Chinese slowdown could mean for Africa

by Developed Africa 6. May 2014 09:00

A recent report from the IMF has suggested that the slowdown of China's economy could have repercussions for African economies.

The report made it clear that whilst many African economies have been able to grow in recent years, this is due to structures supported by bigger, more stable, developed economies:

Should growth in these countries—and particularly in China—slow much more than currently envisaged, the implications for the region could be significant"

But that is not to say that the message from the Sub-Saharan African report is a gloomy outlook, but instead it offers solutions to the problems that the changes in Africa could cause. The moves that need to be made in order to protect sub-saharan economies from the effects of the Chinese slowdown are ones that will also set them up for independence in the future as well. 

The way in which African ecnomies can protect themselves from this, is by ensuring insular economic growth that can last. Currently economic structures involve the protection of larger international economies to help procure growth, but these structures need to be adapted so that African economies can be a little less dependent on the health of outside economies. 

To read the report in full, click here.

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Nigeria's Economy

by Developed Africa 5. May 2014 09:00

Looking at Nigeria's economy and employment.

The rebasing of Nigeria’s economy has set it up as the biggest economy in Africa, but in real terms, there is still vast unemployment and per capita income is still low in the rankings.

no fewer than 5.3 million youths are jobless in the country, while 1.8 million graduates enter the labour market every year."

It is clear from statistics like these that a rebasing of the economy is not something that will improve the lives of Nigeria's citizens, instead education needs improving, youth need to learn skills that will help them gain employment, and the employment prospects across a number of sectors need to see some work.

Although Nigeria now exceeds South Africa in economic size, it still has a long way to go if it wants to reach a similar level of economic development and sophistication." 

What is needed is for the government to really tackle the level of economic development is to address the way in which the country's institutions work, and the way in which business is conducted. What is scary about how little Nigeria's economy has actually improved is the reports of a stampede for jobs that resulted in the death of 16 people, and the injury of many others. When people are dying in their urgency to get a job, then something needs to change in that economy. 

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Climate Change Support in Africa

by Developed Africa 2. May 2014 09:00

A new fund has been set up by the AfDB in order to encourage action to combat climate change across Africa.

The Africa Climate Change Fund (ACCF) will be managed by the development bank with an aim to giving out grants to African countries or to NGOs to carry out projects which tackle climate change.

The fund is of high importance in ensuring that African countries can gain access to financing that will allow them to protect themselves from climate change.

The scope of the ACCF is broad enough to allow for a variety of activities that countries need for the transition to climate smart development, with the aim of generating transformational change in the medium to long term."

The infographic below shows just one of the ways in which the continent will be affected by climate change:

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Kenya's Rise

by Developed Africa 1. May 2014 09:00

Following Nigeria’s ascent to the largest economy in Africa after a rebasing of its economy, Kenya is doing the same, and it appears that after the rebasing its GDP will rise by 2 0 percent, moving it up to the status of a “middle-income” country. Again, as with Nigeria, it will take a while before the increase is properly announced, but by September, Kenya will be ranked as middle-income and will have a much higher ranking GDP.

The new economic data is expected to cement Kenya's position as East Africa's largest economy and Africa's fourth-largest economy after South Africa, Nigeria, and Angola."

However, it would appear that investors are a little cautious in terms of the rebasing. The chairman of the Kenyan Chamber of Commerce is wary of what the new statistics will do for the country, he is acutely aware of the way in which it will affect the special treatment they are given for being a developing country.

Kenya's products will now be required to compete on the same terms with those from highly developed economies."

And this is a valid point, whilst there may be no real change, the change in status will affect the way in which international investors and other countries will deal with Kenya.

This again brings into question what the real meaning of a rebasing is. If there is no real change in the actual workings of the country’s economy, it just hasn’t been recognised properly, does that improve its situation or just put a better label on a still not fully formed product.

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Mobile Banking

by Developed Africa 30. April 2014 09:00

Developed Africa has previously spoken about the benefits of mobile technology in financial inclusion, now there is growing evidence.

The EcoNet telecommunications group has seen vast expansion in the number of people signed up to their mobile cash transfer platform, EcoCash. 

In January 2014 Econet with a total subscriber base of 8.5 million also claimed to have 3.5 million users on their EcoCash money transfer platform whilst Netone's One wallet money transfer service epxerienced a 2000% increase in transaction volume since their re-launch in November 2013"

This is strong evidence of both the usefulness and popularity of mobile banking. Whilst it may not be pleasing to banks, the fact that people can control their money from anywhere they wish is incredibly useful, especially to those living in rural areas who would not have been able to regularly reach their banks before. By introducing mobile banking and money transfer, it is a lot cheaper for people to use the same services they would usually have to go to a bank for.

opening a mobile money account on any of the operators in Zimbabwe is free and all you need to start using mobile money services in Zimbabwe is a basic mobile phone"

The reach of mobile money services such as this should greatly improve access to services for citizens.

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More on Tax

by Developed Africa 29. April 2014 09:00

Following yesterday's blog about taxing foreign investors, today we look at the impact of taxes in general.

A major problem companies come across when doing business in Africa are the high withholding taxes that are charged in some countries. 

withholding taxes differ from country to country, and the rates fluctuate from 5% to 30%"

Governments institute such high withholding taxes in order to protect their tax bases from "BEPS", the term given to Base erosion and Profit shifting, tax evasion essentially. But in having extremely high withholding tax rates, some countries have seen companies entering into complex arrangements which allow them to get around these high rates.

This is an ongoing debate across many countries, as to whether governments better protect themselves by taxing high, or if they actually cause harm to their economies by putting off investors and businesses. 

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The Cost of Tax Incentives

by Developed Africa 28. April 2014 09:00

Tax systems across Africa prove to be difficult when having to appeal to investors but at the same time not harm the poor.

A recent article in the Guardian reported on the tax breaks given to foreign investors in Sierra Leone that mean that the rest of the country, including the poor, have to pay the difference. This article was spurred by a recent report release from Christian Aid regarding the losses Sierra Leone incurs from the tax incentives that it supplies for foreign investors.

In 2012, tax incentives for just six firms amounted to 59% of the entire government budget - more than eight times greater than spending on health and seven times higher than the amount spent on education."

Such a drastic percentage of the national budget surely cannot be sustainable for the country, and whilst it brings in investment from foreign sources, does that out way the costs to the country? But in fact the government cost itself $224m in tax breaks for investors. And this is mainly due to the fact that people often believe that by giving tax breaks companies are more likely to invest, but this isn't strictly true:

IMF research from east Africa suggests good quality infrastructure and political stability have been more important in attracting investment there."

So whilst the government in Sierra Leone is giving away tax breaks, it is quite possible that under the correct circumstances these same companies would invest whilst also paying taxes, which would stop these large costs to those who live in the country, and would actually be better all round. 

To take an in depth look at the report, click here.

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Investment in Housing

by Developed Africa 25. April 2014 09:00

Last week saw the announcement of a $20 million trade finance agreement between AfDB and Shelter Afrique.

Shelter Afrique is:

the only pan-African finance institution that exclusively supports the development of the housing and real estate sector in Africa."

And the $20 million trade agreement is in order to further improve access to affordable housing across Africa.

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Developing Health Care in Africa

by Developed Africa 24. April 2014 09:00

In recent news, it has become clear that a Lesotho public-private hospital partnership has backfired, and will cost far more than promised.

Take a look at this video from Oxfam:

The costs of the healthcare partnership have bloated to far more than originally planned:

the running and loan costs of the three-year-old hospital complex in the capital Maseru have blown out to $67m a year- or 51 percent of Lesotho's health budget."

But does this mean that PPP can never work in healthcare? 

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Employment Rights in Zambia

by Developed Africa 23. April 2014 09:00

Just recently, the social security Minister of Zambia has spoken out on exploitation of vulnerable workers.

Mr Shamenda has called for companies to ensure that they do not exploit workers due to the high unemployment rates, making it clear that those in desperate need of jobs should not be taken advantage of.

We are concerned about Livingstone and as Government we will not entertain any abuse of workers. However, those who are lazy or misbehave at places of work will not be protected by the government."

 This is an interesting development in the area of workers’ rights in Africa, as there has been for a long time a system of “self-regulation”. So does this mean that we could start to see a change in the regulation of workers’ rights in the coming years? Because Mr Shamenda made it clear that if employers do not stick to guidelines and fair pay, would face prosecution. If there are more leaders who start to take this approach it is very possible that changes could start to be made in terms of workers rights, but obviously it would be a slow process.

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Europe and Africa

by Developed Africa 15. April 2014 09:00

Last week saw the EU and Africa grow closer together, as a summit in Brussels promised closer co-operation.

Many things needed to be discussed at the summit, including the ongoing struggle in the Central African Republic. And despite big steps on the part of China and Japan in investing in Africa, the EU is still the continent's largest development and trading partner.

The EU and its 28 member states are the alrgest donors of development assistance to Africa, spending over 18.5 billion euros in 2012 alone."

There was slight tension leading up to the summit as President Zuma of Zimbabwe tried to call for a boycott, which failed, as 48 African nations attended the summit.

This video from EuroNews reflects on the events of the summit:

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Nigeria's Economy

by Developed Africa 14. April 2014 09:00

Nigeria has now surpassed South Africa as Africa’s largest economy, but you might be wondering how it happened so quickly?

By “rebasing” their economy, Nigeria could factor in a number of sectors which its GDP had never reflected or recognised.

In computing its GDP all these years, Nigeria, incredibly, wasn't factoring in booming sectors like film and telecommunications."

So by changing what making sure these sectors are recognised in the calculations, Nigeria’s GDP jumped 89% to $510bn.

But as the article from the Atlantic points out, what does this say about the way we measure prosperity? And are we laying too much faith in the measure of GDP to indicate economic strength?

As Coyle wrote on Monday, this week's GDP overhaul will likely make investors and entrepreneurs more confident in Nigeria. And yet, "Nothing real has changed, the economic problems like poverty and inequality and a poorly-functioning state remain."

What would be intriguing is to see what would happen to other African nations if they took on a rebasing of their economy. Whilst Coyle states that:

Africa as a whole probably is not as poor as we've long though"

this rebasing should take nothing away from the urgency with which African nations need to address their economic problems.

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Employment across Africa

by Developed Africa 11. April 2014 09:00

It is a known fact that more people work in the informal sector than the formal in Africa, but just why are employment rates so low from the formal sector?

The answer is a fairly obvious one, hiring is expensive. But not just in that it costs more to pay someone than not, its the fact that by having more employees the more expensive in terms of the taxes that need to be paid:

government officials in search of taxes and bribes tend to chase large firms, rather than small ones"

So from the outset, businesses are discouraged from employing, despite the fact that employment is known to lead to stronger and more sustainable development in a country. So a vicious cycle is created, until the problems that cause the restraints on employment are dealt with. 

Commodity-driven export, expanding work-force, and high labour costs all lead to employers from hiring more staff. Structural reform is needed, and the system of taxing businesses for employing needs to be looked at in order to create a system that taxes fairly, whilst allowing businesses to grow and thrive, instead of fearing expansion.

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Map Distortion- How much does it matter?

by Developed Africa 10. April 2014 09:00

Discussions about the accuracy of the Mercaror map, which is used the world over, are becomingly increasingly popular.

Now, we are obviously aware that there is no way to perfectly depict the proportions of the globe on a flat diagram, but the issue that is being raised more and more frequently is that the mercaror representation so poorly depicts Africa that we need to come up with a better one. 

Looking at a map, through a layman's eye, you would assume that North America and Africa are fairly similar in size, and that there was no way that North America could fit inside Africa with room for more. But it would appear that it is in fact possible, and that we have been fooled by the scaling of the map since 1516. Take a look back at Developed Africa's post about the true size of Africa. Below is the Gall-Peters equal projection map, telling a different story:

Gall-Peters equal projection map

There are some that might argue that the distorted representation of Africa may have a subconscious affect on people, if it looked bigger, perhaps they would think of it with higher significance. That is not what we are arguing, but it is clear that:

maps communicate much more than mere information and all of them necessarily contain within them the world views of their makers."

So is it time for a change?

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Rwanda's Economy

by Developed Africa 9. April 2014 09:00

Recently named first in the First African Retail Development Index for Market Opportunity from A.T. Kearney, Rwanda's economy looks to be facing a new era.

An article from the New York Times last week also highlighted Rwanda's economy for taking a new direction, and pointed out its successes over the past few years:

the economy has grown an average of nearly 8 percent over the last four years because of increased agricuktyral productivity, tourism, and government spending on infrastructure and housing."

The political state of the country may be repressive, but the economy is reaching is turning to new ways to make it boom, most significantly technology is involved in a way that Rwanda hopes will make it a technology hub for East Africa. The New York Times quotes the minister of Youth and Information Technology as saying that the economy is shifting to one of knowledge:

that's where we want to go, shifting from an agrarian base to a knowledge base, leapfrogging the industrial."

However, is it possible that this is they way in which many African countries might be moving? And the precise reason why they are not able to truly take hold of their potential, because by skipping out the industrial element, there will be no manufacturing in many African nations, and they will still be dependent on others.

But industry aside, it seems as though Rwanda is making a name for itself in a number of areas, notably in technology and retail.

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Congo River Grand Inga Dam

by Developed Africa 3. April 2014 09:00

Plans are underway to build a dam that could help power not only Africa, but Europe as well.

As the video from the BBC explains, the dam is the third of its kind to be proposed for the river. The plans for the dam come at a time when the whole continent is facing a huge energy gap, one that needs to be filled quickly in order for African economies to develop and thrive. 

A large chunk of funding for the project is coming from the World Bank, which has approved a grant of $73.1 million.

The money, combined with another $33 million from the Africa Development Bank, will fund technical studies to analyze the dam's environmental and social impact and ensure it is sustainable, the World Bank said in a statement."

South Africa is also involved, having agreed with the DRC last year that it would provide funding for the project as well as buy a large majority of the energy generated once the dam is up and running.

It is projected that the plant is going to be able to produce 4,800 MW of power, and whilst over a third of that will be sold to both South Africa and to Congo's mining industry:

the remaining 1000 megawatts would go to the national utility SNEL, helping provide power to an estimate 7 million people around Kinshaha, Congo's capital."

Now this is when the dam will positively impact the Congo, and the people of Congo, as such a huge boost to their economy and to their power capacity will be of incredible importance.

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IPCC Report

by Developed Africa 2. April 2014 09:00

The report from the IPPC released on Monday on climate change claims climate change has already started having an impact across the globe on people’s health and access to good water/food resources.

 The summary of the report firstly outlines what previous adaptations across the world have been like, and what affect climate change has had in the past. It then moves on to the more pressing topic of how climate change is going to affect our resources now and in the future, and what, if any, adaptations can be made in order to decrease the effect this has upon daily life and access to resources.

 The effect on water sources and ecosystems is of particular concern:

Climate change is projected to reduce raw water quality and pose risks to drinking water quality even with conventional treatment, due to interacting factors: increased temperature; increased sediment, nutrient, and pollutant loadings from heavy rainfall; increased concentration of pollutants during droughts; and disruption of treatment facilities during floods.”

 But the main punch of the report comes from the affect that climate change is going to have on food security and production. Crop yields are going to be hit badly up to 2050, and even worse after that time, if nothing changes. But there is a key point that this article hits home, that it is going to affect us more than we thought, and that is going to be the case whether we make changes or not, but if we make changes we can change the effects of climate change in the long term future, slowly curbing the effects.

Infographic

Following the release of the report US Secretary of State, John Kerry, announced that:

“there are those who say we can’t afford to act. But waiting is truly unaffordable. The costs of inaction are catastrophic.”

To read the whole report click here.

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India Investing in Africa

by Developed Africa 1. April 2014 09:00

This video from the BBC gives an insight into the growing market between India and China

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Hunger and Climate Change

by Developed Africa 28. March 2014 09:00

This week has seen a lot of news articles regarding increased hunger related to climate change, ahead of the release of a new report from the IPCC on Monday.

A report from Oxfam report came out on Tuesday in order to analyse how prepared we are for climate change to change the way we need to attack hunger, before a report from the IPCC is released this week that will show the real impact climate change will have on hunger across the globe. In their analysis of how prepared we are to adapt, Oxfam used 10 policy areas to assess it thoroughly, and those were: Adaptation Finance, Social Protection, Food Crisis Aid, Food stocks, Gender, Public agricultural investment, Agricultural research gap, Crop irrigation gap, Crop insurance gap, and Weather monitoring gap.

While our results show a great deal of variability in preparedness between and within countries, the global picture is of a food system that is dangerously unprepared for the impacts of climate change."

The idea behind this report is to create more motivation across the world in terms of climate action, when people realise the full reality of the food crisis that will happen due to climate change, the more they will do to prepare.

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Food Retailers in Africa

by Developed Africa 27. March 2014 09:00

A look at the impact large food corporations could possibly have on the continent. 

Connected slightly to our blog on Monday, this post takes a closer look at the consequences that changing the food sector across Africa could have on small businesses. As we discussed in the post on Monday, SMEs appear to be at the heart of boosting economies, but do they then disappear once the economies are grown and the corporations take over? And is this a bad thing, or just the way the world works?

with big food retailers looking to repeat their successes as they expand into Africa, the local entrepreneurs and small and medium enterprises (SMEs) currently at the heart of African food retailing could be similarly under threat."

As the article from Think Africa Press points out however, this does not have to be the direction that the food market takes in Africa, there is the possibility to use the power of the corporations to help Africa in its development journey.  For instance this can be achieved by:

funds to establish new facilities for the drying, freezing, processing or packaging of foods such as wild greens, spices, and mangoes so they meet global standards could create jobs."

On top of this increased demand for such products could boost business for local suppliers and traders.

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Nigerian Green Revolution

by Developed Africa 26. March 2014 09:00

For years now subsistence farmers have just been 'getting by', but that could soon change, in Nigeria in particular.

It appears as though despite a growing population with a growing unemployment rate, Nigeria may yet be able to take hold of its agriculture sector again. Especially since the government has started to address the agriculture problem as such, and has started to treat it as one that needs to be solved by industry, rather than by international aid. This is a good point from which to start to build up a booming agriculture sector, as once it is realised that aid cannot create a long term working economy, then the changes can begin to take hold.

Thanks to a new farming program, Babban Gona, there is hope for smallholder farmers to be able to effectively expand their production to commercial levels. 

Babban Gona trains farmers- franchises and offers them loans, then delivers seed and fertilizer directly to the farms on credit; district managers track production and dispense advice throughout the season."

But not only this, the program helps the farmers at harvest time, providing transport in the form of tractors they wouldn't otherwise have access to, as well as a processes the grain at its warehouse, and sells it on to large corporations, paying the farmers a quarterly dividend payment.

All this is a great advancement on what subsitence farmers are used to, but the struggle is setting up schemes like this one that always keep the farmers in mind. 

Click here to read the full story of how Babban Gona came into existence.

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Energy

by Developed Africa 25. March 2014 09:00

The issue of energy production across Africa is a vital and continuing one, but some countries are making marked progress.

There is a great degree of contrast between African nations when it comes to power and energy production. Looking at recent news and announcements, this contrast can be evidenced in the examples of Ethiopia and South Africa.

Ethiopia, it has recently been announced, looks as though it will begin producing energy at Africa's largest power plant in 2015. The hydropower plant has the capacity to produce 6,000-megawatts, and not only is this production environmentally friendly it looks set to reduce Ethiopia's debts, as it will export some of its excess energy to neighbouring countries, bringing in an estimated $2 billion per year. 

the government already exports power to Sudan and Djibouti. It's also building a transmission line to Kenya and is in discussions with Yemen and war-torn South Sudan."

Compared to Ethiopia's coming triumph, South Africa can be seen to be trailing behind on the energy front. Eskom, the state-owned power company declared:

four power "emergencies" since November and earlier this month imposed rolling blackouts, known locally as "load shedding", for the first time in six years."

All this is evidence that investment into strong energy infrastructure is vital. Due to lack of strong power plants, and failure to invest in them 20 years ago, has led to South Africa having to frantically cobble together energy plans. 

Eskom is scrambling to finish new power plants, including Medupi and Kusile, massive coal-fired outfits with a combined capacity of about 9,5000 megawatts.

But it could be years before they reach completion. So despite South Africa having the largest energy production capacity on the continent, its failure to ensure proper maintenance of its power plants has led to this scramble for power.

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The Power of Small Businesses

by Developed Africa 24. March 2014 09:00

A recent article from How We Made it In Africa highlighted how important small businesses are to growing economies.

The article focuses on the impact small businesses are having on the economies of post-war Sierra Leone and Liberia, proof of the power of small businesses on growing economies if they can be of such high importance to war-torn countries. 

in post-conflict economies which have endure decades of war, the role of small and medium enterprises (SMEs) is even greater in job creation, providing essential services and rebuilding the nation's economy"

On top of the usefulness of SMEs in bolstering economies that have seen much turbulence, it is evident that they are helpful at 'filling in the gaps' in areas such as manufacturing, where there is little large scale activity across Africa at the moment, but by having SMEs partaking in manufacturing, the sector can start to build up.

manufacturing, on a large scale, is still somewhat embryonic in Africa and as such, there is a definite opportunity for SMEs to fill the gaps which are not being serviced by these large global companies."

But it is perhaps important to note that they should not be seen as just a gateway before company giants move in, but perhaps as a real tool for development that comes from, and benefits, real people and their small businesses.

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Rethinking Innovation

by Developed Africa 21. March 2014 09:00 Tags:
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Women in Politics

by Developed Africa 20. March 2014 09:00

Last week the UN released a map to depict Women's role in politics across the world.

 

Take a more detailed look at the results here.

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Capitation in Healthcare

by Developed Africa 19. March 2014 09:00

Capitation has recently been expanded in Ghana, Developed Africa takes a look at the implications of the system

Capitation is a method for healthcare provision in which the state gives a certain amount of money to healthcare providers per patient. In theory, this should lead to a better service, as:

capitation offers a vast array of incentives for providers to increase efficiency in their medical practice, since they must absorb any additional cost if they exceed the fixed amount that is allocated per person."

However it is noted that in order for this method of healthcare payment to be implemented well there needs to be a vigorous regulatory body to ensure that there are no abuses of the system, such as provision of sub-quality healthcare. In order for the expansion of capitation to benefit the people of Ghana, it needs to be properly regulated to make sure that they are receiving the best care that they can because the risk for patients under the capitation model is that the doctor could make decisions regarding their treatment based on the fact that they will make money by providing less care.

But putting aside the potential negative aspects of the model, it could overall be a good move:

data and information from close monitoring and evaluation of the implementation experience will be essential to provide much needed local evidence on what is working well and what needs further modifications to guide the process forward and make adjustments along the way."

It is therefore a good step towards creating a fully functioning health care system that can be improved upon through evidence and evaluation.

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Green Bonds

by Developed Africa 18. March 2014 09:00

Green Bonds are being encouraged to ensure that environmentally friendly projects find funding, especially in developing countries.

Green Bonds are provided to investors in order to encourage them to invest into projects that have a climate-friendly impact. So far the biggest green bond disrtriubtors have been the European Union and the World Bank, but it seems that there is room for expansion.

The green bond principles recognise several broad categories of potential eligible green projects, including renewable energy, energy efficiency (including efficient buildings), sustainable waste management and land us (including forestry and agriculture) biodiversity conservation and clean transportation and water."

Quick explanation of how Green Bonds work:

 

It would appear that support for Green Bonds is picking up speed, with a lot of encouragement coming from Jim Yong Kim, President of the World Bank, urging an increase in the use of the bond. 

In Tunisia, green bonds issued by the World Bank help improve efficiency in irrigation and reliable water supply in rural areas where groundwater sources are stressed."

The introduction of Green Bonds can only be a good thing, as they should help to create a new era of development projects that are climate friendly and based in energy efficiency. 

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Analysis: African Transformation Report 2014

by Developed Africa 17. March 2014 09:00

Last week a report was launched looking into how African countries should capitalise on their growth.

The report starts off by focusing on the fact that whilst growth is good, there needs to be more in order to ensure real development and transformation. This 'something more' that the report specifies is a depth to the growth; which they define as: 

Diversification, more Export competitiveness, more Productivity increases, more Technological upgrading, and more improvements in Human well-being."

But it is not as if this is the first report to recognise that growth alone is not enough, so how do they suggest this should be done?

The main crux of the article is on expanding the capabilities of African economies, and changing the systems that have been in place for years. A particular focus is put on four ways in which depth can be created in this growth transformation. They include, unsurprisingly, manufacturing; agroprocessing; oil, gas, and minerals; and tourism. So nothing particularly new here. Although the report is very useful, and goes into great depth as to where it thinks the best moves need to be made, it is nothing that anyone hasn't thought of before.

To read the full report, click here.

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Representing Africa through Imagery

by Developed Africa 14. March 2014 09:00

An interesting talk from TEDx on the narrative created through imagery of developing nations used in the media and by NGOs.

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